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CONFORMED COPY
New Jersey Natural Gas Company
$125,000,000
5.60% Senior Notes due May 15, 2018
______________
Note Purchase Agreement
_____________
Dated
as of May 15, 2008
Table of Contents
(Not
a part of the Agreement)
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Section
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Heading
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Page
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Section 1.
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Authorization of Notes
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1
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Section 2.
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Sale and Purchase of Notes and Security for the Notes
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1
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Section
2.1.
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Sale
and Purchase of Notes
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1
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Section
2.2.
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Security
for the Notes; First Mortgage Bonds; Release
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1
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Section 3.
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Closing
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3
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Section 4.
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Conditions to Closing
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3
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Section
4.1.
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Representations
and Warranties
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3
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Section
4.2.
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Performance;
No Default
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3
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Section
4.3.
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Compliance
Certificates
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4
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Section
4.4.
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Opinions
of Counsel
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4
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Section
4.5.
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Purchase
permitted by Applicable Law, Etc.
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4
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Section
4.6.
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Related
Transactions
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4
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Section
4.7.
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Payment
of Special Counsel Fees
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4
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Section
4.8.
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Private
Placement Number
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5
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Section
4.9.
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Changes
in Corporate Structure
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5
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Section
4.10.
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Funding
Instructions
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5
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Section
4.11.
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Board
Approval
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5
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Section
4.12.
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First
Mortgage Bonds and Supplemental Indenture
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5
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Section
4.13.
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Proceedings
and Documents
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5
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Section 5.
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Representations and Warranties of the Company
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6
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Section
5.1.
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Organization
Power and Authority
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6
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Section
5.2.
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Authorization,
Etc.
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6
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Section
5.3.
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Disclosure
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6
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Section
5.4.
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Organization
and Ownership of Shares of Subsidiaries
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6
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Section
5.5.
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Financial
Statements
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7
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Section
5.6.
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Compliance
with laws, Other Instruments, Etc.
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7
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Section
5.7.
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Governmental
Authorizations, Etc.
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8
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Section
5.8.
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Litigation;
Observance of Statutes and Orders
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8
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Section
5.9.
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Taxes
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8
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Section
5.10.
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Title
to property; Leases
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8
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Section
5.11.
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Licenses,
Permits, Etc.
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9
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Section
5.12.
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Compliance
with ERISA
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9
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Section
5.13.
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Private
Offering by the Company
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10
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Section
5.14.
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Use
of Proceeds; Margin Regulations
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10
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Section
5.15.
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Existing
Debt
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10
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Section
5.16.
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Foreign
Assets Control Regulations, Etc.
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11
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Section
5.17.
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Status
under Certain Statutes
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11
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Section
5.18.
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Environmental
Matters
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11
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Section
5.19.
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Perfection
of Liens
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12
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Section
5.20.
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First
Mortgage Bonds Pari Passu
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12
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Section
5.21.
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No
Event of Default
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12
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Section 6.
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Representations of the Purchases
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13
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Section
6.1.
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Purchase
for Investment
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13
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Section
6.2.
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Source
of Funds
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13
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Section 7.
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Information as to Company
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14
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Section
7.1.
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Financial
and Business Information
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14
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Section
7.2.
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Officer's
Certificate
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17
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Section
7.3
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Inspection
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18
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Section 8.
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Prepayment of the Notes
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18
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Section
8.1.
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Required
Prepayments
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18
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Section
8.2.
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Required
Prepayment—Condemnation; Required Sale
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18
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Section
8.3.
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Optional
Prepayments with make-Whole Amount
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19
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Section
8.4.
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Allocation
of Partial Prepayments
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19
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Section
8.5.
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Maturity;
Surrender, Etc.
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19
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Section
8.6.
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Purchase
of Notes
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20
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Section
8.7.
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Make-Whole
Amount for Notes
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20
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Section
8.8.
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Offer
to Prepay upon Asset Disposition
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21
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Section 9.
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Affirmative Covenants
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22
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Section
9.1.
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Compliance
with Law
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22
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Section
9.2.
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Insurance
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23
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Section
9.3.
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Maintenance
of Properties
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23
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Section
9.4.
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Payment
of Taxes and Claims
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23
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Section
9.5.
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Corporate
Existence, Etc.
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23
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Section
9.6.
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Regulated
Nature
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23
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Section
9.7.
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Notes
to Rank Pari Passu
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23
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Section 10.
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Negative Covenants
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24
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Section
10.1.
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Limitations
on Debt
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24
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Section
10.2.
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Liens
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24
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Section
10.3.
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Restricted
Payments
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26
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Section
10.4.
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Restrictions
on Dividends of Subsidiaries, Etc.
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27
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Section
10.5.
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Sale
of Assets, Etc.
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27
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Section
10.6.
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Merger,
Consolidation, Etc.
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28
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Section
10.7.
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Disposal
of Ownership of a Restricted Subsidiary
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28
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Section
10.8.
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Limitations
on Subsidiaries, Partnerships and Joint Ventures
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29
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Section
10.9.
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Limitation
on Certain Leases
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29
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Section
10.10.
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Nature
of Business
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29
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Section
10.11.
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Transactions
with Affiliates
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30
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Section
10.12.
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Designation
of Restricted and Unrestricted Subsidiaries
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30
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Section
10.13.
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Terrorism
Sanctions Regulations
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30
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Section 11.
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Events of Default
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31
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Section 12.
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Remedies on Default, Etc.
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33
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Section
12.1.
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Acceleration
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33
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Section
12.2.
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Other
Remedies
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34
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Section
12.3.
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Rescission
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34
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Section
12.4.
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No
Waivers or Election of Remedies, Expenses, Etc.
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35
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Section 13.
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Registration; Exchange; Substitution of Notes
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35
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Section
13.1.
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Registration
of Notes
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35
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Section
13.2.
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Transfer
and Exchange of Notes
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35
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Section
13.3.
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Replacement
of Notes
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36
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Section 14.
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Payments on Notes
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36
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Section
14.1.
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Place
of Payment
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36
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Section 14.2.
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Home
Office Payment
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36
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Section 15.
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Expenses, Etc.
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37
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Section
15.1.
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Transaction
Expenses
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37
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Section
15.2.
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Survival
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37
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Section 16.
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Survival of Representations and Warranties; Entire
Agreement
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37
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Section 17.
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Amendment and Waiver
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38
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Section
17.1.
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Requirements
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38
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Section
17.2.
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Solicitation
of Holders of Notes
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38
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Section
17.3.
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Binding
Effect, Etc.
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39
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Section
17.4.
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Notes
Held by Company, Etc.
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39
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Section 18.
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Notices
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39
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Section 19.
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Reproduction of Documents
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40
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Section 20.
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Confidential Information
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40
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Section 21.
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Substitution of purchaser
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41
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Section 22.
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Miscellaneous
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41
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Section
22.1.
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Successors
and Assigns
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41
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Section
22.2.
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Submission
to Jurisdiction; Waiver of jury Trial
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42
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Section
22.3.
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Payments
Due on Non-Business Days
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42
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Section
22.4.
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Accounting
Terms
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42
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Section
22.5.
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Severability
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42
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Section
22.6.
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Construction
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42
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Section
22.7.
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Counterparts
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43
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Section
22.8.
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Governing
Law
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43
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Section 23.
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Appointment and Direction of Collateral Agent
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43
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Section
23.1.
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Appointment
and Authority; Direction
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43
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Section
23.2.
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Limited
Agency
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43
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Section
23.3.
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Delegation
of Duties
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43
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Section
23.4.
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Exculpatory
Provisions
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44
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Section
23.5.
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Reliance
by Collateral
Agent
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44
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Section
23.6.
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Indemnification
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45
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Section
23.7.
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Duties;
Obligations
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45
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Section
23.8.
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Requesting
Instructions
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45
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Section
23.9.
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Administrative
Actions
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45
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Section
23.10.
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Exercise
of Remedies
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45
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Section
23.11.
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Sharing
and Application of
Proceeds
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46
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Section
23.12.
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Resignation
or Termination of Collateral Agent
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46
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Section
23.13.
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Succession
of Successor Collateral
Agent
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47
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Section
23.14.
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Eligibility
of Collateral
Agent
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47
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Section
23.15.
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Successor
Collateral Agent by Merger
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47
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Section
23.16.
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Compensation
and Reimbursement of Collateral Agent
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48
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Section
23.17.
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Self
Dealing
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48
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Section
23.18.
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Third
Party Beneficiary
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49
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Signature
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50
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Attachments to Note Purchase Agreement:
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Schedule A
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—
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Information
Relating to Purchasers
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Schedule B
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—
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Defined
Terms
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Schedule 4.9
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—
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Changes
in Corporate Structure
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Schedule 5.3
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—
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Disclosure
Materials
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Schedule 5.4
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—
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Subsidiaries
of the Company and Ownership of Subsidiary Stock
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Schedule 5.5
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—
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Financials
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Schedule 5.8
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—
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Certain
Litigation
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Schedule 5.11
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—
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Patents,
Etc.
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Schedule 5.14
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—
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Use
of Proceeds
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Schedule 5.15
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—
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Existing
Debt
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Exhibit 1
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—
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Form
of 5.60% Note due May 15, 2018
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Exhibit 4.4(a)
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—
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Form
of Opinion of Special Counsel to the Company
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Exhibit 4.4(b)
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—
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Form
of Opinion of Special Counsel to the Purchasers
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New Jersey Natural Gas Company
1415 Wyckoff Road
Wall, New Jersey 07719
5.60%
Senior Notes due May 15, 2018
Dated
as of May 15, 2008
To the Purchasers listed in
the attached Schedule A:
Ladies
and Gentlemen:
New
Jersey Natural Gas Company, a New Jersey corporation (the
“Company”
), agrees with the purchasers listed in the attached
Schedule
A (each a “Purchaser”
and collectively, the “Purchasers”
) as follows:
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Section 1.
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Authorization of Notes.
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The
Company will authorize the issue and sale of $125,000,000
aggregate principal amount of its 5.60% Senior Notes due
May 15, 2018 (the “Notes,”
such term to include any such notes issued in substitution
therefor pursuant to Section 13 of
this Agreement). The Notes shall be substantially
in the form set out in Exhibit 1 ,
with such changes therefrom, if any, as may be approved by the
Purchasers and the Company. Certain capitalized
terms used in this Agreement are defined in Schedule B ;
references to a “Schedule” or an
“Exhibit” are, unless otherwise specified, to a
Schedule or an Exhibit attached to this
Agreement.
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Section 2.
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Sale and Purchase of Notes and Security for the Notes.
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Section 2.1.
Sale and
Purchase of Notes. Subject to the terms and
conditions of this Agreement, the Company will issue and sell
to each Purchaser and each Purchaser will purchase from the
Company, at the Closing provided for in Section 3 ,
Notes in the principal amount specified opposite such
Purchaser’s name in Schedule A at
the purchase price of 100% of the principal amount
thereof. Each Purchaser’s obligations
hereunder are several and not joint and no Purchaser shall
have any obligation or liability to any Person for the
performance or nonperformance by any other Purchaser
hereunder.
Section 2.2.
Security for
the Notes; First Mortgage Bonds; Release.
(a) Prior to the Release Date, the Notes shall be
secured by an equal principal amount of the First Mortgage
Bonds issued by the Company under the Mortgage Indenture to
The Bank of New York, as collateral agent for the holders of
the Notes (the “Collateral
Agent” ). The First Mortgage Bonds
will rank pari passu with
all other existing and future first mortgage bonds issued
pursuant to the Mortgage Indenture.
(b)
Terms of
First Mortgage Bonds. The First Mortgage
Bonds will have the same stated interest rate, interest
payment dates, stated maturity and redemption provisions
(including Make-Whole Amount, if any), and will be in the same
aggregate principal amount, as the Notes; provided,
however, that the interest rate on defaulted principal,
Make-Whole Amount, if any, and interest on the First Mortgage
Bonds, to the extent permitted by law, is 6% per
annum. Payments of the principal of, Make-Whole
Amount, if any, and interest on the Notes shall be deemed to
satisfy and discharge the Company’s obligation to make
such payments on the First Mortgage
Bonds. Principal of, Make-Whole Amount, if any, and
interest on the First Mortgage Bonds are payable at the
principal office of the Mortgage Trustee in Chicago, Illinois
or at the Company’s option at the principal office of
the Collateral Agent.
(c)
Parallel
Payments of Notes and First Mortgage Bonds.
The First Mortgage Bonds shall contain optional and mandatory
redemption provisions (including Make-Whole Amount, if any)
which correspond to the optional and mandatory prepayment
provisions of the Notes; provided,
however, that the interest rate on defaulted principal,
Make-Whole Amount, if any, and interest on the First Mortgage
Bonds, to the extent permitted by law, is 6% per
annum. In addition, the First Mortgage Bonds shall
be subject to mandatory redemption if the Company or the
Mortgage Trustee is notified that an Event of Default under
this Agreement has occurred and is continuing and that the
principal amount of all Notes then outstanding has become due
and payable in accordance with this
Agreement. Prior to the Release Date:
(1)
In the event
the Company elects to or is required to prepay the Notes, in
whole or in part, in accordance with the provisions of this
Agreement, the Company’s obligations with respect to a
principal amount of First Mortgage Bonds equal to the
principal amount of such Notes being prepaid will, upon
prepayment of such Notes, be satisfied and discharged, and the
Collateral Agent shall deliver corresponding First Mortgage
Bonds in a principal amount equal to the principal amount of
the Notes so prepaid to the Company for further delivery to
the Mortgage Trustee for cancellation.
(2)
In the event
the Company elects to or is required to redeem First Mortgage
Bonds, in whole or in part, in accordance with the provisions
of the Mortgage Indenture, the Company shall prepay a
principal amount of Notes equal to the principal amount of
such First Mortgage Bonds being redeemed in accordance with
the provisions of Section 8.2
or Section 8.3 ,
as applicable, and the Company’s obligation in respect
of First Mortgage Bonds equal to the principal amount of such
prepaid Notes will be satisfied and discharged, and the
Collateral Agent shall deliver corresponding First Mortgage
Bonds in a principal amount equal to the principal amount of
such Notes so prepaid to the Company for further delivery to
the Mortgage Trustee for cancellation.
(d)
Release of
Security for the Notes. Upon the occurrence
of the Release Date, the Company shall promptly furnish the
Collateral Agent and each holder of the Notes an
Officer’s Certificate certifying that the conditions
precedent to the occurrence of the Release Date have been
satisfied. From and after the Release Date, the
obligations of the Company with respect to the First Mortgage
Bonds shall be deemed to be satisfied and discharged, the
First Mortgage Bonds shall cease to secure in any manner the
Company’s obligations under this Agreement or the Notes,
and the Collateral Agent shall forthwith deliver the First
Mortgage Bonds to the Company which shall then deliver the
First Mortgage Bonds to the Mortgage Trustee for
cancellation. On the Release Date, the Notes shall
become unsecured obligations of the Company and will rank
pari
passu in right of repayment with other unsecured Senior
Debt of the Company. Following the Release Date,
the Company shall cause the Mortgage Indenture to be closed
after payment of all first mortgage bonds and the Company
shall not issue any additional first mortgage bonds under the
Mortgage Indenture.
The
sale and purchase of the Notes to be purchased by the
Purchasers shall occur at the offices of Schiff Hardin LLP,
900 Third Avenue, 23rd Floor, New York, New York 10022, at
11:00 a.m., New York, New York time, at a closing (the
“Closing”
) on May 15, 2008 or on such other Business Day
thereafter on or prior to May 30, 2008 as may be agreed
upon by the Company and the Purchasers. At the
Closing, the Company will deliver to each Purchaser the Notes
to be purchased by such Purchaser in the form of a single Note
(or such greater number of Notes in denominations of at least
$100,000 as such Purchaser may request) dated the date of the
Closing and registered in such Purchaser’s name (or in
the name of its nominee), against delivery by such Purchaser
to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company in
accordance with the funding instructions provided pursuant to
Section 4.10
. If at the Closing the Company shall fail to
tender such Notes to any Purchaser as provided above in this
Section 3 ,
or any of the conditions specified in Section 4
shall not have been fulfilled to any Purchaser’s
satisfaction, such Purchaser shall, at its election, be
relieved of all further obligations under this Agreement,
without thereby waiving any rights such Purchaser may have by
reason of such failure or such nonfulfillment.
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Section 4.
|
Conditions to Closing.
|
Each
Purchaser’s obligation to purchase and pay for the Notes
to be sold to such Purchaser at the Closing is subject to the
fulfillment to such Purchaser’s satisfaction, prior to
or at the Closing, of the following conditions:
Section 4.1.
Representations and
Warranties . The representations and
warranties of the Company in this Agreement, the Mortgage
Indenture (including the Supplemental Indenture) and the First
Mortgage Bond Documents to which it is a party shall be
correct when made and at the time of the Closing.
Section 4.2.
Performance;
No Default. The Company shall have
performed and complied with all agreements and conditions
contained in this Agreement, the Mortgage Indenture (including
the Supplemental Indenture) and the First Mortgage Bond
Documents to which it is a party required to be performed or
complied with by it prior to or at the Closing, and after
giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by
Schedule 5.14
) and the issue of the First Mortgage Bonds, no Default or
Event of Default shall have occurred and be
continuing.
Section 4.3.
Compliance
Certificates .
(a)
Officer’s
Certificate . The Company shall have
delivered to such Purchaser an Officer’s Certificate,
dated the date of the Closing, certifying that the conditions
specified in Sections 4.1,
4.2 and 4.9 have been
fulfilled.
(b)
Secretary’s
Certificate . The Company shall have
delivered to such Purchaser a certificate of its Secretary,
dated the date of Closing, certifying as to the resolutions
attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of this Agreement,
the Supplemental Indenture, the First Mortgage Bond Documents
to which it is a party, the Notes and the First Mortgage
Bonds.
Section 4.4.
Opinions of
Counsel . Such Purchaser shall have received
opinions in form and substance satisfactory to such Purchaser,
dated the date of the Closing (a) from Chapman and Cutler
LLP, special counsel for the Company, covering the matters set
forth in Exhibit 4.4(a)
and covering such other matters incident to the transactions
contemplated hereby as such Purchaser or special counsel to
the Purchasers may reasonably request (and the Company hereby
instructs its counsel to deliver such opinion to such
Purchaser) and (b) from Schiff Hardin LLP, special
counsel to the Purchasers in connection with such
transactions, substantially in the form set forth in
Exhibit 4.4(b)
and covering such other matters incident to such transactions
as such Purchaser may reasonably request.
Section 4.5.
Purchase
Permitted by Applicable Law, Etc . On the
date of the Closing, such Purchaser’s purchase of Notes
shall (a) be permitted by the laws and regulations of
each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as Section 1405(a)(8) of the
New York Insurance Law) permitting limited investments by
insurance companies without restriction as to the character of
the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation
T, U or X of the Board of Governors of the Federal Reserve
System) and (c) not subject such Purchaser to any tax,
penalty or liability under or pursuant to any applicable law
or regulation. If requested by any Purchaser, such
Purchaser shall have received an Officer’s Certificate
certifying as to such matters of fact as such Purchaser may
reasonably specify to enable it to determine whether such
purchase is so permitted.
Section 4.6.
Related
Transactions . The Company shall have
consummated the sale of the entire principal amount of the
Notes scheduled to be sold on the date of the Closing pursuant
to this Agreement and delivered the First Mortgage Bonds to
the Collateral Agent pursuant to this Agreement and the
Supplemental Indenture.
Section 4.7.
Payment of
Special Counsel Fees. Without limiting the provisions
of Section 15.1
, the Company shall have paid on or before the Closing the
reasonable fees, charges and disbursements of special counsel
to the Purchasers referred to in Section 4.4(b)
to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the
Closing.
Section 4.8.
Private
Placement Number . A Private Placement
Number issued by Standard & Poor’s CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of
the National Association of Insurance Commissioners) shall
have been obtained for the Notes.
Section 4.9.
Changes in
Corporate Structure . Except as specified in
Schedule 4.9
, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation
and shall not have succeeded to all or any substantial part of
the liabilities of any other entity, at any time following the
date of the most recent financial statements referred to in
Schedule 5.5
.
Section 4.10.
Funding Instructions
. At least three Business Days prior to the date of the
Closing, such Purchaser shall have received written instructions
executed by an authorized financial officer of the Company on
letterhead of the Company directing the manner of the payment of
funds and setting forth (a) the name of the transferee bank, (b)
such transferee bank’s ABA number, (c) the account name and
number into which the purchase price for the Notes is to be
deposited and (d) the name and telephone number of the account
representative responsible for verifying receipt of such
funds.
Section 4.11.
Board
Approval. The New Jersey Board of Public
Utilities shall have entered an appropriate order authorizing the
issuance and sale of the Notes to the Purchasers and the delivery
of the First Mortgage Bonds to the Collateral Agent as security for
the Notes, upon terms not inconsistent with this Agreement, the
Supplemental Indenture, the Notes and the First Mortgage Bonds and
such order shall not be subject to appeal.
Section 4.12.
First Mortgage Bonds and
Supplemental Indentur e .
(a) All conditions precedent set forth in
the Mortgage Indenture with respect to the execution and delivery
of the Supplemental Indenture and the issuance of the First
Mortgage Bonds shall have been satisfied.
(b)
The First
Mortgage Bonds, the Supplemental Indenture and the First
Mortgage Bond Documents shall have been duly authorized,
executed, authenticated in the case of the First Mortgage
Bonds and delivered by the respective parties thereto, shall
constitute legal, valid and binding contracts and agreements
of such parties, and such Purchaser shall have received true,
complete, executed copies thereof and a certified copy of the
Mortgage Indenture.
(c)
The
Mortgage Indenture and the Supplemental Indenture shall have
been duly recorded as an indenture on real property and duly
filed, recorded or indexed as a security interest in personal
property so as to constitute a valid, perfected first Lien on
all of the Company’s property covered by the Mortgage
Indenture and the Supplemental Indenture, all in accordance
with applicable law, and the Company shall have caused
satisfactory evidence thereof to be furnished to such
Purchaser and special counsel to the Purchasers.
Section 4.13.
Proceedings and
Documents . All corporate and other proceedings
in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions
shall be satisfactory to such Purchaser and special counsel to the
Purchasers, and such Purchaser and special counsel to the
Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as such Purchaser or
special counsel to the Purchasers may reasonably
request.
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Section 5.
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Representations and Warranties of the Company.
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The
Company represents and warrants to each Purchaser
that:
Section 5.1.
Organization; Power and
Authority . The Company is a corporation
duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in
each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to
be so qualified or in good standing would not, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power
and authority to own or lease the properties it purports to
own or lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement,
the Supplemental Indenture and the First Mortgage Bond
Documents to which it is a party, the Notes and the First
Mortgage Bonds and to perform the provisions hereof, thereof
and of the Mortgage Indenture.
Section 5.2.
Authorization,
Etc . This Agreement, the Mortgage Indenture
(including the Supplemental Indenture), the First Mortgage
Bond Documents to which the Company is a party, the Notes, and
the First Mortgage Bonds have been duly authorized by all
necessary corporate action on the part of the Company, and
this Agreement and the Mortgage Indenture (including the
Supplemental Indenture) and the First Mortgage Bond Documents
to which the Company is a party constitute, and upon execution
and delivery thereof each Note and each First Mortgage Bond
will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
respective terms, except as such enforceability may be limited
by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (b) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
Section 5.3.
Disclosure
. The Company, through its agent, Banc of America
Securities LLC, has delivered to each Purchaser a copy of a
Private Placement Memorandum, dated April 2008 (the
“Memorandum”
), relating to the transactions contemplated
hereby. Except as disclosed in Schedule 5.3
, this Agreement, the Supplemental Indenture, the Memorandum,
the documents, certificates or other writings identified in
Schedule 5.3
and the financial statements listed in Schedule 5.5
, (collectively, the “Disclosure
Documents” ), taken as a whole, do not contain
any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were
made. Except as disclosed in the Disclosure
Documents, since September 30, 2007, there has been no change
in the financial condition, operations, business or properties
of the Company or any of its Restricted Subsidiaries except
changes that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse
Effect.
Section 5.4.
Organization
and Ownership of Shares of Subsidiaries
. (a) Schedule 5.4
is (except as noted therein) a complete and correct list of
the Company’s Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its
organization, the percentage of shares of each class of its
capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary and whether or not such
Subsidiary is a Restricted Subsidiary and/or an Inactive
Subsidiary.
(b)
All of the
outstanding shares of capital stock or similar equity
interests of each Restricted Subsidiary shown in Schedule 5.4
as being owned by the Company and its Subsidiaries have been
validly issued, are fully paid and nonassessable and are owned
by the Company or another Subsidiary free and clear of any
Lien (except as otherwise disclosed in Schedule 5.4
).
(c)
Each
Restricted Subsidiary identified in Schedule 5.4
is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of its
jurisdiction of organization, and is duly qualified as a
foreign corporation or other legal entity and is in good
standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which
the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such
Restricted Subsidiary has the corporate or other power and
authority to own or lease the properties it purports to own or
lease and to transact the business it transacts and proposes
to transact.
Section 5.5.
Financial
Statements . The Company has delivered to
each Purchaser copies of the financial statements of the
Company and its Subsidiaries listed on Schedule 5.5
. All of said financial statements (including in
each case the related schedules and notes) fairly present in
all material respects the consolidated financial position of
the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of
their operations and cash flows for the respective periods so
specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as
set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end
adjustments). The Company and its Subsidiaries do
not have any Material liabilities that are not disclosed on
such financial statements or otherwise disclosed in the
Disclosure Documents.
Section 5.6.
Compliance
with Laws, Other Instruments, Etc . Neither
the execution and delivery by the Company of this Agreement,
the Supplemental Indenture, the First Mortgage Bond Documents
to which it is a party, the Notes or the First Mortgage Bonds
nor the performance by the Company of this Agreement, the
Mortgage Indenture (including the Supplemental Indenture), the
First Mortgage Bond Documents to which it is a party, the
Notes or the First Mortgage Bonds will (a) contravene,
result in any breach of, or constitute a default under, or
result in the creation of any Lien (other than the Liens
contemplated thereby) in respect of any property of the
Company or any Restricted Subsidiary under, any indenture,
mortgage, deed of trust, loan, purchase or credit agreement,
lease, corporate charter or by-laws, or any other Material
agreement or instrument to which the Company or any Restricted
Subsidiary is bound or by which the Company or any Restricted
Subsidiary or any of their respective properties may be bound
or affected, (b) conflict with or result in a breach of
any of the terms, conditions or provisions of any order,
judgment, decree or ruling of any court, arbitrator or
Governmental Authority applicable to the Company or any
Restricted Subsidiary or (c) violate any provision of any
statute or other rule or regulation of any Governmental
Authority applicable to the Company or any Restricted
Subsidiary.
Section 5.7.
Governmental
Authorizations, Etc . No consent, approval
or authorization of, or registration, filing or declaration
with, any Governmental Authority is required in connection
with the execution and delivery by the Company of this
Agreement, the Supplemental Indenture, the First Mortgage Bond
Documents to which it is a party, the Notes or the First
Mortgage Bonds or the performance by the Company of this
Agreement, the Mortgage Indenture (including the Supplemental
Indenture), the First Mortgage Bond Documents to which it is a
party, the Notes or the First Mortgage Bonds other than such
consents, approvals, authorizations, registrations, filings or
declarations that have been obtained or made prior to the date
of the Closing.
Section 5.8.
Litigation;
Observance of Statutes and Orders.
(a) Except as disclosed in Schedule 5.8
, there are no actions, suits or proceedings pending or, to
the knowledge of the Company, threatened against or affecting
the Company or any Restricted Subsidiary or any property of
the Company or any Restricted Subsidiary in any court or
before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse
Effect.
(b)
Neither
the Company nor any Restricted Subsidiary is in default under
any order, judgment, decree or ruling of any court, arbitrator
or Governmental Authority or is in violation of any applicable
law, ordinance, rule or regulation (including, without
limitation, ERISA, Environmental Laws or the USA Patriot Act)
of any Governmental Authority, which default or violation,
individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect.
Section 5.9.
Taxes
. The Company and its Subsidiaries have filed all
income tax returns that are required to have been filed in any
jurisdiction, and have paid all taxes shown to be due and
payable on such returns and all other taxes and assessments
payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent,
except for any taxes and assessments (a) the amount of
which is not, individually or in the aggregate, Material or
(b) the amount, applicability or validity of which is
currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate
reserves in accordance with GAAP. The charges,
accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for
all fiscal periods are adequate. The Federal income
tax liabilities of the Company and its Subsidiaries have been
determined by the Internal Revenue Service and paid for all
fiscal years up to and including the fiscal year ended
September 30, 2004.
Section 5.10.
T itle to Property;
Leases . The Company and its Restricted
Subsidiaries have good and sufficient title related to the
ownership of their respective Material properties, including all
such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or
purported to have been acquired by the Company or any Restricted
Subsidiary after said date (except as sold or otherwise disposed of
in the ordinary course of business), in each case free and clear of
Liens prohibited by this Agreement or the Mortgage Indenture
(including the Supplemental Indenture), except for those defects in
title and Liens that, individually or in the aggregate, would not
have a Material Adverse Effect. All Material leases are
valid and subsisting and are in full force and effect in all
material respects.
Section 5.11.
Licenses,
Permits, Etc . Except as disclosed in
Schedule 5.11
, the Company and its Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
proprietary software, service marks, trademarks, trade names and
domain names or rights thereto, that are Material, without known
conflict with the rights of others, except for those conflicts
that, individually or in the aggregate, would not have a Material
Adverse Effect.
Section 5.12.
Compliance with
ERISA . (a) The Company and each ERISA
Affiliate have operated and administered each Plan in compliance
with all applicable laws except for such instances of noncompliance
as have not resulted in and would not reasonably be expected to
result in a Material Adverse Effect. Neither the Company
nor any ERISA Affiliate has incurred any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions
of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would reasonably be expected to result
in the incurrence of any such liability by the Company or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in
either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions, or to Code Sections 401(a)(29) or
412 (replaced by Code Sections 436 and 430, respectively,
effective January 1, 2008) or Section 4068 of ERISA,
other than such liabilities or Liens as would not be, individually
or in the aggregate, Material.
(b)
The
present value of the aggregate benefit liabilities under each
of the Plans which are subject to Title IV of ERISA (other
than Multiemployer Plans), determined as of the end of such
Plan’s most recently ended plan year on the basis of the
actuarial assumptions specified for funding purposes in such
Plan’s most recent actuarial valuation report, did not
exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than
$1,200,000. The term “benefit
liabilities” has the meaning specified in
Section 4001 of ERISA and the terms “current
value” and “present value” have the meanings
specified in Section 3 of ERISA.
(c)
The
Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal
liabilities) under Section 4201 or 4204 of ERISA in
respect of Multiemployer Plans that, individually or in the
aggregate, are Material.
(d)
The
accumulated post-retirement benefit obligation (determined as
of the last day of the Company’s most recently ended
fiscal year in accordance with Financial Accounting Standards
Board Statement No. 106, without regard to liabilities
attributable to continuation coverage mandated by
Section 4980B of the Code) of the Company and its
Restricted Subsidiaries did not exceed
$11,300,000.
(e)
The
execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction
that is subject to the prohibitions of Section 406 of
ERISA or in connection with which a tax could be imposed
pursuant to Section 4975(c)(1)(A)-(D) of the
Code. The representation by the Company in the
first sentence of this Section 5.12(e)
with respect to each Purchaser is made in reliance upon and
subject to the accuracy of such Purchaser’s
representation in Section 6.2
as to the sources of the funds used to pay the purchase price
of the Notes to be purchased by such Purchaser.
Section 5.13.
Private Offering
by the Company . Neither the Company nor anyone
authorized to act on its behalf has offered the Notes, the First
Mortgage Bonds or any similar securities for sale to, or solicited
any offer to buy any of the same from, or otherwise approached or
negotiated in respect thereof with, any Person other than the
Purchasers and not more than 28 other Institutional Investors of
the type described in clause (c) of the definition thereof, each of
which has been offered the Notes at a private sale for
investment. Neither the Company nor anyone acting on its
behalf has taken, or will take, any action that would subject the
issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act.
Section 5.14.
Use of Proceeds; Margin
Regulations . The Company will apply the proceeds
of the sale of the Notes as set forth in Schedule 5.14
. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of
buying or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System (12 CFR 221), or for the purpose of buying or carrying or
trading in any securities under such circumstances as to involve
the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). Margin stock
does not constitute more than 25% of the value of the consolidated
assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more
than 25% of the value of such assets. As used in this
Section, the terms “margin stock” and “purpose of
buying or carrying” shall have the meanings assigned to them
in said Regulation U.
Section 5.15. Existing Debt
. (a) Except as described therein, Schedule 5.15 sets
forth a complete and correct list of all outstanding Debt of the
Company and its Restricted Subsidiaries as of December 31,
2007, since which date there has been no Material change in the
amounts, interest rates, sinking funds, installment payments or
maturities of the Debt of the Company or its Restricted
Subsidiaries. Neither the Company nor any Restricted
Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Debt of
the Company or such Restricted Subsidiary and no event or condition
exists with respect to any Debt of the Company or any Restricted
Subsidiary the outstanding principal amount of which exceeds
$1,000,000 that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt
to become due and payable before its stated maturity or before its
regularly scheduled dates of payment.
(b)
Neither
the Company nor any Subsidiary is a party to, or otherwise
subject to any provision contained in, any instrument
evidencing Debt of the Company or such Subsidiary, any
agreement relating thereto or any other agreement (including,
but not limited to, its charter or other organizational
document) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Company, except
as provided in the Mortgage Indenture, the Bank Credit
Agreement and as otherwise specifically indicated in
Schedule
5.15 .
Section 5.16. Foreign Assets Control
Regulations, Etc . (a) Neither the
sale of the Notes by the Company hereunder or the issuance of the
First Mortgage Bonds pursuant to the Supplemental Indenture nor its
use of the proceeds of the Notes will violate the Anti-Terrorism
Order, the USA Patriot Act, the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
(b)
Neither
the Company nor any Subsidiary (1) is a Person described
or designated in the Specially Designated Nationals and
Blocked Persons List of the Office of Foreign Assets Control
or in Section 1 of the Anti-Terrorism Order or
(2) engages in any dealings or transactions with any such
Person. The Company and its Subsidiaries are in
compliance, in all material respects, with the USA Patriot
Act.
(c)
No part of
the proceeds from the sale of the Notes hereunder will be
used, directly or indirectly, for any payments to any
governmental official or employee, political party, official
of a political party, candidate for political office, or
anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended, assuming in all cases that
such Act applies to the Company.
Section 5.17.
Status under
Certain Statutes . Neither the Company nor any
Subsidiary is an “investment company” registered or
required to be registered under the Investment Company Act of 1940
or an “affiliated person” of an “investment
company” or an “affiliated person” of such
“affiliated person” or under the “control”
of an “investment company” as such terms are defined in
the Investment Company Act of 1940, as amended, and shall not
become such an “investment company” or such an
“affiliated person” or under such
“control.” Neither the Company nor any
Subsidiary is a “holding company” or a
“subsidiary company” of a “holding
company,” or an “affiliate” of a “holding
company” or of a “subsidiary company” of a
“holding company” within the meaning of the Public
Utility Holding Company Act of 2005, as amended. Based
upon the immediately preceding sentence, neither the Company nor
the issue and sale of the Notes or the issuance of the First
Mortgage Bonds pursuant to the Supplemental Indenture is subject to
regulation under the Public Utility Holding Company Act of 2005, as
amended. Neither the Company nor any Subsidiary is
subject to the ICC Termination Act of 1995, as amended, or the
Federal Power Act, as amended. Neither the Company nor
any Subsidiary is subject to any Federal or state statute or
regulation limiting its ability to incur Debt except for rules and
regulations of the New Jersey Board of Public
Utilities.
Section 5.18.
Environmental Matters
. Except as disclosed in Schedule 5.8 ,
neither the Company nor any Restricted Subsidiary has knowledge of
any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the
Company or any of its Restricted Subsidiaries or any of their
respective real properties now or formerly owned, leased or
operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each
case, such as would not reasonably be expected to result in a
Material Adverse Effect. Except as otherwise disclosed
to the Purchasers in writing:
(a)
neither the
Company nor any Restricted Subsidiary has knowledge of any
facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related
to real properties now or formerly owned, leased or operated
by any of them or to other assets or their use, except, in
each case, such as would not reasonably be expected to result
in a Material Adverse Effect;
(b)
neither the
Company nor any of its Restricted Subsidiaries has stored any
Hazardous Materials on real properties now or formerly owned,
leased or operated by any of them or has disposed of any
Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that would reasonably be
expected to result in a Material Adverse Effect;
and
(c)
all
buildings on all real properties now owned, leased or operated
by the Company or any of its Restricted Subsidiaries are in
compliance with applicable Environmental Laws, except where
failure to comply would not reasonably be expected to result
in a Material Adverse Effect.
Section 5.19.
Perfection of
Liens. (a) The Mortgage Indenture has been
duly recorded and filed, and, on the date of the Closing, the
Supplemental Indenture will have been duly recorded and filed, in
each place in which such recording or filing is required to protect
and preserve the Lien of the Mortgage Indenture and the
Supplemental Indenture, as the case may be, in and to the Trust
Estate and such Lien constitutes a valid, fully perfected and
continuing first priority Lien in and to, all right, title and
interest of the Company in the Trust Estate and all taxes and
recording or filing fees required to be paid in connection with the
execution, recording or filing of the Mortgage Indenture and the
Supplemental Indenture have been or will have been duly paid, as
the case may be.
(b) The Lien of the Collateral
Agent in the First Mortgage Bonds constitutes a valid, fully
perfected and continuing first priority Lien.
Section 5.20.
First Mortgage
Bonds Pari Passu. The Company’s
obligations under the Supplemental Indenture and the First Mortgage
Bonds rank pari
passu in right of payment, without preference or priority,
with it obligations under each other series of first mortgage bonds
issued and outstanding under the Mortgage Indenture.
Section 5.21.
No Event of
Default. No “Event of Default” under
the Mortgage Indenture exists on the date of execution of this
Agreement or the Supplemental Indenture, or will exist immediately
after giving effect to the transactions contemplated by this
Agreement or the Supplemental Indenture and the applications of the
proceeds from the issue and sale of the Notes and the issuance of
the First Mortgage Bonds.
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Section 6.
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Representations of the Purchasers.
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Section 6.1.
Purchase for
Investment . Each Purchaser severally
represents that it is purchasing the Notes for its own account
or for one or more separate accounts maintained by such
Purchaser or for the account of one or more pension or trust
funds and not with a view to the distribution thereof,
provided that the
disposition of such Purchaser’s or such pension or trust
fund’s property shall at all times be within such
Purchaser’s or such pension or trust fund’s
control. Each Purchaser represents that it is an
“accredited investor,” as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act. Each Purchaser
understands that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant
to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances
where neither such registration nor such an exemption is
required by law, and that the Company is not required to
register the Notes.
Section 6.2.
Source of
Funds . Each Purchaser severally represents
that at least one of the following statements is an accurate
representation as to each source of funds (a “Source”
) to be used by such Purchaser to pay the purchase price of
the Notes to be purchased by such Purchaser
hereunder:
(a)
the Source
is an “insurance company general account” (as the
term is defined in the United States Department of
Labor’s Prohibited Transaction Exemption ( “PTE”
) 95-60) in respect of which the reserves and liabilities (as
defined by the annual statement for life insurance companies
approved by the National Association of Insurance
Commissioners (the “NAIC Annual
Statement” )) for the general account contract(s)
held by or on behalf of any employee benefit plan together
with the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any other
employee benefit plans maintained by the same employer (or
affiliate thereof as defined in PTE 95-60) or by the same
employee organization in the general account do not exceed 10%
of the total reserves and liabilities of the general account
(exclusive of separate account liabilities) plus surplus as
set forth in the NAIC Annual Statement filed with such
Purchaser’s state of domicile; or
(b)
the Source
is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations
under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in
such separate account (or to any participant or beneficiary of
such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account;
or
(c)
the Source
is either (1) an insurance company pooled separate
account, within the meaning of PTE 90-1 or (2) a bank
collective investment fund, within the meaning of the PTE
91-38 and, except as disclosed by such Purchaser to the
Company in writing pursuant to this clause (c), no employee
benefit plan or group of plans maintained by the same employer
or employee organization beneficially owns more than 10% of
all assets allocated to such pooled separate account or
collective investment fund; or
(d)
the Source
constitutes assets of an “investment fund” (within
the meaning of Part V of PTE 84-14 (the “QPAM
Exemption” )) managed by a “qualified
professional asset manager” or “QPAM”
(within the meaning of Part V of the QPAM Exemption), no
employee benefit plan’s assets that are included in such
investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer
or by the same employee organization and managed by such QPAM,
exceed 20% of the total client assets managed by such QPAM,
the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a Person controlling or
controlled by the QPAM (applying the definition of
“control” in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and
(1) the identity of such QPAM and (2) the names of
all employee benefit plans whose assets are included in such
investment fund have been disclosed to the Company in writing
pursuant to this clause (d); or
(e)
the Source
constitutes assets of a “plan(s)” (within the
meaning of Section IV of PTE 96-23 (the “INHAM
Exemption” )) managed by an “in-house asset
manager” or “INHAM” (within the meaning of
Part IV of the INHAM Exemption), the conditions of Part I(a),
(g) and (h) of the INHAM Exemption are satisfied, neither the
INHAM nor a Person controlling or controlled by the INHAM
(applying the definition of “control” in
Section IV(d) of the INHAM Exemption) owns a 5% or more
interest in the Company and (1) the identity of such
INHAM and (2) the name(s) of the employee benefit plan(s)
whose assets constitute the Source have been disclosed to the
Company in writing pursuant to this clause (e);
or
(f)
the Source
is a governmental plan; or
(g)
the Source
is one or more employee benefit plans, or a separate account
or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing
pursuant to this clause (g); or
(h)
the Source
does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.
As
used in this Section 6.2 ,
the terms “employee benefit plan,”
“governmental plan,” and “separate
account” shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
|
Section 7.
|
Information as to Company.
|
Section 7.1.
Financial
and Business Information . The Company shall
deliver to each holder of Notes that is an Institutional
Investor:
(a)
Quarterly
Statements — within 55 days after the end of each
quarterly fiscal period in each fiscal year of the Company
(other than the last quarterly fiscal period of each such
fiscal year), duplicate copies of:
(1)
a
consolidated and consolidating balance sheet of the Company
and its Subsidiaries as at the end of such quarter,
and
(2)
consolidated
and consolidating statements of income, changes in
shareholders’ equity and cash flows of the Company and
its Subsidiaries for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting
forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable
to quarterly financial statements generally, and certified by
a Senior Financial Officer as fairly presenting, in all
material respects, the financial position of the companies
being reported on and their results of operations and cash
flows, subject to changes resulting from normal year-end
adjustments, provided that
(i) in the event the Company posts such financial
statements on its home page on the worldwide web (at the date
of this Agreement located at http://njr360.client.shareholder.com/njng-reports.cfm
) within the time period specified above, such posting shall
be deemed to satisfy the requirements of this Section 7.1(a)
or (ii) in the event the Company becomes a reporting
company under the Exchange Act, delivery to the Securities and
Exchange Commission within the time period specified above of
copies of the Company’s Quarterly Report on Form 10-Q
prepared in compliance with the requirements therefor and
filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this Section 7.1(a)
and provided,
further, that the Company shall be deemed to have made
such delivery of the financial statements described
above or such Form 10-Q if it shall have timely posted such
financial statements on its home page on the worldwide web or
timely made such Form 10-Q available on “EDGAR”
and on its home page on the worldwide web, as the case may be,
and shall have given such holder prior notice (such notice to
include the address of its home page) of such availability on
its home page or on EDGAR and on its home page in connection
with each delivery (such availability and notice thereof being
referred to as “Electronic
Delivery” );
(b)
Annual Statements
— within 100 days after the end of each fiscal year of
the Company, duplicate copies of,
(1)
a
consolidated and consolidating balance sheet of the Company
and its Subsidiaries, as at the end of such year,
and
(2)
consolidated
and consolidating statements of income, changes in
shareholders’ equity and cash flows of the Company and
its Subsidiaries, for such year,
setting
forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by an opinion thereon of
independent certified public accountants of recognized
national standing, which opinion shall state that such
financial statements present fairly, in all material respects,
the financial position of the companies being reported upon
and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for
such opinion in the circumstances, provided that in
the event the Company becomes a reporting company under the
Exchange Act, the delivery within the time period specified
above of the Company’s Annual Report on Form 10-K for
such fiscal year (together with the Company’s annual
report to shareholders, if any, prepared pursuant to Rule
14a-3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(b)
, and provided,
further, that the Company shall be deemed to have made
such delivery of such Form 10-K if it shall have timely
made Electronic Delivery thereof;
(c)
SEC and Other
Reports — with reasonable promptness, upon their
becoming available, one copy of (1) each financial
statement, report, notice or proxy statement sent by the
Company or any Restricted Subsidiary to its principal lending
banks as a whole (excluding information sent to such banks in
the ordinary course of administration of a bank facility, such
as information relating to pricing and borrowing availability)
or to its public securities holders generally and
(2) each regular or periodic report, each registration
statement that shall have become effective (without exhibits
except as expressly requested by such holder), and each final
prospectus and all amendments thereto filed by the Company or
any Restricted Subsidiary with the Securities and Exchange
Commission, provided and to
the extent that the Company’s Quarterly Report on Form
10-Q or Annual Report on Form 10-K is filed with the
Securities and Exchange Commission such filing shall be deemed
to satisfy the requirements of this Section 7.1(c)
with respect to such filings;
(d)
Notice of Default or
Event of Default — with reasonable promptness,
and in any event within five days after a Responsible Officer
becoming aware of the existence of any Default or Event of
Default, a written notice specifying the nature and period of
existence thereof and what action the Company is taking or
proposes to take with respect thereto;
(e)
ERISA Matters
— with reasonable promptness, and in any event within
five days after a Responsible Officer becoming aware of any of
the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(1)
with respect
to any Plan, any reportable event, as defined in
Section 4043(c) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as in effect on the date thereof; or
(2)
the taking
by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from
a Multiemployer Plan that such action has been taken by the
PBGC with respect to such Multiemployer Plan; or
(3)
any event,
transaction or condition that could result in the incurrence
of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans,
or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with
any other such liabilities or Liens then existing, would
reasonably be expected to have a Material Adverse
Effect;
(f)
Unrestricted
Subsidiaries — at such time as either (1) the
aggregate amount of the total assets of all Unrestricted
Subsidiaries exceeds 10% of the consolidated total assets of
the Company and its Subsidiaries determined in accordance with
GAAP or (2) one or more Unrestricted Subsidiaries account for
more than 10% of the consolidated gross revenues of the
Company and its Subsidiaries determined in accordance with
GAAP, and within the respective periods provided in paragraphs
(a) and (b) above, financial statements of the character and
for the dates and periods as in said paragraphs (a) and (b)
covering each Unrestricted Subsidiary (or groups of
Unrestricted Subsidiaries on a consolidated basis) together
with consolidating statements reflecting eliminations or
adjustments required in order to reconcile such financial
statements to the corresponding consolidated financial
statements of the Company and its Subsidiaries delivered
pursuant to paragraphs (a) and (b) above; and
(g)
Requested
Information — with reasonable promptness, such
other data and information relating to the business,
operations, affairs, financial condition, assets or properties
of the Company or any of its Restricted Subsidiaries or
relating to the ability of the Company to perform its
obligations hereunder, under the Notes and, prior to the
Release Date, under the Mortgage Indenture (including the
Supplemental Indenture), the First Mortgage Bond Documents to
which the Company is a party, and the First Mortgage Bonds as
from time to time may be reasonably requested by any such
holder of Notes.
Section 7.2. Officer’s
Certificate . Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial
Officer setting forth (which, in the case of Electronic Delivery of
any such financial statements, shall be by separate concurrent
delivery of such certificate to each holder of Notes):
(a)
Covenant
Compliance — the information (including
reasonably detailed calculations) required in order to
establish whether the Company was in compliance with the
requirements of Section 10.1
through Section 10.5
, inclusive, and Section 10.9
during the quarterly or annual period covered by the
statements then being furnished (including with respect to
each such Section, where applicable, the calculations of the
maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in
existence); and
(b)
Event of Default
— a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and, prior to the Release
Date, the Mortgage Indenture (including the Supplemental
Indenture), and the First Mortgage Bond Documents to which the
Company is a party and has made, or caused to be made, under
his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the
beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence
during such period of any condition or event that constitutes
a Default or an Event of Default or, if any such condition or
event existed or exists (including, without limitation, any
such event or condition resulting from the failure of the
Company or any Subsidiary to comply with any Environmental
Law), specifying the nature and period of existence thereof
and what action the Company shall have taken or proposes to
take with respect thereto.
Section 7.3.
Inspection
. The Company shall permit the representatives of
each holder of Notes that is an Institutional
Investor:
(a)
No Default
— if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior written
notice to the Company, to visit the principal executive office
of the Company, to discuss the affairs, finances and accounts
of the Company and its Restricted Subsidiaries with the
Company’s officers, and, with the consent of the Company
(which consent will not be unreasonably withheld) to visit the
other offices and properties of the Company and each
Restricted Subsidiary, all at such reasonable times and as
often as may be reasonably requested in writing;
and
(b)
Default —
if a Default or Event of Default then exists, at the expense
of the Company, to visit and inspect any of the offices or
properties of the Company or any Restricted Subsidiary, to
examine all their respective books of account, records,
reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers and independent
public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances
and accounts of the Company and its Restricted Subsidiaries),
all at such times and as often as may be
requested.
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Section 8.
|
Prepayment of the Notes.
|
Section 8.1.
Required
Prepayments . Subject to Section 8.2 ,
the Notes shall not be subject to required
prepayments. The entire unpaid principal balance of
the Notes shall be due and payable on the stated maturity date
thereof.
Section 8.2.
Required
Prepayment—Condemnation; Required Sale.
Prior to the Release Date, in the event that,
pursuant to the terms of Section 8.08 of the Mortgage
Indenture, the First Mortgage Bonds are called for redemption,
in whole or in part, then the Company shall, (a) at least
30 days and not more than 60 days prior to the
redemption date of the First Mortgage Bonds pursuant to
Section 8.08 of the Mortgage Indenture, give written
notice to the Collateral Agent, as the registered holder of
the First Mortgage Bonds, and each holder of Notes, of the
redemption of all or a portion of the First Mortgage Bonds and
the corresponding prepayment of all or a portion of the Notes,
and (b) on the redemption date of the First Mortgage
Bonds so called for redemption, prepay the Notes in an
aggregate principal amount equal to the amount of First
Mortgage Bonds called for redemption at a prepayment price
equal to 100% of the First Mortgage Bonds being redeemed,
together with interest accrued thereon to the date of such
prepayment. The notice described in (a) above shall
specify the prepayment date (which shall be a Business Day),
the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of each Note held by such
holder to be prepaid (determined in accordance with
Section 8.4)
, and the interest to be paid on the prepayment date with
respect to such principal amount being prepaid.
Section 8.3.
Optional
Prepayments with Make-Whole Amount . The
Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the
Notes, in an amount not less than $1,000,000 in aggregate
principal amount of the Notes then outstanding in the case of
a partial prepayment, at 100% of the principal amount so
prepaid together with interest accrued thereon to the date of
such prepayment and the Make-Whole Amount, if any, determined
for the prepayment date with respect to such principal
amount. The Company will give each holder of Notes
written notice of each optional prepayment under this
Section 8.3
not less than 30 days and not more than 60 days prior to the
date fixed for such prepayment. Each such notice
shall specify such date (which shall be a Business Day), the
aggregate principal amount of the Notes to be prepaid on such
date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.4
), and the interest to be paid on the prepayment date with
respect to such principal amount being prepaid, and shall be
accompanied by a certificate of a Senior Financial Officer as
to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the
date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes
a certificate of a Senior Financial Officer specifying the
calculation of such Make-Whole Amount as of the specified
prepayment date.
Section 8.4. Allocation of Partial
Prepayments . In the case of each partial
prepayment of the Notes pursuant to Section 8.2 or
Section 8.3
hereof, the principal amount of the Notes to be prepaid shall be
allocated among all of the Notes at the time outstanding in
proportion, as nearly as reasonably practicable, to the respective
unpaid principal amounts thereof not theretofore called for
prepayment. All partial prepayments or purchases made
pursuant to Section 8.6(b) or
Section 8.8(a)
shall be applied only to the Notes of the holders who have elected
to participate in such prepayment or purchase.
Section 8.5.
Maturity; Surrender,
Etc . In the case of each prepayment of Notes
pursuant to this Section 8 , the
principal amount of each Note to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together
with interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after
such date, unless the Company shall fail to pay such principal
amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal
amount shall cease to accrue. Any Note paid or prepaid
in full shall be surrendered to the Company and cancelled and shall
not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
Section 8.6.
Purchase of
Notes . The Company will not, and will not
permit any Affiliate to, purchase, redeem, prepay or otherwise
acquire, directly or indirectly, any of the outstanding Notes
except (a) upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes or
(b) pursuant to an offer to purchase made by the Company
or an Affiliate pro rata to the
holders of all Notes at the time outstanding upon the same
terms and conditions. Any such offer shall provide
each holder with sufficient information to enable it to make
an informed decision with respect to such offer, and shall
remain open for at least 15 Business Days. If
the holders of more than 50% of the principal amount of the
Notes then outstanding accept such offer, the Company shall
promptly notify the remaining holders of such fact and the
expiration date for the acceptance by holders of Notes of such
offer shall be extended by the number of days necessary to
give each such remaining holder at least 10 Business Days
from its receipt of such notice to accept such
offer. The Company will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of
this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.
Section 8.7.
Make-Whole
Amount for Notes . The term “Make-Whole
Amount” shall mean, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of
the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called
Principal, provided that the
Make-Whole Amount may in no event be less than
zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following
meanings:
“Called Principal” shall mean, with respect to
any Note, the principal of such Note that is to be prepaid pursuant
to Section 8.3 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1 , as
the context requires.
“Discounted Value” shall mean, with respect to
the Called Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such
Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.
“Reinvestment Yield” shall mean, with respect to
the Called Principal of any Note, 0.50% over the yield to maturity
implied by (a) the yields reported, as of 10:00 a.m. (New York, New
York time) on the second Business Day preceding the Settlement Date
with respect to such Called Principal, on the display designated as
“Page PX1” (or such other display as may replace Page
PX1) on the Bloomberg Financial Markets Services Screen) for the
most recently issued actively traded on the run U.S. Treasury
securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date, or (b) if such
yields are not reported as of such time or the yields reported as
of such time are not ascertainable (including by way of
interpolation), the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so
reported as of the second Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (or any comparable successor publication)
for U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of such
Settlement Date.
In
the case of each determination under clause (a) or clause (b),
as the case may be, of the preceding paragraph, such implied
yield will be determined, if necessary, by (1) converting
U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (2)
interpolating linearly between (i) the applicable U.S.
Treasury security with the maturity closest to and greater
than such Remaining Average Life and (ii) the applicable U.S.
Treasury security with the maturity closest to and less than
such Remaining Average Life. The Reinvestment Yield
shall be rounded to the number of decimal places as appears in
the interest rate of the applicable Note.
“Remaining Average Life” shall mean, with
respect to any Called Principal, the number of years (calculated to
the nearest one-twelfth year) obtained by dividing (a) such Called
Principal into (b) the sum of the products obtained by multiplying
(1) the principal component of each Remaining Scheduled Payment
with respect to such Called Principal by (2) the number of years
(calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled
Payment.
“Remaining Scheduled Payments” shall mean, with
respect to the Called Principal of any Note, all payments of such
Called Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no payment
of such Called Principal were made prior to its scheduled due date,
provided
that if such Settlement Date is not a date on which interest
payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date
and required to be paid on such Settlement Date pursuant to
Section 8.3 or
Section 12.1
.
“Settlement Date” shall mean, with respect to
the Called Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 8.3 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1 , as
the context requires.
Section
8.8. Offer to Prepay upon
Asset Disposition .
(a)
Notice and
Offer . In the event of a Transfer where the
Company has elected to apply all or a portion of the Net
Proceeds Amount of such Transfer pursuant to Section 10.5(b)
, the Company shall, no later than the 305 th
day following the date of such Transfer, give written notice
of such event (an “Asset Disposition
Prepayment Event” ) to each holder of
Notes. Such notice shall contain, and shall
constitute, an irrevocable offer to prepay a Ratable Portion
of the Notes held by such holder on the date (which shall be a
Business Day) specified in such notice (the “Asset Disposition
Prepayment Date” ) which date shall be not less
than 30 days and not more than 60 days after such
notice.
(b)
Acceptance
and Payment. A holder of Notes may accept
or reject the offer to prepay pursuant to this Section 8.8
by causing a notice of such acceptance or rejection to be
delivered to the Company at least 10 days prior to the Asset
Disposition Prepayment Date. A failure by a holder
of the Notes to respond to an offer to prepay made pursuant to
this Section 8.8
shall be deemed to constitute a rejection of such offer by
such holder. If so accepted, such offered
prepayment in respect of the Ratable Portion of the Notes of
each holder that has accepted such offer shall be due and
payable on the Asset Disposition Prepayment
Date. Such offered prepayment shall be made at 100%
of the aggregate Ratable Portion of the Notes of each holder
that has accepted such offer, together with interest on that
portion of the Notes then being prepaid accrued to the Asset
Disposition Prepayment Date, but without any Make-Whole
Amount. If any holder of a Note rejects or is
deemed to have rejected such offer of prepayment, the Company
may use the Ratable Portion for such Note for general
corporate purposes.
(c)
Officer’s
Certificate. Each offer to prepay the Notes
pursuant to this Section 8.8 shall
be accompanied by a certificate, executed by a Senior Financial
Officer and dated the date of such offer,
specifying: (1) the Asset Disposition Prepayment Date;
(2) that such offer is being made pursuant to this Section 8.8 and that
the failure by a holder to respond to such offer by the deadline
established in Section 8.8(b) shall
result in such offer to such holder being deemed rejected; (3) the
Ratable Portion of each such Note offered to be prepaid; (4) the
interest that would be due on the Ratable Portion of each such Note
offered to be prepaid, accrued to the Asset Disposition Prepayment
Date; (5) that the conditions of this Section 8.8 have
been satisfied and (6) in reasonable detail, a description of the
nature and date of the Asset Disposition Prepayment Event giving
rise to such offer of prepayment.
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Section 9.
|
Affirmative Covenants.
|
The
Company covenants that so long as any of the Notes are
outstanding:
Section 9.1. Compliance with Law
. The Company will, and will cause each of its
Subsidiaries to, comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including,
without limitation, ERISA, the USA Patriot Act and Environmental
Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance
with such laws, ordinances or governmental rules or regulations or
failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental
authorizations would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
Section 9.2.
Insurance
. The Company will, and will cause each of its
Restricted Subsidiaries to, maintain, with financially sound
and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties
and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar
business and in the same industry and similarly
situated.
Section 9.3.
Maintenance
of Properties . The Company will, and will
cause each of its Restricted Subsidiaries to, maintain and
keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other
than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all
times, provided that
this Section shall not prevent the Company or any Restricted
Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has
concluded that such discontinuance would not reasonably be
expected, individually or in the aggregate, to have a Material
Adverse Effect.
Section 9.4.
Payment of
Taxes and Claims . The Company will, and
will cause each of its Subsidiaries to, file all income tax or
similar tax returns required to be filed in any jurisdiction
and to pay and discharge all taxes shown to be due and payable
on such returns and all other taxes, assessments, governmental
charges or levies payable by any of them, to the extent the
same have become due and payable and before they have become
delinquent, provided that
neither the Company nor any Subsidiary need pay any such tax,
assessment, governmental charge or levy if (1) the
amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Company or a Subsidiary
has established adequate reserves therefor in accordance with
GAAP on the books of the Company or such Subsidiary or
(2) the nonpayment of all such taxes, assessments,
governmental charges and levies in the aggregate would not
reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
S
ection 9.5.
Corporate
Existence, Etc . The Company will at all
times preserve and keep in full force and effect its corporate
existence. Subject to Sections 10.5
, 10.6
and 10.7 , the Company
will at all times preserve and keep in full force and effect
the corporate existence of each of its Restricted Subsidiaries
(unless merged into the Company or a Wholly-Owned Restricted
Subsidiary) and all rights and franchises of the Company and
its Restricted Subsidiaries unless, in the good faith judgment
of the Company, the termination of or failure to preserve and
keep in full force and effect such corporate existence, right
or franchise would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse
Effect.
S
ection 9.6.
Regulated
Nature. The Company will at all times be
and remain a Person that is subject under law to regulation by
a public utility commission or other governmental regulatory
body with oversight responsibilities for
utilities.
Section 9.7.
Notes to
Rank Pari Passu . After the Release Date,
the Company will ensure that its payment obligations under
this Agreement and the Notes will at all times rank at least
pari
passu in right of payment with all other unsecured
Senior Debt (actual or contingent) of the
Company.
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Section 10.
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Negative Covenants.
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The
Company covenants that so long as any of the Notes are
outstanding:
Section 10.1.
Limitations on
Debt. From and after the Release Date, the
Company will not permit, as of the end of any fiscal quarter of the
Company: (a) the ratio of Consolidated Total Debt to
Consolidated Total Capitalization to exceed 0.65 to 1.00; or
(b) Priority Debt to exceed 20% of Consolidated Total
Capitalization.
Section 10.2.
Liens
. The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur,
assume or permit to exist (upon the happening of a contingency or
otherwise) any Lien on or with respect to any property or asset
(including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Company or any such
Restricted Subsidiary, whether now owned or held or hereafter
acquired, or any income or profits therefrom, or assign or
otherwise convey any right to receive income or profits,
except:
(a)
Liens for
taxes, assessments or other governmental charges which are not
yet due and payable or the payment of which is not at the time
required by Section 9.4
;
(b)
statutory
Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case,
incurred in the ordinary course of business for sums not yet
due and payable or the payment of which is not at the time
required by Section 9.4
;
(c)
Liens (other
than any Lien imposed by ERISA) incurred or deposits made in
the ordinary course of business (1) in connection with
workers’ compensation, unemployment insurance and other
types of social security or retirement benefits, or
(2) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations,
surety bonds, appeal bonds, bids, leases (other than Capital
Leases), performance bonds, purchase, construction or sales
contracts, and other similar obligations, in each case not
incurred or made in connection with the borrowing of money,
the obtaining of advances or credit or the payment of the
deferred purchase price of property;
(d) subject to
Section 11(l)
, any attachment or judgment Lien, unless the judgment it
secures shall not, within 30 days after the entry thereof,
have been discharged or execution thereof stayed pending
appeal, or shall not have been discharged within 30 days after
the expiration of any such stay,
(e)
leases or
subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances or
minor survey exceptions, in each case incidental to, and not
interfering with, the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries, provided that
such Liens do not, in the aggregate, materially detract from
the value of such property;
(f)
Liens on
property or assets of any Restricted Subsidiary securing Debt
owing to the Company or to a Wholly-Owned Restricted
Subsidiary;
(g)
Liens
existing on the date of the Closing and described on
Schedule 5.15
hereto (other than Liens on “Excepted
Property” of the Company as defined in the
Mortgage Indenture as in effect on the date of the
Closing);
(h)
Liens on
accounts receivable owned by Securitization Subsidiaries that
are Restricted Subsidiaries and incurred pursuant to
Receivables Securitization Transactions;
(i)
any Lien
created to secure all or any part of the purchase price, or to
secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any
improvement thereon) acquired or constructed by the Company or
a Restricted Subsidiary after the date of the Closing,
provided
that:
(1)
any such
Lien shall extend solely to the item or items of such property
(or improvement thereon) so acquired or constructed and, if
required by the terms of the instrument originally creating
such Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection
with such acquired or constructed property (or improvement
thereon) or which is real property being improved by such
acquired or constructed property (or improvement
thereon);
(2)
the
principal amount of the Debt secured by any such Lien shall at
no time exceed an amount equal to the lesser of (i) the
cost to the Company or such Restricted Subsidiary of the
property (or improvement thereon) so acquired or constructed
and (ii) the Fair Market Value (as determined in good
faith by one or more officers of the Company to whom authority
to enter into the subject transaction has been delegated by
the board of directors of the Company) of such property (or
improvement thereon) at the time of such acquisition or
construction;
(3)
any such
Lien shall be created contemporaneously with, or within
180 days after, the acquisition or construction of such
property; and
(4)
after the
Release Date, the aggregate principal amount of all Debt
secured by such Liens shall be permitted by the limitation set
forth in Section 10.1(a)
if tested on the date of such Lien is created and not as of
the end of the immediately preceding fiscal quarter of the
Company;
(j)
any Lien
existing on property of a Person immediately prior to its
being consolidated with or merged into the Company or a
Restricted Subsidiary or its becoming a Subsidiary, or any
Lien existing on any property acquired by the Company or any
Restricted Subsidiary at the time such property is so acquired
(whether or not the Debt secured thereby shall have been
assumed), provided that
(1) no such Lien shall have been created or assumed in
contemplation of such consolidation or merger or such Person
becoming a Subsidiary or such acquisition of property,
(2) each such Lien shall extend solely to the item or
items of property so acquired and, if required by the terms of
the instrument originally creating such Lien (i) other
property which is an improvement to or is acquired for
specific use in connection with such acquired property or
(ii) other property that does not constitute property or
assets of the Company or any of its Restricted Subsidiaries
and (3) after the Release Date, the aggregate amount of all
Debt secured by such Liens shall be permitted by the
limitation set forth in Section 10.1(a)
if tested on the date of such event and not as of the end of
the immediately preceding fiscal quarter of the
Company;
(k)
Liens on
assets of the Company (other than Liens on “Excepted
Property” as defined in the Mortgage Indenture as in
effect on the date of the Closing) which Liens secure Debt
outstanding as of the date of the Closing under the Mortgage
Indenture and any additional Debt that is issued in accordance
with Article Two of the Mortgage Indenture (as in effect on
the date of the Closing) and after the Release Date, is
otherwise permitted by the limitation set forth in Section 10.1(a)
if tested on the date of such event and not as of the end of
the immediately preceding fiscal quarter of the Company;
provided that
such additional Debt shall not contain covenants, defaults and
other terms and conditions more restrictive than or in
addition to those contained in this Agreement;
(l)
any Lien
renewing, extending or refunding any Lien permitted by
paragraphs (g), (i), (j) or (k) of this Section 10.2
, provided that
(1) the principal amount of Debt secured by such Lien
immediately prior to such extension, renewal or refunding is
not increased or the maturity thereof reduced, (2) such
Lien is not extended to any other property and
(3) immediately after such extension, renewal or
refunding no Default or Event of Default would exist (
provided that,
after the Release Date, with respect to the limitations set
forth in Section 10.1
, calculation of compliance therewith shall be made as of the
date of determination under this Section 10.2(l)
and not as of the end of the immediately preceding fiscal
quarter of the Company); and
(m)
other Liens
not otherwise permitted by paragraphs (a) through (l),
inclusive, of this Section 10.2
securing Debt, provided that
after the Release Date, the Debt secured by such Liens shall
be permitted by the limitations set forth in Section 10.1
if tested on the date such Lien is created and not as of the
end of the immediately preceding fiscal quarter of the
Company.
Section 10.3. R e stricted Payments
. (a) The Company will not, and will not permit any
Restricted Subsidiary to, declare or make or incur any liability to
declare or make any Restricted Payment unless immediately after
giving effect to such action no Default or Event of Default would
exist ( provided that, after
the Release Date, with respect to Section 10.1 ,
calculation of compliance therewith shall be made as of the date of
determination under this Section 10.3 and
not as of the end of the immediately preceding fiscal quarter of
the Company).
(b)
The Company will not, and will not permit any Restricted
Subsidiary to, declare a Restricted Payment that is not
payable within 60 days of such declaration.
Section 10.4.
Restrictions on
Dividends of Subsidiaries, Etc. The Company will
not, and will not permit any Subsidiary to, enter into any
agreement which would restrict any Restricted Subsidiary’s
ability or right to pay dividends to, or make advances to or
investments in, the Company or, if such Restricted Subsidiary is
not directly owned by the Company, the “parent”
Restricted Subsidiary of such Restricted Subsidiary; provided that the
foregoing shall not apply to restrictions and conditions imposed by
law or this Agreement, the Bank Credit Agreement or the Mortgage
Indenture, in each case, as in effect on the date of
Closing.
Section 10.5.
Sale of Assets,
Etc. (a) Except as permitted under Section 10.6 and
Section 10.7 , the
Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless :
(1)
in the good
faith opinion of the Company, the Asset Disposition is in the
best interest of the Company or such Restricted
Subsidiary;
(2)
immediately
after giving effect to the Asset Disposition, no Default or
Event of Default would exist ( provided that,
after the Release Date, with respect to Section 10.1
, calculation of compliance therewith shall be made as of the
date of determination under this Section 10.5
and not as of the end of the immediately preceding fiscal
quarter of the Company); and
(3)
immediately
after giving effect to the Asset Disposition the Disposition
Value of all property that was the subject of any Asset
Disposition occurring in the immediately preceding 12
consecutive month period would not exceed 10% of Consolidated
Tangible Assets as of the end of the then most recently ended
fiscal year of the Company.
(b)
If the Net
Proceeds Amount for any Transfer is, within 365 days after
such Transfer, (1) applied to a Debt Prepayment Application,
(2) applied to or would otherwise constitute a Property
Reinvestment Application or (3) applied to any combination of
the foregoing clauses (1) and (2), then such Transfer, only
for the purpose of determining compliance with
subsection (3) of Section 10.5(a)
as of a date on or after the Net Proceeds Amount is so
applied, shall be deemed not to be an Asset
Disposition.
(c)
Notwithstanding the foregoing, the sale of accounts receivable
to a Securitization Subsidiary in connection with a
Receivables Securitization Transaction shall not be considered
an Asset Disposition for purposes of this Section 10.5
; provided, that,
to the extent any such sale results in the aggregate amount of
Debt of all Securitization Subsidiaries under all Receivables
Securitization Transactions being in excess of $100,000,000,
the Company shall treat that portion of such sale resulting in
the aggregate amount of Debt of all Securitization
Subsidiaries under all Receivables Securitization Transactions
being in excess of $100,000,000 as an Asset Disposition
subject to this Section 10.5
without application of this clause (c).
Section 10.6.
Merger, Consolidation,
Etc. The Company will not, and will not permit any
Restricted Subsidiary to, consolidate with or merge with any other
Person or convey, transfer or lease all or substantially all of its
assets in a single transaction or series of transactions to any
Person (except that a Restricted Subsidiary may (x) consolidate
with or merge with, or convey, transfer or lease all or
substantially all of its assets in a single transaction or series
of transactions to, the Company or another Restricted Subsidiary or
any other Person so long as such Restricted Subsidiary is the
surviving Person and (y) convey, transfer or lease all of its
assets in compliance with the provisions of Section 10.5 or
10.7 ),
provided
that the foregoing restriction does not apply to the consolidation
or merger of the Company with, or the conveyance, transfer or lease
of all or substantially all of the assets of the Company in a
single transaction or series of transactions to, any Person so long
as:
(a)
the
successor formed by such consolidation or the survivor of such
merger or the Person that acquires by conveyance, transfer or
lease all or substantially all of the assets of the Company as
an entirety, as the case may be (the “Successor
Corporation” ), shall be a solvent Person
organized and existing under the laws of the United States or
any State thereof (including the District of
Columbia);
(b)
if the
Company is not the Successor Corporation, (1) such Person
shall have executed and delivered to each holder of the Notes
its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement
and the Note
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