Exhibit (4)-37
Unicom Corporation
Form 10-K File No. 1-11375
[EXECUTION COPY]
LC GUARANTY
GUARANTY, dated as of November 22, 1994, made by UNICOM CORPORATION, a
corporation organized and existing under the laws of the State of Illinois (the
"GUARANTOR"), in favor of Citibank, N.A. ("CITIBANK").
PRELIMINARY STATEMENTS
(1) On December 10, 1993, Commonwealth Edison Company, an Illinois
corporation ("COMMONWEALTH"), and Northwind, Inc., an Illinois corporation, as
account parties, entered into two Agreements for Clean Irrevocable Letter of
Credit (the "LC AGREEMENTS") with Citibank, pursuant to which Citibank issued
Irrevocable Standby Letter of Credit No. NY-00389-30014375 and Irrevocable
Standby Letter of Credit No. NY-00389-30014376, respectively, each dated
December 13, 1993 (the "LETTERS OF CREDIT"). Commonwealth is no longer an
account party under the LC Agreements. The Guarantor has derived, and continues
to derive, substantial direct and indirect benefit from the transactions
contemplated by the LC Agreements and the issuance of the Letters of Credit.
(2) Citibank has entered into a Credit Agreement, dated as of the date
hereof (said Agreement, as it may hereafter be amended or otherwise modified
from time to time, being the "CREDIT AGREEMENT"), the terms defined therein and
not otherwise defined herein being used herein as therein defined), with Unicom
Enterprises Inc., a corporation organized and existing under the laws of the
State of Illinois (the "BORROWER"), the other Lenders and the Agent. The
Guarantor will derive substantial direct and indirect benefit from the
transactions contemplated by the Credit Agreement and the Notes.
(3) Northwind is a wholly-owned Subsidiary of the Guarantor.
(4) It is a condition precedent to Citibank entering into the Credit
Agreement with the Borrower that the Guarantor shall have executed and delivered
this Guaranty.
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NOW, THEREFORE, in consideration of the premises and in order to induce
Citibank to enter into, and make Advances under, the Credit Agreement, the
Guarantor hereby agrees as follows:
SECTION 1. CERTAIN DEFINED TERMS. As used in this Guaranty, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"CONSOLIDATED CAPITALIZATION" means, at any date of determination, the
sum of (i) common equity of the Guarantor and its Consolidated
Subsidiaries, (ii) preferred and preference stock of the Guarantor and its
Consolidated Subsidiaries and (iii) Consolidated Debt of the Guarantor and
its Consolidated Subsidiaries.
"CONSOLIDATED DEBT" means, at any date of determination, the sum of
Debt of the Guarantor and its Consolidated Subsidiaries and Contingent
Obligations of the Guarantor and its Consolidated Subsidiaries.
"CONSOLIDATED SUBSIDIARY" means, as to any Person, any Subsidiary of
such Person whose accounts are or are required to be consolidated with the
accounts of such Person in accordance with GAAP.
"CONTINGENT OBLIGATION" means, as to any Person, the undrawn face
amount of any letters of credit issued for the account of such Person and
shall also mean any obligation of such Person guaranteeing or in effect
guaranteeing any Debt, leases, dividends, letters of credit, or other
obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a)
to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (c) to purchase
property, securities, or services primarily for the purpose of assuring the
obligee under any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation, or (d)
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otherwise to assure or hold harmless the obligee under such primary
obligation against loss in respect thereof; provided, however, that the
term Contingent Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The amount
of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation or, where such
Contingent Obligation is specifically limited to a portion of any such
primary obligation, that portion to which it is limited or, if not stated
or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith. For purposes of computing the
consolidated Debt of any Person, the amount of any primary obligation of
any Subsidiary of such Person and the amount of any Contingent Obligation
of such Person corresponding to such primary obligation shall only be
counted once (i.e., without duplication).
"TANGIBLE NET WORTH" means, at any time of determination, with respect
to any Person, the excess of such Person's total assets over its total
liabilities, with total assets and total liabilities each to be determined
in accordance with GAAP consistently applied, excluding, however, from the
determination of total assets (i) goodwill, organizational expenses,
research and development expenses, trademarks, trade names, copyrights,
patents, patent applications, licenses and rights in any thereof, and other
similar intangibles, (ii) all prepaid expenses, deferred charges or
unamortized debt discount and expense, (iii) all reserves carried and not
deducted from assets, (iv) securities that are not readily marketable, (v)
cash held in a sinking or other analogous fund established for the purpose
of redemption, retirement or prepayment of capital stock or Debt, (vi) any
write-up in the book value of any asset resulting from a revaluation
thereof subsequent to September 30, 1994, and (vii) any items not included
in clauses (i) through (vi), above, that are treated as intangibles in
conformity with GAAP.
SECTION 2. GUARANTY. The Guarantor hereby absolutely, unconditionally and
irrevocably guaranties the punctual payment when due of all unreimbursed
drawings under the Letters of Credit and all other
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obligations of Northwind now or hereafter existing under the LC Agreements,
whether for principal, interest, fees, expenses or otherwise (all such
obligations being the "OBLIGATIONS"), and agrees to pay any and all expenses
(including counsel fees and expenses) incurred by Citibank in enforcing any
rights under this Guaranty. Without limiting the generality of the foregoing,
the Guarantor's liability shall extend to all amounts that constitute part of
the Obligations and would be owed by Northwind to Citibank under the LC
Agreements but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding involving
Northwind.
SECTION 3. GUARANTY ABSOLUTE. The Guarantor guarantees that the
Obligations will be paid strictly in accordance with the terms of the LC
Agreements, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of Citibank
with respect thereto. The obligations of the Guarantor under this Guaranty are
independent of the Obligations, and a separate action or actions may be brought
and prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against Northwind or whether Northwind is joined
in any such action or actions. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Credit Agreement, the
Notes, any other Loan Document, any Advance, the LC Agreements, the
Letters of Credit, or any other agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or
waiver of, or any consent to departure from, the LC Agreements,
including, without limitation, any increase in the Obligations
resulting from the extension of additional credit to Northwind or
otherwise and any extension of the expiration date of the Letters of
Credit;
(iii) any manner of application of collateral, or proceeds thereof, to all
or any of the Obligations, or any manner of sale or other disposition
of, any release of or any failure to perfect any lien on or security
interest in
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any collateral for all or any of the Obligations or any other assets
of Northwind or any of its Subsidiaries, or any release or discharge
of any Person liable for any or all of the Obligations;
(iv) any change, restructuring or termination of the corporate structure or
existence of Northwind or any of its Subsidiaries or any bankruptcy,
insolvency, liquidation or similar proceeding instituted by or against
Northwind or any of its Subsidiaries; or
(v) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Northwind or a guarantor.
As against the Guarantor, this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Obligations is rescinded or must otherwise be returned by Citibank upon the
insolvency, bankruptcy or reorganization of Northwind or otherwise, all as
though such payment had not been made.
SECTION 4. WAIVER. The Guarantor hereby waives promptness, diligence,
presentment, protest, notice of protest, notice of dishonor, notice of
acceptance and any other notice with respect to any of the Obligations and this
Guaranty and any requirement that Citibank protect, secure, perfect or insure
any security interest or lien or any property subject thereto or exhaust any
right or take any action against Northwind or any other person or entity or any
collateral.
SECTION 5. WAIVER OF RIGHTS OF SUBROGATION. The Guarantor hereby
expressly and irrevocably waives with respect to Northwind and its successors
and assigns and any other Person, any and all rights at law or in equity, by
agreement or otherwise, to subrogation, reimbursement, exoneration,
contribution, setoff, share in any collateral or any other rights that could
accrue to a surety against a principal, to a guarantor against a maker or
obligor, to an accommodation party against the party accommodated, or to a
holder or transferee against a maker, and that the Guarantor may have or
hereafter acquire against Northwind, any of its Affiliates, or any other Person
in connection with or as a result of the Guarantor's execution, delivery or
performance hereunder. In furtherance of the foregoing, the Guarantor agrees
that any payment by the Guarantor to Citibank pursuant to this Guaranty shall be
deemed a contribution to the
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capital of Northwind, and no such payment shall constitute the Guarantor a
creditor of Northwind. The Guarantor hereby acknowledges and agrees that the
foregoing waivers are intended to benefit Northwind and Citibank and shall not
limit or otherwise affect the Guarantor's liability hereunder or the
enforceability hereof. If, notwithstanding the foregoing, any amount shall be
paid to the Guarantor on account of such subrogation rights at any time when all
of the Obligations shall not have been paid in full, such amount shall be held
by the Guarantor in trust for Citibank, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to
Citibank in the exact form received by the Guarantor (duly endorsed by the
Guarantor to Citibank) to be applied against the Obligations, whether matured or
unmatured, in such order as Citibank may determine.
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby
represents and warrants as follows:
(a) CORPORATE EXISTENCE AND POWER. It is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Illinois,
is duly qualified to do business as a foreign corporation in, and is in good
standing under the laws of, each state in which the ownership of its properties
or the conduct of its business makes such qualification necessary, except where
the failure to be so qualified would not have a material adverse effect on its
business, assets, revenues, financial condition, results of operations,
operations or prospects or its ability to perform its obligations under this
Guaranty, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to own or lease its property and
to carry on its business as now conducted.
(b) CORPORATE AUTHORIZATION. The execution, delivery and performance by it
of this Guaranty have been duly authorized by all necessary corporate action on
its part and do not, and will not, require the consent or approval of its
shareholders, or any trustee or holder of any Debt or other obligation of the
Guarantor.
(c) NO VIOLATION, ETC. The execution and delivery by the Guarantor of this
Guaranty, and the performance by the Guarantor of its obligations hereunder, (i)
are within the Guarantor's corporate powers, (ii) have been duly authorized by
all necessary corporate action and (iii) do not and will not (A) violate any
provision of the charter or by-laws of the Guarantor or of law, (B)
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violate any legal restriction binding on or affecting the Guarantor, (C) result
in a breach of, or constitute a default under, any indenture or loan or credit
agreement or any other agreement, lease or instrument to which the Guarantor is
a party or by which it or its properties may be bound or affected, or (D) result
in or require the creation of any lien or security interest upon or with respect
to any of its properties.
(d) GOVERNMENTAL ACTIONS. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for the due execution, delivery and performance by the Guarantor of
this Guaranty.
(e) EXECUTION AND DELIVERY. This Guaranty has been duly executed and
delivered by the Guarantor, and is the legal, valid and binding obligation of
the Guarantor enforceable against it in accordance with its terms, subject,
however, to the application by a court of general principles of equity and to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally.
(f) LITIGATION. There is no pending or threatened action or proceeding
(including, without limitation, any proceeding relating to, or arising out of
any Environmental Laws) affecting it or any of its Subsidiaries before any
court, governmental agency or arbitrator, that may have a material adverse
effect on the business, assets, revenues, financial condition, results of
operations, operations or prospects of the Guarantor or the Guarantor and its
Subsidiaries, taken as a whole, or on the Guarantor's ability to perform its
obligations under this Guaranty, or that questions the validity or
enforceability of this Guaranty or any LC Agreement against the Guarantor or
Northwind.
(g) FINANCIAL STATEMENTS; MATERIAL ADVERSE CHANGE. The consolidated
balance sheet of the Guarantor and its Consolidated Subsidiaries as at December
31, 1993, and the consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as at September 30, 1994 and the related consolidated
statements of income, retained earnings and cash flows for the nine-month period
then ended, together with the report thereon of Arthur Andersen LLP included in
the Guarantor's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1994, copies of each of which have been furnished to each Lender,
fairly present (subject, in the case of such balance sheet and statements of
income, retained earnings
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and cash flows for the nine months ended September 30, 1994, to year-end
adjustments) the financial condition of the Guarantor and its Consolidated
Subsidiaries as at such dates and the results of operations of the Guarantor and
its Consolidated Subsidiaries for the periods ended on such dates, all in
accordance with GAAP consistently applied (except for such changes in accounting
methods described in such report of Arthur Andersen LLP). Since September 30,
1994, there has been no material adverse change in the business, assets,
revenues, financial condition, results of operations, operations or prospects of
the Guarantor and its Subsidiaries, taken as a whole, or of Northwind and its
Subsidiaries, taken as a whole (other than operating losses resulting from
start-up operations of Northwind), or in the Guarantor's ability to perform any
of its obligations hereunder.
(h) ERISA. During the preceding twelve-consecutive-month period, no steps
have been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under Section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could result in the incurrence
by the Guarantor or any of its Subsidiaries of any material liability, fine, or
penalty. The Guarantor has no contingent liability with respect to any post-
retirement benefit under a Welfare Plan, other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
(i) TAXES. The Guarantor and each of its Subsidiaries have filed all tax
returns (federal, state and local) required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, or provided adequate
reserves for payment thereof other than such taxes that the Guarantor or such
Subsidiary is contesting in good faith by appropriate legal proceedings and in
respect of which the Guarantor or such Subsidiary, as the case may be, has
established adequate reserves in conformity with GAAP.
(j) VIOLATION OF LAW. Neither the Guarantor nor any of its Subsidiaries is
in violation of any law or governmental regulation or court decree or order
which may result in a material adverse effect on the business, assets, revenues,
financial condition, results of operations, operations or prospects of the
Guarantor and its Subsidiaries, taken as a whole, or of Northwind and its
Subsidiaries, taken as a whole, or on the Guarantor's ability to perform any of
its obligations hereunder.
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(k) INVESTMENT COMPANY. The Guarantor is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or an "investment advisor" within
the meaning of the Investment Advisers Act of 1940, as amended.
(l) HOLDING COMPANY. The Guarantor is a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended, but the
Guarantor and its Subsidiaries are exempt from the provisions of that Act,
except Section 9(a)(2) thereof, by virtue of an order issued by the Securities
and Exchange Commission on July 22, 1994. Such exemption is in full force and
effect and the Guarantor is not aware of any existing or proposed proceedings
contemplating the revocation or modification of such exemption.
(m) INFORMATION. All factual information heretofore or contemporaneously
furnished by or on behalf of the Guarantor in writing to Citibank for purposes
of or in connection with this Guaranty or any transaction contemplated hereby
is, and all other such factual information hereafter furnished by or on behalf
of the Guarantor to Citibank will be, true and accurate in every material
respect on the date as of which such information is dated or certified, and not
incomplete by omitting to state any material fact necessary to make such
information not misleading.
(n) NO CONDITIONS PRECEDENT. There are no conditions precedent to the
effectiveness of this Guaranty that have not been satisfied or waived.
(o) RELIANCE. The Guarantor has, independently and without reliance upon
Northwind and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Guaranty.
SECTION 7. AFFIRMATIVE COVENANTS. The Guarantor covenants and agrees
that, so long as any part of the Obligations shall remain unpaid or the Letters
of Credit shall not have expired or terminated, the Guarantor will:
(a) REPORTING REQUIREMENTS. Furnish to Citibank:
(i) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Guarantor, a
consolidated balance sheet of the Guarantor and its Consolidated
Subsidiaries as of
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the end of such quarter and consolidated statements of income, retained
earnings and cash flows of the Guarantor and its Consolidated Subsidiaries
for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, all in reasonable detail and duly certified
(subject to year-end audit adjustments) by the chief financial officer or
the Treasurer of the Guarantor as having been prepared in accordance with
GAAP consistently applied, except for (A) the absence of notes thereto and
(B) changes in accounting principles required by GAAP;
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of the Guarantor and its Consolidated Subsidiaries,
a copy of the annual report for such year for the Guarantor and its
Consolidated Subsidiaries, containing a consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries as at the end of such fiscal
year and consolidated statements of income, retained earnings and cash
flows of the Guarantor and its Consolidated Subsidiaries for such fiscal
year, certified in a manner acceptable to Citibank by Arthur Anderson & Co.
or another nationally-recognized independent public accounting firm
selected by the Guarantor and acceptable to Citibank;
(iii) concurrently with the financial statements for each quarterly
accounting period and for each fiscal year of the Guarantor furnished
pursuant to paragraphs (i) and (ii), above, (A) a certificate of the chief
financial officer, any vice president responsible for financial or
accounting matters, or the treasurer of the Guarantor stating that the
Guarantor has performed and observed all of, and the Guarantor is not in
default in the performance or observance of any of, the terms, covenants,
agreements and conditions of this Guaranty or, if the Guarantor shall be in
default, specifying all such defaults and the nature thereof, of which the
signer of such certificate may have knowledge, and (B) an analysis prepared
and certified by the chief financial officer, any vice president
responsible for financial or accounting matters, or the Treasurer of the
Guarantor of the covenants contained in Sections 7(i) and (j), containing
all information necessary for determining compliance by the Guarantor with
such covenants;
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(iv) as soon as available and in any event within 90 days after the
end of each fiscal year of the Guarantor and concurrently with the
financial statements furnished pursuant to paragraph (ii), above, a written
statement of the independent public accountants that certified such
financial statements stating that, in making the examination necessary for
their certification of such financial statements, they have obtained no
knowledge of any default by the Guarantor in the observance of any of the
covenants contained in Section 7(i) or (j) or, if such accountants shall
have obtained knowledge of any such default, specifying all such defaults
and the nature thereof, it being understood that they shall not be liable
directly or indirectly for any failure to obtain knowledge of any default;
(v) as soon as possible and in any event within ten days after the
commencement of litigation against the Guarantor, the Borrower, Northwind
or any of their respective Subsidiaries that could reasonably be expected
to have a material adverse effect on the business, assets, revenues,
financial condition, results of operations, operations or prospects of the
Guarantor and its Subsidiaries, taken as a whole, or that questions the
validity or enforceability of any of this Guarantor or any LC Agreement
against the Guarantor or Northwind, notice of such litigation describing in
reasonable detail the facts and circumstances concerning such litigation
and the Guarantor's, the Borrower's, Northwind's or such Subsidiary's, as
the case may be, proposed actions in connection therewith;
(vi) promptly after the sending or filing thereof, copies of all
reports which the Guarantor sends to any of its security holders, and
copies of all reports and registration statements (other than registration
statements relating to (A) the offering of debt or preferred/preference
stock equity securities and (B) employee benefit plans) which the Guarantor
or any of its Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(vii) promptly after the occurrence of the institution of any steps
by the Guarantor or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure
is sufficient to give
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rise to a Lien under Section 302(f) of ERISA, or the taking of any action
with respect to a Pension Plan which could result in the requirement that
the Guarantor or any of its Subsidiaries furnish a bond or other security
to the PBGC or such Pension Plan, or the occurrence of any event with
respect to any Pension Plan which could result in the incurrence by the
Guarantor or any of its Subsidiaries of any material liability, fine, or
penalty, or any material increase in the contingent liability of the
Guarantor or any of its Subsidiaries with respect to any post-retirement
Welfare Plan benefit, notice of such event and the action the Guarantor
proposes to take with respect thereto;
(viii) as soon as possible and in any event within ten days after the
Guarantor knows or should have reason to know of the occurrence of each
Unmatured Default, Event of Default or default under the LC Agreements
continuing on the date of such statement, a statement of the chief
financial officer, any vice president responsible for financial or
accounting matters, or the Treasurer of the Guarantor setting forth details
of such Unmatured Default, Event of Default or default and the action that
the Guarantor or Northwind has taken and proposes to take with respect
thereto; and
(ix) such other information (other than proprietary customer
information) respecting the business, assets, revenues, financial
condition, results of operations, operations or prospects of the Guarantor,
the Borrower, Northwind or any of their respective Subsidiaries as Citibank
may from time to time reasonably request.
(b) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain, and
cause each of its Subsidiaries to preserve and maintain, its legal existence in
the jurisdiction of its organization and qualify and remain qualified as a
foreign organization in each jurisdiction in which such qualification is
reasonably necessary in view of its business and operations or the ownership of
its properties, and preserve, renew and keep in full force and effect the
rights, privileges and franchises necessary or desirable in the normal conduct
of its business, except to the extent that the Guarantor's chief financial
officer certifies to Citibank that the loss of any such right, privilege or
franchise, both individually and together with all other rights, privileges and
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franchises lost since the Effective Date, would not have a Material Adverse
Effect.
(c) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its Subsidiaries
to comply, in all material respects with all Applicable Laws, such compliance to
include compliance with ERISA and Environmental Laws.
(d) MAINTENANCE OF INSURANCE, ETC. Maintain, and cause each of its
Subsidiaries to maintain, such insurance as may be required by law and such
other insurance, to the extent and against such hazards and liabilities, as is
customarily maintained by companies similarly situated.
(e) INSPECTION RIGHTS. At any reasonable time and from time to time as
Citibank may reasonably request, permit Citibank or any agents or
representatives thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Guarantor and
any of its Subsidiaries (except in the case of Commonwealth, as may be
restricted by law), and to discuss the affairs, finances and accounts of the
Guarantor and any of its Subsidiaries with any of their respective officers or
directors.
(f) MAINTAINING OF BOOKS. Maintain, and cause each of its Subsidiaries to
maintain, complete and accurate books of record and account in which entries
shall be made of all financial transactions and the assets and business of the
Guarantor and each of its Subsidiaries in accordance with GAAP.
(g) MAINTENANCE OF PROPERTIES. Cause all properties used or useful in the
conduct of the business of the Guarantor or any of its Subsidiaries to be
maintained and kept in reasonable condition, repair and working order, and cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Guarantor may be necessary
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that neither the
Guarantor nor any such Subsidiary shall be prevented from discontinuing the
operation and maintenance of any such properties if the chief financial officer
of the Guarantor certifies that such discontinuance is desirable in the conduct
of the Guarantor's or such Subsidiary's business and such discontinuance,
individually or with all such other discontinuances since the date hereof, would
not have a material adverse effect on the business, assets,
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revenues, financial condition, results of operations, operations or prospects of
the Guarantor and its Subsidiaries, taken as a whole.
(h) TAXES AND LIABILITIES. Pay, and cause each of its Subsidiaries to pay,
when due all taxes, assessments, governmental charges and other liabilities
imposed upon it or its property, except to the extent contested in good faith
and by appropriate proceedings and in respect of which adequate reserves for the
payment thereof have been set aside by the Guarantor or such Subsidiary, as the
case may be, in accordance with GAAP.
(i) MAINTENANCE OF MINIMUM TANGIBLE NET WORTH. Maintain at all times an
excess of (i) the Tangible Net Worth of the Guarantor and its Consolidated
Subsidiaries over (ii) the Tangible Net Worth of Commonwealth and its
Consolidated Subsidiaries, of at least $10,000,000.
(j) CONSOLIDATED LEVERAGE RATIO. Maintain, on the last day of each fiscal
quarter, a ratio of (i) Consolidated Debt to (ii) Consolidated Capitalization of
not greater than 0.65 to 1.
(k) ERISA. Maintain, and cause each of its Consolidated Subsidiaries to
maintain, each of its defined benefit plans in substantial compliance with all
applicable requirements of ERISA and of the Code and with all applicable rulings
and regulations issued under the provisions of ERISA and the Code.
(l) OWNERSHIP OF SUBSIDIARIES. Maintain direct ownership of 100% of the
capital stock of the Borrower and at least 80% of the voting capital stock of
Commonwealth, and cause the Borrower to maintain direct ownership of 100% of the
capital stock of Northwind.
SECTION 8. NEGATIVE COVENANTS. The Guarantor covenants and agrees that,
so long as any part of the Obligations shall remain unpaid or the Letters of
Credit shall not have expired or terminated, the Guarantor will not:
(a) LIENS, ETC. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any lien, security interest, or other
charge or encumbrance, or any other type of preferential arrangement, upon or
with respect to any of its properties (including, without limitation, the
capital stock of any of its Subsidiaries), whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any right to
receive income, in
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each case to secure or provide for the payment of any Debt of any Person (any of
the foregoing being referred to herein as a "LIEN"), other than (i) Liens
imposed by law, such as carriers', warehousemen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business; (ii) Liens arising
under the Indenture; (iii) "permitted liens", as such term is defined in the
Indenture; and (iv) Liens permitted by Section 6.02(e)(ii) of the Credit
Agreement; provided, however, that, notwithstanding the foregoing, if both
before and after giving effect thereto no Unmatured Default or Event of Default
shall have occurred and be continuing, Commonwealth may sell, pledge or
otherwise dispose of its accounts receivable.
(b) MERGERS, ETC. Merge or consolidate with or into any Person, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions, and whether in a sale/leaseback transaction or
otherwise) more than 10% of its assets (whether now owned or hereafter
acquired), unless, in the case of a merger, immediately after giving effect
thereto, (i) no event shall occur and be continuing that constitutes an
Unmatured Default, an Event of Default, or a default under the LC Agreements,
(ii) the Guarantor is the surviving corporation, (iii) the Guarantor's Tangible
Net Worth shall be equal to or greater than its Tangible Net Worth immediately
prior to such merger and (iv) the Guarantor shall not be liable with respect to
any Debt or allow its property to be subject to any Lien which it could not
become liable with respect to or allow its property to become subject to under
this Guaranty on the date of such transaction.
(c) DEBT. Create, incur, assume or suffer to exist any Debt, other than
(i) Debt to the Borrower in an amount not to exceed $25,000,000 in the aggregate
at any one time outstanding, (ii) Debt hereunder, (iii) unsecured Contingent
Obligations (other than in respect of this Guaranty) in an aggregate amount at
any one time outstanding not to exceed the excess of (A) $300,000,000 over (B)
the amount of Contingent Obligations incurred by the Borrower and its
Subsidiaries pursuant to Section 6.02(b)(ii) of the Credit Agreement, and (iv)
other unsecured Debt; provided, however, that, notwithstanding the foregoing,
the aggregate amount of Debt of the Guarantor, the Borrower and Subsidiaries of
the Borrower at any one time outstanding shall not exceed $500,000,000.
(d) GUARANTOR AND SUBSIDIARIES' STOCK. Permit any of its Subsidiaries to
purchase or otherwise acquire any
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shares of capital stock of the Guarantor; or take any action, or permit any such
Subsidiary to take any action, that would result in a material decrease in the
percentage of the outstanding shares of capital stock of any "Significant
Subsidiary" of the Guarantor (within the meaning of Rule 1-02 of the Regulation
S-X of the Securities and Exchange Commission) owned by the Guarantor and its
other Subsidiaries; provided, however, that the Guarantor or Commonwealth may
take any such action with respect to the capital stock of Commonwealth, provided
that, after giving effect to any such action, the Guarantor is in compliance
with Section 7(l) hereof.
(e) OTHER AGREEMENTS. Enter into any agreement containing any provision
that would be violated or breached by the performance of its obligations
hereunder or under any instrument or document delivered or to be delivered by
the Guarantor hereunder or in connection herewith.
(f) TRANSACTIONS WITH AFFILIATES. Enter into, or permit any of its
Subsidiaries to enter into, any transaction with an Affiliate of the Guarantor,
unless such transaction is on terms no less favorable to the Guarantor or such
Subsidiary, as the case may be, than if the transaction had been negotiated in
good faith on an arm's length basis with a Person that was not an Affiliate of
the Guarantor; provided, however, that the foregoing restrictions shall not
apply to any transaction between the Guarantor and any of its Subsidiaries,
between the Guarantor and Commonwealth, or between Commonwealth and any of the
Guarantor's other Subsidiaries.
(g) MAINTENANCE OF OWNERSHIP OF SUBSIDIARIES. Sell, assign, transfer,
pledge, hypothecate, or otherwise dispose of any shares of capital stock of any
of its Subsidiaries or any warrants, rights or options to acquire such capital
stock, or permit any of its Subsidiaries to issue, sell, or otherwise dispose of
any shares of its capital stock or the capital stock of any other of its
Subsidiaries or any warrants, rights, or options to acquire such capital stock,
except (and only to the extent) as may be necessary to give effect to a
transaction permitted by subsections (b) and (d), above, or subsections (e)(ii),
(f) or (g) of Section 6.02 of the Credit Agreement (including, without
limitation, any disposition pursuant to a foreclosure of any Lien permitted by
Section 6.02(e)(ii) of the Credit Agreement, provided that such disposition
would not have a Material Adverse Effect) and except that, subject to Section
6.02(f) of the Credit Agreement, any Subsidiary of the
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Guarantor may issue and sell shares of its capital stock, and warrants, rights,
or options to acquire the same, to the Guarantor or such Subsidiary's parent
corporation (if not the Guarantor); provided, however, that Commonwealth may
issue shares of its common stock upon any exercise of its common stock purchase
warrants and any conversion of its $1.425 convertible preferred stock, in each
case only with respect to such warrants and shares of preferred stock
outstanding on the date hereof.
(h) DISTRIBUTIONS. Upon the occurrence and during the continuance of an
Event of Default or default under the LC Agreements, declare or pay, directly or
indirectly, any dividend, payment or other distribution of assets, properties,
cash, rights, obligations or securities on account of any share of any class of
capital stock of the Guarantor, or purchase, redeem, retire, or otherwise
acquire for value, or permit any of its Subsidiaries to purchase, redeem,
retire, or otherwise acquire for value, any shares of any class of capital stock
of the Guarantor or any warrants, rights, or options to acquire any such shares,
now or hereafter outstanding, or make any distribution of assets to any of its
shareholders; provided, however, that, notwithstanding the foregoing, the
Guarantor may, to the extent that it is legally required to do so, pay any such
dividend, payment or other distribution after the Guarantor has declared such
dividend, payment or other distribution.
SECTION 9. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty, and no consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by
Citibank and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 10. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
cable communication) and mailed, telecopied, telegraphed, cabled or delivered to
it, (i) if to the Guarantor, at its address at P.O. Box A-3005, 10 South
Dearborn Street, 38th Floor, Chicago, Illinois 60690-3005, Attention: Treasurer,
Telecopy: (312) 394-4082 and (ii) if to Citibank, at its address specified in
the LC Agreements or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telecopied, telegraphed or
cabled, be effective when deposited in the mails, telecopied,
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delivered to the telegraph company or delivered to the cable company,
respectively.
SECTION 11. NO WAIVER; REMEDIES. No failure on the part of Citibank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law,
SECTION 12. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any default under the LC Agreements, Citibank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits of the Guarantor (general or
special, time or demand, provisional or final). Citibank agrees promptly to
notify the Guarantor after any such set-off and application made by Citibank;
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of Citibank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that Citibank may have.
SECTION 13. CONTINUING GUARANTY; ASSIGNMENTS UNDER CREDIT AGREEMENT. This
Guaranty is a continuing guaranty and shall (i) subject to the last sentence of
Section 3, remain in full force and effect until the later to occur of (A) the
payment in full of the Obligations and all other amounts payable under this
Guaranty and (B) the expiration or termination of the Letters of Credit, (ii) be
binding upon the Guarantor, its successors and assigns (provided, that the
Guarantor may not assign any of its rights or obligations hereunder without the
prior written consent of Citibank), and (iii) inure to the benefit of, and be
enforceable by Citibank and its successors, transferees and assigns.
SECTION 14. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. (a) The
Guarantor hereby irrevocably (i) submits to the non-exclusive jurisdiction of
any New York State or Federal court sitting in New York City and any appellate
court from any thereof in any action or proceeding arising out of or relating to
this Guaranty, the LC Agreements or the Letters of Credit and
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(ii) agrees that all claims in respect of such action or proceeding may be heard
and determined in such New York State court or in such Federal court. The
Guarantor hereby irrevocably waives the defense of an inconvenient forum to the
maintenance of such action or proceeding and any objection to venue in
connection therewith. The Guarantor also irrevocably consents to the service of
any and all process in any such action or proceeding by the mailing by certified
mail of copies of such process to the Guarantor at its address specified in
Section 10. The Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(B) THE GUARANTOR HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY LC
AGREEMENT, ANY LETTER OF CREDIT OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED
HEREUNDER OR THEREUNDER.
SECTION 16. EXECUTION IN COUNTERPARTS. This Guaranty may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which counterparts when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
SECTION 17. SEVERABILITY. Any provision of this Guaranty or any LC
Agreement that is prohibited, unenforceable or invalid in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or invalidity without invalidating the remaining
provisions hereof or thereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
SECTION 18. HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Guaranty and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Guaranty.
SECTION 19. ENTIRE AGREEMENT. This Guaranty constitutes the entire
agreement and understanding among the Guarantor and Citibank relative to the
subject matter hereof. Any previous agreement by or among such parties with
respect to the subject matter hereof is superseded by this Guaranty. Nothing in
this Guaranty, expressed or implied, is intended to confer upon any party other
than Citibank any rights, remedies, obligations, or liabilities under or by
reason of this Guaranty.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
UNICOM CORPORATION
By Dennis F. O'Brien
---------------------------
Name: Dennis F. O'Brien
Title: Treasurer