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, 1996
[_] 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. 12,172,143
shares of common stock as of August 1, 1995.
<PAGE>
UNITED INDUSTRIAL CORPORATION
INDEX
Page #
Part I - Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - Unaudited
June 30, 1996 and December 31, 1995 1
Consolidated Condensed Statements of Operations -
Three Months and Six Months Ended June 30, 1996 and 1995 2
Consolidated Condensed Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 7
PART II - Other Information 9
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
June 30 December 31
1996 1995
---- ----
(UNAUDITED)
ASSETS
- ------
<S> <C> <C>
Current Assets
Cash & cash equivalents $ 16,657 $ 11,915
Trade receivables 27,994 32,911
Inventories
Finished goods & work-in-process 49,622 43,185
Materials & supplies 4,200 4,737
-------- --------
53,822 47,922
Deferred income taxes 6,467 6,487
Prepaid expenses & other current assets 1,628 1,761
-------- --------
Total Current Assets 106,568 100,996
Other assets 39,113 39,524
Property & equipment - less allowances
for depreciation (1996 - $89,423 & 1995 - $86,637) 41,745 42,586
-------- --------
$187,426 $183,106
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
- -------------------
Short-term borrowings $ 4,956 $ 3,000
Accounts payable 8,679 10,132
Accrued employee compensation & taxes 7,537 6,384
Customer advances 8,863 6,384
Current portion of long-term debt 6,250 6,250
Other liabilities 8,130 4,472
Reserve for contract losses 7,027 10,751
------- -------
Total Current Liabilities 51,442 47,525
Long-term liabilities (less current maturities) 16,404 18,279
Deferred income taxes 9,910 9,820
Postretirement benefits other than pensions 21,831 21,322
Shareholders' Equity
- --------------------
Common stock $1.00 par value
Authorized - 15,000,000 shares; outstanding
12,172,143 and 12,170,793 shares at
1996 and 1995(net of shares in treasury) 14,374 14,374
Additional capital 90,201 91,421
Retained earnings (deficit) 578 (2,311)
Treasury stock, at cost, 2,205,005 shares
and 2,203,355 shares at 1996 and 1995 (17,314) (17,324)
-------- --------
87,839 86,160
-------- --------
$187,426 $183,106
======== ========
</TABLE>
See accompanying notes
1
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UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in thousands except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
------------------ -----------------
(UNAUDITED)
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $ 55,265 $ 57,869 $109,766 $109,522
Operating costs & expenses
Cost of sales 42,570 45,464 83,319 84,057
Selling & administrative 10,052 9,423 20,956 20,491
Other (income) expense - net (52) 445 141 423
Interest - expense 652 601 1,215 1,189
Interest Income (333) (347) (557) (792)
-------- -------- -------- --------
52,889 55,586 105,074 105,368
-------- -------- -------- --------
Income before income taxes 2,376 2,283 4,692 4,154
Income taxes 918 959 1,803 1,690
-------- -------- -------- --------
Net income $ 1,458 $ 1,324 $ 2,889 $ 2,464
======== ======== ======== ========
Net earnings per share $ .12 $ .11 $ .24 $ .20
====== ====== ====== ======
</TABLE>
See accompanying notes
2
<PAGE>
UNITED INDUSTRIAL CORPORATION & SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
SIX MONTHS ENDED JUNE 30
------------------------
(UNAUDITED)
1996 1995
-------- ------
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
Net income $ 2,889 $2,464
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 4,055 4,186
Deferred income taxes 110 (2,863)
Increase (decrease) in contract loss provision (3,724) 2,821
Changes in operating assets and liabilities 3,469 3,328
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,799 9,936
INVESTING ACTIVITIES
- --------------------
Decrease in note receivable - 8,540
Purchase of property and equipment (2,262) (2,855)
Increase in other assets - net (535) (2,320)
-------- --------
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (2,797) 3,365
FINANCING ACTIVITIES
- --------------------
Increase in long-term liabilities - 31
Proceeds from borrowings 7,956 3,000
Payments on long-term debt & borrowings (6,000) (4,200)
Dividends (1,216) (2,555)
Proceeds from exercise of Stock options - 5
-------- -------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 740 (3,719)
-------- -------
INCREASE IN CASH AND CASH EQUIVALENTS 4,742 9,582
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 11,915 6,132
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 16,657 $ 15,714
======== ========
</TABLE>
See accompanying notes
3
<PAGE>
UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
June 30, 1996
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, 1996
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1996. 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, 1995.
NOTE B - DIVIDENDS
A quarterly dividend of $.05 per share is payable August 30, 1996.
NOTE C - LEGAL PROCEEDINGS
The Company, along with numerous other parties, has been named in five tort
actions 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. One tort claim is a certified
property and medical class action.
A subsidiary of the Company owned and operated a small facility at a site in the
State of Arizona that manufactured semi-conductors between 1959 and 1961 at
which time the subsidiary was sold by the Company. Athough this facility may
have used trichloroethylene ("TCE") in small quantities, 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 ("RI/FS"), and ultimately
to require the remediation of alleged soil and groundwater contamination at and
near a certain industrial site. Since then the State has brought in co-
defendants whose operations at the site were substantially larger than those of
the Company.
On June 20, 1995 the Company and the State of Arizona executed an agreement in
principle to settle the litigation in exchange for a full release from liability
by the State and the Arizona Department of Environmental Quality. Subsequently,
the Company and the State signed a Consent Decree and Work Plan incorporating
these terms and conditions. On May 16, 1996, the United States District Court
approved and entered the Consent Decree. The Company has provided approximately
$1,900,000 based on estimates of the total cost for the settlement. Resolution
of this matter will not have a material adverse effect on the consolidated
financial position of the Company.
On February 11, 1992 a complaint was filed against the Company and ten other
named and ten unnamed entities in the Maricopa County Superior Court of Arizona
by seven individuals seeking to represent a class. A class in excess of 10,000
was originally alleged. The plaintiffs have amended their complaints to separate
the larger property damage and medical monitoring classes into smaller
subclasses based on geographic location and alleged exposure to solvents. In the
process of
4
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amendment, the overall sizes of the respective classes have been significantly
reduced. This suit alleges that the members of the class have been exposed to
contaminated groundwater in the Phoenix/Scottsdale, Arizona area and suffer
increased risk of disease and other physical effects. They also assert property
damages under various theories; seek to have certain scientific studies
performed concerning health risks, preventative measures and long-term effects;
and seek incidental and consequential damages, punitive damages and an
injunction against actions causing further exposures. The property and medical
classes recently were certified. The Company has joined with the other
defendants and appealed the class certification issue to the Arizona Supreme
Court. The Company intends to vigorously contest these actions and believes that
the resolution of these actions will not be material to the Company.
Four additional lawsuits were filed on April 7, 1993, December 20, 1993, June
10, 1994 and July 18, 1995 in the Maricopa County Superior Court of Arizona.
These matters allege personal injury and wrongful death by multiple plaintiffs
arising from the alleged contamination in the Phoenix/Scottsdale, Arizona area.
The Company intends to aggressively defend against these claims; however, at
this time, no estimate can be made as to the amount or range of potential loss,
if any, to the Company with respect to these matters. In comparison to the other
defendants, the operations of the Company were very limited in time and size.
Since January 1993, Detroit Stoker had been named a third-party defendant in
approximately thirty-four asbestos lawsuits pending in the United States
District Court for the Northern District of Ohio. The third-party plaintiffs in
these actions were ship owners who had been sued by Great Lakes maritime workers
who sought damages in unstated amounts for alleged personal injuries and disease
as a result of exposure to asbestos while working aboard the ships. The ship
owners claimed that Detroit Stoker and numerous other suppliers furnished
products, supplies or components of the ships that contained asbestos. These
cases were consolidated in the national multi-district asbestos litigation
pending in the United States District Court, Eastern District of Pennsylvania.
In May, 1996 these cases were administratively dismissed without prejudice.
While the Company does not know whether any of these cases will be refiled in
the future, the dismissal imposes strict conditions on any plaintiff attempting
to reinstate suit.
Detroit Stoker was notified in March 1992 by the Michigan Department of Natural
Resources (MDNR) that it is a potentially responsible party in connection with
the clean-up of a former industrial landfill located in Port of Monroe,
Michigan. MDNR is treating the Port of Monroe landfill site as a contaminated
facility within the meaning of the Michigan Environmental Response Act (MERA),
MCLA Section 299.601 et seq. Under MERA, if a release or a potential release of
a discarded hazardous substance is or may be injurious to the environment or to
the public health, safety, or welfare, MDNR is empowered to undertake or compel
investigation and response activities in order to alleviate any contamination
threat. Detroit Stoker intends to aggressively defend these claims, however, at
this time, no estimate can be made as to the amount or range of potential loss,
if any, to Detroit Stoker with respect to this action.
The Company is involved in various other lawsuits 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 Company.
In May 1995, AAI Systems Management, Inc. (the "subsidiary"), an indirect
subsidiary of the Company, submitted to the U.S. Government (the "customer") a
Request for Equitable Adjustment ("REA") totaling approximately $11,800,000 in
connection with a contract relating to a helicopter simulator program. The REA
seeks monetary damages based on costs incurred by the subsidiary arising out of
or in connection with customer directed suspension of work and resulting
schedule delays, additional work directives, and other actions by the customer
in connection with the contract for which contractors are allowed recovery under
the Federal Acquisition Regulations. On July 14, 1995, the subsidiary received
the final decision of the customer rejecting the REA in its entirety. To fully
5
<PAGE>
protect the Company's interest, on October 10, 1995, a Notice of Appeal of the
final decision was filed with the Armed Services Board of Contract Appeals
seeking monetary damages plus interest. While the Company believes that the
formal claims asserted against the customer are meritorious and the Company will
vigorously pursue recovery of the monies claimed, the customer has asserted
substantive defenses to these claims. Because the proceedings are currently in
the discovery phase, it is not possible at this time to determine the ultimate
amount of recovery of these costs.
In connection with this program, the subsidiary failed to meet a particular
milestone on June 10, 1996. Consequently, on June 12, 1996 the customer issued
to the subsidiary a Show Cause Notice (the "Notice") advising the subsidiary
that the customer is considering terminating the contract for default. The
Notice asked the subsidiary to furnish any facts demonstrating that the
subsidiary's failure to meet that milestone was beyond the subsidiary's control
and without its fault or negligence. On June 27, 1996, the subsidiary responded
to the Notice and provided evidence that the delay was unavoidable and not due
to the subsidiary's negligence. The subsidiary has not received any formal
response from the customer but it has received requests for additional
information. The subsidiary has continued to make significant progress on the
program and is in the process of preparing a revised schedule for submission to
the customer in response to the customer's request.
Under a termination for default, the customer would likely attempt to recover
all monies previously paid to the subsidiary. Further, if the customer
reprocures a substantially similar system, the subsidiary could be responsible
for the excess reprocurement cost. If the customer ultimately terminates the
contract for default and the subsidiary is unsuccessful in its appeal of the
termination for default decision, the termination would likely have a material
adverse effect upon the Company.
Management is hopeful that further discussion with the customer will resolve the
issues raised in the Notice and will permit the contract to proceed to a
conclusion. In the event the contract is terminated for default, the Company
will assert substantial defenses to the termination action.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Results of Operations
Net sales decreased $2,604,000 or 4% to $55,265,000, in the second quarter of
1996 as compared to the second quarter of 1995. For the first six months of
1996, net sales of $109,766,000 were $244,000 higher than the same period in
1995. Sales decreased in both periods in all segments except the Defense segment
which experienced a slight increase in sales for the six months ending June 30,
1996. In the second quarter of 1996, lower sales resulted primarily from the
impact of percentage of completion method of accounting for increased costs on a
certain helicopter simulator program. Further, contract award delays in all
segments during both periods have adversely impacted sales. During the six month
period, improved sales related to training systems in the Defense segment
slightly more than offset the effects of the helicopter simulator program and
contract award delays.
Gross profit percentages increased approximately 1.54 and .84 percentage points
for the three and six month periods ended June 30, 1996, respectively, as
compared to the same periods in the prior year. Only the Defense segment showed
gross profit percentage improvement for these two periods. These improvements
were generally attributable to the mix of contracts in this segment. Included in
the Defense segment's costs in 1996 is a pretax charge of $900,000 related to
the reduction of the estimated net realizable value of certain non-contract
inventories. At December 31, 1995, the Company indicated that the net realizable
value of these inventories was $7,700,000. Inasmuch as the Company has not
produced a buyer for such inventory at March 31, 1996, it has reduced its
estimated net realizable value at that date to $6,800,000. The Company still
identifies potential buyers for a substantial portion of such inventory and has
based the estimate of the net realizable value on its current assessment of the
salability of this inventory. However, the Company faces significant competition
from other producers of similar products and therefore the estimated net
realizable value of this inventory may be further reduced during the year. The
gross profit margin percentage in the Energy segment is essentially unchanged
for the six month period in 1996 as compared to the same period in 1995.
However, shifts in sales volume between lower margin contract work and higher
margin aftermarket products, resulted in an increased gross profit margin
percentage in the first quarter and lower gross profit margin percentage in the
second quarter, as compared to the like periods in 1995.
Selling and administrative expenses as a percentage of net sales were
approximately 18.2% and 19.1% for the three and six month periods ended June 30,
1996, as compared to 16.3% and 18.7% for the same periods in 1995. The elements
accountable for the increase during the second quarter of 1996 were increased
marketing activities and professional fees, as well as decreased sales as
explained above.
Other (income)expense-net for the three and six month periods in 1995 included a
loss on disposition of assets in the Defense segment of $336,000.
Net income increased approximately 10% and 17% for the three and six month
periods ending June 30, 1996, respectively, due to the increase in gross profit
which was partially offset by increased selling and administrative expenses.
Liquidity and Capital Resources
Cash flows from operations were $6,799,000 for the six month period ended June
30, 1996, as compared to $9,936,000 for the same period in the prior year. The
change was principally attributable to the decrease in the reserve for contract
losses. Funds from operations were sufficient for dividends and capital
expenditures. The Company currently has no significant fixed commitments for
capital expenditures or for investments. Its capital requirements consist
primarily of its obligation to fund operations and principal and interest
payments on indebtedness. The Company expects that available cash and existing
lines of credit will be sufficient to finance operations through December 31,
7
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1996. The Company is pursuing an extension or replacement of certain lines of
credit which expire September 30, 1996.
Contingent Matters
Reference is made to Note C to the Financial Statements included herewith, which
Note is incorporated herein by reference.
8
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UNITED INDUSTRIAL CORPORATION AND SUBSIDIARIES
PART II - Other Information
ITEM 1 - Legal Proceedings
Reference is made to Note C to the financial statements included
in Part I hereof, which Note is incorporated herein by
reference, for information concerning lawsuits against the
Company and certain of its subsidiaries relating to
environmental and other matters.
ITEM 4 - Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders of the Registrant was
held on May 14, 1996.
(b) Richard R. Erkeneff and E. Donald Shapiro were elected
directors at the meeting, for terms ending in 1999. The
incumbent directors whose terms of office continued after
the meeting are Edward C. Aldridge, Jr., Howard M. Bloch,
Harold S. Gelb and Susan Fein Zawel.
(c) Voting for the election of directors of the Registrant:
WITHHELD (including
FOR broker non-votes)
--- -----------------
Richard R. Erkeneff 9,545,604 223,836
E. Donald Shapiro 9,539,050 230,391
Other Matters:
9,664,309 shares were voted in favor of the proposal to
ratify the appointment of Ernst & Young LLP as independent
auditors of the Registrant for 1996 with 62,387 shares
voted against, 42,742 abstentions and no broker non-votes.
2,637,071 shares were voted in favor of the stockholder
proposal concerning elimination of a classified Board of
Directors with 4,473,686 voted against, 333,293 abstentions
and 2,325,391 broker non-votes. 6,332,276 shares were
voted in favor of the proposed amendments to the Restated
Certificate of Incorporation and Amended and Restated
Bylaws of the Corporation with 1,128,757 voted against,
172,729 abstentions and 2,135,679 broker non-votes. Since
at least 80% of the outstanding shares have not voted for
the amendments, the amendments are not approved. 8,079,776
shares were voted in favor of the proposed amendments to
the 1994 Stock Option Plan with 1,300,013 shares voted
against, 198,936 abstentions and 190,716 broker non-votes.
Reference is made to the Registrant's Proxy Statement dated
March 29, 1996 for its 1996 Annual Meeting for additional
information concerning the matters voted on at the meeting.
9
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ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
10(t)- Credit Agreement, dated as of November 30, 1995, among NBD
Bank ("NBD"), the Company and Detroit Stoker Company ("Detroit
Stoker"), as extended by the Letter Agreement, dated as of July 18,
1996, among NBD, the Company and Detroit Stoker, together with
Guaranty Agreements, each dated as of November 30, 1995, by each of
the Company, Detroit Stoker and NEO Products Corporation in favor of
NBD.
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, 1996.
10
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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 13, 1996 By: /s/ James H. Perry
----------------------------
James H. Perry
Treasurer and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10(t)- Credit Agreement, dated as of November 30, 1995, among NBD Bank
("NBD"), the Company and Detroit Stoker Company ("Detroit
Stoker"), as extended by the Letter Agreement, dated as of July
18, 1996, among NBD, the Company and Detroit Stoker, together with
Guaranty Agreements, each dated as of November 30, 1995, by each
of the Company, Detroit Stoker and NEO Products Corporation in
favor of NBD.
11 - Computation of Earnings per share
27 - Financial Data Schedule
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
November 30, 1995
United Industrial Corporation
Detroit Stoker Company
18 East 48th Street
New York, NY 10017
Dear Ladies and Gentlemen:
NBD Bank, a Michigan banking corporation, (the "Bank"), is
pleased to inform you that it has approved a line of credit to
United Industrial Corporation, a Delaware corporation, ("United
Industrial"), and Detroit Stoker Company, a Michigan
corporation, ("Detroit Stoker"), in a principal amount not to
exceed NINE MILLION AND 00/100 DOLLARS ($9,000,000.00) in the
aggregate at any one time outstanding (the "Credit Facility"),
under the terms and conditions set forth in this agreement.
United Industrial and Detroit Stoker are sometimes referred to
individually as a "Borrower" and collectively as the
"Borrowers". Unless earlier withdrawn, the Credit Facility
shall expire on June 30, 1996 (the "Expiration Date"). The
Credit Facility is held available contingent upon the Bank's
continued satisfaction with each Borrower's managerial and
financial status. The Bank will extend loans to and issue
Letters of Credit for the account of either or both of the
Borrowers under the Credit Facility from the effective date of
this agreement until the earlier of the Expiration Date or the
Bank's withdrawal of the Credit Facility. Within the limits of
the Credit Facility and subject to the terms and conditions of
this agreement, prior to the Expiration Date, the Borrowers may
borrow, pay down and reborrow. Advances to Detroit Stoker under
the Credit Facility (including Letters of Credit) shall not
exceed the aggregate principal amount of ONE MILLION AND 00/100
DOLLARS (1,000,000.00).
1. Master Promissory Note. All borrowings under the
Credit Facility shall be evidenced by a Master Promissory Note
in the form attached as Exhibit A, executed concurrently with
this letter agreement (the "Master Note"). The Bank shall, in
the ordinary course of its business, record the date, amount,
interest rate and maturity of each borrowing, the amount of
each payment and other information. Such records shall, in the
absence of manifest error, be conclusive as to the outstanding
principal balance of and interest rate or rates applicable to
the Master Note.
2. Letters of Credit. The Credit Facility shall
include the issuance of standby letters of credit not exceeding
FOUR MILLION AND 00/100 DOLLARS ($4,000,000.00) in the
aggregate at any one time outstanding, THREE MILLION NINE
HUNDRED THOUSAND AND 00/100 DOLLARS ($3,900,000.00) of which
must expire not later than
<PAGE>
June 30, 1997 and ONE HUNDRED THOUSAND AND 00/100 DOLLARS
($100,000.00) of which must expire not later than March 31,
1999. The foregoing standby letters of credit are collectively
referred to in this agreement as the "Letters of Credit." The
sum of (a) the aggregate outstanding principal amount of all
loans under the Credit Facility, plus (b) the aggregate
outstanding undrawn amount of the Letters of Credit, plus (c)
the aggregate amount disbursed on drafts drawn under Letters of
Credit for which the Bank has not yet been reimbursed shall not
exceed NINE MILLION AND 00/100 DOLLARS ($9,000,000.00) at any
one time outstanding. The sum of (a) the aggregate outstanding
principal amount of all loans to Detroit Stoker under the
Credit Facility, plus (b) the aggregate outstanding undrawn
amount of Letters of Credit for the account of Detroit Stoker,
plus (c) the aggregate amount disbursed on drafts drawn under
Letters of Credit for the account of Detroit Stoker for which
the Bank has not yet been reimbursed shall not exceed ONE
MILLION AND 00/100 DOLLARS ($1,000,000.00) at any one time
outstanding. Each request for issuance of a Letter of Credit
shall be made by the Borrowers' execution and delivery to the
Bank of the Bank's standard form of Letter of Credit
Application, Reimbursement and Security Agreement (or such
other form as the Bank may reasonably require), appropriately
completed, not less than two business days prior to the
proposed date of issuance. From and after the occurrence of an
event of default described in Section 14 or the Expiration
Date, the Borrower shall maintain a special collateral account
(the "Letter of Credit Collateral Account") at the Bank, in the
name of the Borrower but under the sole dominion and control of
the Bank in which the Borrower shall have no interest other
than as set forth in Section 15 below. The Borrower grants the
Bank a security interest in the Letter of Credit Collateral
Account and any funds that may from time to time be on deposit
in that account to secure the prompt payment and performance of
all amounts owing from the Borrower to the Bank under this
agreement.
3. Interest Rates. Each loan under the Master Note
shall bear interest at the Bank's option at:
(a) a rate established by the Bank in its sole
and absolute discretion (a "Negotiated
Rate"); or
(b) the rate announced from time to time by the
Bank as its "prime rate" (the "Prime Rate");
The interest rate options that the Bank makes available to the
Borrowers from time to time will not necessarily be the most
favorable of the options listed above. The Bank, in its sole
discretion, may decline to make any of those options available
to the Borrowers at any given time. Negotiated, Rates may be
above or below the Prime Rate. Any rate under this agreement is
not necessarily the lowest rate charged by the Bank to any of
its customers.
<PAGE>
4. Maturities
(a) Maturities of Negotiated Rate Loans. Each loan
bearing interest at a Negotiated Rate shall be repayable at a
stated maturity (not to exceed 90 days) established by the
Bank at the time of the advance.
(b) Maturities of Prime Rate Loans. Each loan bearing
interest at the Prime Rate shall be payable on demand and the
rate shall be subject to change daily.
5. Interest Payments. Interest on each loan under
this agreement shall be due and payable at the stated
maturity, if any, or if the loan is payable on demand, on the
last day of each quarter commencing on December 31, 1995.
6. Fees and Expenses.
(a) Commitment Fee. The Borrowers shall pay the Bank
a commitment fee on the daily average of the unused portion of
the Credit Facility, from the effective date of this agreement
until the Expiration Date or withdrawal or cancellation of the
Credit Facility at the rate of one quarter of one percent
(1/4%) per annum. That fee shall be payable quarterly in
arrears, commencing December 31, 1995.
(b) Letter of Credit Fees. The Borrowers shall pay
the Bank at the time of issuance of each Letter of Credit a
commission with respect to that Letter of Credit equal to one
percent per annum of the maximum amount available to be drawn
under the Letter of Credit if the Letter of Credit has any
expiry of one year or less and one and one half percent per
annum if the Letter of Credit has an expiry in excess of one
year.
(c) Out-of-Pocket Expenses. In addition, the
Borrowers shall reimburse the Bank for its out-of-pocket
expenses and reasonable attorney's fees (including the fees of
in-house counsel) allocated to the Credit Facility.
7. Loan Request. Upon request given by telephone,
tested wire, or letter, by a person designated to the Bank as
the Borrowers' duly authorized representative, the Bank will
advance and credit to the account of one or both of the
Borrowers at the Bank, or transfer to another bank designated
by the Borrowers, such sums of money as may mutually be agreed
upon at the time of the request.
The Borrowers and the Bank each shall, upon the
request of the other, forward to the other a written
confirmation of any borrowing under this agreement (which
request may be made by facsimile), including confirmation of
the date, maturity, interest rate and amount of the loan. Any
loans with a maturity of 7 days or longer shall in all cases
require the Borrowers' written confirmation.
The Borrowers shall provide the Bank with a list of
the persons designated by them as their duly authorized
representatives. The Bank may act upon the written or oral
instructions of any person designated by the Borrowers as
their authorized representative.
<PAGE>
Each disbursement and repayment of a loan bearing
interest at a Negotiated Rate shall be in the minimum amount
of $1,000,000.00. Each disbursement and repayment of a loan
under the Credit Facility shall be made in immediately
available funds at the principal office of the Bank in
Detroit, Michigan.
8. Conditions Precedent. The Bank shall not be
obligated to make the initial extension of credit under the
Credit Facility unless prior to or simultaneously with that
extension of credit the Bank shall have received the following
documents in form and substance satisfactory to it and its
counsel (a) certified copies of such corporate documents of
each Borrower as the Bank shall reasonably request, including
a certificate or articles of incorporation, bylaws, a
certificate of good standing, and documents evidencing
necessary corporate action with respect to this agreement and
the Master Note, (b) certified copies of such corporate
documents of the Guarantor (as defined in Section 9 below) as
the Bank shall reasonably request, including articles of
incorporation, bylaws, a certificate of good standing, and
documents evidencing necessary corporate action with respect
to the Guaranty required by Section 9 below, (c) this
agreement, duly executed by the parties, (d) the Master Note,
duly executed by the Borrowers, (e) the Guaranty required by
Section 9 below duly executed by the Guarantor (f) "cross
guaranties" duly executed by each Borrower whereby each
Borrower guaranties payment of the other's obligations under
the Credit Facility (g) the satisfactory opinion of legal
counsel for the Borrowers and the Guarantor as to such matters
as the Bank may require.
The parties acknowledge that the legal opinion
required above has not yet been delivered. If that opinion is
not delivered to the Bank by August 1, 1996, the Bank may
terminate the Credit Facility, declare all amounts owing under
the Credit Facility to be due and payable immediately and
exercise all remedies available to the Bank under this
agreement.
The Bank shall not be obligated to make any extension
of credit under the Credit Facility unless (a) the
representations contained in Section 10 shall be true on and
as of the date of the advance, with the same effect as if they
were made on that date; and (b) no default shall have occurred
under this agreement or the Master Note and be continuing or
will exist upon the making of the advance.
9. Guaranty. Payment of all amounts owing from the
Borrowers to the Bank under the Credit Facility shall be
guaranteed by Neo Products Company (the "Guarantor") by
execution of the Bank's form of guaranty agreement.
10. Representations. Each Borrower represents that it
is a corporation duly organized, existing and in good standing
under the laws of its state of incorporation and that the
execution and delivery of this agreement and the Master Note
and the performance of the obligations they impose are within
its corporate powers, have been duly authorized by all
necessary action of its board of directors, do not contravene
the terms of its articles of incorporation or bylaws, do not
violate any law and do not conflict with any agreement by
which it is bound, do not require the consent or approval of
any governmental authority or any third party and that this
agreement and the Master Note are valid and binding
agreements, enforceable according to their terms. The
<PAGE>
Guarantor represents that it is a corporation duly organized,
existing and in good standing under the laws of its state of
incorporation and that the execution and delivery of the
Guaranty required by Section 9 above and the performance of
the obligations it imposes are within its corporate powers,
has been duly authorized by all necessary action of its board
of directors, does not contravene the terms of its articles of
incorporation or bylaws, does not violate any law and do not
conflict with any agreement by which it is bound, does not
require the consent or approval of any governmental authority
or any third party and that Guaranty is a valid and binding
agreement, enforceable according to its terms. Each Borrower
and the Guarantor further represents that all balance sheets,
income statements, and other financial statements furnished to
the Bank are accurate and fairly reflect the financial
condition of the organizations and persons to which they apply
on their effective dates, including contingent liabilities of
every type, which financial condition has not changed
materially and adversely since those dates.
11. Affirmative Covenants. So long as any debt
remains outstanding under the Credit Facility, each Borrower
shall:
(a) Insurance. Maintain insurance with financially
sound and reputable insurers covering its properties and
business against those casualties and contingencies and in the
types and amounts as shall be in accordance with sound
business and industry practices.
(b) Existence. Maintain its existence and business
operations as presently in effect in accordance with all
applicable laws and regulations, pay its debts and obligations
when due under normal terms, and pay on or before their due
date, all taxes, assessments, fees and other governmental
monetary obligations, except as they may be contested in good
faith if they have been properly reflected on its books and,
at the Bank's request, adequate funds or security has been
pledged to insure payment.
(c) Financial Statements. Furnish to the Bank the
following financial statements:
(1) Within 45 days after each of United
Industrial's fiscal quarters, its consolidated and
consolidating balance sheet as of the end of that
quarter and its consolidated and consolidating
statements of income, cash flows and retained
earnings from the beginning of that fiscal year to
the end of that quarter, certified as correct,
subject to year end adjustments, by one of its
authorized agents.
(2) Within 45 days after each of Detroit
Stoker's fiscal quarters, its balance sheet as of the
end of that quarter and its statements of income,
cash flows and retained earnings from the beginning
of that fiscal year to the end of that quarter,
certified as correct, subject to year end
adjustments, by one of its authorized agents.
(3) Within 90 days after and as of the end
of each of United Industrial's fiscal years, its
detailed audit including its balance sheet and
statements of income, cash flows and retained
earnings, certified by an independent certified
public accountant of recognized standing.
(4) Within 90 days after and as of the end
of each of United Industrial's fiscal years, the
consolidating financial statement of the United
Industrial and its subsidiaries, including a balance
sheet and statements of income, cash flows and
retained earnings, certified by one of United
Industrial's authorized agents.
(5) Within 90 days after and as of the end
of each of United Industrial's fiscal years, its
annual report.
<PAGE>
12. Negative Pledge. So long as any debt remains
outstanding under the Credit Facility, neither Borrower shall
create or permit to exist any lien on any of its property,
real or personal, except: existing liens known to the Bank;
liens to the Bank; liens incurred in the ordinary course of
business securing current non delinquent liabilities for
taxes, worker's compensation, unemployment insurance, social
security and pension liabilities; liens for taxes being
contested in good faith; and purchase-money liens on equipment
hereafter acquired so long as the amount of the debt secured
by all such liens does not exceed TEN MILLION AND 00/100
DOLLARS ($10,000,000.00) in the aggregate at any time
outstanding.
13. Covenants Incorporated By Reference.
The covenants set forth in Section 5 of the United
Industrial's Guaranty Agreement dated July 15, 1992 in favor of
Principal Mutual Life Insurance Company, The Travelers
Insurance Company and The Travelers Indemnity Company of Rhode
Island and their respective successors and assigns as amended
from time to time are incorporated by reference as if fully set
forth in this agreement. Those covenants shall remain in full
force and effect notwithstanding the termination of that
Guaranty Agreement.
14. Default. If any of the following events occurs:
(a) Either Borrower or the Guarantor (1) fails to pay
when due any amount payable under the Credit Facility or (2)
fails to pay when due any amount payable under any agreement or
instrument evidencing debt to any creditor except to the extent
that such amount is contested in good faith and for which
reserves acceptable to the Bank have been made;
(b) Either Borrower or the Guarantor (1) fails to
observe or perform any other term of this agreement or the
Master Note; (2) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (3) makes
any materially incorrect or misleading representation in any
financial
statement or other information delivered to the Bank; or (4)
defaults under the terms of any agreement or instrument
relating to any debt for borrowed money (other than borrowings
under the Credit Facility) such that the creditor declares the
debt due before its maturity;
(c) AAI Corporation ("AAI") defaults under the terms
of the Credit Agreement dated October 13, 1994 among AIA, the
Lenders named in the agreement and First Fidelity Bank,
National Association, as Agent and Issuing Bank, or any renewal
or replacement of or successor to that agreement.
<PAGE>
(d) Any guaranty of the amounts owing under the
Credit Facility becomes unenforceable in whole or in part, or
the Guarantor fails to promptly perform under its guaranty;
(e) A "reportable event" (as defined in the Employee
Retirement Income Security Act of 1974 as amended) occurs that
would permit the Pension Benefit Guaranty Corporation to
terminate any employee benefit plan of either Borrower or any
of their affiliates;
(f) Either Borrower or the Guarantor becomes
insolvent or unable to pay its debts as they become due;
(g) Either Borrower or the Guarantor (1) makes an
assignment for the benefit of creditors; (2) consents to the
appointment of a custodian, receiver or trustee for it or for a
substantial part of its assets; or (3) commences any proceeding
under any bankruptcy, reorganization, liquidation or similar
laws of any jurisdiction;
(h) A custodian, receiver or trustee is appointed for
either Borrower or the Guarantor or for a substantial part of
its assets without its consent and is not removed within 60
days after such appointment;
(i) Proceedings are commenced against either Borrower
or the Guarantor under any bankruptcy, reorganization,
liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for 60 days after commencement;
or the Borrower or Guarantor consents to the commencement of
such proceedings;
(j) The aggregate amount of all outstanding and
unpaid judgments against United Industrial and its subsidiaries
plus the aggregate amount of all attachments, levies, and
garnishments issued against their property exceeds 10% of
United Industrial's consolidated tangible net worth at any one
time;
(k) Either Borrower or the Guarantor, without the
Bank's written consent, (1) is dissolved, (2) merges or
consolidates with any third party, (3) leases, sells or
otherwise conveys a material part of its assets or business
outside the ordinary course of business, (4) leases, purchases,
or otherwise acquires a material part of the assets of any
other corporation or business entity, except in the ordinary
course of business, or (5) agrees to do any of the foregoing
(notwithstanding the foregoing, any subsidiary of United
Industrial may merge or consolidate with any other subsidiary
of United Industrial, or with United Industrial, so long as
United Industrial is the survivor);
(l) There is a substantial change in the existing or
prospective financial condition of either Borrower or the
Guarantor which the Bank in good faith determines to be
materially adverse; or
(m) The Bank in good faith shall deem itself
insecure; then, whether or not the Bank has made demand, the
Credit Facility shall terminate and all amounts owing under it
shall become due immediately, without notice, at the Bank's
option.
<PAGE>
15. Remedies. If amounts owing under the Credit
Facility are not paid at maturity, whether by demand,
acceleration or otherwise, the Bank shall have all of the
rights and remedies provided by any law or agreement. The
Borrowers are liable to the Bank for all reasonable costs and
expenses of every kind incurred in the making and collection of
the Credit Facility, including without limitation, reasonable
attorneys' fees and court costs. These costs and expenses shall
include, without limitation, any costs and expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding. In addition, upon the occurrence and during
the continuance of an event of default under this agreement and
upon the occurrence of the Expiration Date, so long as any
Letter of Credit has not been fully drawn and has not been
canceled or expired by its terms, upon the Bank's demand the
Borrower shall deposit in the Letter of Credit Collateral
Account cash in an amount equal to the aggregate undrawn face
amount of all outstanding Letters of Credit and all fees and
other amounts due or which may become due with respect to the
Letters of Credit. Funds remaining in the Letter of Credit
Collateral Account following the payment in full of all amounts
owing to the Bank under this agreement shall be promptly paid
over to the Borrower unless the Bank is otherwise directed by a
court of competent jurisdiction.
16. Waivers. No delay on the part of the Bank in the
exercise of any right or remedy shall operate as a waiver. No
single or partial exercise by the Bank of any right or remedy
shall preclude any other future exercise of that right or
remedy or the exercise of any other right or remedy. No waiver
or indulgence by the Bank of any default shall be effective
unless it is in writing and signed by the Bank, nor shall a
waiver on one occasion be construed as a bar to or waiver of
that right on any future occasion.
17. Entire Agreement/Severability. This agreement and
the Master Note embody the entire agreement and understanding
between the Borrowers and the Bank and supersede all prior
agreements and understandings relating to their subject matter.
If any one or more of the obligations of the Borrowers under
this agreement or the Master Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining obligations of the Borrowers
shall not in any way be affected or impaired, and such
validity, illegality or unenforceability in one jurisdiction
shall not affect the validity, legality or enforceability of
the obligations of the Borrowers under this agreement or the
Master Note in any other jurisdiction.
18. Miscellaneous. This agreement and the Master Note
are governed by Michigan law. This agreement and the Master
Note are binding on the Borrowers and their respective
successors, and shall inure to the benefit of the Bank, its
successors and assigns. Section headings are for convenience of
reference only and shall not affect the interpretation of this
agreement or the Master Note.
<PAGE>
19. WAIVER OF JURY TRIAL: The Bank and the Borrowers,
after consulting or having had the opportunity to consult with
counsel, knowingly, voluntarily and intentionally waive any
right any of them may have to a trial by jury in any litigation
based upon or arising out of this agreement, the Master Note or
any related instrument or agreement or any of the transactions
contemplated by this agreement, or any course of conduct,
dealing, statements (whether oral or written), or actions of
any of them. Neither the Bank nor the Borrowers shall seek to
consolidate, by counterclaim or otherwise, any action in which
a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Borrowers except by a
written instrument executed by each of them.
NBD BANK ADDRESS FOR NOTICES:
By: _______________________ 611 Woodward Avenue
Anna R. Hoffman Detroit, Michigan 48226
Its: Vice President Fax No. ___________________
Accepted and agreed to on _________________, 1996 but effective
as of the date first written above.
UNITED INDUSTRIAL CORPORATION ADDRESS FOR NOTICES:
By: ______________________ ___________________________
Its: ______________________ Attn: _____________________
Fax No. ___________________
DETROIT STOKER COMPANY ADDRESS FOR NOTICES:
By: _____________________ ___________________________
Its: _____________________ Attn: ____________________
Fax No. ___________________
Subsidiary of First Chicago NBD Corporation
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
<PAGE>
EXHIBIT A
MASTER PROMISSORY NOTE
$9,000,000.00 Detroit, Michigan
November 30, 1995
For value received, on demand or at such other maturity or maturities
as are set forth in the Bank's records, United Industrial Corporation, a
Delaware corporation, and Detroit Stoker Company, a Michigan corporation, (each,
a "Borrower", and together, the "Borrowers") promise to pay to the order of NBD
Bank, a Michigan banking corporation (the "Bank"), at the Bank's principal
office in the State of Michigan, in lawful money of the United States of America
and in immediately available funds, the principal sum of NINE MILLION AND 00/100
DOLLARS ($9,000,000.00), or such lesser amount as is indicated on the Bank's
records, together with interest computed on the balance from time to time unpaid
on the basis of the actual number of days elapsed in a year of 360 days at the
rate(s) per annum determined from time to time pursuant to the "Letter
Agreement," as defined below, and reflected on the Bank's records, which
interest shall be payable in accordance with the terms set forth in the Letter
Agreement, and to pay interest on overdue principal from the date of demand or
default until paid at the rate which is three percent (3%) per annum in excess
of the rate announced from time to time by the Bank as its prime rate.
In no event shall the interest rate exceed the maximum rate allowed by
law. Any interest which would for any reason be deemed unlawful under applicable
law shall be applied to principal.
Waiver: The Borrowers and each endorser of this note and any other
party liable for the debt evidenced by this note severally waives demand,
presentment, notice of dishonor and protest of this note, and consents to any
extension or postponement of time of its payment without limit as to number or
period, to any substitution, exchange or release of all or any part of any
collateral securing this note, to the addition of any party, and to the release,
discharge, or suspension of any rights and remedies against any person who may
be liable for the payment of this note. No delay on the part of the holder in
the exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the holder of any right or remedy shall preclude any future
exercise of that right or remedy or the exercise of any other right or remedy.
No waiver or indulgence by the holder of any default shall be effective unless
it is in writing and signed by the holder, nor shall a waiver on one occasion be
construed as a bar to or waiver of any right on any future occasion.
This note evidences a debt under the terms of a certain Letter
Agreement between the Bank and the Borrowers dated November 30, 1995, and any
amendments, (the "Letter Agreement"), which is incorporated by reference for
additional terms and conditions, including default and acceleration provisions.
WAIVER OF JURY TRIAL: The Bank and the Borrowers, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right any of them may have to a trial by jury in any
litigation based upon or arising out of this note, or any related instrument or
agreement, or any of the transactions contemplated by this note, or any course
of conduct, dealing, statements (whether oral or written), or actions of any of
them. Neither the Bank nor the Borrowers shall seek to consolidate, by
counterclaim or otherwise, any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived.
These provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Borrowers except by a written instrument
executed by all of them.
Address:
18 East 48th Street UNITED INDUSTRIAL
New York, NY 10017 CORPORATION
By:_________________________
Its:_________________________
Address: DETROIT STOKER COMPANY
By:__________________________
Its:___________________________
<PAGE>
NBD Bank
611 Woodward Avenue
Detroit, Michigan 48226
July 18, 1996
Mr. James H. Perry
Chief Financial Officer
United Industrial Corporation
York Road & Industry Lane
Cockeysville, Maryland 21030
Dear Jim:
We are pleased to inform you that NBD Bank has renewed the Line of Credit
Agreement executed by NBD Bank, United Industrial Corporation and Detroit Stoker
Company on November 30, 1995 (the "Line of Credit").
The expiration date set forth in the Line of Credit is changed to September 30,
1996. Except as modified by this letter, all of the terms and conditions of the
Line of Credit remain in effect. Please sign the enclosed copy of this letter
and return it to my attention.
Very truly yours,
Anna R. Hoffman
Accepted and Agreed to on July 17, 1996.
UNITED INDUSTRIAL CORPORATION
By James Perry
Its:Treasurer and Chief Financial Officer
DETROIT STOKER COMPANY
By James Ballantine
Its: President
<PAGE>
CONTINUING GUARANTY
GUARANTY: To induce NBD Bank (the "Bank"), of 611 Woodward Avenue, Detroit,
Michigan 48226-3497 at its option, to make loans, extend or continue credit or
some other benefit, including letters of credit and foreign exchange contracts,
present or future, direct and indirect, and whether several, joint or joint and
several (referred to collectively as "Liabilities"), to United Industrial
Corporation, a Michigan corporation and its successors (the "Borrower"), and
because the undersigned (the "Guarantor") has determined that executing this
Guaranty is in its interest and to its financial benefit, the Guarantor
absolutely and unconditionally guaranties to the Bank, as primary obligor and
not merely as surety, that the Liabilities will be paid when due, whether by
acceleration or otherwise. The Guarantor will not only pay the Liabilities, but
will also reimburse the Bank for accrued and unpaid interest, and any expenses,
including reasonable attorneys' fees, that the Bank may pay in collecting from
the Borrower or the Guarantor, and for liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is
UNLIMITED. Unless otherwise specified below, the Guarantor's obligation shall be
payable in U.S. Dollars.
CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives written notice
of termination from the Guarantor. That notice shall be effective at the opening
of the Bank for business on the day after receipt of the notice. If terminated,
the Guarantor will continue to be liable to the Bank for any Liabilities
created, assumed or committed to at the time the termination becomes effective,
and all subsequent renewals, extensions, modifications and amendments of the
Liabilities.
SECURITY: As security for the Guaranty, the Guarantor pledges and
grants to the Bank a continuing security interest in the following described
property and all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"):
1. All securities and other property of the Guarantor in the custody,
possession or control of the Bank (other than property held by the Bank solely
in a fiduciary capacity);
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability, direct or indirect, of the
Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
The Bank shall have the right at any time to apply its own debt or liability to
the Guarantor in whole or partial payment of this Guaranty or other present or
future liabilities, direct or indirect, without any requirement for mutual
maturity.
<PAGE>
If the Guarantor fails to pay any amount owing under this Guaranty, the
Bank shall have all of the rights and remedies provided by law or under any
other agreement to liquidate or foreclose on and sell the Collateral, including
but not limited to the rights and remedies of a secured party under the Uniform
Commercial Code. These rights and remedies shall be cumulative and not
exclusive. If the Guarantor is entitled to notice, that requirement will be met
if the Bank sends notice at least seven (7) days prior to the date of sale,
disposition or other event which requires notice. The proceeds of any sale shall
be applied first to costs, then toward payment of the amount owing under this
Guaranty. The Bank is authorized to cause all or any part of the Collateral to
be transferred to or registered in its name or in the name of any other person,
firm or corporation, with or without designation of the capacity of such
nominee.
For purposes of the following paragraphs, "any collateral" shall
include the Guarantor's Collateral and any other collateral securing
the Liabilities.
ACTION REGARDING BORROWER: If any monies become available that the Bank
can apply to the Liabilities, the Bank may apply them in any manner it chooses,
including but not limited to applying them against liabilities which are not
covered by this Guaranty. The Bank can take any action against the Borrower, any
collateral, or any other person liable for any of the Liabilities. The Bank can
release the Borrower or anyone else from the Liabilities, either in whole or in
part, or release any collateral, and need not perfect a security interest in any
collateral. The Bank does not have to exercise any rights that it has against
the Borrower or anyone else, or make any effort to realize on any collateral or
right of set-off. If the Borrower requests more credit or any other benefit, the
Bank may grant it and the Bank may grant renewals, extensions, modifications and
amendments of the Liabilities and otherwise deal with the Borrower or any other
person as the Bank sees fit and as if this Guaranty were not in effect. The
Guarantor's obligations under this Guaranty shall not be released or affected by
(a) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of the Borrower, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings affecting
the Borrower or any of its assets, or (b) any change in the composition or
structure of the Borrower or the Guarantor, including a merger or consolidation
with any other person or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank can insist that the Guarantor pay immediately,
and the Bank is not required to attempt to collect first from the Borrower, any
collateral, or any other person liable for the Liabilities. The obligation of
the Guarantor shall be unconditional and absolute, regardless of the
unenforceability of the Liabilities, or the existence of any defense, setoff or
counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their
obligations under this Guaranty shall be joint and several. In addition, each
Guarantor shall be jointly and severally liable with any other guarantor of the
Liabilities. If the Bank elects to enforce its rights against less than all
guarantors of the Liabilities, that election shall not release Guarantor from
its obligations under this Guaranty. The compromise or release of any of the
obligations of any of the other guarantors or the Borrower shall not serve to
waive, alter or release the Guarantor's obligations. This Guaranty is not
conditioned on anyone else executing this or any other guaranty.
<PAGE>
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights
of subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Liabilities, or any collateral, until the
Liabilities are fully paid, even if all Liabilities are not covered by this
Guaranty. The Guarantor further agrees that if any payments to the Bank on the
Liabilities are in whole or in part invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act or code, state or federal law, common law
or equitable doctrine, this Guaranty and the Bank's interest in any collateral
remain in full force and effect (or are reinstated as the case may be) until
payment in full of those amounts. That payment is due on demand.
WAIVERS: The Guarantor waives any right it may have to receive notice
of the following matters before the Bank enforces any of its rights: (a) the
Bank's acceptance of this Guaranty, (b) any credit that the Bank extends to the
Borrower, (c) the Borrower's default, (d) any demand, (e) any action that the
Bank takes regarding the Borrower, anyone else, any collateral, or any
Liability, which it might be entitled to by law or under any other agreement.
Any waiver shall affect only the specific terms and time period stated in the
waiver. The Bank may waive or delay enforcing any of its rights without losing
them. No modification or waiver of this Guaranty shall be effective unless it is
in writing and signed by the party against whom it is being enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the obligations
it imposes do not violate any law, conflict with any agreement by which it is
bound, or require the consent or approval of any governmental authority or any
third party; (b) that this Guaranty is a valid and binding agreement,
enforceable according to its terms; and (c) that all balance sheets, profit and
loss statements, and other financial statements furnished to the Bank are
accurate and fairly reflect the financial condition of the organizations and
persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates. Each Guarantor, other than a natural person,
further represents: (a) that it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) that the execution and
delivery of this Guaranty and the performance of the obligations it imposes (i)
are within its powers and have been duly authorized by all necessary action of
its governing body; and (ii) do not contravene the terms of its articles of
incorporation or organization, its by-laws, or any partnership, operating or
other agreement governing its affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or facsimile number set forth
under its name by any of the following means: (a) hand delivery, (b) registered
or certified mail, postage prepaid, with return receipt requested, (c) first
class or express mail, postage prepaid, (d) Federal Express, Purolator Courier
or like overnight courier service or (e) facsimile, telex or other wire
transmission with request for assurance of receipt in a manner typical with
respect to communications of that type. Notice made in accordance with this
section shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by first class,
registered or certified mail, or on the next business day after mailing or
deposit with an overnight courier service if delivered by express mail or
overnight courier. Notwithstanding the foregoing, notice of termination of this
Guaranty shall be deemed received only upon the receipt of actual written notice
by the Bank in accordance with the paragraph above labeled "Continued Reliance."
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by
Michigan law. The Guarantor agrees that any legal action or proceeding against
it with respect to any of its obligations under this Guaranty may be brought in
any court of the State of Michigan or of the United States of America for the
Eastern or Western District of Michigan, as the Bank in its sole discretion may
elect. By the execution and delivery of this Guaranty, the Guarantor submits to
and accepts, with regard to any such action or proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts. The Guarantor waives any claim that the State of Michigan is not a
convenient forum or the proper venue for any suit, action or proceeding.
<PAGE>
MISCELLANEOUS: The Guarantor's liability under this Guaranty is
independent of its liability under any other guaranty previously or subsequently
executed by the Guarantor or one of them, singularly or together with others, as
to all or any part of the Liabilities, and may be enforced for the full amount
of this Guaranty regardless of the Guarantor's liability under any other
guaranty. This Guaranty is binding on the Guarantor's heirs, successors and
assigns, and will operate to the benefit of the Bank and its successors and
assigns. The use of headings shall not limit the provisions of this Guaranty.
All discussions and documents arising between this Guaranty and the last
guaranty signed by the Guarantor as to the Borrower are merged into this
Guaranty.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Guaranty or any related instrument
or agreement, or any of the transactions contemplated by this Guaranty, or any
course of conduct, dealing, statements (whether oral or written), or actions of
either of them. Neither the Bank nor the Guarantor shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived with
any other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Guarantor except by a written instrument
executed by both of them.
Dated: November 30, 1995
ADDRESS: GUARANTOR:
_____________________________ NEO PRODUCTS CORPORATION
_____________________________ By: __________________________
Its: _________________________
<PAGE>
CONTINUING GUARANTY
GUARANTY: To induce NBD Bank (the "Bank"), of 611 Woodward Avenue, Detroit,
Michigan 48226-3497 at its option, to make loans, extend or continue credit or
some other benefit, including letters of credit and foreign exchange contracts,
present or future, direct and indirect, and whether several, joint or joint and
several (referred to collectively as "Liabilities"), to Detroit Stoker Company,
a Michigan corporation and its successors (the "Borrower"), and because the
undersigned (the "Guarantor") has determined that executing this Guaranty is in
its interest and to its financial benefit, the Guarantor absolutely and
unconditionally guaranties to the Bank, as primary obligor and not merely as
surety, that the Liabilities will be paid when due, whether by acceleration or
otherwise. The Guarantor will not only pay the Liabilities, but will also
reimburse the Bank for accrued and unpaid interest, and any expenses, including
reasonable attorneys' fees, that the Bank may pay in collecting from the
Borrower or the Guarantor, and for liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is
UNLIMITED. Unless otherwise specified below, the Guarantor's obligation shall be
payable in U.S. Dollars.
CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives written notice
of termination from the Guarantor. That notice shall be effective at the opening
of the Bank for business on the day after receipt of the notice. If terminated,
the Guarantor will continue to be liable to the Bank for any Liabilities
created, assumed or committed to at the time the termination becomes effective,
and all subsequent renewals, extensions, modifications and amendments of the
Liabilities.
SECURITY: As security for the Guaranty, the Guarantor pledges and
grants to the Bank a continuing security interest in the following described
property and all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"):
1. All securities and other property of the Guarantor in the custody,
possession or control of the Bank (other than property held by the Bank solely
in a fiduciary capacity);
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability, direct or indirect, of the
Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
The Bank shall have the right at any time to apply its own debt or liability to
the Guarantor in whole or partial payment of this Guaranty or other present or
future liabilities, direct or indirect, without any requirement for mutual
maturity.
<PAGE>
If the Guarantor fails to pay any amount owing under this Guaranty, the
Bank shall have all of the rights and remedies provided by law or under any
other agreement to liquidate or foreclose on and sell the Collateral, including
but not limited to the rights and remedies of a secured party under the Uniform
Commercial Code. These rights and remedies shall be cumulative and not
exclusive. If the Guarantor is entitled to notice, that requirement will be met
if the Bank sends notice at least seven (7) days prior to the date of sale,
disposition or other event which requires notice. The proceeds of any sale shall
be applied first to costs, then toward payment of the amount owing under this
Guaranty. The Bank is authorized to cause all or any part of the Collateral to
be transferred to or registered in its name or in the name of any other person,
firm or corporation, with or without designation of the capacity of such
nominee.
For purposes of the following paragraphs, "any collateral" shall
include the Guarantor's Collateral and any other collateral securing
the Liabilities.
ACTION REGARDING BORROWER: If any monies become available that the Bank
can apply to the Liabilities, the Bank may apply them in any manner it chooses,
including but not limited to applying them against liabilities which are not
covered by this Guaranty. The Bank can take any action against the Borrower, any
collateral, or any other person liable for any of the Liabilities. The Bank can
release the Borrower or anyone else from the Liabilities, either in whole or in
part, or release any collateral, and need not perfect a security interest in any
collateral. The Bank does not have to exercise any rights that it has against
the Borrower or anyone else, or make any effort to realize on any collateral or
right of set-off. If the Borrower requests more credit or any other benefit, the
Bank may grant it and the Bank may grant renewals, extensions, modifications and
amendments of the Liabilities and otherwise deal with the Borrower or any other
person as the Bank sees fit and as if this Guaranty were not in effect. The
Guarantor's obligations under this Guaranty shall not be released or affected by
(a) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of the Borrower, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings affecting
the Borrower or any of its assets, or (b) any change in the composition or
structure of the Borrower or the Guarantor, including a merger or consolidation
with any other person or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank can insist that the Guarantor pay immediately,
and the Bank is not required to attempt to collect first from the Borrower, any
collateral, or any other person liable for the Liabilities. The obligation of
the Guarantor shall be unconditional and absolute, regardless of the
unenforceability of the Liabilities, or the existence of any defense, setoff or
counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their
obligations under this Guaranty shall be joint and several. In addition, each
Guarantor shall be jointly and severally liable with any other guarantor of the
Liabilities. If the Bank elects to enforce its rights against less than all
guarantors of the Liabilities, that election shall not release Guarantor from
its obligations under this Guaranty. The compromise or release of any of the
obligations of any of the other guarantors or the Borrower shall not serve to
waive, alter or release the Guarantor's obligations. This Guaranty is not
conditioned on anyone else executing this or any other guaranty.
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights
of subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Liabilities, or any collateral, until the
Liabilities are fully paid, even if all Liabilities are not covered by this
Guaranty. The Guarantor further agrees that if any payments to the Bank on the
Liabilities are in whole or in part invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act or code, state or federal law, common law
or equitable doctrine, this Guaranty and the Bank's interest in any collateral
remain in full force and effect (or are reinstated as the case may be) until
payment in full of those amounts. That payment is due on demand.
<PAGE>
WAIVERS: The Guarantor waives any right it may have to receive notice
of the following matters before the Bank enforces any of its rights: (a) the
Bank's acceptance of this Guaranty, (b) any credit that the Bank extends to the
Borrower, (c) the Borrower's default, (d) any demand, (e) any action that the
Bank takes regarding the Borrower, anyone else, any collateral, or any
Liability, which it might be entitled to by law or under any other agreement.
Any waiver shall affect only the specific terms and time period stated in the
waiver. The Bank may waive or delay enforcing any of its rights without losing
them. No modification or waiver of this Guaranty shall be effective unless it is
in writing and signed by the party against whom it is being enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the obligations
it imposes do not violate any law, conflict with any agreement by which it is
bound, or require the consent or approval of any governmental authority or any
third party; (b) that this Guaranty is a valid and binding agreement,
enforceable according to its terms; and (c) that all balance sheets, profit and
loss statements, and other financial statements furnished to the Bank are
accurate and fairly reflect the financial condition of the organizations and
persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates. Each Guarantor, other than a natural person,
further represents: (a) that it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) that the execution and
delivery of this Guaranty and the performance of the obligations it imposes (i)
are within its powers and have been duly authorized by all necessary action of
its governing body; and (ii) do not contravene the terms of its articles of
incorporation or organization, its by-laws, or any partnership, operating or
other agreement governing its affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or facsimile number set forth
under its name by any of the following means: (a) hand delivery, (b) registered
or certified mail, postage prepaid, with return receipt requested, (c) first
class or express mail, postage prepaid, (d) Federal Express, Purolator Courier
or like overnight courier service or (e) facsimile, telex or other wire
transmission with request for assurance of receipt in a manner typical with
respect to communications of that type. Notice made in accordance with this
section shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by first class,
registered or certified mail, or on the next business day after mailing or
deposit with an overnight courier service if delivered by express mail or
overnight courier. Notwithstanding the foregoing, notice of termination of this
Guaranty shall be deemed received only upon the receipt of actual written notice
by the Bank in accordance with the paragraph above labeled "Continued Reliance."
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by
Michigan law. The Guarantor agrees that any legal action or proceeding against
it with respect to any of its obligations under this Guaranty may be brought in
any court of the State of Michigan or of the United States of America for the
Eastern or Western District of Michigan, as the Bank in its sole discretion may
elect. By the execution and delivery of this Guaranty, the Guarantor submits to
and accepts, with regard to any such action or proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts. The Guarantor waives any claim that the State of Michigan is not a
convenient forum or the proper venue for any suit, action or proceeding.
<PAGE>
MISCELLANEOUS: The Guarantor's liability under this Guaranty is
independent of its liability under any other guaranty previously or subsequently
executed by the Guarantor or one of them, singularly or together with others, as
to all or any part of the Liabilities, and may be enforced for the full amount
of this Guaranty regardless of the Guarantor's liability under any other
guaranty. This Guaranty is binding on the Guarantor's heirs, successors and
assigns, and will operate to the benefit of the Bank and its successors and
assigns. The use of headings shall not limit the provisions of this Guaranty.
All discussions and documents arising between this Guaranty and the last
guaranty signed by the Guarantor as to the Borrower are merged into this
Guaranty.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Guaranty or any related instrument
or agreement, or any of the transactions contemplated by this Guaranty, or any
course of conduct, dealing, statements (whether oral or written), or actions of
either of them. Neither the Bank nor the Guarantor shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived with
any other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Guarantor except by a written instrument
executed by both of them.
Dated: November 30, 1995
ADDRESS: GUARANTOR:
_____________________________ NEO PRODUCTS CORPORATION
_____________________________ By: _________________________
Its: ________________________
<PAGE>
CONTINUING GUARANTY
GUARANTY: To induce NBD Bank (the "Bank"), of 611 Woodward Avenue, Detroit,
Michigan 48226-3497 at its option, to make loans, extend or continue credit or
some other benefit, including letters of credit and foreign exchange contracts,
present or future, direct and indirect, and whether several, joint or joint and
several (referred to collectively as "Liabilities"), to United Industrial
Corporation, a Michigan corporation and its successors (the "Borrower"), and
because the undersigned (the "Guarantor") has determined that executing this
Guaranty is in its interest and to its financial benefit, the Guarantor
absolutely and unconditionally guaranties to the Bank, as primary obligor and
not merely as surety, that the Liabilities will be paid when due, whether by
acceleration or otherwise. The Guarantor will not only pay the Liabilities, but
will also reimburse the Bank for accrued and unpaid interest, and any expenses,
including reasonable attorneys' fees, that the Bank may pay in collecting from
the Borrower or the Guarantor, and for liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is
UNLIMITED. Unless otherwise specified below, the Guarantor's obligation shall be
payable in U.S. Dollars.
CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives written notice
of termination from the Guarantor. That notice shall be effective at the opening
of the Bank for business on the day after receipt of the notice. If terminated,
the Guarantor will continue to be liable to the Bank for any Liabilities
created, assumed or committed to at the time the termination becomes effective,
and all subsequent renewals, extensions, modifications and amendments of the
Liabilities.
SECURITY: As security for the Guaranty, the Guarantor pledges and
grants to the Bank a continuing security interest in the following described
property and all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"):
1. All securities and other property of the Guarantor in the custody,
possession or control of the Bank (other than property held by the Bank solely
in a fiduciary capacity);
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability, direct or indirect, of the
Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
The Bank shall have the right at any time to apply its own debt or liability to
the Guarantor in whole or partial payment of this Guaranty or other present or
future liabilities, direct or indirect, without any requirement for mutual
maturity.
If the Guarantor fails to pay any amount owing under this Guaranty, the
Bank shall have all of the rights and remedies provided by law or under any
other agreement to liquidate or foreclose on and sell the Collateral, including
but not limited to the rights and remedies of a secured party under the Uniform
Commercial Code. These rights and remedies shall be cumulative and not
exclusive. If the Guarantor is entitled to notice, that requirement will be met
if the Bank sends notice at least seven (7) days prior to the date of sale,
disposition or other event which requires notice. The proceeds of any sale shall
be applied first to costs, then toward payment of the amount owing under this
Guaranty. The Bank is authorized to cause all or any part of the Collateral to
be transferred to or registered in its name or in the name of any other person,
firm or corporation, with or without designation of the capacity of such
nominee.
For purposes of the following paragraphs, "any collateral" shall
include the Guarantor's Collateral and any other collateral securing
the Liabilities.
<PAGE>
ACTION REGARDING BORROWER: If any monies become available that the Bank
can apply to the Liabilities, the Bank may apply them in any manner it chooses,
including but not limited to applying them against liabilities which are not
covered by this Guaranty. The Bank can take any action against the Borrower, any
collateral, or any other person liable for any of the Liabilities. The Bank can
release the Borrower or anyone else from the Liabilities, either in whole or in
part, or release any collateral, and need not perfect a security interest in any
collateral. The Bank does not have to exercise any rights that it has against
the Borrower or anyone else, or make any effort to realize on any collateral or
right of set-off. If the Borrower requests more credit or any other benefit, the
Bank may grant it and the Bank may grant renewals, extensions, modifications and
amendments of the Liabilities and otherwise deal with the Borrower or any other
person as the Bank sees fit and as if this Guaranty were not in effect. The
Guarantor's obligations under this Guaranty shall not be released or affected by
(a) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of the Borrower, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings affecting
the Borrower or any of its assets, or (b) any change in the composition or
structure of the Borrower or the Guarantor, including a merger or consolidation
with any other person or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank can insist that the Guarantor pay immediately,
and the Bank is not required to attempt to collect first from the Borrower, any
collateral, or any other person liable for the Liabilities. The obligation of
the Guarantor shall be unconditional and absolute, regardless of the
unenforceability of the Liabilities, or the existence of any defense, setoff or
counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their
obligations under this Guaranty shall be joint and several. In addition, each
Guarantor shall be jointly and severally liable with any other guarantor of the
Liabilities. If the Bank elects to enforce its rights against less than all
guarantors of the Liabilities, that election shall not release Guarantor from
its obligations under this Guaranty. The compromise or release of any of the
obligations of any of the other guarantors or the Borrower shall not serve to
waive, alter or release the Guarantor's obligations. This Guaranty is not
conditioned on anyone else executing this or any other guaranty.
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights
of subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Liabilities, or any collateral, until the
Liabilities are fully paid, even if all Liabilities are not covered by this
Guaranty. The Guarantor further agrees that if any payments to the Bank on the
Liabilities are in whole or in part invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act or code, state or federal law, common law
or equitable doctrine, this Guaranty and the Bank's interest in any collateral
remain in full force and effect (or are reinstated as the case may be) until
payment in full of those amounts. That payment is due on demand.
<PAGE>
WAIVERS: The Guarantor waives any right it may have to receive notice
of the following matters before the Bank enforces any of its rights: (a) the
Bank's acceptance of this Guaranty, (b) any credit that the Bank extends to the
Borrower, (c) the Borrower's default, (d) any demand, (e) any action that the
Bank takes regarding the Borrower, anyone else, any collateral, or any
Liability, which it might be entitled to by law or under any other agreement.
Any waiver shall affect only the specific terms and time period stated in the
waiver. The Bank may waive or delay enforcing any of its rights without losing
them. No modification or waiver of this Guaranty shall be effective unless it is
in writing and signed by the party against whom it is being enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the obligations
it imposes do not violate any law, conflict with any agreement by which it is
bound, or require the consent or approval of any governmental authority or any
third party; (b) that this Guaranty is a valid and binding agreement,
enforceable according to its terms; and (c) that all balance sheets, profit and
loss statements, and other financial statements furnished to the Bank are
accurate and fairly reflect the financial condition of the organizations and
persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates. Each Guarantor, other than a natural person,
further represents: (a) that it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) that the execution and
delivery of this Guaranty and the performance of the obligations it imposes (i)
are within its powers and have been duly authorized by all necessary action of
its governing body; and (ii) do not contravene the terms of its articles of
incorporation or organization, its by-laws, or any partnership, operating or
other agreement governing its affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or facsimile number set forth
under its name by any of the following means: (a) hand delivery, (b) registered
or certified mail, postage prepaid, with return receipt requested, (c) first
class or express mail, postage prepaid, (d) Federal Express, Purolator Courier
or like overnight courier service or (e) facsimile, telex or other wire
transmission with request for assurance of receipt in a manner typical with
respect to communications of that type. Notice made in accordance with this
section shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by first class,
registered or certified mail, or on the next business day after mailing or
deposit with an overnight courier service if delivered by express mail or
overnight courier. Notwithstanding the foregoing, notice of termination of this
Guaranty shall be deemed received only upon the receipt of actual written notice
by the Bank in accordance with the paragraph above labeled "Continued Reliance."
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by
Michigan law. The Guarantor agrees that any legal action or proceeding against
it with respect to any of its obligations under this Guaranty may be brought in
any court of the State of Michigan or of the United States of America for the
Eastern or Western District of Michigan, as the Bank in its sole discretion may
elect. By the execution and delivery of this Guaranty, the Guarantor submits to
and accepts, with regard to any such action or proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts. The Guarantor waives any claim that the State of Michigan is not a
convenient forum or the proper venue for any suit, action or proceeding.
<PAGE>
MISCELLANEOUS: The Guarantor's liability under this Guaranty is
independent of its liability under any other guaranty previously or subsequently
executed by the Guarantor or one of them, singularly or together with others, as
to all or any part of the Liabilities, and may be enforced for the full amount
of this Guaranty regardless of the Guarantor's liability under any other
guaranty. This Guaranty is binding on the Guarantor's heirs, successors and
assigns, and will operate to the benefit of the Bank and its successors and
assigns. The use of headings shall not limit the provisions of this Guaranty.
All discussions and documents arising between this Guaranty and the last
guaranty signed by the Guarantor as to the Borrower are merged into this
Guaranty.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Guaranty or any related instrument
or agreement, or any of the transactions contemplated by this Guaranty, or any
course of conduct, dealing, statements (whether oral or written), or actions of
either of them. Neither the Bank nor the Guarantor shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived with
any other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Guarantor except by a written instrument
executed by both of them.
Dated: November 30, 1995
ADDRESS: GUARANTOR:
_____________________________ DETROIT STOKER COMPANY
_____________________________ By: _________________________
Its: ________________________
<PAGE>
CONTINUING GUARANTY
GUARANTY: To induce NBD Bank (the "Bank"), of 611 Woodward Avenue, Detroit,
Michigan 48226-3497 at its option, to make loans, extend or continue credit or
some other benefit, including letters of credit and foreign exchange contracts,
present or future, direct and indirect, and whether several, joint or joint and
several (referred to collectively as "Liabilities"), to Detroit Stoker Company,
a Michigan corporation and its successors (the "Borrower"), and because the
undersigned (the "Guarantor") has determined that executing this Guaranty is in
its interest and to its financial benefit, the Guarantor absolutely and
unconditionally guaranties to the Bank, as primary obligor and not merely as
surety, that the Liabilities will be paid when due, whether by acceleration or
otherwise. The Guarantor will not only pay the Liabilities, but will also
reimburse the Bank for accrued and unpaid interest, and any expenses, including
reasonable attorneys' fees, that the Bank may pay in collecting from the
Borrower or the Guarantor, and for liquidating any collateral.
LIMITATION: The Guarantor's obligation under this Guaranty is
UNLIMITED. Unless otherwise specified below, the Guarantor's obligation shall be
payable in U.S. Dollars.
CONTINUED RELIANCE: The Bank may continue to make loans or extend
credit to the Borrower based on this Guaranty until it receives written notice
of termination from the Guarantor. That notice shall be effective at the opening
of the Bank for business on the day after receipt of the notice. If terminated,
the Guarantor will continue to be liable to the Bank for any Liabilities
created, assumed or committed to at the time the termination becomes effective,
and all subsequent renewals, extensions, modifications and amendments of the
Liabilities.
SECURITY: As security for the Guaranty, the Guarantor pledges and
grants to the Bank a continuing security interest in the following described
property and all of its additions, substitutions, increments, proceeds and
products, whether now owned or later acquired ("Collateral"):
1. All securities and other property of the Guarantor in the custody,
possession or control of the Bank (other than property held by the Bank solely
in a fiduciary capacity);
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability, direct or indirect, of the
Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
The Bank shall have the right at any time to apply its own debt or liability to
the Guarantor in whole or partial payment of this Guaranty or other present or
future liabilities, direct or indirect, without any requirement for mutual
maturity.
<PAGE>
If the Guarantor fails to pay any amount owing under this Guaranty, the
Bank shall have all of the rights and remedies provided by law or under any
other agreement to liquidate or foreclose on and sell the Collateral, including
but not limited to the rights and remedies of a secured party under the Uniform
Commercial Code. These rights and remedies shall be cumulative and not
exclusive. If the Guarantor is entitled to notice, that requirement will be met
if the Bank sends notice at least seven (7) days prior to the date of sale,
disposition or other event which requires notice. The proceeds of any sale shall
be applied first to costs, then toward payment of the amount owing under this
Guaranty. The Bank is authorized to cause all or any part of the Collateral to
be transferred to or registered in its name or in the name of any other person,
firm or corporation, with or without designation of the capacity of such
nominee.
For purposes of the following paragraphs, "any collateral" shall
include the Guarantor's Collateral and any other collateral securing
the Liabilities.
ACTION REGARDING BORROWER: If any monies become available that the Bank
can apply to the Liabilities, the Bank may apply them in any manner it chooses,
including but not limited to applying them against liabilities which are not
covered by this Guaranty. The Bank can take any action against the Borrower, any
collateral, or any other person liable for any of the Liabilities. The Bank can
release the Borrower or anyone else from the Liabilities, either in whole or in
part, or release any collateral, and need not perfect a security interest in any
collateral. The Bank does not have to exercise any rights that it has against
the Borrower or anyone else, or make any effort to realize on any collateral or
right of set-off. If the Borrower requests more credit or any other benefit, the
Bank may grant it and the Bank may grant renewals, extensions, modifications and
amendments of the Liabilities and otherwise deal with the Borrower or any other
person as the Bank sees fit and as if this Guaranty were not in effect. The
Guarantor's obligations under this Guaranty shall not be released or affected by
(a) the voluntary or involuntary liquidation, sale or other disposition of all
or substantially all of the assets of the Borrower, or any receivership,
insolvency, bankruptcy, reorganization, or other similar proceedings affecting
the Borrower or any of its assets, or (b) any change in the composition or
structure of the Borrower or the Guarantor, including a merger or consolidation
with any other person or entity.
NATURE OF GUARANTY: This Guaranty is a guaranty of payment and not of
collection. Therefore, the Bank can insist that the Guarantor pay immediately,
and the Bank is not required to attempt to collect first from the Borrower, any
collateral, or any other person liable for the Liabilities. The obligation of
the Guarantor shall be unconditional and absolute, regardless of the
unenforceability of the Liabilities, or the existence of any defense, setoff or
counterclaim which the Borrower may assert.
OTHER GUARANTORS: If there is more than one Guarantor, their
obligations under this Guaranty shall be joint and several. In addition, each
Guarantor shall be jointly and severally liable with any other guarantor of the
Liabilities. If the Bank elects to enforce its rights against less than all
guarantors of the Liabilities, that election shall not release Guarantor from
its obligations under this Guaranty. The compromise or release of any of the
obligations of any of the other guarantors or the Borrower shall not serve to
waive, alter or release the Guarantor's obligations. This Guaranty is not
conditioned on anyone else executing this or any other guaranty.
RIGHTS OF SUBROGATION: The Guarantor agrees not to enforce any rights
of subrogation, contribution or indemnification that it has against the
Borrower, any entity liable for the Liabilities, or any collateral, until the
Liabilities are fully paid, even if all Liabilities are not covered by this
Guaranty. The Guarantor further agrees that if any payments to the Bank on the
Liabilities are in whole or in part invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act or code, state or federal law, common law
or equitable doctrine, this Guaranty and the Bank's interest in any collateral
remain in full force and effect (or are reinstated as the case may be) until
payment in full of those amounts. That payment is due on demand.
<PAGE>
WAIVERS: The Guarantor waives any right it may have to receive notice
of the following matters before the Bank enforces any of its rights: (a) the
Bank's acceptance of this Guaranty, (b) any credit that the Bank extends to the
Borrower, (c) the Borrower's default, (d) any demand, (e) any action that the
Bank takes regarding the Borrower, anyone else, any collateral, or any
Liability, which it might be entitled to by law or under any other agreement.
Any waiver shall affect only the specific terms and time period stated in the
waiver. The Bank may waive or delay enforcing any of its rights without losing
them. No modification or waiver of this Guaranty shall be effective unless it is
in writing and signed by the party against whom it is being enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents: (a) that the
execution and delivery of this Guaranty and the performance of the obligations
it imposes do not violate any law, conflict with any agreement by which it is
bound, or require the consent or approval of any governmental authority or any
third party; (b) that this Guaranty is a valid and binding agreement,
enforceable according to its terms; and (c) that all balance sheets, profit and
loss statements, and other financial statements furnished to the Bank are
accurate and fairly reflect the financial condition of the organizations and
persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed materially
and adversely since those dates. Each Guarantor, other than a natural person,
further represents: (a) that it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) that the execution and
delivery of this Guaranty and the performance of the obligations it imposes (i)
are within its powers and have been duly authorized by all necessary action of
its governing body; and (ii) do not contravene the terms of its articles of
incorporation or organization, its by-laws, or any partnership, operating or
other agreement governing its affairs.
NOTICES: Notice from one party to another relating to this Guaranty
shall be deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or facsimile number set forth
under its name by any of the following means: (a) hand delivery, (b) registered
or certified mail, postage prepaid, with return receipt requested, (c) first
class or express mail, postage prepaid, (d) Federal Express, Purolator Courier
or like overnight courier service or (e) facsimile, telex or other wire
transmission with request for assurance of receipt in a manner typical with
respect to communications of that type. Notice made in accordance with this
section shall be deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing if mailed by first class,
registered or certified mail, or on the next business day after mailing or
deposit with an overnight courier service if delivered by express mail or
overnight courier. Notwithstanding the foregoing, notice of termination of this
Guaranty shall be deemed received only upon the receipt of actual written notice
by the Bank in accordance with the paragraph above labeled "Continued Reliance."
LAW AND JUDICIAL FORUM THAT APPLY: This agreement is governed by
Michigan law. The Guarantor agrees that any legal action or proceeding against
it with respect to any of its obligations under this Guaranty may be brought in
any court of the State of Michigan or of the United States of America for the
Eastern or Western District of Michigan, as the Bank in its sole discretion may
elect. By the execution and delivery of this Guaranty, the Guarantor submits to
and accepts, with regard to any such action or proceeding, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts. The Guarantor waives any claim that the State of Michigan is not a
convenient forum or the proper venue for any suit, action or proceeding.
<PAGE>
MISCELLANEOUS: The Guarantor's liability under this Guaranty is
independent of its liability under any other guaranty previously or subsequently
executed by the Guarantor or one of them, singularly or together with others, as
to all or any part of the Liabilities, and may be enforced for the full amount
of this Guaranty regardless of the Guarantor's liability under any other
guaranty. This Guaranty is binding on the Guarantor's heirs, successors and
assigns, and will operate to the benefit of the Bank and its successors and
assigns. The use of headings shall not limit the provisions of this Guaranty.
All discussions and documents arising between this Guaranty and the last
guaranty signed by the Guarantor as to the Borrower are merged into this
Guaranty.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in any
litigation based upon or arising out of this Guaranty or any related instrument
or agreement, or any of the transactions contemplated by this Guaranty, or any
course of conduct, dealing, statements (whether oral or written), or actions of
either of them. Neither the Bank nor the Guarantor shall seek to consolidate, by
counterclaim or otherwise, any action in which a jury trial has been waived with
any other action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Guarantor except by a written instrument
executed by both of them.
Dated: November 30, 1995
ADDRESS: GUARANTOR:
_____________________________ UNITED INDUSTRIAL
CORPORATION
_____________________________ By: _________________________
Its: ________________________
EXHIBIT 11 - Computation of Earnings Per Share -
Item 6(a)
Exhibit 11
<TABLE>
<CAPTION>
Computation of Earnings per Share
United Industrial Corporation and Subsidiaries
Three Months Ended Six Months Ended
June 30 June 30
------------------------ ----------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 12,203,089 12,218,639 12,190,494 12,195,084
========== ========== ========== ==========
Net income $1,458,000 $1,324,000 $2,889,000 $2,464,000
========== ========== ========== ==========
Earnings per share $ .12 $ .11 $ .24 $.20
====== ====== ====== ====
</TABLE>
<TABLE> <S> <C>
<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> 6-Mos
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Jun-30-1996
<CASH> 16,657
<SECURITIES> 0
<RECEIVABLES> 27,994
<ALLOWANCES> 0
<INVENTORY> 53,822
<CURRENT-ASSETS> 106,568
<PP&E> 131,168
<DEPRECIATION> 89,423
<TOTAL-ASSETS> 187,426
<CURRENT-LIABILITIES> 51,442
<BONDS> 16,404
0
0
<COMMON> 14,374
<OTHER-SE> 73,465
<TOTAL-LIABILITY-AND-EQUITY> 187,426
<SALES> 109,766
<TOTAL-REVENUES> 110,323
<CGS> 83,319
<TOTAL-COSTS> 104,275
<OTHER-EXPENSES> 141
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,215
<INCOME-PRETAX> 4,692
<INCOME-TAX> 1,803
<INCOME-CONTINUING> 2,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,889
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
