GUARANTY
GUARANTY, dated as of June 9, 1999 (this "Guaranty"), from KEYSPAN
CORPORATION (d/b/a KeySpan Energy), a New York corporation (the "Guarantor"), in
favor of LIC FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership (the
"Lessor"), and its successors and assigns.
WHEREAS, the Guarantor wishes to induce the Lessor to enter into a
certain Lease (as defined below) with a Subsidiary (as defined below) of the
Guarantor; and
WHEREAS, the Lessor is unwilling to enter into the Lease unless the
Guarantor enters into this Guaranty;
NOW, THEREFORE, in order to induce the Lessor to enter into the Lease,
the Guarantor hereby agrees as follows:
SECTION 1
DEFINED TERMS;
RULES OF CONSTRUCTION
1.1Definitions. As used in this Guaranty, capitalized terms defined and
used herein or in Exhibit A but not otherwise defined herein or in Exhibit A
shall have the meanings set forth in the Lease.
1.2Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
1.3Use of Certain Terms. Unless the context of this Guaranty requires
otherwise, the plural includes the singular, the singular includes the plural,
and "including" has the inclusive meaning of "including without limitation." The
words "hereof," "herein," "hereby," "hereunder" and other similar terms of this
Guaranty refer to this Guaranty as a whole and not exclusively to any particular
provision of this Guaranty. All pronouns and any variations thereof shall be
deemed to refer to masculine, feminine or neuter, singular or plural, as the
identity of the Person or Persons may require.
1.4Headings and References. Section and other headings are for reference
only, and shall not affect the interpretation or meaning of any provision of
this Guaranty. Unless otherwise provided, references to Articles, Sections,
Schedules and Exhibits shall be deemed references to Articles, Sections,
Schedules and Exhibits of this Guaranty. References to this Guaranty and any
other Operative Document include this Guaranty and the other Operative Documents
as the same may be modified, amended, restated or supplemented from time to time
pursuant to the provisions hereof or thereof. A reference to any law shall mean
that law as it may be amended, modified or supplemented from time to time, and
any successor law. A reference to a Person includes the successors and assigns
of such Person, but such reference shall not increase, decrease or otherwise
modify in any way the provisions in this Guaranty governing the assignment of
rights and obligations under or the binding effect of any provision of this
Guaranty.
SECTION 2
GUARANTY
2.1Guaranty. Subject to the terms and conditions in this Guaranty, the
Guarantor absolutely, unconditionally and irrevocably guarantees to the Lessor
and each Related Assignee that (i) all Payment Obligations will be promptly paid
in full as and when due in accordance with the terms thereof whether at the
stated due date, by acceleration or otherwise, and (ii) the Lessee will duly and
punctually perform, comply with and observe all Covenant Obligations as and when
required in accordance with the terms thereof, in each case, without regard to
whether such Obligation is direct or indirect, absolute or contingent, now or
hereafter existing or owing, voluntary or involuntary, created or arising by
contract, operation of law or otherwise or incurred or payable before or after
commencement of any proceedings by or against the Lessee under any bankruptcy
law.
If an event permitting the exercise of remedies under the Operative
Documents shall at any time have occurred and be continuing and such exercise,
or any consequences thereof provided in the Operative Documents, shall at such
time be prevented by reason of the pendency against the Lessee of a case or
proceeding under a bankruptcy or insolvency law, the Guarantor agrees that,
solely for purposes of this Guaranty and its obligations hereunder, the
Obligations and all other amounts payable under the Operative Documents shall be
deemed to have been declared in default, with all attendant consequences as
provided in the Operative Documents as if such declaration of default and the
consequences thereof had been accomplished in accordance with the terms of the
Operative Documents, and the Guarantor shall forthwith pay any amounts
guaranteed hereunder, without further notice or demand.
2.2Guaranty Absolute. This Guaranty is an absolute, unlimited and
continuing guaranty of performance and payment (and not of collection) of the
Obligations. This Guaranty is in no way conditioned upon any attempt to collect
from the Lessee or upon any other event or contingency, and shall be binding
upon and enforceable against the Guarantor without regard to the validity,
regularity or enforceability of any Operative Document or the Notes, or of any
term thereof.
The obligations of the Guarantor set forth herein constitute the full
recourse obligations of the Guarantor enforceable against it to the full extent
of all its assets and properties, notwithstanding any provision in the Lease
limiting the liability of any Person, or any agreement by a trustee or a
Noteholder under a Financing Arrangement to look for payment with respect
thereto, solely to certain property and other collateral as described in the
Operative Documents. Without limiting the foregoing, it is agreed and understood
that (a) repeated and successive demands may be made and recoveries may be had
hereunder as and when, from time to time, the Lessee shall be in default with
respect to the Obligations under the terms of the Lease, and (b) notwithstanding
the recovery hereunder for or in respect of any given default with respect to
the Obligations by the Lessee under the Lease, this Guaranty shall remain in
full force and effect and shall apply to each and every subsequent default with
respect to the Obligations.
2.3Reinstatement. In case any Operative Document shall be terminated as
a result of the rejection thereof by any trustee, receiver or liquidating agent
of the Lessee or any of its properties in any bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar proceeding, the Guarantor's obligations hereunder shall continue to
the same extent as if such agreement had not been so rejected. The Guarantor
agrees that this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time payment to the Lessor or any Related Assignee of
the Obligations or any part thereof is rescinded or must otherwise be returned
by the Lessor or such Related Assignee upon the insolvency, bankruptcy or
reorganization of the Lessee, or otherwise, as though such payment to the Lessor
or such Related Assignee had not been made.
2.4Enforcement. The Guarantor shall pay all costs, expenses and damages
incurred (including reasonable attorneys' fees and disbursements) in connection
with the enforcement of the Obligations to the extent that such costs, expenses
and damages are not paid by the Lessee, and in connection with the enforcement
of the obligations of the Guarantor under this Guaranty.
2.5Guaranty Not Subject to Setoff, etc. The obligations of the Guarantor
hereunder shall not be subject to any counterclaim, setoff, deduction or defense
(other than payment or performance) based upon any claim the Guarantor or the
Lessee may have against the Lessor or any Related Assignee or any claim the
Guarantor may have against the Lessee or any other Person and shall remain in
full force and effect without regard to, and shall not be released, discharged,
reduced or in any way affected by any circumstance or condition whatsoever
(whether or not the Guarantor shall have any knowledge or notice thereof) which
might constitute a legal or equitable discharge or defense including, but not
limited to, (a) the amending, modifying, supplementing or terminating (by
operation of law or otherwise), expressly or impliedly, of any Operative
Document, or any other instrument applicable to the Lessee or to its
Obligations, or any part thereof; (b) any failure on the part of the Lessee to
perform or comply with any term of any Operative Document or any failure of any
other Person to perform or comply with any term of any Operative Document; (c)
any waiver, consent, change, extension, indulgence or other action or any action
or inaction under or in respect of any Operative Document or this Guaranty,
whether or not the Lessor, the Lessee or the Guarantor has notice or knowledge
of any of the foregoing; (d) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar proceeding with
respect to the Lessor, the Guarantor or the Lessee, or their respective
properties or their creditors, or any action taken by any trustee or receiver or
by any court in any such proceeding; (e) any furnishing or acceptance of
additional security or any release of any security (and the Guarantor authorizes
the Lessor or each Related Assignee to furnish, accept or release said
security); (f) any limitation on the liability or Obligations of the Lessee
under any Operative Document (except as expressly set forth therein) or any
termination (by operation of law or otherwise), cancellation (by operation of
law or otherwise), frustration or unenforceability, in whole or in part, of any
Operative Document or the Notes, or any term thereof; (g) any lien, charge or
encumbrance on or affecting the Guarantor's, the Lessor's or the Lessee's
respective assets and properties; (h) any act, omission or breach on the part of
the Lessor or any Related Assignee under any Operative Document, or any other
agreement at any time existing between the Lessor and the Lessee or any other
law, governmental regulation or other agreement applicable to the Lessor or any
Obligation; (i) any claim as a result of any other dealings among the Lessor,
any Related Assignee, the Guarantor, any Noteholder or any of them; (j) the
assignment or transfer of this Guaranty, any Operative Document (whether or not
in accordance with and subject to the terms thereof) or any other agreement or
instrument referred to in any Operative Document or applicable to the Lessee or
the Obligations by the Lessor to any other Person; (k) any change in the name of
the Lessor, any Related Assignee, the Lessee or any other Person; (l) any
subleasing or further subleasing of the Facility or any other Parcel of Property
or Unit of Equipment or any part thereof, or any redelivery, repossession, sale,
transfer or other disposition, surrender or destruction of the Facility or any
other Parcel of Property or Unit of Equipment or any part thereof; (m) the
transfer, assignment, mortgaging or purported transfer, assignment or mortgaging
of all or any part of the interest of the Lessor, its successors or assigns, or
the Lessee in the Facility or any other Parcel of Property or Unit of Equipment
or any part thereof or the failure to record a mortgage on or with respect to
all or any part of the Lessor's interest in the Facility or any part thereof or
any other Recordable Document; (n) any failure of title with respect to the
interest of the Lessor or the Lessee, or their respective successors and
assigns, in the Facility or any other Parcel of Property or Unit of Equipment or
any part thereof; (o) any defect in the compliance with specifications,
condition, design, operation or fitness for use of, or any damage to or loss or
destruction of, or any interruption or cessation in the use of, the Facility or
any other Parcel of Property or Unit of Equipment or any part thereof by the
Lessee or any other Person for any reason whatsoever (including without
limitation any governmental prohibition or restriction, condemnation,
requisition, seizure or any other act on the part of any governmental or
military authority, or any act of God or of the public enemy, or any Event of
Loss), and regardless of the duration thereof (even though such duration would
otherwise constitute a frustration of the Lease), whether or not without fault
on the part of the Lessee or any other Person; (p) any merger or consolidation
of the Lessee or the Guarantor into or with any other Person or any direct or
indirect sale, lease or transfer of any other assets of the Lessee or the
Guarantor to any other Person; (q) any change in the ownership of any shares of
capital stock of the Guarantor or the Lessee (including any such change which
results in the Guarantor no longer owning capital stock of the Lessee); or (r)
any other event or circumstance whatsoever (other than indefeasible payment and
performance in full of the Obligations).
2.6Waiver. The Guarantor unconditionally waives: (a) notice of any of
the matters referred to in Section 2 hereof; (b) all notices which may be
required by statute, rule of law or otherwise (except as expressly required to
be given to the Guarantor by any Operative Document) to preserve any rights
against the Guarantor hereunder, including notice of the acceptance of this
Guaranty by the Lessor or any Related Assignee, or the creation, renewal,
extension, modification or accrual of the Obligations or notice of any other
matters relating thereto, any presentment, demand, notice of dishonor, protest
or nonpayment of any damages or other amounts payable under any Operative
Document; (c) any requirement for the enforcement, assertion or exercise of any
right, remedy, power or privilege under or in respect of any Operative Document,
including diligence in collection or protection of or realization upon the
Obligations or any part thereof or any collateral therefor; (d) any requirement
of diligence; (e) any requirement to mitigate the damages resulting from a
default or termination under any Operative Document, except that this shall not
relieve the Lessor of any such obligation; (f) the occurrence of every other
condition precedent to which the Guarantor or the Lessee may otherwise be
entitled, except as provided in any Operative Document; and (g) the right to
require the Lessor or any Related Assignee to proceed against the Lessee or any
other Person liable on the Obligations, to proceed against or exhaust security
held from the Lessee or any other Person, or to pursue any other remedy in the
Lessor's or such Related Assignee's power whatsoever, and the Guarantor waives
the right to have the property of the Lessee first applied to the discharge of
the Obligations.
The Lessor or any Related Assignee may, at its election, exercise any
right or remedy it might have against the Lessee or any security held by the
Lessor or such Related Assignee, including the right to foreclose upon any such
security by judicial or nonjudicial sale, without affecting or impairing in any
way the liability of the Guarantor hereunder, except to the extent the
Obligations have been indefeasibly paid or satisfied, and the Guarantor waives
any defense arising out of the absence, impairment or loss of any right of
reimbursement, contribution or subrogation or any other right or remedy of the
Guarantor against the Lessee or any such security, whether resulting from such
election by the Lessor or such Related Assignee or otherwise. The Guarantor
waives any defense arising by reason of any disability or other defense of the
Lessee, or by reason of the cessation from any cause whatsoever of the
liability, either in whole or in part, of the Lessee to the Lessor for the
Obligations.
The Guarantor understands that the Lessor's or any Related Assignee's
exercise of certain rights and remedies contained in the Operative Documents may
affect or eliminate the Guarantor's rights of subrogation against the Lessee and
that the Guarantor may therefore incur partially or totally nonreimbursable
liability hereunder; nevertheless, the Guarantor hereby authorizes and empowers
the Lessor, its successors, endorsees and/or assignees (including each Related
Assignee) to exercise in its or their sole discretion, any rights and remedies,
or any combination thereof, which may then be available, it being the purpose
and intent of the Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.
The Guarantor assumes the responsibility for being and keeping informed
of the financial condition of the Lessee and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and agrees that neither the
Lessor nor any Related Assignee shall have any duty to advise the Guarantor of
information regarding any condition or circumstance or any change in such
condition or circumstance. The Guarantor acknowledges that neither the Lessor
nor any Related Assignee has made any representation to the Guarantor concerning
the financial condition of the Lessee.
SECTION 3
COVENANTS OF THE GUARANTOR
3.1Affirmative Covenants. So long as any Operative Document is in effect
or the Lessee owes any amount thereunder, the Guarantor covenants as follows:
3.1.1 Financial and Business Information. The Guarantor will
deliver or otherwise make available to the Lessor and each Qualifying Assignee
through electronic media (provided that the Guarantor shall give prior written
notice to each such Person of such availability and shall, notwithstanding such
availability, make timely delivery to each such Person upon its request either
generally or from time to time):
(a)Quarterly Statements -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Guarantor (other than
the last quarterly fiscal period of each such fiscal year), copies of
(i) a consolidated balance sheet of the Guarantor and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash flows of
the Guarantor 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 Guarantor's Quarterly Report on 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 3.1.1 if such Quarterly Report also complies
with the requirements of clauses (i) and (ii) of this Section 3.1.1(a);
(b)Annual Statements -- as soon as available and in any event
within 120 days after the end of each fiscal year of the Guarantor,
copies of
(i) a consolidated balance sheet of the Guarantor 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 Guarantor 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 generally accepted auditing standards, 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 Guarantor's Annual
Report on Form 10-K for such fiscal year (together with the Guarantor's annual
report to shareholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and filed
with the SEC shall be deemed to satisfy the requirements of this Section
3.1.1(b) if such Annual Report also complies with the requirements of clauses
(i) and (ii) of this Section 3.1.1(b);
(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 Guarantor or any Material Subsidiary to
public securities holders generally and (ii) each regular, periodic or
current report and each registration statement (without exhibits except
as expressly requested by such Qualifying Assignee and other than
registration statements on Form S-8 or any successor form), and each
final prospectus and all amendments thereto filed by the Guarantor or
any Material Subsidiary with the SEC;
(d)Notice of Potential Lease Default, Lease Event of Default or
Recording Event -- promptly, and in any event within five days after a
Responsible Officer's becoming aware of the existence of any Potential
Lease Default, Lease Event of Default or Recording Event, a written
notice specifying the nature and period of existence thereof and what
action the Guarantor or the Lessee is taking or proposes to take with
respect thereto;
(e)ERISA Matters -- promptly, and in any event within five days
after a Responsible Officer's becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Guarantor or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) 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
Guarantor 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 Guarantor 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 Guarantor 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; and
(f)Requested Information -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Guarantor, any
of its Material Subsidiaries or the Lessee or relating to the ability of
the Guarantor to perform its obligations under this Guaranty or the
Consent and Agreement (as defined in the Note Purchase Agreement) of
Guarantor or the ability of the Lessee to perform its obligations under
the Lease as from time to time may be reasonably requested by any
Qualifying Assignee, acting through the Related Assignee.
3.1.2 Officer's Certificates. Each set of financial statements
delivered to a Qualifying Assignee pursuant to Section 3.1.1(a) or Section
3.1.1(b) hereof shall be accompanied by a certificate of a Senior Financial
Officer to the effect that such 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 Guarantor, its Material Subsidiaries and
the Lessee 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 Potential Lease Default, Lease Event of
Default or Recording Event or, if any such condition or event existed or exists
(including without limitation any such event or condition resulting from the
failure of the Guarantor, any Material Subsidiary or the Lessee to comply with
any Environmental Requirement), specifying the nature and period of existence
thereof and what action the Guarantor, such Material Subsidiary or the Lessee
shall have taken or proposes to take with respect thereto.
3.1.3 Inspection. The Guarantor shall permit the representatives
of each Qualifying Assignee:
(a)No Recording Event or Lease Default -- if no Recording Event
(other than a Recording Event described in clause (iv) of the definition
thereof), or Lease Event of Default then exists, at the expense of such
Qualifying Assignee and upon reasonable prior notice to the Guarantor
and compliance with the Guarantor's safety procedures, to visit the
principal executive office of the Guarantor, to discuss the affairs,
finances and accounts of the Guarantor, its Material Subsidiaries and
the Lessee with the Guarantor's officers, and (with the consent of the
Guarantor, which consent will not be unreasonably withheld) its
independent public accountants; and
(b)Recording Event or Lease Default -- if a Recording Event
(other than a Recording Event described in clause (iv) of the definition
thereof), or Lease Event of Default then exists, at the expense of the
Guarantor to visit and inspect any of the offices or properties of the
Guarantor, any Material Subsidiary or the Lessee, to examine all their
respective books of account, records, reports and other papers (other
than information that the Guarantor is prohibited from disclosing under
applicable laws), 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
Guarantor authorizes said accountants to discuss the affairs, finances
and accounts of the Guarantor, its Material Subsidiaries and the
Lessee), all at such times and as often as may be requested (and subject
to the requirement that each such representative sign the Guarantor's
customary confidentiality agreement with respect to any proprietary
information sought to be examined or discussed and compliance with the
Guarantor's or any Material Subsidiary's safety procedures).
3.1.4 Compliance with Law. Without limiting the requirements of
Section 2 of the Lease, the Guarantor will and will cause each of its Material
Subsidiaries and the Lessee to comply with all laws, ordinances or governmental
rules or regulations to which each of them is subject, including, without
limitation, Environmental Requirements, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
3.1.5 Insurance. Without limiting the requirements of Section 10
of the Lease, the Guarantor will and will cause each of its Material
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.
3.1.6 Maintenance of Properties. Without limiting the
requirements of Section 9 of the Lease, the Guarantor will and will cause each
of its Material Subsidiaries to maintain and keep, or cause to be maintained and
kept, in accordance with Prudent Gas Utility Practice, 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 3.1.6 shall not
prevent the Guarantor or any Material 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 Guarantor has concluded that
such discontinuance would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
3.1.7 Payment of Taxes and Claims. The Guarantor will and will
cause each of its Material Subsidiaries and the Lessee 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 such taxes and assessments 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 Guarantor or any Material Subsidiary or the Lessee,
provided that neither the Guarantor nor any Material Subsidiary need pay any
such tax, assessment, charge, levy or claim if (a) the amount, applicability or
validity thereof is contested by the Guarantor or such Material Subsidiary on a
timely basis in good faith and in appropriate proceedings, and the Guarantor or
a Material Subsidiary has established adequate reserves therefor in accordance
with GAAP on the books of the Guarantor or such Material Subsidiary or (b) the
nonpayment of all such taxes, assessments, charges, levies or claims in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
3.1.8 Corporate Existence, etc. Subject to Section 3.2.1, the
Guarantor will at all times preserve and keep in full force and effect its
corporate existence. Subject to Section 3.2.1, the Guarantor will at all times
preserve and keep in full force and effect the corporate existence of each of
its Material Subsidiaries and all rights and franchises of the Guarantor and its
Material Subsidiaries unless, in the good faith judgment of the Guarantor, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, have a Material Adverse Effect.
3.2Negative Covenants. So long as any Operative Document is in effect or
the Lessee owes any amount thereunder, the Guarantor will not, and will not
permit any Material Subsidiary to:
3.2.1 Mergers. Etc. Directly or indirectly merge or consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to, any Person, except that:
(a)any Material Subsidiary may merge or consolidate with or
dispose of assets to or acquire assets from any other Material
Subsidiary; and
(b)any Material Subsidiary may merge into or consolidate with or
transfer assets to the Guarantor, and the Guarantor or any Material
Subsidiary may merge or consolidate with or transfer assets to any other
Person;
provided that in each case, immediately after giving effect thereto, (x) no
Event of Default shall occur and be continuing, (y) in any case of any such
merger, consolidation or transfer of assets to which the Guarantor is not a
party, a Subsidiary of the Guarantor shall be the continuing or surviving Person
or transferee of such assets, and (z) in any case of any such merger,
consolidation or transfer of assets to which the Guarantor is a party, (A) if
the Guarantor is the continuing or surviving Person, (I) the Guarantor shall be
rated at least Baa3 by Moody's Investors Service, Inc. (or any successor agency)
and at least BBB- by Standard & Poor's Ratings Services (or any successor
agency), (II) the Guarantor shall have, on a pro forma basis, a Consolidated Net
Worth at least equivalent to its Consolidated Net Worth immediately prior
thereto and (III) the Guarantor shall continue to own and operate, directly or
indirectly, the Core Gas Distribution Business, or (B) if the Guarantor is not
the continuing or surviving Person nor the Person who acquires by transfer,
lease or otherwise all or substantially all of the assets of the Guarantor, (I)
the continuing or surviving Person or transferee shall continue to own and
operate, directly or indirectly, the Core Gas Distribution Business, (II) the
continuing or surviving Person or transferee shall be rated at least Baa3 by
Moody's Investors Service, Inc. (or any successor agency) and at least BBB- by
Standard & Poor's Ratings Services (or any successor agency), (III) the
continuing or surviving Person or transferee shall have, on a pro forma basis, a
Consolidated Net Worth at least equivalent to the Guarantor's Consolidated Net
Worth immediately prior thereto, (IV) the continuing or surviving Person or
transferee shall assume, by execution and delivery of instruments reasonably
satisfactory to the Lessor and each Related Assignee, the obligations of the
Guarantor under this Guaranty and shall become successor to the Guarantor for
purposes of this Guaranty, but the Guarantor shall not thereby be released,
without the consent of the Lessor and each Qualifying Assignee, from its
obligations under this Guaranty and (V) the continuing or surviving Person or
transferee shall deliver to the Lessor and each Qualifying Assignee an opinion
of counsel of such continuing or surviving Person or transferee, in form and
substance reasonably satisfactory to the Lessor and each Related Assignee, with
respect to the enforceability of this Guaranty against such continuing or
surviving Person or transferee.
3.2.2 Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any Material Subsidiary to sell, lease, transfer or
otherwise dispose of (other than in connection with a transaction authorized by
Section 3.2.1) any substantial part of its assets; provided that the foregoing
shall not prohibit any sale, lease, transfer or disposition which (i) would not
materially impair the ability of the Guarantor to perform its obligations under
this Guaranty and (ii) together with all other such sales, leases, transfers or
dispositions, could not reasonably be expected to have a Material Adverse
Effect. Notwithstanding anything to the contrary contained in this Guaranty and
without limiting the generality of the foregoing, the Guarantor (or any
successor formed by a consolidation or merger with, or the transferee of all or
substantially all of the assets of, the Guarantor permitted under Section 3.2.1
hereof) shall at all times continue to own and operate, directly or indirectly,
the Core Gas Distribution Business.
SECTION 4
REPRESENTATIONS AND WARRANTIES
The Guarantor represents and warrants to the Lessor and each Related
Assignee (effective as of the Effective Date for the Facility) that:
4.1Organization; Power and Authority. The Guarantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The Guarantor has full power and
authority to own or hold under lease the properties it purports to own or hold
under lease, to transact the business it transacts and to execute and deliver
and perform the provisions of this Guaranty.
4.2Authorization, etc. This Guaranty has been duly authorized by all
necessary corporate and shareholder action on the part of the Guarantor, and
this Guaranty constitutes a legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor 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).
4.3Disclosure. The Private Placement Memorandum dated April 1999 (such
Private Placement Memorandum together with any financial statements attached
thereto, the "Memorandum"), relating to the transactions contemplated hereby
fairly describes, in all material respects, the business and properties of the
Guarantor and its Material Subsidiaries. None of this Guaranty, the Memorandum,
and the financial statements listed in Schedule 4.5 to this Guaranty, taken as a
whole, contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made. Except as disclosed in the
Memorandum or in the financial statements listed in Schedule 4.5 to this
Guaranty, since December 31, 1998, there has been no change in the financial
condition, operations, business or properties of the Guarantor or any Material
Subsidiary except changes that individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
4.4Organization and Ownership of Shares of Material Subsidiaries.
Schedule 4.4 to this Guaranty contains (except as noted therein) complete and
correct lists of (i) the Material Subsidiaries, showing, as to each such
Material 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 Guarantor and each other
Subsidiary of the Guarantor and (ii) the Guarantor's directors and senior
officers.
All of the outstanding shares of capital stock or similar equity
interests of each Material Subsidiary shown in Schedule 4.4 as being owned by
the Guarantor and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Guarantor or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 4.4).
Each Material Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so qualified or in
good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Each such Material 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.
No Material Subsidiary is a party to or otherwise subject to any legal
restriction or any agreement (other than this Guaranty, the agreements listed on
Schedule 4.4 and customary limitations imposed by corporate law statutes and
applicable regulatory requirements) restricting the ability of such Material
Subsidiary to pay dividends out of profits or make any other similar
distributions of profits to the Guarantor or any of its Subsidiaries that owns
outstanding shares of capital stock of such Material Subsidiary.
4.5Financial Statements. The Guarantor has delivered to the Lessor and
each Note Purchaser copies of the consolidated financial statements of the
Guarantor listed on Schedule 4.5 to this Guaranty. All of such financial
statements (including in each case the related schedules and notes) fairly
present in all material respects the consolidated financial position of the
Guarantor and its Subsidiaries as of the respective dates specified in such
Schedule 4.5 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).
4.6Compliance with Laws, Other Instruments, etc. The execution, delivery
and performance by the Guarantor of this Guaranty 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 Guarantor or any of its
Subsidiaries under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other Material
agreement or instrument to which the Guarantor or any of its Subsidiaries is
bound or by which the Guarantor or any of its Subsidiaries 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 Guarantor or any of its Subsidiaries or (c) violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
the Guarantor or any of its Subsidiaries.
4.7Governmental 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 Guarantor of this Guaranty.
4.8Litigation; Observance of Agreements, Statutes and Orders. (a) Except
as disclosed in Schedule 4.8(a) to this Guaranty, there are no actions, suits or
proceedings pending or, to the knowledge of the Guarantor, threatened against or
affecting the Guarantor or any of its Subsidiaries or any property of the
Guarantor or any of its Subsidiaries in any court or before any arbitrator of
any kind or before or by any Governmental Authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Schedule 4.8(b) to this Guaranty, neither the
Guarantor nor any of its Subsidiaries 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 applicable to it, or is in violation of any applicable law, ordinance,
rule or regulation (including without limitation Environmental Requirements) of
any Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
4.9Taxes. The Guarantor 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 Guarantor or any of its
Subsidiaries, as the case may be, has established adequate reserves in
accordance with GAAP.
4.10 Title to Property; Leases. The Guarantor and its Material
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 described in Schedule 4.5 to
this Guaranty or purported to have been acquired by the Guarantor or any
Material Subsidiary after the date of such balance sheet (except as sold or
otherwise disposed of in the ordinary course of business). The Lease and all
other leases that individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material respects.
4.11 Licenses, Permits, Y2K, etc. Except as disclosed in Schedule
4.11(a) to this Guaranty:
(i) the Guarantor and its Material Subsidiaries own or
possess all licenses, permits, franchises, authorizations,
patents, proprietary software, copyrights, 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;
(ii) to the best knowledge of the Guarantor, no product of
the Guarantor or any Material Subsidiary infringes in any
Material respect on any license, permit, franchise,
authorization, patent, proprietary software, copyright, service
mark, trademark, trade name or other right owned by any other
Person; and
(iii) to the best knowledge of the Guarantor, there is no
Material violation by any Person of any right of the Guarantor or
any of its Material Subsidiaries with respect to any patent,
proprietary software, copyright, service mark, trademark, trade
name or other right owned or used by the Guarantor or any of its
Material Subsidiaries.
(a)The Guarantor and its Subsidiaries are in the process of (i)
reviewing and assessing all areas within their respective businesses and
operations (including those affected by information received from
suppliers and vendors) that would reasonably be expected to be adversely
affected by the Year 2000 Problem, (ii) developing a plan and timetable
for addressing the Year 2000 Problem on a timely basis, and (iii) where
a plan is substantially complete, implementing that plan substantially
in accordance with that timetable. The Guarantor reasonably believes
that all of its computer applications that are Material to the
businesses and operations of the Guarantor and its Subsidiaries will on
a timely basis be Year 2000 Compliant, except to the extent that a
failure to do so would not reasonably be expected to have a Material
Adverse Effect. The Guarantor has asked its Material vendors and
suppliers about their plans for and progress in identifying and
addressing problems that their computer systems may face in correctly
processing date information related to the Year 2000 Problem and is
developing contingency plans for any essential vendors and suppliers who
fail to give the Guarantor sufficient credible information of their
readiness as it affects the Guarantor's ability to be Year 2000
Compliant. As used in this Section 4.11(b), the term "Year 2000
Compliant" means all computer applications of the Guarantor that are
Material to the businesses and operations of the Guarantor and its
Subsidiaries will on a timely basis be able to perform properly
date-sensitive functions involving all dates on and after January 1,
2000; and the term "Year 2000 Problem" means the risk that computer
applications used by the Guarantor or any of its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions
involving certain dates on and after January 1, 2000.
4.12 Compliance with ERISA. (a) The Guarantor and each ERISA Affiliate
have operated and administered each Plan in compliance with all applicable laws
except for such instances of noncompliance as have not resulted in and would not
reasonably be expected to result in a Material Adverse Effect. Neither the
Guarantor nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans (as defined in section 3 of ERISA), and no event,
transaction or condition has occurred or exists that would reasonably be
expected to result in the incurrence of any such liability by the Guarantor or
any ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Guarantor or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not, individually or in the aggregate, be Material.
(b) The present value of the aggregate benefit liabilities under each of
the Plans (other than Multiemployer Plans), determined 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. 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 Guarantor 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 postretirement benefit obligation (determined as of the
last day of the Guarantor's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Guarantor and its Subsidiaries is reflected in the financial
statements listed in Schedule 4.5 to this Guaranty as of the respective dates
thereof.
(e) The execution and delivery of this Guaranty 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 Guarantor in the first
sentence of this Section 4.12(e) is made in reliance upon and subject to the
accuracy of the representations of the Note Purchasers in Section 2.2 of the
Note Purchase Agreement as to the sources of the funds used to pay the purchase
price of the Notes to be purchased by them thereunder.
4.13 Offering of the Notes and this Guaranty, Etc. Neither the Guarantor
nor anyone authorized to act on its behalf has offered this Guaranty or the
Notes 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 Note Purchasers and not more than 110 other
institutional investors (all such other investors being "accredited investors"
as defined under Rule 501(a) of the Securities Act). Neither the Guarantor nor
anyone authorized to act on its behalf has taken, or will take, any action that
would subject the execution and delivery of this Guaranty or the issuance or
sale of the Notes to the registration requirements of Section 5 of the
Securities Act.
4.14 Existing Indebtedness. Neither the Guarantor 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 Indebtedness of the Guarantor or such
Subsidiary and no event or condition exists with respect to any Indebtedness of
the Guarantor or any Subsidiary that would permit one or more Persons to cause
such Indebtedness to become due and payable before its stated maturity, except
in each case for any default, event or condition which individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect.
SECTION 5
MISCELLANEOUS
5.1Payments. Each payment by the Guarantor under this Guaranty shall be
made in immediately available funds to or on the order of the Lessor or any
Related Assignee, as the case may be, in each case without setoff or
counterclaim; provided that, no such payment shall be deemed a waiver of any
rights the Guarantor may have against the Lessor or the Lessee.
5.2Parties. This Guaranty shall inure to the benefit of the Lessor and
each Related Assignee (including the Noteholders) and its and their respective
successors, assigns or transferees, and shall be binding upon the Guarantor and
its successors and assigns. The Guarantor may not delegate any of its duties
under this Guaranty without the prior written consent of the Lessor and each
Related Assignee or except as otherwise permitted by Section 3.2.1. Upon notice
to the Guarantor, the Lessor and its successors, assigns and transferees may
assign its or their rights and benefits under this Guaranty to (a) any financial
institutions providing financing to the Lessor in connection with the Lease or
any trustee for such financial institutions, and (b) any purchaser or transferee
of all or a substantial portion of the rights and interests of the Lessor and
its successors, assigns or transferees in and to the Facility or any Parcel of
Property or Unit of Equipment. The Guarantor acknowledges receipt of notice of
such assignment to The Bank of New York, as trustee, in connection with the
Lessor's financing of the Facility.
5.3Notices. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder shall be in writing, shall
be addressed as provided below and shall be considered as properly given (a) if
delivered in person, (b) if sent by express courier service (including Federal
Express, Emery, DHL, Airborne Express, and other similar express delivery
services), (c) in the event overnight delivery services are not readily
available, if mailed through the United States Postal Service, postage prepaid,
registered or certified with return receipt requested, or (d) if sent by
telecopy and confirmed; provided, that in the case of a notice by telecopy, the
sender shall in addition confirm such notice by writing sent in the manner
specified in clauses (a), (b) or (c) of this Section 5.3. All notices shall be
effective upon receipt by the addressee; provided, however, that if any notice
is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. For the purposes of
notice, the addresses of the parties shall be as set forth below; provided,
however, that any party shall have the right to change its address for notice
hereunder to any other location by giving written notice to the other party and
the Related Assignee in the manner set forth herein. The initial addresses of
the parties hereto are as follows:
If to the Lessor:
LIC Funding, Limited Partnership
c/o LIC Capital, Inc.,
as General Partner
c/o ML Leasing Equipment Corp.
World Financial Center
North Tower
250 Vesey Street
New York, New York 10281
Attention: Jean M. Tomaselli
Telecopier: (212) 449-2854
Telephone: (212) 449-7925
With a copy to:
ML Leasing Equipment Corp.
Controller's Office
World Financial Center
South Tower - 14th Floor
225 Liberty Street
New York, New York 10080
Attention: Kira Toone
Telecopier: (212) 236-7584
Telephone: (212) 236-7203
If to the Guarantor:
KeySpan Corporation
One MetroTech Center
Brooklyn, New York 11201
Attention: General Counsel
Telecopier: (718) 403-1000
Telephone: (718) 696-7139
5.4Remedies. The Guarantor stipulates that the remedies at law in
respect of any default or threatened default by the Guarantor in the performance
of or compliance with any of the terms of this Guaranty are not and will not be
adequate, and that any of such terms may be specifically enforced by a decree
for specific performance or by an injunction against violation of any such terms
or otherwise.
5.5Right to Deal with the Lessee. At any time and from time to time,
without terminating, affecting or impairing the validity of this Guaranty or the
obligations of the Guarantor hereunder, the Lessor or any Related Assignee may
deal with the Lessee in the same manner and as fully and as if this Guaranty did
not exist and shall be entitled, among other things, to grant the Lessee,
without notice or demand and without affecting the Guarantor's liability
hereunder, such extension or extensions of time to perform, renew, compromise,
accelerate or otherwise change the time for payment of or otherwise change the
terms of payment or any part thereof contained in or arising under any Operative
Document, or to waive any Obligation of the Lessee to perform any act or acts as
the Lessor or any Related Assignee may deem advisable.
5.6Subrogation. The Guarantor will not exercise any rights which it may
acquire by way of subrogation hereunder, by any payment made hereunder or
otherwise, until all of the Obligations have been indefeasibly paid in full in
cash and performed in full. If 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 in cash, such amount shall be held in trust for the
benefit of the Lessor and the trustee under any Financing Arrangement and shall
forthwith be paid as provided in Section 5.1 hereof to be credited and applied
upon the Obligations, whether matured or unmatured, in accordance with the terms
of the Operative Documents. If (a) the Guarantor shall make payment to the
Lessor or any successor, assignee or transferee of the Lessor of all or any part
of the Obligations and (b) all the Obligations shall be indefeasibly paid in
full in cash, the Lessor or any such successor, assignee or transferee of the
Lessor will, at the Guarantor's request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse as set forth in Section 31 of
the Lease, and without representation or warranty, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor.
5.7Survival of Representations, Warranties, etc. All representations,
warranties, covenants and agreements made herein and in statements or
certificates delivered pursuant hereto shall survive any investigation or
inspection made by or on behalf of the Lessor or any Related Assignee (including
any Noteholder) and shall continue in full force and effect, notwithstanding any
termination or unenforceability of the Lease or any other Operative Document or
the Notes, until all of the obligations of the Guarantor under this Guaranty
shall be fully performed in accordance with the terms hereof, including without
limitation the payment and performance in full of all Obligations.
5.8GOVERNING LAW; WAIVER OF JURY TRIAL. THIS GUARANTY SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THE
GUARANTOR EXPRESSLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM RELATED TO THIS GUARANTY OR ANY OTHER OPERATIVE DOCUMENT. THE
GUARANTOR ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION 5.8 HAVE BEEN
BARGAINED FOR AND THAT THE GUARANTOR HAS BEEN REPRESENTED BY COUNSEL IN
CONNECTION THEREWITH.
5.9Severability. If any term of this Guaranty or any application thereof
shall be invalid or unenforceable, the remainder of this Guaranty and any other
application of such term shall not be affected thereby. Any term of this
Guaranty may be amended, modified, waived, discharged or terminated only by an
instrument in writing signed by the Guarantor and Lessor, and consented to by
the trustee under any Financing Arrangement.
5.10 Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.11 No Merger. There shall be no merger of this Guaranty and the Lease
by reason of the fact that the same person, firm or entity is, directly or
indirectly, the Guarantor and a lessee under the Lease or acquires or holds the
leasehold estate created by the Lease or any part of such leasehold estate.
5.12 No Solicitation of Noteholders. Neither the Guarantor nor any of
its Subsidiaries will make any solicitation or request of the Lessor, the
Related Assignee or any Noteholder for or with respect to any proposed waiver or
amendment of any of the provisions of this Guaranty or any of the other Finance
Documents (as defined in the Note Purchase Agreement) unless the Lessor and each
Noteholder shall be informed thereof by the Guarantor and shall be afforded the
opportunity of considering the same and shall be supplied by the Guarantor with
sufficient information to enable it to make an informed decision with respect
thereto. Neither the Guarantor nor any of its Subsidiaries will, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fees or otherwise, or grant any security to
the Lessor or any Noteholder as consideration for, as an inducement to or in
connection with the Lessor or such Noteholder entering into any waiver or
amendment of any of the provisions of this Guaranty or any of the other Finance
Documents unless such remuneration is concurrently paid or security is
concurrently granted, on the same terms, to the Lessor and ratably to the
holders of all of the Notes then outstanding.
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to
be executed and delivered as of the day and year first above written.
KEYSPAN CORPORATION
(d/b/a KeySpan Energy),
as Guarantor
By:___________________________
Name:
Title:
Acknowledged and Agreed:
LIC FUNDING, LIMITED PARTNERSHIP
By: LIC Capital, Inc.,
its General Partner
By: ____________________________
Name:
Title:
A-5
343675-v14 0064428-0045
343675-v14 0064428-0045
EXHIBIT A
DEFINED TERMS
"COVENANT OBLIGATIONS" means all obligations, covenants and undertakings
of the Lessee contained in the Operative Documents, other than Payment
Obligations.
"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 Guarantor
under Section 414 of the Code.
"EVENT OF DEFAULT" means any of the following events shall occur and be
continuing:
(a) The Guarantor shall fail to pay any amount due under this
Guaranty when the same becomes due and payable; or
(b) Any representation or warranty made by the Guarantor in this
Guaranty or by the Guarantor (or any of its officers) in connection with
this Guaranty or any Financing Arrangement shall prove to have been
incorrect in any material respect when made; or
(c) The Guarantor shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 3.1.1, Section 3.1.5 or
Section 3.2 of this Guaranty, or (ii) any other term, covenant or
agreement contained in this Guaranty on its part to be performed or
observed if the failure to perform or observe such other term, covenant
or agreement shall remain unremedied for thirty (30) days after written
notice thereof shall have been given to the Guarantor by the Lessor or
any Related Assignee; provided, that if such default is of a nature that
is not capable of being cured within such thirty (30) day period and the
Guarantor shall have diligently commenced curing such default and
proceeds diligently and in good faith thereafter to complete curing such
default, such thirty (30) day period shall be extended to ninety (90)
days; or
(d) The entry of a decree or order for relief in respect of the
Guarantor or a Material Subsidiary by a court having jurisdiction in the
premises in an involuntary case under the Federal bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or other similar law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Guarantor or a Material Subsidiary or of any substantial
part of the respective property of the Guarantor or a Material
Subsidiary, or ordering the winding up or liquidation of the affairs of
the Guarantor or a Material Subsidiary, and the continuance of any such
decree or order unstayed and in effect for a period of sixty (60)
consecutive days; or
(e) The suspension or discontinuance of the business operations
of the Guarantor or a Material Subsidiary, the insolvency (however
evidenced) of the Guarantor or a Material Subsidiary or the admission by
the Guarantor or a Material Subsidiary of insolvency or bankruptcy, or
the commencement by the Guarantor or a Material Subsidiary of a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or the consent by the Guarantor or a
Material Subsidiary to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
other similar official of the Guarantor or a Material Subsidiary or of
any substantial part of the respective property of the Guarantor or a
Material Subsidiary, or the making by the Guarantor or a Material
Subsidiary of an assignment for the benefit of creditors, or the failure
of the Guarantor or a Material Subsidiary generally to pay its debts as
such debts become due, or the taking of corporate action by the
Guarantor or a Material Subsidiary in furtherance of any such action; or
(f) A default or event of default, the effect of which is to
permit the holder or holders of any Indebtedness of the Guarantor or a
Material Subsidiary in excess of $5,000,000 in the aggregate, or a
trustee or agent on behalf of such holder or holders, to cause such
Indebtedness to become due prior to its stated maturity, shall occur and
be continuing under the provisions of any agreement pursuant to which
such Indebtedness was created or any instrument evidencing such
Indebtedness, or any obligation of the Guarantor or such Material
Subsidiary for the payment of such Indebtedness shall become or be
declared to be due and payable prior to its stated maturity, or shall
not be paid when due (after giving effect to any applicable grace
period); or
(g) Any final non-appealable judgment for the payment of money in
excess of $5,000,000 shall be rendered against the Guarantor or any of
its Material Subsidiaries by any court of competent jurisdiction and the
same shall remain undischarged for a period of thirty (30) consecutive
days during which execution of such judgment or judgments shall not be
effectively stayed.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
"INDEMNIFICATION OBLIGATIONS" means any amount or amounts due to any
Indemnified Person from the Lessee pursuant to Section 11 of the Lease.
"LEASE" means the Lease Agreement dated as of June 9, 1999 between LIC
Funding, Limited Partnership, as Lessor, and KeySpan-Ravenswood, Inc., as
Lessee, as the same may be amended or supplemented from time to time in
accordance with its terms and the terms of the Collateral Indenture.
"LEASE EVENT OF DEFAULT" means an Event of Default under the Lease.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Guarantor 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
Guarantor and its Subsidiaries taken as a whole, or (b) the ability of the
Lessee to perform its obligations under the Lease or any other Operative
Document to which it is a party, or (c) the ability of the Guarantor to perform
its obligations under this Guaranty, or (d) the validity or enforceability of
this Guaranty or any other Operative Document.
"MATERIAL SUBSIDIARY" means "Material Subsidiary" as defined in the Lease.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"NOTE" means any of the 6.91% Senior Notes due 2009, issued by the
Lessor pursuant to the Note Purchase Agreement.
"NOTEHOLDER" means the Person in whose name a Note is registered from
time to time.
"NOTE PURCHASER" has the meaning specified in the Note Purchase Agreement.
"NOTE PURCHASE AGREEMENT" means, collectively, the several Note Purchase
Agreements, each dated as of June 9, 1999, between the Lessor and the purchasers
named in Schedule I thereto, as the same may be amended, restated, modified or
supplemented from time to time.
"OBLIGATIONS" means Payment Obligations and Covenant Obligations,
individually and collectively.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Guarantor whose responsibilities extend
to the subject matter of such certificate.
"OPERATIVE DOCUMENTS" means this Guaranty, the Lease, any Consent, the
Facility Support Agreement, the SNDA (as defined in the Note Purchase
Agreement), the Landlord's Consent (as defined in the Note Purchase Agreement),
the Site Lease, each Ground Lease, and each agreement, certificate or instrument
delivered by the Guarantor or the Lessee pursuant to the terms of any of the
foregoing.
"PAYMENT OBLIGATIONS" means all amounts stated in the Operative
Documents to be payable by the Lessee, including without limitation (but without
duplication), amounts in respect of (i)(A) an Event of Loss, Event of Default or
Event of Lease Termination (as each such term is defined in the Lease) and (B)
any other termination or expiration of the Lease, including without limitation,
a termination of the Lease or purchase of the Facility or a Parcel of Property
or Unit of Equipment, as the case may be, pursuant to the terms of Section 12,
Section 13, Section 14, Section 15, Section 16 and Section 29 of the Lease; (ii)
Basic Rent, Additional Rent, Acquisition Cost and Debt Yield-Maintenance
Premium; (iii) a Recording Event under Section 8(i) of the Lease; and (iv) all
amounts of Indemnification Obligations, in each case, notwithstanding any
rejection of the Lease by the Lessee or a trustee in any Federal or state
bankruptcy, insolvency or other similar proceeding and any limit imposed in any
such proceeding or by statute or other applicable law on the amounts payable
under the Lease by the Lessee.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, limited liability company,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) 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 Guarantor or any ERISA Affiliate
or with respect to which the Guarantor or any ERISA Affiliate may have any
liability.
"POTENTIAL DEFAULT" means any event that, with the giving of notice,
lapse of time or both, would constitute an Event of Default.
"POTENTIAL LEASE DEFAULT" means a Potential Default under the Lease.
"PROPERTY"or "PROPERTIES" means, unless otherwise specifically limited,
real or personal property of any kind, tangible or intangible, choate or
inchoate.
"PRUDENT GAS UTILITY PRACTICE" means, as the context may require, at a
particular time any of the practices, methods and acts (including, without
limitation, methods or acts engaged in or approved by at least a substantial
portion of the gas utility industry prior thereto) which, in the exercise of a
Material Subsidiary's reasonable judgment in light of the facts and the
characteristics of the property of such Material Subsidiary known at the time
the decision was made, would have been expected to accomplish the desired result
at the lowest reasonable cost consistent with reliability, safety, expedition
and good customer relations. "Prudent Gas Utility Practice" is not intended to
be limited to the optimum practice, method or act, to the exclusion of all
others, but rather to be a spectrum of reasonable and prudent practices, methods
or acts.
"QUALIFYING ASSIGNEE" means each (a) Noteholder or other Person
originally providing credit support to the Lessor pursuant to a Financing
Arrangement (together with the Affiliates of such Noteholder or other Person and
any collateral trustee or agent for any thereof), and (b) transferee of such
Noteholder or other Person which holds at least 1% (or in the case of Section
3.1.1 (a) through (e), 0.5%) of the total unpaid principal amount of
indebtedness under such Financing Arrangement.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Guarantor with responsibility for the administration of the
relevant portion of this Guaranty.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer, assistant treasurer or comptroller of the
Guarantor.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
owns more than 50% of the voting stock or other equity interest of such Person .
Unless the context otherwise clearly requires, any reference to a "Subsidiary"
is a reference to a Subsidiary of the Guarantor.
2
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SCHEDULE 4.4
ORGANIZATION AND OWNERSHIP OF SHARES OF MATERIAL SUBSIDIARIES
Material Subsidiaries
Brooklyn Union Gas Company, a New York corporation, is a wholly owned subsidiary
of KeySpan Energy Corp. (a wholly owned subsidiary of the Guarantor).
KeySpan Gas East Corporation d/b/a Brooklyn Union of Long Island, a New York
corporation, is a wholly owned subsidiary of the Guarantor.
Guarantor's Directors
Robert B. Catell
Lilyan H. Affinito
George Bugliarello
Howard R. Curd
Richard N. Daniel
Donald H. Elliot
Alan H. Fishman
James R. Jones
Stephen W. McKessy
Edward D. Miller
Basil A. Paterson
James Q. Riordan
Frederic V. Salerno
Vincent Tese
Guarantor's Executive Officers
Robert B. Catell - Chief Executive Officer
Anthony J. DiBrita - Senior Vice President of Gas Operations
Lawrence S. Dryer - Vice President of Internal Audit
Robert J. Fani - Senior Vice President of Gas Marketing and Sales
William K. Feraudo - Senior Vice President
Ronald S. Jendras - Vice President, Controller and Chief Accounting Officer
Frederick M. Lowther - General Counsel
David J. Manning - Senior Vice President of Corporate Affairs
Craig G. Matthews - President and Chief Operating Officer
H. Neil Nichols - Senior Vice President
Anthony Nozzolillo - Senior Vice President of the Company's Electric Business
Unit
Wallace P. Parker, Jr. - Senior Vice President of Human Resources
David L. Phillips - Senior Vice President of Strategic Planning & Corporate
Development
Lenore F. Puleo - Senior Vice President of Customer Relations
Cheryl Smith - Senior Vice President and Chief Information Officer
Michael J. Taunton - Vice President of Investor Relations
Robert R. Wieczorek - Vice President, Secretary and Treasurer
Steven L. Zelkowitz - Senior Vice President and Deputy General Counsel
Restrictions on Payment of Dividends
There are no agreements restricting the ability of any Material Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to the Guarantor or any of its Subsidiaries that owns outstanding shares of
capital stock of any Material Subsidiary, except as set forth in the reports,
schedules, forms, statements and other documents filed by the Guarantor with the
Securities and Exchange Commission, and publicly available prior to the date of
this Guaranty.
SCHEDULE 4.5
FINANCIAL STATEMENTS
Copies of the Guarantor's audited financial statements dated December 31, 1998
and the unaudited financial statements dated March 31, 1999 are attached hereto.
SCHEDULE 4.8
LITIGATION
None, except as set forth in the statements under the captions "Item 1. Business
Environmental Matters," "Item 3. Legal Proceedings," "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations
Environmental" and "Note 8. Contractual Obligations, Financial Instruments and
Contingencies" of the Annual Report of the Guarantor or any Subsidiary of the
Guarantor for the year ended December 31, 1998 on Form 10-K and the statements
under the captions "Note 6. Environmental Matters" of "Item 1. Financial
Statements," "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Environmental" and "Item 1. Legal
Proceedings" of Part II of the Quarterly Report of the Guarantor or any
Subsidiary of the Guarantor for the quarter ended March 31, 1999 on Form 10-Q
filed with the Securities and Exchange Commission, and publicly available prior
to the date of this Guaranty.
SCHEDULE 4.11
LICENSES, PERMITS, Y2K
NONE