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EXHIBIT 10(x)
GUARANTY
BY
KCS ENERGY, INC.
IN FAVOR OF
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, AS AGENT
Dated as of September ___, 1996
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CREDIT FACILITY TO KCS RESOURCES, INC.,
KCS PIPELINE SYSTEMS, INC., KCS MICHIGAN RESOURCES, INC.,
AND KCS ENERGY MARKETING, INC.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND INTERPRETATION........................... 2
1.1 Terms Defined Above...................................... 2
1.2 Terms Defined in Credit Agreement........................ 2
1.3 Additional Defined Terms................................. 2
1.4 Undefined Financial Accounting Terms..................... 2
1.5 References............................................... 2
1.6 Articles and Sections.................................... 2
1.7 Number and Gender........................................ 2
1.8 Knowledge................................................ 3
ARTICLE II GUARANTY................................................. 3
2.1 Guaranty................................................. 3
2.2 Absolute, Complete, and Continuing Guaranty.............. 3
2.3 Liability Not Impaired................................... 3
2.4 Primary Liability........................................ 4
2.5 Security; Additional Guarantees.......................... 4
2.6 Waivers.................................................. 4
2.7 Pursuit of Remedies...................................... 4
2.8 Status of Borrowers...................................... 5
2.9 Independent Review; Solvency............................. 5
2.10 Enforcement Costs........................................ 5
ARTICLE III REPRESENTATIONS AND WARRANTIES........................... 5
3.1 Due Authorization........................................ 5
3.2 Corporate Existence...................................... 6
3.3 Valid and Binding Obligations............................ 6
3.4 Scope and Accuracy of Financial Statements............... 6
3.5 No Material Misstatements................................ 6
3.6 Litigation............................................... 6
3.7 Default.................................................. 7
3.8 ERISA.................................................... 7
3.9 Proper Filing of Tax Returns; Payment of Taxes Due....... 7
3.10 Authorizations; Consents................................. 8
3.11 Compliance with Federal Reserve Regulations.............. 8
3.12 Investment Company Act Compliance........................ 8
3.13 Public Utility Holding Company Act Compliance............ 8
3.14 Subsidiaries............................................. 8
ARTICLE IV AFFIRMATIVE COVENANTS.................................... 8
4.1 Maintenance and Access to Records........................ 8
4.2 Quarterly Financial Statements; Compliance Certificates.. 9
4.3 Annual Financial Statements.............................. 9
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4.5 Notices of Certain Events................................ 9
4.6 Additional Information................................... 10
4.7 Maintenance of Corporate Existence and Good Standing..... 11
4.8 Compliance with Laws..................................... 11
4.9 Payment of Assessments and Charges....................... 11
4.10 Indemnification.......................................... 11
4.11 Further Assurances....................................... 12
ARTICLE V NEGATIVE COVENANTS....................................... 12
5.1 Dividends and Distributions.............................. 12
5.2 Changes in Corporate Structure........................... 13
5.3 Transactions with Affiliates............................. 13
5.4 Tangible Net Worth....................................... 13
5.5 Interest Coverage Ratio.................................. 13
5.6 Partnerships and Joint Ventures.......................... 13
5.7 Lines of Business........................................ 13
ARTICLE VI MISCELLANEOUS............................................ 13
6.1 Survival of Representations, Warranties, and Covenants... 13
6.2 Notices and Other Communications......................... 13
6.3 Parties in Interest...................................... 14
6.4 Rights of Third Parties.................................. 14
6.5 No Waiver; Rights Cumulative............................. 15
6.6 Severability............................................. 15
6.7 Amendments; Waivers...................................... 15
6.8 Review of Guaranty....................................... 15
6.9 Payments................................................. 15
6.10 Governing Law............................................ 15
6.11 Jurisdiction and Venue................................... 15
6.12 Appointment of Agent for Service of Process.............. 15
6.13 Waiver of Rights to Jury Trial........................... 16
6.15 Confidentiality.......................................... 16
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GUARANTY
This GUARANTY (this "Guaranty") dated effective as of September __,
1996, is by KCS Energy, Inc., a Delaware corporation (the "Guarantor") in favor
of the lenders party to the Credit Agreement (as such term is defined below)
from time to time (together with their respective successors and assigns as
permitted pursuant to the Credit Agreement referred to below, the "Lenders"),
and Canadian Imperial Bank of Commerce, a Canadian chartered bank, acting
through its New York Agency, as agent for the Lenders pursuant to the Credit
Agreement (in such capacity, together with its successors in such capacity
pursuant to the terms of the Credit Agreement, the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the terms and conditions of the Credit Agreement
dated of even date herewith by and among KCS Resources, Inc. ("KRI"), a Delaware
corporation, KCS Pipeline Systems, Inc. ("KCS Pipeline"), a Delaware
corporation, KCS Michigan Resources, Inc. ("KCS Michigan"), a Delaware
corporation, and KCS Energy Marketing, Inc. ("KCS Marketing"), a New Jersey
corporation (each individually a "Borrower" and collectively, the "Borrowers"),
the Agent, CIBC Inc., as Collateral Agent (the "Collateral Agent"), and the
Lenders (as such agreement may be amended, restated, or supplemented from time
to time, the "Credit Agreement"), the Lenders have agreed to extend credit to or
for the benefit of the Borrowers;
WHEREAS, the Guarantor has heretofore executed that certain Guaranty
dated March 15, 1994, in favor of Bank One, Texas, National Association ("Bank
One") (as heretofore amended, restated, or supplemented, the "Prior Bank One
Guaranty"), guaranteeing all Indebtedness of KRI and KCS Pipeline to the lenders
under the Existing Bank One Credit Agreement (as such term is defined in the
Credit Agreement);
WHEREAS, the Guarantor has heretofore executed that certain Guaranty
dated November 28, 1995 in favor of Comerica Bank-Texas, as agent ("Comerica")
(as heretofore amended, restated, or supplemented, the "Prior Comerica
Guaranty"), guaranteeing all Indebtedness of KCS Michigan and KCS Marketing to
the lenders under the Existing Comerica Credit Agreement (as such term is
defined in the Credit Agreement);
WHEREAS, the Guarantor, as the ultimate sole shareholder of the
Borrowers, will derive substantial direct and indirect benefits from the
extension of credit to the Borrowers pursuant to the Credit Agreement; and
WHEREAS, pursuant to the Credit Agreement and as an inducement to the
Lenders to extend credit to the Borrowers pursuant to the Credit Agreement, the
Guarantor has agreed to execute this Guaranty in favor of the Agent for the
benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree that the Prior Bank One
Guaranty and the Prior
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Comerica Guaranty are each hereby amended and restated in their entirety
respectively to read as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Guaranty, each of the terms
"Agent," "Bank One," "Borrower," "Borrowers," "Collateral Agent," "Comerica,"
"Credit Agreement," "Guarantor," "Guaranty," "KCS Marketing," "KCS Michigan,"
"KCS Pipeline," "KRI," "Lenders," "Prior Bank One Guaranty," and "Prior Comerica
Guaranty" shall have the meaning assigned to such term hereinabove.
1.2 Terms Defined in Credit Agreement. Each capitalized term used
but not defined herein shall have the meaning assigned to such term in the
Credit Agreement.
1.3 Additional Defined Terms. As used in this Guaranty, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Guaranteed Indebtedness" shall mean the Indebtedness and other
obligations as to which payment is guaranteed by the Guarantor hereunder
pursuant to Section 2.1.
"Subsidiaries" shall mean all Subsidiaries (as defined in the Credit
Agreement) of the Guarantor.
1.4 Undefined Financial Accounting Terms. Undefined financial
accounting terms used in this Guaranty shall have the meanings assigned to such
terms according to GAAP.
1.5 References. The words "hereby," "herein," "hereinabove,"
"hereinafter," "hereinbelow," "hereof," "hereunder," and words of similar import
when used in this Guaranty shall refer to this Guaranty as a whole and not to
any particular Article, Section, or provision of this Guaranty. References in
this Guaranty to Article or Section numbers are to such Articles or Sections of
this Guaranty unless otherwise specified. References in this Agreement to
"includes" or "including" shall mean "includes, without limitation," or
"including, without limitation," as the case may be.
1.6 Articles and Sections. This Guaranty, for convenience only, has
been divided into Articles and Sections; and it is understood that the rights
and other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.7 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be
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understood to include the singular. Words denoting sex shall be construed to
include the masculine, feminine and neuter, when such construction is
appropriate. Definitions of terms defined in the singular or plural shall be
equally applicable to the plural or singular, as the case may be, unless
otherwise indicated.
1.8 Knowledge. As used herein "knowledge" or "knowledge and belief"
of the Guarantor shall mean the knowledge of any officer of the Guarantor.
ARTICLE II
GUARANTY
2.1 Guaranty. The Guarantor unconditionally guarantees to the Agent
and the Lenders the prompt payment and performance when due (whether at stated
maturity, by acceleration, or otherwise) of the Obligations.
2.2 Absolute, Complete, and Continuing Guaranty. This is an
absolute, complete, and continuing Guaranty; and no notice of the Obligations,
the making of any Loans, the issuance of any Letter of Credit, the making of any
Letter of Credit Payment, or any extension of credit now or hereafter contracted
by or extended to the Borrowers need be given to the Guarantor. The grant of any
Liens by the Guarantor shall not in anyway limit or be construed as limiting the
Agent or the Collateral Agent to collect payment of any liability of the
Guarantor incurred hereby from the Collateral, but it is expressly understood
and provided that the liability of the Guarantor hereunder shall constitute the
absolute and unconditional obligation of the Guarantor. The Borrowers and the
Lenders may, in accordance with the terms of the Credit Agreement, rearrange,
extend, increase and/or renew all or any portion of the Obligations without
notice to the Guarantor; and in such event, the Guarantor shall remain fully
bound hereunder for payment of the Guaranteed Indebtedness. The obligations of
the Guarantor hereunder shall not be released, impaired, or diminished by any
amendment, modification, or alteration of any Loan Document, except as may be
expressly provided in any such amendment, modification, or alteration. The
Guarantor shall remain liable under this Guaranty regardless of whether the
Borrowers or any other guarantor be found not liable on all or any part of the
Obligations for any reason, including, without limitation, insanity, minority,
disability, bankruptcy, insolvency, death, liquidation, or dissolution, even
though rendering all or any part of the Obligations void, unenforceable, or
uncollectible as against the Borrowers or any other guarantor. This Guaranty
shall continue to be effective or shall be reinstated, as the case may be, if at
any time any payment of any of the Guaranteed Indebtedness is rescinded or must
otherwise be returned by the Agent or any Lender upon the insolvency,
bankruptcy, or reorganization of the Borrowers or otherwise, all as though such
payment had not been made and will, thereupon, guarantee payment of such amount
as to which refund or restitution has been made, together with interest accruing
thereon subsequent to the date of refund or restitution at the applicable rate
under the Credit Agreement and collection costs and fees (including, without
limitation, reasonable attorneys' fees) applicable thereto.
2.3 Liability Not Impaired. The liabilities and obligations of the
Guarantor hereunder shall not be affected or impaired by (a) the failure of the
Agent, the Collateral Agent
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or any other Person to exercise diligence or reasonable care in the
preservation, protection, or other handling or treatment of all or any part of
the Collateral, (b) the failure of any Lien intended to be granted or created to
secure all or any part of the Obligations to be properly perfected or created or
the unenforceability of any Lien for any other reason, or (c) the subordination
of any such Lien to any other Lien.
2.4 Primary Liability. The liability of the Guarantor for the
payment of the Guaranteed Indebtedness shall be primary and not secondary.
2.5 Security; Additional Guarantees. The Guarantor authorizes the
Agent and the Lenders, without notice to or demand upon the Guarantor and
without affecting the liability of the Guarantor hereunder, (a) to take and hold
security voluntarily provided by any Person as security for the payment of all
or any portion of the Guaranteed Indebtedness and the other Obligations, and to
exchange, enforce, waive, and/or release any such security; (b) to apply such
security and direct the order or manner of sale thereof as the Agent, the
Collateral Agent or the Lenders in their discretion may determine; and (c) to
obtain a guaranty of all or any portion of the Guaranteed Indebtedness and the
other Obligations from any one or more other Persons and to enforce, waive,
rearrange, modify, limit, or release at any time or times such other Persons
from their obligations under such guaranties, whether with or without
consideration.
2.6 Waivers. The Guarantor waives any right to require the Agent,
the Collateral Agent or any Lender to (a) proceed against the Borrowers or make
any effort at the collection of the Guaranteed Indebtedness from the Borrowers
or any other guarantor or Person liable for all or any part of the Guaranteed
Indebtedness, (b) proceed against or exhaust any collateral securing the
Guaranteed Indebtedness, or (c) pursue any other remedy in the power of the
Agent, the Collateral Agent or any Lender. The Guarantor further waives any and
all rights and remedies of suretyship. The Guarantor waives any defense arising
by reason of any disability, lack of corporate authority or power, or other
defense of the Borrowers or any other guarantor of all or any part of the
Obligations. The Guarantor expressly waives all notices of any kind, presentment
for payment, demand for payment, protest, notice of protest, notice of intent to
accelerate maturity, notice of acceleration of maturity, dishonor, diligence,
notice of any amendment of any Loan Document, notice of any adverse change in
the financial condition of the Borrowers, notice of any adjustment, indulgence,
forbearance, or compromise that might be granted or given by the Agent, the
Collateral Agent or any Lender to the Borrowers, and notice of acceptance of
this Guaranty, acceptance on the part of the Agent being conclusively presumed
by its request for this Guaranty and the delivery of this Guaranty to the Agent.
The liability and obligations of the Guarantor hereunder shall not be affected
or impaired by any action or inaction by the Agent, the Collateral Agent or any
Lender in regard to any matter waived or notice of which is waived by the
Guarantor in this Guaranty.
2.7 Pursuit of Remedies. The Agent, the Collateral Agent and the
Lenders may pursue any remedy without altering the obligations of the Guarantor
hereunder and without liability to the Guarantor, even though the pursuit of
such remedy may result in the loss by the Guarantor of rights of subrogation or
to proceed against others for reimbursement or contribution or any other right.
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2.8 Status of Borrowers. Should the status of the Borrowers change
in any way, as a result of reorganization or dissolution, any sale, lease, or
transfer of any or all of the assets of the Borrowers, any change in the
shareholders, partners, or members of the Borrowers or otherwise, this Guaranty
shall continue and shall cover the Guaranteed Indebtedness under the new status.
This Section shall not, however, be construed to authorize any action by the
Borrowers otherwise prohibited under the Credit Agreement or any other Loan
Document.
2.9 Independent Review; Solvency. The Guarantor is familiar with and
has independently reviewed the books and records regarding the financial
condition of the Borrowers and is familiar with the value of any and all
property intended as Collateral; however, the Guarantor is not relying on such
financial condition or such Collateral as an inducement to enter into this
Guaranty. The Guarantor acknowledges that it is not relying on any
representations (oral or otherwise) of the Agent, the Collateral Agent, any
Lender or any other Person except as may be expressly described in this
Guaranty. As of the date hereof, and after giving effect to this Guaranty and
the contingent obligations evidenced hereby, the Guarantor is and will be
solvent, and has and will have Property which, valued fairly, exceed the
obligations, debts, and liabilities of the Guarantor, and has and will have
Property sufficient to satisfy, repay, and discharge the same.
2.10 Enforcement Costs. If the Guaranteed Indebtedness is not paid
by the Guarantor when due, as required herein, and this Guaranty is placed in
the hands of an attorney for collection or is enforced by suit or through
probate or bankruptcy court or through any other judicial proceedings, the
Guarantor shall pay to the Agent an amount equal to the reasonable attorneys'
fees and collection costs incurred by the Agent, the Collateral Agent or any
Lender in the collection of the Guaranteed Indebtedness.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Agent, the Collateral Agent and the Lenders to enter
into the Credit Agreement and to make Loans to or for the benefit of and to
issue Letters of Credit for the account of the Borrowers, the Guarantor
represents and warrants to the Agent (which representations and warranties shall
survive the delivery of this Guaranty and the other Loan Documents) that:
3.1 Due Authorization. The execution and delivery by the Guarantor
of this Guaranty and each other Loan Document to which the Guarantor is a party
and the performance of all obligations of the Guarantor hereunder and thereunder
are within the power of the Guarantor, have been duly authorized by all
necessary corporate action, and do not and will not (a) require the consent of
any Governmental Authority to be obtained by the Guarantor, (b) contravene or
conflict with any Requirement of Law applicable to the Guarantor or the articles
or certificate of incorporation, bylaws, or other organizational or governing
documents of the Guarantor, (c) contravene or conflict with any material
indenture, instrument, or other agreement, or any indenture, instrument, or
other agreement that, when aggregated with other such agreements, is material,
to which the Guarantor is a party or by which any Property of the
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Guarantor may be presently bound or encumbered, except as could not reasonably
be expected to have a Material Adverse Effect, or (d) result in or require the
creation or imposition of any Lien in, upon or of any Property of the Guarantor
under any such indenture, instrument, or other agreement, other than such Loan
Documents.
3.2 Corporate Existence. The Guarantor is a corporation duly
organized, legally existing, and in good standing under the laws of the State of
Delaware and is duly qualified as a foreign corporation and is in good standing
in all jurisdictions wherein the ownership of Property or the operation of its
business necessitates same, other than those jurisdictions wherein the failure
to so qualify will not have a Material Adverse Effect.
3.3 Valid and Binding Obligations. This Guaranty and each other Loan
Document to which the Guarantor is a party, when duly executed and delivered by
the Guarantor, will be the legal, valid, and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its respective
terms except as limited by bankruptcy, insolvency, or similar laws affecting
generally the rights of creditors and general principles of equity, whether
applied by a court of law or equity.
3.4 Scope and Accuracy of Financial Statements. The Financial
Statements of the Guarantor and its Subsidiaries as of December 31, 1995 and
June 30, 1996 (subject, in the case of the Financial Statements as of June 30,
1996, to normal year-end audit adjustments), present fairly the financial
position and results of operations and cash flows of the Guarantor and its
Subsidiaries in accordance with GAAP as at the relevant point in time or for the
period indicated, as applicable. No event or circumstance has occurred since
December 31, 1995 or June 30, 1996 which could reasonably be expected to have a
Material Adverse Effect.
3.5 No Material Misstatements. All written estimates, projections
and forecasts furnished by or on behalf of the Guarantor to the Agent, the
Collateral Agent or any of the Lenders for purposes of or in connection with
this Guaranty, or in connection with any extension of credit under the Credit
Agreement, were and will be prepared on the basis of the good faith estimate of
the Guarantor's senior management concerning probable financial condition and
performance based on assumptions, data, tests or conditions believed to be
reasonable or to represent industry conditions existing at the time such
estimates, projections or forecasts were made. No other information, exhibit,
statement, or report furnished to the Agent, the Collateral Agent or any Lender
by or at the direction of the Guarantor in connection with this Guaranty or any
other Loan Document contains any material misstatement of fact or omits to state
a material fact or any fact necessary to make the statements contained therein,
in light of the circumstances in which they were made, not misleading as of the
date made or deemed made.
3.6 Litigation. Except as set forth under the heading "Litigation"
on Exhibit X to the Credit Agreement, no litigation or other action of any
nature is pending before any Governmental Authority or, to the best knowledge of
the Guarantor, threatened, against or affecting (a) any Collateral, or, in the
case of Environmental Laws, any real Property of the Guarantor or the facilities
located and the operations conducted thereon, which, if determined adversely to
the Guarantor, could reasonably be expected to have a Material Adverse Effect,
(b) the Guarantor's ability to enter into, execute, deliver or perform in any
material respect its obligations under the Loan Documents to which it is a
party, (c) the Guarantor, which, if
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determined adversely to the Guarantor, could reasonably be expected to result in
any judgment or liability, individually or when aggregated with all other such
judgments or liabilities, which could reasonably be expected to have a Material
Adverse Effect and which is not fully covered by insurance (exclusive of any
deductible amount related to such insurance, which deductible amount is
customary for Persons engaged in similar businesses), or (d) the Guarantor,
which if determined adversely to the Guarantor, could reasonably be expected to
result in any other Material Adverse Effect.
3.7 Default. Neither any Borrower nor the Guarantor is in default
of, and no event has occurred which, with the lapse of time or giving of notice,
or both, could result in such a default of, (i) any charter document or bylaws
of any Borrower or the Guarantor, or (ii) any agreement or obligation other than
an agreement or obligation evidencing or relating to Debt to which any Borrower
or the Guarantor is a party or by which any Property of any Borrower or the
Guarantor may be bound, pursuant to which the obligations of the Guarantor and
the Borrowers in the aggregate under any of such agreements, or the obligations
secured thereby, exceed $2,500,000, except such as are being contested in good
faith and as to which such reserve as may be required by GAAP shall have been
made therefor.
3.8 ERISA. No Reportable Event has occurred with respect to any
Single Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Guarantor, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. Each Plan satisfied
the minimum funding requirements under ERISA and the Code as of the last annual
valuation date applicable thereto. Neither the Guarantor nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan for which there is any withdrawal liability. As of the most
recent valuation date applicable to any Multiemployer Plan, neither the
Guarantor nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Guarantor or such Commonly Controlled Entity were
to withdraw completely from such Multiemployer Plan. Neither the Guarantor nor
any Commonly Controlled Entity has received notice that any Multiemployer Plan
is Insolvent or in Reorganization. To the best knowledge of the Guarantor, no
such Insolvency or Reorganization which could reasonably be expected to have a
Material Adverse Effect is likely to occur. Based upon GAAP existing as of the
date of this Guaranty and current factual circumstances, the Guarantor has no
reason to believe that the annual cost during the term of this Guaranty to the
Guarantor and all Commonly Controlled Entities for post-retirement benefits to
be provided to the current and former employees of the Guarantor and all
Commonly Controlled Entities under Plans which are welfare benefit plans (as
defined in Section 3(1) of ERISA) will, in the aggregate, have a Material
Adverse Effect.
3.9 Proper Filing of Tax Returns; Payment of Taxes Due. The
Guarantor has duly and properly filed its United States income tax returns and
all other tax returns which are required to be filed and has paid all taxes
shown to be due thereon, except such as are being contested in good faith and as
to which adequate provisions and disclosures have been made and except such
returns of which the failure to file has not had or would not have a Material
Adverse
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Effect. The respective charges and reserves on the books of the Guarantor with
respect to taxes and other governmental charges are adequate.
3.10 Authorizations; Consents. Except as expressly contemplated by
the Loan Documents, no authorization, consent, approval, exemption, franchise,
permit, or license of, or filing with, any Governmental Authority or any other
Person is required to be obtained by the Guarantor to authorize, or is otherwise
required in connection with, the valid execution and delivery by the Guarantor
of this Guaranty or any other Loan Document or the payment and performance by
the Guarantor of the Guaranteed Indebtedness.
3.11 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including
Regulations G, T, U, or X.
3.12 Investment Company Act Compliance. The Guarantor is not, nor is
the Guarantor directly or indirectly controlled by or acting on behalf of any
Person which is, an "investment company" or an "affiliated person" of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
3.13 Public Utility Holding Company Act Compliance. The Guarantor is
not a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
3.14 Subsidiaries. As of the Closing Date, the Guarantor has no
Subsidiaries other than those described on Exhibit X to the Credit Agreement
under the heading "Subsidiaries." The Guarantor is not a general partner or
joint venturer or has partnership or joint venture interests in any Person.
ARTICLE IV
AFFIRMATIVE COVENANTS
Unless agreed in writing by the Agent to the contrary, the Guarantor
covenants, so long as any Obligation remains outstanding or unpaid or any
Commitment exists, to:
4.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the reasonable request of the Agent, the Collateral Agent
or any Lender, make such records available at the Guarantor's place of business
upon reasonable prior notice, during normal business hours, for inspection by
the Agent, the Collateral Agent or any Lender and, at the expense of the
Guarantor, allow the Agent, the Collateral Agent or any Lender to make and take
away copies thereof.
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4.2 Quarterly Financial Statements; Compliance Certificates. Deliver
to the Agent, to the extent not previously delivered by any Borrower, on or
before the 45th day after the close of each of the first three quarterly periods
of each fiscal year of the Guarantor, Sufficient Copies of the unaudited
consolidated and consolidating Financial Statements of the Guarantor and its
Subsidiaries as at the close of such quarterly period and from the beginning of
such fiscal year to the end of such period, such Financial Statements to be
certified by a Responsible Officer of the Guarantor as having been prepared in
accordance with GAAP consistently applied and as a fair presentation of the
condition of the Guarantor and its Subsidiaries, subject to changes resulting
from normal year-end audit adjustments, and a Compliance Certificate.
4.3 Annual Financial Statements. Deliver to the Agent, to the extent
not previously delivered by any Borrower, on or before the 90th day after the
close of each fiscal year of the Guarantor, Sufficient Copies of the annual
audited consolidated and consolidating Financial Statements of the Guarantor and
its Subsidiaries, and a Compliance Certificate.
4.4 Projected Budget. Deliver to the Agent as soon as available and
in any event on or before the 90th day after the close of each (a) fiscal year,
Sufficient Copies of a projected budget for the Guarantor and its Subsidiaries
on a consolidated basis for (i) the current fiscal year, prepared in a six-month
analysis, and (ii) the five (5) fiscal years then commencing, prepared in a
year-by-year analysis, and (b) second quarterly period of each fiscal year,
Sufficient Copies of (i) a revised projected budget for the operations of the
Guarantor and its Subsidiaries on a consolidated basis for the second six (6)
months of such fiscal year, and (ii) a report of actual operations of the
Guarantor and its Subsidiaries on a consolidated basis for the first six (6)
months of such fiscal year, reflecting in comparative form, the original
projected budget for such period and the numbers related to such projected
budget based upon actual operations.
4.5 Notices of Certain Events. Deliver to the Agent, to the extent
not previously delivered by any Borrower, promptly upon having knowledge
thereof, a written statement with respect to the occurrence of any of the
following events or circumstances, signed by a Responsible Officer of the
Guarantor and setting forth the relevant event or circumstance and the steps
being taken by the Guarantor or any Subsidiary with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of the Guarantor or any Subsidiary, or any litigation, investigation, or
proceeding between the Guarantor or any Subsidiary and any Governmental
Authority which, in either case, if not cured or if adversely determined,
as the case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding involving the Guarantor or any
Subsidiary as a defendant or in which any Property of the Guarantor or any
Subsidiary is subject to a claim and in which the amount of the claim
against the Guarantor or any
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Subsidiary is $1,000,000 or more and which is not covered by insurance or
in which injunctive or similar relief is sought;
(d) the receipt by the Guarantor of any Environmental Complaint
which individually, or in the aggregate with any other Environmental
Complaints then outstanding relating to any matter, relates to a matter
which could reasonably be expected to have a Material Adverse Effect;
(e) any actual, proposed, or threatened testing or other
investigation by any Governmental Authority or other Person concerning the
environmental condition of, or relating to, any Property of any Borrower
or any real Property of the Guarantor and the facilities located and the
operations conducted thereon following any allegation of a violation of
any Requirement of Law regarding any condition in each case which could
reasonably be expected to have a Material Adverse Effect;
(f) any of the following which could reasonably be expected to have
a Material Adverse Effect: any Release of Hazardous Substances by any
Borrower or the Guarantor or from, affecting, or related to any Property
of any Borrower or any real Property of the Guarantor and the facilities
located and the operations conducted thereon except in accordance with
applicable Requirements of Law or the terms of a valid permit, license,
certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or
forfeiture of or failure to renew, any permit, license, registration,
approval, or authorization;
(g) any Reportable Event or imminently expected Reportable Event
with respect to any Plan; any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan; the institution
of proceedings or the taking of any other action by PBGC, the Guarantor,
or any Commonly Controlled Entity or Multiemployer Plan with respect to
the withdrawal from or the termination, Reorganization or Insolvency of,
any Single Employer Plan or Multiemployer Plan; or any Prohibited
Transaction in connection with any Plan or any trust created thereunder
and the action being taken by the Internal Revenue Service with respect
thereto;
(h) the creation, organization or acquisition of any Subsidiary,
direct or indirect, of the Guarantor; and
(i) any other event or condition which could reasonably be expected
to cause a Material Adverse Effect.
4.6 Additional Information. Furnish to the Agent, to the extent not
previously furnished by any Borrower, within five Business Days after any
material report (other than financial statements) or other communication is sent
by the Guarantor to its stockholders or filed by the Guarantor with the
Securities and Exchange Commission or any successor or analogous Governmental
Authority, copies of such report or communication and, promptly upon the request
of the Agent, such additional financial or other information concerning the
assets, liabilities,
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operations, and transactions of the Guarantor and the Borrowers as the Agent may
from time to time reasonably request.
4.7 Maintenance of Corporate Existence and Good Standing. (a)
Maintain its corporate existence and good standing in its jurisdiction of
incorporation and (b) maintain its corporate qualification and good standing in
all jurisdictions wherein the Property now owned or hereafter acquired or
business now or hereafter conducted by the Guarantor necessitates same, unless
the failure to do so would not have a Material Adverse Effect.
4.8 Compliance with Laws. Except to the extent the failure to comply
or cause compliance would not have a Material Adverse Effect, comply with all
applicable Requirements of Law.
4.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against the Property of the Guarantor, except any of the foregoing
being contested in good faith and as to which adequate reserve in accordance
with GAAP has been established or unless failure to pay would not have a
Material Adverse Effect.
4.10 Indemnification. Indemnify and hold the Agent, the Collateral
Agent, and each Lender and their respective shareholders, officers, directors,
employees, agents, attorneys-in-fact, and affiliates and each trustee for the
benefit of the Agent, the Collateral Agent, or the Lenders under any Security
Instrument harmless from and against any and all claims, losses, damages,
liabilities, fines, penalties, charges, administrative and judicial proceedings
and orders, judgments, remedial actions, requirements and enforcement actions of
any kind, and all costs and expenses incurred in connection therewith
(including, without limitation, reasonable attorneys' fees and expenses),
arising directly or indirectly, in whole or in part, from (a) the presence of
any Hazardous Substances on, under, or from the Property of the Guarantor or any
Subsidiary, whether prior to or during the term hereof, (b) any activity carried
on or undertaken on or off the Property of the Guarantor or any Subsidiary,
whether prior to or during the term hereof, and whether by the Guarantor or any
Subsidiary or any predecessor in title, employee, agent, contractor, or
subcontractor of the Guarantor or any Subsidiary or any predecessor in title, or
any other Person at any time occupying or present on such Property, in
connection with the handling, treatment, removal, storage, decontamination,
cleanup, transportation, or disposal of any Hazardous Substances at any time
located or present on or under such Property, (c) any residual contamination of
any Hazardous Substance on or under the Property of the Guarantor or any
Subsidiary, (d) any contamination of any Property or natural resources arising
in connection with the generation, use, handling, storage, transportation, or
disposal of any Hazardous Substances by the Guarantor or any Subsidiary or any
employee, agent, contractor, or subcontractor of the Guarantor or any Subsidiary
while such persons are acting within the scope of their relationship with the
Guarantor or any Subsidiary, irrespective of whether any of such activities were
or will be undertaken in accordance with applicable Requirements of Law, or (e)
the performance and enforcement of any Loan Document, any allegation by any
beneficiary of a letter of credit of a wrongful dishonor by the Agent of a claim
or draft presented thereunder, or any other act or omission in connection with
or related to any Loan Document or the transactions contemplated thereby,
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including, without limitation, any of the foregoing arising from negligence,
whether sole or concurrent, on the part of the Agent, the Collateral Agent or
any Lender or any of their respective shareholders, officers, directors,
employees, agents, attorneys-in-fact, or affiliates or any trustee for the
benefit of the Agent, the Collateral Agent or the Lenders under any Security
Instrument; provided, however, the foregoing clauses (a) through (e) shall not
apply to any claim, loss, damage, liability, fine, penalty, charge, proceeding,
order, judgment, action or requirement attributable to (i) the gross negligence
or wilful misconduct of any Person to be indemnified, or (ii) any action or
inaction of any Person to be indemnified subsequent to the exercise of ownership
rights or the taking of any foreclosure action with respect to any Collateral
and with respect to such Collateral such claim, loss, damage, liability, fine,
penalty, charge, proceeding, order, judgment, action or requirement arises
subsequent to the exercise of ownership rights or the taking of any foreclosure
action with respect to such Collateral, to the extent such Person is a "person
in control" under any Environmental Law. The foregoing indemnity shall survive
satisfaction of the Guaranteed Indebtedness and all other Obligations and the
termination of this Guaranty and the Credit Agreement, unless all Obligations
have been satisfied wholly in cash from the Guarantor or the Borrowers and not
by way of realization against any Collateral or the conveyance of any Property
in lieu thereof.
4.11 Further Assurances. Promptly after discovery thereof cure or
cause to be cured any defects, errors, or omissions in the execution and
delivery of any of the Loan Documents executed by the Guarantor, and execute,
acknowledge, and deliver to the Agent or cause to be executed, acknowledged, and
delivered to the Agent such other assurances and instruments as shall, in the
opinion of the Agent, be necessary to fulfill the terms of the Loan Documents.
ARTICLE V
NEGATIVE COVENANTS
Unless agreed in writing by the Agent to the contrary, so long as
any Obligation remains outstanding or unpaid or any Commitment exists, the
Guarantor will not:
5.1 Dividends and Distributions. (a) Declare, pay, or make, whether
in cash or other Property, any dividend or distribution on, or purchase, redeem,
or otherwise acquire for value, any share of any class of its capital stock at
any time that a Default or Event of Default exists or will occur as the result
of the payment of such dividend or distribution; provided, however, the
foregoing restriction shall not apply to dividends or distributions paid in
capital stock of the Guarantor or options, warrants or other rights to purchase
such capital stock.
(b) Declare, pay, or make, whether in cash or other Property,
dividends or distributions on any share of any class of its capital stock in an
aggregate amount exceeding 50% of Net Income for the period from September 30,
1993 to such time; provided that no such dividend or distribution shall be
declared, paid or made when to do so would result in (i) a violation of Delaware
law as in effect from time to time, (ii) a violation of Section 5.1(a), or
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(iii) a Default or Event of Default, provided, however, the foregoing
restriction shall not apply to dividends or distributions paid in capital stock
of the Guarantor or options, warrants or other rights to purchase such capital
stock.
5.2 Changes in Corporate Structure. Enter into any transaction of
consolidation, merger, or amalgamation unless the Guarantor is the surviving
party and no Default will occur due to such transaction; or liquidate, wind up,
or dissolve (or suffer any liquidation or dissolution); or permit any Borrower
to do any of the foregoing in this Section.
5.3 Transactions with Affiliates. Directly or indirectly, enter into
any material transaction (including the sale, lease, or exchange of Property or
the rendering of service) with any of its Affiliates, other than upon fair and
reasonable terms no less favorable than could be obtained in an arm's length
transaction with a Person which was not an Affiliate, or permit any Borrower to
do so.
5.4 Tangible Net Worth. Permit Tangible Net Worth as of the close of
any fiscal quarter to be less than $75,000,000 plus 50% of positive Net Income
and 75% of the net proceeds from any offering by the Guarantor or any of its
Subsidiaries of capital stock or rights to acquire capital stock in each
quarter, beginning with the quarter commencing on April 1, 1996.
5.5 Interest Coverage Ratio. Permit, as of the close of any fiscal
quarter, the ratio of (a) EBITDA for the preceding four fiscal quarters
(including the quarter just ended) to (b) Interest Expense for the preceding
four fiscal quarters to be less than 2.0 to 1.0.
5.6 Partnerships and Joint Ventures. Become a general partner, joint
venturer or venturer in any Person or become or assume any similar capacity in
any Person which gives rise to such similar general liability.
5.7 Lines of Business. Expand, on its own or through any Subsidiary,
into any line of business other than those permitted by the Senior Note
Indenture.
ARTICLE VI
MISCELLANEOUS
6.1 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Guarantor and all covenants and agreements
herein made shall survive the making of the Loans and the issuance of the
Letters of Credit and shall remain in force and effect so long as any Obligation
is outstanding or any Commitment exists.
6.2 Notices and Other Communications. Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder or in connection herewith or
with any other Loan Document shall be in writing (including by telecopy). Unless
otherwise expressly provided herein, any such notice, request, demand, or other
communication shall be deemed to have been duly given or made
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when delivered by hand, or, in the case of delivery by mail, two Business Days
after deposited in the mail, certified mail, return receipt requested, postage
prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally or by written confirmation report, addressed as follows:
(a) if to the Agent, the Collateral Agent or any Lender, to:
Canadian Imperial Bank of Commerce, New York Agency
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxx
Syndications Group
Telecopy: (000) 000-0000
with copies to:
Canadian Imperial Bank of Commerce
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
(b) if to the Guarantor, to:
KCS Energy, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
Any party may, by proper written notice hereunder to the other,
change the individuals or addresses (within the United States) to which such
notices to it shall thereafter be sent.
6.3 Parties in Interest. Subject to any applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Guarantor or the Agent shall be binding upon and inure to the benefit of
the Guarantor, the Agent, the Collateral Agent or the Lenders, as the case may
be, and their respective legal representatives, successors, and assigns as
permitted pursuant to the Credit Agreement.
6.4 Rights of Third Parties. All provisions herein are imposed
solely and exclusively for the benefit of the Guarantor, the Agent, the
Collateral Agent and the Lenders and their successors and assigns. No other
Person shall have any right, benefit, priority, or interest hereunder or as a
result hereof or have standing to require satisfaction of provisions hereof in
accordance with their terms.
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6.5 No Waiver; Rights Cumulative. No course of dealing on the part
of the Agent, the Collateral Agent or any Lender, their officers or employees,
nor any failure or delay by the Agent, the Collateral Agent or any Lender with
respect to exercising any of its rights under any Loan Document shall operate as
a waiver thereof. The rights of the Agent, the Collateral Agent and the Lenders
under the Loan Documents shall be cumulative and the exercise or partial
exercise of any such right shall not preclude the exercise of any other right.
6.6 Severability. In the event any one or more of the provisions
contained in any of the Loan Documents shall, for any reason, be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision of any Loan Document.
6.7 Amendments; Waivers. Neither this Guaranty nor any provision
hereof may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the Agent and the Guarantor and the Agent shall
obtain all consents of the Required Lenders or all Lenders, as may be required
under the Credit Agreement in connection with such amendment or waiver.
6.8 Review of Guaranty. This Guaranty was reviewed by the Guarantor,
and the Guarantor acknowledges and agrees that it understands fully all of the
terms of this Guaranty and the consequences and implications of its execution of
this Guaranty and has been afforded an opportunity to have this Guaranty
reviewed by an attorney and such other Persons as desired and to discuss the
terms, consequences, and implications of this Guaranty with such attorney and
other Persons.
6.9 Payments. All amounts becoming payable by the Guarantor under
this Guaranty shall be payable to the Agent at the address of the Agent set
forth hereinabove.
6.10 Governing Law. This Guaranty shall be deemed to be a contract
made under and shall be construed in accordance with and governed by the laws of
the State of New York without giving effect to principles thereof relating to
conflicts of law.
6.11 Jurisdiction and Venue. All actions or proceedings with respect
to, arising directly or indirectly in connection with, out of, related to, or
from this Guaranty or any other Loan Document to which the Guarantor is a party
may be litigated, at the sole discretion and election of the Agent, in the
courts of the State of New York or of the United States of America for the
Southern District of New York. The Guarantor hereby submits to the non-exclusive
jurisdiction of the aforesaid courts and hereby waives any rights it may have to
transfer or change the jurisdiction or venue of any litigation brought against
it by the Agent, the Collateral Agent or any Lender in accordance with this
Section.
6.12 Appointment of Agent for Service of Process. The Guarantor
hereby irrevocably designates CT Corporation System, or such other corporate
process agent as is acceptable to the Agent, as the designee, appointee and
agent of the Guarantor to receive, for and on behalf of the Guarantor, service
of process out of any of the aforementioned courts in any legal action or
proceeding with respect to this Guaranty or any Loan Document to which the
Guarantor is a party. It is understood that a copy of such process served on
such agent will
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be promptly forwarded by mail to the Guarantor at its address specified below
its name on the signature pages hereof, but the failure of the Guarantor to
receive such copy shall not affect in any way the service of such process. The
Guarantor further irrevocably consents to the service of process of any of the
courts mentioned in Section 6.11 in any such action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the
Guarantor at such address, such service to become effective four days after
mailing. Nothing herein shall affect the right of the Agent, the Collateral
Agent or any Lender to serve process in any other manner permitted by law.
6.13 Waiver of Rights to Jury Trial. The Guarantor, the Agent, the
Collateral Agent and each Lender hereby knowingly, voluntarily, intentionally,
irrevocably, and unconditionally waive all rights to trial by jury in any
action, suit, proceeding, counterclaim, or other litigation that relates to or
arises out of any of this Guaranty or any other Loan Document or the acts or
omissions of the Agent, the Collateral Agent or any Lender in the enforcement of
any of the terms or provisions of this Guaranty or any other Loan Document or
otherwise with respect thereto. The provisions of this section are a material
inducement for the Agent, the Collateral Agent and the Lenders entering into the
Credit Agreement.
6.14 Entire Agreement. This Guaranty amends, restates and replaces
the Prior Bank One Guaranty and the Prior Comerica Guaranty and constitutes the
entire agreement between the parties hereto with respect to the subject hereof
and shall supersede any prior agreements, whether written or oral, between the
parties hereto relating to the subject hereof. Furthermore, in this regard, this
Guaranty and the other written Loan Documents represent, collectively, the final
agreement among the parties thereto and may not be contradicted by evidence of
prior, contemporaneous, or subsequent oral agreements of such parties. There are
no unwritten oral agreements among such parties.
6.15 Confidentiality. In the event that the Guarantor or any
Borrower provides to the Agent, the Collateral Agent, or the Lenders information
belonging to the Guarantor or any Affiliate of the Guarantor, the Agent, the
Collateral Agent, and the Lenders shall thereafter maintain such information in
confidence. This obligation of confidence shall not apply to such portions of
the information which (i) are in the public domain, (ii) hereafter become part
of the public domain without the Agent, the Collateral Agent, or the Lenders
breaching their obligation of confidence herein or in any other Loan Document,
(iii) are previously known by the Agent, the Collateral Agent, or the Lenders
from some source other than the Guarantor or any Affiliate of the Guarantor,
(iv) are hereafter developed by the Agent, the Collateral Agent, or the Lenders
without using the information thus provided, (v) are hereafter obtained by or
available to the Agent, the Collateral Agent, or the Lenders from a third party
who owes no obligation of confidence to the Guarantor or any Affiliate of the
Guarantor with respect to such information or through any other means other than
through disclosure by the Guarantor or any Affiliate of the Guarantor to the
Agent, the Collateral Agent, or the Lenders, (vi) are disclosed with the
Guarantor's consent; (vii) must be disclosed pursuant to any Requirement of Law;
(viii) as may be required by law or regulation or order of any Governmental
Authority in any judicial, arbitration or governmental proceeding or (ix) as may
be requested by any Governmental Authority pursuant to any bank examination or
audit; provided, however, that to the extent practicable and unless otherwise
prohibited by any Requirement of Law, any Person disclosing
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any non-public information pursuant to clauses (vii) or (viii) shall endeavor in
good faith to give the Guarantor at least 5 days' prior written notice of such
disclosure. Further, the Agent, the Collateral Agent or a Lender may disclose
any such information to any other Lender or successor agent, any independent
petroleum engineers or consultants, any independent certified public
accountants, any legal counsel employed by such Person in connection with this
Guaranty or any other Loan Document, including the enforcement or exercise of
all rights and remedies hereunder or thereunder, or any assignee or participant
(including prospective assignees and participants) in the Loans; provided,
however, that the Agent, the Collateral Agent, or the Lenders impose on the
Person to whom such information is disclosed the same obligation to maintain the
confidentiality of such information as is imposed upon it hereunder and such
Person agrees to be bound by the terms hereof. Notwithstanding anything to the
contrary provided herein, this obligation of confidence shall cease three (3)
years from the later of (a) Final Maturity or (b) the date that all Obligations
are paid or satisfied in full or otherwise performed or discharged or deemed
performed or discharged.
IN WITNESS WHEREOF, this Guaranty is executed as of the date first
above written.
KCS ENERGY, INC.
By: ___________________________
Xxxxx X. Xxxxxx
Vice President
(Signatures Continued on next Page)
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CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY, AS AGENT
By: ___________________________
Xxxxxxxx Xxxx
Authorized Signatory
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