GUARANTY AGREEMENT
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GUARANTY AGREEMENT, dated as of May 27, 1994 (this "Guaranty
Agreement") by UIC-DEL. CORPORATION, a Delaware corporation (herein
called the "Guarantor"), to Signet Bank/Maryland (the "Bank").
Capitalized terms not otherwise defined herein have the meanings
specified in Section 7 hereof.
RECITALS
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Reference is made to that certain Amended and Restated Loan
Agreement dated August 11, 1992, as amended (the "Loan Agreement"), by
and among AAI Corporation, a Maryland corporation ("AAI"), AAI
Engineering Support, Inc., a Maryland corporation ("Engineering"), AAI
Manufacturing Assembly, Inc., a Maryland corporation ("Assembly"), AAI
Systems Management, Inc., a Maryland corporation ("Systems"), AAI
Medical Corporation, a Maryland corporation ("Medical"), Seti, Inc., a
Pennsylvania corporation ("Seti"), AAI/ACL Technologies, Inc., a
Maryland corporation ("AAI/ACL"), and AAI Microflite Simulation
International Corporation, a Maryland corporation ("AAI Microflite",
and AAI, Engineering, Assembly, Systems, Medical, Seti, AAI/ACL and
AAI Microflite jointly and severally, individually and collectively,
the "Borrower"), and the Bank. The Loan Agreement provided, inter
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alia, for the extension by the Bank to the Borrower of a revolving
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credit facility in an original aggregate principal amount not to
exceed $30,000,000.00. The "Termination Date" as defined in the Loan
Agreement has occurred without extension by the Bank, and all of the
"Obligations" as therein defined have become due and payable. The
Borrower and the Guarantor have requested the Bank to extend the
Termination Date to August 20, 1994, and as a condition to consenting
to such request the Bank has, inter alia, required the execution
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hereof by the Guarantor.
NOW, THEREFORE, in consideration of and in order to induce
the Bank to extend additional credit to the Borrower, the Guarantor
agrees as follows:
SECTION 1. GUARANTY.
(a) The Guarantor hereby guarantees absolutely and
unconditionally to the Bank the due and punctual payment of all
obligations under the Loan Agreement and the "Note" (as therein
defined and herein the "Note"), and the payment, performance and
observation of all obligations, covenants and agreements of the
Borrower under the Loan Agreement, the Note and under the other
NYFS11...:\95\78495\0001\7120\AGR81094.A40
"Loan Documents" (as defined in the Loan Agreement and herein the
"Loan Documents") and all attorneys' fees, costs and expenses of
collection incurred by the Bank in connection therewith and in
connection with the enforcement of this Guaranty Agreement.
(b) This is a guaranty of payment and performance and the
Guarantor waives any right to require that any action be brought
against the Borrower or any other Person or to require that resort be
had to any security. The Bank may, at its option, proceed against the
Guarantor in the first instance to collect any monies, the payment of
which is guaranteed hereby, or enforce any obligations, covenants or
agreements, the performance of which is guaranteed hereby without
first restoring to any direct or indirect security or to any other
remedies including, by way of example but not of limitation, any right
of setoff at the same or at different times, as the Bank may deem
advisable, and the liability of the Guarantor hereunder shall in no
way be affected or impaired by any acceptance by the Bank of any
direct or indirect security for, or other guarantees of, any
indebtedness, liability or obligation of the Borrower to the Bank or
by any failure, delay, neglect or omission by the Bank to realize upon
or protect any such indebtedness, liability or obligation, or any
notes or other instruments evidencing the same or any direct or
indirect security therefor.
(c) The Guarantor hereby consents that the Bank, from time
to time, before or after any default by the Borrower, with or without
any further notice to or assent from the Guarantor, may, without in
any manner affecting the liability of the Guarantor, and upon such
terms and conditions as the Bank may deem advisable: (1) extend the
time for performance or payment in whole or in part by renewal or
otherwise, compromise or release any indebtedness, liability,
obligation of or undertaking of the Borrower or of any other Person
secondarily or otherwise liable for any indebtedness, liability or
obligation of the Borrower, or waive any default with respect thereto
or waive any provision of the Note, the Loan Agreement or any of the
other Loan Documents; (2) sell, release, surrender, modify, impair,
exchange, substitute or extend the duration or the time for the
performance or payment of any and all property, of any nature and from
whomsoever received, held by the Bank as direct or indirect security
for the payment or performance of any indebtedness, liability,
obligation or undertaking of the Borrower or of any other Person
secondarily or otherwise liable for any indebtedness, liability,
obligation or undertaking of the Borrower; (3) settle, adjust or
compromise any claim of the Bank against the Borrower or any other
Person secondarily or otherwise liable for any indebtedness, liability
or obligation of the
Borrower; or (4) add or partially release any guarantor, maker,
surety, endorser, indemnitor or other party or parties primarily or
secondarily liable for the payment and/or performance of any
indebtedness, liability or obligation of the Borrower (including,
without limitation, the addition or release of any presently existing
or future subsidiary or affiliate of AAI as one of the "Borrower"
under the Loan Agreement). The Guarantor hereby ratifies and confirms
any such extension of time, renewal, release, waiver, surrender,
exchange, impairment, substitution, settlement, adjustment,
compromise, addition or release and agrees that the same shall be
binding upon the Guarantor, and hereby waives any and all defenses,
counterclaims or offsets which the Guarantor might or could have by
reason thereof, it being understood that the Guarantor shall at all
times be bound by this Guaranty and remain liable to the Bank
hereunder. No modification, change or amendment (executed by the
party or parties against whom enforcement thereof may be sought) of
any provision of the Loan Agreement, the Note or any of the other Loan
Documents will release the Guarantor from its obligations hereunder.
(d) The Guarantor hereby waives: (1) notice of acceptance
of this Guaranty by the Bank or of the creation, renewal or accrual of
any liability of the Borrower, present or future, or of the reliance
of the Bank upon this Guaranty (it being understood that every
indebtedness, liability and obligation of the Borrower to the Bank
created pursuant to the Loan Agreement, the Note or any of the other
Loan Documents shall conclusively be presumed to have been created,
contracted or incurred in reliance upon the execution of this
Guaranty); (2) demand of payment or performance by the Bank or any
other Person from the Borrower or from any other Person indebted in
any manner on or for any of the indebtedness, liabilities or
obligations hereby guaranteed; (3) presentment and demand for payment
by the Bank or any other Person of any instrument of the Borrower or
of any other Person, protest thereof, and notice of its dishonor to
any part thereto and to the Guarantor; (4) notice of the occurrence of
a default or Event of Default under the Note, the Loan Agreement or
any of the other Loan Documents; (5) notice of any indulgences or
extensions granted to Borrower; (6) any and all notice of every kind
and description which may be required to be given by any statute or
rule of law in any jurisdiction; and (7) all subrogation and other
rights and claims of the Guarantor against the Borrower arising on
account of this Guaranty or any sums paid by the Guarantor collected
by the Bank pursuant to this Guaranty.
SECTION 2. REPRESENTATIONS AND WARRANTIES.
(a) Corporate Existence and Power. The Guarantor is a
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corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and has all corporate powers
and all material governmental licenses, authorization, consents and
approvals required to carry on its business as now conducted. The
Guarantor is duly qualified as a foreign corporation, licensed and in
good standing in each jurisdiction where qualification or licensing is
required by the nature of its business or the character and location
of its property, business or customers and in which the failure to so
qualify or be licensed, as the case may be, in the aggregate, could
have a material adverse effect on the business, financial position,
results of operation, properties or prospects of the Guarantor. The
Guarantor is not a "foreign person" within the meaning of Section 1445
or 7701 of the Internal Revenue Code.
(b) Corporate and Governmental Authorization;
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Contravention. The execution, delivery and performance by the
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Guarantor of this Guaranty Agreement are within its corporate power,
have been duly authorized by all necessary corporate and shareholder
action, required no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or
constitute (with or without the giving of notice or lapse of time or
both) a default under, any provisions of applicable law or of the
articles of incorporation or by-laws of the Guarantor or of any
agreement, judgment, injunction, order, decree or other instrument
binding upon or affecting the Guarantor or result in the creation or
imposition of any Lien on any of its assets.
(c) Binding Effect. This Guaranty Agreement constitutes a
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valid and binding agreement of the Guarantor, in each case enforceable
against the Guarantor in accordance with their respective terms,
except as the enforceability hereof and thereof may be limited by
bankruptcy, insolvency or similar laws applied to Guarantor and
affecting the enforceability of creditors' rights generally.
(d) Financial Information. The UIC-Del. Corp. Trial
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Balance as at April 24, 1994, a copy of which has been delivered to
the Bank, fairly presents the financial position of the Guarantor as
of such date. As of April 24, 1994, the Guarantor did not have any
material contingent obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment,
which is not reflected on its financial statements or notes thereto.
Since April 24, 1994, there has been no material adverse change in the
business,
financial position, results of operation or prospects of the
Guarantor.
(e) Litigation. There is no action, suit or proceeding
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pending against or, to the knowledge of the Guarantor, threatened
against or affecting, the Guarantor or any of its Subsidiaries before
any court or governmental body, agency or official in which there is a
reasonable possibility of a decision which could materially adversely
affect the business, financial position or results of operations of
the Guarantor or which in any manner draws into question the validity
of this Guaranty Agreement, the Loan Agreement, the Note or any other
Loan Document and there is no basis known to the Guarantor for any
such action, suit or proceeding. There is no case, voluntary or
involuntary, or other proceeding pending against or, to the knowledge
of the Guarantor, threatened against or affecting, the Guarantor or
any of its Subsidiaries seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property.
(f) Marketable Title. The Guarantor has good and
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marketable title to all its properties and assets, including, without
limitation, the Note and the Letter of Credit, subject to no Lien.
All leases necessary in any material respect for the conduct of the
Guarantor's business are valid and subsisting and are in full force
and effect.
(g) Taxes. The Guarantor has filed all United States
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Federal income tax returns and all other material tax returns which
are required to be filed by it and has paid all taxes due as shown on
such returns or pursuant to any assessment received by the Guarantor.
Neither the Internal Revenue Service nor the income tax authority of
any State has initiated any audit (which has not been concluded, and
the Guarantor having paid any amount determined to be owing) or
otherwise questioned any tax returns of the Guarantor. The charges,
accruals and reserves on the books of the Guarantor in respect of
taxes or other governmental charges have been established in
accordance with GAAP. The provisions on the books of the Guarantor
for tax liabilities for the current fiscal period and for open tax
years are adequate in the opinion of management. The Guarantor is not
the subject of any proposed income or franchise tax assessment for
which adequate reserves have not been established on the books of the
Guarantor
(h) Conflicting Agreements and Other Matters. The
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Guarantor is not a party to any contract or agreement or subject to
any charter or other corporate restriction which materially and
adversely affects its business, property or assets or its financial
condition. Neither the execution nor delivery of this Guaranty
Agreement or fulfillment of nor compliance with the terms and
provisions hereof will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon
any of its properties or assets pursuant to the articles of
incorporation or by-laws of the Guarantor, any award of any arbitrator
or any other agreement (including any agreement with stockholders),
instrument, order, judgment, decree, statutes, law, rule or regulation
to which the Guarantor is subject. The Guarantor is not a party to,
or otherwise subject to any provisions contained in, any instrument
evidencing Debt of the Guarantor, any agreement relating thereto or
any other contract or agreement (including its articles of
incorporation) which limits the amount of or otherwise imposes
restriction on the incurring of, Debt of the Guarantor of the type
evidenced hereby.
(i) Governmental Consent. Neither the nature of the
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Guarantor, nor any of its business or properties, nor any relationship
between the Guarantor and any other Person, nor any circumstance in
connection with the execution or delivery of this Guaranty Agreement
is such as to require any authorization, consent, approval, exception
or other action by or notice to or filing with any court or
administrative or governmental body in connection with the execution
and delivery of this Guaranty Agreement or fulfillment of or
compliance with the terms and provisions hereof.
(j) Disclosure. Neither this Guaranty Agreement nor any
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other document, certificate or statement furnished to the Bank by or
on behalf of the Guarantor pursuant hereto contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein
not misleading in light of the circumstances in which they were made.
To the best knowledge of the Guarantor, there is no fact peculiar to
the Guarantor which materially adversely affects or in the future may
(so far as the Guarantor can now foresee) materially adversely affect
the business, property or assets, or the financial condition of the
Guarantor and which has not been set forth in this Guaranty Agreement
or in the other documents, certificates and statements furnished to
the Bank by or on behalf of the Guarantor prior to the date hereof in
connection with the transactions contemplated hereby.
SECTION 3. CHARACTER OF OBLIGATIONS OF THE
GUARANTOR.
(a) The obligations of the Guarantor under this Guaranty
Agreement, and the rights of the Bank to enforce such obligations by
any proceedings, whether by action at law, suit in equity or
otherwise, shall not be subject to any reduction, limitation,
impairment or termination, whether by reason of any claim of any
character whatsoever or otherwise, including, without limitation,
claims of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense, setoff, counterclaim, recoupment
or termination whatsoever.
(b) The obligations of the Guarantor under this Guaranty
Agreement are absolute, unconditional and continuing under any and all
circumstances, and no such obligation shall be to any extent or in any
way discharged, impaired or otherwise affected, except by performance
in full thereof. Without limiting the generality of the foregoing,
the obligations of the Guarantor shall not be discharged or impaired
or otherwise affected by:
(1) any default, failure or delay, willful or otherwise, in
the performance by the Borrower of any of its obligations under the
Loan Agreement, the Note or the other Loan Documents;
(2) any creditor's rights, bankruptcy, receivership or
other insolvency proceeding of the Borrower or in respect of the
property of the Borrower or any merger, consolidation, reorganization,
dissolution, liquidation or winding up of the Borrower or of the
Guarantor;
(3) impossibility or illegality of performance on the part
of the Borrower of its obligations under the Loan Agreement, the Note
or any of the other Loan Documents;
(4) the invalidity, irregularity or unenforceability of the
Loan Agreement, the Note, any of the other Loan Documents or any
documents referred to therein or herein;
(5) any order, judgment, decree, ruling or regulation
(whether or not valid) of any court of any federal, state or local
governmental unit or any body, agency, department, official or
administrative or regulatory agency of any thereof or any other
action, happening, event or reason whatsoever which shall delay,
interfere with, hinder or prevent, or in any way adversely
affect, the performance by the Borrower of any of its obligations
under the Loan Agreement, the Note or any of the other Loan Documents;
(6) the extension of the time for payment or performance by
the Borrower of any amount owing or payable under the Loan Agreement,
the Note or any of the other Loan Documents, or of the time for
performance by the Borrower or any other Person of any other
obligations under or arising out of any such documents, or the
extension or the renewal of any thereof;
(7) the modification or amendment (whether material or
otherwise) of any obligation, undertaking or condition to be performed
by the Borrower under the Loan Agreement, the Note or any of the other
Loan Documents;
(8) any failure, omission, delay or lack on the part of the
Bank to enforce, assert or exercise any right, power or remedy
conferred on the Bank in the Loan Agreement, the Note or any of the
other Loan Documents or any action on the part of the Bank granting
indulgence or extension in any form;
(9) the release or discharge of the Borrower or the Bank
from the performance or observance of any obligation, undertaking or
condition to be performed by Borrower or the Bank under the Loan
Agreement, the Note or any of the other Loan Documents by operation of
law;
(10) the sale, divestiture or other disposition of any or
all of the interest of UIC or the Guarantor in the Borrower, or any
other change in the relationship of the Guarantor and the Borrower;
(11) the sale, divestiture or other disposition by the
Borrower or any or all of its properties or any assumption by any
person or entity of the Borrower's obligations under the Note;
(12) the existence or nonexistence of the Borrower as a
legal entity or any merger or consolidation of the Borrower or
Guarantor into or with any other person or entity or any sale, lease
or transfer of substantially all of the assets of the Borrower or
Guarantor;
(13) the power or authority or lack thereof of the Borrower
to execute and deliver the Note, the Loan Agreement or any of the
other Loan Documents;
(14) the legality, validity or enforceability or lack
thereof of any of the Note, the Loan Agreement or any of the other
Loan Documents;
(15) any event or circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
indemnitor or surety under any applicable law; or
(16) any other cause, whether similar or dissimilar to the
foregoing.
SECTION 4. NON-FINANCIAL COVENANTS. The Guarantor agrees
that so long as any obligation, covenant or agreement which the
Guarantor has guaranteed hereunder remains unsatisfied, it shall
comply with, perform and observe the following covenants and
provisions and shall cause each Subsidiary to comply with, perform and
observe said covenants and provisions as are applicable thereto:
(a) Information. The Guarantor will deliver or cause to
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be delivered to the Bank, promptly upon any transmission thereof, the
following reports, certificates and opinions:
(1) promptly (and in any event, within five Business Days)
after obtaining knowledge of the commencement of, or a material threat
of the commencement of, an action, suit or proceeding against the
Guarantor which could materially adversely affect the business,
properties, financial position, results of operations or prospects of
the Guarantor or which in any manner questions the validity of this
Guaranty Agreement, the Loan Agreement, the Note or any of the other
Loan Documents or any of the other transactions contemplated hereby or
thereby, written notice setting forth the nature of such pending or
threatened action, suit or proceeding and such additional information
as may be reasonably requested by the Bank;
(2) promptly upon transmission thereof, copies of all
press releases and other statements made available generally by the
Guarantor to the public concerning material developments in the
results of operations, financial condition, business or prospects of
the Guarantor;
(3) promptly upon receipt thereof, copies of each report
submitted to the Guarantor by independent public accountants in
connection with any annual, interim or special audit made by them of
the books of the Guarantor including, without limitation, each report
submitted to the Guarantor concerning its accounting practices and
systems and any final
comment letter submitted by such accountants to management in
connection with the annual audit of the Guarantor; and
(4) from time to time such additional information
regarding the financial position, results of operations or business of
the Guarantor as the Bank may reasonably request.
Bank is authorized to submit a copy of any financial
statement delivered to it pursuant to this Section 4(a) to any
regulatory body having jurisdiction over it, to rating agencies and,
on a confidential basis, to any prospective participant or assignee.
The Guarantor will, upon reasonable notice by the Bank (and
at the expense of the Bank except during the continuance of a Default
or an Event of Default, in which case at the expense of the
Guarantor), permit representatives of the Bank to visit and inspect
the properties of the Guarantor and its Subsidiaries and examine and
make abstracts from any of their books and records at any time during
normal business hours and as often as may reasonably be requested, and
to discuss the business of the Guarantor and its Subsidiaries with
officers and employees of the Guarantor and its Subsidiaries and with
its independent certified public accountants. The Bank shall use its
best efforts to hold all nonpublic information obtained confidential
in accordance with its customary procedures to the extent that the
Guarantor or any of its Subsidiaries clearly identifies such
information as confidential.
(b) Notice of Default. Forthwith upon the occurrence of
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any Default, and not later than three Business Days after such fact
becomes known to an Executive Officer of the Guarantor, the chief
financial officer of the Guarantor will deliver or cause to be
delivered to the Bank notice of such Default setting for the details
thereof, the period of existence thereof and the action which the
Guarantor is taking or proposes to take with respect thereto.
(c) Payment of Obligations. The Guarantor will pay and
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discharge, as the same shall become due and payable, (1) all its
obligations and liabilities, including all claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other
like persons which, in any such case, if unpaid, might by law give
rise to a Lien upon any of its property or assets, and (2) all taxes,
assessments and charges or levies made upon it or its property or
assets, by any governmental body, agency or official except
obligations, liabilities, taxes, assessments, charges and levies being
diligently contested in good faith by
appropriate proceedings and reserved against in accordance with GAAP.
(d) Maintenance of Property; Insurance.
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(1) The Guarantor will, and will cause its Subsidiaries
to, keep all property useful and necessary and in its business in good
working order and condition, subject to ordinary wear and tear, and
form time to time make or cause to be made all repairs, renewals,
replacements, extensions, additions and improvements to such
properties and assets as are necessary and proper.
(2) The Guarantor will, and will cause its Subsidiaries
to, maintain with financially sound and reputable insurance companies,
comprehensive liability insurance on all its properties in at least
such amounts and against at least such risks (and with such risk
retentions) as are usually insured against by companies engaged in the
same or a similar business and will furnish to the Bank upon request
full information as the insurance carried.
(e) Conduct of Business and Maintenance of Existence. The
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Guarantor will, and will cause each Subsidiary to, continue to engage
in business of the same general type as now conducted by the Guarantor
or such Subsidiary, and will preserve, renew and keep in full force
and effect its corporate existence and its rights, privileges and
franchises necessary or desirable in the normal conduct of business.
The Guarantor will not engage in any business other than substantially
the same line of business as conducted by the Guarantor on the date of
this Guaranty Agreement or liquidate, wind-up or dissolve, whether
voluntarily or involuntarily (or suffer any such liquidation or
dissolution) or make any material change in its capital structure or
any of its business objectives, purposes and operations.
(f) Compliance with Laws. The Guarantor will, and will
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cause each Subsidiary to, comply with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities
(including, without limitation, ERISA and the rules and regulations
thereunder and all Environmental Requirements) except where the
necessity of compliance therewith is contested in good faith by
appropriate proceedings or where noncompliance would not materially
and adversely affect the Guarantor's business or financial position.
(g) Accounting and Records. The Guarantor will, and will
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cause each Subsidiary to, keep proper books of record and
account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its
business and activities, will maintain its fiscal reporting periods on
the present basis.
SECTION 5. FINANCIAL COVENANTS. The Guarantor hereby
agrees that so long as any obligation, covenant or agreement which the
Guarantor has guaranteed hereunder remains unsatisfied, it shall
comply with, perform and observe the following covenants and
provisions and shall cause each Subsidiary to comply with, perform and
observe said covenants and provisions as are applicable thereto:
(a) Restriction on Liens. The Guarantor will not, and
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will not permit any Subsidiary to, at any time create, assume, incur
or suffer to exist any Lien on any property or asset of any kind, real
or personal, tangible or intangible, now owned or hereafter acquired
by it or assign or subordinate any present or future right to receive
assets. Without limitation of the foregoing, the Guarantor
specifically covenants not to cause or permit to exist any Lien on the
Note or on the Letter of Credit. Simultaneously with the execution
hereof by the Guarantor, the Guarantor shall deliver the Note and the
Letter of Credit to the Bank, and the Bank shall retain possession
thereof until all obligations and liabilities of the Borrower to the
Bank guaranteed by the Guarantor hereunder have been irrevocably
satisfied in full. The Guarantor further agrees to turn over to the
Bank, promptly following its receipt thereof, any and all payments
(including prepayments) made under, pursuant to or in satisfaction of
the indebtedness evidenced by the Note or the Letter of Credit,
excluding the payment of interest under the Note due May 31, 1994.
The Bank shall have the right, at its option, to apply any or all of
the payments delivered to it pursuant to the preceding sentence to any
of the obligations and liabilities of the Borrower guaranteed
hereunder, or to hold such payments as additional collateral for the
satisfaction of such obligations and liabilities, and the Guarantor
agrees to execute and deliver to the Bank, promptly upon its request,
such additional agreements, instruments and documents as the Bank may
reasonably require in connection therewith. The Bank shall have no
liability or duty to the Guarantor at any time to collect or enforce
any rights of the Guarantor under the Note or the Letter of Credit, or
to preserve any rights of the Guarantor thereunder, the sole duty of
the Bank in this regard being to exercise reasonable care with respect
to such instruments for as long as they remain in its actual
possession.
(b) Consolidations, Mergers and Sales of Assets. (1) The
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Guarantor will not, and will not permit any Subsidiary to, sell,
lease, transfer or otherwise dispose of all, or substantially all, of
the property or assets of the Guarantor or such Subsidiary to any
other person or consolidate with or merge into any other Person or
permit any Person to merge into the Guarantor.
(2) The Guarantor will not during any fiscal year sell,
lease, transfer or otherwise dispose of any of its property or assets
(other than in the ordinary course of business).
(c) Transactions with Affiliates/Shareholders. The
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Guarantor will not, and will not permit any Subsidiary to, directly or
indirectly enter into any transaction, including without limitation,
the purchase, sale or exchange of property or the rendering of any
service to, the Borrower or to any Affiliate of the Borrower or the
Guarantor except in the ordinary course of business pursuant to the
reasonable requirements of the business of the Guarantor and upon fair
and reasonable terms no less favorable to the Guarantor than would be
obtained in a comparable arms-length transaction with a person not an
Affiliate or shareholder of the Guarantor.
(d) Restricted Payments. The Guarantor will not, and will
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not permit any Subsidiary to, make a Restricted Payment other than the
payment of cash dividends to UIC.
SECTION 6. EVENTS OF DEFAULT. If one or more of the
following events ("Defaults") shall have occurred and be continuing,
whether such occurrence shall be voluntary or involuntary or comes
about or is effected by operation of law or otherwise:
(a) the Borrower shall fail to pay when due any principal
or premium of the Note when due, or shall fail to pay within five (5)
days of the due date thereof any interest or other amount payable
under the Loan Agreement, the Note or any of the other Loan Documents;
(b) the Borrower or the Guarantor shall fail to observe or
perform any covenant, term of condition contained in the Loan
Agreement or this Guaranty Agreement and such failure shall not be
remedied within any specified cure period;
(c) any material representation, warranty, certification
or statement made by the Borrower or the Guarantor in the Loan
Agreement or this Guaranty Agreement or in any
certificate, financial statement or other document delivered pursuant
thereto or hereto shall prove to have been incorrect in any material
respect when made;
(d) the Borrower or the Guarantor shall fail to perform or
observe any agreement, term or condition contained in any agreement
for borrowed money, which failure results in or would permit the
acceleration of the maturity of any Debt of the Borrower or the
Guarantor and which failure is not cured within the cure period
originally specified in such agreement;
(e) either the Borrower or the Guarantor (or both) shall
commence a voluntary cause or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(f) an involuntary case or other proceeding shall be
commenced against either the Borrower or the Guarantor (or both)
seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the Borrower
under the federal bankruptcy laws as now or hereafter in effect;
(g) the Guarantor fails for a period of 15 days to pay one
or more final judgments or orders for the payment of money which are
either unappealable or unstayed, when the sum of such judgments is in
excess of $1,000,000.00;
(h) if at any time UIC fails to own 100% of the issued and
outstanding voting stock of the Guarantor;
(i) if an adverse change deemed material by the Bank in
good faith shall occur with respect to the business, assets,
operations, business prospects or financial condition of the
Guarantor; or
(j) an Event of Default shall occur under the Loan
Agreement, the Note or any of the other Loan Documents.
Upon the occurrence of any such Event of Default, the Bank
shall have whatever rights in law or equity it might have to enforce
this Guaranty Agreement.
SECTION 7. DEFINITIONS
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, owns 5% or more of the
voting capital stock of the Guarantor (ii) any Person other than the
Guarantor and a Subsidiary of the Guarantor of which 5% or more of the
voting securities, including common stock or partnership interests, is
owned by the Guarantor or (iii) any Person which possesses, directly
or indirectly, the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise.
"Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in the City of Baltimore are
authorized by law to close.
"Debt" of any Person means at any date, without duplication,
obligations which under GAAP are shown as liabilities on the balance
sheet of such Person, excluding accrued taxes and accrued operating
expenses, but including (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such Person as
lessee under capital leases, (v) all obligations of such Person to
purchase securities or other property which arise out of or in
connection with the sale of the same or substantially similar
securities or property, (vi) all non-contingent obligations of such
Person to reimburse any bank or other person in respect of amounts
paid under a letter of credit or similar instrument; (vii) all
obligations of others secured by a Lien on any asset of such Person,
whether or not such obligation is assumed by such Person and (viii)
all obligations of others guaranteed by such Person.
"Default" has the meaning specified in Section 6.
"Executive Officer" means any member of the Board of
Directors, the President, any Vice President (including various grades
of such office), the Treasurer or the Secretary of the Guarantor.
"GAAP" means generally accepted accounting principles in the
United States.
"Letter of Credit" means Irrevocable Standby Letter of
Credit No. P622514 dated February 26, 1985, issued by The Chase
Manhattan Bank, N.A. for the benefit of the Guarantor in the original
face amount of $46,000,000.00 including all amendments, extensions and
supplements thereof and thereto.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, or encumbrance of any kind in
respect of such asset, including any agreement to give any of the
foregoing. For the purposes of this Guaranty Agreement, the Guarantor
and its Subsidiaries shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset or with
respect to which a financing statement under the Uniform Commercial
Code of any jurisdiction has been filed or an agreement to give such a
financing statement has been entered into.
"Note" means, as the same may be amended, modified,
extended, renewed, supplemented or replaced from time to time, that
certain Promissory Note dated February 26, 1985, made by Smith &
Nephew Investment Group, Ltd., a Delaware corporation, and payable to
the order of the Guarantor in the original principal amount of Forty-
Two Million Six Hundred Ninety-Nine Thousand Three Hundred Eighty-Four
Dollars ($42,699,384.00).
"Officer's Certificate" means a certificate signed in the
name of the Guarantor by its President, one of its Vice Presidents,
its Treasurer or its Secretary.
"Person" means an individual, a corporation, a partnership,
an association, a trust or any other entity or organization, including
a government or political subdivision or any agency or instrumentality
thereof.
"Restricted Investments" means any stock or equity interest
in, or any note or other debt of any Person other than the Company or
the Guarantor, provided however, that the term Restricted Investments
shall not include: (i) direct obligations
of the U.S. Government, or obligations guaranteed by the U.S.
Government, maturing no later than one year from the date of
acquisition; (ii) negotiable certificates of deposit issued by banks
having a combined capital and surplus in excess of $100,000,000 and
are rated A or better by either Standard and Poor's Corporation or
Moody's Investors Services, Inc. or B or better by Thompson's
BankWatch; (iii) commercial paper with minimum rating by Standard and
Poor's Corporation or Moody's Investors Services, Inc. of A1/P1
maturing within 270 days; (iv) short term tax-exempt obligations given
the highest credit rating of either Standard and Poor's Corporation or
Moody's Investors Services, Inc.; and (v) repurchase agreements with
commercial banks whose certificates of deposits are eligible for
purchase under clause (ii) and which mature within 270 days.
"Restricted Payment" means any (a) payment of cash
dividends, (b) payment of funds to repurchase of the stock of the
Guarantor, (c) any prepayments of subordinated debt, and (d)
Restricted Investments.
"Subsidiary" means any corporation at least a majority of
the voting stock of which, now or in the future, is owned or
controlled by the Guarantor, directly or indirectly through one or
more Subsidiaries.
"UIC" means United Industrial Corporation, a Delaware
corporation.
SECTION 8. NOTICES. Except as otherwise provided herein,
any notice required hereunder shall be in writing, and shall be deemed
to have been validly served, given or delivered after transmission by
hand or by facsimile (if a copy thereof is promptly deposited in the
United States malls, registered first class mail, with proper postage
prepaid or by Federal Express) or by Federal Express or similar
service or five business days after deposit in the United States
mails, registered first-class mail, with proper postage prepaid and
addressed to the party to be notified at the following addresses (or
such other address as such party shall designate in a notice delivered
to the other party hereunder);
(A) If to the Bank, to:
Signet Bank/Maryland
7 St. Paul Street
Baltimore, Maryland 21203
Attention: Mr. David A. Bauereis
(B) If to the Guarantor, at:
c/o United Industrial Corporation
18 East 48th Street
New York, New York 10017
Attention: Treasurer
with a copy to:
AAI Corporation
York and Industry Lane
Cockeysville, Maryland 21030
Attention: Mr. Paul J. Michaud
SECTION 9. SEVERABILITY. Wherever possible, each provision
of this Guaranty Agreement shall be interpreted in such manner as to
be effective and valid under applicable law. If, however, any
provision of this Guaranty Agreement shall be prohibited by or invalid
under applicable law, such provision shall be ineffective to the
extent or such prohibition of invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Guaranty Agreement, unless the ineffectiveness of such provision
materially and adversely alters the benefits accruing to either party
hereunder.
SECTION 10. ENTIRE AGREEMENT; WAIVERS. The Guarantor
hereby agrees that this instrument contains the entire agreement
between the parties with respect to the subject matter hereof and that
there is and can be no other oral or written agreement or
understanding whereby the provisions of this instrument have been or
can be terminated, affected, varied, waived, amended or modified in
any manner, unless the same be set forth in writing and consented to
by the Bank.
SECTION 11. SUCCESSORS AND ASSIGNS. This Guaranty
Agreement shall be binding upon and inure to the benefit of the
respective successors, participants and assigns of the Guarantor and
the Bank. This Guaranty Agreement shall, without further consent of,
or notice to, the Guarantor, pass to, and may be relied upon and
enforced by, any assignee or transferee of the Bank.
SECTION 12. GOVERNING LAW, ETC. This Guaranty Agreement
is, and shall be deemed to be, a contract entered into, under and
pursuant to the laws of the State of Maryland, and shall be binding
upon the Guarantor and its successors and assigns.
SECTION 13. NO WAIVER. No delay on the part of the Bank in
exercising any rights hereunder or failure to exercise the same shall
operate as a waiver of such rights; no notice to or demand on the
Guarantor shall be deemed to be a waiver of the obligation of the
Guarantor or of the rights of the Bank to take further action without
notice or demand as provided herein.
SECTION 14. HEADINGS. The descriptive headings of the
several paragraphs of this Guaranty Agreement are inserted for
convenience only and do not constitute a part of this Guaranty
Agreement.
SECTION 15. COUNTERPARTS. This Guaranty Agreement may be
executed in any number of counterparts each of which shall be deemed
an original, and all such counterparts shall together constitute the
same Guaranty Agreement.
SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made by the Guarantor herein shall
survive the execution and delivery of this Guaranty Agreement, the
Loan Agreement the Note and the other Loan Documents, regardless of
any investigation made by the Bank or the Bank's access to any
information.
SECTION 17. DURATION. This Guaranty Agreement shall remain
in effect until all amounts payable under the Loan Agreement, the Note
and the other Loan Documents shall have been paid in full.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty
Agreement to be duly executed under seal as of the date first above
set forth.
ATTEST/WITNESS: UIC-DEL. CORPORATION
______________________ By:Robert W. Worthing (SEAL)
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Title Secretary
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STATE OF _____________
COUNTY OF ____________
On this __th day of ________, 1994, before me, the
undersigned officer personally appeared _________________ who
acknowledged himself/herself to be the ______________ of UIC-Del.
Corporation, a Delaware corporation, and that (s)he, as such
_____________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of
the corporation by himself/herself as _______________.
______________________
Notary Public
My commission expires:_________________