<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number #1-4252
UNITED INDUSTRIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-2081809
(State or other jurisdiction of (I.R.S. Identification No.)
incorporation or organization)
18 East 48th Street, New York, NY 10017
(Address of principal executive offices)
Registrant's telephone number, including area code (212) 752-8787
Not Applicable
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1)has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
12,256,693 shares of common stock as of August 1, 1994.
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UNITED INDUSTRIAL CORPORATION
INDEX
Page #
Part I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheet - Unaudited
June 30, 1994 and December 31, 1993 1
Consolidated Condensed Statement of Operations -
Three Months and Six Months Ended June 30, 1994 and 1993 2
Consolidated Condensed Statement of Cash Flows
Six Months Ended June 30, 1994 and 1993 3
Notes to Consolidated Condensed Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 6
PART II - Other Information 7
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PART I - FINANCIAL INFORMATION
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEET - UNAUDITED
(Dollars in Thousands)
<CAPTION>
June 30 December 31
1994 1993
ASSETS
<S> <C> <C>
Current Assets
Cash & cash equivalents $ 2,638 $ 3,906
Note receivable 8,540 8,540
Trade receivables 39,007 45,233
Inventories
Finished goods & work-in-process 47,178 46,087
Materials & supplies 3,697 3,776
50,875 49,863
Recoverable federal income taxes (83) 3,618
Deferred income taxes 8,650 8,796
Prepaid expenses & other current assets 2,541 2,480
Assets held for sale - 5,439
Total Current Assets 112,168 127,875
Other assets 31,615 23,096
Note receivable - 8,540
Deferred income taxes 10,365 10,365
Property & equipment - less allowances
for depreciation ($80,480 & $75,714) 44,865 46,635
$199,013 $216,511
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable to banks $ 3,000 $ 20,700
Accounts payable 9,182 9,634
Accrued employee compensation & taxes 8,757 7,598
Customer advances 8,087 5,725
Other liabilities 4,545 6,370
Provision for contract losses 9,387 10,232
Deferred income taxes 3,398 3,493
Estimated restructuring liability 500 750
Total Current Liabilities 46,856 64,502
Long-term liabilities (less current maturities) 28,897 27,851
Deferred income taxes 16,584 18,645
Accumulated postretirement benefit obligation 20,576 20,159
Shareholders' Equity
Common stock $1.00 par value
Authorized - 15,000,000 shares; outstanding
12,258,693 shares (net of shares in treasury) 14,374 14,374
Additional capital 95,451 97,167
Retained earnings (deficit) (5,949) (8,411)
Treasury stock, at cost, 2,115,455 shares (16,875) (16,875)
Minimum pension liability adjustment (901) (901)
86,100 85,354
$199,013 $216,511
See accompanying notes
</TABLE>
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Dollars in thousands except per share amounts)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net Sales $ 42,216 $ 62,995 $ 92,292 $120,394
Operating costs & expenses
Cost of sales 30,531 47,714 68,618 97,321
Selling & administrative 10,721 13,092 21,002 24,422
Other income - net (127) (80) (332) (313)
Interest expense 875 725 1,471 1,393
Interest income (537) (709) (926) (1,524)
Provision for restructuring charge (1,554) - (1,554) 23,000
39,909 60,742 88,279 144,299
Income (loss) before income taxes and
cumulative effect of accounting changes 2,307 2,253 4,013 (23,905)
Income taxes (benefit) 899 528 1,551 (8,179)
Income (loss) before cumulative
effect of accounting changes 1,408 1,725 2,462 (15,726)
Cumulative effect as of December
31, 1992 of changes in method of
accounting for:
Post retirement benefits other
than pensions, net of taxes - - - (12,890)
Income taxes - - - 13,884
Net income (loss) $ 1,408 $ 1,725 $ 2,462 $(14,732)
Earnings (loss) per share:
Earnings (loss) per share before
cumulative effect of accounting changes $ .11 $ .14 $ .20 $(1.28)
Cumulative effect of accounting
changes for:
Postretirement benefits other than pensions - - - (1.05)
Income taxes - - - 1.13
Net earnings (loss) per share $ .11 $ .14 $ .20 $(1.20)
See accompanying notes
</TABLE>
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<CAPTION>
SIX MONTHS ENDED JUNE 30
1994 1993*
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 2,462 $ (14,732)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Cumulative effect of changes in accounting for:
Postretirement benefits - 20,054
Income taxes - (13,884)
Depreciation and amortization 2,815 3,878
Deferred income taxes (2,010) (9,043)
Restructuring charge - 23,000
Expenses charged to restructuring reserve - (4,638)
Increase (decrease) in contract loss provision (845) 6,092
Changes in operating assets and liabilities:
Decrease in accounts receivable 4,859 13,822
Decrease (increase) in inventories (1,175) 10,460
Decrease (increase) in prepaid expenses and
other current assets 6,003 (84)
Decreases in accounts payable,
accruals, advances and other (2,217) (14,524)
Increase (decrease) in federal income taxes 3,697 (10,230)
Increase (decrease) in long-term liabilities (483) 1,657
Net Cash Provided by Operating Activities 13,106 11,828
INVESTING ACTIVITIES
Decrease in note receivable 8,540 8,541
Purchase of property and equipment (535) (1,979)
Increase in other assets - net (2,691) (6,817)
Acquisition of business - net of
cash received (2,218) -
Net Cash Provided by (used in) Investing Activities 3,096 (255)
FINANCING ACTIVITIES
Increase in long-term liabilities 1,946 1,580
Proceeds from borrowings 6,000 6,000
Payments on long-term debt & borrowings (23,700) (16,579)
Dividends (1,716) (2,574)
Net Cash Used in Financing Activities (17,470) (11,573)
Decrease in Cash and Cash Equivalents (1,268) -
Cash and cash equivalents at beginning of period 3,906 2,608
Cash and cash equivalents at end of period $ 2,638 $ 2,608
See accompanying notes
<FN>
* Restated to conform to current classifications
</TABLE>
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
June 30, 1994
Note A - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June
30, 1994 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1994. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K
for the year ended December 31, 1993.
Note B - Restructuring Charge
The Consolidated Condensed Statement of Operations for the six months
ended June 30, 1993 includes a restructuring charge of $23 million
($14.7 million or $1.20 per share, net of income tax benefit). The
charge covered the anticipated cost of organizational and product line
changes, consolidation of facilities, and work force reductions of
approximately 300 at AAI and its four subsidiaries. A major portion
of the charge covered the curtailment of operations of AAI/MICROFLITE
in Binghamton, New York, due to lack of significant new orders.
AAI/MICROFLITE was acquired in 1991. During the six months ended June
30, 1993, AAI/MICROFLITE sales amounted to $646,000, and losses were
$1,604,000 or $.13 per share. At June 30, 1994, the restructuring
program was substantially completed and only $500,000 related to the
consolidation and discontinuation of certain manufacturing activities,
had not been expended. At December 31, 1993 the restructuring charge
was reduced from $23 million to $22.5 million.
Note C - Assets Held for Sale
Assets held for sale of $5,439,000 included on the consolidated
balance sheet at December 31, 1993, relate to the remaining assets of
AAI/MICROFLITE, including the office/manufacturing complex. The
company sold these assets in 1994. The profit of $1,304,000 is
included in the provision for restructuring in the Consolidated
Condensed Statement of Operations.
Note D - Dividends
A quarterly dividend of $.07 per share is payable August 31, 1994 and
additional capital has been reduced.
Note E - Stock Options
In May 1994, the shareholders approved the 1994 Stock Option Plan,
which provides for the granting of 600,000 stock options to key
employees. Options granted may be either "incentive stock options,"
within the meaning of Section 422A of the Internal Revenue Code, or
non-qualified options.
The options are granted at market value at the date of grant and are
exercisable over a period determined by the Board of Directors, but no
longer than ten years after the date they are granted.
On June 21, 1994 options were granted for 91,000 shares at an option
price per share of $4.75.
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Note F - Legal Proceedings
The company, along with various other parties, has been named in three
claims (including two tort claims, one of which alleges class action)
relating to environmental matters based on allegations partially
related to a predecessor's operations. These tort actions seek
recovery for personal injury and property damage among other damages.
The company owned and operated a small facility at a site in the State
of Arizona that manufactured semi-conductors between 1959 and 1960.
All such operations of the company were sold prior to 1962. This
facility may have used trichloroethylene ("TCE") in small quantities.
However, to date, there is no evidence that this facility released or
disposed of TCE at this site.
On May 18, 1993, the State of Arizona filed suit against the company
seeking the recovery of investigative costs, injunctive relief to
require the company to perform a Remedial Investigation and
Feasibility Study, and ultimately to require the remediation of
alleged soil and groundwater contamination at and near a certain
industrial site. In response to the State's claim the company filed a
third party complaint that seeks contribution from seventy-five
identified possible responsible parties that are believed to have used
solvents on and around the company's former site.
Management intends to vigorously contest these actions and believes
that the resolution of these actions will not be material to the
company.
The company is involved in various other law suits and claims,
including certain other environmental matters, arising out of the
normal course of its business. In the opinion of management, the
ultimate amount of liability, if any, under pending litigation,
including claims described above, will not have a materially adverse
effect on the consolidated financial position of the company.
Note G - Acquisitions
On January 18, 1994, the company purchased all the outstanding shares
of Symtron Systems, Inc. (Symtron), a producer of fire training
simulators for the military and commercial markets. The purchase
price consists of an initial payment of $1,500,000, a subsequent
payment of $500,000, assumption of certain liabilities of
approximately $5,900,000 and contingent payments, not to exceed
$1,000,000, based on the net worth at specified dates and future
profits on contracts existing at the acquisition date. Additionally,
contingent amounts are payable if certain pretax profits, as defined
in the purchase agreement, are earned for each of the years in the
five year period ending December 31, 1998. Funds generated from
operations and an existing line of credit were utilized to finance the
purchase of Symtron.
The acquisition is accounted for as a purchase, accordingly, the
operations of Symtron are included in the company's 1994 financial
statements. Symtron had sales of $2,600,000 and the profit was not
material in the six months ending June 30, 1994.
NOTE H - Credit Arrangements
AAI has not borrowed under the $7,500,000 credit facility at June 30,
1994 and has letters of credit outstanding of approximately $678,000.
This credit facility, expires August 20, 1994. Management expects to
refinance this facility with other lenders. The terms of such
financing, including security, interest rates, guarantees and
covenants, may differ from those provided for under this credit
facility.
As part of the credit facility, AAI granted to the lender a first
priority security interest in all accounts receivable of AAI. UIC-
Del. Corporation, a subsidiary of UIC, was added as an additional
guarantor of any AAI bank debt. In addition to the lender, the
security interests are subject to the rights of the present insurance
company noteholders.
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Management's Discussion and Analysis of Financial Condition
Net sales for the first six months of 1994 were $28,102,000 lower than
for the prior year and $20,779,000 lower for the three months period
ending June 30, 1994 than the prior period. Sales decreased in all
segments in both periods, except for the 3 months ending June 30, 1994
the plastic products segment increased slightly. The major decrease
was in the defense segment due to a lack of new government orders
caused by the Government's reduced budget. Symtron sales of
$2,600,000 are included.
The net loss for the first six months of 1993 includes a restructuring
charge at the AAI Corporation subsidiary of $23 million ($14.7
million, or $1.20 per share net of income tax benefit). The charge
covered the anticipated cost of organizational and product-line
changes, the consolidation of facilities, and work force reductions of
approximately 300 in AAI and its four subsidiaries. A major portion
of the charge covered the curtailment of operations of AAI/MICROFLITE
in Binghamton, New York due to lack of significant new orders.
AAI/MICROFLITE was acquired in 1991. Predominately a defense
contractor, AAI is in the process of realigning its business to become
more competitive in the marketplace with its current customers and to
enter new non-DOD markets. Net loss included a loss of $1,604,000
($.13 per share), from operations of AAI/MICROFLITE, in the first six
months of 1993.
In the six month period the cost of sales as a percent of sales
decreased from 80.8 in 1993 to 74.4 in 1994 and from 75.7 in 1993 to
72.3 in 1994 for the three months period primarily due to the
recognition of losses of approximately $10 million and $4 million on
certain long-term contracts for the six and three month periods in
1993, respectively.
The company sold $5,439,000 of the remaining AAI/MICROFLITE assets in
1994. The profit of $1,304,000 is included in the provision for
restructuring in the Consolidated Condensed Statement of Operations.
Cash and cash equivalents decreased by $1,268,000 from December 31,
1993. See Consolidated Condensed Statement of Cash Flows. The
restructuring charge ($23 million), the accumulated postretirement
benefit obligation ($20 million) and the change in the deferred
federal income taxes due to a change in accounting method ($13.9
million) are non-cash items in 1993 and are included in the
Consolidated Condensed Statement of Cash Flows as adjustments to
reconcile net income to net cash provided or used in operating
activities. At December 31, 1993 the restructuring charge was reduced
from $23 million to $22.5 million.
AAI has not borrowed under the $7,500,000 credit facility at June 30,
1994 and has letters of credit outstanding of approximately $678,000.
This credit facility expires August 20, 1994. Management expects to
refinance this facility with other lenders. The terms of such
financing, including security, interest rates, guarantees and
covenants, may differ from those provided for under this credit
facility.
As part of the credit facility, AAI granted to the lender a first
priority security interest in all accounts receivable of AAI. UIC-
Del. Corporation, a subsidiary of UIC, was added as an additional
guarantor of any AAI bank debt. In addition to the lender, the
security interests are subject to the rights of the present insurance
company noteholders.
Effective January 1, 1993 the company adopted FASB Statement No. 109
(see Note B of the Condensed Financial Statement) decreasing net loss
by $13.9 million or $1.13 per share. Deferred federal income taxes -
current was reduced $16.4 million and non-current was increased $2.5
million.
Effective January 1, 1993 the company adopted FASB Statement No. 106
(see Note B of the Condensed Financial Statement) increasing net loss
by $12.9 million or $1.05 per share.
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
PART II - Other Information
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
10 a - Signet Bank/Maryland letter, dated May 13, 1994,
re: Credit Facilities to AAI
10 b - Security Agreement dated May 27, 1994
by AAI Corporation and Signet Bank/Maryland
10 c - Guaranty Agreement dated May 27, 1994 by UIC-Del.
Corporation and Signet Bank/Maryland.
11 - Computation of Earnings per share
27 - Financial Data Schedule
(b) The Registrant did not file any reports on Form 8-K during
the quarter ended June 30, 1994.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
UNITED INDUSTRIAL CORPORATION
Date August 12, 1994 By:/s/ Howard M. Bloch
Howard M. Bloch, Treasurer and
Chief Financial Officer
<PAGE>
<PAGE>
UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
INDEX OF EXHIBITS FILED HEREWITH
Exhibit No.
10 a - Signet Bank/Maryland letter, dated May 13, 1994,
re: Credit Facilities to AAI
10 b - Security Agreement dated May 27, 1994 by
AAI Corporation and Signet Bank/Maryland
10 c - Guaranty Agreement dated May 27, 1994 by UIC-Del.
Corporation and Signet Bank/Maryland
11 - Computation of Earnings per share
27 - Financial Data Schedule
<PAGE>
Exhibit 10a - Signet Bank letter, dated May 13, 1994,
re: Credit Facilities to AAI - Page 12
[Letterhead of SIGNET BANK]
May 13, 1994
BY HAND DELIVERY
Mr. Richard R. Erkeneff
President
AAI Corporation
P. O. Box 126
Hunt Valley, Maryland 21030
Re: Signet Bank/Maryland Credit Facilities to AAI
Dear Mr. Erkeneff:
By letter to Paul Michaud dated April 4, 1994, the
undersigned memorialized previous conversations held with Mr.
Michaud pursuant to which AAI was advised that the availability
of additional credit under our Amended and Restated Loan
Agreement dated as of August 11, 1992, as amended (the "Loan
Agreement") would terminate on April 30, 1994, and that all
outstanding "Obligations" (as defined in the Loan Agreement)
would be due and payable on such date. As of April 30, the
obligations of AAI to Signet Bank had not been satisfied, and AAI
has requested Signet Bank to continue extending credit under the
Loan Agreement in order to provide sufficient additional time to
arrange for replacement financing.
The purpose of this letter is to advise you of the terms
under which Signet Bank is willing to extend additional credit to
AAI under the Loan Agreement. Capitalized terms used in this
letter without definition which are defined in the Loan Agreement
shall have the same meanings assigned to such terms in the Loan
Agreement.
The Lender hereby consents to an extension of the
Termination Date to August 20, 1994 (the "Termination Date"),
upon the following terms and conditions:
1. From and after the date hereof, the Maximum Loan Amount
shall be $7,500,000.00 minus the face amount of all issued and
outstanding Letters of Credit; provided, however, that for
purposes of determining whether the Maximum Loan Amount has been
exceeded, Letter of Credit S1881 and Letter of Credit S1764 (the
"Excluded Letters of Credit") shall be excluded.
2. From and after the date hereof, the Maximum Letter of
Credit Facility Amount shall be equal to the amount available to
be drawn as of the date of this letter under the currently
outstanding Letters of Credit (other than the Excluded Letters of
Credit).
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3. On or before May 20, 1994, pursuant to written
agreements in form and substance satisfactory to the Lender (a)
the Borrower shall grant to the Lender a first priority security
interest in all accounts receivable of the Borrower, and (b) UIC
shall grant to the Lender a first priority security interest in a
certain note receivable with a current outstanding principal
balance of $8,540,000.00 which is further described in footnote 4
to the consolidated financial statements of UIC in the 1993
Annual Report of UIC, together with all rights of UIC under any
and all letters of credit and other collateral securing the
repayment thereof. The foregoing security interests to be
granted to the Lender shall be subject only to the rights of
Principal Mutual Life Insurance Company, The Travelers Insurance
Company and The Travelers Indemnity Company of Rhode Island
(collectively, the "Creditor") under the Inter-Creditor Agreement
dated August 11, 1992, by and among the Lender, the Creditor, the
Borrower and UIC. The Borrower and UIC shall execute and deliver
to the Lender upon the Lender's demand such security agreements,
financing statements and other documents and instruments as the
Lender may reasonably require in order to establish and perfect
the aforementioned security interest.
4. The Borrower shall pay to the Lender, concurrently with
its acceptance hereof, an extension fee in the amount of
$75,000.00 (the "Extension Fee"); provided, however, that the
Borrower shall be entitled to a rebate of such Fee in the event
that all outstanding obligations are satisfied more than thirty
days prior to the Termination Date. The amount rebated to the
Borrower shall equal (a) $50,000.00 if the Obligations are
satisfied more than sixty days prior to the Termination Date, and
(b) $25,000.00 if the Obligations are satisfied more than thirty
(but less than sixty-one) days prior to the Termination Date.
The Obligations of the Borrower with respect to outstanding
Letters of Credit shall not be deemed satisfied unless (i)
replacement letters of credit have been issued by another
institution with the result that the Letters of Credit shall have
been terminated and all of the Lender's obligations thereunder
discharged, or (ii) the Lender shall have been provided, pursuant
to a written agreement or agreements satisfactory to the Lender
and with the concurrence of the Creditor, cash collateral for
such obligations in an amount not less than the maximum potential
reimbursement an other obligations of the Borrower in connection
with such Letter of Credit.
5. Each Letter of Credit currently outstanding or issued
after the Borrower's acceptance hereof shall be subject to the
requirement that if it is to extend beyond the Termination Date,
on or before such Termination Date the Borrower shall (a) have
arranged for the issuance of a replacement letter of credit by
another institution with the result that such Letter of Credit
shall be terminated and all of the Lender's obligations
thereunder discharged, or (b) have provided, pursuant to a
written agreement or agreements satisfactory to the Lender and
with the concurrence of the Creditor, cash collateral in form and
substance satisfactory to the Lender in an amount not less than
the maximum potential reimbursement and other obligations of the
Borrower in connection with such Letter of Credit. The
requirements of this Paragraph 5 are consistent with the terms
and conditions of our letter agreement dated August 2, 1993.
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6. The Borrower shall pay on the demand of the Lender all
expenses paid or incurred by the Lender (including the fees and
expenses of its counsel) in connection with (a) the preparation
and negotiation of this letter agreement and all other documents
and agreements referred to herein, and (b) all future matters
arising in connection with the Lender's credit extensions to the
Borrower.
Until the terms under which the Lender is willing to extend
credit to the Borrower have been agreed upon, no additional
credit will be extended to the Borrower. The offer contained in
this letter shall expire on May 16, 1994 unless previously
accepted by the Borrower and UIC. Acceptance shall be indicated
by the Borrower and UIC signing this letter in the space provided
below, and returning this letter, together with payment of the
Extension Fee, to the Lender. An additional copy of this letter
is also enclosed for your records.
In the event the Borrower does not find the proposed terms
of extension as described above to be acceptable, the Borrower
should arrange for the satisfaction of the outstanding
Obligations (including, without limitation, the satisfaction of
the outstanding Letters of Credit on the terms outlined in this
letter) on or before May 16, 1994.
Please call (332-5144) if you should have any further
questions or comments concerning this matter.
Yours truly,
/S/ David A. Bauereis
David A. Bauereis
Vice President
96/nea
Enclosure
cc: Mr. Paul J. Michaud
Kevin G. Gralley, Esquire
ACCEPTED AND AGREED THIS ____
DAY OF MAY, 1994
AAI CORPORATION
AAI ENGINEERING SUPPORT, INC.
AAI MANUFACTURING ASSEMBLY, INC.
AAI SYSTEMS MANAGEMENT, IN.
AAI MEDICAL CORPORATION
SETI, INC.
AAI/ACL TECHNOLOGIES, INC.
AAI MICROFLITE SIMULATION INTERNATIONAL CORPORATION
By: /s/ Richard Ray Erkeneff
Name: RICHARD RAY ERKENEFF
Title:President & CEO AAI
UNITED INDUSTRIAL CORPORATION
By: /s/ Howard M. Bloch
Name: HOWARD M. BLOCH
Title:Vice President -Treasurer
<PAGE>
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT ("Agreement") is made this 27th day
of May, 1994, 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"), jointly and severally (AAI,
Engineering, Assembly, Systems, Medical, Seti, AAI/ACL and AAI
MICROFLITE jointly and severally, individually and collectively,
"Debtor"), and SIGNET BANK/MARYLAND ("Secured Party").
RECITALS
--------
Reference is made to that certain Amended and Restated Loan
Agreement dated August 11, 1992, as amended (the "Loan Agreement"), by
and among Debtor and Secured Party pursuant to which Secured Party
extended credit to Debtor in an original principal amount not to
exceed Thirty Million Dollars ($30,000,000.00). The "Termination
Date" as defined in the Loan Agreement has occurred without extension
by Secured Party, and all of the "Obligations" as therein defined have
become due and payable. Debtor has requested Secured Party to extend
the Termination Date until August 20, 1994, and as a condition to
consenting to such request Secured Party has, inter alia, required the
----------
execution hereof by Debtor.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, Debtor and Secured Party do hereby agree as follows:
1. CONSTRUCTION AND DEFINITION OF TERMS
------------------------------------
Capitalized terms used herein without definition which
are defined in the Loan Agreement shall have the meanings assigned to
them in the Loan Agreement. All terms used herein without definition
which are not defined in the Loan Agreement and which are defined by
the Maryland Uniform Commercial Code shall have the meanings assigned
to them by the Maryland Uniform Commercial Code unless and to the
extent varied by this Agreement. Whenever the phrase "satisfactory to
Secured Party" is used in this Agreement such phrase shall mean
"satisfactory to
NYFS11...:\95\78495\0001\7120\FRM80394.L40
<PAGE>
<PAGE>
Secured Party in its sole discretion." The use of any gender or the
neuter herein shall also refer to the other gender or the neuter and
the use of the plural shall also refer to the singular, and vice
versa. In addition to the terms defined elsewhere in this Agreement,
unless the context otherwise requires, when used herein, the following
terms shall have the following meanings:
"Collateral" shall mean all of Debtor's Receivables,
all property and funds of Debtor, both now owned and hereafter
acquired, now or hereafter in Secured Party's possession, all property
and assets of Debtor in or on which Secured Party has, or may in the
future acquire or be granted, a Lien, whether related or unrelated to
this Agreement, whether or not now contemplated, whether or not any
instrument or agreement relating thereto specifically refers to this
Agreement, and all proceeds (cash and non-cash, including insurance
proceeds), products, substitutions, renewals and replacements of all
of the foregoing in any form whatsoever and all books, records and
data processing materials in any form (including tapes, disks and the
like) documenting, describing or in any way relating to any or all of
the foregoing, whether in the possession of Debtor or any other
Person.
"Event of Default" shall mean any of the events
described in Section 6 hereof.
"Inter-Creditor Agreement" shall mean that certain
Inter-Creditor Agreement made as of August 11, 1992, by and among
Secured Party, Principal Mutual Life Insurance Company, The Travelers
Insurance Company, The Travelers Indemnity Company of Rhode Island,
AAI and UIC, as the same may hereafter be amended, supplemented or
otherwise modified from time to time.
"Permitted Liens" shall mean (a) Liens of Secured
Party, (b) Liens permitted pursuant to the Inter-Creditor Agreement,
and (c) Liens specifically consented to by Secured Party in writing.
"Receivables" shall mean all of Debtor's present and
future accounts, notes, instruments, documents, chattel paper, tax
refunds, contract rights, general intangibles, goodwill, judgments,
orders, awards and decrees in favor of Debtor, causes of action in
favor of Debtor, all goods returned, repossessed, or stopped in
transit the sale, lease or other disposition of which contributed to
the creation of any account, instrument or chattel paper, all present
and future rights of Debtor to the payment of money due or to become
due to Debtor for
<PAGE>
<PAGE>
any reason whatsoever, whether or not such right to payment has been
or is to be earned by any performance and howsoever such right to
payment may be evidenced, whether by open account, instrument, note,
draft, chattel paper, judgment, order, award, decree or otherwise, all
rights which Debtor may at any time have, by law or agreement, against
any account debtor, all rights which Debtor may at any time have, by
law or agreement, against any other obligor obligated to make such
payment and all rights and Liens which Debtor may at any time have, by
law or agreement, against any property of any account debtor or
against any property of any such other obligor; provided, however,
that notwithstanding the foregoing, Receivables shall not include (a)
any property now or hereafter abandoned or returned by the United
States government which AAI is contractually obligated to deliver to
Reflectone, Inc., or (b) any present or future rights of Debtor with
respect to any patents, copyrights, franchises, trade names,
trademarks, or computer software (collectively, "Excluded Intellectual
Property") except to the extent such rights relate to (x) proceeds of
such Excluded Intellectual Property which otherwise would fall within
the foregoing definition of Receivables, or (y) computer software
consisting of the books, records or data processing materials of
Debtor documenting or describing the Receivables and/or any account
debtor or other obligor of Debtor or in any way used or useful in the
collection or enforcement of the Receivables.
2. SECURITY
--------
2.01 Security Interest. As security for the payment
-----------------
and performance of all of the Obligations, whether or not any
instrument or agreement relating to any Obligation specifically refers
to this Agreement or the security interest created hereunder, Debtor
hereby assigns, pledges and grants to Secured Party a continuing
security interest in the Collateral. Secured Party's security
interest shall continually exist until (a) all Obligations have been
paid in full, and (b) there exists no commitment by Secured Party
which could give rise to any Obligations, whether or not all
Obligations shall at any time or from time to time be reduced to zero.
Debtor shall make notations, satisfactory to Secured Party, on its
books and records disclosing the existence of Secured Party's security
interest in the Collateral. Secured Party shall have no liability or
duty, either before or after the occurrence of an Event of Default
hereunder, on account of loss of or damage to, or to collect or
enforce any of its rights against, the Collateral, or to preserve any
rights against account debtors or other parties with prior interests
in the Collateral, the sole duty of Secured Party in this regard being
to exercise reasonable
<PAGE>
<PAGE>
care with respect to tangible Collateral in its actual possession.
2.02 Covenants and Representations Concerning
----------------------------------------
Collateral. With respect to all of the Collateral, Debtor covenants,
----------
warrants and represents that:
(a) No financing statement covering any of the
Collateral is on file in any public office or land or financing
records except for financing statements in favor of Secured Party and
financing statements with respect to any Permitted Liens and Debtor is
the legal and beneficial owner of all of the Collateral, free and
clear of all Liens, except for Permitted Liens.
(b) The security interest granted Secured Party
here under shall constitute a first priority Lien upon the Collateral,
except for any Permitted Liens. Debtor will not, except in the
ordinary course of business, transfer, discount, sell, grant or assign
any interest in the Collateral nor, without Secured Party's prior
written consent, permit any other Lien to be created or remain thereon
except for Permitted Liens.
(c) Debtor will maintain the Collateral in good
order and condition, ordinary wear and tear excepted, and will use,
operate and maintain the Collateral in compliance with all laws,
regulations and ordinances and in compliance with all applicable
insurance requirements and regulations. Debtor will promptly notify
Secured Party in writing of any litigation involving or affecting the
Collateral which Debtor knows or has reason to believe is pending or
threatened. Debtor will promptly pay when due all taxes and all
transportation, storage, warehousing and other such charges and fees
affecting or arising out of or relating to the Collateral and shall
defend the Collateral, at Debtor's expense, against all claims and
demands of any Persons claiming any interest in the Collateral adverse
to Debtor or Secured Party.
(d) At all reasonable times Secured Party and its
agents and designees may enter any business premises of Debtor and any
other premises of Debtor and inspect the Collateral and all books and
records of Debtor (in whatever form).
(e) All books and records pertaining to the
Collateral are located at York Road and Industry Lane, Cockeysville,
Maryland 21030, at 11101 Gilroy Road, Cockeysville, Maryland 21030, at
2801 Professional Parkway, Ocoee, Florida
<PAGE>
<PAGE>
34761, at 1505 East Warner Avenue, Santa Ana, California 92705-5419 or
at 430 Stump Road, Montgomeryville, Pennsylvania 18936, and Debtor
will not change the location(s) of such books and records without the
prior written consent of Secured Party.
(f) Debtor shall do, make, execute and deliver
all such additional and further acts, things, deeds, assurances,
instruments and documents as Secured Party may request to vest in and
assure to Secured Party its rights hereunder or in any of the
Collateral, including, without limitation, the execution and delivery
of financing statements, financing statement amendments and/or
continuation statements, and Debtor agrees to pay all taxes, fees and
costs (including attorney's fees) paid or incurred by Secured Party in
connection with the preparation and filing or recordation thereof.
(g) A carbon, photographic or other reproduction
of this Agreement or any financing statement signed by Debtor in
connection with this Agreement shall be sufficient as a financing
statement.
(h) whenever required by Secured Party, Debtor
shall promptly deliver to Secured Party, with all endorsements and/or
assignments required by Secured Party, all instruments, chattel paper,
guaranties and the like received by Debtor constituting, evidencing or
relating to any of the Collateral or proceeds of any of the
Collateral.
(i) If any Receivable arises out of a contract
with the United States of America or any State, county, municipality
or any department, agency or instrumentality thereof, Debtor shall, if
required by Secured Party, execute and deliver any agreements, notices
and/or assignments and do such other things as may be satisfactory to
Secured Party in order that all sums due and to become due to Debtor
under such contract shall be duly assigned to Secured Party in
accordance with the Federal Assignment of Claims Act (31 United States
Code Section 1203; 41 United States Code Section 15) and/or any other
applicable federal, State and local laws and regulations relating to the
assignment of governmental obligations.
(j) Debtor agrees that until the Obligations
shall have been satisfied in full and this Agreement shall have been
terminated, Debtor will not, without Secured Party's prior written
consent, enter into any agreement (for example, a license agreement)
which is inconsistent with Debtor's obligations under this Agreement
and Debtor further agrees that it will not take any action, or permit
any action to be taken by others subject to
<PAGE>
<PAGE>
its control, including licensees, or fail to take any action, which
would materially adversely affect the validity or enforcement of the
rights transferred to Secured Party under this Agreement.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Secured Party to enter into this Agreement,
Debtor represents and warrants to Secured Party that:
3.01 Good Standing. Debtor and each Subsidiary is a
-------------
corporation duly organized, legally existing and in good standing
under the laws of the State of its incorporation, has the power to own
its property and to carry on its business and is duly qualified to do
business and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary.
3.02 Authority. Debtor has full power and authority
---------
to enter into this Agreement, to execute and deliver all documents and
instruments required hereunder and to incur and perform the
obligations provided for herein, all of which have been duly
authorized by all necessary and proper corporate and other action, and
no consent or approval of any Person, including, without limitation,
stockholders of Debtor and any public authority or regulatory body,
which has not been obtained is required as a condition to the validity
or enforceability hereof or thereof.
3.03 Binding Agreements. This Agreement has been duly
------------------
and properly executed by Debtor, constitutes the valid and legally
binding obligation of Debtor and is fully enforceable against Debtor
in accordance with its terms, subject only to laws affecting the
rights of creditors generally and application of general principles of
equity.
3.04 No Conflicting Agreements. The execution,
-------------------------
delivery and performance by Debtor of this Agreement will not (a)
violate (i) any provision of law or any order, rule or regulation of
any court or agency of government, (ii) any award of any arbitrator,
(iii) the Charter or Bylaws of Debtor, or (iv) any indenture,
contract, agreement, mortgage, deed of trust or other instrument to
which Debtor is a party or by which Debtor or any of its property is
bound, or (b) be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under, any such
award, indenture, contract, agreement, mortgage, deed of trust or
other instrument, or result in the
<PAGE>
<PAGE>
creation or imposition of any Lien upon any of the property or assets
of Debtor except for Liens created in favor of Secured Party under or
pursuant to this Agreement.
3.05 Title to Properties. Debtor has good and
-------------------
marketable title to all of its properties and assets (including the
Collateral) and all of the properties and assets of Debtor are free
and clear of Liens, except for Permitted Liens.
3.06 Reaffirmation of Existing Representations and
---------------------------------------------
Warranties. Each of the representations and warranties contained in
----------
the Loan Agreement and the other Loan Documents is incorporated herein
and restated as of the date hereof.
4. AFFIRMATIVE COVENANTS
---------------------
Debtor covenants and agrees with Secured Party that,
until (a) all Obligations have been paid in full and (b) there exists
no commitment by Secured Party which could give rise to any
Obligations, Debtor will:
4.01 Taxes. Pay and discharge, and cause each
-----
Subsidiary to pay and discharge, all taxes, assessments and
governmental charges upon Debtor and each Subsidiary, its income and
properties, prior to the date on which penalties attach thereto unless
and to the extent only that the same are being diligently contested by
Debtor or a Subsidiary, as the case may be, in good faith by
appropriate proceedings, provided, however, that (a) Secured Party
shall have been given reasonable prior written notice of intention to
contest, (b)nonpayment of the same will not, in Secured Party's sole
discretion, materially impair any of the Collateral or Secured Party's
rights or remedies with respect thereto or the prospect for full and
punctual payment of all of the Obligations, (c) Debtor or such
Subsidiary at all times effectively stays or prevents any official or
judicial sale of or action or filing against any of the Collateral by
reason of nonpayment of the same and (d) Debtor or such Subsidiary
establishes reasonable reserves for any liabilities being contested
and for expenses arising out of such contest.
4.02 Extraordinary Loss. Promptly notify Secured
------------------
Party in writing of any event causing extraordinary loss or
depreciation of the value of Debtor's or any Subsidiary's assets
(whether or not insured) and the facts with respect thereto.
4.03 Further Assurances and Corrective Instruments.
---------------------------------------------
Promptly execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, to Secured Party from
<PAGE>
<PAGE>
time to time such supplements hereto and such financing statements and
other instruments and documents as may be requested by Secured Party
to protect and preserve the Collateral, Secured Party's security
interest therein, perfection of Secured Party's security interest
and/or Secured Party's rights and remedies hereunder and under the
Loan Documents.
5. NEGATIVE COVENANTS
------------------
Debtor covenants and agrees with Secured Party that,
until (a) all Obligations have been paid in full, and (b) there exists
no commitment by Secured Party which could give rise to any
Obligations, Debtor will not, directly or indirectly, without Secured
Party's prior written consent:
5.01 Dividends, Stock Redemptions. Directly or
----------------------------
indirectly declare or pay any dividend on, or make any other
distribution with respect to (whether by reduction of capital or
otherwise), any shares of its capital stock, or purchase, redeem,
retire or otherwise acquire for value any shares of its capital stock,
except that a Subsidiary may pay dividends to Debtor.
5.02 Funded Debt. Redeem, call for redemption,
-----------
purchase or otherwise acquire or retire, directly or indirectly, or
make any optional prepayment of principal on, any Funded Debt, or
amend, alter or otherwise modify the provisions relating to any Funded
Debt, if the effect of such amendment, alteration or other
modification would or might be to accelerate such Funded Debt. For
purposes of this Subsection, "Funded Debt" shall include any
obligation of Debtor to any Person other than Secured Party payable
more than one year from the date of its creation which, under
generally accepted accounting principles, is shown on the balance
sheet as a liability (excluding reserves for deferred income taxes and
other reserves to the extent that such reserves do not constitute an
obligation).
6. EVENTS OF DEFAULT
-----------------
The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) Any representation or warranty made herein, in any
of the Loan Documents or in any statement, report, certificate,
opinion, financial statement or other document furnished or to be
furnished in connection with this Agreement or the Loan Documents
shall be false or misleading in any material respect.
<PAGE>
<PAGE>
(b) Failure of Debtor or any other Person to observe
or perform any warranty, covenant, condition or agreement to be
observed or performed by Debtor or such other Person under this
Agreement or any of the Loan Documents.
(c) The occurrence of a default under or an "Event of
Default" as defined in the Loan Agreement or any of the other Loan
Documents.
7. RIGHTS AND REMEDIES
-------------------
7.01 Rights and Remedies of Secured Party. Upon and
------------------------------------
after the occurrence of an Event of Default, Secured Party may,
without notice or demand, exercise in any jurisdiction in which
enforcement hereof is sought, the following rights and remedies, in
addition to the rights and remedies available to Secured Party under
the Loan Documents, the rights and remedies of a secured party under
the Uniform Commercial Code and all other rights and remedies
available to Secured Party under applicable law, all such rights and
remedies being cumulative and enforceable alternatively, successively
or concurrently:
(a) Declare all of the Obligations to be
immediately due and payable and the same shall thereupon become
immediately due and payable without presentment, demand for payment,
protest or notice of any kind, all of which are hereby expressly
waived.
(b) Institute any proceeding or proceedings to
enforce the Obligations and any Liens of Secured Party.
(c) Take possession of the Collateral, and for
that purpose, so far as Debtor may give authority therefor, enter upon
any premises on which the Collateral or any part thereof may be
situated and remove the same therefrom without any liability for suit,
action or other proceeding, DEBTOR HEREBY WAIVING ANY AND ALL RIGHTS
TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH RESPECT TO REPOSSESSION
OF COLLATERAL, and require Debtor, at Debtor's expense, to assemble
and deliver the Collateral to such place or places as Secured Party
may designate.
(d) Operate, manage and control the Collateral
(including use of the Collateral and any other property or assets of
Debtor in order to continue or complete performance of Debtor's
obligations under any contracts of Debtor), or permit the Collateral
or any portion thereof to remain idle or store the same, and collect
all rents and revenues
<PAGE>
<PAGE>
therefrom and sell or otherwise dispose of any or all of the
Collateral upon such terms and under such conditions as Secured Party,
in its sole discretion, may determine, and purchase or acquire any of
the Collateral at any such sale or other disposition, all to the
extent permitted by applicable law.
(e) With respect to any accounts, notes,
instruments, chattel paper, tax refunds, contract rights, general
intangibles or other debts or liabilities payable to Debtor securing
the Obligations, notify any account debtors and other obligors thereon
to make payments thereon directly to Secured Party, take control of
the cash and non-cash proceeds thereof, demand, collect, sue for and
receive any money or property at any time due, payable or receivable
on account thereof, compromise and settle with any Person liable
thereon, and extend the time of payment or otherwise change the terms
thereof, without incurring liability or responsibility therefor to
Debtor or any guarantor of any of the Obligations.
(f) Cease making advances under any other
commitments or credit accommodations of Secured Party to Debtor and
stop and retract the making of any advance hereunder or thereunder
which may have been requested by Debtor.
7.02 Power of Attorney. Effective upon the occurrence
-----------------
of an Event of Default, Debtor hereby designates and appoints Secured
Party and its designees as attorney-in-fact of Debtor, irrevocably and
with power of substitution, with authority to receive, open and
dispose of all mail addressed to Debtor; to notify the postal
authorities to change the address for delivery of mail addressed to
Debtor to such other address as Secured Party designates; to endorse
Debtor's name on any notes, acceptances, checks, drafts, money orders,
instruments or other evidences of payment or proceeds of the
Collateral that may come into Secured Party's possession; to sign
Debtor's name on any invoices, documents, drafts against and notices
to account debtors or other obligors of Debtor and requests for
verification of accounts; to execute proofs of claim and loss; to
execute any endorsements, assignments or other instruments of
conveyance or transfer; to adjust and compromise any claims under
insurance policies; to execute releases; and to perform all other acts
necessary and advisable, in Secured Party's sole discretion, to carry
out and enforce this Agreement and the Loan Documents. All acts of
said attorney or designee are hereby ratified and approved by Debtor
and said attorney or designee shall not be liable for any acts of
commission or omission nor for any error of judgment or mistake of
fact or law. This power of attorney is coupled with an interest and
is irrevocable so long as any of the
<PAGE>
<PAGE>
Obligations remain unpaid or unperformed or there exists any
commitment by Secured Party which could give rise to any Obligations.
7.03 Notice of Disposition of Collateral. It is
-----------------------------------
mutually agreed that commercial reasonableness and good faith require
Secured Party to give Debtor no more than 5 Business Days prior
written notice of the time and place of any public disposition of
Collateral or of the time after which any private disposition or any
other intended disposition is to be made.
7.04 Costs and Expenses. Debtor agrees to pay to
------------------
Secured Party on demand the amount of all expenses, including
attorney's fees and court costs paid or incurred by Secured Party in
exercising or enforcing or consulting with counsel concerning any of
its rights hereunder, under the Loan Documents or under applicable
law, together with interest on all such expenses paid by Secured Party
at the highest rate and calculated in the manner provided in the Note;
provided, however, that if such Note shall have been satisfied in full
and no commitment by Secured Party to extend additional credit to
Debtor under the Loan Agreement or any of the other Loan Documents
shall exist, interest shall accrue at the highest rate and calculated
in the manner provided in the Loan Documents. The provisions of this
Subsection shall survive the termination of this Agreement and Secured
Party's security interest hereunder and the payment of all other
Obligations.
8. MISCELLANEOUS
-------------
8.01 Performance for Debtor. Debtor agrees and hereby
----------------------
authorizes that Secured Party may, in Secured Party's sole discretion,
but Secured Party shall not be obligated to, whether or not an Event
of Default shall have occurred, advance funds on behalf of Debtor,
without prior notice to Debtor, in order to insure Debtor's compliance
with any covenant, warranty, representation or agreement of Debtor
made in or pursuant to this Agreement or any of the Loan Documents, to
continue or complete, or cause to be continued or completed,
performance of Debtor's obligations under any contracts of Debtor, to
cover overdrafts in any checking or other accounts of Debtor at
Secured Party or to preserve or protect any right or interest of
Secured Party in the Collateral or under or pursuant to this Agreement
or any of the Loan Documents, including, without limitation, the
payment of any insurance premiums or taxes and the satisfaction or
discharge of any judgment or any Lien upon the Collateral or other
property or assets of Debtor; provided, however, that the making of
any such advance by Secured Party shall not constitute a waiver by
Secured
<PAGE>
<PAGE>
Party of any Event of Default with respect to which such advance is
made nor relieve Debtor of any such Event of Default. Debtor shall
pay to Secured Party upon demand all advances made by Secured Party
under this Subsection 8.01 with interest thereon at the highest rate
and calculated in the manner provided in the Note; provided, however,
that if such Note shall have been satisfied in full and no commitment
by Secured Party to extend additional credit to Secured Party under
the Loan Agreement or any of the other Loan Documents shall exist,
interest shall accrue at the highest rate and calculated in the manner
provided in the Loan Documents. All such advances shall be deemed to
be included in the Obligations and secured by the security interest
granted Secured Party hereunder; provided, however, that the
provisions of this Subsection shall survive the termination of this
Agreement and Secured Party's security interest hereunder and the
payment of all other Obligations.
8.02 Expenses. Debtor agrees to pay to Secured Party
--------
on demand the amount of all expenses paid or incurred by Secured Party
(including the fees and expenses of its counsel) in connection with
the preparation of all written commitments of Secured Party antedating
this Agreement, this Agreement and the Loan Documents and all
documents and instruments referred to herein. Debtor further agrees
to pay all expenses in connection with the filing or recordation of
all financing statements and instruments as may be required by Secured
Party at the time of, or subsequent to, the execution of this
Agreement, including, without limitation, all documentary stamps,
recordation and transfer taxes and other costs and taxes incident to
recordation of any document or instrument in connection herewith and,
if any such expenses shall be paid or incurred by Secured Party, to
pay to Secured Party upon its demand the amount of such expenses.
Debtor agrees to save harmless and indemnify Secured Party from and
against any liability resulting from the failure to pay any required
documentary stamps, recordation and transfer taxes, recording costs,
or any other expenses in connection with this Agreement. The
provisions of this Subsection shall survive the termination of this
Agreement and Secured Party's security interest hereunder and the
payment of all other Obligations.
8.03 Applications of Collateral. Except as may be
--------------------------
otherwise specifically provided in this Agreement, all Collateral and
proceeds of Collateral coming into Secured Party's possession may be
applied by Secured Party to any of the Obligations, whether matured or
unmatured, as Secured Party shall determine in its sole discretion.
<PAGE>
<PAGE>
8.04 Waivers by Debtor. Debtor hereby waives, to the
-----------------
extent the same may be waived under applicable law: (a) notice of
acceptance of this Agreement; (b) all claims, causes of action and
rights of Debtor against Secured Party on account of actions taken or
not taken by Secured Party in the exercise of Secured Party's rights
or remedies hereunder, under the Loan Documents or under applicable
law; (c) all claims of Debtor for failure of Secured Party to comply
with any requirement of applicable law relating to enforcement of
Secured Party's rights or remedies hereunder, under the Loan Documents
or under applicable law; (d) all rights of redemption of Debtor with
respect to the Collateral; (e) in the event Secured Party seeks to
repossess any or all of the Collateral by judicial proceedings, any
bond(s) or demand(s) for possession which otherwise may be necessary
or required; (f) presentment, demand for payment, protest and notice
of non-payment and all exemptions; (g) any and all other notices or
demands which by applicable law must be given to or made upon Debtor
by Secured Party; (h) settlement, compromise or release of the
obligations of any Person primarily or secondarily liable upon any of
the Obligations; (i) trial by jury in any action or proceeding of any
kind or nature in connection with any of the Obligations, this
Agreement or any of the Loan Documents; and (j) substitution,
impairment, exchange or release of any collateral security for any of
the Obligations. Debtor agrees that Secured Party may exercise any or
all of its rights and/or remedies hereunder, under the Loan Documents
and under applicable law without resorting to and without regard to
any collateral security or sources of liability with respect to any of
the Obligations.
8.05 Waivers by Secured Party. Neither any failure
------------------------
nor any delay on the part of Secured Party in exercising any right,
power or remedy hereunder, under any of the Loan Documents or under
applicable law shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
8.06 Modifications. No modification or waiver of any
-------------
provision of this Agreement or any of the Loan Documents, and no
consent by Secured Party to any departure by Debtor therefrom, shall
in any event be effective unless the same shall be in writing, and
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand
upon Debtor in any case shall entitle Debtor to any other or further
notice or demand in the same, similar or other circumstances.
<PAGE>
<PAGE>
8.07 Notices. Any notice or other communication in
-------
connection with this Agreement shall be provided in the manner
specified in the Loan Agreement.
8.08 Confession of Judgment. Debtor hereby authorizes
----------------------
any clerk of court or any attorney-at-law to appear for Debtor before
any court, having jurisdiction, within the United States or elsewhere,
and, after one or more complaints filed, confess judgment against
Debtor as of any time after any of the Obligations are due (whether by
demand, stated maturity, acceleration or otherwise) for the unpaid
balance of the Obligations, including principal, interest, fees, late
charges, court costs and expenses, together with attorneys' fees equal
to fifteen percent (15%) of the amount of such Obligations, for
collection and release of all errors, and without stay of execution,
and inquisition and extension upon any levy on real estate is hereby
waived and condemnation agreed to, and the exemption of personal
property from levy and sale is also hereby expressly waived, and no
benefit of exemption shall be claimed under any exemption law now in
force or which may be hereafter adopted. The foregoing authorities
and powers to confess judgment shall not be exhausted by one or more
exercises of any of them or by any imperfect exercise of any of them,
shall not be extinguished by any judgment entered because of any of
them and may be exercised before, during or after sale, liquidation or
other disposition by Secured Party of any property directly or
indirectly securing any of the Obligations or exercise or enforcement
by Secured Party of any other right or remedy of Secured Party with
respect to the Obligations. Debtor agrees that any agreements of
Debtor contained in this Agreement or any of the Other Agreements to
pay any costs or expenses, including attorneys' fees and expenses,
paid or incurred by Secured Party shall not be merged into, or
otherwise impaired by, any such judgment by confession, but Secured
Party shall not be entitled to recover on account of such costs or
expenses any amount in excess of the greater of (a) such costs or
expenses included in any judgments by confession (without
duplication), or (b) such costs or expenses actually paid or incurred
by Secured Party.
8.09 Survival; Successors and Assigns. All covenants,
--------------------------------
agreements, representations and warranties made herein and in the Loan
Documents shall survive the execution and delivery hereof and thereof,
and shall continue in full force and effect until all Obligations have
been paid in full and there exists no commitment by Secured Party
which could give rise to any Obligations. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All
covenants,
<PAGE>
<PAGE>
agreements, representations and warranties by or on behalf of Debtor
which are contained in this Agreement and the Loan Documents shall
inure to the benefit of Secured Party, its successors and assigns.
Debtor may not assign this Agreement or any of its rights hereunder
without the prior written consent of Secured Party. Secured Party may
at any time, in its discretion, assign, transfer or pledge to any
person, or grant to any person a security interest in, the
Obligations, this Agreement, any of the Other Agreements or any of its
rights hereunder or thereunder. In addition, Secured Party may sell,
in such amounts, upon such terms and to such persons as Secured Party
may determine, participations in its interests in the Obligations
and/or under this Agreement and/or any of the Other Agreements. In
the case of each such assignment, transfer, pledge, grant or sale,
Secured Party may from time to time provide to the assignee,
transferee, pledgee, secured party or participant, any information and
documents (or copies thereof) relating to this Agreement and the Other
Agreements and related transactions, and relating to the business,
assets, operations, business prospects or financial condition of
Debtor.
8.10 Merger and Integration. This Agreement and the
----------------------
attached Schedule(s) contain the entire agreement of the parties
hereto with respect to the matters covered and the transactions
contemplated hereby, and no other agreement, statement or promise made
by any party hereto, or by any employee, officer, agent or attorney of
any party hereto, which is not contained herein, shall be valid or
binding.
8.11 Counterparts. This Agreement may be executed in
------------
any number of counterparts and by different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be
an original, but all such counterparts shall together constitute one
and the same instrument.
8.12 Headings. The headings and sub-headings
--------
contained in the titling of this Agreement are intended to be used for
convenience only and shall not be used or deemed to limit or diminish
any of the provisions hereof.
8.13 Recitals. The Recitals hereto are hereby
--------
incorporated into and made a part of this Agreement.
8.14 Loan Document. This Agreement is one of the Loan
-------------
Documents.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or
caused to be executed this Agreement under seal as of the date first
above written.
WITNESS/ATTEST: AAI CORPORATION
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI ENGINEERING SUPPORT, INC.
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI MANUFACTURING ASSEMBLY,
By: Robert W. Worthing (SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI SYSTEMS MANAGEMENT, INC.
By: Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI MEDICAL CORPORATION
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
SETI, INC.
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
<PAGE>
<PAGE>
AAI/ACL TECHNOLOGIES, INC.
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI MICROFLITE SIMULATION
INTERNATIONAL CORPORATION
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
DEBTOR
<PAGE>
<PAGE>
SIGNET BANK/MARYLAND
By:David A. Bauereis(SEAL)
------------------------- -----------------
David A. Bauereis
Vice President
SECURED PARTY
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _________, 1994,
before me, the subscriber, a Notary Public of said State, personally
appeared Paul J. Michaud, who acknowledged himself to be (1) the Vice
President, Chief Financial Officer and Treasurer of each of AAI
Corporation, AAI Engineering Support, Inc., AAI Manufacturing
Assembly, Inc., AAI Systems Management, Inc., Seti, Inc. and AAI/ACL
Technologies, Inc., (2) the Vice President and Secretary of AAI
Medical Corporation, and (3) the Vice President and Chief Financial
Officer of AAI Microflite Simulation International Corporation, and
that he, as such, being authorized so to do, executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
-------------------------
Notary Public
My Commission expires:
----------------------
<PAGE>
GUARANTY AGREEMENT
------------------
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
--------
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
-----
alia, for the extension by the Bank to the Borrower of a revolving
----
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
----------
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
<PAGE>
<PAGE>
"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
<PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
(a) Corporate Existence and Power. The Guarantor is a
-----------------------------
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;
-----------------------------------------
Contravention. The execution, delivery and performance by the
-------------
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
--------------
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
---------------------
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,
<PAGE>
<PAGE>
financial position, results of operation or prospects of the
Guarantor.
(e) Litigation. There is no action, suit or proceeding
----------
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
----------------
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
-----
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
<PAGE>
<PAGE>
(h) Conflicting Agreements and Other Matters. The
----------------------------------------
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
--------------------
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
----------
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.
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
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;
<PAGE>
<PAGE>
(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
-----------
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
<PAGE>
<PAGE>
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
-----------------
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
----------------------
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
<PAGE>
<PAGE>
appropriate proceedings and reserved against in accordance with GAAP.
(d) Maintenance of Property; Insurance.
----------------------------------
(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
------------------------------------------------
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
--------------------
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
----------------------
cause each Subsidiary to, keep proper books of record and
<PAGE>
<PAGE>
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
--------------------
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.
<PAGE>
<PAGE>
(b) Consolidations, Mergers and Sales of Assets. (1) The
-------------------------------------------
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
-----------------------------------------
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
-------------------
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
<PAGE>
<PAGE>
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,
<PAGE>
<PAGE>
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.
<PAGE>
<PAGE>
"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
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
(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.
<PAGE>
<PAGE>
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)
------------------
Title Secretary
------------
<PAGE>
<PAGE>
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:_________________
<PAGE>
EXHIBIT 11 - Computation of Earnings Per Share
Item 6(a)
Exhibit 11
<TABLE>
Computation of Earnings per Share
United Industrial Corporation and Subsidiaries
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 12,258,693 12,258,693 12,258,693 12,258,693
Net income (loss) $1,408,000 $1,725,000 $2,462,000 $(14,732,000)
Earnings (loss) per share $ .11 $ .14 $ .20 $(1.20)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements contained in the body of the accompanying Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> DEC-31-1993
<PERIOD-END> JUN-30-1994
<CASH> 2,638
<SECURITIES> 0
<RECEIVABLES> 47,547
<ALLOWANCES> 0
<INVENTORY> 50,875
<CURRENT-ASSETS> 112,168
<PP&E> 125,345
<DEPRECIATION> 80,480
<TOTAL-ASSETS> 199,013
<CURRENT-LIABILITIES> 46,856
<BONDS> 28,897
<COMMON> 14,374
0
0
<OTHER-SE> 71,726
<TOTAL-LIABILITY-AND-EQUITY> 199,013
<SALES> 92,292
<TOTAL-REVENUES> 92,292
<CGS> 68,618
<TOTAL-COSTS> 89,620
<OTHER-EXPENSES> (332)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,471
<INCOME-PRETAX> 4,013
<INCOME-TAX> 1,551
<INCOME-CONTINUING> 2,462
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,462
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
