-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, O17GyUMDKnxful9p4TWbmCxd5LieinygsuiKDaPZPxOg2tECD65S0vGJPtSkscSF zLggsjBOeJ5SUZioDavYBw== 0000893220-94-000338.txt : 19940726 0000893220-94-000338.hdr.sgml : 19940726 ACCESSION NUMBER: 0000893220-94-000338 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19940725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA GAS SYSTEM INC CENTRAL INDEX KEY: 0000022099 STANDARD INDUSTRIAL CLASSIFICATION: 4923 IRS NUMBER: 131594808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-07903 FILM NUMBER: 94539940 BUSINESS ADDRESS: STREET 1: 20 MONTCHANIN RD CITY: WILMINGTON STATE: DE ZIP: 19807 BUSINESS PHONE: 3024295000 POS AMC 1 POST-EFFECTIVE AMENDMENT NO.5 1 File No. 70-7903 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form U-1 Post Effective Amendment No. 5 DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE COLUMBIA GAS SYSTEM, INC. 20 Montchanin Road Wilmington, Delaware 19807 - -------------------------------------------------------------------------------- (Name of Company of Companies Filing This Statement and Addresses of the Principal Executive Offices) THE COLUMBIA GAS SYSTEM, INC. - -------------------------------------------------------------------------------- (Name of Top Registered Holding Company Parent of Each Applicant or Declarant) L. J. BAINTER, TREASURER The Columbia Gas System, Inc. 20 Montchanin Road Wilmington, Delaware 19807 - -------------------------------------------------------------------------------- (Name and Address of Principal Agent for Service) 2 PAGE 2 The Declaration as amended is hereby further amended by adding the following: Item 1. Description of Proposed Transaction. (a) Furnish a reasonably detailed and precise description of the proposed transaction, including a statement of the reasons why it is desired to consummate the transaction and the anticipated effect thereof. If the transaction is part of a general program, describe the program and its relation to the proposed transaction. INTRODUCTION: The Columbia Gas System, Inc. ("Columbia") requests Commission authorization to further amend and restate its Secured Revolving Credit Agreement (the "Credit Agreement") dated as of September 23, 1991, as amended. The Commission authorized the Credit Agreement, which called for a commitment of $275,000,000, in its Order dated September 20, 1991 ( HCAR No. 35-25380). The amount of that commitment was subsequently reduced twice and is currently $100,000,000, (which commitment is available for the making of loans and the issuance of letters of credit in an aggregate face amount not to exceed $50 million) under the Commission's Order dated June 11, 1993 (HCAR No. 35-25825). The reduction in the commitment has resulted in fee savings to Columbia and further savings will be achieved by the proposed conversion of the Credit Agreement to solely a letter of credit facility (the "Proposed Facility"). 3 PAGE 3 TERMS OF THE PROPOSED LETTER OF CREDIT FACILITY: Columbia's current cash reserves are sufficient to meet projected requirements without borrowings under the Credit Agreement. However, there remains a need to maintain a facility for letters of credit in the amount of $25,000,000 and Columbia requested Chemical Bank ("Chemical") to submit a proposal describing the terms, conditions and fees for such a facility. Chemical provided a term sheet for the Proposed Facility which would permit the issuance of collateralized standby letters of credit at the request of Columbia at any time from the effective date of the Proposed Facility until December 31, 1995, or such later date as may be from time to time agreed upon by Columbia and Chemical if needed to extend the Proposed Facility until Columbia's Plan of Reorganization is effective. Columbia requests the Commission's approval to extend the facility from time to time, as needed, until Columbia's Plan of Reorganization is effective. An order of the Bankruptcy Court approving the terms of the Proposed Facility is expected to be issued prior to the order of this Commission. The fees to be charged pursuant to the Proposed Facility would include the following: a letter of credit fee equal to 1% per annum of the face amount of each Letter of Credit; a commitment fee equal to 1/2 of 1% per annum of the average daily unutilized portion of the commitment and an 4 PAGE 4 amendment fee equal to 1/4 of 1% of the commitment, payable at closing. The proposed changes to the Credit Agreement will result in fee savings to Columbia. The Credit Agreement requires payment of a commitment fee of 1/2 of 1% on the unused portion of a $100,000,000 commitment amount and the letter of credit fees are presently 2% of the face amount of the letters of credit issued. Chemical serves as agent for a group of banks under the Credit Agreement . Under the Proposed Facility, Chemical will provide the entire commitment and act as the sole issuing bank with respect to the letters of credit to be issued there under. ITEM 2. FEES, COMMISSION AND EXPENSES. (a) State (1) the fees, commissions and expenses paid or incurred, or to be paid or incurred, directly or indirectly, in connection with the proposed transaction by the applicant or declarant or any associate company thereof, and (2) if the proposed transaction involves the sale of securities at competitive bidding, the fees and expenses to be paid to counsel selected by applicant or declarant to act for the successful bidder. Services of Columbia Gas System Service Corporation in connection with the preparation of the Declaration............... $ 5,000 Services of Simpson, Thacher & Bartlett...... 15,000 ------ (estimate) Total...................................... $ 20,000 ======
(b) If any person to whom fees or commissions have been or are to be paid in connection with the proposed transaction is an associate company or an affiliate of any applicant or declarant, or is an affiliate of an associate company, set forth the facts with respect thereto. 5 PAGE 5 Columbia Gas System Service Corporation, a wholly-owned subsidiary of Columbia, is providing certain services at cost, as set forth in Item 2(a) above. ITEM 3. APPLICABLE STATUTORY PROVISIONS. (a) State the sections of the Act and the rules thereunder believed to be applicable to the proposed transaction. If any section or rule would be applicable in the absence of a specific exemption, state the basis of exemption. To the extent that a letter of credit if drawn and not repaid (even though fully collateralized) might result in a debt and interest payable on that debt, the Proposed Facility might be deemed to result in the issuance of a security subject to Sections 6(a) and 7 of the Act. ITEM 4. REGULATORY APPROVAL. (a) State the nature and extent of the jurisdiction of any State Commission or any Federal Commission (other than the Securities and Exchange Commission) over the proposed transaction. Approval of the Bankruptcy Court will be required for the proposed conversion of the Credit Agreement. ITEM 5. PROCEDURE. (a) State the date when Commission action is requested. If the date is less than 40 days from the date of the original filing, set forth the reasons for acceleration. It is respectfully requested that the Commission issue its notice with respect to the transaction proposed herein no later than August 5, 1994, and that the Order be issued no later than September 9, 1994. (b) State (i) whether there should be a recommended decision by a hearing officer, (ii) whether there should be a recommended decision by any other responsible officer of the Commission, (iii) whether the Division of Investment Management 6 PAGE 6 may assist in the preparation of the Commission's decision, and (iv) whether there should be a 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. The applicants hereby specify that with reference to the procedures considered necessary or appropriate in the proceedings (i) there should not be a recommended decision by a hearing officer; (ii) there should not be a recommended decision by any other responsible officer of the Commission; (iii) the Division of Investment Management may assist in the preparation of the Commission's decision; and (iv) there should not be a 30-day waiting period between the issuance of the Commission's Order and the date on which it is to become effective. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS. (a) Exhibits A-3 Term Sheet A-4 Form of Amended and Restated Revolving Credit Agreement D-3 Order of the Bankruptcy Court for the District of Delaware (to be filed by amendment) G-2 Proposed Notice F-2 Opinion of Counsel (to be filed by amendment) (b) Financial Statements 1. The Columbia Gas System, Inc. and Subsidiaries (a) Consolidated Balance Sheet as of April 30, 1994 (actual and pro forma)
7 PAGE 7 (b) Consolidated Statement of Capitalization as of April 30, 1994 (actual and pro forma) (c) Statement of Consolidated Income for the twelve months ended April 30, 1994 (actual and pro forma) (d) Consolidated Statements of Common Stock Equity as of April 30, 1994 (actual and pro forma) (e) Pro Forma Entries 2. The Columbia Gas System, Inc. (a) Balance Sheet as of April 30, 1994 (actual and pro forma) (b) Statement of Capitalization as of April 30, 1994 (actual and pro forma) (c) Statement of Income for the twelve months ended April 30, 1994 (actual and pro forma) (d) Statements of Common Stock Equity for the twelve months ended April 30, 1994 (actual and pro forma) (e) Pro Forma Entries
8 PAGE 8 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned has duly caused this statement to be signed on its behalf by the undersigned thereunto duly authorized. THE COLUMBIA GAS SYSTEM, INC. Dated: July 25, 1994 By: /s/ L. J. Bainter ------------------ ---------------------------- L. J. Bainter, Treasurer 9 (b)(1)(a) THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES (1 of 2) CONSOLIDATED BALANCE SHEET (UNAUDITED) ACTUAL and PRO FORMA As of April 30, 1994 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ----------- ---------- ----------- ASSETS Property, Plant and Equipment Gas utility and other plant, at original cost .... 6,380,176 - 6,380,176 Accumulated depreciation and depletion ........... (3,107,864) - (3,107,864) ----------- ---------- ----------- Net Gas Utility and Other Plant .................. 3,272,312 - 3,272,312 ----------- ---------- ----------- Oil and gas producing properties, full cost method 1,217,521 - 1,217,521 Accumulated depletion ............................ (613,766) - (613,766) ----------- ---------- ----------- Net Oil and Gas Producing Properties ............. 603,755 - 603,755 ----------- ---------- ----------- Net Property, Plant, and Equipment ................. 3,876,067 - 3,876,067 ----------- ---------- ----------- Investments and Other Assets Accounts receivable - noncurrent ................. 222,594 - 222,594 Unconsolidated affiliates ........................ 68,569 - 68,569 Investment in Columbia LNG Corporation ........... 10,500 - 10,500 Other ............................................ 26,134 - 26,134 ----------- ---------- ----------- Total Investments and Other Assets ................. 327,797 - 327,797 ----------- ---------- ----------- Current Assets Cash and temporary cash investments .............. 1,672,897 - 1,672,897 Accounts receivable, net ......................... 704,382 - 704,382 Gas inventories .................................. 44,281 - 44,281 Other inventories at average cost ................ 43,227 - 43,227 Prepayments ...................................... 88,138 - 88,138 Other ............................................ 37,483 - 37,483 ----------- ---------- ----------- Total Current Assets ............................... 2,590,408 - 2,590,408 ----------- ---------- ----------- Deferred Charges ................................... 282,895 - 282,895 ----------- ---------- ----------- Total Assets ....................................... 7,077,167 - 7,077,167 =========== ========== ===========
10 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES (2 of 2) CONSOLIDATED BALANCE SHEET (UNAUDITED) ACTUAL and PRO FORMA As of April 30, 1994 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ----------- ---------- ----------- CAPITALIZATION AND LIABILITIES Capitalization Common stock equity .............................. 1,374,981 (203) 1,374,778 Long-term debt ................................... 4,536 - 4,536 ----------- ---------- ----------- Total Capitalization ............................... 1,379,517 (203) 1,379,314 ----------- ---------- ----------- Current Liabilities Debt obligations ................................. 1,285 - 1,285 Debtor in possession financing ................... - - - Accounts and drafts payable ...................... 177,635 - 177,635 Accrued taxes .................................... 131,024 (110) 130,914 Accrued interest ................................. (2,436) 313 (2,123) Estimated rate refunds ........................... 208,134 - 208,134 Estimated supplier obligations ................... 141,577 - 141,577 Deferred income taxes - current .................. 2,100 - 2,100 Other ............................................ 361,594 - 361,594 ----------- ---------- ----------- Total Current Liabilities .......................... 1,020,913 203 1,021,116 ----------- ---------- ----------- Liabilities Subject to Chapter 11 Proceedings ..... 3,911,732 - 3,911,732 ----------- ---------- ----------- Other Liabilities and Deferred Credits Deferred income taxes, noncurrent ................ 298,398 - 298,398 Deferred investment tax credits .................. 39,521 - 39,521 Postretirement benefits other than pensions ...... 234,182 - 234,182 Other ............................................ 192,904 - 192,904 ----------- ---------- ----------- Total Other Liabilities and Deferred Credits ....... 765,005 - 765,005 ----------- ---------- ----------- Total Capitalization and Liabilities ............... 7,077,167 - 7,077,167 =========== ========== ===========
11 (b)(1)(b) THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CAPITALIZATION (UNAUDITED) ACTUAL and PRO FORMA As of April 30, 1994 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ----------- ---------- ----------- Common Stock Equity Common Stock, The Columbia Gas System, Inc., $10 par value, authorized 100,000,000 shares, outstanding 50,559,225 shares ................... 505,592 - 505,592 Additional paid in capital ....................... 601,759 - 601,759 Retained earnings ................................ 337,596 (203) 337,393 Unearned employee compensation ................... (69,966) - (69,966) ----------- ---------- ----------- Total Common Stock Equity .......................... 1,374,981 (203) 1,374,778 ----------- ---------- ----------- Long-Term Debt Miscellaneous debt of subsidiaries ............... 1,888 - 1,888 Capitalized lease obligations .................... 2,648 - 2,648 ----------- ---------- ----------- Total Long-Term Debt ............................... 4,536 - 4,536 ----------- ---------- ----------- Total Capitalization ............................... 1,379,517 (203) 1,379,314 =========== ========== ===========
12 (b)(1)(c) THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES STATEMENT OF CONSOLIDATED INCOME (UNAUDITED) ACTUAL and PRO FORMA Twelve Months Ended April 30, 1994 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ----------- ---------- ----------- Operating Revenues Gas sales......................................... 2,368,347 - 2,368,347 Transportation ................................... 668,982 - 668,982 Other ............................................ 223,374 - 223,374 ----------- ---------- ----------- Total Operating Revenues ........................... 3,260,703 - 3,260,703 ----------- ---------- ----------- Operating Expenses Products purchased .............................. 1,405,452 - 1,405,452 Operation ........................................ 826,707 - 826,707 Maintenance ...................................... 166,880 - 166,880 Depreciation and depletion ....................... 245,511 - 245,511 Other taxes ...................................... 202,857 - 202,857 Write-Down of investment in Columbia LNG Corp. ... 57,472 - 57,472 ----------- ---------- ----------- Total Operating Expenses ........................... 2,904,879 - 2,904,879 ----------- ---------- ----------- Operating Income ................................... 355,824 - 355,824 ----------- ---------- ----------- Other Income (Deductions) Interest income and other, net ................... (8,858) - (8,858) Interest expense and related charges.............. (79,020) (313) (79,333) Reorganization items, net ........................ 13,830 - 13,830 ----------- ---------- ----------- Total Other Income (Deductions) .................... (74,048) (313) (74,361) ----------- ---------- ----------- Income before Income Taxes and Cumulative Effect of Accounting Change ............................. 281,776 (313) 281,463 Income taxes ....................................... 137,027 (110) 136,917 ----------- ---------- ----------- Income before Cumulative Effect of Accounting Change ........................................... 144,749 (203) 144,546 Cumulative Effect of Change in Accounting for Postemployment Benefits .......................... (5,644) - (5,644) ----------- ---------- ----------- Net Income ......................................... 139,105 (203) 138,902 =========== ========== ===========
13 (b)(1)(d) THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMMON STOCK EQUITY (UNAUDITED) ACTUAL and PRO FORMA Twelve Months Ended April 30, 1994 ($000)
CGS Pro Forma CGS Actual Entries Pro Forma ----------- ---------- ----------- COMMON STOCK Balance at May 1, 1993 ............................. 505,592 - 505,592 Common stock issued - Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... - - - Public offering .................................. - - - ----------- ---------- ----------- Balance at April 30, 1994 .......................... 505,592 - 505,592 ----------- ---------- ----------- ADDITIONAL PAID IN CAPITAL Balance at May 1, 1993 ............................. 601,759 - 601,759 Common stock issued - Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... - - - Public offering .................................. - - - ----------- ---------- ----------- Balance at April 30, 1994 .......................... 601,759 - 601,759 ----------- ---------- ----------- RETAINED EARNINGS Balance at May 1, 1993 ............................. 198,491 - 198,491 Net income ......................................... 139,105 (203) 138,902 Common stock dividends ............................. - - - Other .............................................. - - - ----------- ---------- ----------- Balance at April 30, 1994 .......................... 337,596 (203) 337,393 ----------- ---------- ----------- UNEARNED EMPLOYEE COMPENSATION Balance at May 1, 1993 ............................. (69,966) - (69,966) Adjustment ......................................... - - - ----------- ---------- ----------- Balance at April 30, 1994 .......................... (69,966) - (69,966) ----------- ---------- ----------- TOTAL COMMON STOCK EQUITY .......................... 1,374,981 (203) 1,374,778 =========== ========== ===========
14 UNAUDITED (b)(1)(e) THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES PRO FORMA ENTRIES ($000) 1. Interest expense and related charges 313 Accrued interest 313 To record Letter of Credit Fee equal to 1% of the face amount of the Letter of Credit Facility and to record the amendment fee equal to 1/4 of 1% of the commitment. 2. Accrued taxes 110 Income taxes 110 To record the related tax effects of above transaction at 35%.
15 (b)(2)(a) THE COLUMBIA GAS SYSTEM, INC. (1 of 2) BALANCE SHEET (UNAUDITED) ACTUAL and PRO FORMA As of April 30, 1994 ($000)
CG Pro Forma CG Actual Entries Pro Forma ---------- ---------- ---------- ASSETS Investments and Other Assets Accounts receivable - noncurrent ................. 24,426 - 24,426 Unconsolidated affiliates ........................ - - - Investment in Columbia LNG Corporation ........... 12,665 - 12,665 ---------- ---------- ---------- Total Investments and Other Assets ................. 37,091 - 37,091 ---------- ---------- ---------- Investments in Subsidiaries Capital stock .................................... 1,160,907 - 1,160,907 Equity in undistributed retained earnings ........ (393,974) - (393,974) Installment promissory notes receivable .......... 792,574 - 792,574 Other investments ................................ 437,833 - 437,833 Other receivables - TCO .......................... 1,508,443 - 1,508,443 ---------- ---------- ---------- Total Investments in Subsidiaries .................. 3,505,783 - 3,505,783 ---------- ---------- ---------- Current Assets Cash and temporary cash investments .............. 288,244 - 288,244 Accounts receivable, net Customers ...................................... - - - Affiliated ..................................... 103,228 - 103,228 Other .......................................... 15,259 - 15,259 Prepayments ...................................... 28 - 28 Other ............................................ 1 - 1 ---------- ---------- ---------- Total Current Assets ............................... 406,760 - 406,760 ---------- ---------- ---------- Deferred Charges ................................... 3,126 - 3,126 ---------- ---------- ---------- Total Assets ....................................... 3,952,760 - 3,952,760 ========== ========== ==========
16 THE COLUMBIA GAS SYSTEM, INC. (2 of 2) BALANCE SHEET (UNAUDITED) ACTUAL and PRO FORMA As of April 30, 1994 ($000)
CG Pro Forma CG Actual Entries Pro Forma ---------- ---------- ---------- CAPITALIZATION AND LIABILITIES Capitalization Common stock equity .............................. 1,374,981 (203) 1,374,778 Long-term debt ................................... - - - ---------- ---------- ---------- Total Capitalization ............................... 1,374,981 (203) 1,374,778 ---------- ---------- ---------- Current Liabilities Debt obligations ................................. - - - Debtor in possession financing ................... - - - Accounts and drafts payable ...................... 1,216 - 1,216 Affiliated accounts payable ...................... 7,080 - 7,080 Accrued taxes .................................... 549 (110) 439 Accrued interest ................................. 931 313 1,244 Deferred income taxes - current .................. (1,191) - (1,191) Other ............................................ 10,677 - 10,677 ---------- ---------- ---------- Total Current Liabilities .......................... 19,262 203 19,465 ---------- ---------- ---------- Liabilities Subject to Chapter 11 Proceedings ...... 2,382,216 - 2,382,216 ---------- ---------- ---------- Other Liabilities and Deferred Credits Deferred income taxes, noncurrent ................ 170,120 - 170,120 Postretirement benefits other than pensions ...... 6,132 - 6,132 Other ............................................ 49 - 49 ---------- ---------- ---------- Total Other Liabilities and Deferred Credits ....... 176,301 - 176,301 ---------- ---------- ---------- Total Capitalization and Liabilities ............... 3,952,760 - 3,952,760 ========== ========== ==========
17 (b)(2)(b) THE COLUMBIA GAS SYSTEM, INC. STATEMENT OF CAPITALIZATION (UNAUDITED) ACTUAL and PRO FORMA As of April 30, 1994 ($000)
CG Pro Forma CG Actual Entries Pro Forma ---------- ---------- ---------- Common Stock Equity Common Stock, $10 par value, authorized 100,000,000 shares, outstanding 50,559,225 shares .......................................... 505,592 - 505,592 Additional paid in capital ....................... 601,759 - 601,759 Retained earnings ................................ 337,596 (203) 337,393 Unearned employee compensation ................... (69,966) - (69,966) ---------- ---------- ---------- Total Common Stock Equity .......................... 1,374,981 (203) 1,374,778 ---------- ---------- ---------- Long-Term Debt Debentures, net of unamortized discount less premium ......................................... - - - ---------- ---------- ---------- Total Long-Term Debt ............................... - - - ---------- ---------- ---------- Total Capitalization ............................... 1,374,981 (203) 1,374,778 ========== ========== ==========
18 (b)(2)(c) THE COLUMBIA GAS SYSTEM, INC. STATEMENT OF INCOME (UNAUDITED) ACTUAL and PRO FORMA Twelve Months Ended April 30, 1994 ($000)
CG Pro Forma CG Actual Entries Pro Forma ---------- ---------- ---------- Operating Revenues Gas Sales ........................................ - - - Transportation ................................... - - - Other ............................................ - - - ---------- ---------- ---------- Total Operating Revenues ........................... - - - ---------- ---------- ---------- Operating Expenses Products purchased ............................... - - - Operation ........................................ 7,295 - 7,295 Maintenance ...................................... - - - Depreciation and depletion ....................... - - - Other taxes ...................................... 169 - 169 ---------- ---------- ---------- Total Operating Expenses ........................... 7,464 - 7,464 ---------- ---------- ---------- Operating Income (Loss) ............................ (7,464) - (7,464) ---------- ---------- ---------- Other Income (Deductions) Interest income and other, net ................... 222,106 - 222,106 Interest expense and related charges ............. (1,398) (313) (1,711) Reorganization items, net ........................ (3,161) - (3,161) ---------- ---------- ---------- Total Other Income (Deductions) .................... 217,547 (313) 217,234 ---------- ---------- ---------- Income before Income Taxes and Cumulative Effect of Accounting Change ............................. 210,083 (313) 209,770 Income taxes ....................................... 70,934 (110) 70,824 ---------- ---------- ---------- Income before Cumulative Effect of Accounting Change ........................................... 139,149 (203) 138,946 Cumulative Effect of Accounting for Postemployment Benefits ......................................... (44) - (44) ---------- ---------- ---------- Net Income ......................................... 139,105 (203) 138,902 ========== ========== ==========
19 (b)(2)(d) THE COLUMBIA GAS SYSTEM, INC. STATEMENTS OF COMMON STOCK EQUITY (UNAUDITED) ACTUAL and PRO FORMA Twelve Months Ended April 30, 1994 ($000)
CG Pro Forma CG Actual Entries Pro Forma ---------- ---------- ---------- COMMON STOCK Balance at May 1, 1993 ............................. 505,592 - 505,592 Common stock issued - Subsidiaries ..................................... - - - Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... - - - Public offering .................................. - - - ---------- ---------- ---------- Balance at April 30, 1994 .......................... 505,592 - 505,592 ---------- ---------- ---------- ADDITIONAL PAID IN CAPITAL Balance at May 1, 1993 ............................. 601,759 - 601,759 Common stock issued - Subsidiaries ..................................... - - - Leveraged employee stock ownership plan (LESOP) .. - - - Dividend reinvestment plan ....................... - - - Long-term incentive plan ......................... - - - Public offering .................................. - - - ---------- ---------- ---------- Balance at April 30, 1994 .......................... 601,759 - 601,759 ---------- ---------- ---------- RETAINED EARNINGS Balance at May 1, 1993 ............................. 198,491 - 198,491 Net income ......................................... 139,105 (203) 138,902 Common stock dividends - CG ............................................... - - - Subsidiaries (to CG) ............................. - - - Other .............................................. - - - ---------- ---------- ---------- Balance at April 30, 1994 .......................... 337,596 (203) 337,393 ---------- ---------- ---------- UNEARNED EMPLOYEE COMPENSATION Balance at May 1, 1993 ............................. (69,966) - (69,966) Adjustment ......................................... - - - ---------- ---------- ---------- Balance at April 30, 1994 .......................... (69,966) - (69,966) ---------- ---------- ---------- TOTAL COMMON STOCK EQUITY .......................... 1,374,981 (203) 1,374,778 ========== ========== ==========
20 UNAUDITED (b)(2)(e) THE COLUMBIA GAS SYSTEM, INC. PRO FORMA ENTRIES ($000) 1. Interest expense and related charges 313 Accrued interest 313 To record Letter of Credit Fee equal to 1% of the face amount of the Letter of Credit Facility and to record the amendment fee equal to 1/4 of 1% of the commitment. 2. Accrued taxes 110 Income taxes 110 To record the related tax effects of above transaction at 35%.
21 EXHIBIT INDEX (a) Exhibits A-3 Term Sheet A-4 Form of Amended and Restated Revolving Credit Agreement D-3 Order of Bankruptcy Court for the District of Delaware (to be filed by amendment) F-2 Opinion of Counsel (to be filed by amendment) G-2 Proposed Notice EX-99.A3 2 TERM SHEET 1 Exhibit A-3 LETTER OF CREDIT FACILITY Statement of Terms and Conditions Type of Facility: Committed letter of credit facility (the "Facility"). Amount: Up to $25,000,000 (the "Commitment"). Account Party: The Columbia Gas System, Inc. (the "Company"). Letters of Credit may be issued for the account of the Company in support of its own obligations or obligations of its subsidiaries (other than Columbia Gas Transmission Corporation ("TCO")). Issuing Bank: Chemical. In the event of a downgrading of Chemical's credit rating, additional issuing banks may be appointed as described below. Availability: Standby letters of credit (the "Letters of Credit") may be issued at any time during the period from the closing date to the earliest of (i) December 31, 1995 or such later date as may be from time to time agreed in writing by the Company and Chemical (the "Maturity Date"), (ii) the substantial consummation of a plan of reorganization of the Company and (iii) the date on which the final order of the bankruptcy court approving the Facility (the "Final Order") is amended or modified without the consent of Chemical. No Letter of Credit may have an expiry date later than the Maturity Date. Downgrade of Chemical Rating; If at any time Moody's Investors Appointment of Additional Service, Inc. or Standard & Poor's Issuing Bank: Corporation shall reduce the long- term indebtedness rating of Chemical below A3 or A-, as the case may be, the Company shall have the right to appoint an additional issuing bank (which issuing bank shall be acceptable to Chemical) under the Facility which shall be entitled to issue subsequent Letters of Credit under the Facility. In such event, Chemical shall take an irrevocable and unconditional participation of 100% of such issuing bank's obligations under any Letters of Credit so issued by such additional issuing bank.
2 Fees: Letter of Credit Fee: 1% of the face amount of each Letter of Credit per annum, payable quarterly in advance, plus, in the case of any Letter of Credit issued by an issuing bank other than Chemical, a fronting fee payable to such issuing bank in an amount to be agreed between the Company and such issuing bank. Customary administrative, issuance, amendment, payment and negotiation charges will be payable to the issuing bank for its own account. Commitment Fee: 1/2 of 1% of unutilized portion of the Commitment, payable on the Closing Date and quarterly in arrears thereafter. Such commitment fee shall accrue from the date of the closing of the Facility. Amendment Fee: 1/4 of 1% of the Commitment, payable at closing. Rate and Fee Basis: 360 days for actual days elapsed. Collateral: The obligations under the Facility shall be secured at all times by a first priority lien on cash collateral in an amount equal to at least 105% of the aggregate face amount of all outstanding Letters of Credit. The obligations owing to Chemical under the Facility shall also constitute a superpriority administrative claim. The Company shall also agree not to grant or suffer to exist any claim or lien against the Company or its assets that would be pari passu with or senior to the claim and lien in favor of Chemical. Conditions to Availability The availability of the Facility of Facility: will be conditioned upon, among other things, satisfaction of the following conditions precedent: The Borrower shall have executed and delivered definitive financing agreements and related documentation with respect to the Facility (including, without limitation, an amended and restated credit agreement and an amended and restated security agreement), in each case satisfactory in form and substance to Chemical. (i) Any loans outstanding under the Existing Facility shall have been
3 paid, (ii) all Existing Banks shall have agreed to the termination of their commitments under the Existing Facility, and (iii) all Existing Banks shall have provided evidence satisfactory to Chemical that all amounts owing to them under the Existing Facility have been paid in full. No litigation, inquiry, injunction or restraining order (other than the Company's reorganization proceedings under the United States Bankruptcy Code (the "Chapter 11 Case")) shall be pending, entered or threatened which, in the opinion of Chemical, could have a material adverse effect on (i) the business, assets, operations, condition (financial or otherwise) or prospects of the Company or any of its subsidiaries (other than TCO), (ii) the ability of the Company to perform its obligations under the agreements relating to the Facility or (iii) the rights of Chemical (collectively a "Material Adverse Effect"). (i) The Final Order, in form and substance satisfactory to Chemical, shall have been entered, (ii) an order of the Securities and Exchange Commission approving the transaction (the "SEC Approval"), in form and substance satisfactory to Chemical, shall have been issued, (iii) all other governmental and third party approvals necessary or advisable in connection with the Facility and the continuing operations of the Company and its subsidiaries shall have been obtained and (iv) all of the foregoing shall be in full force and effect. There shall not have occurred any change, or development or event involving a prospective change, which in the opinion of Chemical could have a Material Adverse Effect. All actions required to create and perfect a first priority security interest in all collateral shall have been duly taken, including, without limitation, the deposit of at least 105% of the face amount of all letters of credit outstanding under the Existing Facility into the cash collateral account for the Facility, and all collateral shall be free and clear of other liens.
4 Chemical shall have received satisfactory legal opinions from counsel to the Borrower. Chemical and the Existing Banks shall have received all fees and expenses required to be paid or delivered on or before the closing date. Chemical shall have received such other legal opinions, officer's certificates, corporate documents and other instruments as are customary for transactions of this type or as it may reasonably request. Conditions to Issuance of Each The issuance of each Letter of Letter of Credit: Credit will be conditioned upon (i) receipt of a letter of credit request, (ii) receipt of an amount of cash sufficient so that after giving effect to the issuance of such Letter of Credit at least 105% of the face amount of all Letters of Credit is on deposit in the cash collateral account, (iii) the Final Order and SEC Approval being in full force and effect and not modified without Chemical's consent and such other conditions as are customary in transactions of this type or are deemed appropriate by Chemical. Covenants: The documentation relating to the Facility shall include covenants customary for transactions of this type, including, without limitation: delivery of financial statements and other information comparable to the information required under the Existing Facility, except that (i) the Facility shall not require the delivery of an annual compliance certificate by the Company's independent accountants, (ii) the Facility shall not require the delivery of third party appraisals of the Company's assets, (iii) no monthly financial statements shall be required to be delivered and (iv) annual budgets and business plans shall be delivered as soon as practicable after they become available; maintenance of property; compliance with laws; payment of obligations and taxes; inspection of property, books and records; delivery of information relating to the Chapter 11 Case; maintenance of corporate existence; and further assurances. The Facility shall also
5 include a limitation on certain actions with respect to the collateral and the Chapter 11 case without the consent of Chemical. Events of Default; Remedies: Events of Default under the Facility shall include, without limitation, the following: Failure to pay repay letter of credit drawings or failure to repay other amounts within three business days; Failure to observe any covenant referred to in the last sentence under the caption "Covenants" above or failure to observe other covenants for 20 days; Any representation or warranty shall be inaccurate in any material respect; Any document executed in connection with the Facility shall have ceased to be in full force and effect; Reversal of the Final Order or the SEC Approval or any modification thereof without the consent of Chemical; Entry of an order in the Chapter 11 Case dismissing the Chapter 11 Case, converting the Chapter 11 Case into a case under Chapter 7 of the Bankruptcy Code or appointing an examiner with enlarged powers (subject to certain provisos as specified under Existing Facility); the filing or approval of an application for, or the existence of, any lien or claim in the Chapter 11 Case having a priority superior to or pari passu with that of Chemical; application for payment of, or approval to pay, any pre- petition claim except as expressly contemplated by the Facility; or entry of an order approving a disclosure statement in connection with a plan of reorganization of the Company which does not provide for payment in full of all obligations to Chemical; Entry of any judgment as to post- petition liabilities for payment of in excess of $10,000,000 in the aggregate and either (i) enforcement proceedings shall have commenced or (ii) enforcement shall not have been
6 stayed for a period of 15 consecutive days; Any non-monetary judgement with respect to post-petition events shall have been rendered which could reasonably be expected to (i) have a Material Adverse Effect or (ii) cause a material decrease in the collateral; Entry of an order granting relief from the automatic stay in the Chapter 11 Case to a party to any pre-petition action which could reasonably be expected to have a Material Adverse Effect or draw into question the validity of the Facility or the collateral arrangements contemplated thereby. Remedies: The Facility shall provide that if an event of default shall occur, Chemical may (i) set off amounts in the Company's accounts with Chemical and foreclose on the collateral and/or (ii) upon seven days' prior notice, exercise other available remedies and/or (iii) declare all amounts owing or contingently owing to be due and payable. Representations and Warranties: Customary for financings of this type and others deemed appropriate by Chemical. Governing Law: State of New York. Indemnity: The Company will indemnify, pay and hold harmless Chemical and its officers, employees and agents against any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or proposed use of the proceeds hereof. Commitment Termination Date: Definitive financing agreements and related documentation must have been entered into prior to September 30, 1994.
EX-99.A4 3 FORM OF AMENDED & RESTATED REVOLVING CREDIT AGREE 1 Exhibit A-4 AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Between THE COLUMBIA GAS SYSTEM, INC., a Debtor in Possession, and CHEMICAL BANK - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Dated as of _______ __, 1994 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.2 Accounting Terms and Determinations . . . . . . . . . . . 7 Section 1.3 Other Definitional Provisions . . . . . . . . . . . . . . 8 ARTICLE II. AMOUNT AND TERMS OF COMMITMENT . . . . . . . . . . . . . . . 8 Section 2.1 Commitment of the Bank . . . . . . . . . . . . . . . . . 8 Section 2.2 Agreement to Repay Letter of Credit Drawings . . . . . . 9 Section 2.3 Commitment Fee; Letter of Credit Fee; Other Fees . . . . . . . . . . . . . . . . . . . . . . . . 10 Section 2.4 Optional Termination or Reduction of Commitment . . . . . 11 Section 2.5 Requirements of Law . . . . . . . . . . . . . . . . . . . 11 Section 2.6 Payments . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 2.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 2.8 Priority and Liens . . . . . . . . . . . . . . . . . . . 13 Section 2.9 Right of Set-Off . . . . . . . . . . . . . . . . . . . . 14 Section 2.10 Rating Downgrade; Alternative Fronting Banks . . . . . . 14 ARTICLE III. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 17 Section 3.1 Conditions Precedent to Effectiveness of Agreement . . . . . . . . . . . . . . . . . . . . . 17 Section 3.2 Conditions Precedent to Each Letter of Credit. . . . . . 19 ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 20 Section 4.1 Organization and Authority . . . . . . . . . . . . . . . 20 Section 4.2 Due Execution . . . . . . . . . . . . . . . . . . . . . . 20 Section 4.3 Effectiveness of Order . . . . . . . . . . . . . . . . . 21 Section 4.4 Information . . . . . . . . . . . . . . . . . . . . . . . 21 Section 4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . 22 Section 4.6 Security Interest . . . . . . . . . . . . . . . . . . . . 22 Section 4.7 Not an Investment Company . . . . . . . . . . . . . . . . 22 Section 4.8 No Conflicting Requirements . . . . . . . . . . . . . . . 22 Section 4.9 Restrictions on the Company . . . . . . . . . . . . . . . 22 Section 4.10 No Defenses . . . . . . . . . . . . . . . . . . . . . . 22 ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 5.1 Information . . . . . . . . . . . . . . . . . . . . . . . 23 Section 5.2 Maintenance of Property; Insurance . . . . . . . . . . . 24 Section 5.3 Compliance with Laws . . . . . . . . . . . . . . . . . . 24 Section 5.4 Inspection of Property; Books and Records . . . . . . . . 24 Section 5.5 Chapter 11 Case . . . . . . . . . . . . . . . . . . . . . 25 Section 5.6 Corporate Existence; No Change in Business . . . . . . . 25 Section 5.7 Further Assurances; Security Interests . . . . . . . . . 25 Section 5.8 Chapter 11 Claims and Liens . . . . . . . . . . . . . . . 26 ARTICLE VI. EVENTS OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 28 Section 7.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 7.2 No Waivers . . . . . . . . . . . . . . . . . . . . . . . 28 Section 7.3 Expenses; Documentary Taxes; Indemnification . . . . . . 29 Section 7.4 Amendments and Waivers . . . . . . . . . . . . . . . . . 29 Section 7.5 NEW YORK LAW . . . . . . . . . . . . . . . . . . . . . . 29 Section 7.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 29 Section 7.7 WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . 30 Section 7.8 Effectiveness . . . . . . . . . . . . . . . . . . . . . . 30 Section 7.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . 30 EXHIBITS Exhibit A Form of Security Agreement Exhibit B Form of Letter of Credit Request
3 AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT Dated as of _____ __, 1994 AMENDED AND RESTATED SECURED REVOLVING CREDIT AGREEMENT, dated as of _______ __, 1994, between THE COLUMBIA GAS SYSTEM, INC., a Delaware corporation (the "Company"), a debtor-in-possession in proceedings under Chapter 11 of the Bankruptcy Code, and CHEMICAL BANK, a New York banking corporation (the "Bank", including its successors by merger or otherwise). INTRODUCTORY STATEMENT On July 31, 1991 (the "Filing Date") the Company and its wholly-owned Subsidiary, Columbia Gas Transmission Corporation ("TCO"), filed petitions with the United States Bankruptcy Court for the District of Delaware, initiating proceedings in reorganization under Chapter 11 of Title 11 of the United States Code. Pursuant to the Secured Revolving Credit Agreement, dated as of September 23, 1991 (as heretofore amended, supplemented or otherwise modified, the "Original Agreement"), among the Company, the banks from time to time parties thereto, and the Bank, as agent for such banks, a senior secured revolving credit facility in an aggregate principal amount of up to $275,000,000 was provided by such banks to the Company for the making of revolving credit loans and for the issuance of Letters of Credit for the benefit of various insurance companies, state agencies and other entities. Upon request of the Company, the Banks party to the Original Agreement have reduced their aggregate commitments under the Original Agreement to $100,000,000. To provide security for the obligations of the Company under the Original Agreement, the Company provided to the Bank, as agent, certain Liens on certain property of the Company (as more fully described in the Original Security Agreement referred to herein) and an allowed administrative expense claim in the Chapter 11 Case pursuant to Section 364(c)(1) of the Bankruptcy Code having priority, subject to a Carve-Out (as herein defined), over all administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code. In order to reduce certain fees currently payable under the Original Agreement, the Company has requested that the Bank and the other banks party to the Original Agreement agree to amend the Original Agreement to eliminate the commitments of all banks party thereto other than the Bank, to release the Liens on certain collateral under the Original Security Agreement, to reduce the and to provide that the commitment of the Bank shall be $25,000,000 and shall be available only for the issuance of Letters of Credit from time to time. Subject to the terms and conditions set forth herein, the Bank is willing to agree to the Company's request. NOW THEREFORE, the parties hereto hereby agree to amend and restate the Original Agreement in its entirety as follows: ARTICLE I. DEFINITIONS Section 1.1 Definitions. The following terms, as used herein, have the following meanings: 4 "Agreement" means this Amended and Restated Secured Revolving Credit Agreement, as it may be amended, modified or supplemented from time to time. "Alternate Base Rate" for any day, means a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Bank as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by Chemical Bank in connection with extensions of credit to debtors); "Base CD Rate" shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by the Bank from three New York City negotiable certificate of deposit dealers of recognized standing selected by it; and "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Bank from three federal funds brokers of recognized standing selected by it. Any change in the Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively. "Bank" has the meaning set forth in the preamble to this Agreement. "Bankruptcy Code" means the Bankruptcy Reform Act of 1978 as heretofore and hereafter amended and codified as 11 U.S.C. #101 et seq. "Bankruptcy Court" means the United States Bankruptcy Court for the District of Delaware having jurisdiction over the Chapter 11 Case. "Board" means the Board of Governors of the Federal Reserve System of the United States. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "Carve-Out" has the meaning set forth in Section 2.7(a). "Cash Collateral Account" has the meaning set forth in the Security Agreement. "Chapter 11 Case" means the case of the Company administered under Case No. 91-803 in the Bankruptcy Court. "Code" means the Internal Revenue Code of 1986, as amended, or any successor statute. 5 "Collateral" means the property of the Company, tangible and intangible, and the proceeds thereof subject from time to time to the Liens created by the Final Order and the Security Agreement. "Commitment" means the commitment of the Bank to issue or participate in Letters of Credit having an aggregate face amount at any time outstanding not in excess of the lesser of (a) $25,000,000, (b) the amount of the commitment approved by the Bankruptcy Court in the Final Order and (c) the amount of the commitment approved by the Securities and Exchange Commission in the SEC Order. "Company" has the meaning set forth in the preamble of this Agreement. "Default" means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default. "Dollars" or "$" means dollars in lawful currency of the United States of America. "Effective Date" has the meaning set forth in Section 3.1. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "Event of Default" has the meaning set forth in Article VI. "Filing Date" has the meaning set forth in the Introductory Statement to this Agreement. "Final Order" means the order entered by the Bankruptcy Court on ______ ___, 1994 in the Chapter 11 Case approving this Agreement. "Fronting Bank", with respect to any Letter of Credit, means the financial institution issuing such Letter of Credit. The Fronting Bank with respect to Letters of Credit issued hereunder shall be the Bank or, in the case of any Letter of Credit issued during a Rating Downgrade Period, at the election of the Company, an alternative financial institution designated to act in such capacity in accordance with Section 2.9. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "L/C Coverage Requirement" means, at any time, with respect to each Letter of Credit, an amount equal to 105% of the Stated Amount of such Letter of Credit. "Letter of Credit" means an irrevocable standby letter of Credit issued by the Bank pursuant to the Original Agreement or by a Fronting Bank pursuant hereto under which the Bank or Fronting Bank, as the case may be, agrees to make payments in Dollars for the account of the Company or the joint and several account of the Company and any Subsidiary (other than TCO), in respect of obligations of the Company or any Subsidiary (other than TCO). "Letter of Credit Fee" has the meaning set forth in Section 2.3(b). "Letter of Credit Outstandings" means, at any time, without duplication, the sum of (a) the aggregate Stated Amount of all outstanding Letters of Credit and (b) the aggregate amount of all Unpaid Drawings. "Letter of Credit Request" has the meaning set forth in Section 2.1(c). "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, the Company or any Subsidiary of the 6 Company shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset. "Material Adverse Effect" means a material adverse effect on (a) the business, operations, property, condition (financial or otherwise) or prospects of the Company and its Subsidiaries (other than TCO) taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement or the Security Agreement or (c) the validity or enforceability of this Agreement or the Security Agreement or the rights or remedies of the Bank or any Fronting Bank hereunder or thereunder. "Maturity Date" means December 31, 1995, or such later date as may be from time to time agreed by the Company and the Bank. "Obligations" means the reimbursement obligations in respect of Letters of Credit, and all other monetary obligations of the Company to the Bank or any Fronting Bank under this Agreement and the Security Agreement. "Original Agreement" has the meaning set forth in the Introductory Statement to this Agreement. "Original Security Agreement" means the security agreement, dated as of September 23, 1991, between the Company and the Bank, as agent under the Original Agreement. "Permitted Liens" means: (a) Liens for Post-Petition taxes, assessments, governmental charges or levies not yet due or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained on the books of the Company or the appropriate Subsidiary, as the case may be, in accordance with generally accepted accounting principles; and (b) statutory Liens of landlords and carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue or which are being contested in good faith and by appropriate proceedings in a manner which will not jeopardize or diminish the interest of the Bank in any of the Collateral or interfere with the conduct of the business of the Company or any Subsidiary. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Post-Petition" means and refers to any time on or after the Filing Date. "Pre-Petition" means and refers to any time prior to the Filing Date. "PUHCA" means the Public Utility Holding Company Act of 1935, as amended. "Rating Downgrade" means any date on which the Bank's deposit rating is reduced below either A- by Standard & Poor's Rating Group ("S&P") or A3 by Moody's Investors Service, Inc. ("Moody's"). "Rating Downgrade Period" means any period commencing on the date of the occurrence of a Rating Downgrade and ending on the first date thereafter on which the Bank's long-term indebtedness ratings are restored to at least A- by S&P and A3 by Moody's. "Requirement of Law" as to any Person, means the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable 7 to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer" means the chief executive officer or the president of the Company or, with respect to financial matters, the chief financial officer, the treasurer or the controller of the Company. "SEC Order" has the meaning set forth in Section 3.1(d). "Security Agreement" means the Amended and Restated Security Agreement, dated as of the date hereof, between the Bank and the Company, in substantially the form of Exhibit A hereto, as the same may be from time to time amended, supplemented or otherwise modified. "Stated Amount" means, with respect to each Letter of Credit, the remaining maximum amount available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met. "Subsidiary" means, with respect to any Person, any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. Unless otherwise specified, a reference to a Subsidiary is a reference to a Subsidiary of the Company. "TCO" has the meaning set forth in the Introductory Statement. "Termination Date" shall mean the earliest of (a) the Maturity Date, (b) the substantial consummation (as such term is defined in Section 1101(2) of the Bankruptcy Code) of a plan of reorganization of the Company in the Chapter 11 Case and (c) the date upon which the Final Order shall be amended or modified (other than to correct non-substantive errors) without the written consent of the Bank, unless such amendment or modification is as a result of an amendment, waiver or modification of this Agreement or the Security Agreement approved by the Bank. "UCC" means the Uniform Commercial Code as from time to time in effect in the State of New York. "Unpaid Drawing" has the meaning set forth in Section 2.2(a). "Wholly Owned" means any Subsidiary of a Person all of the shares of capital stock or other ownership interests of which (except directors' qualifying shares) are at the time directly or indirectly owned by such Person. Section 1.2 Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time, applied on a basis consistent (except for changes concurred in by the Company's independent public accountants) with the most recent audited consolidated financial statements of the Company and its consolidated Subsidiaries delivered pursuant hereto. The parties hereto agree, however, that in the event that any change in accounting principles from those used in the preparation of the most recent financial statements of the Company and its consolidated Subsidiaries delivered to the Bank on or prior to the date hereof pursuant to the terms of this Agreement is hereafter occasioned by the promulgation of rules, regulations, pronouncements and opinions by or required by the Financial Accounting Standards Board or Accounting Principles Board of the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and results in any change in the method of calculation of financial covenants, standards or terms found in this Agreement, such financial covenants, standards or terms (other than in respect of financial statements to be delivered 8 hereunder) shall be computed without giving effect to such change in accounting principles. Section 1.3 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Security Agreement or any certificate or other document made or delivered pursuant hereto or thereto. (b) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection and Exhibit references are to this Agreement unless otherwise specified. (c) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. ARTICLE II. AMOUNT AND TERMS OF COMMITMENT Section 2.1 Commitment of the Bank. (a) From and including the Effective Date to but excluding the Termination Date, the Bank agrees, on the terms and conditions set forth in this Agreement, that it will from time to time, following receipt of a Letter of Credit Request delivered in accordance with Section 2.1(c) below, issue, for the account of the Company or the joint and several accounts of the Company and any Subsidiary (other than TCO), and in support of obligations of the Company or any Subsidiary (other than TCO), one or more Letters of Credit in such form and for such purposes as are customary for, or may otherwise be approved in the sole discretion of, the Bank; provided, however, that no such Letter of Credit shall be so issued if: (i) at the time of such issuance, any order, judgment or decree of any Governmental Authority or arbitrator shall purport by its terms to enjoin or restrain the Bank from issuing such Letter of Credit or any Requirement of Law applicable to the Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Bank shall prohibit, or request that the Bank refrain from, the issuance of Letters of Credit generally or such Letter of Credit in particular or shall impose upon the Bank with respect to such Letter of Credit any restriction or reserve or capital requirement (for which the Bank is not otherwise compensated) not in effect on the date hereof, or any unreimbursed loss, cost or expense which was not applicable or in effect to the Bank as of the date hereof and which the Bank in good faith deems material to it; (ii) after giving effect to any such issuance, the Letter of Credit Outstandings would exceed the Commitment; (iii) in the case of a Letter of Credit to be issued in support of obligations of a Subsidiary, at the time of such issuance, the Company shall have failed to receive from such Subsidiary, an agreement, in form and substance satisfactory to the Bank, pursuant to which such Subsidiary agrees to reimburse the Borrower for the amount of all drawings under the Letter of Credit, plus all interest and fees in respect thereof; or (iv) the Letter of Credit would have an expiration date subsequent to the Maturity Date. Each Letter of Credit Request and each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits [(1983 Revision)], International Chamber of Commerce Publication No. 400 and, to the extent not inconsistent therewith, the laws of the State of New York and shall provide for the fees set forth in Section 2.3 hereof. (b) If on the Termination Date any Letter of Credit shall be outstanding, then, upon request of the Bank, the Company shall use its reasonable best efforts to immediately cause all such outstanding Letters of Credit to be returned undrawn to the Bank. 9 (c) Whenever the Company wishes a Letter of Credit to be issued, it shall give the Bank at least two Business Days' prior request therefor. Each such request shall include the information required by Exhibit B and such other information as the Bank shall reasonably request and shall be either (i) in writing and executed by the Company or (ii) transmitted by the Company to the Bank over a secure electronic data transmission system maintained for such purpose by the Bank (such request, a "Letter of Credit Request"). (d) The making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Company that such Letter of Credit will be issued in accordance with, and will not violate the requirements of, Section 2.1 and that each of the applicable conditions specified in Article III has been satisfied. Section 2.2 Agreement to Repay Letter of Credit Drawings. (a) The Company agrees to reimburse the Bank, for the account of the applicable Fronting Bank, on each date on which the Bank notifies the Company of the date and amount of a draft presented under any Letter of Credit and paid by the Fronting Bank with respect thereto or otherwise paid in accordance with the terms of the Letter of Credit Request relating thereto, for the amount of (i) such draft so paid and (ii) any customary administrative and out-of-pocket taxes, fees, charges or other costs or expenses incurred by the Fronting Bank in connection with such payment (each such amount so paid until reimbursed, an "Unpaid Drawing"). Each such payment shall be made in Dollars and in immediately available funds to the Bank at its address for notices specified herein; provided, however, that the Company authorizes the Bank to, and the Bank agrees that it will, debit the Cash Collateral Account in amounts sufficient to reimburse the Fronting Bank for any Unpaid Drawings; provided, further, that the Bank shall not be obligated to withdraw from the Cash Collateral Account any amount if the balance in the Cash Collateral Account would, if such withdrawal occurred, be less than the L/C Coverage Requirement for all outstanding Letters of Credit. Interest shall be payable to the Bank on any and all amounts remaining unpaid by the Company under this Section 2.2 from 12:00 Noon, New York City time, on the date such amounts become payable until the third Business Day thereafter at the Alternate Base Rate plus [1]% and thereafter until payment in full (after as well as before judgment) at a rate per annum equal to the Alternate Base Rate plus [3]%; it being understood that if the Bank debits the Cash Collateral Account in amounts sufficient to reimburse the Fronting Bank for any Unpaid Drawing pursuant to the immediately preceding sentence, no interest will be paid under this Agreement with respect to such Unpaid Drawing. (b) The Company's obligations under this Section 2.2 to reimburse the Bank with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Bank or the Company has or has had against any Fronting Bank, the Bank or any beneficiary or transferee of any Letter of Credit, including, without limitation, any defense based upon the failure of any drawing under a Letter of Credit (each a "Drawing") to conform to the terms of the Letter of Credit or any non-application or misapplication by the beneficiary of the proceeds of such Drawing; provided, however, that the Company shall not be obligated to reimburse the Bank for any wrongful payment made by the Fronting Bank under a Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of the Fronting Bank. Section 2.3 Commitment Fee; Letter of Credit Fee; Other Fees. (a) The Borrower shall pay to the Bank (for its own account) a commitment fee at the rate of # of 1% per annum (computed on the basis of actual days elapsed over a year of 360 days) on the average daily unused portion of the Commitment. The commitment fee shall accrue from and including the Effective Date to but excluding the date on which the Commitment shall have been terminated in its entirety pursuant to this Agreement. Such commitment fee shall be payable in arrears quarterly on the 15th day of each March, June, September and December, commencing on the first such date after the Effective Date, and upon the termination of the Commitment. 10 (b) The Company agrees to pay to the Bank (for its own account) a letter of credit fee (the "Letter of Credit Fee") with respect to each Letter of Credit issued pursuant to this Agreement, for the period from the date of issuance of such Letter of Credit until the date of termination of such Letter of Credit, payable quarterly in advance, the first such payment to be due on the date of issuance of such Letter of Credit and each subsequent payment to be due on the same date every three calendar months thereafter, computed at the rate of 1% per annum on the Stated Amount of such Letter of Credit during the period of calculation. (c) The Company shall pay to the Bank (for its own account), on the Effective Date, an amendment fee in the amount of # of 1% of the Commitment. (d) The Company shall pay to the Bank, for the account of the Fronting Bank with respect to each Letter of Credit, the following fees on the following dates, each such fee to be payable in the amount or at the rate then generally being charged by the applicable Fronting Bank: (i) upon issuance of each Letter of Credit, an issuance fee and a processing fee and (ii) upon each amendment of each Letter of Credit, an amendment or reissuance fee. In addition, with respect to each Letter of Credit issued by any Fronting Bank other than the Bank, the Company shall pay to the Bank, for the account of the Fronting Bank, a fronting fee with respect to such Letter of Credit, which fronting fee shall be payable in such amounts and on such dates as shall be agreed upon by the Company and the Fronting Bank and notified to the Bank prior to the issuance of such Letter of Credit. Section 2.4 Optional Termination or Reduction of Commitment. The Borrower may, upon at least one Business Day's prior written notice to the Bank, terminate at any time, or proportionately reduce from time to time by an aggregate amount of $1,000,000 or any larger integral multiple thereof, the unused portion of the Commitment; provided, however, that the Borrower shall not at any time reduce the Commitment to an amount less than the aggregate Letter of Credit Outstandings. If the Commitment is terminated in its entirety, all accrued commitment fees shall be payable on the effective date of such termination. Section 2.5 Requirements of Law. In the event that the Bank or any Fronting Bank shall have determined that any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by the Bank or such Fronting Bank, as the case may be, with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on the Bank's or such Fronting Bank's capital, as the case may be, as a consequence of its obligations hereunder to a level below that which the Bank or such Fronting Bank could have achieved but for such change or compliance (taking into consideration such the Bank's or such Fronting Bank's policies with respect to capital adequacy) by an amount deemed by the Bank or such Fronting Bank, as the case may be, to be material, then from time to time, after submission by the Bank to the Company, or such Fronting Bank to the Bank and the Company, of a written request therefor (setting forth the basis of such claim), the Company shall pay to the Bank, for its own account or the account of such Fronting Bank, as the case may be, such additional amount or amounts as will compensate the Bank or such Fronting Bank for such reduction. Section 2.6 Payments. All payments to be made by the Company hereunder, whether on account of any Unpaid Drawing, interest, fees or otherwise, shall be made without set-off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Bank, at the Bank's office specified in Section 7.1, in Dollars and in immediately available funds. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of Unpaid Drawings, interest thereon shall be payable at the then applicable rate during such extension. 11 Section 2.7 Taxes. All payments made by the Company under this Agreement shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on the Bank or any Fronting Bank, as a result of any present or former connection (excluding a connection arising solely from the Bank or such Fronting Bank having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or the other agreements or instruments required to be executed in connection herewith) between the Bank or such Fronting Bank, as the case may be, and the jurisdiction of the government or taxing authority imposing such tax or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "Taxes"). If any Taxes are required to be withheld from any amounts payable to the Bank or any Fronting Bank hereunder, the amounts so payable shall be increased to the extent necessary to yield to the Bank or such Fronting Bank, as the case may be (after payment of all Taxes), interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement. Whenever any Taxes relating to withholding are payable by the Company in connection with any Letter of Credit issued hereunder, as promptly as possible thereafter the Company shall send to the Bank and to the applicable Fronting Bank (if other than the Bank) a certified copy of an original official receipt received by the Company showing payment thereof. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Bank (for its own account or the account of the applicable Fronting Bank, as the case may be) the required receipts or other required documentary evidence, the Company shall indemnify the Bank and such Fronting Bank for any incremental taxes, interest or penalties that may become payable by the Bank or such Fronting Bank, as the case may be, as a result of any such failure. If the Bank or a Fronting Bank shall become aware that it is entitled to receive a refund in respect of Taxes in respect of which it has been paid additional amounts by the Company pursuant to this Section 2.6, it shall promptly notify the Company and the Bank of the availability of such refund and shall, within 30 days after receipt of a request by the Company, apply for such refund. If the Bank or a Fronting Bank receives a refund in respect of any Taxes in respect of which it has been paid additional amounts by the Company pursuant to this Section 2.6, it shall promptly notify the Company and the Bank of such refund and shall, within 30 days after receipt of a request by the Company (or promptly upon receipt, if the Company has requested application for such refund pursuant hereto), repay such refund to the Company. The Bank and any Fronting Bank shall use reasonable efforts to file any certificate or document if the making of such a filing would avoid the need for or reduce the amount of any such additional amounts which may thereafter accrue and would not be disadvantageous to the Bank or such Fronting Bank, as the case may be. The agreements in this Section shall survive the termination of this Agreement and the payment of all amounts payable hereunder. Section 2.8 Priority and Liens. (a) The Company hereby covenants, represents and warrants that pursuant to Section 364(c)(1) of the Bankruptcy Code, the Obligations shall constitute allowed administrative expense claims in the Chapter 11 Case having priority over any and all administrative expenses of the kind specified in Section 503(b) or 507(b) of the Bankruptcy Code. Notwithstanding anything to the contrary contained herein, all of the claims referred to in this Section 2.7(a) and granted in the Chapter 11 Case to the Bank shall be subject in the event of the occurrence of a Default or an Event of Default, (i) to allowed accrued and unpaid professional fees and disbursements incurred by the Company and any statutory committee appointed in the Chapter 11 Case in an amount not to exceed $7,500,000 in the aggregate to the extent allowed by the Bankruptcy Court (exclusive of compensation previously awarded, whether or not paid) and (ii) to fees pursuant to 28 U.S.C. # 1930 (collectively, the "Carve-Out"). (b) The Bank agrees that so long as no Event of Default shall have occurred, the Company shall be permitted to pay administrative expenses of the kind specified in Section 503(b) of the Bankruptcy Code incurred in the ordinary course of the Company's business, and compensation and reimbursement of expenses 12 allowed and payable under Sections 330 and 331 of the Bankruptcy Code, as the same may be due and payable, and checks issued therefor shall be honored upon presentment (to the extent of available funds) and such payments shall not be applied against the Carve-Out. (c) The Company hereby covenants, represents and warrants that, pursuant to Section 364(c)(2) of the Bankruptcy Code, the Obligations shall at all times be secured by a first priority senior security interest in and Lien upon all Collateral. Section 2.9 Right of Set-Off. Subject to the provisions of Article VI, upon the occurrence and during the continuance of any Event of Default, the Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law and without further order of or application to the Bankruptcy Court, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Bank to or for the credit or the account of the Company against any and all of the Obligations of the Company now or hereafter existing under this Agreement and the Security Agreement, irrespective of whether or not the Bank shall have made any demand under this Agreement or the Security Agreement and although such Obligations may be unmatured. The Bank agrees promptly to notify the Company after any such set- off and application made by the Bank; provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of the Bank under this Section are in addition to other rights and remedies which the Bank may have upon the occurrence and during the continuance of any Event of Default. Section 2.10 Rating Downgrade; Alternative Fronting Banks. (a) During the continuation of any Rating Downgrade Period, the Borrower may elect to designate a financial institution other than the Bank (which institution shall be reasonably acceptable to the Bank) to act as Fronting Bank with respect to any Letter of Credit requested to be issued during such Rating Downgrade Period. If the Company so elects to designate an alternative Fronting Bank with respect to any Letter of Credit, in lieu of the Letter of Credit Request otherwise required pursuant to Section 2.1, the Company shall, at least two Business Days prior to the issuance of such Letter of Credit, deliver to the Bank the following: (i) the identity of such other Fronting Bank, (ii) a copy of the letter of credit request submitted to such other Fronting Bank, (iii) evidence satisfactory to the Bank that the conditions set forth in Section 2.1(a)(ii), (iii) and (iv) have been satisfied with respect to the issuance of such Letter of Credit by such Fronting Bank and (iv) an executed agreement of such Fronting Bank indicating that such Fronting Bank has agreed to become bound by the terms of this Agreement with respect to such Letter of Credit. Delivery of such documents to the Bank shall be deemed to constitute a representation and warranty by the Company that the conditions set forth in Sections 2.1(a)(ii), (iii) and (iv) and Article III have been satisfied with respect to such Letter of Credit. (b) If on the Termination Date any Letter of Credit issued by a Fronting Bank other than the Bank shall be outstanding, then, upon request by the Bank or such Fronting Bank, the Company shall use its reasonable best efforts to immediately cause all such outstanding Letters of Credit to be returned undrawn to such Fronting Bank. Such Fronting Bank shall promptly notify the Bank upon receipt of any such returned Letter of Credit. (c) Immediately upon the issuance by any Fronting Bank other than the Bank of any Letter of Credit, such Fronting Bank shall be deemed to have sold and transferred to the Bank, and the Bank shall be deemed irrevocably and unconditionally to have purchased and received from such Fronting Bank, without recourse or warranty, a participation in such Letter of Credit equal to 100% of such Fronting Bank's interest in such Letter of Credit, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor. (d) In the event that any Drawing is made under any Letter of Credit issued by a Fronting Bank other than the Bank, upon notice by such Fronting Bank to the Bank of such Drawing and of the amount of the Unpaid Drawing with respect thereto, the Bank shall promptly and unconditionally pay to the Fronting Bank the 13 amount of such Unpaid Drawing in Dollars and in immediately available funds. If the Fronting Bank so notifies the Bank prior to 11:00 A.M, New York City time, on any Business Day, the Bank shall make available to such Fronting Bank the amount of such payment on such Business Day. If and to the extent the Bank shall not make such amount available to the Fronting Bank on a timely basis, the Bank agrees to pay to the Fronting Bank forthwith on demand, such amount (together with interest thereon for each day from such date until the date such amount is paid to the Fronting Bank at the Federal Funds Effective Rate). The Bank shall also pay to the Fronting Bank, prior to 3:00 P.M. on the date when such amounts are due from the Company, all amounts payable by the Company to such Fronting Bank pursuant to Section 2.3(d). The Bank shall also pay to the Fronting Bank, within one Business Day of receipt thereof from the Company, all other amounts received from the Company for the account of such Fronting Bank pursuant to the terms hereof. (e) Upon the request of the Bank, each Fronting Bank shall furnish to the Bank copies of any Letter of Credit to which such Fronting Bank is party and such other documentation as may reasonably be requested by the Bank. (f) The obligations of the Bank to make payments to each Fronting Bank with respect to Letters of Credit issued by such Fronting Bank shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including, without limitation, any of the following circumstances: (i) any lack of validity or enforceability of this Agreement; (ii) the existence of any claim, set-off, defense or other right which the Company may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Fronting Bank or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Company and the beneficiary named in any such Letter of Credit); (iii) any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of this Agreement or the Final Order; or (v) the occurrence of any Default or Event of Default. (g) Each Fronting Bank hereby irrevocably designates and appoints the Bank as its agent to receive payments on its behalf pursuant to Section 2.2 or 2.3 and to take action with respect to the Collateral and any other collateral security existing from time to time securing payment of the Obligations, and to exercise such powers and perform such duties as are reasonably incidental thereto. The Bank reserves the right, in its sole discretion in each instance, to exercise or refrain from exercising any rights or remedies which the Bank may have under the Security Agreement, including, without limitation, the right to foreclose and sell and otherwise deal with, or refrain from foreclosing and selling or otherwise dealing with any Collateral or any other collateral security existing from time to time securing payment of the Obligations or to enforce, or refrain from enforcing, the Security Agreement, and no Fronting Bank shall be entitled to exercise any rights thereunder. The Security Agreement and all Collateral shall be held by the Bank in its name, but to the extent of any Fronting Bank's interest in the Letters of Credit in accordance with this Agreement, the Bank agrees that the Collateral and the Security Agreement shall be held by the Bank as agent for such Fronting Bank. 14 (c) The Bank shall not have any duties or responsibilities to any Fronting Bank, except those expressly set forth in this Section 2.9, or any fiduciary relationship with any Fronting Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the Security Agreement. Neither the Bank nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates shall be liable for any action lawfully taken or omitted to be taken by it or such person under or in connection with this Agreement, the Security Agreement or any document delivered pursuant hereto or thereto, except that it or such person shall be liable for its or such person's own gross negligence or willful misconduct. (d) Each Fronting Bank severally agrees to indemnify the Bank against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time be imposed on, incurred by or asserted against the Bank relating to the gross negligence or willful misconduct, or alleged gross negligence or willful misconduct, of such Fronting Bank. ARTICLE III. CONDITIONS PRECEDENT Section 3.1 Conditions Precedent to Effectiveness of Agreement. This Agreement shall become effective on the date (the "Effective Date") on which all of the following conditions are satisfied, whether or not the Company requests the issuance of a Letter of Credit on such date: (a) receipt by the Bank of an opinion of ______________, General Counsel of the Company, in form and substance satisfactory to the Bank (which opinion may be given in reliance on opinions delivered by local counsel or special counsel or the provisions of the Final Order); (b) receipt by the Bank of evidence satisfactory to it that all conditions precedent to the issuance of a Letter of Credit have been met, including, without limitation, a certificate signed by the chairman or president or any vice president and by the chief financial officer or treasurer or controller of the Company, to the effect set forth in clauses (c), (d), (e), (f) and (h) of Section 3.2; (c) receipt by the Bank of (i) a certified copy of the Final Order which shall have been entered by the Bankruptcy Court on such notice and with such terms as may be satisfactory to the Bank and the Company and which shall not have been reversed, modified, amended, vacated or stayed and (ii) evidence, satisfactory to the Bank, that the Company has filed with the Securities and Exchange Commission ("SEC") a declaration, in form and substance satisfactory to the Bank, pursuant to Section 7(b) of PUHCA, and that the SEC has issued an order, in form and substance satisfactory to the Bank (the "SEC Order") in response to such declaration approving this transaction; (d) the Bank shall be satisfied that, in its judgment, there is no (i) injunction, stay, decree or order issued by any court or arbitrator or any governmental body, agency or official or (ii) action, suit or proceeding pending or threatened against or affecting the Company before any court or arbitrator or any governmental body, agency or official in which there is a reasonable possibility of an adverse decision, in either case, which could reasonably be expected to have a Material Adverse Effect or which in any manner draws into question the validity of this Agreement, the Security Agreement, the Final Order or the SEC Order; (e) receipt by the Bank of an amount equal to the L/C Coverage Requirement for all Letters of Credit issued by the Bank under the Original Agreement and outstanding on such date deposited in the Cash Collateral Account in accordance with the Security Agreement; (f) receipt by the Bank of all documents it may reasonably request, including, but not limited to, Certificates of Incorporation and good standing certificates and board resolutions, relating to the existence of 15 the Company and its Subsidiaries (other than TCO), the corporate authority for and validity hereof, and any other matters relevant hereto, all in form and substance reasonably satisfactory to the Bank; (g) all actions necessary or advisable in order to establish, protect and perfect the interest of the Bank in the Collateral pursuant to the Security Agreement which the Bank has requested the Company to make or take as a condition to the initial extension of credit hereunder shall have been made or taken (it being understood that the failure to request a particular action shall be without prejudice to the rights of the Bank set forth in Section 5.8); (h) receipt by the Bank of all fees owed hereunder or under the Original Agreement including, without limitation, all fees payable pursuant to Section 2.3; (i) receipt by the Bank from each bank (other than the Bank) party to the Original Agreement of a letter, in form and substance satisfactory to the Bank, evidencing that such bank (A) consents to the termination of its commitment under the Original Agreement, (B) acknowledges receipt of payment in full of all principal of and interest on all loans outstanding under the Original Agreement, all interest, fees and other amounts payable to it in respect of all letters of credit issued thereunder and all other amounts payable to such bank under the Original Agreement (including all fees and other amounts payable as a result of the termination of its Commitment under the Original Agreement) and (C) in the case of any fronting bank (other than the Bank) under the Original Agreement, acknowledges that no letters of credit issued by such fronting bank are outstanding under the Original Agreement; and (j) each of this Agreement and the Security Agreement shall have been duly executed and delivered to the Bank by each party thereto and shall be in form and substance satisfactory to the Bank. Section 3.2 Conditions Precedent to Each Letter of Credit. Each issuance of a Letter of Credit by the Bank shall be subject to the satisfaction of the following conditions precedent: (a) receipt by the Bank of a Letter of Credit Request as required by Section 2.1; (b) receipt by the Bank of an amount equal to the L/C Coverage Requirement for such Letter of Credit deposited in the Cash Collateral Account in accordance with the Security Agreement; (c) immediately after such issuance of such Letter of Credit, no Default or Event of Default shall have occurred and be continuing; (d) the representations and warranties of the Company contained in this Agreement and the Security Agreement, or otherwise made in writing in connection herewith and therewith, shall be true and correct in all material respects on and as of the date of such issuance of such Letter of Credit with the same effect as if made on and as of such date (unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); (e) each of the Final Order and the SEC Order shall be in full force and effect and shall not have been modified or amended in any respect (other than to correct non-substantive errors) without the written consent of the Bank, unless such amendment or modification is as a result of an amendment, waiver or modification of this Agreement or the Security Agreement approved by the Bank, and neither the Final Order or the SEC Order shall be subject to appeal or shall have been reversed or vacated; 16 (f) immediately after giving effect to such issuance of such Letter of Credit, the Letter of Credit Outstandings shall not exceed the Commitment; (g) all corporate and judicial proceedings and all instruments and agreements in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Bank, and the Bank shall have received all information and copies of all documents and papers, including records of corporate and judicial proceedings, which the Bank may have reasonably requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate, governmental or judicial authorities; and (h) all fees payable pursuant hereto on or before the date of such issuance of such Letter of Credit shall have been paid in full. Each Letter of Credit Request hereunder shall be deemed to be a representation and warranty by the Company on the date of such Letter of Credit Request as to the facts specified in clauses (c), (d), (e), (f) and (h) of this Section 3.2. ARTICLE IV. REPRESENTATIONS AND WARRANTIES In order to induce the Bank to enter into this Agreement and to issue Letters of Credit hereunder, the Company represents and warrants to the Bank as follows: Section 4.1 Organization and Authority. Each of the Company and each of its Subsidiaries (other than TCO) (a) is a corporation duly organized and validly existing under the laws of the state of its incorporation and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which the failure to so qualify would have a Material Adverse Effect, (b) has the requisite corporate power and authority to effect the transactions contemplated hereby and by the Security Agreement and (c) has all requisite corporate power and authority and the legal right to own, pledge, mortgage and operate its properties as contemplated hereunder and under the Security Agreement, and to conduct its business as now or currently proposed to be conducted. Section 4.2 Due Execution. The execution, delivery and performance by the Company of each of this Agreement and the Security Agreement are within the corporate powers of the Company, have been duly authorized by all necessary corporate action, including the consent of shareholders where required, and do not (a) contravene the charter or by-laws of the Company, (b) violate any law (including, without limitation, the Securities Exchange Act of 1934 or PUHCA) or regulation (including, without limitation, Regulations G, T, U or X of the Board), or any order or decree of any court or governmental instrumentality, (c) conflict with or result in a breach of or constitute a default under, any material indenture, mortgage or deed of trust entered into after the Filing Date or any material lease, agreement or other instrument entered into after the Filing Date binding on the Company, any of its Subsidiaries or any of their respective properties, (d) result in or require the creation or imposition of any Lien other than the Liens granted pursuant to this Agreement and the Security Agreement or (e) require the consent, authorization by or approval of or notice to or filing or registration with any governmental body, agency, authority, or regulatory body other than the entry of the Final Order and the SEC Order. This Agreement has been duly executed and delivered by the Company. This Agreement is, and the Security Agreement, when executed and delivered will be, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. Section 4.3 Effectiveness of Order. The Final Order is in full force and effect. Section 4.4 Information. (a) The consolidated balance sheet of the Company and its consolidated Subsidiaries as of December 31, 1993 and the related consolidated statements of income, changes in shareholders' equity and cash flows 17 for the fiscal year then ended, reported on by Arthur Andersen & Co. and set forth in the Company's 1993 Form 10-K, a copy of which has been delivered to the Bank, and the balance sheet of the Company as of December 31, 1993 and the related statements of income, changes in shareholders' equity and cash flows for the fiscal year then ended, fairly present, in conformity with generally accepted accounting principles, the consolidated financial position of the Company and its consolidated Subsidiaries and the financial position of the Company as of such date and their respective results of operations and cash flows for such fiscal year. (b) The unaudited consolidated and consolidating balance sheets of the Company and its consolidated Subsidiaries as of March 31, 1993 and the related unaudited consolidated statements of income, changes in shareholders' equity and cash flows for the three months then ended, set forth in the Company's quarterly report for the fiscal quarter ended March 31, 1994, copies of which have been delivered to the Bank, fairly present, in conformity with generally accepted accounting principles applied on a basis consistent with the financial statements referred to in paragraph (a) of this Section, the consolidated financial position of the Company and its consolidated Subsidiaries as of such date and their consolidated results of operations and cash flows for such three-month period (subject to normal year-end adjustments). (c) Other than as disclosed to the Bank in writing prior to the date hereof, since June 30, 1993 there has been no material adverse change in the business, financial position, results of operations or prospects of the Company and its Subsidiaries (other than TCO) taken as a whole. (d) Neither this Agreement, the Security Agreement, the Original Agreement nor any agreement, document, certificate or statement furnished to the Bank by or on behalf of the Company in connection with the transactions contemplated hereby or thereby or filed in the Bankruptcy Court by or on behalf of the Company in connection with the Chapter 11 Case, at the time it was furnished or filed, contained any untrue statement of a material fact or omitted to state any fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; the projections contained therein were prepared in good faith and represented at the time they were furnished, the Company's best estimate of the information purported to be shown therein, and the Company is not aware of any information that would lead it to believe that such projections or other information are misleading in any material respect. Section 4.5 Litigation. Other the Chapter 11 Case or as otherwise disclosed to the Bank in writing prior to the date hereof, there is no (a) injunction, stay, decree or order issued by any court or arbitrator or any governmental body, agency or official or (b) action, suit or proceeding pending against, or to the knowledge of the Company threatened against or affecting, the Company or any of its Subsidiaries before any court or arbitrator or any governmental body, agency or official which could reasonably be expected to have a Material Adverse Effect. Section 4.6 Security Interest. The Final Order and the Security Agreement will create and grant to the Bank a valid, first priority perfected and enforceable security interest in and lien upon the Collateral, securing the Obligations, superior in right to any other Liens, existing or future, which the Company or any creditors thereof or any other Person, may have against such Collateral or interests therein, other than Permitted Liens. Section 4.7 Not an Investment Company. The Company is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. Section 4.8 No Conflicting Requirements. Neither the Company nor any Subsidiary is in violation or in default under any term or provision of any charter, by-law, statute, rule, regulation, judgment, decree, order, writ or injunction applicable to it, such that such violations or defaults in the aggregate could reasonably be expected to have a Material Adverse Effect. 18 Section 4.9 Restrictions on the Company. Neither the Company nor any of its Subsidiaries (other than TCO) is a party to any agreement or instrument or subject to any legislative or charter or other corporate restriction or any judgment, order, writ, injunction, decree, rule or regulation materially and adversely affecting the business, operations, properties or assets or the financial condition of the Company or its Subsidiaries (other than TCO), taken as a whole. Section 4.10 No Defenses. The Company is truly and justly indebted to the Bank for the Obligations, and does not currently have, and agrees that it will not at any time hereafter assert, any defense, offset or counterclaim with respect to the reimbursement of amounts drawn under Letters of Credit, except as such defense offset or counterclaim relates to the gross negligence or willful misconduct of the Bank. ARTICLE V. COVENANTS The Company agrees that during the period commencing on the Effective Date and ending on the later of the Termination Date and the date on which all amounts owing in respect of all Letters of Credit or otherwise arising hereunder or under the Security Agreement are paid: Section 5.1 Information. The Company will deliver to the Bank: (a) as soon as available, and in any event within 90 days after the end of each fiscal year of the Company, the consolidated and consolidating balance sheets of the Company and its consolidated Subsidiaries as of the end of such fiscal year and the related consolidated and consolidating statements of earnings, changes in consolidated shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all (except for the consolidating statements) reported on in a manner acceptable to the Securities and Exchange Commission by Arthur Andersen & Co or other independent public accountants of recognized standing; (b) as soon as available, and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, consolidated and consolidating balance sheets of the Company and its consolidated Subsidiaries as of the end of such quarter and the related consolidated and consolidating statements of earnings, changes in consolidated shareholders' equity and consolidated cash flows for such quarter and for the portion of the Company's fiscal year ended at the end of such quarter, setting forth in the case of each consolidated financial statement in comparative form the figures for the corresponding quarter and the corresponding portion of the Company's previous fiscal year; (c) simultaneously with the delivery of each set of financial statements referred to in clauses (a) and (b) above, a certificate of the chief financial officer or the chief accounting officer of the Company stating (i) that the Company is responsible for the preparation and fair presentation of each balance sheet and the related statements of earnings, changes in shareholders' equity and cash flows of the Company in conformance with generally accepted accounting principles, (ii) that such officer has no reason to believe that such balance sheets and statements (other than consolidating statements) have not been prepared in conformance with generally accepted accounting principles and (iii) whether any Default or Event of Default exists on the date of such certificate and, if any Default or Event of Default then exists, setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; (d) as soon as available, copies of all final annual budgets and business plans, forecasts and other similar materials prepared by or for the Company and any of its Subsidiaries; (e) within five Business Days of any Responsible Officer of the Company obtaining knowledge of any Default or Event of Default, if such 19 Default or Event of Default is then continuing, a certificate of a Responsible Officer of the Company setting forth the details thereof and the action which the Company is taking or proposes to take with respect thereto; and (f) from time to time such additional information regarding the financial position or business of the Company or any Subsidiary as the Bank may reasonably request. Section 5.2 Maintenance of Property; Insurance. The Company will keep, and will cause each Subsidiary (other than TCO) to keep, all material property useful and necessary in its business in good working order and condition, ordinary wear and tear excepted; will maintain, and will cause each such Subsidiary to maintain (either in the name of the Company or in such Subsidiary's own name), either with financially sound and reputable insurance companies or pursuant to a plan of self-insurance established in accordance with sound and appropriate practices, insurance on all their property in at least such amounts and against at least such risks as are usually insured against in the same general area by companies of established repute engaged in the same or a similar business; and will furnish to the Bank, upon written request, full information as to the insurance carried. Section 5.3 Compliance with Laws. (a) The Company will comply, and cause each Subsidiary (other than TCO) to comply, in all material respects with all applicable laws, ordinances, rules, regulations, and requirements of Governmental Authorities (including, without limitation, ERISA and the rules and regulations thereunder), except where (i) the failure to so comply would not have a Material Adverse Effect or (ii) the necessity of compliance therewith is contested in good faith by appropriate proceedings. (b) The Company will comply with all court orders in the Chapter 11 Case. Section 5.4 Inspection of Property; Books and Records. The Company will keep, and will cause each Subsidiary (other than TCO) to keep, proper books of record and account in which full, true and correct entries in conformity with generally accepted accounting principles shall be made of all dealings and transactions in relation to its business and activities; and will permit, and cause each Subsidiary (other than TCO) to permit, representatives of the Bank to visit and inspect any of their respective properties, to examine and make abstracts from any of their respective books and records and to discuss their respective affairs, finances and accounts with their respective officers, appropriate employees, independent public accountants, consultants and financial advisors all at such reasonable times, upon reasonable notice and as often as may reasonably be desired. Section 5.5 Chapter 11 Case. The Company will furnish monthly to the Bank's counsel an index of all pleadings, motions, applications, judicial information, financial information and other documents filed (and not under seal) with the Bankruptcy Court by the Company or any other Person or (except for such materials as the Company and the official committee receiving the same shall determine in good faith are inappropriate for review by the Bank) distributed by the Company to any official committee appointed in the Chapter 11 Case. The Company will provide to the Bank's counsel copies of any documents described in such index promptly upon request by the Bank or the Bank's counsel. Section 5.6 Corporate Existence; No Change in Business. The Company shall continue to, and shall cause each of its Subsidiaries (other than TCO) to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its corporate existence, material rights, licenses, permits and franchises and comply in all material respects with all laws and regulations applicable to it. Neither the Company nor any Subsidiary (other than TCO) will engage in any business which is not directly related to its business as conducted on the date hereof. Section 5.7 Further Assurances; Security Interests. (a) Upon the request of the Bank, the Company shall duly execute and deliver, or cause to be 20 duly executed and delivered, at the cost and expense of the Company, such further instruments as may be necessary or proper, in the reasonable judgment of the Bank, to provide the Bank a perfected Lien in the Collateral and to carry out the provisions and purposes of this Agreement and the Security Agreement. (b) Upon the reasonable request of the Bank, the Company shall promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all mortgages and other documents (including, without limitation, the execution, amendment or supplementation of any financing statement and continuation statement or other statement) for filing under the provisions of the UCC and the rules and regulations thereunder, or any other statute, rule or regulation of any applicable foreign, federal, state or local jurisdiction, which are desirable, from time to time, in order to grant and maintain in favor of the Bank the security interest in the Collateral contemplated hereby and by the Security Agreement, subject to no other Liens except as may be expressly permitted hereunder and under the Security Agreement. (c) The Company shall promptly undertake to deliver or cause to be delivered to the Bank from time to time such other documentation, consents, authorizations, approvals and orders in form and substance satisfactory to the Bank, as the Bank shall deem reasonably advisable to perfect or maintain the Lien of the Bank in the Collateral. Section 5.8 Chapter 11 Claims and Liens. The Company will not incur, create, assume, suffer or permit to exist or permit any Subsidiary to incur, create, assume, suffer or permit to exist any claim against the Company or any Subsidiary in the Chapter 11 Case which would be pari passu with or senior to the claims of the Bank against the Company nor any Lien which would be pari passu with or senior to the Liens of the Bank, nor will the Company apply to the Bankruptcy Court for authority to do so. ARTICLE VI. EVENTS OF DEFAULTS If one or more of the following events (each, an "Event of Default") shall have occurred and be continuing: (a) the Company shall fail to pay when due (i) any amount specified in Section 2.2 or (ii) any other amount required to be paid by the Company hereunder and any such failure shall remain unremedied for three Business Days; or (b) the Company shall fail to observe or perform its covenants contained in Section 5.1(e) or Section 5.5; or (c) the Company or any Subsidiary shall fail to observe or perform any covenant or agreement contained in this Agreement or in the Security Agreement (other than those covered by clauses (a) or (b) above) for 20 days after the Company has knowledge of such failure; or (d) any representation, warranty, certification or statement made by the Company or any Subsidiary in this Agreement or the Security Agreement or in any certificate, financial statement or other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made (or deemed made); or (e) this Agreement or the Security Agreement shall cease to be in full force and effect and valid, or any security interest or Lien purported to be created hereby thereby shall cease to be valid and perfected or the Company or any Subsidiary shall so have asserted; or (f) the Final Order shall be vacated or reversed or shall be modified, supplemented or amended in any respect (except as provided in Section 3.2(e)) or the Company shall apply to the Bankruptcy Court for authority to do so; or (g) the Bankruptcy Court shall enter an order (i) dismissing the Chapter 11 Case, (ii) converting the Chapter 11 Case to a case under 21 Chapter 7 of the Bankruptcy Code, (iii) appointing a trustee in the Chapter 11 Case or (iv) appointing an examiner with enlarged powers (powers beyond those set forth in Sections 1106(a)(3) and (4) of the Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; provided, however, that appointment of an examiner with enlarged powers based upon a finding of fraud or dishonesty by the Company's management, incompetence of the Company's management or mismanagement or irregularities in the management of the Company's affairs shall not be an Event of Default; or an application shall be filed for the approval of, or there shall arise, any Lien on the Collateral (other than those of the Bank hereunder or under the Security Agreement or as otherwise expressly permitted hereby) in the Chapter 11 Case having a priority (whether under Section 364 of the Bankruptcy Code or otherwise) superior to or pari passu with that of the Bank; or an application shall be filed for the approval of, or there shall arise, any claim in the Chapter 11 Case having a priority (whether under Section 364 of the Bankruptcy Code or otherwise) pari passu with or superior to that of the Bank; or the Company shall pay, or apply to the Bankruptcy Court for authority to pay, any Pre-Petition claim except as expressly contemplated by this Agreement or otherwise approved in writing by the Bank; or the Bankruptcy Court shall enter an order approving a disclosure statement in connection with a plan of reorganization proposed by the Company, any Subsidiary or any third party, which plan does not provide for payment in full in cash of the Obligations on the Termination Date; or (h) any judgments or orders as to a Post-Petition liability or debt for the payment of money in excess of $10,000,000 in the aggregate shall be rendered against the Company and either (i) enforcement proceedings shall have been commenced and be continuing by any creditor upon such judgment or order or (ii) there shall be any period of 15 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (i) any non-monetary judgment or order with respect to a Post-Petition event shall be rendered against the Company which does or could reasonably be expected to (i) have a Material Adverse Effect or (ii) cause a material decrease in the value of the Collateral, and in each case there shall be any period of 10 consecutive days during which a stay of enforcement of such judgement or order by reason of a pending appeal or otherwise, shall not be in effect; or (j) the Bankruptcy Court shall enter an order granting relief from the automatic stay applicable under Section 362 of the Bankruptcy Code to a party to any Pre-Petition action, suit or proceeding against the Company, which action, suit or proceeding (x) could reasonably be expected to materially adversely affect the business, consolidated financial position or consolidated results of operations of the Company and its consolidated Subsidiaries or (y) draws into question the validity of this Agreement or the Security Agreement or could materially adversely affect the ability of the Company or any of its Subsidiaries to perform any of their obligations hereunder or thereunder; then, and in every such event and at any time thereafter during the continuance of such event, without further order of or application to the Bankruptcy Court, the Bank may take any or all of the following actions, at the same or different times: (i) set-off amounts in the Company's accounts deposited with the Bank or otherwise take steps to foreclose upon Collateral (as set forth in the Security Agreement) and/or (ii) upon seven (7) days' prior notice to the Company and the official committees in the Chapter 11 Case exercise such remedies as are provided for elsewhere in this Agreement or may otherwise be available to it under applicable law or in equity. Upon the occurrence of any Event of Default described in this Article VI which shall be continuing, the Bank may, in its sole discretion, but shall not be obligated to, by notice of default to the Company, declare all amounts owing or contingently owing hereunder to be forthwith due and payable, and the same shall thereupon become due and payable without demand, presentment, protest or further notice of any kind, all of which are hereby expressly waived by the Company. 22 ARTICLE VII. MISCELLANEOUS Section 7.1 Notices. All notices, requests and other communications to any party hereunder shall be in writing (including bank wire or telecopy or similar writing) and shall be given to such party: (a) in the case of the Company or the Bank, at its address or telecopy number set forth on the signature pages hereof or (b) in the case of the official committees in the Chapter 11 Case or any party, at such other address or telecopy number as such party may hereafter specify for such purpose by notice to the Bank and the Company. Each such notice, request or other communication shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified in this Section and such telecopy is electronically or telephonically confirmed, (ii) if given by mail, 96 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (iii) if given by any other means, when delivered at the address specified in this Section; provided that notices to the Bank under Article II shall not be effective until received. Section 7.2 No Waivers. No failure or delay by the Bank in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. Section 7.3 Expenses; Documentary Taxes; Indemnification. (a) The Company shall pay (i) all reasonable out-of-pocket expenses of the Bank, including reasonable fees and disbursements of counsel for the Bank in connection with the negotiation, preparation and administration of this Agreement and the Security Agreement (including, without limitation, the recording or filing of any security document and the reasonable out-of-pocket fees and expenses and allocable internal costs incurred by the Bank in connection with its audit or review of the Collateral) and any other document contemplated hereby or thereby, any waiver or consent hereunder or thereunder or any amendment hereof or thereof or any Default or alleged Default hereunder or thereunder and (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the Bank, including fees and disbursements of counsel, in connection with such Event of Default and collection and other enforcement proceedings resulting therefrom. The Company shall indemnify the Bank against any transfer taxes, filing charges or taxes, documentary taxes, assessments or charges made by any Governmental Authority by reason of the execution or delivery of this Agreement, the Security Agreement or any related documents or the recording or filing of any security document. (b) The Company agrees to indemnify the Bank and hold the Bank harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of counsel for the Bank) in connection with any claim asserted against the Bank or investigative, administrative or judicial proceeding, whether or not the Bank shall be designated a party thereto, which may be incurred by the Bank relating to or arising out of this Agreement or the transactions contemplated hereby or in connection with any press release issued by the Company, or any document filed by the Company with the Securities and Exchange Commission; provided that the Bank shall not have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. Section 7.4 Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company and the Bank, and if the rights and duties of any Fronting Bank are adversely affected thereby in any material respect, by such Fronting Bank). Section 7.5 NEW YORK LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW. 23 Section 7.6 Counterparts. This Agreement may be signed in any number of counterparts (including telecopy counterparts), each of which shall be an original, with the same effect as if the signature thereto and hereto were upon the same instrument. Section 7.7 WAIVER OF TRIAL BY JURY. THE PARTIES TO THIS AGREEMENT WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY. Section 7.8 Effectiveness. This Agreement shall become effective on the Effective Date, on which date the Original Agreement shall be amended and restated in its entirety as set forth herein. Effective on the Effective Date, the Letter of Credit Fees with respect to Letters of Credit issued by the Bank under the Original Agreement shall be payable at the rate provided in this Agreement. Section 7.9 Confidentiality. The Bank agrees to keep confidential (and to cause its officers, directors, employees, agents and representatives to keep confidential) all materials, documents and information which the Company may furnish to it pursuant hereto or in connection with the transaction contemplated hereby (collectively, the "Information"), except that the Bank shall be permitted to disclose Information (a) to its officers, directors, employees, agents, counsel, advisors and representatives, (b) to the extent (i) required by any subpoena or similar legal process or compelled by any court acting in law or in equity or (ii) required by applicable laws or regulations or requested by any bank regulatory authority, (c) to the extent such Information (i) becomes publicly available other than as a result of the Bank's breach of this Agreement, (ii) becomes available to it on a non-confidential basis from a source other than the Company or (iii) was available to it on a non-confidential basis prior to disclosure to it by the Company, (d) to the extent the Company shall have consented to such disclosure in writing; provided that (x) any Information constituting trade secrets is protected by an appropriate confidentiality stipulation or order, in any legal proceeding and (y) the Bank will use its best efforts to give the Company prior notice in the case of any disclosure of Information made in accordance with subparagraph (b)(i) of this Section 7.9. 24 IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated Secured Revolving Credit Agreement to be duly executed by their respective authorized officers as of the day and year first above written. THE COLUMBIA GAS SYSTEM, INC. By: ------------------------------------ Name: Title: Address for Notices: 20 Montchanin Road Wilmington, Delaware 19807 Attention: L.J. Bainter Telephone: (302) 429-5597 Telecopy: (302) 429-5461 CHEMICAL By: ------------------------------------ Name: Title: Address for Notices: 270 Park Avenue New York, New York 10017 Attention: Thomas James Telephone: (212) 270-1348 Telecopy: (212) 949-1459 25 EXHIBIT A FORM OF AMENDED AND RESTATED SECURITY AGREEMENT AMENDED AND RESTATED SECURITY AGREEMENT, dated as of _________, 1994, between THE COLUMBIA GAS SYSTEM, INC., a Delaware corporation and a debtor-in-possession in proceedings under Chapter 11 of the Bankruptcy Code (the "Company"), and CHEMICAL BANK, a New York banking corporation (the "Bank," including any successor thereto, by merger or otherwise). W I T N E S S E T H : WHEREAS, pursuant to the Secured Revolving Credit Agreement, dated as of September 23, 1991 (as heretofore amended and otherwise modified, the "Original Agreement"), among the Company, the banks from time to time parties thereto, and the Bank, as agent for such banks, a senior secured revolving credit facility was provided by such banks to the Company in an aggregate principal amount of up to $275,000,000 for the making of revolving credit loans and for the issuance of Letters of Credit for the benefit of various insurance companies, state agencies and other entities. Upon the request of the Company, the banks party to the Original Agreement have reduced their aggregate commitments thereunder to $100,000,000. WHEREAS, to provide security for the obligations of the Company under the Original Agreement, the Company provided to the Bank certain Liens on certain property of the Company as more fully described in the Security Agreement, dated as of September 23, 1991 (as heretofore amended, supplemented or otherwise modified, the "Original Security Agreement"), between the Company and the Bank; and WHEREAS, in order to reduce certain fees currently payable under the Original Agreement, the Company has requested that the Original Agreement be amended to eliminate the commitments of all banks party thereto other than the Bank, to release certain security under the Original Security Agreement and to provide that the Commitment of the Bank shall be $25,000,000 and shall be available only for the issuance of Letters of Credit from time to time. WHEREAS, pursuant to the Amended and Restated Secured Revolving Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified from time to time, the "Restated Agreement"), between the Company and the Bank, the Bank has agreed to issue letters of credit for the account of the Company upon the terms and subject to the conditions set forth therein; and WHEREAS, it is a condition precedent to the agreement of the Bank to issue the letters of credit under the Restated Agreement and to release certain Collateral held under the Original Security Agreement, that the Company shall have executed and delivered to the Bank this Amended and Restated Security Agreement; NOW, THEREFORE, in consideration of the premises and to induce the Bank to enter into the Restated Agreement and to induce the Bank to issue letters of credit under the Restated Agreement, the Company hereby agrees with the Bank, to amend and restate the Original Security Agreement in its entirety as follows: 1. Defined Terms. Unless otherwise defined herein, terms which are defined in the Restated Agreement and used herein are so used as so defined, and the following terms shall have the following meanings: "Cash Collateral Account" has the meaning assigned to it in paragraph 3(a) hereof. 26 "Cash Equivalents" means (i) debt securities with maturities of 30 days or less from the date of acquisition, issued or fully guaranteed or insured by the United States Government or any agency thereof, (ii) banker's acceptances, certificates of deposits and time deposits with maturities of 30 days or less from the date of acquisition, from the Bank or any other commercial bank having capital and surplus in excess of $1,000,000,000, (iii) commercial paper of a domestic issuer rated at the date of acquisition at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc. and (iv) repurchase agreements in respect of any of the above with the Bank or any other commercial bank having capital and surplus in excess of $1,000,000,000. "Code" means the Uniform Commercial Code from time to time in effect in the State of New York. "Collateral" means the Cash Collateral Account and all cash and Cash Equivalents at any time on deposit therein or maintained pursuant hereto and all Proceeds of any and all thereof. "Obligations" means (a) all Obligations (as defined therein) under the Restated Agreement and (b) all other obligations and liabilities of the Company to the Bank or any Fronting Bank, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, the Restated Agreement, the Letters of Credit, each Letter of Credit Request and any other document made, delivered or given in connection therewith or herewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including, without limitation, all fees and disbursements of counsel to the Bank that are required to be paid by the Company pursuant to the terms of the Restated Agreement or this Security Agreement). "Proceeds" means all "proceeds" as such term is defined in Section 9-306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all interest or other income from the cash from time to time on deposit in the Cash Collateral Account, collections thereon or distributions with respect thereto. "Security Agreement" means this Amended and Restated Security Agreement, as amended, supplemented or otherwise modified from time to time. 2. Grant of Security Interest in the Collateral. As collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations, the Company hereby grants to the Bank a security interest in the Collateral. 3. Establishment and Operation of Cash Collateral Account. (a) Prior to the execution and delivery of this Security Agreement, there shall be established with the Bank a collateral account in the name of the Bank (the "Cash Collateral Account"). The Company shall from time to time deposit funds into the Cash Collateral Account pursuant to the express provisions of this Security Agreement requiring or permitting such deposit. At the time of issuance of each Letter of Credit pursuant to the Restated Agreement, the Company will deliver to the Bank for deposit in the Cash Collateral Account an amount necessary to cause, after giving effect to such issuance of such Letter of Credit, the balance in the Cash Collateral Account to equal the L/C Coverage Requirement for all outstanding Letters of Credit. The Cash Collateral Account shall be maintained and operated in accordance with this Security Agreement. (b) The Bank shall have sole dominion and control over the Cash Collateral Account, and the Company shall have no right of withdrawal therefrom; provided that the Bank shall make the withdrawals therefrom as required by this Security Agreement; and provided, further, that, so long as no Default or Event of Default shall have occurred and be continuing, amounts on deposit in the Cash 27 Collateral Account shall be invested at the direction of the Company in cash and Cash Equivalents. (c) All Cash Equivalents shall be held by the Bank in its own name subject to the provisions of this Security Agreement. All interest and other earnings, income and distributions in respect of the Cash Collateral Account shall be deposited in the Cash Collateral Account and be held and applied subject to this Security Agreement. (d) If no Default or Event of Default shall have occurred and be continuing, the Bank shall, upon written request of the Company, and subject to paragraph 2(e), withdraw from the Cash Collateral Account and pay to the Company the amount specified in such request; provided that the amount remaining on deposit in the Cash Collateral Account after giving effect to each such payment shall be at least equal to the L/C Coverage Requirement for all outstanding Letters of Credit. (e) The Company will pay, on demand, the Bank's reasonable and customary fees for maintaining the Cash Collateral Account; provided that, in lieu of the foregoing, the Company may, at its option, authorize the Bank to withdraw from the Cash Collateral Account from time to time, and retain for its own account, amounts sufficient to cover such fees; and provided, further, that the amount remaining on deposit in the Cash Collateral Account after giving effect to each such withdrawal shall be at least equal to the L/C Coverage Requirement for all outstanding Letters of Credit. 4. Covenants. The Company covenants and agrees with the Bank that, from and after the date of this Security Agreement until termination of this Security Agreement in accordance with paragraph 9 hereof: (a) At any time and from time to time, upon the written request of the Bank, and at the sole expense of the Company, the Company will promptly and duly execute and deliver such further instruments and documents and take such further actions as the Bank may reasonably request for the purposes of obtaining or preserving the full benefits of this Security Agreement and of the rights and powers herein granted. If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note, other instrument or chattel paper, such note, instrument or chattel paper shall be immediately delivered to the Bank, duly endorsed in a manner satisfactory to the Bank, to be held as Collateral pursuant to this Security Agreement. (b) The Company will not sell, assign, transfer, exchange, or otherwise dispose of, or grant any option with respect to, the Collateral, or create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with respect to, any of the Collateral, or any interest therein, except for the Lien provided for by this Security Agreement. The Company will defend the right, title and interest of the Bank in and to the Collateral against the claims and demands of all Persons whomsoever. (c) The Company agrees to pay, and to save the Bank harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamps, excise, sales or other taxes (other than any taxes which are determined based upon the income or revenues of the Bank) which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Security Agreement; provided that the Bank shall not have the right to be indemnified hereunder for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction. 5. Rights of the Bank. The rights of the Bank hereunder shall not be conditioned or contingent upon the pursuit by the Bank of any right or remedy against any other Person which may be or become liable in respect of all or any part of the Obligations or against any other collateral security therefor, guarantee thereof or right of offset with respect thereto. The Bank shall not be liable for any failure to demand, collect or realize upon all or any part of 28 the Collateral or for any delay in doing so, nor shall it be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Company or any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. 6. Remedies. If an Event of Default shall occur and be continuing, the Bank may exercise, in addition to all other rights and remedies granted in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Code. Without limiting the generality of the foregoing, the Bank, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law referred to below) to or upon the Company or any other Person (all and each of which demands, defenses, advertisements and notices are hereby waived to the extent permitted by the Code and other applicable law), may in such circumstances forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith collect, receive, appropriate and realize upon the right, title and interest of the Company in and to the Collateral, or any part thereof, and/or may forthwith dispose of and deliver the same, or any part thereof, upon such terms and conditions as it may deem advisable, free of any right or equity of redemption in the Company, which right or equity is hereby waived or released. The Bank shall apply any Proceeds from time to time held by it and the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein or incidental to the care or safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the Bank hereunder, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations, in such order as the Bank may elect; and only after such application and after the payment by the Bank of any other amount required by any provision of law, including, without limitation, Section 9-504(1)(c) of the Code, need the Bank account for the surplus, if any, to the Company. To the extent permitted by applicable law, the Company waives all claims, damages and demands it may acquire against the Bank arising out of the exercise by the Bank of any of its rights hereunder. If any notice of a proposed sale or other disposition of Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at least 10 days before such sale or other disposition. 7. Amendments, etc. with respect to the Obligations. The Company shall remain obligated hereunder, and the Collateral shall remain subject to the lien granted hereby, notwithstanding that, without any reservation of rights against the Company, and without notice to or further assent by the Company, any demand for payment of any of the Obligations made by the Bank may be rescinded by the Bank, and any of the Obligations continued, and the Obligations, or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Bank, and the Restated Agreement and any other document in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, as the Bank may deem advisable from time to time, and any guarantee, right of offset or other collateral at any time held by the Bank for the payment of the Obligations may be sold, exchanged, waived, surrendered or released. The Bank shall have no obligation to protect, secure, perfect or insure any other Lien at any time held by it as security for the Obligations or any property subject thereto. The Company waives any and all notice of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Bank upon this Security Agreement; the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Security Agreement; and all dealings between the Company and the Bank shall likewise conclusively be presumed to have been had or consummated in reliance upon this Security Agreement. The Company waives presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company with respect to the Obligations. 8. Limitation on Duties Regarding Collateral. The Bank's sole duty with respect to the custody, safekeeping and physical preservation of the 29 Collateral in its possession, under Section 9-207 of the Code or otherwise, shall be to deal with it in the same manner as the Bank deals with similar property for its own account. Neither the Bank nor any of its directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of the Company or otherwise. 9. Release of Collateral. The Bank agrees that upon payment in full of all of the Obligations, all of the Collateral granted to the Bank under this Security Agreement shall be released by the Bank and promptly returned to the Company (without representation, warranty or recourse, express or implied, other than that the Collateral shall be free of any Liens granted by the Bank to any third party) and this Security Agreement shall terminate and be of no further force and effect; provided, however, that this paragraph 9 shall not limit the Bank's ability to debit the Cash Collateral Account in amounts sufficient to reimburse the Bank for any Unpaid Drawings, as provided in Section 2.2 of the Restated Agreement. 10. Powers Coupled with an Interest. All authorizations and agencies herein contained with respect to the Collateral are irrevocable and powers coupled with an interest. 11. Severability. Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 12. Paragraph Headings. The paragraph headings used in this Security Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof. 13. No Waiver; Cumulative Remedies. The Bank shall not by any act (except by a written instrument pursuant to paragraph 14 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of the Bank, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Bank of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Bank would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 14. Waivers and Amendments; Successors and Assigns. None of the terms or provisions of this Security Agreement may be waived, amended, supplemented or otherwise modified except by a written instrument executed by the Company and the Bank, provided that any provision of this Security Agreement may be waived by the Bank in a letter or agreement executed by the Bank or by telex or facsimile transmission from the Bank. This Security Agreement shall be binding upon the successors and assigns of the Company and the Bank and shall inure to the benefit of the Company, the Bank and their respective successors and assigns. 15. Notices. Notices by the Bank to the Company may be given by mail or by facsimile transmission, addressed or transmitted to the Company at its address or transmission number set forth in the Restated Agreement and shall be effective (a) in the case of mail, three days after deposit in the postal system, first class postage pre-paid and (b) in the case of facsimile notices, when sent. The Company may change its address and transmission numbers by written notice to the Bank. 30 16. Effectiveness. This Security Agreement shall become effective on the Effective Date, on which date the Original Security Agreement shall be amended and restated in its entirety as set forth herein. On the Effective Date, except to the extent provided in the Restated Agreement, this Security Agreement and the Final Order, all prior Liens of the Bank against the property of the Company shall be released. 17. Counterparts. This Security Agreement may be executed by the parties hereto in separate counterparts, and each of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Security Agreement signed by both parties shall be lodged with the Company and the Bank. 18. Integration. This Security Agreement and the Restated Agreement represent the agreements of the Company and the Bank with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Bank relative to the subject matter hereof not expressly set forth or referred to herein or therein. 19. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW. IN WITNESS WHEREOF, the undersigned have caused this Security Agreement to be duly executed and delivered as of the date first above written. THE COLUMBIA GAS SYSTEM, INC. By: ------------------------------------ Title: CHEMICAL BANK By: ------------------------------------ Title: 31 EXHIBIT B LETTER OF CREDIT REQUEST No. (1) Dated (2) --------------------- ------------------- To: Chemical Bank Dear Sirs: We hereby request that you issue a Letter of Credit on _______(3) (the "Date of Issuance") in the aggregate stated amount of _____(4)______ with the legend set forth below indicated on its face. For purposes of this Letter of Credit Request, unless otherwise defined, all capitalized terms used herein which are defined in the Amended and Restated Secured Revolving Credit Agreement, dated as of _________ __, 1994, between The Columbia Gas System, Inc. (the "Company") and Chemical Bank (the "Bank") shall have the respective meanings provided therein. The beneficiary of the requested Letter of Credit will be _____(5), and such Letter of Credit will be in support of _____(6)_____________ and will have a stated termination date of ____(7)______. Copies of all documentation with respect to the supported transaction are attached hereto. THE COLUMBIA GAS SYSTEM, INC. By: ------------------------------------ Name: Title: - ------------------------- (1) Letter of Credit Request Number. (2) Date of Letter of Credit Request (at least five Business Days prior to the Date of Issuance). (3) Date of Issuance. (4) Aggregate initial Stated Amount of Letter of Credit. (5) Name and address of beneficiary. (6) Description of supported obligations and name of agreement to which it relates. (7) Last date upon which drafts may be presented. EX-99.G2 4 PROPOSED NOTICE 1 EXHIBIT G-2 SECURITIES AND EXCHANGE COMMISSION (Release No. ) The Columbia Gas System, Inc. Proposed Conversion of Credit Facility to Letter of Credit Facility. The Columbia Gas System, inc. ("Columbia") a Delaware corporation and registered holding company has filed a declaration with this Commission pursuant to Sections 6(a) and 7 under the Public Utility Holding Company Act of 1935 (the "Act"). Columbia originally agreed to borrow up to $275,000,000 under a debtor in possession financing facility (the "Credit Facility"); Commission Order dated September 20, 1991, HCAR No.35-25380. That commitment was subsequently reduced twice to $100,000,000 currently (which commitment is available for the making of loans and the issuance of Letters of Credit in an aggregate face amount not to exceed $50 million) under the Commission Order dated June 11, 1993, HCAR No. 35-25825. The Declarant states that its current cash reserves are sufficient to meet projected requirements without the need for borrowing under the Credit Facility. However, Columbia acknowledges that there remains a need to maintain a facility for letters of credit in the amount of $25,000,000. Columbia requested Chemical Bank ("Chemical") to submit a proposal for such a facility, describing its terms, conditions and fees (the "Proposed Facility"). Chemical's proposal would permit the issuance of standby letters of credit at any time during the period until December 31, 1995, or such later date as may be from time to time agreed by both Columbia and Chemical if necessary to extend the Proposed Facility until Columbia's Plan of Reorganization is effective. An order of the Bankruptcy Court approving the terms of the proposed letter of credit facility (the "Proposed Facility") is expected to be issued prior to the order of this Commission. The fees to be charged under the Proposed Facility would include a Letter of Credit Fee of 1% per annum of the face amount of each Letter of Credit, a Commitment Fee of 1/2 of 1% of the unutilized portion of the commitment and an Amendment Fee of 1/4 of 1% of the commitment, payable at closing. The Declarant states that these fees represent less cost to Columbia than those which are payable under the current Credit Facility. Chemical serves as agent for a group of banks under the Credit Facility. Under the Proposed Facility, Chemical would provide the entire commitment and act as the sole issuing bank with respect to the letters of credit issued. The declaration and any amendments thereto are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing should submit their views in writing by _______________________ to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on the applicants declarant at the address specified above. Proof of service (by affidavit or, in case of an attorney-at-law, by certificate) should be filed with the request. Any request for a hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice of order issued in this matter. After said date, the joint application declaration as filed or as it may be amended, may be permitted to become effective. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Jonathan G. Katz Secretary -----END PRIVACY-ENHANCED MESSAGE-----