Exhibit 10.1

 

 

 

CH ENERGY GROUP, INC.

 

 

$50,000,000

 

 

 

$50,000,000 6.58% Senior Notes, Series A, due April 17, 2014

 

 

______________

NOTE PURCHASE AGREEMENT

 

_____________

 

 

Dated as of April 17, 2009

 

 

 

 

 

 

TABLE OF CONTENTS

(Not a part of the Agreement)

SECTION     HEADING     PAGE                     SECTION 1.   AUTHORIZATION OF
NOTES       1                            Section 1.1.     Series A and B Notes  
    1          Section 1.2.     Subsequent Series       1                    
SECTION 2.   SALE AND PURCHASE OF NOTES; SUBSEQUENT SALES; SECURITY       2    
                       Section 2.1.     Purchase and Sale of Initial Notes      
2          Section 2.2.     Subsequent Sales       2          Section 2.3.    
Security       3                     SECTION 3.     CLOSINGS       3            
        SECTION 4.   CONDITIONS TO EACH CLOSING       4                    
       Section 4.1.     Representations and Warranties       4          Section
4.2.     Performance; No Default       4          Section 4.3.     Compliance
Certificates       5          Section 4.4.     Opinions of Counsel       5  
       Section 4.5.     Purchase Permitted by Applicable Law, Etc.       5  
       Section 4.6.     Sale of Other Notes       5          Section 4.7.    
Payment of Special Counsel Fees       6          Section 4.8.     Private
Placement Number       6          Section 4.9.     Changes in Corporate
Structure       6          Section 4.10.     Funding Instructions       6  
       Section 4.11.     Subsidiary Guaranty       6          Section 4.12.    
Proceedings and Documents       6                     SECTION 5.
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY       6                    
       Section 5.1.     Organization; Power and Authority       6  
       Section 5.2.     Authorization, Etc.       7          Section 5.3.    
Disclosure       7          Section 5.4.     Organization and Ownership of
Shares of Subsidiaries; Affiliates       7          Section 5.5.     Financial
Statements; Material Liabilities       8          Section 5.6.     Compliance
with Laws, Other Instruments, Etc.       8          Section 5.7.    
Governmental Authorizations, Etc.       8          Section 5.8.     Litigation;
Observance of Agreements, Statutes and Orders       8          Section 5.9.    
Taxes       9  

 

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       Section 5.10.     Title to Property; Leases       9          Section
5.11.     Licenses, Permits, Etc.       9          Section 5.12.     Compliance
with ERISA       10          Section 5.13.     Private Offering by the Company  
    11          Section 5.14.     Use of Proceeds; Margin Regulations       11  
       Section 5.15.     Existing Debt; Future Liens       11          Section
5.16.     Foreign Assets Control Regulations, Etc.       12          Section
5.17.     Status under Certain Statutes       12          Section 5.18.    
Notes Rank Pari Passu       12          Section 5.19.     Environmental Matters
      12                     SECTION 6.   REPRESENTATIONS OF THE INITIAL
PURCHASERS       13                            Section 6.1.     Purchase for
Investment       13          Section 6.2.     Source of Funds       13          
          SECTION 7.   INFORMATION AS TO THE COMPANY       15                  
         Section 7.1.     Financial and Business Information       15  
       Section 7.2.     Officer’s Certificate       18          Section 7.3.    
Visitation       18                     SECTION 8.   PREPAYMENT OF THE NOTES    
  19                            Section 8.1.     Maturity       19  
       Section 8.2.     Optional Prepayments with Make-Whole Amount       19  
       Section 8.3.     Change in Control       19          Section 8.4.    
Allocation of Partial Prepayments       21          Section 8.5.     Maturity;
Surrender, Etc.       21          Section 8.6.     Purchase of Notes       21  
       Section 8.7.     Make-Whole Amount       21                     SECTION
9.   AFFIRMATIVE COVENANTS       23                            Section 9.1.    
Compliance with Law       23          Section 9.2.     Insurance       23  
       Section 9.3.     Maintenance of Properties       23          Section 9.4.
    Payment of Taxes and Claims       23          Section 9.5.     Legal
Existence, Etc.       24          Section 9.6.     Notes to Rank Pari Passu    
  24          Section 9.7.     Books and Records       24                    
SECTION 10.   NEGATIVE COVENANTS       24                            Section
10.1.     Limitation on Debt       24          Section 10.2.     Limitation on
Priority Debt       24          Section 10.3.     Limitation on Liens       24  
       Section 10.4.     Mergers, Consolidations, Etc.       26          Section
10.5.     Sale of Assets       27  

 

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       Section 10.6.     Utility Dividends       29          Section 10.7.    
Transactions with Affiliates       29          Section 10.8.     Line of
Business       29          Section 10.9.     Terrorism Sanctions Regulations    
  29                     SECTION 11.   EVENTS OF DEFAULT       30              
      SECTION 12.   REMEDIES ON DEFAULT, ETC.       32                    
       Section 12.1.     Acceleration       32          Section 12.2.     Other
Remedies       33          Section 12.3.     Rescission       33  
       Section 12.4.     No Waivers or Election of Remedies, Expenses, Etc.    
  33                     SECTION 13.   REGISTRATION; EXCHANGE; SUBSTITUTION OF
NOTES       33                            Section 13.1.     Registration of
Notes       33          Section 13.2.     Transfer and Exchange of Notes      
34          Section 13.3.     Replacement of Notes       34                    
SECTION 14.   PAYMENTS ON NOTES       35                            Section
14.1.     Place of Payment       35          Section 14.2.     Home Office
Payment       35                     SECTION 15.   EXPENSES, ETC.       35      
                     Section 15.1.     Transaction Expenses       35  
       Section 15.2.     Survival       36                     SECTION 16.
  SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT       36        
            SECTION 17.   AMENDMENT AND WAIVER       36                    
       Section 17.1.     Requirements       36          Section 17.2.    
Solicitation of Holders of Notes       37          Section 17.3.     Binding
Effect, Etc.       37          Section 17.4.     Notes Held by Company, Etc.    
  37                     SECTION 18.   NOTICES       37                    
SECTION 19.   REPRODUCTION OF DOCUMENTS       38                     SECTION 20.
  CONFIDENTIAL INFORMATION       38                     SECTION 21.
  SUBSTITUTION OF PURCHASER       39                    

 

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SECTION 22.   MISCELLANEOUS       40                            Section 22.1.  
  Successors and Assigns       40          Section 22.2.     Payments Due on
Non-Business Days       40          Section 22.3.     Accounting Terms       40
         Section 22.4.     Severability       41          Section 22.5.    
Construction, Etc.       41          Section 22.6.     Counterparts       42  
       Section 22.7.     Governing Law       42          Section 22.8.    
Jurisdiction and Process; Waiver of Jury Trial       42                    
Signature             43  

 

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SCHEDULE A     —     INFORMATION RELATING TO PURCHASERS                      
SCHEDULE B     —     DEFINED TERMS           SCHEDULE 5.3     —     Disclosure
Materials           SCHEDULE 5.4     —     Subsidiaries of the Company and
Ownership of Subsidiary Stock           SCHEDULE 5.5     —     Financial
Statements           SCHEDULE 5.15     —     Existing Debt           EXHIBIT 1  
  —     Form of 6.58% Senior Notes, Series A, due April 17, 2014          
EXHIBIT 1.2     —     Form of Supplemental Note           EXHIBIT 2.2     —    
Form of Supplemental Note Purchase Agreement           EXHIBIT 2.3(a)     —    
Form of Subsidiary Guaranty           EXHIBIT 4.4(a)     —     Form of Opinion
of Special Counsel for the Company           EXHIBIT 4.4(b)     —     Form of
Opinion of Special Counsel for the Purchasers    

 

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CH ENERGY GROUP, INC.

284 South Avenue

Poughkeepsie, New York 12601-4879

 

$50,000,000 6.58% Senior Notes, Series A, due April 17, 2014

 

Dated as of April 17, 2009

TO EACH OF THE PURCHASERS LISTED IN

SCHEDULE A HERETO:

Ladies and Gentlemen:

CH ENERGY GROUP, INC., a New York corporation (the “Company”), agrees with each
of the purchasers whose names appear at the end hereof (each, an “Initial
Purchaser” and, collectively, the “Initial Purchasers”) as follows:

SECTION 1.

AUTHORIZATION OF NOTES.

Section 1.1.Series A Notes. The Company will authorize the issue and sale of
$50,000,000 aggregate principal amount of its 6.58% Senior Notes, Series A, due
April 17, 2014 (the “Series A Notes,” such term to include any such notes issued
in substitution therefor pursuant to Section 13). The Series A Notes shall be
substantially in the form set out in Exhibit 1. Certain capitalized and other
terms used in this Agreement are defined in Schedule B; and references to a
“Section,” a “Schedule” or an “Exhibit” are, unless otherwise specified, to a
Section, a Schedule or an Exhibit attached to this Agreement.

Section 1.2.Subsequent Series. Subsequent Series of promissory notes
(collectively, the “Supplemental Notes”) may be issued pursuant to Supplemental
Note Purchase Agreements as provided in Section 2.2 in an aggregate principal
amount not to exceed $75,000,000 and shall: (a) be sequentially identified as
“Series B Notes”, “Series C Notes”, “Series D Notes” et seq. (which such series
may consist of more than one different and separate tranches (each, a
“tranche”), (b) shall be in the aggregate principal amount of not less than
$10,000,000 per each such series, (c) shall be dated the date of such
Supplemental Note Purchase Agreement, (d) shall bear interest from the date of
issue at the rate per annum to be determined as of such date, (e) shall bear
interest on overdue principal (including any overdue optional prepayment of
principal) and premium, if any, and, to the extent permitted by law, on any
overdue installment of interest at the rate stated therein, (f) shall be subject
to required and optional prepayments, (g) shall be expressed to mature on the
stated maturity date and (h) shall have such additional or different conditions
precedent to closing, such representations and warranties and such additional
covenants as shall be specified in the Supplemental Note Purchase Agreement
under which such Supplemental Notes are issued and upon execution of any such
Supplemental Note Purchase Agreement, this Agreement shall be amended (i) to
reflect such additional covenants without further action on the part of the
holders of the Notes outstanding under this Agreement, provided,

 

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

that any such additional covenants shall inure to the benefit of all holders of
Notes so long as any Supplemental Notes issued pursuant to such Supplemental
Note Purchase Agreement remain outstanding, and (ii) to reflect such
representations and warranties as are contained in such Supplemental Note
Purchase Agreement for the benefit of the holders of such Supplemental Notes in
accordance with the provisions of Section 16, all as set forth in the
Supplemental Note Purchase Agreement relating thereto and shall otherwise be
substantially in the form attached hereto as Exhibit 1.2; provided, no
Supplemental Notes shall be issued if at the time of issuance thereof and after
giving effect to the application of proceeds therefore, any Default or Event of
Default shall have occurred and be continuing. The Series A Notes and the
Supplemental Notes are herein sometimes collectively referred to as the “Notes”
such term to include any such note issued in substitution therefore pursuant to
Section 13. As used herein, the term “Notes” shall include, without limitation,
each Note delivered pursuant to this Agreement and any other Supplemental Note
Purchase Agreement at the Initial Closing and/or at any Supplemental Closing and
each Note delivered in substitution or exchange for any such Note pursuant
hereto.

SECTION 2.

SALE AND PURCHASE OF NOTES; SUBSEQUENT SALES; SECURITY.

Section 2.1. Initial Sale of Series A Notes. Subject to the terms and conditions
of this Agreement, the Company will issue and sell to each Initial Purchaser and
each Initial Purchaser will purchase from the Company, at the Initial Closing
provided for in Section 3, Series A Notes in the principal amount and in the
tranche specified opposite such Initial Purchaser’s name in Schedule A at the
purchase price of 100% of the principal amount thereof. The Initial Purchasers’
obligations hereunder are several and not joint obligations and no Initial
Purchaser shall have any liability to any Person for the performance or
non-performance of any obligation by any other Initial Purchaser hereunder.

Section 2.2. Subsequent Sales. At any time, and from time to time, the Company
and one or more Eligible Purchasers may enter into an agreement substantially in
the form of the Supplemental Note Purchase Agreement attached hereto as
Exhibit 2.2 (a “Supplemental Note Purchase Agreement”) in which the Company
shall agree to sell to each such Eligible Purchaser named on the Supplemental
Note Purchaser Schedule attached thereto (collectively, the “Supplemental
Purchasers” and collectively with the Initial Purchasers, the “Purchasers”) and,
subject to the terms and conditions herein and therein set forth, each such
Supplemental Purchaser shall agree to purchase from the Company the aggregate
principal amount of the Series of Supplemental Notes (which Series shall
aggregate not less than $10,000,000) described in such Supplemental Note
Purchase Agreement and set forth opposite such Supplemental Purchaser’s name in
the Supplemental Note Purchaser Schedule attached thereto at the price and
otherwise under the terms set forth in such Supplemental Note Purchase
Agreement. The sale of the Supplemental Notes of the Series described in such
Supplemental Note Purchase Agreement will take place at the location, date and
time set forth therein at a closing (a “Supplemental Closing”). At such
Supplemental Closing, the Company will deliver to each such Supplemental
Purchaser one or more Notes of the Series to be purchased by such Supplemental
Purchaser registered in such Supplemental Purchaser’s name (or in the name of
its nominee), evidencing the aggregate principal amount of Notes of such Series
to be purchased by such Supplemental Purchaser and in the denomination or
denominations specified with respect to such Supplemental Purchaser in such
Supplemental Note Purchaser Schedule against payment of the purchase price

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

thereof by transfer of immediately available funds for credit to the Company’s
account on the date of such Supplemental Closing (a “Supplemental Closing Date”)
(as specified in a notice to each such Supplemental Purchaser at least three
Business Days prior to such Supplemental Closing Date).

 

Section 2.3.

Security.

(a) The payment by the Company of all amounts due with respect to the Notes and
the performance by the Company of its obligations under this Agreement will be
absolutely and unconditionally guaranteed by CHEC (the “Subsidiary Guarantor”)
pursuant to the guaranty agreement substantially in the form of Exhibit 2.3(a)
attached hereto and made a part hereof (as the same may be amended, modified,
extended or renewed, the “Subsidiary Guaranty”).

(b) The holders of the Notes agree that the Subsidiary Guarantor shall be deemed
released under the Subsidiary Guaranty upon notice by the Company if and to the
extent the Subsidiary Guarantor is released and discharged from all of its
liabilities under the Bank Credit Agreement, provided that no Default or Event
of Default has occurred and is continuing at the time of such release, and
provided, further, that in the event such Subsidiary shall again become
obligated under or with respect to the Bank Credit Agreement, then the
obligations of such Subsidiary under the Subsidiary Guaranty shall ipso facto
again benefit the holders of the Notes on an equal and pro rata basis.

(c) The Company agrees that it will not, nor will it permit any Subsidiary or
Affiliate to, directly or indirectly, pay or cause to be paid any consideration
or remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any creditor of the Company or of the Subsidiary Guarantor as
consideration for or as an inducement to the entering into by any such creditor
of any release or discharge of the Subsidiary Guarantor with respect to any
liability of such Subsidiary Guarantor as an obligor or guarantor under or in
respect of the Bank Credit Agreement, unless such consideration or remuneration
is concurrently paid, on the same terms, ratably to the holders of all of the
Notes then outstanding; provided, that amendments to, or replacements of, the
Bank Credit Agreement or any other credit facility which reflect adjustments in
interest rates payable by the Company to reflect current market interest rate
levels at the time of any such amendment or replacement or customary fees
charged for making bank commitments available in the ordinary course of business
shall not cause in either such case the Company to pay additional consideration
or remuneration pursuant to this Section 2.3(c) to the holders of the Notes,
notwithstanding that any such amendment or replacement shall occur at the time
of such release or discharge of the Subsidiary Guarantor.

SECTION 3.

CLOSINGS.

The sale and purchase of the Series A Notes to be purchased by each Purchaser
shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street,
Chicago, Illinois  60603, at 10:00 a.m. Chicago time, on the date or dates set
forth opposite such Initial Purchaser’s name on Schedule A, the first of which
shall occur on April 17, 2009 and the second of which shall occur on June 15,
2009 (individually each called an “Initial Closing” and collectively the
“Initial Closings”) or, in the case of each such Initial Closing, on such other

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

Business Day thereafter on or prior to April 17, 2009 as may be agreed upon by
the Company and the Initial Purchasers. At each Initial Closing, the Company
will deliver on the date of such Initial Closing to each Initial Purchaser the
Series A Notes to be purchased by such Initial Purchaser in the form of a single
Note (or such greater number of Notes in denominations of at least $100,000 as
such Initial Purchaser may request) dated the date of the Initial Closing and
registered in such Initial Purchaser’s name (or in the name of its nominee),
against delivery by such Initial Purchaser to the Company or its order of
immediately available funds in the amount of the purchase price therefor by wire
transfer of immediately available funds for the account of the Company to
account number 080-35687-0 at HSBC Bank USA, 801 Auto Park Place, Newburgh, New
York 12550, ABA # 021-0010-88 FFCT: CH Energy Group. If at an Initial Closing
the Company shall fail to tender such Series A Notes to any Initial Purchaser as
provided above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to such Initial Purchaser’s
satisfaction, such Initial Purchaser shall, at its election, be relieved of all
further obligations under this Agreement, without thereby waiving any rights
such Initial Purchaser may have by reason of such failure or such
nonfulfillment. Each Initial Closing and each Supplemental Closing are
hereinafter sometimes each referred to as a “Closing.”

SECTION 4.

CONDITIONS TO EACH CLOSING.

Each Initial Purchaser’s obligation to execute and deliver this Agreement at the
first Initial Closing and the obligations of each Initial Purchaser and each
Supplemental Purchaser to purchase and pay for the Notes to be sold to such
Purchaser at a Closing is subject to the fulfillment to such Purchaser’s
satisfaction, prior to or at such Closing, of the following conditions:

Section 4.1. Representations and Warranties. (a) The representations and
warranties of the Company in this Agreement shall be correct when made and at
the time of such Closing.

(b)The representations and warranties of the Subsidiary Guarantor in the
Subsidiary Guaranty shall be correct when made and at the time of Closing.

Section 4.2. Performance; No Default. (a) The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by it prior to or at such Closing, and after
giving effect to the issue and sale of the Notes to be sold at such Closing (and
the application of the proceeds thereof as contemplated by Section 5.14), no
Default or Event of Default shall have occurred and be continuing. Neither the
Company nor any Subsidiary shall have entered into any transaction since the
date of the Memorandum that would have been prohibited by Section 10 had such
Section applied since such date.

(b) The Subsidiary Guarantor shall have performed and complied with all
agreements and conditions contained herein or in the Subsidiary Guaranty
required to be performed and complied with by it prior to or at the Closing, and
after giving effect to the issue and sale of Notes (and the application of the
proceeds thereof as contemplated by Schedule 5.14), no Default or Event of
Default shall have occurred and be continuing.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

 

Section 4.3.

Compliance Certificates.

(a) Company Officer’s Certificate. The Company shall have delivered to such
Purchaser an Officer’s Certificate, dated the date of such Closing, certifying
that the conditions specified in Sections 4.1(a), 4.2(a) and 4.9 have been
fulfilled.

(b)Subsidiary Guarantor Officer’s Certificate. The Subsidiary Guarantor shall
have delivered to such Purchaser a certificate of an authorized officer, dated
the date of such Closing, certifying that the conditions set forth in Section
4.1(b), 4.2(b) and 4.9 have been fulfilled.

(c) Company Secretary’s Certificate. The Company shall have delivered to such
Purchaser a certificate of its Secretary or Assistant Secretary, dated the date
of such Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement.

(d) Subsidiary Guarantor Secretary’s Certificate. The Subsidiary Guarantor shall
have delivered to such Purchaser a certificate, dated the date of such Closing,
certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of the
Subsidiary Guaranty.

Section 4.4. Opinions of Counsel. Such Purchaser shall have received opinions in
form and substance satisfactory to such Purchaser, dated the date of such
Closing (a) from Thompson Hine LLP, counsel for the Company and the Subsidiary
Guarantor, covering the matters set forth in Exhibit 4.4(a) and covering such
other matters incident to the transactions contemplated hereby as such Purchaser
or its counsel may reasonably request (and the Company hereby instructs its
counsel to deliver such opinion to the Purchasers) and (b) from Chapman and
Cutler LLP, the Purchasers’ special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(b) and covering
such other matters incident to such transactions as such Purchaser may
reasonably request.

Section 4.5. Purchase Permitted by Applicable Law, Etc. On the date of such
Closing such Purchaser’s purchase of Notes shall (a) be permitted by the laws
and regulations of each jurisdiction to which such Purchaser is subject, without
recourse to provisions (such as section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject such
Purchaser to any tax, penalty or liability under or pursuant to any applicable
law or regulation, which law or regulation was not in effect on the date hereof.
If requested by such Purchaser, such Purchaser shall have received an Officer’s
Certificate certifying as to such matters of fact as such Purchaser may
reasonably specify to enable such Purchaser to determine whether such purchase
is so permitted.

Section 4.6. Sale of Other Notes. Contemporaneously with such Closing, the
Company shall sell to each other Purchaser, and each other Purchaser shall
purchase, the Notes to be purchased by it at such Closing as specified in
Schedule A.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

Section 4.7. Payment of Special Counsel Fees.Without limiting the provisions of
Section 15.1, the Company shall have paid on or before such Closing the fees,
charges and disbursements of the Purchasers’ special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to
the Company at least one Business Day prior to such Closing.

Section 4.8. Private Placement Number. A Private Placement Number issued by
Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have
been obtained for each Series or tranche of the Notes to be sold at such
Closing.

Section 4.9. Changes in Corporate Structure. Neither the Company nor the
Subsidiary Guarantor shall have changed its jurisdiction of incorporation or
organization, as applicable, or been a party to any merger or consolidation or
succeeded to all or any substantial part of the liabilities of any other entity,
at any time following the date of the most recent financial statements referred
to in Schedule 5.5.

Section 4.10. Funding Instructions. At least three Business Days prior to the
date of such Closing, each Purchaser shall have received written instructions
signed by a Responsible Officer on letterhead of the Company confirming the
information specified in Section 3 including (a) the name and address of the
transferee bank, (b) such transferee bank’s ABA number and (c) the account name
and number into which the purchase price for such Notes is to be deposited.

Section 4.11. Subsidiary Guaranty. The Subsidiary Guarantor shall have executed
and delivered the Subsidiary Guaranty, or in the case of a Subsequent Closing,
reaffirmed its obligations under the Subsidiary Guaranty, and, unless released
pursuant to Section 2.3(b), the Subsidiary Guaranty shall be in full force and
effect.

Section 4.12. Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement or such
Supplemental Note Purchase Agreement and all documents and instruments incident
to such transactions shall be satisfactory to such Purchaser and its special
counsel, and such Purchaser and its special counsel shall have received all such
counterpart originals or certified or other copies of such documents as such
Purchaser or such special counsel may reasonably request.

SECTION 5.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Purchaser that:

Section 5.1. Organization; Power and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement and the Notes and to perform the
provisions hereof and thereof.

Section 5.2. Authorization, Etc. This Agreement and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3. Disclosure. The Company, through its agent, KeyBanc Capital
Markets, has delivered to each Purchaser a copy of a Private Placement
Memorandum, dated April, 2009 (the “Memorandum”), relating to the transactions
contemplated hereby. The Memorandum fairly describes, in all material respects,
the general nature of the business and principal properties of the Company and
its Subsidiaries. This Agreement, the Memorandum and the documents, certificates
or other writings delivered to the Purchasers by or on behalf of the Company in
connection with the transactions contemplated hereby and identified in
Schedule 5.3, and the financial statements listed in Schedule 5.5, (this
Agreement, the Memorandum and such documents, certificates or other writings and
such financial statements delivered to each Purchaser prior to March 19, 2009
being referred to, collectively, as the “Disclosure Documents”), taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Since December 31, 2008,
there has been no change in the financial condition, operations, business,
properties or prospects of the Company or any Subsidiary except changes that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set
forth herein or in the Disclosure Documents.

Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete and correct lists
(i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct
name thereof, the jurisdiction of its organization, and the percentage of shares
of each class of its capital stock or similar equity interests outstanding owned
by the Company and each other Subsidiary, (ii) of the Company’s Affiliates,
other than Subsidiaries, and (iii) of the Company’s directors and senior
officers.

(b) All of the outstanding shares of capital stock or similar equity interests
of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization,

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

and is duly qualified as a foreign corporation or other legal entity and is in
good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Subsidiary has the
corporate or other power and authority to own or hold under lease the properties
it purports to own or hold under lease and to transact the business it transacts
and proposes to transact.

(d) No Subsidiary is a party to, or otherwise subject to, any legal, regulatory,
contractual or other restriction (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law or
similar statutes) restricting the ability of such Subsidiary to pay dividends
out of profits or make any other similar distributions of profits to the Company
or any of its Subsidiaries that owns outstanding shares of capital stock or
similar equity interests of such Subsidiary.

Section 5.5. Financial Statements; Material Liabilities. The Company has
delivered to each Purchaser copies of the financial statements of the Company
and its Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries as of the respective dates specified in such financial statements
and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments). The Company and its Subsidiaries do not have any
Material liabilities that are not disclosed on such financial statements or
otherwise disclosed in the Disclosure Documents.

Section 5.6. Compliance with Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes will not
(a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company or
any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which the Company or any Subsidiary is bound or by which the
Company or any Subsidiary or any of their respective properties may be bound or
affected, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any Subsidiary
or (c) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to the Company or any Subsidiary.

Section 5.7. Governmental Authorizations, Etc. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the Notes.

Section 5.8. Litigation; Observance of Agreements, Statutes and Orders.
(a) Except for the matters disclosed in footnote 12 of the Form 10-K dated
December 31, 2008 of the Company included in the Disclosure Documents and for
which the Company has insufficient information

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

with which to assess the effect thereof, there are no actions, suits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

(b) Neither the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including without limitation Environmental Laws or the USA Patriot
Act) of any Governmental Authority, which default or violation, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

Section 5.9. Taxes. The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before
they have become delinquent, except for any taxes and assessments (a) the amount
of which is not individually or in the aggregate Material or (b) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
federal, state or other taxes for all fiscal periods are in accordance with
GAAP. The federal income tax liabilities of the Company and its Subsidiaries
have been finally determined (whether by reason of completed audits or the
statute of limitations having run) for all fiscal years up to and including the
fiscal year ended December 31, 2004.

Section 5.10. Title to Property; Leases. The Company and its Subsidiaries have
good and sufficient title to their respective properties that individually or in
the aggregate are Material, including all such properties reflected in the most
recent audited balance sheet referred to in Section 5.5 or purported to have
been acquired by the Company or any Subsidiary after said date (except as sold
or otherwise disposed of in the ordinary course of business), in each case free
and clear of Liens prohibited by this Agreement. All leases that individually or
in the aggregate are Material are valid and subsisting and are in full force and
effect in all material respects.

Section 5.11. Licenses, Permits, Etc. (a) The Company and its Subsidiaries own
or possess all licenses, permits, franchises, authorizations, patents,
copyrights, proprietary software, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others.

(b) To the knowledge of the Company, no product of the Company or any of its
Subsidiaries infringes in any Material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark,
trade name or other right owned by any other Person.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

(c) To the knowledge of the Company, there is no Material violation by any
Person of any right of the Company or any of its Subsidiaries with respect to
any patent, copyright, proprietary software, service mark, trademark, trade name
or other right owned or used by the Company or any of its Subsidiaries.

Section 5.12. Compliance with ERISA. (a) The Company and each ERISA Affiliate
have operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and could not
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
(other than the obligation to make contributions in the ordinary course in
accordance with the terms of the Plans and applicable law) or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee benefit plans
(as defined in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the incurrence
of any such liability by the Company or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets of the Company
or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or sections 412 or 430(j) of the Code or
section 4068 of ERISA, other than such liabilities or Liens as would not be
individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the
Plans (other than Multiemployer Plans), determined in accordance with GAAP for
purposes of the Company’s consolidated balance sheet as of December 31, 2008
included in the Disclosure Documents on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $128,000,000 in the aggregate
for all Plans. The term “benefit liabilities” has the meaning specified in
section 4001 of ERISA and the terms “current value” and “present value” have the
meaning specified in section 3 of ERISA.

(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.

(d) The expected post retirement benefit obligation (determined as of the last
day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 158, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is disclosed in footnote 10 of the
Form 10-K dated December 31, 2008 of the Company included in the Disclosure
Documents in accordance with GAAP.

(e) The execution and delivery of this Agreement and the issuance and sale of
the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of such Purchaser’s

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

representation in Section 6.2 as to the sources of the funds used to pay the
purchase price of the Notes to be purchased by such Purchaser.

Section 5.13. Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered, the Series A Notes, the Subsidiary Guaranty or
any similar Securities for sale to, or solicited any offer to buy any of the
same from, or otherwise approached or negotiated in respect thereof with, any
Person other than the Initial Purchasers and not more than 35 other
Institutional Investors, each of which has been offered the Series A Notes and
the Subsidiary Guaranty at a private sale for investment. Neither the Company
nor anyone acting on its behalf has taken, or will take, any action that would
subject the issuance or sale of the Series A Notes and the Subsidiary Guaranty
to the registration requirements of Section 5 of the Securities Act or to the
registration requirements of any securities or blue sky laws of any applicable
jurisdiction.

Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Series A Notes to refinance short-term debt and for
general corporate purposes. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (12 CFR 221), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms “margin stock” and
“purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.

Section 5.15. Existing Debt; Future Liens. (a) Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and its
Subsidiaries as of March 31, 2009 (including a description of the obligors and
obligees, principal amount outstanding and collateral therefor, if any, and
Guaranty thereof, if any), since which date there has been no Material change in
the amounts, interest rates, sinking funds, installment payments or maturities
of the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the
payment of any principal or interest on any Debt of the Company or such
Subsidiary and, except with respect to the Pollution Control Bonds as described
on Schedule 5.15, no event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.

(b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary
has agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.3.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(c) Neither the Company nor any Subsidiary is a party to, or otherwise subject
to any provision contained in, any instrument evidencing Debt of the Company or
such Subsidiary, any agreement relating thereto, any other agreement, its
charter or any other organizational document which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the Company or any
Subsidiary, except as specifically indicated in Schedule 5.15.

Section 5.16. Foreign Assets Control Regulations, Etc. (a) Neither the sale of
the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.

(b) Neither the Company nor any Subsidiary (i) is a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or
(ii) engages in any dealings or transactions with any such Person. The Company
and its Subsidiaries are in compliance, in all material respects, with the USA
Patriot Act.

(c) No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Company.

Section 5.17. Status under Certain Statutes. Neither the Company nor any
Subsidiary is subject to regulation under the Investment Company Act of 1940, as
amended, the Public Utility Holding Company Act of 2005, as amended, the ICC
Termination Act of 1995, as amended, or the Federal Power Act, as amended.

Section 5.18. Notes Rank Pari Passu. The obligations of the Company under this
Agreement and the Notes rank at least pari passu in right of payment with all
other unsecured Debt (actual or contingent) of the Company, including, without
limitation, all senior unsecured Debt of the Company described in Schedule 5.15
hereto.

Section 5.19. Environmental Matters. (a) Except for the matters disclosed in
footnote 12 of the Form 10-K dated December 31, 2008 of the Company included in
the Disclosure Documents and for which the Company has insufficient information
with which to assess the effect thereof, neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(b) Except for the matters disclosed in footnote 12 of the Form 10-K dated
December 31, 2008 of the Company included in the Disclosure Documents and for
which the Company has insufficient information with which to assess the effect
thereof, neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.

(c) Except for the matters disclosed in footnote 12 of the Form 10-K dated
December 31, 2008 of the Company included in the Disclosure Documents and for
which the Company has insufficient information with which to assess the effect
thereof, neither the Company nor any Subsidiary has stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by any of
them nor has disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect.

(d) Except for the matters disclosed in footnote 12 of the Form 10-K dated
December 31, 2008 of the Company included in the Disclosure Documents and for
which the Company has insufficient information with which to assess the effect
thereof, all buildings on all real properties now owned, leased or operated by
the Company or any Subsidiary are in compliance with applicable Environmental
Laws, except where failure to comply could not reasonably be expected to result
in a Material Adverse Effect.

SECTION 6.

REPRESENTATIONS OF THE INITIAL PURCHASERS.

Section 6.1. Purchase for Investment. Each Initial Purchaser severally
represents that it is purchasing the Series A Notes for its own account or for
one or more separate accounts maintained by such Initial Purchaser or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof; provided that the disposition of such Initial Purchaser’s
or their property shall at all times be within such Initial Purchaser’s or their
control. Each Initial Purchaser understands that the Series A Notes have not
been registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Series A Notes.

Section 6.2. Source of Funds. Each Initial Purchaser severally represents that
at least one of the following statements is an accurate representation as to
each source of funds (a “Source”) to be used by such Initial Purchaser to pay
the purchase price of the Series A Notes to be purchased by such Initial
Purchaser hereunder:

(a) the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction Exemption
(“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the National
Association of

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

Insurance Commissioners (the “NAIC Annual Statement”)) for the general account
contract(s) held by or on behalf of any employee benefit plan together with the
amount of the reserves and liabilities for the general account contract(s) held
by or on behalf of any other employee benefit plans maintained by the same
employer (or affiliate thereof as defined in PTE 95-60) or by the same employee
organization in the general account do not exceed ten percent (10%) of the total
reserves and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
such Initial Purchaser’s state of domicile; or

(b) the Source is a separate account that is maintained solely in connection
with such Initial Purchaser’s fixed contractual obligations under which the
amounts payable, or credited, to any employee benefit plan (or its related
trust) that has any interest in such separate account (or to any participant or
beneficiary of such plan (including any annuitant)) are not affected in any
manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1, or (ii) a bank collective investment fund,
within the meaning of the PTE 91-38 and, except as have been disclosed by such
Initial Purchaser to the Company in writing pursuant to this clause (c), no
employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or

(d) the Source constitutes assets of an “investment fund” (within the meaning of
Part V of the QPAM Exemption) managed by a “qualified professional asset
manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no
employee benefit plan’s assets that are included in such investment fund, when
combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, as of the last day of its most recent calendar quarter, the QPAM
does not own a 10% or more interest in the Company and no Person controlling or
controlled by the QPAM (applying the definition of “control” in Section V(e) of
the QPAM Exemption) owns a 20% or more interest in the Company (or less than 20%
but greater than 10%, if such person exercises control over the management or
policies of the Company by reason of its ownership interest) and (i) the
identity of such QPAM and (ii) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (d); or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of
Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset
manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the
conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the

 

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INHAM nor a Person controlling or controlled by the INHAM (applying the
definition of “control” in section IV(d) of the INHAM Exemption) owns a 5% or
more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or

 

(f)

the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (g); or

(h) the Source does not include assets of any employee benefit plan, other than
a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental
plan”, “party in interest” and “separate account” shall have the respective
meanings assigned to such terms in section 3 of ERISA.

SECTION 7.

INFORMATION AS TO THE COMPANY.

Section 7.1. Financial and Business Information. The Company shall deliver to
each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 60 days after the end of each quarterly fiscal
period in each fiscal year of the Company (other than the last quarterly fiscal
period of each such fiscal year), duplicate copies of:

(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and

(ii) consolidated statements of income, changes in shareholders’ equity and cash
flows of the Company and its Subsidiaries for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with
such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments; provided that delivery within the time period specified above of
copies of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) prepared
in compliance with the requirements therefor and filed with the SEC shall be
deemed to satisfy the requirements of this Section 7.1(a); provided, further,
that the Company shall be deemed to have made such delivery of such Form 10-Q if
it

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

shall have timely made such Form 10-Q available on “EDGAR” and on its home page
on the worldwide web (at the date of this Agreement located at:
http//www.chenergygroup.com) and shall have given each Purchaser prior notice of
such availability on EDGAR and on its home page in connection with each delivery
(such availability and notice thereof being referred to as “Electronic
Delivery”);

(b) Annual Statements — within 90 days with the SEC regardless of whether the
Company is subject to the filing requirements thereof) after the end of each
fiscal year of the Company, duplicate copies of,

(i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and

(ii) consolidated statements of income, changes in shareholders’ equity and cash
flows of the Company and its Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), and that such audit provides a reasonable basis for such
opinion in the circumstances, provided that the delivery within the time period
specified above of the Company’s Annual Report on Form 10-K for such fiscal year
(the “Form 10-K”) prepared in accordance with the requirements therefor and
filed with the SEC, shall be deemed to satisfy the requirements of this
Section 7.1(b); provided, further, that the Company shall be deemed to have made
such delivery of such Form 10-K if it shall have timely made Electronic Delivery
thereof;

(c) SEC and Other Reports — promptly upon their becoming available, one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Company or any Subsidiary to its principal lending banks as a whole (excluding
information sent to such banks in the ordinary course of administration of a
bank facility, such as information relating to pricing and borrowing
availability or to its public securities holders generally), (ii) the Company’s
annual report to shareholders, if any, prepared pursuant to the Rule 14a(3)
under the Exchange Act, and (iii) each regular or periodic report, each
registration statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the Company or
any Subsidiary with the SEC and of all press releases and other statements made
available generally by the Company or any Subsidiary to the public concerning
developments that are Material; provided, further, that the Company shall be
deemed to have made such delivery of such materials if it shall have timely made
Electronic Delivery thereof;

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(d) Notice of Default or Event of Default — promptly, and in any event within
five days after a Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice or taken any
action with respect to a claimed default hereunder or that any Person has given
any notice or taken any action with respect to a claimed default of the type
referred to in Section 11(f), a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes to take
with respect thereto;

(e) ERISA Matters — promptly, and in any event within ten days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:

(i) with respect to any Plan, any reportable event, as defined in
section 4043(c) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or

(ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or

(iii) any event, transaction or condition that could result in the incurrence of
any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, could
reasonably be expected to have a Material Adverse Effect;

(f) Notices from Governmental Authority — promptly, and in any event within 30
days of receipt thereof, copies of any notice to the Company or any Subsidiary
from any Federal or state Governmental Authority relating to any order, ruling,
statute or other law or regulation that could reasonably be expected to have a
Material Adverse Effect;

(g) Supplements — promptly, and in any event within 10 Business Days after the
execution and delivery of any Supplemental Note Purchase Agreement, a copy
thereof; and

(h) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

properties of the Company or any of its Subsidiaries (including, but without
limitation, actual copies of the Company’s Form 10-Q and Form 10-K) or relating
to the ability of the Company to perform its obligations hereunder and under the
Notes as from time to time may be reasonably requested by any such holder of
Notes.

Section 7.2. Officer’s Certificate. Each set of financial statements delivered
to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be
accompanied by a certificate of a Senior Financial Officer setting forth (which,
in the case of Electronic Delivery of such financial statements, shall be by
concurrent delivery of such certificate to each holder of Notes):

(a) Covenant Compliance — the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the
requirements of Sections 10.1, 10.2 and 10.5 during the quarterly or annual
period covered by the statements then being furnished (including with respect to
each such Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the terms of
such Sections, and the calculation of the amount, ratio or percentage then in
existence); and

(b) Event of Default — a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the Company
and its Subsidiaries from the beginning of the quarterly or annual period
covered by the statements then being furnished to the date of the certificate
and that such review shall not have disclosed the existence during such period
of any condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action the Company shall have taken or
proposes to take with respect thereto.

Section 7.3. Visitation. The Company shall permit the representatives of each
holder of Notes that is an Institutional Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the Company’s officers, and
(with the consent of the Company, which consent will not be unreasonably
withheld) its independent public accountants, and (with the consent of the
Company, which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and

(b) Default — if a Default or Event of Default then exists, at the expense of
the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.

SECTION 8.

PREPAYMENT OF THE NOTES.

Section 8.1. Maturity. As provided therein, the entire unpaid principal balance
of the Series A Notes shall be due and payable on the stated maturity date
thereof.

Section 8.2. Optional Prepayments with Make-Whole Amount. The Company may, at
its option, upon notice as provided below, prepay at any time all, or from time
to time any part of, any Series of the Notes, in an amount not less than 5% of
the aggregate principal amount of the Notes of such Series then outstanding in
the case of a partial prepayment (but if in the case of a partial prepayment,
then against each tranche of such Series of Notes in proportion to the aggregate
principal amount outstanding on each tranche), at 100% of the principal amount
so prepaid, together with interest accrued thereon to the date of such
prepayment, and the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Company will give each holder of Notes of
such Series written notice of each optional prepayment under this Section 8.2
not less than 30 days and not more than 60 days prior to the date fixed for such
prepayment. Each such notice shall specify such date (which shall be a Business
Day), the aggregate principal amount of each Series and tranche Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.4), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.

Section 8.3. Change in Control. (a) Notice of Change in Control. The Company
will, within five Business Days after any Responsible Officer has knowledge of
the occurrence of any Change in Control, give written notice of such Change in
Control to each holder of Notes. Such notice shall contain and constitute an
offer to prepay the Notes as described in subparagraph (b) of this Section 8.3
and shall be accompanied by the certificate described in subparagraph (e) of
this Section 8.3.

(b) Offer to Prepay Notes. The offer to prepay Notes contemplated by
subparagraph (a) of this Section 8.3 shall be an offer to prepay, in accordance
with and subject to this Section 8.3, all, but not less than all, the Notes held
by each holder (in this case only, “holder” in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the “Proposed Prepayment
Date”). Such date shall be not less than 30 days and not more than 120 days
after the date of such offer (if the

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 
Proposed Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the first Business Day after the 45th day after the
date of such offer).

(c) Acceptance/Rejection. A holder of Notes may accept the offer to prepay made
pursuant to this Section 8.3 by causing a notice of such acceptance to be
delivered to the Company not later than 15 days after receipt by such holder of
the most recent offer of prepayment. A failure by a holder of Notes to respond
to an offer to prepay made pursuant to this Section 8.3 shall be deemed to
constitute rejection of such offer by such holder.

(d) Prepayment. Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together
with interest on such Notes accrued to the date of prepayment, but without
Make-Whole Amount or other premium.

(e) Officer’s Certificate. Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this
Section 8.3; (iii) the principal amount of each Note offered to be prepaid;
(iv) the interest that would be due on each Note offered to be prepaid, accrued
to the Proposed Prepayment Date; (v) that the conditions of this Section 8.3
have been fulfilled; and (vi) in reasonable detail, the nature and date or
proposed date of the Change in Control.

 

(f)

Certain Definitions. “Change in Control” means any of the following:

(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire (such right,
an “option right”), whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of 20% or more of the equity
securities of the Company entitled to vote for members of the board of directors
or equivalent governing body of the Company on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right); or

(ii) the Company ceases to own, directly or indirectly, 100% of the outstanding
stock of CHEC and/or the Utility.

(g) All calculations contemplated in this Section 8.3 involving the capital
stock of any Person shall be made with the assumption that all convertible
Securities of such Person then outstanding and all convertible Securities
issuable upon the exercise of any warrants, options and other rights outstanding
at such time were converted at such time and that all options, warrants and
similar rights to acquire shares of capital stock of such Person were exercised
at such time.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

Section 8.4. Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes pursuant to Section 8.2, the principal amount of the
Notes of a Series to be prepaid shall be (a) allocated among each tranche of
such Series of Notes in proportion to the aggregate unpaid principal amount of
each such tranche of Notes and (b) allocated pro rata among all holders of each
tranche of such Series of Notes at the time outstanding in proportion, as nearly
as practicable, to the respective unpaid principal amounts thereof not
theretofore called for prepayment. All partial prepayments made pursuant to
Section 8.3 shall be applied only to the Notes of the holders who have elected
to participate in such prepayment.

Section 8.5. Maturity; Surrender, Etc. In the case of each prepayment of Notes
pursuant to this Section 8, the principal amount of each Note to be prepaid
shall mature and become due and payable on the date fixed for such prepayment
(which shall be a Business Day), together with interest on such principal amount
accrued to such date and the applicable Make-Whole Amount, if any. From and
after such date, unless the Company shall fail to pay such principal amount when
so due and payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue. Any Note
paid or prepaid in full shall be surrendered to the Company and cancelled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.

Section 8.6. Purchase of Notes. The Company will not and will not permit any
Affiliate to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment or prepayment
of a Series of the Notes in accordance with the terms of this Agreement and the
Notes. The Company will promptly cancel all Notes acquired by it or any
Affiliate pursuant to any payment or prepayment of Notes pursuant to any
provision of this Agreement and no Notes may be issued in substitution or
exchange for any such Notes.

Section 8.7.Make-Whole Amount. The term “Make-Whole Amount” means, with respect
to any Note, an amount equal to the excess, if any, of the Discounted Value of
the Remaining Scheduled Payments with respect to the Called Principal of such
Note over the amount of such Called Principal; provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes of such Series or tranche
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
0.50% (50 basis points) over the yield to maturity implied by (i) the yields
reported as of 10:00 a.m. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as “Page PX1” (or such other display as may replace Page PX1)
on Bloomberg Financial Markets for the most recently issued actively traded on
the run U.S. Treasury securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date, or (ii) if
such yields are not reported as of such time or the yields reported as of such
time are not ascertainable (including by way of interpolation), the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (or any comparable successor publication) for U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. In the case of each
determination under clause (i) or clause (ii), as the case may be, of the
preceding paragraph, such implied yield will be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the applicable U.S. Treasury security with the maturity closest to
and greater than such Remaining Average Life and (2) the applicable U.S.
Treasury security with the maturity closest to and less than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal
places as appears in the interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing
(a) such Called Principal into (b) the sum of the products obtained by
multiplying (i) the principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (ii) the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date;
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes of such Series or tranche, then
the amount of the next succeeding scheduled interest payment will be reduced by
the amount of interest accrued to such Settlement Date and required to be paid
on such Settlement Date pursuant to Section 8.2 or 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

SECTION 9.

AFFIRMATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

Section 9.1. Compliance with Law. The Company will, and will cause each of its
Subsidiaries to, comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain
in effect all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

Section 9.2. Insurance. The Company will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurers,
insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.

Section 9.3. Maintenance of Properties. The Company will, and will cause each of
its Subsidiaries to, maintain and keep, or cause to be maintained and kept,
their respective properties in good repair, working order and condition (other
than ordinary wear and tear), so that the business carried on in connection
therewith may be properly conducted at all times; provided that this Section 9.3
shall not prevent the Company or any Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is desirable
in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

Section 9.4. Payment of Taxes and Claims. The Company will, and will cause each
of its Subsidiaries to, file all tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and payable on
such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent the same have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a Lien on properties or assets of the Company or any Subsidiary;
provided that neither the Company nor any Subsidiary need pay any such tax,
assessment, charge, levy or claim if (a) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (b) the nonpayment of all such taxes,
assessments, charges, levies and claims in the aggregate could not reasonably be
expected to have a Material Adverse Effect.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

Section 9.5. Legal Existence, Etc. Subject to Section 10.4, the Company will at
all times preserve and keep in full force and effect its legal existence.
Subject to Sections 10.4 and 10.5, the Company will at all times preserve and
keep in full force and effect the legal existence of each of its Subsidiaries
(unless merged into the Company or a Wholly-owned Subsidiary) and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such legal existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.

Section 9.6. Notes to Rank Pari Passu. The Notes and all other obligations under
this Agreement of the Company are and at all times shall rank at least pari
passu in right of payment with all other present and future unsecured Debt
(actual or contingent) of the Company which is not expressed to be subordinate
or junior in rank to any other unsecured Debt of the Company.

Section 9.7. Books and Records. The Company will, and will cause each of its
Subsidiaries to, maintain proper books of record and account in conformity with
GAAP and all applicable requirements of any Governmental Authority having legal
or regulatory jurisdiction over the Company, or such Subsidiary, as the case may
be.

SECTION 10.

NEGATIVE COVENANTS.

The Company covenants that so long as any of the Notes are outstanding:

Section 10.1. Limitation on Debt. The Company will not at any time permit the
ratio of Consolidated Total Debt to Consolidated Total Capitalization to exceed
0.65 to 1.00.

Section 10.2. Limitation on Priority Debt. The Company will not at any time
permit Priority Debt to exceed 10% of Consolidated Total Assets.

Section 10.3. Limitation on Liens. The Company will not, and will not permit any
Subsidiary to, create or incur, or suffer to be incurred or to exist, any Lien
on its or their property or assets, whether now owned or hereafter acquired, or
upon any income or profits therefrom, or transfer any property for the purpose
of subjecting the same to the payment of obligations in priority to the payment
of its or their general creditors, or acquire or agree to acquire, or permit any
Subsidiary to acquire, any property or assets upon conditional sales agreements
or other title retention devices, except:

(a) Liens for property taxes and assessments or governmental charges or levies
and Liens securing claims or demands of mechanics and materialmen; provided that
payment thereof is not at the time required by Section 9.4;

(b) Liens incidental to the conduct of business or the ownership of properties
and assets (including Liens in connection with worker’s compensation,
unemployment insurance and other like laws, warehousemen’s and attorneys’ liens
and statutory landlords’ liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

nature, in any such case incurred in the ordinary course of business and not in
connection with the borrowing of money;

(c) Liens resulting from judgments or other legal proceedings, unless such
judgments are not, within 60 days, discharged or stayed pending appeal, or shall
not have been discharged within 60 days after the expiration of any such stay;

(d) Liens securing Debt of a Subsidiary to the Company or to another
Wholly-owned Subsidiary;

(e)  Liens existing as of the first Initial Closing and described on
Schedule 5.15 hereto;

(f) survey exceptions or minor encumbrances, leases or subleases granted to
others, easements or reservations, or rights of others for rights-of-way,
utilities and other similar purposes, or zoning or other restrictions as to the
use of real properties, (i) which are necessary for the conduct of the
activities of the Company and its Subsidiaries or which customarily exist on
properties of corporations engaged in similar activities and similarly situated
and (ii) which do not in any event Materially impair their use in the operation
of the business of the Company and its Subsidiaries taken as a whole or the
value of such properties;

(g) Liens created or incurred after the date of the Initial Closing given to
secure the payment of the purchase price incurred in connection with the
acquisition or purchase or the cost of construction of property or of assets
useful and intended to be used in carrying on the business of the Company or a
Subsidiary, including Liens existing on such property or assets at the time of
acquisition thereof or at the time of construction, as the case may be, whether
or not such existing Liens were given to secure the payment of the acquisition
or purchase price or cost of construction, as the case may be, of the property
or assets to which they attach; provided that (i) the Lien shall attach solely
to the property or assets acquired, purchased or constructed, (ii) such Lien
shall have been created or incurred within 365 days of the date of acquisition
or purchase or completion of construction, as the case may be, (iii) at the time
of acquisition or purchase or of completion of construction of such property or
assets, the aggregate amount remaining unpaid on all Debt secured by Liens on
such property or assets, whether or not assumed by the Company or a Subsidiary,
shall not exceed an amount equal to 100% of the lesser of the total purchase
price or fair market value at the time of acquisition or purchase (as determined
in good faith by a Senior Financial Officer of the Company) or the cost of
construction on the date of completion thereof, and (iv) at the time of
creation, issuance, assumption, guarantee or incurrence of the Debt secured by
such Lien and after giving effect thereto and to the application of the proceeds
thereof, no Default or Event of Default would exist;

(h) any Lien existing on property or assets of a Person at the time such Person
is consolidated with or merged into the Company or a Subsidiary or becomes a
Subsidiary, or any Lien existing on any property or assets acquired by the
Company or

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

any Subsidiary at the time such property or assets are so acquired (whether or
not the Debt secured thereby shall have been assumed), provided that (i) each
such Lien shall extend solely to the property or assets so acquired, and (ii) at
the time of creation, issuance, assumption, guarantee or incurrence of the Debt
secured by such Lien and after giving effect thereto and to the application of
the proceeds thereof, no Default or Event of Default would exist;

(i) Liens created or incurred after the date of the first Initial Closing given
to secure Debt of the Company or any Subsidiary in addition to the Liens
permitted by the preceding clauses (a) through (h) hereof; provided that at the
time of creation, issuance, assumption, guarantee or incurrence of the Debt
secured by such Lien and after giving effect thereto and to the application of
the proceeds thereof, no Default or Event of Default would exist; and

(j) any extension, renewal or refunding of any Lien permitted by the preceding
clauses (d), (e), (g) and (h) of this Section 10.3 in respect of the same
property theretofore subject to such Lien in connection with the extension,
renewal or refunding of the Indebtedness secured thereby; provided that (i) such
extension, renewal or refunding of Indebtedness shall be without increase in the
principal amount remaining unpaid as of the date of such extension, renewal or
refunding, (ii) such Lien shall attach solely to the same such property, (iii)
the principal amount remaining unpaid as of the date of such extension, renewal
or refunding of Indebtedness is less than or equal to the fair market value of
the property (determined in good faith by the Board or Directors of the Company)
to which such Lien is attached, and (iv) at the time of such extension, renewal
or refunding and after giving effect thereto, no Default or Event of Default
would exist.

Section 10.4. Mergers, Consolidations, Etc. The Company will not, and will not
permit any Subsidiary to, consolidate with or be a party to a merger with any
other Person, or sell, lease or otherwise dispose of all or substantially all of
its assets (determined on a consolidated basis); provided that:

(a) any Subsidiary may merge or consolidate with or into, or sell, lease or
otherwise dispose of all or substantially all of its assets to, the Company or
any Wholly-owned Subsidiary so long as in (i) any merger or consolidation, or
sale, lease or other disposition of all or substantially all of a Subsidiary’s
assets, involving the Company, the Company shall be the surviving or continuing
entity and (ii) in any merger or consolidation, or sale, lease or other
disposition of all or substantially all of a Subsidiary’s assets, involving a
Subsidiary that is not a Wholly-owned Subsidiary, the Company or a Wholly-owned
Subsidiary shall be the surviving or continuing corporation or limited liability
company;

(b) the Company may consolidate or merge with or into any other corporation or
limited liability company if (i) the corporation or limited liability company
which results from such consolidation or merger (the “Surviving Person”) is
solvent and organized under the laws of any state of the United States or the
District of Columbia, (ii) the due and punctual payment of the principal of and
premium, if any, and interest on

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

all of the Notes, according to their tenor, and the due and punctual performance
and observation of all of the covenants in the Notes and this Agreement to be
performed or observed by the Company are expressly assumed in writing by the
Surviving Person and the Surviving Person shall furnish to the holders of the
Notes an opinion of counsel satisfactory to the Required Holders to the effect
that the instrument of assumption has been duly authorized, executed and
delivered and constitutes the legal, valid and binding contract and agreement of
the Surviving Person enforceable in accordance with its terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles, (iii) the
Subsidiary Guarantor shall have affirmed in writing its obligations under the
Subsidiary Guaranty, and (iv) at the time of such consolidation or merger and
immediately after giving effect thereto, no Default or Event of Default would
exist;

(c) the Company (directly and/or through its Subsidiaries) may sell or otherwise
dispose of all or substantially all of its assets (other than as provided in
Section 10.5) to any Person for consideration which represents the fair market
value of such assets (as determined in good faith by the Board of Directors of
the Company) at the time of such sale or other disposition if (i) the acquiring
Person (the “Acquiring Person”) is a corporation or limited liability company
solvent and organized under the laws of any state of the United States or the
District of Columbia, (ii) the due and punctual payment of the principal of and
premium, if any, and interest on all the Notes, according to their tenor, and
the due and punctual performance and observance of all of the covenants in the
Notes and in this Agreement to be performed or observed by the Company are
expressly assumed in writing by the Acquiring Person and the Acquiring Person
shall furnish to the holders of the Notes an opinion of counsel satisfactory to
the Required Holders to the effect that the instrument of assumption has been
duly authorized, executed and delivered and constitutes the legal, valid and
binding contract and agreement of such Acquiring Person enforceable in
accordance with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
the enforcement of creditors’ rights generally and by general equitable
principles, (iii) the Subsidiary Guarantor shall have affirmed in writing its
obligations under the Subsidiary Guaranty, and (iv) at the time of such sale or
disposition and immediately after giving effect thereto, no Default or Event of
Default would exist.

No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation or limited liability company that shall theretofore have become such
in the manner prescribed in this Section 10.4 from its liability under this
Agreement or the Notes.

Section 10.5. Sale of Assets. The Company will not, and will not permit any
Subsidiary to, sell, lease, transfer, abandon or otherwise dispose of assets
(except assets sold in the ordinary course of business for fair market value and
except as provided in Section 10.4); provided that, for the avoidance of doubt,
the foregoing restrictions do not apply to contributions by the Company in its
Subsidiaries in exchange for equity interests in, or Debt obligations of, such
Subsidiary; provided further that the foregoing restrictions do not apply to:

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(a) the sale, lease, transfer or other disposition of assets of a Subsidiary to
the Company or a Wholly-owned Subsidiary; or

(b) the transfer or other disposition of assets of the Company or a Subsidiary
which are worn-out or obsolete; or

(c) the sale of assets for cash or other property to a Person or Persons other
than an Affiliate if all of the following conditions are met:

(i) such assets (valued at net book value) do not, together with all other
assets of the Company and its Subsidiaries previously disposed of during the 12
month period ending on the date of such sale (other than in the ordinary course
of business or as provided in cause (a) above), exceed 10% of Consolidated Total
Assets, determined as of the end of the immediately preceding fiscal year;

(ii) in the opinion of a Senior Financial Officer of the Company, the sale is
for fair value and is in the best interests of the Company; and

(iii) immediately before and immediately after the consummation of the
transaction and after giving effect thereto, no Default or Event of Default
would exist;

provided, however, that for purposes of the foregoing calculation, there shall
not be included any assets the proceeds of which were or are applied within 365
days before or after the date of sale of such assets to either (y) the
acquisition of, or reinvestment in, assets useful and intended to be used in the
operation of the business of the Company and its Subsidiaries and having a fair
market value (as determined in good faith by the Company) at least equal to that
of the assets so disposed of or (z) the prepayment or payment of principal and
accrued but unpaid interest, if any, and the applicable prepayment premium, if
any, on a pro rata basis of Senior Debt of the Company. It is understood and
agreed by the Company that any such proceeds paid and applied to the prepayment
of the Notes as hereinabove provided shall be offered and prepaid as and to the
extent provided below:

(A) the offer to prepay Notes contemplated by this Section 10.5 shall be an
offer to each of the holders of the Notes to prepay on a date specified in such
offer, which date shall be not less than 30 days and not more than 120 days
after the date of such offer (if the proposed prepayment date shall not be
specified in such offer, the proposed prepayment date shall be the first
Business Day after the 45th day after the date of such offer), all, or a pro
rata part of, the Notes held by such holder at par and without payment of
Make-Whole Amount or other premium;

(B) any holder of the Notes may accept or decline any offer of prepayment
pursuant to this Section 10.5 by causing a notice of such acceptance or
rejection to be delivered to the Company not later than 15 days after receipt by
such holder of such offer of prepayment;

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(C) the failure of any such holder to accept or decline any such offer of
prepayment shall be deemed to be an election by such holder to decline such
prepayment; and

(D) if such offer is so accepted, the proceeds so offered towards the prepayment
of the Notes and accepted shall be prepaid and applied to 100% of the principal
amount to be prepaid, together with interest accrued thereon to the date of such
prepayment; provided that such prepayment shall be at par without payment of
Make-Whole Amount or other premium.

To the extent that any holder of the Notes declines or is deemed to have
declined such offer of prepayment, the amount of the prepayment offered to such
holder shall be used by the Company to prepay other Senior Debt, if any.

Section 10.6. Utility Dividends. The Company will not permit to exist any
contractual restriction or restriction in the certificate of incorporation or
bylaws of the Utility, on the ability of the Utility to pay dividends to the
Company, other than any contractual restriction restricting the ability of the
utility to pay dividends to the Company and required by the New York State
Public Service Commission.

Section 10.7. Transactions with Affiliates. The Company will not and will not
permit any Subsidiary to enter into directly or indirectly any Material
transaction or Material group of related transactions (including without
limitation the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except (i)  in the ordinary course and pursuant to the
reasonable requirements of the Company’s or such Subsidiary’s business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary
than would be obtainable in a comparable arm’s-length transaction with a Person
not an Affiliate, (ii) sales of goods to an Affiliate for use or distribution
outside the United States that in the good faith judgment of the Company
complies with any applicable legal requirements of the Code, and
(iii) agreements and transactions with and payments to officers, directors and
shareholders that either: (x) are entered into in the ordinary course of
business and are not prohibited by any of the other provisions of this
Agreement, or (y) are entered into outside the ordinary course of business, are
approved by the board of directors or a majority of the shareholders of the
Company and are not prohibited by any of the other provisions of this Agreement.

Section 10.8. Line of Business. The Company will not and will not permit any
Subsidiary to engage in any business if, as a result, the general nature of the
business in which the Company and its Subsidiaries, taken as a whole, would then
be engaged would be substantially changed from the general nature of the
business in which the Company and its Subsidiaries, taken as a whole, are
engaged on the date of this Agreement as described in the Memorandum.

Section 10.9. Terrorism Sanctions Regulations. The Company will not and will not
permit any Subsidiary to (a) become a Person described or designated in the
Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

Section 1 of the Anti-Terrorism Order or (b) engage in any dealings or
transactions with any such Person.

SECTION 11.

EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount,
if any, on any Note when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more
than five Business Days after the same becomes due and payable; or

(c) the Company defaults in the performance of or compliance with any term
contained in Section 7.1(d) or Section 10 or any covenant in a Supplemental Note
Purchase Agreement which specifically provides that it shall have the benefit of
this paragraph (c); or

(d) the Company defaults in the performance of or compliance with any term
contained herein, in any Supplemental Note Purchase Agreement (other than those
referred to in Sections 11(a), (b) and (c)) and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer obtaining actual
knowledge of such default and (ii) the Company receiving written notice of such
default from any holder of a Note (any such written notice to be identified as a
“notice of default” and to refer specifically to this Section 11(d)); or

(e) any representation or warranty made in writing by or on behalf of the
Company or by any officer of the Company in this Agreement or any Supplemental
Note Purchase Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or

(f)(i) the Company or any Subsidiary is in default (as principal or as guarantor
or other surety) in the payment of any principal of or premium or make-whole
amount or interest on any Debt that is outstanding in an aggregate principal
amount of at least $20,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Subsidiary is in default in the performance
of or compliance with any term of any evidence of any Debt in an aggregate
outstanding principal amount of at least $20,000,000 or of any mortgage,
indenture or other agreement relating thereto or any other condition exists, and
as a consequence of such default or condition such Debt has become, or has been
declared, due and payable before its stated maturity or before its regularly
scheduled dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time or the
right of the holder of Debt to convert such Debt into equity interests), the
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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

Subsidiary has become obligated to purchase or repay Debt before its regular
maturity or before its regularly scheduled dates of payment in an aggregate
outstanding principal amount of at least $20,000,000; provided, however, that
notwithstanding anything contained in clause (iii) hereof, an obligation of the
Utility to mandatorily purchase or redeem any of its Debt evidenced by the
Pollution Control Bonds in connection with a change in the interest rate mode
applicable to such bonds and a subsequent failure to remarket such bonds shall
not constitute a Default or Event of Default; provided, further, that a failure
of the Utility to so purchase or redeem any of such Debt pursuant to such
obligation shall constitute an Event of Default under clause (i) hereof, or

(g) the Company or any Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or
consents by answer or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement or any other petition in bankruptcy, for
liquidation or to take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an assignment
for the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

(h) a court or Governmental Authority of competent jurisdiction enters an order
appointing, without consent by the Company or any of its Subsidiaries, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or

(i) a final judgment or judgments for the payment of money aggregating in excess
of $15,000,000 are rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within
60 days after the expiration of such stay; or

(j) the Subsidiary Guaranty shall cease to be in full force and effect for any
reason whatsoever (other than pursuant to a release under Section 2.3(b)),
including, without limitation, a determination by any Governmental Authority
that such Subsidiary Guaranty is invalid, void or unenforceable or the
Subsidiary Guarantor shall contest or deny in writing the enforceability of any
its obligations under the Subsidiary Guaranty; or

(k) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of
the Code,

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(ii) a notice of intent to terminate any Plan shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a
Plan may become a subject of any such proceedings, (iii) the Company or any
ERISA Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (iv) the Company or
any ERISA Affiliate withdraws from any Multiemployer Plan, or (v) the Company or
any Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and any such event or
events described in clauses (i) through (v) above, either individually or
together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect.

As used in Section 11(k), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in section 3 of ERISA.

SECTION 12.

REMEDIES ON DEFAULT, ETC.

Section 12.1. Acceleration. (a) If an Event of Default with respect to the
Company described in Section 11(g) or (h) (other than an Event of Default
described in clause (i) of Section 11(g) or described in clause (vi) of
Section 11(g) by virtue of the fact that such clause encompasses clause (i) of
Section 11(g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or
holders of more than 50% in principal amount of the Notes at the time
outstanding may at any time at its or their option, by notice or notices to the
Company, declare all the Notes then outstanding to be immediately due and
payable.

(c) If any Event of Default described in Section 11(a) or (b) has occurred and
is continuing, any holder or holders of Notes at the time outstanding affected
by such Event of Default may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (i) all accrued and unpaid interest
thereon (including, but not limited to, interest accrued thereon at the Default
Rate) and (ii) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for), and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

prepaid or are accelerated as a result of an Event of Default, is intended to
provide compensation for the deprivation of such right under such circumstances.

Section 12.2. Other Remedies. If any Default or Event of Default has occurred
and is continuing, and irrespective of whether any Notes have become or have
been declared immediately due and payable under Section 12.1, the holder of any
Note at the time outstanding may proceed to protect and enforce the rights of
such holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.

Section 12.3. Rescission. At any time after any Notes have been declared due and
payable pursuant to Section 12.1(b) or (c), the holders of more than 50% in
principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if
(a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate for such Series and tranche, (b) neither the Company nor any other Person
shall have paid any amounts which have become due solely by reason of such
declaration, (c) all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration, have been
cured or have been waived pursuant to Section 17, and (d) no judgment or decree
has been entered for the payment of any monies due pursuant hereto or to the
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Event of Default or Default or impair any right consequent
thereon.

Section 12.4. No Waivers or Election of Remedies, Expenses, Etc. No course of
dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice
such holder’s rights, powers or remedies. No right, power or remedy conferred by
this Agreement or by any Note upon any holder thereof shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to the holder
of each Note on demand such further amount as shall be sufficient to cover all
costs and expenses of such holder incurred in any enforcement or collection
under this Section 12, including, without limitation, reasonable attorneys’
fees, expenses and disbursements.

SECTION 13.

REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

Section 13.1. Registration of Notes. The Company shall keep at its principal
executive office a register for the registration and registration of transfers
of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.

Section 13.2. Transfer and Exchange of Notes. Upon surrender of any Note to the
Company at the address and to the attention of the designated officer (all as
specified in Section 18(iii)) for registration of transfer or exchange (and in
the case of a surrender for registration of transfer accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
such holder’s attorney duly authorized in writing and accompanied by the
relevant name, address and other information for notices of each transferee of
such Note or part thereof), within ten Business Days thereafter, the Company
shall execute and deliver, at the Company’s expense (except as provided below),
one or more new Notes (as requested by the holder thereof) in exchange therefor,
of the same Series and tranche and in an aggregate principal amount equal to the
unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be substantially in
the form of Exhibit 1 or Exhibit 1.2, as the case may be. Each such new Note
shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $200,000; provided that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes of a Series or tranche, one
Note of such Series or tranche may be in a denomination of less than $200,000.
Any transferee, by its acceptance of a Note registered in its name (or the name
of its nominee), shall be deemed to have made the representation set forth in
Section 6.2.

Section 13.3. Replacement of Notes. Upon receipt by the Company at the address
and to the attention of the designated officer (all as specified in
Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of
and the loss, theft, destruction or mutilation of any Note (which evidence shall
be, in the case of an Institutional Investor, notice from such Institutional
Investor of such ownership and such loss, theft, destruction or mutilation), and

(a)in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original purchaser or another holder of a Note with a minimum net worth
of at least $50,000,000 or a Qualified Institutional Buyer, such Person’s own
unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

 

(b)

in the case of mutilation, upon surrender and cancellation thereof,

within ten Business Days thereafter, the Company at its own expense shall
execute and deliver, in lieu thereof, a new Note of the same Series and tranche
and dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.

SECTION 14.

PAYMENTS ON NOTES.

Section 14.1. Place of Payment. Subject to Section 14.2, payments of principal,
Make-Whole Amount, if any, and interest becoming due and payable on the Notes
shall be made in Poughkeepsie, New York at the principal office of the Company
in such jurisdiction. The Company may at any time, by notice to each holder of a
Note, change the place of payment of the Notes so long as such place of payment
shall be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

Section 14.2. Home Office Payment. So long as any Purchaser or its nominee shall
be the holder of any Note, and notwithstanding anything contained in
Section 14.1 or in such Note to the contrary, the Company will pay all sums
becoming due on such Note for principal, Make-Whole Amount, if any, and interest
by the method and at the address specified for such purpose below such
Purchaser’s name in Schedule A hereto or any Supplemental Note Purchaser
Schedule, as the case may be, or by such other method or at such other address
as such Purchaser shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by a Purchaser or its nominee, such Purchaser will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes of the same Series and tranche
pursuant to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or indirect
transferee of any Note purchased by a Purchaser under this Agreement and that
has made the same agreement relating to such Note as the Purchasers have made in
this Section 14.2.

SECTION 15.

EXPENSES, ETC.

Section 15.1. Transaction Expenses. Whether or not the transactions contemplated
hereby are consummated, the Company will pay all costs and expenses (including
reasonable attorneys’ fees of a special counsel and, if reasonably required by
the Required Holders, local or other counsel) incurred by the Purchasers and
each other holder of a Note in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement, the Subsidiary Guaranty or the Notes (whether or not such

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement, the
Subsidiary Guaranty or the Notes or in responding to any subpoena or other legal
process or informal investigative demand issued in connection with this
Agreement, the Subsidiary Guaranty or the Notes, or by reason of being a holder
of any Note, (b) the costs and expenses, including financial advisors’ fees,
incurred in connection with the insolvency or bankruptcy of the Company or any
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes, and (c) the costs and
expenses incurred in connection with the initial filing of this Agreement and
all related documents and financial information, with the SVO, provided that
such costs and expenses under this clause (c) shall not exceed $3,000. The
Company will pay, and will save each Purchaser and each other holder of a Note
harmless from, all claims in respect of any fees, costs or expenses, if any, of
brokers and finders (other than those, if any, retained by a Purchaser or other
holder in connection with its purchase of the Notes).

Section 15.2. Survival. The obligations of the Company under this Section 15
will survive the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement or the Notes, and the termination of
this Agreement.

SECTION 16.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT .

All representations and warranties contained herein or in the Subsidiary
Guaranty shall survive the execution and delivery of this Agreement or the
Subsidiary Guaranty and the Notes, the purchase or transfer by any Purchaser of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of such Purchaser or any other
holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company or the Subsidiary Guaranty
pursuant to this Agreement or the Subsidiary Guaranty shall be deemed
representations and warranties of the Company or the Subsidiary Guarantor under
this Agreement or the Subsidiary Guaranty. Subject to the preceding sentence,
this Agreement, the Subsidiary Guaranty and the Notes embody the entire
agreement and understanding between each Purchaser and the Company or the
Subsidiary Guarantor and supersede all prior agreements and understandings
relating to the subject matter hereof.

SECTION 17.

AMENDMENT AND WAIVER.

Section 17.1. Requirements. This Agreement, the Subsidiary Guaranty and the
Notes may be amended, and the observance of any term hereof or of the Notes may
be waived (either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except that (a) no
amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21
hereof, or any defined term (as it is used therein), will be effective as to any
Purchaser unless consented to by such Purchaser in writing, and (b) no such
amendment or waiver may, without the written consent of the holder of each Note
at the time outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the amount or time of
any prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

on, the Notes, (ii) change the percentage of the principal amount of the Notes
the holders of which are required to consent to any such amendment or waiver, or
(iii) amend any of Section 8, 11(a), 11(b), 12, 17 or 20.

 

Section 17.2.

Solicitation of Holders of Notes.

(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount or Series or tranche of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a decision is
required, to enable such holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof or of the Notes. The Company will deliver executed or true and
correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.

(b) Payment. The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security or provide other credit support, to any holder
of Notes as consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted or other credit support concurrently provided, on the same
terms, ratably to each holder of Notes then outstanding even if such holder did
not consent to such waiver or amendment.

Section 17.3. Binding Effect, Etc. Any amendment or waiver consented to as
provided in this Section 17 applies equally to all holders of Notes and is
binding upon them and upon each future holder of any Note and upon the Company
without regard to whether such Note has been marked to indicate such amendment
or waiver. No such amendment or waiver will extend to or affect any obligation,
covenant, agreement, Default or Event of Default not expressly amended or waived
or impair any right consequent thereon. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under any Note shall operate as a waiver of any rights of any holder of such
Note.

Section 17.4. Notes Held by Company, Etc. Solely for the purpose of determining
whether the holders of the requisite percentage of the aggregate principal
amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement, the Subsidiary Guaranty or the
Notes, or have directed the taking of any action provided herein or in the Notes
to be taken upon the direction of the holders of a specified percentage of the
aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to
be outstanding.

SECTION 18.

NOTICES.

All notices and communications provided for hereunder shall (except as otherwise
provided in Section 7 with respect to Electronic Delivery) be in writing and
sent (a) by telefacsimile if the sender on the same day sends a confirming copy
of such notice by a

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

recognized overnight delivery service (charges prepaid), or (b) by registered or
certified mail with return receipt requested (postage prepaid), or (c) by a
recognized overnight delivery service (with charges prepaid). Any such notice
must be sent:

(i) if to any Purchaser or its nominee, to such Purchaser or nominee at the
address specified for such communications in Schedule A hereto or in a
Supplemental Note Purchaser Schedule, or at such other address as such Purchaser
or nominee shall have specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or

(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Chief Financial Officer, or at such other
address as the Company shall have specified to the holder of each Note in
writing.

Notices under this Section 18 will be deemed given only when actually received.

SECTION 19.

REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by any Purchaser at a Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to any Purchaser, may be reproduced by such
Purchaser by any photographic, photostatic, electronic, digital or other similar
process and such Purchaser may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by such Purchaser in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of Notes from
contesting any such reproduction to the same extent that it could contest the
original, or from introducing evidence to demonstrate the inaccuracy of any such
reproduction.

SECTION 20.

CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means
information delivered to any Purchaser by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified in writing when received by
such Purchaser as being confidential information of the Company or such
Subsidiary; provided that such term does not include information that (a) was
publicly known or otherwise known to such Purchaser prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission
by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise
becomes known to such Purchaser other than through

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

disclosure by the Company or any Subsidiary or (d) constitutes financial
statements delivered to such Purchaser under Section 7.1 that are otherwise
publicly available. Each Purchaser will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by such Purchaser
in good faith to protect confidential information of third parties delivered to
such Purchaser; provided that such Purchaser may deliver or disclose
Confidential Information to (i) its directors, officers, employees, agents,
attorneys, trustees and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by its Notes),
(ii) its financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which it sells or offers to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (v) any Person from which it offers to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction over such
Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization,
or any nationally recognized rating agency that requires access to information
about such Purchaser’s investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to such Purchaser,
(x) in response to any subpoena or other legal process, (y) in connection with
any litigation to which such Purchaser is a party or (z) if an Event of Default
has occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes and this Agreement. Each holder of a Note, by its acceptance
of a Note, will be deemed to have agreed to be bound by and to be entitled to
the benefits of this Section 20 as though it were a party to this Agreement. On
reasonable request by the Company in connection with the delivery to any holder
of a Note of information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with
the Company embodying the provisions of this Section 20.

SECTION 21.

SUBSTITUTION OF PURCHASER.

Each Purchaser shall have the right to substitute any one of its Affiliates as
the purchaser of the Notes that it has agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both such Purchaser and
such Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, any reference to such Purchaser in this Agreement (other than in
this Section 21) shall be deemed to refer to such Affiliate in lieu of such
original Purchaser. In the event that such Affiliate is so substituted as a
Purchaser hereunder and such Affiliate thereafter transfers to such original
Purchaser all of the Notes then held by such Affiliate, upon receipt by the
Company of notice of such transfer, any reference to such Affiliate as a
“Purchaser” in this Agreement (other than in this Section 21) shall no longer be
deemed to refer to such Affiliate, but shall refer to such original Purchaser,
and such original Purchaser shall again have all the rights of an original
holder of the Notes under this Agreement.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

SECTION 22.

MISCELLANEOUS.

Section 22.1. Successors and Assigns. All covenants and other agreements
contained in this Agreement by or on behalf of any of the parties hereto bind
and inure to the benefit of their respective successors and assigns (including,
without limitation, any subsequent holder of a Note) whether so expressed or
not.

Section 22.2. Payments Due on Non-Business Days. Anything in this Agreement or
the Notes to the contrary notwithstanding (but without limiting the requirement
in Section 8.5 that the notice of any optional prepayment specify a Business Day
as the date fixed for such prepayment), any payment of principal of or
Make-Whole Amount or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day without including
the additional days elapsed in the computation of the interest payable on such
next succeeding Business Day; provided that if the maturity date of any Note is
a date other than a Business Day, the payment otherwise due on such maturity
date shall be made on the next succeeding Business Day and shall include the
additional days elapsed in the computation of interest payable on such next
succeeding Business Day.

Section 22.3. Accounting Terms. (a) All accounting terms used herein which are
not expressly defined in this Agreement have the meanings respectively given to
them in accordance with GAAP. Except as otherwise specifically provided herein,
(i) all computations made pursuant to this Agreement shall be made in accordance
with GAAP and (ii) all financial statements shall be prepared in accordance with
GAAP.

(b) Each of the holders of the Notes by its acceptance thereof understands and
agrees with the Company that in the event that a change in GAAP occurs which is
the sole cause of a change in any of the calculations contemplated by this
Agreement, including without limitation, calculations with regard to the
covenants contained in Sections 10.1 through 10.3 andSection 10.5 hereof, then
and in such event the holders and the Company shall undertake in good faith to
amend any affected provisions of this Agreement so as to preserve the intent and
purpose thereof and to accommodate such change in GAAP and to enter into an
amendment hereof to reflect the same, such amendment to be in form and substance
satisfactory to the Company and the Required Holders. In the event that such a
change in GAAP is the sole cause of the Company violating any of the covenants
contained in Sections 10.1 through 10.3 and Section 10.5 hereof or causes a
Default or Event of Default to occur, at a time when no other Default or Event
of Default exists, then and in such event, anything in this Agreement to the
contrary notwithstanding, no Default or Event of Default will be caused by such
change in GAAP for a period of 120 days following the event which would
otherwise be treated as a Default or Event of Default and the Company shall,
notwithstanding anything in Section 11 to the contrary, have 120 days from and
after the date of the occurrence of such event within which to enter into an
amendment with the Required Holders as hereinbelow contemplated.

The procedure for amending this Agreement pursuant to this Section 22.3(b) shall
be as follows:

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

(i) The Company shall, within 15 days of the occurrence of the event which would
otherwise be treated as a Default or an Event of Default due to a change in
GAAP, prepare and deliver to each holder of the Notes and to their special
counsel a proposed form of amendment;

(ii) The holders of the Notes shall, within 30 days of receipt of the Company’s
proposed form of amendment, deliver to the Company their collective written
response to the Company’s proposed amendment;

(iii) For the remainder of the period ending 90 days after such occurrence, the
parties shall negotiate in good faith toward the execution of the amendment
contemplated by this Section 22.3;

(iv) In the event the parties are unable to come to an agreement on the form and
substance of the amendment during such 90-day period, the Company shall
designate a “Big Four” accounting firm (which shall not be an accounting firm
currently engaged by the Company), to prepare the amendment contemplated by this
Section 22.3, which accounting firm must be acceptable to the Required Holders,
whose approval shall not be unreasonably withheld or delayed;

(v) Such accounting firm shall be engaged to prepare the amendment for execution
by the parties no later than the 120th day following the occurrence of the event
which gave rise to such Default or Event of Default; provided, however, that the
accounting firm may utilize an additional 30 days to complete work on the
amendment in the event it determines that such time is necessary and during
which such additional 30 days no Default or Event of Default will be caused by
the change in GAAP; and

(vi) The Company and each of the holders of the Notes agrees to be bound by the
determination of the chosen accounting firm as to the form and substance of the
amendment and the Company and each such holder agrees to promptly execute and
deliver such amendment following such accounting firm’s delivery of the
amendment to such Persons.

Section 22.4. Severability. Any provision of this Agreement that 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 (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.5. Construction, Etc. Each covenant contained herein shall be
construed (absent express provision to the contrary) as being independent of
each other covenant contained herein, so that compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers to action
to be taken by any Person, or which such Person is prohibited from taking, such
provision shall be applicable whether such action is taken directly or
indirectly by such Person.

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

For the avoidance of doubt, all Schedules and Exhibits attached to this
Agreement shall be deemed to be a part hereof.

Section 22.6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.

Section 22.7. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York, excluding choice-of-law principles of the law of such
State that would permit the application of the laws of a jurisdiction other than
such State.

Section 22.8. Jurisdiction and Process; Waiver of Jury Trial. (a) The Company
irrevocably submits to the non-exclusive jurisdiction of any New York State or
federal court sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating to this Agreement or
the Notes. To the fullest extent permitted by applicable law, the Company
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any claim that it is not subject to the jurisdiction of any such
court, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding brought in any such court and any
claim that any such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum.

(b) The Company consents to process being served by or on behalf of any holder
of Notes in any suit, action or proceeding of the nature referred to in
Section 22.8(a) by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, return receipt
requested, to it at its address specified in Section 18 or at such other address
of which such holder shall then have been notified pursuant to said Section. The
Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or
proceeding and (ii) shall, to the fullest extent permitted by applicable law, be
taken and held to be valid personal service upon and personal delivery to it.
Notices hereunder shall be conclusively presumed received as evidenced by a
delivery receipt furnished by the United States Postal Service or any reputable
commercial delivery service.

(c) Nothing in this Section 22.8 shall affect the right of any holder of a Note
to serve process in any manner permitted by law, or limit any right that the
holders of any of the Notes may have to bring proceedings against the Company in
the courts of any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.

(d) THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN
CONNECTION HEREWITH OR THEREWITH.

*     *     *     *     *

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

If you are in agreement with the foregoing, please sign the form of agreement on
a counterpart of this Agreement and return it to the Company, whereupon this
Agreement shall become a binding agreement between you and the Company.

 

Very truly yours,

 

CH ENERGY GROUP, INC.

 

 

 

By

 /s/ Christopher M. Capone   

Christopher M. Capone

Executive Vice President and

Chief Financial Officer

 

This Agreement is hereby accepted and agreed

to as of the date thereof.

 

Thrivent Financial for Lutherans

 

 

 

By

 /s/ Alan D. Onstad

Name: Alan D. Onstad

Title: Senior Director

This Agreement is hereby accepted and agreed

to as of the date thereof.

 

MODERN WOODMEN OF AMERICA

 

 

 

By

 /s/ W. Kenny Massey

Name: W. Kenny Massey

Title: President & CEO

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

INFORMATION RELATING TO PURCHASERS

 

NAME AND ADDRESS OF PURCHASER

PRINCIPAL AMOUNT AND CLOSING DATE OF SERIES A NOTES TO BE PURCHASED

 

THRIVENT FINANCIAL FOR LUTHERANS
625 Fourth Avenue South
Minneapolis, Minnesota 55415
Attention: Investment Division-Private
Placements
Fax Number: (612) 844-4027

APRIL 17, 2009

$5,000,000
$5,000,000
$5,000,000
$5,000,000

 

 

JUNE 15, 2009

$5,000,000
$5,000,000
$5,000,000

 

Payments

All payments of principal, premium or interest on the account of the Notes shall
be made by bank wire transfer (in immediately available funds) to:

 

ABA #011000028

State Street Bank & Trust Co.

DDA # A/C — 6813-049-1

Fund Number: NCE1

Fund Name: Thrivent Financial for Lutherans

 

All payments must include the following information: security description,
private placement number, reference purpose of payment and interest and/or
principal breakdown

Notices

All notices and communications to be addressed as first provided above, except
notices with respect to payment and written confirmation of each such payment,
to be addressed:

 

SCHEDULE A

(to Note Purchase Agreement)

 

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CH ENERGY GROUP, INC.       NOTE PURCHASE AGREEMENT 

 

Thrivent Financial for Lutherans

625 Fourth Avenue South

Minneapolis, Minnesota 55415

Investment Division-Private Placements

Attention: Alan D. Onstad

Fax: (612) 844-4027

 

with a copy to:

 

Thrivent Accounts

State Street Kansas City

801 Pennsylvania

Kansas City, Missouri 64105

Attention: Bart Woodson

Fax: (816) 691-3610

Name of Nominee in which Notes are to be issued: Swanbird & Co.

Taxpayer I.D. Number for Swanbird & Co.: 04-3475606

Taxpayer I.D. Number for Thrivent Financial for Lutherans: 39-0123480

 

Instructions for Delivery of Notes:

 

DTC/New York Window

55 Water Street

Plaza Level – 3rd Floor

New York, New York 10041

Attention: Robert Mendez

Account: State Street

Fund Name: Thrivent Financial for Lutherans

Fund Number: NCE1

Nominee Name: Swanbird & Co.

Nominee Tax ID Number: 04-3475606

 

With a copy to the Thrivent Financial in-house attorney, Marlene Nogle.

 

A-2

 

 

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NAME AND ADDRESS OF PURCHASER

PRINCIPAL AMOUNT AND CLOSING DATE OF SERIES A NOTES TO BE PURCHASED

 

MODERN WOODMEN OF AMERICA
1701 First Avenue
Rock Island, Illinois 61201
Attention: Investment Department
investments@modern-woodmen.org
Fax: (309) 793-5574

APRIL 17, 2009

$15,000,000

 

Payments

All payments on account of the Notes held by such purchaser shall be made by
wire transfer of immediately available funds (identifying each payment as “CH
Energy Group, Inc., 6.58% Senior Notes, Series A, due April 17, 2014, PPN:
12541M A*3 principal, premium or interest”) for credit to:

 

The Northern Trust Company

50 South LaSalle Street

Chicago, IL 60675

ABA No. 071-000-152

Account Name: Modern Woodmen of America

Account No. 84352

 

Each such wire transfer shall set forth the name of the Company, the full title
(including the applicable coupon rate and final maturity date) of the Notes, a
reference to PPN: 12541M A*3 and the due date and application (as among
principal, premium and interest) of the payment being made.

Notices

Notices relating to payments and written confirmation of each such payment
should be sent to:

 

Modern Woodmen of America

1701 First Avenue

Rock Island, IL 61201

Attention: Investment Accounting Department

Fax: (309) 793-5688

All other notices and communications to be addressed as first provided above.

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D. Number: 36-1493430

 

A-3

 

 

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Instructions for Delivery of Notes:

 

Douglas A. Pannier

Modern Woodmen of America

1701 First Avenue

Rock Island, IL 61201

 

 

A-4

 

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DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

“Acquiring Person” is defined in Section 10.4(b).

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person, and with respect to the Company, shall include any Person beneficially
owning or holding, directly or indirectly, 10% or more of any class of voting or
equity interests of the Company or any Subsidiary or any Person of which the
Company and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity interests.
As used in this definition, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of the Company.

“Agreement” or “this Agreement” means this Agreement as it may from time to time
be amended or supplemented, and without limiting the generality of the
foregoing, shall include all Supplemental Note Purchase Agreements.

“Anti-Terrorism Order”means Executive Order No. 13,224 of September 24, 2001,
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49,079 (2001), as amended.

“Bank Credit Agreement” means that certain Amended and Restated Credit Agreement
dated as of February 21, 2008 among the Company and CHEC, as borrowers, Key Bank
National Association, as administrative agent, and the other financial
institutions party thereto, as the same may be amended, supplemented, replaced
or refinanced from time to time.

“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

“CHEC” means Central Hudson Enterprises Corporation, a New York corporation, or
any successor that becomes such in the manner prescribed in Section 10.4.

“Closing” is defined in Section 3.

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

 

SCHEDULE B

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

“Company” means CH Energy Group, Inc., a New York corporation or any successor
that becomes such in the manner prescribed in Section 10.4.

“Confidential Information” is defined in Section 20.

“Consolidated Net Worth” means the consolidated stockholders’ equity of the
Company and its Subsidiaries, as defined according to GAAP.

“Consolidated Total Assets” means total assets of the Company and its
Subsidiaries determined on a consolidated basis in accordance with GAAP.

“Consolidated Total Capitalization” means, at any time, the sum of
(a) Consolidated Net Worth and (b) Consolidated Total Debt.

“Consolidated Total Debt” means as of any date of determination, the total of
all Debt of the Company and its Subsidiaries determined on a consolidated basis
in accordance with GAAP.

“Debt” with respect to any Person means, at any time, without duplication,

(a)its liabilities for borrowed money and its redemption obligations in respect
of mandatorily redeemable Preferred Stock;

(b)its liabilities for the deferred purchase price of property acquired by such
Person (excluding accounts payable and guarantees of accounts payable arising in
the ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);

(c)(i) all liabilities appearing on its balance sheet in accordance with GAAP in
respect of Capital Leases and (ii) all liabilities which would appear on its
balance sheet in accordance with GAAP in respect of Synthetic Leases assuming
such Synthetic Leases were accounted for as Capital Leases;

(d)all liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities); and

(e)any Guaranty of such Person with respect to liabilities of a type described
in any of clauses (a) through (d) hereof (giving effect to any exclusions
expressly set forth in any such clause).

Debt of any Person shall include all obligations of such Person of the character
described in clauses (a) through (e) to the extent such Person remains legally
liable in respect thereof notwithstanding that any such obligation is deemed to
be extinguished under GAAP.

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

 

B-2

 

--------------------------------------------------------------------------------

“Default Rate” means, with respect to any Series or tranche of Notes, that rate
of interest that is the greater of (i) 2% per annum above the rate of interest
stated in clause (a) of the first paragraph of the Notes of such Series or
tranche or (ii) 2% over the rate of interest publicly announced by Citibank,
N.A. in New York, New York as its “base” or “prime” rate.

“Disclosure Documents”is defined in Section 5.3.

“Electronic Delivery” is defined in Section 7.1(a).

“Eligible Purchasers” means any Initial Purchaser of the Series A Notes and
additional Institutional Investors.

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.

“Event of Default” is defined in Section 11.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time
in effect.

“Form 10-K” is defined in Section 7.1(b).

“Form 10-Q” is defined in Section 7.1(a).

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America (including IFRS if so in effect at the time
of determination).

“Governmental Authority” means

 

(a)

the government of

(i) the United States of America or any State or other political subdivision
thereof, or

 

B-3

 

--------------------------------------------------------------------------------

(ii) any other jurisdiction in which the Company or any Subsidiary conducts all
or any part of its business, or which asserts jurisdiction over any properties
of the Company or any Subsidiary, or

(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:

(a) to purchase such Debt or obligation or any property constituting security
therefor;

(b) to advance or supply funds (i) for the purchase or payment of such Debt or
obligation, or (ii) to maintain any working capital or other balance sheet
condition or any income statement condition of any other Person or otherwise to
advance or make available funds for the purchase or payment of such Debt or
obligation;

(c) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such Debt or obligation of the ability of any
other Person to make payment of the Debt or obligation; or

(d) otherwise to assure the owner of such Debt or obligation against loss in
respect thereof;

provided, that, for the avoidance of doubt, a “Guaranty” shall not include any
obligations of an entity to guaranty obligations of its subsidiary if such
subsidiary’s obligations do not themselves constitute “Debt” of such subsidiary.
In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor.

“Hazardous Materials” means any and all pollutants, toxic or hazardous wastes or
any other substances, including all substances listed in or regulated in any
Environmental Law that might pose a hazard to health and safety, the removal of
which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be restricted, regulated, prohibited or penalized by any applicable law
including, but not limited to, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum, petroleum products, lead based paint,
radon gas or similar restricted, prohibited or penalized substances.

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

 

B-4

 

--------------------------------------------------------------------------------

“IAS” means International Accounting Standards as promulgated by the
International Accounting Standards Board.

“IFRS” means international accounting standards promulgated by the IAS and
approved by the SEC.

“Initial Closing” is defined in Section 3.

“Initial Purchaser” is defined in the introductory paragraph hereto.

“Initial Purchaser Schedule” means Schedule A to this Agreement.

“Institutional Investor” means (a) any original purchaser of a Note, (b) any
holder of a Note holding (together with one or more of its affiliates) more than
$2,000,000 of the aggregate principal amount of the Notes then outstanding,
(c) any bank, trust company, savings and loan association or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form, and (d) any Related Fund of any holder of any Note.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

“Make-Whole Amount” is defined in Section 8.7.

“Material” means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement and the Notes, or (c) the validity
or enforceability of this Agreement or the Notes.

“Memorandum” is defined in Section 5.3.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).

“NAIC” means the National Association of Insurance Commissioners or any
successor thereto.

“Notes” is defined in Section 1.

 

B-5

 

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“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

“Permitted CHEC Debt” means, so long as the Subsidiary Guaranty is in full force
and effect, liabilities of CHEC for Debt incurred under the Bank Credit
Agreement; provided that in no event shall Permitted CHEC Debt exceed
$150,000,000 at any time outstanding.

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, business entity or
Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
subject to Title I of ERISA that is or, within the preceding five years, has
been established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the Company or
any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate
may have any liability.

“Pollution Control Bonds” means tax exempt pollution control refunding revenue
bonds in an aggregate principal amount not exceeding $115,850,000 issued on
behalf of the Utility through the New York State Energy Research and Development
Authority pursuant to that certain Trust Indenture between the New York State
Energy Research and Development Authority and United States Trust Company of New
York, as trustee, dated as of August 1, 1999 as in effect on the date of the
first Initial Closing.

“Preferred Stock” means any class of capital stock of a Person that is preferred
over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon
liquidation or dissolution of such Person.

“Priority Debt” means (without duplication) the sum of (a) all Debt of the
Company’s Subsidiaries other than (i) Debt of the Utility and (ii) Permitted
CHEC Debt plus (b) Debt of the Company and its Subsidiaries other than the
Utility secured by a Lien permitted by Section 10.3(i).

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

“PTE” is defined in Section 6.2(a).

“Purchaser” is defined in the first paragraph of this Agreement.

“Purchaser Schedules” means the Initial Purchaser Schedule and the Supplemental
Note Purchaser Schedule.

 

B-6

 

 

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“QPAM Exemption” means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.

“Qualified Institutional Buyer” means any Person who is a “qualified
institutional buyer” within the meaning of such term as set forth in
Rule 144A(a)(1) under the Securities Act.

“Related Fund” means, with respect to any holder of any Note, any fund or entity
that (i) invests in Securities or bank loans, and (ii) is advised or managed by
such holder, the same investment advisor as such holder or by an affiliate of
such holder or such investment advisor.

“Required Holders” means, at any time, the holders of more than 50% in principal
amount of the Notes at the time outstanding (exclusive of Notes then owned by
the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this Agreement.

“SEC” shall mean the Securities and Exchange Commission of the United States, or
any successor thereto.

“Securities” or“Security” shall have the same meaning as in Section 2(1) of the
Securities Act.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Senior Debt” means all Debt of the Company which is not expressed to be
subordinate or junior in rank to any other Debt of the Company.

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.

“Series” means anyone of or any combination of the Series A Notes and any
subsequent Notes of any Series.

“Series A Notes” is defined in Section 1 of this Agreement.

“Subsidiary” means, as to any Person, any other Person in which such first
Person or one or more of its Subsidiaries or such first Person and one or more
of its Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
second Person, and any partnership or joint venture if more than a 50% interest
in the profits or capital thereof is owned by such first Person or one or more
of its Subsidiaries or such first Person and one or more of its Subsidiaries
(unless such partnership or joint venture can and does ordinarily take major
business actions without the prior approval of such Person or one or

 

B-7

 

 

--------------------------------------------------------------------------------

more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a “Subsidiary” is a reference to a Subsidiary of the Company.

“Subsidiary Guarantor” is defined in Section 2.3.

“Subsidiary Guaranty” is defined in Section 2.3.

“Supplemental Closing” is defined in Section 2.2.

“Supplemental Closing Date” is defined in Section 2.2.

“Supplemental Note Purchase Agreement” is defined in Section 2.2.

“Supplemental Note Purchaser Schedule” means the Schedule of Purchasers of any
Series of Supplemental Notes which is attached to the Supplemental Note Purchase
Agreement relating to such Series.

“Supplemental Notes” is defined in Section 1.2.

“Supplemental Purchasers” is defined in Section 2.2.

“Surviving Person” is defined inSection 10.4(a).

“SVO” means the Securities Valuation Office of the NAIC or any successor to such
Office.

“Synthetic Lease” means, at any time, any lease (including leases that may be
terminated by the lessee at any time) of any property (a) that is accounted for
as an operating lease under GAAP and (b) in respect of which the lessee retains
or obtains ownership of the property so leased for U.S. federal income tax
purposes, other than any such lease under which such Person is the lessor.

“tranche” is defined in Section 1.2.

“USA Patriot Act” means United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

“Utility” means Central Hudson Gas & Electric Corporation, a New York
corporation, together with its successors and assigns.

“Voting Stock” means Securities of any class or classes, the holders of which
are ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions).

 

B-8

 

 

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“Wholly-owned Subsidiary” means, at any time, any Subsidiary one hundred percent
(100%) of all of the equity interests (except directors’ qualifying shares) and
voting interests of which are owned by any one or more of the Company and the
Company’s other Wholly-owned Subsidiaries at such time.

 

B-9

 

 

--------------------------------------------------------------------------------

 

DISCLOSURE MATERIALS

 

None.

 

SCHEDULE 5.3
(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY STOCK

 

 

Subsidiary

Jurisdiction of Organization

Ownership of Shares/
Equity Interests

Central Hudson Gas & Electric Corporation

New York

100% by the Company

Central Hudson Enterprise Corporation

New York

100% by the Company

Griffith Energy Services, Inc.

New York

100% by the Subsidiary Guarantor

CH–Auburn Energy, LLC

New York

100% by the Subsidiary Guarantor

Lyonsdale Biomass, LLC

Delaware

75% by the Subsidiary Guarantor

The Utility is subject to regulation by the New York Public Service Commission
(the “PSC”) and is a party to an amended and restated settlement agreement dated
January 2, 1998 among the Staff of the PSC and others, as adopted by the PSC in
Opinion No. 98, issued and effective June 30, 1998, which may restrict the right
of the Utility to pay dividends in certain circumstances.

 

Board of Directors of the Company:

Steven V. Lant, Chairman of the Board

Margarita K. Dilley

Steven M. Fetter

Stanley J. Grubel

Manuel J. Iraola

E. Michel Kruse

Jeffrey D. Tranen

Ernest R. Verebelyi

 

Senior Officers of the Company:

Steven V. Lant

Chairman of the Board, President and Chief Executive Officer

Carl E. Meyer

Executive Vice President

Joseph J. DeVirgilio

Executive Vice President Corporate Services & Administration

Christopher M. Capone

Executive Vice President and Chief Financial Officer

Kimberly J. Wright

Vice President Accounting & Controller

 

The directors and senior officers of the Company may be deemed to be Affiliates
of the Company under applicable rules of the Securities and Exchange Commission.
The Company is not aware of any other Affiliates of the Company.

 

SCHEDULE 5.4

(to Note Purchase Agreement)

 

 

--------------------------------------------------------------------------------

FINANCIAL STATEMENTS

 

1.

Consolidated financial statements of CH Energy Group, Inc. for the year ended
December 31, 2008 (as set forth in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2008).

 
 
 

 

SCHEDULE 5.5

(to Note Purchase Agreement)

 

 

 

--------------------------------------------------------------------------------

 

EXISTING DEBT

 

1.

Central Hudson Gas & Electric Corporation

 

Promissory Notes

 

Maturity Date

 

Amount Outstanding
March 31, 2009
(In Thousands)

 

2003 Series D (4.33%)(d)

 

Sep. 23, 2010

 

$

24,000

 

2002 Series D (6.64%)(d)

 

Mar. 28, 2012

 

 

36,000

 

2008 Series F (6.854%) (b)

 

Nov. 01, 2013

 

 

30,000

 

2004 Series D (4.73%)(d)

 

Feb. 27, 2014

 

 

7,000

 

2004 Series E (4.80%)(e)

 

Nov. 05, 2014

 

 

7,000

 

2007 Series F (6.028%)(b)

 

Sep. 01, 2017

 

 

33,000

 

2004 Series E (5.05%)(e)

 

Nov. 04, 2019

 

 

27,000

 

1999 Series A (5.45%)(a)

 

Aug. 01, 2027

 

 

33,400

 

1999 Series C (a)(c)

 

Aug. 01, 2028

 

 

41,150

 

1999 Series D (a)(c)

 

Aug. 01, 2028

 

 

41,000

 

1998 Series A (6.50%)(a)

 

Dec. 01, 2028

 

 

16,700

 

2006 Series E (5.76%)(e)

 

Nov. 17, 2031

 

 

27,000

 

1999 Series B (a)(c)

 

July 01, 2034

 

 

33,700

 

2005 Series E (5.84%)(e)

 

Dec. 05, 2035

 

 

24,000

 

2007 Series F (5.804%)(b)

 

Mar. 23, 2037

 

 

33,000

 

 

(a)

Promissory Notes issued in connection with the sale by NYSERDA of tax-exempt
pollution control revenue bonds.

(b)

Issued under Central Hudson’s medium-term note program.

(c)

Variable rate notes.

(d)

Issued pursuant to a 2001 PSC Order approving the issuance by Central Hudson
prior to June 30, 2004, of up to $100 million of unsecured medium-term notes.

(e)

Issued pursuant to a 2004 PSC Order approving the issuance by Central Hudson
prior to December 31, 2006, of up to $85 million of unsecured medium-term notes.

 

 

SCHEDULE 5.15

(to Note Purchase Agreement)

 

 

 

--------------------------------------------------------------------------------

 

 

I.

Central Hudson Gas & Electric Corporation (cont.)

Debt

Obligee

Amount Outstanding
March 31, 2009
(In Thousands)

Guarantee of Non-Revolving Commercial Line of Credit held by Stephen E. Miron

Patriot National Bank

$6,260

Deferred Purchase Price of Miron Property

Stephen E. Miron

$6,660

Standby Letter of Credit

Patriot National Bank

$0

$125 million Revolving Credit Agreement

JPMorgan Chase Bank, N.A., HSBC Bank USA, N.A., Keybank National Association

$40,000

 

II. Central Hudson Enterprise Corporation

Debt

Obligee

Amount Outstanding
March 31, 2009
(In Thousands)

Intercompany Debt

CH Energy Group, Inc.

$6,375

Guarantee of Griffith’s Demand Note

Manufacturers and Traders Trust Company

$5,000*

Premium Finance Agreement

Prime Rate Premium Finance Corporation, Inc.

$1,310*

* Amount of debt is recorded on Griffith Energy Services, Inc.’s books

 

III. Griffith Energy Services, Inc.

Debt

Obligee

Guaranteed By

Amount Outstanding March 31, 2009
(In Thousands)

Demand Note

Manufacturers and Traders Trust Company

CH Energy Group, Inc. and Central Hudson Enterprise Corporation

$5,000

Intercompany Debt

CH Energy Group, Inc.

 

$51,600

 

5.15-2

 

--------------------------------------------------------------------------------

IV. CH–Auburn Energy, LLC

None

V. Lyonsdale Biomass, LLC

Debt

Obligee

Amount Outstanding
March 31, 2009
(In Thousands)

Premium Finance Agreement

Prime Rate Premium Finance Corporation, Inc.

$10

VI. CH Energy Group, Inc.

Debt

Obligee

Amount
Outstanding
March 31, 2009
(In Thousands)

$150 million Revolving Credit Agreement

JPMorgan Chase Bank, N.A., HSBC Bank USA, N.A., Keybank National Association

$0

 

 

 

SCHEDULE 5.15

(to Note Purchase Agreement)

 

 

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FORM OF SERIES A NOTE

CH ENERGY GROUP, INC.

6.58% Senior Notes, Series A, due April 17, 2014

No. _________

Date  

$____________

PPN 12541M A*3

FOR VALUE RECEIVED, the undersigned, CH ENERGY GROUP, INC. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
New York, hereby promises to pay to [________________], or registered assigns,
the principal sum of [________________] DOLLARS (or so much thereof as shall not
have been prepaid) on April 17, 2014, with interest (computed on the basis of a
360-day year of twelve 30-day months) on the unpaid balance hereof at the rate
of (a) 6.58% per annum from the date hereof, payable semiannually, on the 17th
day of April and October in each year, commencing with the April 17 or
October 17 next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) to the extent permitted by law, on any
overdue payment of interest and, during the continuance of an Event of Default,
on such unpaid balance and on any overdue payment of any Make-Whole Amount, at a
rate per annum from time to time equal to the greater of (i) 8.58% or (ii) 2%
over the rate of interest publicly announced by Citibank, N.A.from time to time
in New York, New York as its “base” or “prime” rate payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreement referred to below.

This Note is one of a Series of Senior Notes, Series A (herein called the
“Notes”) issued pursuant to the Note Purchase Agreement, dated as of April 17,
2009 (as from time to time amended or supplemented, the “Note Purchase
Agreement”), among the Company and the Purchasers named therein and is entitled
to the benefits thereof. Each holder of this Note will be deemed, by its
acceptance hereof, to have (i) agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreement and (ii) made the
representation set forth in Section 6.2 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the

 

EXHIBIT 1

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.

If an Event of Default occurs and is continuing, the principal of this Note may
be declared or otherwise become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in the
Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York, excluding choice-of-law principles of the law of such State
that would permit application of the laws of a jurisdiction other than such
State.

 

CH ENERGY GROUP, INC.

 

 

 

By

_______________________________

[Title]

 

E-1-2

 

--------------------------------------------------------------------------------

[FORM OF SUPPLEMENTAL NOTE]

 

CH ENERGY GROUP, INC.

_____% Senior Note, Series __, due ________ __, _____

No. _________

Date

$____________

PPN___________

FOR VALUE RECEIVED, the undersigned, CH ENERGY GROUP, INC. (herein called the
“Company”), a corporation organized and existing under the laws of the State of
New York, hereby promises to pay to [________________], or registered assigns,
the principal sum of [________________] DOLLARS (or so much thereof as shall not
have been prepaid) on _______ __, ____, with interest (computed on the basis of
a 360-day year of twelve 30-day months) on the unpaid balance hereof at the rate
of (a) ____% per annum from the date hereof, payable semiannually, on the _____
day of ________ and ______________ in each year, commencing with the
[________________] or [________________] next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) to the extent
permitted by law, on any overdue payment of interest and, during the continuance
of an Event of Default, on such unpaid balance and on any overdue payment of any
Make-Whole Amount, at a rate per annum from time to time equal to the greater of
(i) [________+2]% or (ii) 2% over the rate of interest publicly announced by
[name of reference bank] from time to time in New York, New York as its “base”
or “prime” rate payable semiannually as aforesaid (or, at the option of the
registered holder hereof, on demand).

Payments of principal of, interest on and any Make-Whole Amount with respect to
this Note are to be made in lawful money of the United States of America at the
principal office of the Company or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the Note
Purchase Agreement referred to below.

This Note is one of a series of Senior Notes (herein called the “Series ___
Notes”) issued pursuant to the Supplemental Note Purchase Agreement dated as of
_________________ to that certain Note Purchase Agreement, dated as of April 17,
2009 (as from time to time amended or supplemented, the “Note Purchase
Agreement”), among the Company and the Purchasers named therein and is entitled
to the benefits thereof. Each holder of this Note will be deemed, by its
acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement. Unless
otherwise indicated, capitalized terms used in this Note shall have the
respective meanings ascribed to such terms in the Note Purchase Agreement.

 

EXHIBIT 1.2

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

This Note is a registered Note and, as provided in the Note Purchase Agreement,
upon surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder’s attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.

[The Company will make required prepayments of principal on the dates and in the
amounts specified in the Note Purchase Agreement.] [This Note is [also] subject
to [optional] prepayment, in whole or from time to time in part, at the times
and on the terms specified in the Note Purchase Agreement, but not otherwise.]
[This Note is not subject to prepayment.]

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner, at the price (including any applicable Make-Whole
Amount) and with the effect provided in the Note Purchase Agreement.

This Note shall be construed and enforced in accordance with, and the rights of
the Company and the holder of this Note shall be governed by, the law of the
State of New York, excluding choice-of-law principles of the law of such State
that would permit application of the laws of a jurisdiction other than such
State.

 

CH ENERGY GROUP, INC.

 

 

 

By

______________________________

[Title]

 

 

E-1.2-2

 

 

--------------------------------------------------------------------------------

 

FORM OF SUPPLEMENTAL NOTE PURCHASE AGREEMENT

 

CH ENERGY GROUP, INC.

284 South Avenue

Poughkeepsie, New York 12601-4879

 

 

As of ____________, _____

 

To Each of the Purchasers

Named in the Supplemental

Purchaser Schedule Attached Hereto

 

Ladies and Gentlemen:

Reference is made to that certain Note Purchase Agreement, dated as of April 17,
2009 among the Company and each of the Initial Purchasers named in the Initial
Purchaser Schedule attached thereto (the “Agreement”). Terms used but not
defined herein shall have the respective meanings set forth in the Agreement.

As contemplated in Section 2.2 of the Agreement, the Company agrees with you as
follows:

A.Subsequent Series of Notes. The Company has authorized and will create a
Subsequent Series of Notes to be called the “Series ___ Notes.” Said Series ___
Notes will be dated the date of issue; will bear interest (computed on the basis
of a 360-day year of twelve 30-day months) from such date at the rate of ____%
per annum, payable semiannually in arrears on the ___ day of each _________ and
__________ in each year (commencing _________, _____) until the principal amount
thereof shall become due and payable and shall bear interest on overdue
principal (including any overdue optional prepayment of principal) and premium,
if any, and, to the extent permitted by law, on any overdue installment of
interest at the rate specified therein after the date due for payment, whether
by acceleration or otherwise, until paid; will be expressed to mature on
__________, _____; and will be substantially in the form attached to the
Agreement as Exhibit 1.2 with the appropriate insertions to reflect the terms
and provisions set forth above.

B.Purchase and Sale of Series ___ Notes. The Company hereby agrees to sell to
each Supplemental Purchaser set forth on the Supplemental Purchaser Schedule
attached hereto (collectively, the “Series ___ Purchasers”) and, subject to the
terms and conditions in the Agreement and herein set forth, each Series ___
Purchaser agrees to purchase from the Company the aggregate principal amount of
the Series ___ Notes set opposite each Series ___ Purchaser’s name in the
Supplemental Purchaser Schedule at 100% of the aggregate principal amount. The

 

EXHIBIT 2.2

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

sale of the Series ___ Notes shall take place at the offices of
________________________ at 10:00 a.m. _________ time, at a closing the (“Series
___ Closing”) on ____________, ____, or such other date as shall be agreed upon
by the Company and each Series ___ Purchaser. At the Series ___ Closing the
Company will deliver to each Series ___ Purchaser one or more Series ___ Notes
registered in such Series ___ Purchaser’s name (or in the name of its nominee),
evidencing the aggregate principal amount of Series ___ Notes to be purchased by
said Series ___ Purchaser and in the denomination or denominations specified
with respect to such Series ___ Purchaser in the Supplemental Purchaser Schedule
attached hereto against payment of the purchase price thereof by transfer of
immediately available funds for credit to the Company’s account on the date of
the Series ___ Closing (the “Series ___ Closing Date”) (as specified in a notice
to each Series ___ Purchaser at least three Business Days prior to the
Series ___ Closing Date).

C. Conditions of Series ___ Closing. The obligation of each Series ___ Purchaser
to purchase and pay for the Series ___ Notes to be purchased by such purchaser
hereunder on the Series ___ Closing Date is subject to the satisfaction, on or
before such Series ___ Closing Date, of the conditions set forth in Section 4 of
the Agreement, and to the following additional conditions:

(a) Except as supplemented, amended or superceded by the representations and
warranties set forth in Exhibit A hereto, each of the representations and
warranties of the Company set forth inSection 5 of the Agreement shall be
correct as of the Series __ Closing Date and the Company shall have delivered to
each Series __ Purchaser an Officer’s Certificate, dated the Series __ Closing
Date certifying that such condition has been fulfilled.

(b) Contemporaneously with the Series __ Closing, the Company shall sell to each
Series __ Purchaser, and each Series __ Purchaser shall purchase, the Series __
Notes to be purchased by such Series __ Purchaser at the Series __ Closing as
specified in theSupplemental Purchaser Schedule.

D. Prepayments. The Series ___ Notes shall be subject to prepayment only
(a) pursuant to the required prepayments, if any, specified in clause (x) below;
and (b) pursuant to the optional prepayments permitted by Section 8.2 of the
Agreement.

 

(x)

Required Prepayments; Maturity

 

[to be determined]

(y)  Optional and Contingent Prepayments. As provided in Sections 8.2 of the
Agreement.

E.Purchaser Representations. Each Series ___ Purchaser represents and warrants
that the representations and warranties set forth in Section 6 of the Agreement
are true and correct on the date hereof with the same force and effect as if
each reference to “Series A Notes” set forth therein was modified to refer the
“Series __ Notes”, each reference to “Initial Purchaser” set

 

E-2.2-2

 

--------------------------------------------------------------------------------

forth therein was modified to refer the “Series __ Purchaser” and each reference
to “this Agreement” therein was modified to refer to the Agreement as
supplemented by this Supplemental Note Purchase Agreement.

F.Series ___ Notes Issued under and Pursuant to Agreement. Except as
specifically provided above, the Series ___ Notes shall be deemed to be issued
under, to be subject to and to have the benefit of all of the terms and
provisions of the Agreement as the same may from time to time be amended and
supplemented in the manner provided therein.

The execution hereof by the Series ___ Purchasers shall constitute a contract
among the Company and the Series ___ Purchasers for the uses and purposes
hereinabove set forth. By their acceptance hereof, each of the Series ___
Purchasers shall also be deemed to have accepted and agreed to the terms and
provisions of the Agreement, as in effect on the date hereof.

 

CH ENERGY GROUP, INC.

 

 

 

By

______________________________

[Title]

Accepted as of

_________________________

[VARIATION]

 

 

By

_______________________________

Its_________________________________

 

 

 

E-2.2-3

 

--------------------------------------------------------------------------------

INFORMATION RELATING TO SERIES __ PURCHASERS

 

NAME AND ADDRESS OF SERIES __ PURCHASER

CLOSING DATE

PRINCIPAL
AMOUNT OF SERIES
__ NOTES TO BE
PURCHASED

[NAME OF SERIES __ PURCHASER]

 

$

(1)           All payments by wire transfer of immediately available funds to:

with sufficient information to identify the source and application of such
funds.

 

 

(2)           All notices of payments and written confirmations of such wire
transfers:

 

 

(3)           All other communications:

 

 

(4)           All Electronic Deliveries:

 

 

 

 

SCHEDULE A

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

EXHIBIT A

SUPPLEMENTAL REPRESENTATIONS

The Company represents and warrants to each Series ____ Purchaser that except as
hereinafter set forth in this Exhibit A, each of the representations and
warranties set forth in Section 5 of the Agreement is true and correct as of the
date hereof with respect to the Series __ Notes with the same force and effect
as if each reference to “Series A Notes” set forth therein was modified to refer
the “Series __ Notes” and each reference to “this Agreement” therein was
modified to refer to the Agreement as supplemented by this Supplemental Note
Purchase Agreement. The Section references hereinafter set forth correspond to
the similar sections of the Note Purchase Agreement which are supplemented
hereby:

 

[Add any Sections as appropriate at the time the Series ___ Notes are issued]

 

 

 

SCHEDULE A

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

FORM OF SUBSIDIARY GUARANTY

(see Exhibit 10.2 to this Form 8-K)

 

EXHIBIT 2.3(a)

(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

FORM OF OPINION OF SPECIAL COUNSEL

TO THE COMPANY

 

 

 

EXHIBIT 4.4(a)
(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 
 

FORM OF OPINION OF SPECIAL COUNSEL

TO THE PURCHASERS

(Delivered to Purchasers only)

 

 

EXHIBIT 4.4(b)
(to Note Purchase Agreement)

 

--------------------------------------------------------------------------------

 

April 17, 2009

 

Thrivent Financial for Lutherans

Modern Woodmen of America

625 Fourth Avenue South

1701 First Avenue

Minneapolis, Minnesota 55415

Rock Island, Illinois 61201

 

Ladies and Gentlemen:

 

We have acted as counsel to CH Energy Group, Inc., a New York corporation (the
"Company"), and Central Hudson Enterprises Corporation, a New York corporation
("Subsidiary Guarantor"), in connection with the issuance and sale of
$35,000,000 in principal amount of the Company’s 6.58% Senior Notes, Series A,
due April 17, 2014 (the "Series A Notes") to Thrivent Financial for Lutherans
and Modern Woodmen of America (collectively, the “Note Purchasers”) pursuant to
the Note Purchase Agreement, dated as of April 17, 2009, (the “Note Purchase
Agreement”), among the Company and the Note Purchasers, which are guaranteed by
the Subsidiary Guarantor pursuant to the Guaranty Agreement, dated as of April
17, 2009 (the "Subsidiary Guaranty"). We have been requested by the Company and
the Subsidiary Guarantor to give our opinion pursuant to Section 4.4(a) of the
Note Purchase Agreement. For purposes hereof, terms defined in the Note Purchase
Agreement and used herein without definition shall have the meanings given such
terms in the Note Purchase Agreement.

In connection with the opinions set forth in this letter, we have reviewed the
Note Purchase Agreement, the Series A Notes, and the Subsidiary Guaranty
(collectively, the “Documents”). We also have investigated such questions of law
and examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents and records, in each case as we have
deemed necessary or appropriate for purposes of the opinions set forth herein.
In addition, we have obtained and relied upon such certificates and assurances
from public officials as we have deemed necessary. We have relied upon the
representations and warranties of the Company in the Note Purchase Agreement and
of the Subsidiary Guarantor in the Subsidiary Guaranty and upon certificates of
officers of the Company and the Subsidiary Guarantor and of others with respect
to certain factual matters. We have not independently verified such factual
matters.

In our examination, we have assumed the genuineness of all signatures (other
than those of the Company and the Subsidiary Guarantor), the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified copies or photocopies, the
authenticity of the originals of such copies and the legal capacity of all
natural persons.

We also have made, with your consent, the following additional assumptions:

(a)       Each of the Documents executed by a party other than the Company or
the Subsidiary Guarantor has been duly authorized, executed and delivered by
such other party.

 

--------------------------------------------------------------------------------

 

 

 

Thrivent Financial for Lutherans

Modern Woodmen of America

April 17, 2009

Page 2

 

(b)       Each of the Documents executed by a party other than the Company or
the Subsidiary Guarantor is a legal, valid and binding obligation of such other
party, enforceable against such other party in accordance with its terms.

(c)       Each of the parties to the Documents other than the Company and the
Subsidiary Guarantor is duly organized, validly existing and in good standing
under the laws of the jurisdiction in which it is organized, with full power and
authority to execute and deliver the Documents to which it is a party and to
perform the transactions contemplated thereby.

Based upon the foregoing, but subject to the assumptions set forth above and the
qualifications hereinafter set forth, it is our opinion that:

1. The Company is a corporation, duly incorporated, validly existing and in good
standing under the laws of the State of New York, has the corporate power and
authority to execute and perform the Note Purchase Agreement and to issue the
Series A Notes and is duly licensed or qualified, and is in good standing, as a
foreign corporation in each jurisdiction in which such qualification is required
by law, other than those jurisdictions as to which the failure to be so
qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have Material Adverse Effect.

2. The Subsidiary Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, has the corporate
power and authority to execute and perform the Subsidiary Guaranty and is duly
licensed or qualified, and is in good standing, as a foreign corporation in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to have
Material Adverse Effect.

3. Each Subsidiary of the Company other than the Subsidiary Guarantor is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization and
is duly licensed or qualified, and is in good standing, in each jurisdiction in
which such qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have Material
Adverse Effect.

4. The Note Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.

 

--------------------------------------------------------------------------------

 

 

 

Thrivent Financial for Lutherans

Modern Woodmen of America

April 17, 2009

Page 3

 

5. The Series A Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by the
Company and constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms.

6. The Subsidiary Guaranty has been duly authorized by all necessary corporate
action on the part of the Subsidiary Guarantor, has been duly executed and
delivered by the Subsidiary Guarantor and constitutes a legal, valid and binding
obligation of the Subsidiary Guarantor.

7. No approval, consent or withholding of objection on the part of, or filing,
registration or qualification with, any governmental body of the State of New
York or the United States of America is necessary in connection with the
execution, delivery and performance of the Note Purchase Agreement, the
Subsidiary Guaranty or the Series A Notes, except as may be required under the
blue sky laws of the State of New York (as to which we express no opinion).

8. The issuance and sale of the Series A Notes and the execution, delivery and
performance by the Company of the Note Purchase Agreement do not conflict with
or result in any breach of any of the provisions of or constitute a default
under or result in the creation or imposition of any Lien upon any of the
property of the Company pursuant to the provisions of the Restated Certificate
of Incorporation of the Company, as amended, or the By-laws of the Company or
any agreement or instrument known to us to which the Company is a party or by
which the Company may be bound or by any laws of the State of New York or of the
United States of America.

9. The execution, delivery and performance by the Subsidiary Guarantor of the
Subsidiary Guaranty do not conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the creation or
imposition of any Lien upon any of the property of the Subsidiary Guarantor
pursuant to the provisions of the Certificate of Incorporation, as amended, of
the Subsidiary Guarantor or the By-laws of the Subsidiary Guarantor or any
agreement or instrument known to us to which the Subsidiary Guarantor is a party
or by which the Subsidiary Guarantor may be bound or by any laws of the State of
New York or of the United States of America.

10. The issuance, sale and delivery of the Series A Notes and the delivery of
the Subsidiary Guaranty under the circumstances contemplated by the Note
Purchase Agreement do not, under existing law, require the registration of the
Series A Notes or the Subsidiary Guaranty under the Securities Act of 1933, as
amended, or the qualification of an indenture under the Trust Indenture Act of
1939, as amended.

 

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Thrivent Financial for Lutherans

Modern Woodmen of America

April 17, 2009

Page 4

 

11. The issuance of the Series A Notes and the use of the proceeds of the sale
of the Series A Notes in accordance with the provisions of and contemplated by
the Note Purchase Agreement do not violate or conflict with Regulations T, U or
X of the Board of Governors of the Federal Reserve System.

12. Neither the Company nor the Subsidiary Guarantor is an “investment company”
or a company “controlled” by an “investment company” under the Investment
Company Act of 1940, as amended.

13. To our knowledge, there is no litigation pending or threatened which
challenges the legal, valid and binding nature of any of the Documents.

The foregoing opinions are subject to the following assumptions and
qualifications:

(i) The opinions expressed herein with respect to the enforceability of the
Documents are subject to the effect of (A) any federal and other applicable
bankruptcy, reorganization, liquidation, insolvency, arrangement, moratorium,
fraudulent transfer, fraudulent conveyance and other similar laws relating to or
generally affecting the rights of creditors, and the principles of the law of
guaranty and suretyship, in any case whether in effect now or in the future, and
(B) the exercise of judicial discretion in accordance with general principles of
equity (whether applied by a court of law or by a court of equity). In addition,
we advise you that a court may not strictly enforce the covenants contained in
the Documents or permit acceleration if it determines that such enforcement or
acceleration would be unreasonable under the then existing circumstances.

(ii) The use of the words “our knowledge,” “known to us” or other similar
phrases signify that, in the course of our representation of the Company and the
Subsidiary Guarantor, no such information has come to our attention. We have not
undertaken any independent investigation or verification of any such statement
that would give us actual knowledge or actual notice that the statement is not
accurate or that any of the documents, certificates, reports and information on
which we have relied are not accurate and complete. The words “our knowledge or
“known to us” are limited to the knowledge of the lawyers within our firm who
are currently working on matters on behalf of the Company and/or the Subsidiary
Guarantor.

(iii) We are members of the Bar of the State of New York, and we do not hold
ourselves out as being conversant with, and we express no opinion as to, the
laws of any jurisdiction other than the laws of the State of New York and the
federal laws of the United States of America.

(iv) We express no opinion as to the validity or enforceability of any provision
of the Documents which (A) permits the Note Purchasers to charge a pre-payment
premium or to increase the rate of interest to an amount that may be determined
to be a penalty or liquidated

 

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Thrivent Financial for Lutherans

Modern Woodmen of America

April 17, 2009

Page 5

 

damages, (B) purports to be a waiver by the Company or the Subsidiary Guarantor
of any right or benefit (including, without limitation, any cognovit provisions
or confessions of judgment) except to the extent permitted by applicable law,
(C) purports to grant to the Note Purchasers a power-of-attorney, or (D)
purports to require that waivers be in writing. The provisions of the Documents
that purport to grant the Note Purchasers the right to have their attorneys’
fees and expenses paid by the Company or the Subsidiary Guarantor will be
enforceable only to the extent such fees and expenses are determined to be
reasonable by a court of competent jurisdiction.

(v) We express no opinion as to whether the enforceability of certain remedial
and other provisions of the Documents may be limited by implied covenants of
good faith, fair dealing, and commercially reasonable conduct.

(vi) Matters provided in the Documents to be in the sole or uncontrolled
discretion of the Note Purchasers or subject to the exclusive judgment of the
Note Purchasers may be held by a court to be subject to a standard of
reasonableness or not to be enforceable.

We have reviewed this letter with our clients, and have received their consent
to deliver it to you. The foregoing opinions may be relied upon by the Note
Purchasers only in connection with the transactions contemplated by the Note
Purchase Agreement and may not be used or relied upon by you or any other person
for any other purpose whatsoever without, in each instance, our prior written
consent; provided, however, that subsequent holders of the Series A Notes may
rely on such opinions to the same extent as the Note Purchasers. Our opinions
are limited to the conclusions specifically stated herein, and no opinion may be
inferred or implied beyond such specific conclusions. We disclaim any
undertaking or obligation to advise you of any changes in the conclusions or
other matters covered in this letter that hereafter may come to our attention.

Very truly yours,

 

JEG;DAN;JBK