<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarter Ended
JUNE 30, 1995
Commission File Number 1-8889
[LOGO] MORRISON KNUDSEN CORPORATION
A Delaware Corporation
IRS Employer Identification No. 82-0393735
MORRISON KNUDSEN PLAZA, BOISE, IDAHO 83729
208/386-5000
The registrant's common stock is registered on the New York and Pacific Stock
Exchanges.
At June 30, 1995, 33,053,754 shares of the registrant's common stock were
outstanding (excluding 436,910 shares held in treasury).
The registrant has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months and has
been subject to such filing requirements for the past 90 days.
/X/ Yes / / No
<PAGE>
MORRISON KNUDSEN CORPORATION
QUARTERLY REPORT FORM 10-Q FOR THE
THREE MONTH PERIOD ENDED JUNE 30, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Consolidated Condensed Financial Statements and Notes Thereto
Statements of Operations for the Three and Six Month
Periods Ended June 30, 1995 and 1994 I-1
Balance Sheets at June 30, 1995 and December 31, 1994 I-2
Statements of Cash Flows for the
Six Month Periods Ended June 30, 1995 and 1994 I-4
Notes to Financial Statements I-5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations I-17
PART II.OTHER INFORMATION
Item 1. Legal Proceedings II-1
Item 6. Exhibits and Reports on Form 8-K II-2
Signatures II-3
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
MORRISON KNUDSEN CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED)
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- ----------------------------
1995 1994 (a) 1995 1994 (a)
<S> <C> <C> <C> <C>
Revenue $ 633,848 $ 517,308 $ 1,151,020 $ 979,102
Cost of revenue (623,104) (589,091) (1,134,200) (1,041,246)
- -------------------------------------------------------------------------------------------------------------------------
Operating income (loss) from continuing operations 10,744 (71,783) 16,820 (62,144)
General and administrative expenses (15,165) (8,249) (25,784) (16,974)
Interest expense (9,008) (1,219) (14,439) (1,794)
Other income (expense), net 2,005 (4,259) 1,713 (49)
Equity in net income of unconsolidated affiliates 1,724 4,774 4,910 4,887
Gain (loss) on disposition of investments in affiliates, net (1,282) (13,828) (8,098) (8,951)
- -------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations before income
taxes and minority interests (10,982) (94,564) (24,878) (85,025)
Income tax (expense) benefit (902) 37,910 (2,339) 34,173
Minority interests in net (income) loss of subsidiaries (504) (66) (5,055) 1,349
- -------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations (12,388) (56,720) (32,272) (49,503)
Discontinued operations of MK Rail:
Net income (loss) of discontinued operations - 1,825 (5,935) 4,260
Estimated loss on sale, including disposal costs - - (25,500) -
Gain on MK Rail's sale of stock (less applicable
income taxes of $9,600) - 14,429 - 14,429
- -------------------------------------------------------------------------------------------------------------------------
Net loss $ (12,388) $ (40,466) $ (63,707) $ (30,814)
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share:
Continuing operations $(.37) $(1.74) $ (.98) $(1.53)
Discontinued operations - .50 (.95) .58
- -------------------------------------------------------------------------------------------------------------------------
Net loss $(.37) $(1.24) $(1.93) $ (.95)
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
Common shares used to compute earnings (loss) per share 33,042,000 32,550,800 32,954,000 32,363,500
Dividends declared per share $ - $ .20 $ - $ .40
- -------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<FN>
(a) Certain amounts reclassified to conform to 1995 financial statement
presentation.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
I-1
<PAGE>
MORRISON KNUDSEN CORPORATION
CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS 1995 1994 (a)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 72,877 $ 65,088
Accounts receivable including retentions of $37,014 and $45,386 181,201 209,564
Unbilled receivables 117,342 124,468
Refundable federal income taxes, net 7,189 20,607
Inventories, net of advances of $240,322 and $293,697 90,750 152,053
Investments in and advances to construction joint ventures 11,670 12,854
Deferred income taxes 53,366 63,437
Assets of subsidiaries and investments held for sale 189,342 -
Net assets of discontinued MK Rail operations 127,184 147,521
Other 15,410 24,300
- ----------------------------------------------------------------------------------------------------
Total current assets 866,331 819,892
- ----------------------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Securities available for sale, at fair value 21,825 25,101
Investments in and advances to unconsolidated affiliates 42,805 71,382
Goodwill and other intangibles, net 4,476 18,288
Other investments and assets 27,536 37,694
- ----------------------------------------------------------------------------------------------------
Total investments and other assets 96,642 152,465
- ----------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, AT COST
Land and mineral rights 10,507 18,402
Buildings and improvements 96,647 116,106
Machinery and equipment 36,033 44,105
Construction equipment 135,614 190,807
- ----------------------------------------------------------------------------------------------------
Total property and equipment 278,801 369,420
LESS ACCUMULATED DEPRECIATION (179,173) (223,585)
- ----------------------------------------------------------------------------------------------------
Property and equipment, net 99,628 145,835
- ----------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,062,601 $1,118,192
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<FN>
(a) Certain amounts reclassified to conform to 1995 financial statement
presentation.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
I-2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 (a)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT LIABILITIES
Short-term and current portion of long-term debt $ 307,617 $ 192,152
Accounts payable including retentions of $19,094 and $29,348 153,643 233,240
Accrued salaries, wages and benefits 45,359 43,663
Accruals for estimated losses on uncompleted contracts 75,327 146,796
Other accrued liabilities 67,785 57,274
Billings in excess of costs and earnings on uncompleted contracts 82,994 98,415
Advances from customers 90,784 156,817
Liabilities of subsidiaries held for sale 124,529 -
- ----------------------------------------------------------------------------------------------------
Total current liabilities 948,038 928,357
- ----------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Deferred income taxes 18,713 22,203
Deferred compensation 13,582 18,001
Deferred income 8,988 11,082
Accrued workers' compensation insurance 15,937 11,026
Accrued postretirement benefit obligation 27,035 26,710
Debt due after one year 1,400 9,273
Accrued litigation settlement 25,000 25,000
- ----------------------------------------------------------------------------------------------------
Total non-current liabilities 110,655 123,295
- ----------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 9)
- ----------------------------------------------------------------------------------------------------
MINORITY INTERESTS IN SUBSIDIARIES - 3,647
- ----------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.10, authorized 10,000,000 shares, none
Common stock, par value $1.67, authorized 100,000,000 shares, issued
33,490,664 shares 55,818 55,818
Capital in excess of par value 270,629 272,594
Retained deficit (311,916) (248,209)
Treasury stock, 436,910 and 626,434 shares, at cost (7,467) (11,116)
Unearned compensation - restricted stock (2,304) (2,345)
Cumulative translation adjustments (1,236) (3,270)
Net unrealized holding gain (loss) on securities available for sale 384 (579)
- ----------------------------------------------------------------------------------------------------
Total stockholders' equity 3,908 62,893
- ----------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,062,601 $1,118,192
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
</TABLE>
I-3
<PAGE>
MORRISON KNUDSEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED JUNE 30, 1995, AND 1994 (UNAUDITED)
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1995 1994 (a)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net (loss) $(63,707) $ (30,814)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Provision for estimated loss on sale of discontinued operations 25,500 -
Loss on disposition of businesses and assets, net 11,309 8,951
Depreciation and amortization 15,861 18,694
Gains on subsidiaries sales of stock - (25,284)
Equity in net income of unconsolidated subsidiaries (4,910) (4,887)
Increase in working capital from cancellation
of accounts receivable sales (60,000) -
Other changes in working capital, net (55,714) (33,221)
Increase (decrease) in other assets and liabilities, net 14,281 (14,752)
- -----------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities (117,380) (81,313)
- -----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Property and equipment acquisitions (10,824) (21,481)
Property and equipment disposals 8,120 13,942
Purchase of securities available for sale (11,339) -
Proceeds from securities available for sale 15,664 -
Proceeds from sales of investments in affiliates 32,494 -
Investments in and advances to unconsolidated affiliates 1,030 (7,653)
Other investing activities 714 187
- -----------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 35,859 (15,005)
- -----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Borrowing (repayments) under credit agreements and short-term debt, net
including $60,000 from cancellation of accounts receivable sales in 1995 121,096 121,459
Borrowings of long-term debt - 10,739
Payments of long-term debt - (66)
Proceeds from stock issued - 496
Dividends paid (6,164) (19,215)
- -----------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 114,932 113,413
- -----------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (466) -
- -----------------------------------------------------------------------------------------------------
Cash and cash equivalents of businesses held for sale (25,156) -
- -----------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 7,789 17,095
Cash and cash equivalents at beginning of period 65,088 80,108
- -----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 72,877 $ 97,203
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
OTHER CASH FLOW INFORMATION FOR CONTINUING AND DISCONTINUED OPERATIONS
Interest paid $ 17,613 $ 3,965
Income taxes paid (refunded), net (21,121) (12,096)
Acquisition of business for stock:
Property and equipment and other assets - 9,128
Goodwill and other intangibles - 19,215
Long-term debt - (4,675)
Other liabilities assumed - (4,005)
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<FN>
(a) Certain amounts reclassified to conform to 1995 financial statement
presentation.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
I-4
<PAGE>
MORRISON KNUDSEN CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(ALL DOLLAR AMOUNTS IN THOUSANDS)
THE TERM "CORPORATION" AS USED IN THIS QUARTERLY REPORT INCLUDES MORRISON
KNUDSEN CORPORATION AND ITS CONSOLIDATED SUBSIDIARIES UNLESS OTHERWISE
INDICATED.
1. BASIS OF PRESENTATION AND MANAGEMENT'S PLANS
In March 1995, the Corporation announced its decision to sell its 65% ownership
interest in MK Rail Corporation ("MK Rail"). The accompanying consolidated
financial statements and financial statement footnotes as of and for the three
and six month periods ended June 30, 1995 and 1994 give effect to the
anticipated sale of the Corporation's 65% ownership interest in MK Rail. The
disposal of the MK Rail segment has been accounted for as a discontinued
operation at March 31, and June 30, 1995 and accordingly, its results of
operations and cash flows are segregated and reported as discontinued operations
in the accompanying consolidated statements of operations and cash flows for the
three and six month periods ended June 30, 1995. The assets and liabilities of
MK Rail have been segregated on the consolidated balance sheet at June 30, 1995,
from their historical classifications consistent with the presentation of the
related results of operations of MK Rail as a separate item in the accompanying
statements of operations. Prior period consolidated financial statements have
been restated to present MK Rail as a discontinued operation. The comparative
consolidated balance sheet and financial statement footnotes included herein as
December 31, 1994 amounts have been derived from the audited balance sheet and
financial statement footnotes at December 31, 1994. See Note 2. "Changes in
Business - Discontinued Operations".
The accompanying consolidated financial statements include the accounts of the
Corporation and its majority-owned subsidiaries. Investments in 20 percent to 50
percent owned companies and joint ventures are accounted for by the equity
method. The Corporation's proportionate share of joint venture revenue, cost of
revenue and operating income (loss) is included in the consolidated statements
of operations. Intercompany accounts and transactions have been eliminated.
The consolidated financial statements have been prepared without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
financial information and footnote disclosures normally included in annual
financial statements have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Corporation's Annual Report to Stockholders or the Corporation's
Annual Report on Form 10-K for the year ended December 31, 1994.
The unaudited consolidated financial statements included herein reflect all
adjustments consisting of normal recurring adjustments which are, in the opinion
of management, necessary to a fair presentation of the results of operations and
cash flows for the interim period. The results of operations for the six month
period ended June 30, 1995 are not necessarily indicative of the results to be
expected for the full year.
The Corporation's consolidated financial statements have been prepared on the
basis that it will continue as a going concern, which contemplates the
realization of asset values and the satisfaction of liabilities in the normal
course of business. There are certain conditions that raise substantial doubt
about the Corporation's ability to continue as a going concern:
- - The Corporation reported net losses of $63,707 and $349,635 for the six
month period ended June 30, 1995 and year ended December 31, 1994,
respectively.
- - Net cash used by the Corporation's operating activities was $117,380 and
$142,536 for the six month period ended June 30, 1995 and year ended
December 31, 1994, respectively.
- - At June 30, 1995 and December 31, 1994 stockholders' equity was $3,908 and
$62,893, respectively, and included retained deficits of $311,916 and
$248,209 at June 30, 1995 and December 31, 1994, respectively.
- - At June 30, 1995 and December 31, 1994 there were working capital deficits
of $81,707 and $108,465, respectively.
- - The Corporation expects significant negative cash flow from operations in
1995 and will require additional funding to cover expected negative cash
flows.
I-5
<PAGE>
The Corporation received bank waivers on certain covenant defaults under its
credit agreements, additional funding of $50,000 from its banks (of which
$31,200 was repaid prior to June 30, 1995) and received extensions of all the
bank credit agreements through July 31, 1995. On August 11, 1995, the
Corporation its bank lenders and sureties agreed as of July 31, 1995 to a
restructuring of the Corporation's existing indebtedness and the establishment
of new interim credit facilities, expiring September 1, 1995 to advance funds to
the Transit segment prior to its planned divestiture as a limited liability
company, anticipated by September 1, 1995. The restructuring provides for an
increase in the amount of the bridge loans from $122,100 to $129,000.
Outstanding borrowings under the bridge loans are due and payable on March 31,
1996. The restructuring agreements require the repayment of $100,000 of the
antecedent bank debt on September 30, 1996 and the balance payable on December
31, 1996. In addition to these required payments, the restructuring agreements
also provide for the Corporation to repay (i) net cash proceeds in excess of
$10,000 received from the sales of certain businesses and assets currently held
for sale, (ii) any prepayments or repayments received by the Corporation on the
$52,200 note receivable from MK Rail, and (iii) any tax refunds received.
In addition, in July 1995, the Corporation reached a preliminary agreement
("transit agreement") with its surety-syndicate-manager and letter-of-credit
banks ("LC banks") to fund the Transit segment's anticipated cash flow
deficiency. The transit agreement contemplates, among other matters, the sharing
of Transit's cash flow deficiency between the Corporation and its surety
syndicate and LC banks, including limits on the Corporation's funding
requirements and participation in future operating losses.
The restructuring provides ongoing indebtedness of the Corporation to the lender
banks and its sureties to be secured and the Corporation will grant stock
purchase warrants to the lender banks and sureties for unissued common stock up
to 14,859,430 shares. In connection with the restructuring the Corporation would
also receive limited bonding capacity.
The Corporation believes that the funds available under the restructuring
agreements, together with the anticipated net proceeds from sales of businesses
and assets currently held for sale will provide sufficient liquidity until
September 1996 when the Corporation believes, a substantial recapitalization
through an equity infusion or new debt will be required. Unless the Corporation
is able to obtain alternative sources of cash to meet the mandatory interim
$100,000 repayment of the antecedent bank debt on September 30, 1996 required
under the restructuring, the Corporation may, among other alternatives, seek
protection from its creditors under the United States Bankruptcy Code. The
Corporation believes that, in such circumstances, the ability, if any, of its
stockholders to recover their investments would be significantly impaired and
that any such recovery, if available, would be substantially delayed.
The Corporation's ability to continue as a going concern is dependent upon the
Corporation successfully completing a recapitalization by obtaining additional
debt or equity capital and returning the Corporation to profitable operations.
In this connection, the Corporation has adopted the following operating and
management plans to:
- - Sell non-core businesses and use the cash proceeds to substantially reduce
the debt burden. See Note 2. "Changes in Business" and Note 7. "Short-Term
Debt - New and Amended Credit Facilities".
- - Successfully resolve the stockholders' litigation. See Note 9. "Commitments
and Contingencies - Legal Proceedings" and Item 1. "Legal Proceedings" in
Part II of this Quarterly Report on Form 10-Q.
- - Continue to obtain new, profitable contracts and to generate positive cash
flow from continuing operations in 1996 and beyond.
Although the results of these actions cannot be predicted with certainty,
management believes that if the Corporation can continue to receive the
cooperation of its banks and surety syndicate, and can obtain additional debt or
equity financing that the Corporation has the ability ultimately to return to
profitability and repay or refinance the existing indebtedness.
I-6
<PAGE>
2. CHANGES IN BUSINESS
The Corporation decided in the fourth quarter of 1994 and the first quarter of
1995 to pursue the sale of certain of its consolidated subsidiaries and
investments in unconsolidated affiliates.
DISCONTINUED OPERATIONS: In March 1995, the Corporation adopted a plan to sell
its 65% ownership interest in MK Rail Corporation. The sale is expected to be
completed no later than March 31, 1996. Accordingly, the Corporation has
accounted for the planned divestiture of MK Rail as a discontinued operation,
and the accompanying consolidated financial statements have been reclassified to
report the net assets, results of operations and cash flows of MK Rail
separately. Prior period consolidated financial statements have been restated to
present MK Rail as a discontinued operation. The Corporation has recorded an
estimated loss on sale of its ownership interest in MK Rail based upon the
information available in the circumstances. However, there can be no assurance
that the net proceeds realized by the Corporation from the ultimate sale of its
ownership interest therein will not be less than the estimated fair value
assumed in this estimate.
Summary results of operations for the discontinued MK Rail segment for the six
months in the periods ended June 30, 1995 and 1994 follows:
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
FOR THE SIX MONTHS IN THE PERIODS ENDED JUNE 30, 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue $139,073 $153,643
Operating income (loss) (3,866) 9,660
Net income (loss) (9,048)(1) 5,129
- -----------------------------------------------------------------------------------------------
Corporation's share of net income (loss) $ (5,881) $ 3,334
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<FN>
(1) Included in the net loss for the six months ended June 30, 1995 is an
aggregate after-tax loss of $7,285 in connection with MK Rail's wholly-owned
subsidiary Morrison Knudsen Corporation of Australia, Ltd. ("MKA"). MK Rail
recognized a $4,485 operating loss from MKA's operations and a $2,800 loss on
sale of its ownership interest in MKA to the Corporation. See Note 10.
"Subsequent Events - Morrison Knudsen Corporation of Australia, Ltd."
</TABLE>
The assets and liabilities of MK Rail adjusted to give effect to the estimated
fair value of the Corporation's ownership interest therein, have been segregated
on the consolidated balance sheets at June 30, 1995 and December 31, 1994. Such
amounts are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 2,674 $ 12,459
Accounts receivable 41,542 34,675
Unbilled receivables 1,254 11,393
Inventories 122,484 116,526
Other current assets 6,120 8,119
Property and equipment, net 70,128 71,426
Deferred income taxes 10,001 19,171
Goodwill and other intangibles, net 28,266 29,511
Prepaid lease cost 6,062 8,017
Short-term and current portion of long-term debt (458) (2,776)
Accounts payable (26,832) (31,133)
Accrued expenses and other accrued liabilities (26,585) (35,560)
Customer advances - (6,196)
Debt due after one year (50,081) (38,091)
Other non-current liabilities (13,089) (13,450)
Minority interests (41,750) (41,667)
Cumulative translation losses 5,538 5,097
Excess of investment in MK Rail over proportionate share of net assets 17,410 -
Accrual for estimated loss on sale (25,500) -
- -----------------------------------------------------------------------------------------------
Net assets of discontinued operations $ 127,184 $ 147,521
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
I-7
<PAGE>
MK RAIL INTERCOMPANY AGREEMENT: On June 15, 1995, the Corporation entered into
an agreement with MK Rail regarding the amount of intercompany indebtedness owed
by MK Rail to the Corporation and certain other matters. The agreement resulted
in the Corporation reducing its receivable from MK Rail through a capital
contribution of $29,500. The remaining balance of $52,200 was converted into a
note, with interest at the prime rate, due in 2000 with earlier repayments under
certain default and change-of-interest conditions. The outstanding balance of
the intercompany debt is due and payable in full upon the acquisition of all of
the common stock or substantially all of the assets of MK Rail by a third party.
The estimated loss on sale of MK Rail recognized includes the effect of this
additional capital contribution to MK Rail.
ASSETS OF SUBSIDIARIES AND INVESTMENTS HELD FOR SALE: The assets and liabilities
of the Corporation's subsidiaries - McConnell Dowell Corporation, Ltd., MK
Investments, Inc. (North Pacific construction operations) and Western Aircraft,
Inc. and the Corporation's investment in Amerbank, have been segregated on the
balance sheet at June 30, 1995 from their historical classifications to
separately identify them as held for sale. Such amounts are summarized as
follows:
<TABLE>
<CAPTION>
JUNE 30, 1995
- -----------------------------------------------------------------------------------
<S> <C>
Cash and cash equivalents $ 25,156
Accounts receivable 70,751
Unbilled receivables 20,183
Investments in and advances to construction joint ventures 9,078
Investments in and advances to unconsolidated affiliates 5,389
Property and equipment, net 34,132
Other assets 24,653
- -----------------------------------------------------------------------------------
Total assets $ 189,342
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
Short-term and current portion of long-term debt $ 11,934
Accounts payable and accrued expenses 63,670
Accrued salaries and wages 1,599
Other accrued liabilities 6,514
Billings in excess of costs and earnings on uncompleted contracts 25,497
Deferred income taxes 3,634
Debt due after one year 1,330
Other long-term liabilities 1,397
Minority interests in subsidiaries 8,954
- -----------------------------------------------------------------------------------
Total liabilities $ 124,529
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
3. DISPOSITION OF INVESTMENTS IN AFFILIATES
DISPOSITIONS IN 1995
SALE OF INVESTMENT IN MK GOLD COMPANY ("MK GOLD"): On June 6, 1995 the
Corporation sold its 46.4% ownership interest in MK Gold to Leucadia National
Corporation ("Leucadia") for $22,500 cash. As a condition to the purchase of the
shares, Leucadia acquired MK Gold's $20,000 bank credit facility and released
the Corporation from its guarantee obligations under the facility. The
Corporation recognized a pretax loss on disposal of $9,256.
SALE OF INVESTMENT IN BENJAMIN DEVELOPMENTS, LTD. In March 1995, the
Corporation's majority-owned subsidiary McConnell Dowell Corporation, Ltd. sold
its ownership interest in Benjamin Developments, Ltd. for cash and recognized a
pretax gain of $9,994.
MK INVESTMENTS, INC. (NORTH PACIFIC CONSTRUCTION OPERATIONS) ("MKI"): On July
21, 1995, the Corporation and a potential buyer reached a preliminary
understanding which contemplates the sale of certain MKI operations for cash.
The preliminary understanding is predicated on the occurrence of certain events,
including the negotiation and execution of a definitive purchase and sale
agreement. In this connection, the Corporation recognized a provision of $8,836
to write-down the carrying value of its investment in MKI to its estimated fair
value based on the preliminary understanding.
I-8
<PAGE>
DISPOSITIONS IN 1994
WRITE OFF OF INVESTMENT IN TEXAS TGV CORPORATION ("TEXAS TGV"): Texas TGV was
awarded a franchise in May 1991 to finance, construct and operate a high speed
rail system in Texas. Because Texas TGV failed to provide equity financing by
December 31, 1993 as required under the franchise agreement and since its
efforts to extend the deadline or to negotiate amendments to the franchise
agreement with the Texas High Speed Rail Authority in early 1994 were
unsuccessful, the Corporation abandoned the project and wrote-off its $13,828
investment in Texas TGV in June 1994.
SALE OF INTEREST IN STRAIT CROSSING DEVELOPMENT, INC. ("SCDI"): In October 1993,
Strait Crossing Development, Inc., a 45% owned unconsolidated subsidiary,
entered into a development agreement with the government of Canada to design,
construct and operate for 35 years an 8.4 mile long toll bridge linking the
Atlantic Provinces of New Brunswick and Prince Edward Island. On March 31, 1994,
the Corporation entered into an agreement to sell a portion of its ownership
interest in SCDI to a third party for $1,301 cash and a $3,576 note receivable
with interest at 7% per annum, due and payable on the earlier of the date of
final completion of the toll bridge or May 31, 1998. The sale decreased the
Corporation's ownership interest in SCDI from 45% to 36%. The Corporation
recognized a pretax gain of $4,877 on the change of interest.
4. INVENTORIES
Transit segment inventories at June 30, 1995 and December 31, 1994 are
summarized as follows:
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
- --------------------------------------------------------------------------------------
<S> <C> <C>
Work in progress $ 220,263 $ 302,334
Raw materials 110,809 143,416
- --------------------------------------------------------------------------------------
Total inventories 331,072 445,750
Payments on account of work in progress (240,322) (293,697)
- --------------------------------------------------------------------------------------
Net inventories $ 90,750 $ 152,053
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
I-9
<PAGE>
5. CONSTRUCTION JOINT VENTURES
The Corporation has from time to time entered into a number of partnership
arrangements with other contractors commonly referred to as "joint ventures".
Construction joint ventures frequently have a short life span, since they are
designed and created for the sole purpose of bidding on, negotiating for, and
completing one specific project and are liquidated when the project is
completed. The number of joint ventures in which the Corporation participates
and the size, scope and duration of the projects vary between periods. Specific
joint ventures change from period to period, and the comparability of the
following summary financial information between periods may not be meaningful.
The following table presents summarized financial information of the
construction joint ventures on a combined 100 percent basis at June 30, 1995 and
December 31, 1994 and for the six months in the periods ended June 30, 1995 and
1994.
<TABLE>
<CAPTION>
FINANCIAL POSITION AT JUNE 30, 1995 DECEMBER 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents $ 91,833 $ 124,627
Other current assets 107,937 143,521
Non-current assets 20,080 19,365
Property and equipment, net 35,891 32,299
Advances from customers (83,674) (88,214)
Other current liabilities (138,389) (213,295)
- -------------------------------------------------------------------------------------------------------------------
Net assets $ 33,678 $ 18,303
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Corporation's investment in and advances to construction joint ventures $11,670 $12,854
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1995 1994
- -------------------------------------------------------------------------------------------------------------------
Combined joint ventures, net:
Revenue $ 453,242 $584,623
Cost of revenue (434,724) 590,033
- -------------------------------------------------------------------------------------------------------------------
Operating income $ 18,518 $5,410
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Corporation's share, net:
Revenue $ 137,003 $ 169,938
Cost of revenue (126,463) (179,154)
- -------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 10,540 $ (9,216)(1)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1)The Corporation recognized a net loss from its proportionate share of the
combined joint ventures' results of operations for the six month period ended
June 30, 1994 because the Corporation's proportionate share of joint ventures
with operating losses exceed its proportionate share of joint ventures with
operating income.
</TABLE>
I-10
<PAGE>
6. INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
The following table presents summarized financial information of the
unconsolidated affiliates accounted for by the equity method on a combined 100
percent basis at June 30, 1995 and December 31, 1994 and for the six months in
the periods ended June 30, 1995 and 1994. Amounts for all periods presented
include the accounts of the following individually significant investees (the
Corporation's ownership interests therein are shown parenthetically): MK Gold
Company (46.4%); Strait Crossing Development, Inc. (36%); AmerBank (29.5%);
Westmoreland Resources, Inc. (24%) and Mitteldeutsche Braunkohlengesellschaft
mbH ("MIBRAG mbH") (33%), except as noted in (1) below.
<TABLE>
<CAPTION>
FINANCIAL POSITION AT JUNE 30, 1995 (1) DECEMBER 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 330,820 $ 446,260
Non-current assets 624,798 494,560
Current liabilities (131,345) (241,174)
Long-term debt (85,427) (75,455)
Other non-current liabilities (524,252) (440,987)
- -------------------------------------------------------------------------------------------------------------------
Net assets $ 214,594 $ 183,204
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Corporation's investment in and advances to unconsolidated affiliates $42,805 $71,382
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
RESULTS OF OPERATIONS
FOR THE SIX MONTH PERIODS ENDED JUNE 30, 1995(1) 1994
- -------------------------------------------------------------------------------------------------------------------
Revenue $377,169 $335,540
Operating income 10,168 20,499
Net income 17,847 17,504
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Corporation's equity in net income of unconsolidated affiliates $4,910 $4,887
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) As of June 30, 1995 the assets and liabilities of MK Gold Company and
AmerBank are not included in the summarized financial position of the
unconsolidated affiliates. On June 6, 1995 the Corporation sold its ownership
interest in MK Gold and in connection with its decision to sell its ownership
interest in AmerBank, the Corporation has included the carrying amount of its
investment in AmerBank in "Assets of subsidiaries and investments held for sale"
in the balance sheet at June 30, 1995. The results of operations of AmerBank for
the six months in the periods ended June 30, 1995 and 1994 are included in the
summarized results of operations of unconsolidated affiliates.
</TABLE>
I-11
<PAGE>
7. SHORT-TERM DEBT
Short-term debt at June 30, 1995 and December 31, 1994 consisted of the
following:
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Secured antecedent bank debt, interest rates of
9% at June 30, 1995, 6.5% at December 31, 1994 $208,873 $139,000
Secured bridge loans, interest rates of 12% at June 30, 1995,
6.7% at December 31, 1994 84,104 12,100
Unsecured borrowings, interest rates of
7.5% to 12% at June 30, 1995, 6.4% to 10.5% at December 31, 1994 14,640 21,287
Commercial paper, interest rate of 6.1% at December 31, 1994 - 19,765
- -------------------------------------------------------------------------------------------------------------------
Total short-term debt $307,617 $192,152
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The weighted average interest rates on short-term borrowings outstanding of
$307,617 at June 30, 1995 and $192,152 at December 31, 1994 were 10.4% and 6.6%,
respectively.
CREDIT FACILITY: On April 11, 1995, the Corporation and its current lender banks
entered into a Credit Facility under which certain of the lender banks provided
secured bridge loans of $110,000. The Facility included establishment of $50,000
in new borrowing capacity and absorption of a then existing $60,000 accounts
receivable purchase agreement. The Credit Facility also waived until May 31,
1995, non-compliance with various financial covenants under the unsecured
antecedent bank debt agreement. Interest on the outstanding unsecured antecedent
bank debt, equal to the prime rate (9% at June 30, 1995), is generally payable
on the last day of each month. On April 25, 1995 the Credit Facility was amended
to include an additional accounts receivable facility of $12,100. The $122,100
outstanding under the Credit Facility was due and payable on May 31, 1995.
Effective June 1, 1995, the Credit Facility was amended to (i) extend the loan
termination date and the waivers from May 31, 1995 to July 31, 1995 and (ii)
require the Corporation to repay $31,200 of the secured bridge loans by July 31,
1995. The Corporation repaid $31,200 prior to June 30, 1995. Interest on the
outstanding $122,100 secured bridge loans, equal to the prime rate plus three
percent per annum (12% at June 30, 1995), is payable on the last day of each
month and on July 31, 1995. The Credit Facility specifies certain events of
default. These events of default arise upon the occurrence of, among other
things, (i) the Corporation's failure to pay amounts owing under the secured
bridge loans (ii) breaches of covenants, representations and warranties and
(iii) other events that customarily constitute events of default under loan
agreements similar to the secured bridge loans.
NEW AND AMENDED CREDIT FACILITIES: On August 11, 1995, the Corporation its bank
lenders and sureties agreed as of July 31, 1995 to (i) a restructuring of the
Corporation's existing indebtedness (ii) establishment of an interim Revolving
Credit Facility, expiring September 1, 1995, to advance funds of up to $15,000
with interest at the prime rate to the Transit segment to finance its operations
in connection with its Metra contract, and (iii) establishment of an Interim
Loan Facility, expiring September 1, 1995, to advance funds of up to $25,000 to
the Transit segment prior to its planned divestiture as a limited liability
company, anticipated by September 1, 1995. Funds advanced to the Transit segment
bear interest at the prime rate and are to be used solely for financing its
operations in connection with its non-Metra contracts and are guaranteed by the
Corporation's principal surety.
In connection with the restructuring, the bank lenders increased the amount of
the secured bridge loans from $122,100 to $129,000. Amounts borrowed are to be
used for non-Transit-segment working capital purposes. As of July 31, 1995 the
Corporation had unused borrowing capacity under the secured bridge loans of
$52,287. Outstanding borrowings under the secured bridge loans are due and
payable on March 31, 1996 and bear interest at a rate equal to the prime rate
plus three percent. Interest is payable on the last day of each calendar month
and on March 31, 1996. The Corporation paid a closing fee of $1,290 on August
11, 1995.
The restructuring permits the deferral of principal payments on the antecedent
bank debt from July 1, 1995 until December 31, 1996, except, the Corporation is
required to repay $100,000 on September 30, 1996 plus interest and periodic bank
fees accrued to that date. Outstanding borrowings under the antecedent bank debt
bear interest at the prime rate. Interest accrued on outstanding borrowings
after July 1, 1995, may be deferred and paid in six equal monthly installments,
together with accrued interest thereon at the prime rate on the unpaid interest,
commencing April 30, 1996 unless repaid with optional principal prepayments.
Under the restructuring agreements, the antecedent bank debt was secured by
security interests and mortgages on substantially all of the assets of the
Corporation and certain of its subsidiaries.
I-12
<PAGE>
In addition to the required repayment of the outstanding balance under the
bridge loans at March 31, 1996 and $100,000 repayment under the antecedent bank
debt at September 30, 1996, the restructuring agreements also provide for (i)
optional prepayments and (ii) mandatory prepayments. The Corporation may, at its
option, prepay at any time all or part of the amount outstanding under the
antecedent bank debt and bridge loans. The Corporation must prepay (i) net cash
proceeds in excess of $10,000 received from the sales of certain businesses and
assets currently held for sale, (ii) any prepayments or repayments received by
the Corporation on the $52,200 note receivable from MK Rail, and (iii) any tax
refunds received.
In connection with the restructuring, the Corporation as of July 31, 1995,
granted to the bank lenders two stock purchase warrants to acquire a total of
14,029,391 shares of unissued common stock at an exercise price of $6.75 per
share. The warrants may be exercised for all or any part thereof at December 31,
1996, or earlier upon a payment default on the antecedent bank debt, but not
later than July 31, 2000. The Corporation's obligation for the warrant covering
9,415,696 shares can be (i) eliminated if the Corporation repays the outstanding
balance of the antecedent bank debt by June 30, 1996 or (ii) reduced by 50% if
repaid during the period from July 1, 1996 through September 30, 1996. The
Corporation's obligation for the warrant covering 4,613,695 shares can be (i)
eliminated if the Corporation repays the outstanding balance of all indebtedness
in connection with Transit segment's Metra contract by June 30, 1996 or (ii)
reduced by 50% if repaid during the period from July 1, 1996 through December
31, 1996 or (iii) reduced by 25% if repaid during the period from January 1,
1997 through June 30, 1997. The Corporation's sureties were also granted a stock
purchase warrant to acquire a total of 830,039 shares of unissued common stock
at an exercise price of $6.75 per share. The sureties warrant may be exercised
for all or any part thereof at December 31, 1996, or earlier upon a payment
default with respect to the Corporation's reimbursement obligation to its
sureties for Transit segment liabilities, but not later than July 31, 2000. The
Corporation's obligation for the sureties warrant can be (i) eliminated if the
Corporation satisfies its reimbursement obligation to the sureties for their
Transit segment liabilities by June 30, 1996 or (ii) reduced by 50% if satisfied
during the period from July 1, 1996 through September 30, 1996.
I-13
<PAGE>
8. OTHER INCOME (EXPENSE), NET
Other income (expense) items for the three and six months in the periods ended
June 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and dividends $ 1,606 $ 112 $ 5,947 $ 1,933
Net gains (losses) on sales of marketable securities (99) (165) 109 1,399
Net loss on disposals and write-downs
of assets held for sale, net - (2,446) (3,209) (4,102)
Gain on MK Gold's sale of stock - - - 1,255
Underwriting income (expense) of insurance subsidiary, net 29 344 (131) 3,323
Miscellaneous income (expense), net 469 (2,104) (1,003) (3,857)
- ---------------------------------------------------------------------------------------------------------------
Other income (expense), net $ 2,005 $(4,259) $ 1,713 $ (49)
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
LEGAL PROCEEDINGS: The Corporation and several of its current and former
officers and the Corporation's auditors were named as defendants in lawsuits
asserted by certain stockholders who claim to represent a class of stockholders
that purchased shares of the Corporation's common stock between October 15, 1993
and March 20, 1995 (the "MK Securities Class Actions"). These class action
complaints, which were first filed on July 28, 1994, purport to present claims
under federal and state securities and other laws and seek equitable relief and
unspecified damages for losses resulting from alleged improper disclosures
during the class periods. The Corporation, MK Rail, several of MK Rail's
officers and directors, and the managing underwriters of MK Rail's initial
public offering were named as defendants in lawsuits asserted by stockholders
who claim to represent a class of stockholders that purchased shares of MK
Rail's common stock between April 26, 1994 and September 29, 1994 (the "MK Rail
Securities Class Actions"). The complaints, which were first filed on October
20, 1994, purport to present claims under the federal securities laws and seek
equitable relief and unspecified damages for losses resulting from, among other
things, alleged improper disclosures during the class period. Certain of the
Corporation's current and former directors and officers have been named as
defendants in thirteen derivative actions which have been filed in state courts
in Idaho and Delaware between February 13 and June 2, 1995. The Corporation is a
nominal defendant in each of these actions. Plaintiffs assert that the
defendants authorized or acquiesced in wrongful conduct on the part of the
Corporation's former chairman and failed to properly supervise his activities,
and also allege waste of corporate assets through payment of excessive
compensation.
Preliminary agreements as to the principal economic terms of a settlement of
securities class actions and derivative actions were reached in June 1995,
subject, among other things, to approval by the appropriate courts. The $69,000
settlement will include payment of cash and the issuance of stock. The $40,000
cash settlement will be paid by the Corporation's and MK Rail's insurers. The
Corporation and MK Rail will issue new common and preferred stock in the amounts
of $25,000 and $4,000, respectively, based on predetermined stock prices.
Effective December 1994, the Corporation recognized an aggregate pretax charge
of $25,000 for the estimated costs of the settlement. The estimated liability
for the $25,000 settlement is included in the balance sheets at December 31,
1994 and June 30, 1995 as a non-current liability. Assuming court approval and
issuance of the stock, the $25,000 will be reflected in stockholders' equity.
However, there can be no assurance that all the parties to the preliminary
agreements will agree on the terms of the final settlement or that such final
settlement will be approved by the appropriate courts. Although the Corporation
has recorded its estimate of the minimum liability, the ultimate outcome of the
litigation cannot presently be determined. Accordingly, no provision for
additional loss that may result upon resolution of this matter has been made in
the consolidated financial statements.
On February 7, 1995 the Corporation was named a defendant in lawsuits by former
stockholders of Touchstone. The plaintiffs allege that certain financial
statements of the Corporation, upon which they based their decision to exchange
their shares for shares of common stock of the Corporation, were misleading. The
plaintiffs purport to state claims for violation of federal and state securities
laws and also assert certain common law and contractual claims. The Touchstone
actions are at a preliminary state of proceedings and accordingly, the outcome
cannot be predicted with any certainty. As a result, the Corporation cannot make
a determination if the affects of the Touchstone actions will have a material
adverse affect on the Corporation's financial position.
I-14
<PAGE>
The Corporation is a defendant in a number of other legal actions of the type
normally associated with the Corporation's business and involving claims for
damages. The Corporation is of the opinion that such actions will not result in
any material adverse effect on the Corporation's financial position.
LETTERS OF CREDIT: The Corporation was contingently liable, in the normal
course of business, for $298,000 in standby and financial letters of credit not
reflected in the accompanying financial statements at June 30, 1995 for contract
performance guarantees on a number of Engineering and Construction and Transit
segment contracts.
DISCONTINUED SHIPBUILDING OPERATIONS: In April 1989, the Corporation sold its
interest in National Steel and Shipbuilding Company ("NASSCO") and in June 1994,
the Corporation renegotiated and amended the April 1989 sale agreement with
NASSCO. Under the terms of the amended agreement the Corporation will provide
NASSCO a $21,000 credit facility continuing for a period of three years after
completion of a U.S. Navy contract, expected in mid 1996, and NASSCO will
relinquish its right to require the Corporation to accept repayment in NASSCO
preferred stock for any balance outstanding under the credit facility. At June
30, 1995, NASSCO had no balance outstanding under the Corporation's credit
facility.
At June 30, 1995, the Corporation was contingently liable up to a maximum of
$21,000 on a bank credit facility obtained by NASSCO. The balance outstanding
under NASSCO's bank credit facility at June 30, 1995 was $21,000. The
Corporation's credit facility is reduced by the amount of funds borrowed under
NASSCO's bank credit facility. The Corporation has also guaranteed $21,000 of
NASSCO's port facility bonds until not later than December 1, 2002, and
guaranteed $1,793 of NASSCO's federal workers' compensation bonds. NASSCO's
floating dry dock is pledged as collateral for the $21,000 port facility bonds.
DISCONTINUED REAL ESTATE OPERATIONS: At June 30, 1995, the Corporation was
contingently liable for $30,980 of bank loans in connection with commercial real
estate operations discontinued in 1987. Net assets of the real estate operations
of Emkay Development Company, Inc. ("Emkay"), a subsidiary of the Corporation,
are included in the accompanying balance sheets under the caption "Other
investments and assets" and consist of:
<TABLE>
<CAPTION>
FINANCIAL POSITION AT JUNE 30, 1995 DECEMBER 31, 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Notes and interest receivable $ 25,179 $ 25,504
Properties held for sale 4,744 5,920
Other assets, net 2,185 2,853
Secured bank loans, 9% at June 30, 1995 and
6.4% and 6.9% at December 31, 1994 (30,980) (31,078)
- -------------------------------------------------------------------------------------------------------------------
Net assets $ 1,128 $ 3,199
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The notes receivable are due at various dates from 1995 through 1999 at interest
rates ranging from 6.4% to 6.9%. Most of the notes are collateralized by deeds
of trust.
On March 31, 1995, Emkay failed to make a scheduled $5,000 payment under one of
two unsecured loan agreements with banks. The Corporation and the banks have
reached a Forbearance Agreement which, among other things, provides for the
waiving of existing defaults resulting from the nonpayment of the $5,000 owed
under the loan agreement and the granting to the banks of security interests and
mortgages in all of Emkay's real estate and other assets, and the repayment of
the outstanding loan balance by June 30, 1996. Interest on the outstanding
secured bank loans, equal to the prime rate (9% at June 30, 1995), is payable on
the last day of each month.
I-15
<PAGE>
10. SUBSEQUENT EVENTS
MORRISON KNUDSEN CORPORATION OF AUSTRALIA, LTD.: Effective July 1, 1995, the
Corporation acquired MK Rail's ownership interest in Morrison Knudsen
Corporation of Australia, Ltd. ("MKA") for $3,000 in preferred stock of MKA.
SALE OF WESTERN AIRCRAFT, INC. ("WESTERN"): On July 21, 1995, the Corporation
sold its ownership interest in Western for $4,900 cash. Since the Corporation's
carrying value of its investment in Western was written down to its estimated
realizable value at December 31, 1994, no gain or loss was recognized upon
closing of the sale transaction.
RETENTION AND SEVERANCE PAY PLANS: Effective July 7, 1995, the Corporation
adopted a key employee retention and severance program to retain certain key
executives and key employees. The program encourages employees to remain
employed at the Corporation by providing additional compensation from the date
of adoption through July 1, 1996, and by providing enhanced severance benefits
to any covered employee who is involuntarily terminated prior to July 1, 1996.
Under the retention plan, covered employees will receive awards in cash and
stock ranging from 23.3% to 62.5% of their annual base salaries, payable on
December 15, 1995, and July 1, 1996. Under the severance plan, covered employees
who are involuntarily terminated after the occurrence of (i) a change in control
of either the Corporation or the covered employee's division, or (ii) a
bankruptcy filing, will receive cash awards ranging from four to nine months
annual base salary. The severance plan terminates on July 1, 1996, provided that
neither event has occurred. The aggregate amount of the retention plan awards
are estimated to be approximately $12,000, which amount will be accrued ratably
over the service period from July 1995 through June 1996.
NEW AND AMENDED CREDIT FACILITIES: On August 11, 1995, the Corporation and its
lender banks and sureties agreed to a restructuring of the Corporation's
existing indebtedness. See Note 7. "Short-Term Debt" for a description of the
restructuring of the Corporation's existing indebtedness, establishment of
interim credit facilities for its Transit segment, issuance of stock purchase
warrants to its lender banks and sureties, and other matters.
I-16
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1995 COMPARED TO THE THREE MONTH PERIOD ENDED
JUNE 30, 1994
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1995 1994 (a)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue
Engineering and construction $513,755 $499,070
Transit 120,093 18,238
- --------------------------------------------------------------------------------------------------------------------
Total revenue $633,848 $517,308
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Operating income (loss)
Engineering and construction $12,878 $ (8,664)
Transit (2,134) (63,119)
- --------------------------------------------------------------------------------------------------------------------
Total operating income (loss) $10,744 $(71,783)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<FN>
(a) Certain amounts reclassified to conform to 1995 financial statement
presentation.
</TABLE>
ENGINEERING AND CONSTRUCTION: E&C's revenue for the second quarter of 1995 was
$513.8 million an increase of $14.7 million compared to the same period of 1994.
The increase is principally due to an increase in additional revenue from claim
settlements of $9.5 million.
The E&C segment reported $12.9 million operating income in the second quarter of
1995 compared to an $8.7 million operating loss in the comparable period of
1994. The second quarter 1995 results of operations were affected by the
recognition of certain unusual items consisting of (i) a $9.5 million favorable
impact from the settlement of a number of claims on contracts completed in prior
periods which benefit was partially offset by (ii) the adverse impact of a $2.2
million provision for anticipated costs of settling a long-term real estate
lease obligation.
The second quarter 1994 results of operations were affected by the recognition
of certain unusual items consisting of (i) the adverse impact from the
recognition of a $17.6 million charge to write down investments in two
environmental businesses and fixed assets and provide for an anticipated loss on
a long-term construction project which charge was partially offset by (ii) the
beneficial impact from the recognition of $1.4 million proceeds from a claim
settlement.
TRANSIT: Transit's revenue for the second quarter of 1995 was $120.1 million an
increase of $101.9 million compared to the same period of 1994. The increase was
due to the higher volume of new transit car deliveries for the second quarter
of 1995 as reflected in the table below.
<TABLE>
<CAPTION>
NUMBER OF TRANSIT CARS
-----------------------------------------------------------------------
SHIPPED SHIPPED DURING REMAINING IN
UNDER THROUGH THREE MONTHS ENDED BACKLOG AT
NEW TRANSIT CAR CUSTOMER CONTRACT MARCH 31, 1995 JUNE 30, 1995 JUNE 30, 1995
<S> <C> <C> <C> <C>
Metro North Commuter Railroad 48 (27) (18) 3
Illinois Metra Authority 173 (6) (4) 163
National Railroad Passenger Corporation 50 - - 50
Bay Area Rapid Transit District 80 (14) (18) 48
California Department of Transportation:
Inter-city cars 66 (8) (12) 46
Commuter cars 47 - - 47
- -----------------------------------------------------------------------------------------------------------------------
Total New Transit Cars 464 (55) (52) 357
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
I-17
<PAGE>
Transit reported a $2.1 million operating loss in the second quarter of 1995
compared to a $63.1 million operating loss in the comparable period of 1994. The
1995 operating loss stems almost entirely from the recognition of
non-manufacturing overhead costs and expenses. In 1994 the Transit segment
recognized $198.0 million of pretax charges to operating income for anticipated
cost overruns on fixed-price new transit cars in the early stages of production
which were anticipated to be manufactured and delivered in 1995 and 1996.
In the second quarter of 1994 the Transit segment recognized $59.4 million of
pretax charges to operating income for anticipated cost overruns on fixed-price
new transit cars in the early stages of production which were anticipated to be
manufactured and delivered in 1995 and 1996.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses for
the second quarter of 1995 increased $6.9 million or 84% compared to the same
period of 1994. The increase is due to substantial non-recurring expenses for
legal and other professional fees associated with pending litigation and
financial restructuring offset by allocations of centralized common-service
costs to segment operations.
INTEREST EXPENSE: Interest expense for the second quarter of 1995 increased
$7.8 million from $1.2 million in the same period of 1994. The significant
increase in interest expense in 1995 is attributed to a substantially higher
level of short-term debt outstanding during the second quarter of 1995 compared
to the comparable period of 1994 and a weighted average cost of borrowing during
the second quarter of 1995 of 10.4% compared to 4.3% during the comparable
period of 1994.
OTHER INCOME (EXPENSE), NET: Other income of $2.0 million, net for the second
quarter of 1995 is comprised principally of interest earned on short-term
investments. Other expense of $4.3 million, net for the second quarter of 1994
is comprised principally of losses on disposals of assets, write-downs of
certain assets held overseas, and a loan guarantee loss. See Note 8. "Other
Income (Expense), Net".
EQUITY IN NET INCOME (LOSS) OF UNCONSOLIDATED AFFILIATES: The Corporation's
share of unconsolidated affiliates' income decreased from $4.8 million in the
second quarter of 1994 to $1.7 million in the comparable quarter of 1995. The
decrease is due to the recognition by the Corporation of its $5.6 million equity
in the net income of MIBRAG mbH in the second quarter of 1994. Although MIBRAG
mbH was acquired effective January 1, 1994, the Corporation deferred recognition
of its equity in the net income of MIBRAG mbH for the first quarter of 1994
until certain contingencies existing at March 31, 1994 were resolved in the
second quarter of 1994. See Note 6. "Investments in and Advances to
Unconsolidated Affiliates".
DISPOSITION OF INVESTMENTS IN AFFILIATES: The $1.3 million loss on disposition
of investments in affiliates for the second quarter of 1995 is the result of
writing-down the increase in the carrying value of its investment in an
affiliate resulting from the Corporation's recognition of affiliate's periodic
income which increase is not expected to be realized through subsequent
disposition of the affiliate. The $13.8 million loss on disposition of
affiliates for the second quarter of 1994 is the result of the Corporation
writing off its investment in Texas TGV Corporation after Texas TGV's failure to
provide equity financing for a high speed rail system project as required under
the franchise agreement. See Note 3. "Disposition of Investments in Affiliates".
INCOME TAX EXPENSES: The Corporation recognized tax expense for the second
quarter of 1995 of $.9 million consisting only of estimated foreign and state
income taxes relating to certain jurisdictions in which the Corporation had net
taxable income. The Corporation did not provide any tax benefit in 1995 because
management could not predict with reasonable certainty the amount of such
benefit which would be realized from future taxable income. Income taxes
provided in the second quarter of 1994 was based upon an estimated annual
effective tax rate of 40.0% which was slightly lower than the Corporation's
blended statutory tax rate of 40.85% because of anticipated utilization of
foreign tax credits to offset U.S. income taxes.
DISCONTINUED OPERATIONS: Consistent with the presentation of MK Rail as a
discontinued operation, the Corporation's share of MK Rail's results of
operations for the three month period ended June 30, 1994 and the
Corporation's gain recognized from MK Rail's sale of stock in May 1994, have
been segregated and reported as discontinued operations in the statements of
operations. On May 3, 1994, MK Rail completed an IPO of 6,000,000 shares of
its common stock at an offering price of $16.00 per share which decreased the
Corporation's investment to 65%. The Corporation recognized a $24.0 million
pretax gain with respect to such shares because MK Rail's public offering
price per share exceeded the Corporation's carrying value per share.
I-18
<PAGE>
RESULTS OF OPERATIONS
SIX MONTH PERIOD ENDED JUNE 30, 1995 COMPARED TO THE SIX MONTH PERIOD ENDED
JUNE 30, 1994
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994 (a)
- -----------------------------------------------------------------
<S> <C> <C>
Revenue
Engineering and construction $ 929,713 $955,191
Transit 221,307 23,911
- -----------------------------------------------------------------
Total revenue $1,151,020 $979,102
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Operating income (loss)
Engineering and construction $20,625 $ 1,760
Transit (3,805) (63,904)
- -----------------------------------------------------------------
Total operating income (loss) $16,820 $(62,144)
- -----------------------------------------------------------------
- -----------------------------------------------------------------
<FN>
(a) Certain amounts reclassified to conform to 1995 financial statement
presentation.
</TABLE>
ENGINEERING AND CONSTRUCTION: E&C's revenue for the first six months of 1995 was
$929.7 million, a decrease of $25.5 million compared to the same period of 1994
reflecting the decline in new work booked in prior periods.
The E&C segment reported $20.6 million operating income for the first six months
of 1995 compared to $1.8 million operating income in the comparable period of
1994. The results of operations for the first six months of 1995 were affected
by the recognition of certain unusual items consisting of (i) a $12.8 million
favorable impact from the settlement of claims on contracts completed in prior
periods which benefit was partially offset by (ii) the adverse impact of a $2.2
million provision for anticipated costs of settling a long-term real estate
obligation.
The results of operations for the first six months of 1994 were affected by the
recognition of a $17.6 million charge to write down investments in two
environmental businesses and fixed assets and provide for an anticipated loss on
a long-term project which charge was partially offset by (ii) the benefit from
recognition of $1.4 million proceeds from a claim settlement.
TRANSIT: Transit's revenue for the first six months of 1995 was $221.3 million
an increase of $197.4 million compared to the same period of 1994. The increase
was due to the higher volume of new transit car deliveries for the first six
months of 1995 as reflected in the table below.
<TABLE>
<CAPTION>
NUMBER OF TRANSIT CARS
-------------------------------------------------------------------
SHIPPED SHIPPED DURING REMAINING IN
UNDER THROUGH SIX MONTHS ENDED BACKLOG AT
NEW TRANSIT CAR CUSTOMER CONTRACT DEC. 31, 1994 JUNE 30, 1995 JUNE 30, 1995
<S> <C> <C> <C> <C>
Metro North Commuter Railroad 48 (12) (33) 3
Illinois Metra Authority 173 (3) (7) 163
National Railroad Passenger Corporation 50 - - 50
Bay Area Rapid Transit District 80 (1) (31) 48
California Department of Transportation:
Inter-city cars 66 - (20) 46
Commuter cars 47 - - 47
- -------------------------------------------------------------------------------------------------------------------
Total New Transit Cars 464 (16) (91) 357
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Transit reported a $3.8 million operating loss in the first half of 1995
compared to a $63.9 million operating loss in the comparable period of 1994. The
1995 operating loss stems almost entirely from the recognition of
non-manufacturing overhead costs and expenses.
I-19
<PAGE>
In the first half of 1994 the Transit segment recognized $59.4 million of pretax
charges to operating income for anticipated cost overruns on fixed-price new
transit cars in the early stages of production which were anticipated to be
manufactured and delivered in 1995 and 1996.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expense for the
first half of 1995 increased $8.8 million or 52% compared to the same period of
1994. The increase is due to substantial non-recurring expenses for legal and
other professional fees associated with pending litigation and financial
restructuring offset by allocations of centralized common-services costs to
segment operations.
INTEREST EXPENSE: Interest expense for the first half of 1995 increased $12.6
million from $1.8 million in the same period of 1994. The significant increase
in interest expense in 1995 is attributed to a substantially higher level of
short-term debt outstanding during the first half of 1995 compared to the
comparable period of 1994 and a weighted average cost of borrowing during the
first half of 1995 of 9.4% compared to 4.2% during the comparable period of
1994.
OTHER INCOME (EXPENSE), Net: Other income of $1.7 million, net for the first
half of 1995 is comprised principally of interest earned on short-term
investments. Other expense, net for the first half of 1994 is comprised
principally of losses on disposals of assets, write-downs of certain assets held
overseas, and a loan-guarantee loss, offset by investment gains, underwriting
income and gain from MK Gold's sale of stock. See Note 8. "Other Income
(Expense), Net".
EQUITY IN NET INCOME (LOSS) OF UNCONSOLIDATED AFFILIATES: The Corporation's
share of unconsolidated affiliates' income for the first half of 1995 remained
about the same as reported for the comparable period of 1994 due to the
recognition by the Corporation of its $5.7 million and $5.6 million equity in
the net income of MIBRAG mbH for the first six months of 1995 and 1994,
respectively. See Note 6. "Investments in and Advances to Unconsolidated
Affiliates".
DISPOSITION OF INVESTMENTS IN AFFILIATES: The $8.1 million net loss on
disposition of investments in affiliates for the first half of 1995 consisted of
a pretax gain of $10.0 million in connection with the sale of a McConnell Dowell
subsidiary, offset by a pretax loss of $9.3 million in connection with the
Corporation's sale in June 1995 of its remaining ownership interest in MK Gold
Company and a pretax loss provision of $8.8 million to write-down the carrying
amount of its investment in MK Investments, Inc. (North Pacific construction
operations). The $8.9 million net loss on disposition of investments in
affiliates for the first half of 1994 resulted from a $4.9 million gain on the
Corporation's sale of a portion of its ownership interest in Strait Crossing
Development, Inc. and a $13.8 million loss from writing off the Corporation's
investment in Texas TGV after Texas TGV's failure to provide equity financing
for a high speed rail system project as required under the franchise agreement.
See Note 3. "Disposition of Investments in Affiliates".
INCOME TAX EXPENSES: The Corporation recognized tax expense for the first half
of 1995 of $2.3 million consisting only of estimated foreign and state income
taxes relating to certain jurisdictions in which the Corporation had net taxable
income. The Corporation did not provide any tax benefit in 1995 because
management could not predict with reasonable certainty the amount of such
benefit which would be realized from future taxable income. Income taxes
provided in the first half of 1994 was based upon an estimated annual effective
tax rate of 40.0% which was slightly lower than the Corporation's blended
statutory tax rate of 40.85% because of anticipated utilization of foreign tax
credits to offset U.S. income taxes.
DISCONTINUED OPERATIONS: In connection with its decision to sell MK Rail, the
Corporation recorded a loss from discontinued operations of $31.4 million in
March 1995, without providing any future tax benefit. The loss includes (i) a
$25.5 million write-down of the Corporation's carrying value of its investment
in MK Rail to estimated net realizable value based upon information available in
the circumstances and (ii) an estimated $5.9 million provision for the
Corporation's share of MK Rail's estimated net operating loss until the expected
time of disposal. See Note 2. "Changes in Business - Discontinued Operations".
Consistent with the presentation of MK Rail as a discontinued operation, the
Corporation's share of MK Rail's results of operations for the three and six
month periods ended June 30, 1994 and the Corporation's gain recognized from MK
Rail's sale of stock in May 1994 have been segregated and reported as
discontinued operations in the statements of operations. On May 3, 1994, MK Rail
completed an IPO of 6,000,000 shares of its common stock at an offering price of
$16.00 per share which decreased the Corporation's investment to 65%. The
Corporation recognized a $24.0 million pretax gain with respect to such shares
because MK Rail's public offering price per share exceeded the Corporation's
carrying value per share.
I-20
<PAGE>
FINANCIAL CONDITION
<TABLE>
<CAPTION>
Liquidity and capital resources (THOUSANDS OF DOLLARS) JUNE 30,
-------------------------
1995 1994
<S> <C> <C>
CASH AND CASH EQUIVALENTS:
Beginning of period $65,088 $80,108
End of period 72,877 97,203
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1995 1994
<S> <C> <C>
NET CASH PROVIDED (USED) BY:
Operating activities $(117,380) $(81,313)
Investing activities 35,859 (15,005)
Financing activities 114,932 113,413
</TABLE>
Total capitalization at June 30, 1995 was $312.9 million, and consisted of
$309.0 million debt and $3.9 million equity compared to total capitalization at
December 31, 1994 of $264.3 million, which consisted of $201.4 million debt and
$62.9 million equity.
Net cash used for operating activities of $117.4 million in the first half of
1995 included an increase in accounts receivable at June 30, 1995 of $60.0
million. These accounts receivable were sold at December 31, 1994, cancelled
effective March 31, 1995, and subsequently absorbed into the new bank credit
facility on April 11, 1995. In addition, the balance of $57.4 million was
principally used to fund cost overruns on fixed-price contracts, which cost
overruns had been fully reserved in prior periods.
Net cash used for operating activities of $81.3 million in the first half of
1994 was primarily used to fund Transit segment inventories, accounts receivable
and unbilled receivables.
Net cash provided by investing activities in the first half of 1995 of $35.9
million arose principally from (i) $4.3 million net proceeds from sales and
purchases of securities available for sale (ii) $32.5 million proceeds from the
sales of investments in affiliates which included $10.0 million from the sale of
McConnell Dowell's ownership interest in Benjamin Developments, Ltd. and $22.5
million from the sale of the Corporation's ownership interest in MK Gold and
(iii) $1.7 million from collection of outstanding accounts receivables from
affiliates.
Net cash used by investing activities in the first half of 1994 of $15.0 million
resulted from (i) $7.5 million for net acquisitions of property and equipment
and (ii) $7.5 million net investment in and advances to unconsolidated
affiliates. See Note 3. "Disposition of Investments in Affiliates".
Net cash provided by financing activities in the first half of 1995 of $114.9
million included $121.1 million additional borrowings under bank credit
agreements less the payment of the fourth quarter 1994 cash dividend of $6.2
million.
Net cash provided by financing activities in the first half of 1994 of $113.4
million included $132.1 million additional net borrowings under bank credit
agreements less the payment of $19.2 million cash dividends for the three
quarters ended June 1994.
LIQUIDITY
As of August 18, 1995, the Corporation had available cash and credit of $75.9
million for working capital requirements. The Corporation expects significant
negative cash flow from operations during 1995, due primarily to the funding of
the operating losses recognized in 1994, interest cost on bank debt and legal
and professional service fees in connection with the Corporation's legal
proceedings and financial restructuring. Cash has been generated from the sales
of non-core businesses, including MK Gold Corporation which was sold in June
1995 for $22.5 million cash and Western Aircraft, Inc. which was sold in July
1995 for $4.9 million cash. During the second half of 1995, planned sales of
other non-core business units, including MK Rail Corporation, McConnell Dowell
and North Pacific construction operations
I-21
<PAGE>
and the investment in AmerBank are, if consummated, expected to generate
significant cash which is required to be used to repay existing indebtedness. No
assurance can be given as to the amount or timing of the proceeds from such
sales.
On April 11, 1995, the Corporation and certain lenders entered into a Credit
Facility ("the Facility") under which the lenders provided secured bridge loans
of $110.0 million and waived conditions of default under its unsecured credit
agreements through May 31, 1995. The Facility established $50.0 million of new
credit capacity and the absorption of an existing $60.0 million accounts
receivable facility. On April 25, 1995 the Facility was amended to include an
additional accounts receivable facility of $12.1 million. The $122.1 million
outstanding under the secured bridge loans was due and payable on May 31, 1995.
On June 14, 1995, a second amendment was signed which extended the maturity date
and waivers to July 31, 1995. Interest on the outstanding balance under the
Facility accrues at the prime rate plus three percent, (12% at June 30, 1995)
and is payable on the last day of each month. Interest on the antecedent bank
debt, equal to the prime rate (9% at June 30, 1995) is generally payable on the
last day of each month. The Corporation repaid $31.2 million of the secured
bridge loans prior to June 30, 1995.
On August 11, 1995, the Corporation, its bank lenders and sureties agreed as
of July 31, 1995 to a restructuring of the Corporation's existing indebtedness
and the establishment of new interim credit facilities, expiring September 1,
1995 to advance funds to the Transit segment prior to its planned divestiture as
a limited liability company, anticipated by September 1, 1995. The restructuring
provides, among other things, for (i) an increase in the amount of the secured
bridge loans from $122.1 million to $129.0 million, (ii) extension of the
maturity date for the secured bridge loans to March 31, 1996 and extension of
the maturity date for the antecedent bank debt to December 31, 1996, (iii)
mandatory repayment of $100.0 million of antecedent bank debt on September 30,
1996, (iv) required repayments with the net cash proceeds from sales of certain
businesses and assets, and cash collected on certain receivables and (v) the
granting of stock purchase warrants to the lender banks and sureties.
The restructuring provides that ongoing indebtedness of the Corporation to the
banks and its surety syndicate to be secured. In connection with the
restructuring the Corporation would also receive limited bonding capacity.
The Corporation anticipates that the funds available under the restructuring
agreements together with the net proceeds from planned sales of businesses and
assets currently held for sale and collection of certain receivables should
provide sufficient liquidity until September 30, 1996 when the Corporation
believes, a substantial recapitalization through an equity infusion or new debt
will be required.Unless the Corporation is able to obtain alternative sources of
cash to meet the scheduled repayments at September 30, 1996 and December 31,
1996 required under the restructuring, the Corporation may, among other
alternatives, seek protection from its creditors under the United States
Bankruptcy Code. The Corporation believes that, in such circumstances, the
ability, if any, of its stockholders to recover their investments would be
significantly impaired and that any such recovery, if available, would be
substantially delayed.
I-22
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Corporation previously has reported in its Annual Report on
Form 10-K for the fiscal year ending December 31, 1994, that
lawsuits in the following four general categories currently are
pending against the Corporation and its directors and/or
officers: (1) class actions relating to transactions in the
common stock of the Corporation ("MK Securities Class Actions");
(2) class actions relating to the issuance of, and transactions
in, the common stock of MK Rail ("MK Rail Securities Class
Actions"); (3) derivative actions brought by persons who claim to
be stockholders of the Corporation ("Derivative Actions"); and
(4) claims brought by the former stockholders of Touchstone, Inc.
("Touchstone Litigation").
The MK Securities Class Actions consist of seven separate cases
which have been consolidated as IN RE: MORRISON KNUDSEN
SECURITIES LITIGATION, No. 94-0334-S-EJL (U.S. District Court,
Dist. of Idaho) (first filed July 28, 1994). The defendants
include the Corporation, certain of the Corporation's current and
former officers, and the Corporation's auditors. The MK Rail
Securities Class Actions consist of two cases relating to the
issuance of, and transactions in, the common stock of MK Rail
which have been consolidated in the U.S. District Court for the
District of Idaho. The defendants include the Corporation, MK
Rail, certain current and former officers and directors of the
Corporation and MK Rail, and the managing underwriters of MK
Rail's initial public offering. Those two cases are: SUSSER, ET
AL. V. AGEE, ET AL., No. CIV 94-0477-S-LMB (U.S. District Court
for the District of Idaho); and NEWMAN, ET AL. V. AGEE, ET AL.,
No. CIV 94-0478-S-EJL (U.S. District Court for the District of
Idaho) (both filed October 20, 1994).
The Derivative Actions consist of 13 derivative actions which
have been filed in state courts in Idaho and Delaware , naming as
defendants certain of the Corporation's President and former
Directors and Officers. The Corporation is a nominal defendant in
each of these actions. The five Idaho derivative cases are as
follows: (i) DEKLOTZ, ET AL. V. MORRISON KNUDSEN CO., ET AL.,
No. CV-00-9500605D (Idaho District Court, Ada County) (filed
February 13, 1995); (ii) WOHLGELERNTER V. AGEE, ET AL., No.
CV-OC-9500656D (Idaho District Court, Ada County) (filed March
24, 1995); (iii) FLINN V. AGEE, ET AL., No. CV-OC-9500765D
(Idaho District Court, Ada County) (filed February 21, 1995);
(iv) STEINER V. AGEE, ET AL., No. CV-OC-9500745D (Idaho District
Court, Ada County) (filed February 17, 1995); and (v) STATE BOARD
OF ADMINISTRATION OF FLORIDA V. MORRISON KNUDSEN CORPORATION, ET
AL., No. CV-OC-9502463D (Idaho District Court, Ada County) (filed
June 2, 1995) and the eight Delaware derivative cases are as
follows: (i) STERN V. AGEE, ET AL., Civil Action No. 14032
(Delaware Chancery Court) (filed February 13, 1995); (ii) HAGER
V. AGEE, ET AL., Civil Action No. 14034 (Delaware Chancery
Court) (filed February 14, 1995); (iii) TROY V. AGEE, ET AL.,
Civil Action No. 14167 (Delaware Chancery Court) (filed March 31,
1995); (iv) CAFFREY V. AGEE, ET AL., Civil Action No. 14033
(Delaware Chancery Court) (filed February 13, 1995); (v)
HAMMERSLOUGH V. AGEE, ET AL., Civil Action No. 14042 (Delaware
Chancery Court) (filed February 17, 1995); (vi) ROSENN V. AGEE,
ET AL., Civil Action No. 14106 (Delaware Chancery Court) (filed
March 9, 1995); (vii) CITRON V. AGEE, ET AL., Civil Action No.
14136 (Delaware Chancery Court) (filed March 22, 1995); and
(viii) ANTONICELLO V. AGEE, ET AL., Civil Action No. 14182
(Delaware Chancery Court) (filed April 4, 1995).
The Touchstone Litigation consists of two cases brought by the
former stockholders of Touchstone which currently are pending in
U.S. District Court in Tennessee: THEODORE E. NELSON V. MORRISON
KNUDSEN CORP., No. 95-1029 (U.S.D.C. W.D. Tenn.) (filed February
7, 1995); and RICHARD JACOBS, ET AL. V. MORRISON KNUDSEN CORP.,
No. 95-1024 (U.S.D.C. W.D. Tenn.) (filed February 7, 1995). The
plaintiffs, who among other things purport to state claims for
violation of federal and Tennessee securities laws, purport to be
all of the stockholders of Touchstone prior to the Corporation's
acquisition of Touchstone through an exchange offer. The
Corporation is the sole defendant in these two cases. The
Corporation has been advised that the plaintiffs have filed a
separate lawsuit against William J. Agee, the Corporation's
former chairman: RICHARD L. JACOBS, ET AL. V. WILLIAM J. AGEE,
No. 95-1168 (U.S.D.C. W.D. Tenn.) (filed July 18, 1995). The
Corporation further has been advised that the complaint naming
Mr. Agee, which contains allegations similar to those against the
Corporation, has not been served and that such case currently
remains inactive.
II-1
<PAGE>
As has been previously reported, settlement discussions have been
held among the Corporation, MK Rail, certain of their present and
former officers and directors, their insurance carriers, the
underwriter defendants, and plaintiffs, and that those
discussions have resulted in agreements as to the principal terms
of settlement of the MK Securities Class Actions, the MK Rail
Securities Class Actions and the Derivative Actions (other than
the FLORIDA case pending in Idaho) as to all defendants in those
cases other than the Corporation's auditors. Discussions are
continuing between certain of the plaintiffs and defendants with
respect to the final terms of the memoranda of understanding with
respect to the settlements. Once the final terms have been agreed
to, it is anticipated that the parties will enter into formal
settlement documentation; the settlements then will be submitted
for and be subject to approval by the appropriate courts.
The settlement terms will require the Corporation, as its share
of the settlement; to (i) issue 2,976,923 shares of Common Stock
in connection with the settlement of the MK Securities Class
Actions, (ii) issue 869,231 shares of Common Stock in connection
with the settlement of the MK Rail Securities Class Actions,
(iii) pay the net (after plaintiffs attorneys fees and related
expenses) insurance proceeds received by the Corporation in
connection with the settlement of the Derivative Actions into a
settlement fund to be created in connection with the settlement
of the MK Securities Class Actions, and (iv) implement certain
corporate governance procedures (including, among other things,
making reasonable efforts to appoint up to seven additional
non-employee directors, a presumption that Board and Stockholders
meetings will be held in Boise or certain other specified
locations, disclosure of certain common memberships of directors
or their immediate families on governing bodies of not-for-profit
organizations, and a requirement that future executive
compensation not be based on non-recurring items without
stockholder approval). In addition, the defendant non-employee
directors (other than Mrs. Peden) would relinquish five years of
credited service for purposes of the Corporation's Retirement
Plan for Non-Employee Directors. The settlement terms also would
require MK Rail, as its share of the settlement of the MK Rail
Securities Class Actions, to issue 413,793 shares of Common Stock
and shares of a new class of Preferred Stock with a redemption
value of $1 million. The Corporation's insurance carriers will
pay $35 million (including the amounts referred to in clause
(iii) above) on behalf of the individual defendants in the MK
Securities Class Actions and the Derivative Actions, and MK
Rail's insurance carrier will pay $6 million into a settlement
fund to be created in connection with the settlement of the MK
Rail Securities Class Actions, such payments to be made with
respect to the individual defendants in those cases. The funds
paid by MK Rail's insurance carrier will include the purchase
from the settlement fund of the MK Rail Preferred Stock referred
to above for $1 million. As part of the proposed settlement of
the Derivative Actions, Mr. Agee would relinquish his claim to
contractual severance pay and all other contractual benefits
other than his Supplemental Savings Plan account (approximately
$350,000 as of April 20, 1995, the date the Plan was terminated),
a reduced lifetime (with right of survivorship) annual
supplemental retirement benefit of $99,750 commencing in 1995,
and prepaid medical and dental benefits for Mr. Agee and his
family.
In connection with the agreements as to the principal terms of
settlement of the MK Securities Class Actions, the MK Rail
Securities Class Actions, and the Derivative Actions (other than
the FLORIDA case pending in Idaho), the Corporation and MK Rail
accrued a total estimated liability of $29 million at December
31, 1994. However, there can be no assurance that all the parties
to these agreements will agree on the terms of the final
settlement or that such final settlement will be approved by the
appropriate courts.
The Corporation has been advised that it may become
subject to an ongoing investigation by the Central Regional
Office of the Securities and Exchange Commission of the issuance
by the City and County of Denver of revenue bonds to finance the
construction of the new Denver International Airport. A
subsidiary of the Corporation is a joint venture partner of The
Greiner/MKE Team, which was the program management support
consultant in connection with the construction of the new
airport.
II-2
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
FILED IN PART I
None
FILED IN PART II
The exhibits to this Quarterly Report on Form 10-Q are listed in
the Exhibit Index contained elsewhere in this Quarterly Report.
(b) Reports on Form 8-K
The Registrant filed current reports on Form 8-K to report that
(i) on April 11, 1995, the Registrant filed Form 12b-25
Notification of Late Filing on March 31, 1995 with respect to its
Annual Report on Form 10-K which it expected to file on May 1,
1995 and that the Registrant and certain of its current lenders
entered into a new credit agreement under which the lenders would
provide secured loans of up to $110 million (ii) on May 1, 1995,
the Registrant was not able to file its Annual Report on Form
10-K on May 1, 1995 (iii) on June 6, 1995, the Registrant
completed the sale of its 35% ownership interest in MK Gold
Company for cash and postponed its annual meeting of stockholders
pending filing of its Annual Report on Form 10-K, and (iv) on
June 30, 1995, the Registrant's annual meeting of stockholders
would be held on Friday, September 8, 1995 in Boise, Idaho.
All other items required under Part II are omitted because they are not
applicable.
SIGNATURES
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.
MORRISON KNUDSEN CORPORATION
/S/ M.E. Howland
-------------------------------------------------
Vice President and Controller and Principal
Accounting Officer, in his respective capacities
as such
Date: August 21, 1995
II-3
<PAGE>
MORRISON KNUDSEN CORPORATION
EXHIBIT INDEX
EXHIBITS MARKED WITH AN ASTERISK ARE FILED HEREWITH, THE REMAINDER OF THE
EXHIBITS HAVE HERETOFORE BEEN FILED WITH THE COMMISSION AND ARE
INCORPORATED BY REFERENCE.
EXHIBIT
NUMBER EXHIBITS
- ------- --------
4.1* Third Amendment to the registrant's Rights Agreement effective as of
August 1, 1995 with Norwest Bank Minnesota, N.A., as Successor Rights
Agent to Bank of America National Trust and Savings Association.
4.2* The registrant's Override Agreement dated as of July 31, 1995 with
Mellon Bank, N.A., as Agent, and other financial institutions named
therein.
4.3* The registrant's Amended and Restated Credit Agreement dated as of
July 31, 1995 with Mellon Bank, N.A., as Administrative Agent and
Co-Agent, and other financial institutions named therein with combined
commitments of the banks in the aggregate of $129 million.
4.4* The registrant's Credit Agreement dated as of July 31, 1995 with
Mellon Bank, N.A., as Agent and other financial institutions named
therein with combined commitments of the banks in the aggregate of $25
million.
4.5* The registrant's Revolving Credit Agreement with Bank of America
National Trust and Savings Association, as Agent, and other financial
institutions named therein.
4.6* The form of Warrant to purchase 9,415,696 Shares of Common Stock of
the registrant by the financial institutions named therein.
4.7* The form of Warrant to Purchase 4,613,695 Shares of Common Stock of
the registrant by the financial institutions named therein.
4.8* The form of Warrant to Purchase 830,039 Shares of Common stock of the
registrant by Fidelity and Deposit Company of Maryland and certain
cosureties and other reinsurers.
4.9* The registrant's Securities Purchase Agreement dated as of July 31,
1995 with Mellon Bank, N.A., as Agent, and other financial
institutions named therein.
4.10* The registrant's Securities Purchase Agreement dated as of July 31,
1995 with Fidelity and Deposit Company of Maryland and certain
cosureties and other reinsurers.
4.11* The registrant's Registration Rights Agreement dated as of July 31,
1995 with certain financial institutions in connection with Warrants
to Purchase 14,029,391 shares of Common Stock of the registrant.
4.12* The registrant's Registration Rights Agreement dated as of July 31,
1995 with Fidelity Deposit Company of Maryland and certain cosureties
and other reinsurers in connection with Warrants to Purchase 830,039
shares of Common Stock of the registrant.
4.13* The registrant's Indemnification and Reimbursement Agreement dated as
of July 31, 1995 with Fidelity and Deposit Company of Maryland and
Colonial American Casualty and Surety Company.
4.14* The registrant's Guaranty dated as of July 31, 1995 with Bank of
America National Trust and Savings Association, as agent, and other
financial institutions named therein.
<PAGE>
4.15 The registrant agrees to provide the Securities and Exchange
Commission, upon request, with copies of instruments defining the
rights of holders of other long-term debt of the registrant.
10.1* The registrant's Forbearance Agreement dated as of June 30, 1995, with
Mellon Bank, N.A., United States National Bank of Oregon and Emkay
Development Company, Inc., a wholly owned subsidiary of registrant.
10.2* The registrant's Key Employee Retention Incentive Plan.
10.3* The registrant's Retention Severance Pay Plan.
10.4 Form of registrant's Indemnification Agreement (filed as Exhibit B to
Proxy Statement dated March 23, 1987, and incorporated herein by
reference.) A schedule listing the individuals with whom the
registrant has entered into such agreements is filed herewith.
27.* Financial Data Schedule.
<PAGE>
Exhibit 4.3
ITEM 1.1
$129,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF
JULY 31, 1995
AMONG
MORRISON KNUDSEN CORPORATION,
A DELAWARE CORPORATION,
AND
MORRISON KNUDSEN CORPORATION,
AN OHIO CORPORATION,
AS BORROWERS
THE BANKS AND OTHER FINANCIAL INSTITUTIONS LISTED HEREIN
AS LENDERS
MELLON BANK, N.A.,
AS ADMINISTRATIVE AGENT
AND
MELLON BANK, N.A. AND
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AS CO-AGENTS
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................ 2
1.1. Definitions................................................ 2
1.2. Accounting Terms and Determinations........................ 20
1.3. General Construction....................................... 20
ARTICLE II AMOUNT AND TERMS OF THE LOANS.............................. 20
2.1. The Loans.................................................. 20
2.2. Notice of Borrowing........................................ 21
2.3. Notice to Lenders; Funding of Loans........................ 21
2.4. Notes...................................................... 22
2.5. Maturity of Loans.......................................... 23
2.6. Interest Rates............................................. 23
2.7. Fees....................................................... 23
(a) Closing Fee.......................................... 23
(b) Administrative Agent's Fee........................... 23
(c) Bank of America's Fee................................ 24
(d) Collateral Agent's Fee............................... 24
(e) Fees Cumulative...................................... 24
2.8. Optional Prepayments....................................... 24
2.9. Mandatory Prepayment....................................... 25
2.10. Application of Payments.................................... 26
2.11. General Provisions as to Payments.......................... 26
2.12. Computation of Interest and Fees........................... 27
2.13. Cash Management System..................................... 27
ARTICLE III CHANGE IN CIRCUMSTANCES.................................... 27
3.1. Increased Cost............................................. 27
3.2. Taxes...................................................... 28
ARTICLE IV SECURITY................................................... 29
4.1. The Borrowers' Obligations................................. 29
4.2. Further Assurances......................................... 30
ARTICLE V CONDITIONS PRECEDENT....................................... 30
5.1. Conditions Precedent to Effectiveness of Agreement......... 30
(a) Restructuring Documents.............................. 30
(b) The Notes............................................ 30
(c) Legal Opinion of the Borrowers' Counsel.............. 30
(d) Insurance............................................ 31
(e) Perfection and Priority of Personal Property Security
Interests............................................ 31
(f) Descriptions with Respect to Real Property Collateral 31
(g) Mortgages; Landlord Waivers.......................... 31
(h) Title Policies....................................... 31
(i) Environmental Inspection............................. 32
(j) Defaults under Indebtedness.......................... 32
(k) Consents............................................. 32
(l) Disbursement Authorization........................... 32
i
<PAGE>
(m) Payment of Fees and Expenses......................... 33
(n) Pending and Threatened Litigation.................... 33
(o) Asset Disposition Program............................ 33
(p) The Restructuring.................................... 33
(q) Closing Date Paydown................................. 33
(r) Other Matters........................................ 33
5.2. Additional Conditions Precedent - Surrender of Existing Notes 33
5.3. Conditions Precedent to All Loans.......................... 33
(a) Borrowings........................................... 34
(b) Representations and Warranties....................... 34
(c) No Default or Event of Default....................... 34
(d) No Violations........................................ 34
(e) Certificate of Chief Financial Officer Regarding the
Budget............................................... 34
(f) Officer's Certificate................................ 34
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................. 35
6.1. Organization and Qualification............................. 35
6.2. Corporate Power and Authorization; Binding Effect.......... 35
6.3. No Conflict................................................ 35
6.4. No Consents................................................ 36
6.5. Absence of Litigation...................................... 36
6.6. No Default under the Restructuring Documents............... 36
6.7. Indebtedness............................................... 36
6.8. Material Contracts......................................... 37
6.9. Correctness of Collateral Schedules........................ 37
6.10. Correctness of Financial Information....................... 37
6.11. Security Documents......................................... 38
6.12. Taxes...................................................... 38
6.13. No Burdensome Restrictions................................. 38
6.14. Judgments.................................................. 38
6.15. Compliance with Laws....................................... 38
6.16. Compliance with ERISA...................................... 39
6.17. Governmental Authorizations; Permits, Licenses and
Accreditations; Other Rights............................... 39
6.18. Environmental Matters...................................... 40
6.19. No Material Adverse Effect................................. 40
6.20. Consolidated Subsidiaries; Subsidiaries.................... 40
6.21. Margin Securities.......................................... 40
6.22. Investment Company Act..................................... 41
6.23. Business Locations and Trade Names......................... 41
6.24. Title to Real Property and Other Assets.................... 41
6.25. Labor Matters.............................................. 41
6.26. Employment and Investment Agreements....................... 41
6.27. No Misstatements........................................... 42
6.28. Restructuring.............................................. 42
6.29. MK Rail Lock Box........................................... 42
6.30. Cash Management System..................................... 42
ii
<PAGE>
ARTICLE VII AFFIRMATIVE COVENANTS...................................... 42
7.1. Financial Statements; Additional Reporting Requirements.... 42
7.2. Provision of Notices....................................... 45
7.3. Filing of Returns; Payment of Taxes........................ 46
7.4. Maintenance of Existence................................... 46
7.5. Compliance with Laws....................................... 47
7.6. Maintenance of Properties.................................. 47
7.7. Insurance.................................................. 47
7.8. Books and Records.......................................... 48
7.9. Compliance With Terms of All Real Property Related
Agreements................................................. 48
7.10. Hazardous Materials........................................ 48
7.11. Intellectual Property Assignments.......................... 48
7.12. Further Assurances......................................... 49
7.13. Inspection of Property, Books and Records.................. 49
7.14. Use of Proceeds............................................ 49
7.15. Compliance with Asset Disposition Program.................. 49
7.16. Standstill Agreements...................................... 50
7.17. Cash Management System..................................... 50
ARTICLE VIII NEGATIVE COVENANTS......................................... 50
8.1. Indebtedness............................................... 50
8.2. Negative Pledge............................................ 51
8.3. Prohibition of Fundamental Changes......................... 52
8.4. Prohibition on Sale of Assets.............................. 52
8.5. Investments................................................ 53
8.6. Compliance with ERISA...................................... 53
8.7. Restricted Payments........................................ 53
8.8. Transactions With Affiliates............................... 54
8.9. Sale/Lease-Backs........................................... 54
8.10. Operating Leases........................................... 54
8.11. Capital Expenditures....................................... 54
8.12. Amendment of Charter or Bylaws............................. 54
8.13. No Consent to Subordination................................ 54
8.14. Intercompany Obligations................................... 55
8.15. Transit Division Operations................................ 55
ARTICLE IX DEFAULTS................................................... 55
9.1. Events of Default.......................................... 55
9.2. The Lenders' Remedies...................................... 58
9.3. Other Remedies............................................. 59
9.4. Waivers by Borrowers....................................... 60
ARTICLE X THE ADMINISTRATIVE AGENT AND CO-AGENTS..................... 60
10.1. Appointment................................................ 60
10.2. Administrative Agent, Co-Agents and Affiliates............. 60
10.3. Retention of Documents and Information to the Lenders...... 61
10.4. Delegation of Duties....................................... 61
10.5. Limitation of Liability.................................... 61
iii
<PAGE>
10.6. Reliance by the Administrative Agent and Co-Agents......... 62
10.7. Notice of Default.......................................... 62
10.8. Non-Reliance on the Administrative Agent, Co-Agents and the
Other Lenders.............................................. 63
10.9. Collateral................................................. 63
10.10. Indemnification............................................ 64
10.11. Each Agent in its Individual Capacity...................... 64
10.12. Successor Administrative Agent and Co-Agent................ 64
10.13. Applicability of Section to The Borrowers.................. 65
ARTICLE XI JOINT AND SEVERAL LIABILITY................................ 66
11.1. Joint and Several Liability................................ 66
11.2. The Guarantees............................................. 66
11.3. Guarantees Unconditional................................... 66
11.4. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances...................................... 67
11.5. Waivers by The Borrowers................................... 67
11.6. Subrogation................................................ 69
11.7. Stay of Acceleration....................................... 69
ARTICLE XII TREATMENT OF LENDER'S APPLICABLE PRO RATA SHARES........... 70
12.1. Funding of Loans........................................... 70
12.2. Prepayments and Repayments of Loans........................ 70
12.3. Treatment of Maximum Loan Amounts and Commitments.......... 71
12.4. Treatment of Loans for Voting Purposes..................... 71
12.5. Equalization of Applicable Pro Rata Shares................. 71
12.6. Administrative Agent's Calculation of Applicable Pro Rata
Shares..................................................... 71
ARTICLE XIII MISCELLANEOUS.............................................. 72
13.1. Notices.................................................... 72
13.2. Entire Agreement........................................... 72
13.3. No Waivers................................................. 72
13.4. Expenses; Indemnification.................................. 72
13.5. Set-Off; Sharing of Set-Offs............................... 73
13.6. Amendments and Waivers..................................... 74
13.7. Effect of Waivers; Modification of Documents............... 75
13.8. Successors and Assigns..................................... 76
13.9. Headings and Captions...................................... 77
13.10. Interpretation............................................. 77
13.11. Inconsistencies With Other Documents....................... 77
13.12. Severability............................................... 77
13.13. GOVERNING LAW.............................................. 77
13.14. CONSENT TO JURISDICTION.................................... 77
13.15. WAIVER OF JURY TRIAL....................................... 78
13.16. Cumulative Remedies........................................ 78
13.17. Survival of Representations and Warranties................. 78
13.18. Relationship of the Parties................................ 78
13.19. Counterparts............................................... 78
13.20. T-Co Term Sheet............................................ 78
iv
<PAGE>
EXHIBITS
EXHIBIT A FORM OF PROMISSORY NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C BUDGET
EXHIBIT D T-CO TERM SHEET
EXHIBIT E FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
SCHEDULES
SCHEDULE A SCHEDULE OF LENDERS
SCHEDULE B SCHEDULE OF THE EXISTING LENDERS AND EXISTING AGREEMENTS
SCHEDULE C SCHEDULE OF DOCUMENTS
SCHEDULE D SCHEDULE FOR NOTICES
SCHEDULE E SCHEDULE OF GUARANTORS
SCHEDULE F CASH MANAGEMENT SYSTEM
SCHEDULE G SCHEDULE OF REAL PROPERTY COLLATERAL
SCHEDULE 5.1(h) SCHEDULE OF TITLE POLICIES
SCHEDULE 5.1(j) SCHEDULE OF FUNDED DEBT DEFAULTS
SCHEDULE 5.1(n) SCHEDULE OF PENDING AND THREATENED LITIGATION
SCHEDULE 6.7A SCHEDULE OF INDEBTEDNESS
SCHEDULE 6.7B SCHEDULE OF CONTINGENT OBLIGATIONS
SCHEDULE 6.8 SCHEDULE OF MATERIAL CONTRACTS
SCHEDULE 6.8A MATERIAL DEFAULTS
SCHEDULE 6.14 SCHEDULE OF JUDGMENTS
SCHEDULE 6.16 SCHEDULE OF MULTIEMPLOYER PLAN WITHDRAWAL LIABILITY
SCHEDULE 6.19 SCHEDULE OF MATERIAL ADVERSE EFFECTS
SCHEDULE 6.20 SCHEDULE OF SUBSIDIARIES
SCHEDULE 6.23A SCHEDULE OF BUSINESS LOCATIONS
SCHEDULE 6.23B SCHEDULE OF TRADE NAMES
SCHEDULE 6.24 SCHEDULE OF CONTRACTS OR OPTIONS FOR SALE OR
LEASE OF REAL PROPERTY COLLATERAL
SCHEDULE 6.26 SCHEDULE OF EMPLOYMENT AND INVESTMENT AGREEMENTS
SCHEDULE 7.1(k) BACKLOG CERTIFICATE
SCHEDULE 7.2(c)(a) SCHEDULE OF REPORTABLE EVENTS
SCHEDULE 7.2(c)(b) SCHEDULE OF PLAN TERMINATIONS
SCHEDULE 8.1 SCHEDULE OF EXISTING INDEBTEDNESS
SCHEDULE 8.2 SCHEDULE OF PERMITTED LIENS
SCHEDULE 8.5 SCHEDULE OF PERMITTED INVESTMENTS
SCHEDULE 8.10 SCHEDULE OF OPERATING LEASES
SCHEDULE 13.4 SCHEDULE OF STEERING COMMITTEE LENDERS
v
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement"), dated
as of July 31, 1995, is entered into among MORRISON KNUDSEN CORPORATION ("MKD"),
a Delaware corporation, and MORRISON KNUDSEN CORPORATION ("MKO"), an Ohio
corporation (each a "Borrower," and collectively, the "Borrowers"), the banks
and other financial institutions named on SCHEDULE A hereto (the "Schedule of
Lenders") and whose signatures appear on the signature pages hereto (each,
together with its successors and assigns, a "Lender," and collectively, the
"Lenders"), Mellon Bank, N.A., as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"), and Mellon Bank, N.A. and Bank of America
National Trust and Savings Association as co-agents for the Lenders (in such
capacity, the "Co-Agents").
The parties hereto agree as follows:
RECITALS
A. The Borrowers are currently indebted to certain of the Lenders (the
"Existing Bridge Loan Lenders") in the amount of approximately $77,000,000 (the
"Bridge Loan"), pursuant to that certain Credit Agreement dated as of April 11,
1995, as amended April 25, 1995 and June 1, 1995 (the "Credit Agreement").
B. MKO and MKD have obligations (funded, contingent or otherwise) of
approximately $521,600,000 (the "Existing Indebtedness") to certain lenders or
their predecessors in interest (the "Existing Lenders") pursuant to the terms of
the respective loan agreements and other financing arrangements set forth on the
Schedule of the Existing Lenders and Existing Agreements attached hereto as
SCHEDULE B (the "Existing Agreements").
C. The Borrowers are currently indebted to Fidelity and Deposit Company
of Maryland and Colonial American Casualty and Surety Company and certain other
sureties for payment and/or performance bonds.
D. The Borrowers have requested, and the Lenders, the Existing Lenders,
Fidelity and Deposit Company of Maryland, and Colonial American Casualty and
Surety Company have agreed to, a restructuring of the Existing Indebtedness and
the Bridge Loan, the establishment of an interim credit facility to finance the
operations required in connection with the Metra Contract, (as hereinafter
defined) (the "Metra Transaction"), and the establishment of an as yet unformed
and unnamed limited liability company ("T-Co"), as contemplated by the terms of
the T-Co Term Sheet (as hereinafter defined) (the "T-Co Transaction"). The
1
<PAGE>
Borrowers anticipate that T-Co will be formed by September 1, 1995, and that
prior to such formation, certain of the Lenders will advance funds to MKO's
transit division (the "Transit Division") pursuant to various credit facilities
as set forth in the T-Co Term Sheet (the "Interim T-Co Transaction"). The
restructuring of the Existing Indebtedness, the Bridge Loan, the Metra
Transaction and the Interim T-Co Transaction shall collectively be referred to
as the "Restructuring."
E. In connection with the Restructuring, the Borrowers have requested
the Lenders to amend and restate the Credit Agreement to, among other things,
increase the amount of the secured loans to up to approximately $129,000,000 to
be used for non Transit Division working capital purposes.
F. The Lenders are willing to agree to the above requests on the terms
and conditions set forth herein and in the documents executed in connection
herewith, including the condition that the Borrowers secure their obligations
under this Agreement with substantially all of their assets.
In consideration of the foregoing, MKD, MKO, the Administrative Agent, the
Co-Agents and each of the Lenders hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Additional Capital Expenditure Indebtedness" has the meaning
assigned to it in SECTION 8.1(e).
"Administrative Agent" means Mellon Bank, N.A., in its capacity
as administrative agent for the Lenders hereunder, and its successors in such
capacity.
"Administrative Agent's Fee" has the meaning assigned to it in
SECTION 2.7(b).
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. As used herein, the term "control" means possession, directly
or indirectly, or the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
2
<PAGE>
"Agents" means, collectively, the Administrative Agent, the
Co-Agents and the Collateral Agent.
"All Lenders" means one hundred percent (100%) of the Lenders
listed on SCHEDULE A without regard to their Applicable Pro Rata Share.
"Alpha Loan" means any Loan to the extent that, after giving
effect to such Loan, the aggregate unpaid balance of the Loans does not exceed
$69,198,468.
"Alpha Pro Rata Share" for each Lender means that percentage set
forth opposite such Lender's name as its Alpha Pro Rata Share on the Schedule of
Lenders.
"Applicable Pro Rata Share" means, with respect to each Lender,
such Lender's Alpha Pro Rata Share, Beta Pro Rata Share, Equalization Pro Rata
Share or Outstanding Pro Rata Share, as the case may be, determined in
accordance with ARTICLE XII and (except with respect to the Outstanding Pro
Rata Share) as set forth on the Schedule of Lenders.
"Asset Disposition Program" means a program designed by the
Borrowers setting forth a detailed list of actions to be taken by specified
dates with respect to the proposed disposition of assets, including dates when
materials are to be prepared and when solicitations are to be commenced relating
to the Borrowers or the following Subsidiaries: MK Rail Corporation;
McConnell Dowell Corporation Limited; AmeriBank; Morrison Knudsen Investments,
Inc.; MK Pacific, Inc.; G.W. Murphy Construction Company, Inc.; E.E. Black
Limited; Black Construction Corporation; Black Micro Corporation; and P.T.E.E.
Black Indonesia. For purposes of this Agreement, any disposition of MKO's
interest under any leases or subleases pertaining to real property in Fayette
County, West Virginia, shall be considered a disposition under the Asset
Disposition Program.
"Assignee" has the meaning assigned to it in SECTION 13.8(c).
"Bank of America Fee" has the meaning assigned to it in SECTION
2.7(c).
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multi-employer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Beta Loan" means any Loan to the extent that, after giving
effect to such Loan, the aggregate unpaid balance of the Loans exceeds
$69,198,468 but is less than the Equalization Date Loan Amount.
3
<PAGE>
"Beta Pro Rata Share" for each Lender means that percentage set
forth opposite such Lender's name as its Beta Pro Rata Share on the Schedule of
Lenders.
"Bonding Company" means, collectively, Fidelity and Deposit
Company of Maryland and Colonial American Casualty and Surety Company or any
such other Person that provides the Borrowers or their Subsidiaries with payment
or performance bonds.
"Borrower" means MKD or MKO and the "Borrowers" means both of
the foregoing.
"Borrowing" means a borrowing consisting of Loans made on the
same day.
"Borrowing Period" has the meaning assigned to it in SECTION
2.1.
"Bridge Loan" has the meaning assigned to it in RECITAL A.
"Budget" means the projections of the Borrowers for the period
from July 1, 1995 through the Termination Date attached hereto as EXHIBIT C or
such other budget submitted by the Borrowers and accepted by the Majority
Lenders as an acceptable substitute Budget.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City, New York, Los Angeles,
California or Pittsburgh, Pennsylvania are authorized by law to close.
"Capital Expenditures" means, as to any Person, any expenditures
for the acquisition or construction of fixed assets which would be capitalized
on a balance sheet of such Person prepared in accordance with Generally Accepted
Accounting Principles.
"Capital Lease" means, as to any Person, any lease of property
by such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Generally Accepted Accounting Principles.
"Capital Lease Obligation" means, as to any Person,
collectively, the capitalized amount of the obligations of such Person and its
Subsidiaries under all Capital Leases.
"Cash Equivalent" means, at any time, (a) United States of
America government securities having a maturity not exceeding one year from the
date acquired, (b) commercial paper rated at least A-l+ by Standard & Poor's
Corporation or P-1 by
4
<PAGE>
Moody's Investors Service, Inc., having a maturity not exceeding one year from
the date acquired, (c) certificates of deposit or time deposits of commercial
banks with capital and undivided surplus of at least $300,000,000 issuing
commercial paper rated as described in the preceding clause (b) and organized
and existing under the laws of the United States or any State thereof or the
District of Columbia, having a maturity not exceeding one year from the date
acquired, and (d) time deposits (of one year or less) and demand deposits with
any FDIC insured bank, not exceeding the maximum amount insured thereby.
"Cash Management System" means the Cash Management System set
forth on SCHEDULE F.
"Closing Date" means July 31, 1995, or such other later date on
which the Administrative Agent shall have determined that all conditions
precedent set forth in ARTICLE V have been satisfied in full or waived.
"Co-Agents" means Mellon Bank, N.A. and Bank of America National
Trust and Savings Association as co-agents for the Lenders hereunder, and their
successors in such capacity.
"Collateral" means collectively, all real and personal property,
fixtures and interests in such property and proceeds thereof presently owned or
hereafter created or acquired by the Borrowers or the Guarantors, including the
Real Property Collateral, in which a security interest, Mortgage or ship
mortgage is granted in favor of the Collateral Agent for the benefit of the
Lenders to secure the Obligations.
"Collateral Account" shall have the meaning assigned to it in
SCHEDULE F.
"Collateral Agent" means the entity or person serving as the
"Collateral Agent and Mortgage Trustee" under and as defined in the Collateral
Agent Agreement, in its capacity as agent or trustee for the Lenders, or any
successor agent or trustee pursuant to the terms thereof.
"Collateral Agent Agreement" means the Amended and Restated
Collateral Agent Agreement and Mortgage Trust dated as of July 31, 1995, among
the Lenders, the Co-Agents, the Administrative Agent and the Collateral Agent.
"Commitment" means, with respect to each Lender, the amount set
forth opposite the name of such Lender on the Schedule of Lenders as such
Lender's commitment.
"Commonly Controlled Entity" means a Person, which is under
common control with a Borrower within the meaning of Section 414(b) or Section
414(c) of the Internal Revenue Code.
5
<PAGE>
"Concentration Account" has the meaning assigned to it in
SCHEDULE F.
"Consolidated," when used with respect to any of the terms
defined herein, refers to such terms as reflected in a consolidation of the
accounts or other items of the Borrowers and of the accounts or other items of
the Borrowers' Subsidiaries, if any, in conformity with Generally Accepted
Accounting Principles.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be Consolidated in accordance with
Generally Accepted Accounting Principles with those of the Borrowers in their
Consolidated financial statements if such statements were prepared as of such
date; PROVIDED, that any Consolidated Subsidiary which ceases to be a
Consolidated Subsidiary solely because it is classified as a discontinued
operation shall be deemed to be a Consolidated Subsidiary so long as it remains
a Subsidiary.
"Contingent Obligations" means, as to any Person, collectively,
all Indebtedness, obligations or other liabilities of such Person guarantying or
in effect guarantying the payment or performance of any Indebtedness, obligation
or other liability, whether or not contingent (collectively, the "primary
obligations"), of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including any Indebtedness, obligation or other
liability of such Person (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) any contingent reimbursement
obligation of such Person in respect of any letter of credit or any other
financing accommodations, or (e) otherwise to assure or hold harmless the owner
of such primary obligation against loss with respect thereto.
"Contractual Obligation" means, as to any Person, collectively,
any Indebtedness, obligation or other liability of such Person (whether for the
payment of money or otherwise), now existing or hereafter arising, whether due
or not due, absolute or contingent, liquidated or unliquidated, direct or
indirect, express or implied, individually or jointly with others, pursuant to
the provisions of any security issued by such Person or any document, instrument
or agreement to which such Person is a party or by which such Person or any of
its property is or may be bound or affected.
6
<PAGE>
"Credit Agreement" has the meaning assigned to it in RECITAL
A.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" means a rate of interest equal to the Prime Rate
plus five percent (5%) per annum, PROVIDED, that to the extent the Default
Rate exceeds the Maximum Lawful Rate, the Default Rate shall be a rate equal to
the Maximum Lawful Rate.
"Deposit Bank" has the meaning assigned to it in SCHEDULE F.
"Environmental Laws" means all Federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any applicable judicial
or administrative interpretation thereof relating to the disposal of waste and
the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 ET
SEQ.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C. Sections 1801 ET SEQ.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. Sections 136 ET SEQ.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 ET SEQ.)
("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. Sections 2601
ET SEQ.); Clean Air Act, as amended (42 U.S.C. Sections 7400 ET SEQ.); the
Federal Water Pollution SEQ.); the Clean Air Control Act, as amended (33 U.S.C.
Sections 1251 ET SEQ.); the Occupational Safety and Health Act, as amended (29
U.S.C. Sections 651 ET SEQ.) ("OSHA"); and the Safe Drinking Water Act, as
amended (42 U.S.C. Sections 300(f) ET SEQ.); and any and all regulations
promulgated thereunder, and all analogous state and local counterparts or
equivalents and any transfer of ownership notification or approval statutes.
"Equalization Date" means the earlier of: (i) the first day, if
any, upon which the aggregate outstanding principal balance of the Loans equals
$129,000,000, (ii) September 1, 1995, (iii) the date of the consummation of the
T-Co Transaction; or (iv) the date upon which the Outstanding Pro Rata Share for
each Lender is equal to the Equalization Pro Rata Share for each Lender as
determined by the Administrative Agent.
"Equalization Date Loan Amount" means a balance of the Loans
(calculated on the date of determination by the
7
<PAGE>
Administrative Agent, taking into consideration all Loans made and all
prepayments and repayments received, as each may be allocated in accordance with
each Lender's Applicable Pro Rata Share) at which each Lender's Outstanding Pro
Rata Share shall equal its Equalization Pro Rata Share.
"Equalization Pro Rata Share" for each Lender means that
percentage set forth opposite such Lender's name as its Equalization Pro Rata
Share on the Schedule of Lenders.
"Equipment Asset Pool Intercreditor Agreement" means an
Intercreditor and Subordination Agreement which may be entered into by and among
Fidelity and Deposit Company of Maryland and Colonial American Casualty and
Surety Company, Mellon Bank, N.A. as agent and collateral agent for itself and
the other Lenders and Mellon Bank, N.A., as agent and collateral agent for
itself and the other Existing Lenders. (Nothing in this Agreement shall imply
that any party is obligated to enter into the Equipment Asset Pool Intercreditor
Agreement and each party shall decide, in its sole and absolute discretion,
whether to enter into such an agreement.)
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrowers and their Subsidiaries and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrowers or any of their Subsidiaries, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Event of Default" has the meaning set forth in SECTION 9.1.
"Existing Agreements" has the meaning assigned to it in RECITAL
B; PROVIDED that, unless the context otherwise requires, all references to
Existing Agreements shall be references to the Existing Agreements as modified
by the Override Agreement.
"Existing Bridge Loan Lenders" has the meaning assigned to it in
RECITAL A.
"Existing Indebtedness" has the meaning assigned to it in
RECITAL B.
"Existing Lenders" has the meaning assigned to it in RECITAL
B.
"Existing Note" means each promissory note of the Borrowers
evidencing the obligations of such Borrower to each
8
<PAGE>
Existing Bridge Loan Lender under the Credit Agreement, and "Existing Notes"
means all of the foregoing.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, PROVIDED, that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to Mellon Bank, N.A. on such day on such transactions as determined by
the Administrative Agent.
"Financing Shortfall" means the amounts set forth on the Budget
as "Financing Shortfall."
"Financing Statements" means any Uniform Commercial Code
financing statement on form UCC-1 or a comparable form executed pursuant to the
provisions of this Agreement or any of the other Loan Documents or any such
similar statement to be filed in Canada.
"Five Party Agreement" means that certain Five Party Agreement
dated as of July 31, 1995 among the Borrowers, the Bonding Company and Mellon
Bank, N.A. as agent under the T-Co Interim Credit Agreement.
"Form 10-K" means the annual report on Form 10-K as filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
"Form 10-Q means the report on Form 10-Q as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Generally Accepted Accounting Principles" means accounting
principles that are generally accepted and consistently applied and maintained
throughout the period indicated and that are consistent with the prior financial
practices of the Borrowers, except for changes mandated by the Financial
Accounting Standards Board or any similar accounting authority of comparable
standing.
"Governmental Authority" means any nation, province, state or
other political subdivision thereof, any government or any natural person or
entity exercising executive, legislative,
9
<PAGE>
regulatory or administrative functions of or pertaining to government.
"Guarantor" means each of the indirectly or directly
wholly-owned Subsidiaries of each Borrower listed on SCHEDULE E and
"Guarantors" means all of the foregoing.
"Guaranty" means, collectively, a Guaranty Agreement dated as of
April 11, 1995, and the Reaffirmation and Consent Regarding Guaranty dated July
31, 1995, made by a Guarantor in favor of the Co-Agents for the benefit of the
Lenders guarantying the Obligations.
"Guaranty Security Agreement" means a Security and Pledge
Agreement (Guaranty) dated as of April 11, 1995, as amended July 31, 1995, among
a Guarantor and the Collateral Agent securing the Obligations under such
Guarantor's Guaranty.
"Hazardous Materials" means (i) any substance, material or
waste, which is either (a) defined as, (b) included in the definition, listing
or identification of, or (c) otherwise regulated as, a "solid waste," "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous waste"
or "restricted hazardous waste" or other similar term or phrase under any
Environmental Laws, or (ii) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls, or radioactive substances.
"Indebtedness" of any Person means without duplication, any
obligation of such Person for borrowed money, including (a) any obligation of
such Person evidenced by bonds, debentures, notes or other similar debt
instruments, (b) any obligation of such Person for the deferred purchase price
of any property or services, except trade accounts payable of such Person with a
maturity of not greater than 90 days incurred in the ordinary course of such
Person's business, (c) any obligation of such Person as lessee under a Capital
Lease, (d) Contingent Obligations, (e) any reimbursement obligation in respect
of any letter of credit or any other financing accommodations, and (f) any
obligation for borrowed money which is non-recourse to such Person but which is
secured by a Lien on any asset of such Person.
"Intercreditor Agreements" means the Transit Division
Intercreditor Agreement, the MKO/MKD Asset Pool Intercreditor Agreement, and the
Equipment Asset Pool Intercreditor Agreement.
"Interim T-Co Transaction" has the meaning assigned to it in
RECITAL D.
10
<PAGE>
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Investments" has the meaning assigned to it in SECTION 8.5.
"Lender" and "Lenders" have the meanings assigned to them in the
preamble hereto, and shall include the Administrative Agent and the Co-Agents,
in their individual capacity.
"Lien" means, as to any asset, (a) any lien, charge, claim,
mortgage, security interest, pledge or other encumbrance of any kind with
respect to such asset, (b) any interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title retention agreement
relating to such asset, (c) any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
affecting such asset, or (d) any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction other than a precautionary
financing statement with respect to a lease that is not in the nature of a
security interest).
"Loan Documents" means this Agreement, the Notes, the Security
Documents, each Guaranty, the Collateral Agent Agreement, the Intercreditor
Agreements, and any other of those documents listed on the Schedule of Documents
and therein specified to be executed and delivered, or caused to be executed and
delivered, by the Borrowers or the Guarantors to the Agents or the Lenders in
connection with this Agreement; PROVIDED, that the Override Agreement and
related loan documents, the T-Co Interim Credit Agreement and related loan
documents, and the Metra Interim Credit Agreement and related loan documents,
shall not be included in the definition of Loan Documents.
"Loan" and "Loans" have the meaning assigned to them in SECTION
2.1.
"Majority Lenders" means the Lenders holding at least sixty-six
and two-thirds percent (66 2/3%) of the Equalization Pro Rata Shares.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
any Borrower, Guarantor or any of their Consolidated Subsidiaries; (b) the
ability of any Borrower, Guarantor or their Consolidated Subsidiaries to pay or
perform the Obligations under the Loan Documents in accordance with the
11
<PAGE>
terms thereof; (c) the Collateral or the Collateral Agent's Liens on the
Collateral or the priority of any such Lien; or (d) the Lenders' rights and
remedies under any Loan Documents or the other Restructuring Documents.
"Material Contract" means, as to the Borrowers or their
Consolidated Subsidiaries, a Contractual Obligation (a) the cancellation,
non-performance or non-renewal of which by any party thereto could have or
result in a Material Adverse Effect on the Borrowers or the Borrowers and their
Consolidated Subsidiaries taken as a whole or (b) which involves amounts,
payments or Indebtedness in excess of $10,000,000.
"Maximum Lawful Rate" means the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable under this Agreement.
"Maximum Loan Amount" has the meaning assigned to it in SECTION
2.1.
"Metra" means the Commuter Rail Division of the Regional
Transportation Authority, d/b/a Metra/Metropolitan Rail.
"Metra Contract" means that certain contract, as amended,
executed as of March 9, 1992, by and between Metra and MKO.
"Metra Interim Credit Agreement" means that certain Revolving
Credit Agreement dated as of July 31, 1995 among MKO, Bank of America National
Trust and Savings Association as agent and the financial institutions named
therein as lenders.
"Metra Transaction" has the meaning assigned to it in RECITAL
D.
"MKD" means Morrison Knudsen Corporation, a Delaware
corporation, and its successors.
"MKD Security Agreement" means the Pledge and Security Agreement
dated as of April 11, 1995 as amended July 31, 1995, executed by MKD in favor of
the Collateral Agent, for the benefit of the Administrative Agent, the Co-Agents
and the Lenders, granting a security interest in the personal property
Collateral described therein.
"MKO" means Morrison Knudsen Corporation, an Ohio corporation,
and its successors.
"MKO/MKD Asset Pool Intercreditor Agreement" means that certain
Intercreditor and Subordination Agreement, dated July 31, 1995, by and between
Mellon Bank, N.A., as agent and
12
<PAGE>
collateral agent for itself and the other Lenders, and Mellon Bank, N.A., as
agent and collateral agent for itself and the other Existing Lenders.
"MKO Security Agreement" means the Pledge and Security Agreement
dated as of April 11, 1995 as amended July 31, 1995, executed by MKO in favor of
the Collateral Agent, for the benefit of the Administrative Agent, the Co-Agents
and the Lenders, granting a security interest in the personal property
Collateral described therein.
"MK Rail" means MK Rail Corporation, a Delaware corporation.
"MK Rail Global Settlement Agreement" means the Global
Settlement Agreement dated as of June 15, 1995 by and among MKO, MK Rail and
MKD.
"MK Rail Note" means that certain Note dated June 26, 1995,
issued by MK Rail Corporation in favor of MKO in the amount of $52,200,000,
which Note was issued pursuant to the MK Rail Global Settlement Agreement.
"Mortgages" means, collectively, the fee and leasehold deeds of
trust and mortgages and any modifications thereto, executed by any Borrower or
Guarantor in favor of the Collateral Agent for the benefit of the Lenders,
granting a lien on and security interest in the Real Property Collateral.
"Multi-employer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Multiparty Agreement" means that certain agreement between the
Borrowers, the Bonding Company and the Collateral Agent dated as of April 11,
1995 as amended April 25, 1995, May 31, 1995, June 7, 1995 and July 31, 1995.
"Net Cash Proceeds" means, with respect to either the sale or
refinancing of any asset of any Borrower or any Consolidated Subsidiary or any
other transaction identified in SECTION 2.9, all amounts payable to such
Borrower or such Consolidated Subsidiary as a result of such transaction after
payment of (i) all reasonable and customary closing costs, including brokerage
commissions, appraisal fees, recording fees, attorneys' fees, title insurance
premiums, inspection report charges, prepayment penalties payable to senior
lienholders, escrow credits in favor of the purchaser or financier, customary
13
<PAGE>
prorations, transfer and other taxes, escrow fees, points and other loan fees,
and (ii) Indebtedness secured by Senior Permitted Liens on such asset.
"North Pacific Operations" means, collectively, the operations
of E.E. Black, Limited, G.W. Murphy Construction Company, Inc., Black Micro
Corporation, P.T.E.E. Black Indonesia, and Black Construction Corporation.
"Notes" means promissory notes of a Borrower, substantially in
the form of EXHIBIT A hereto, evidencing the obligation of such Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Acceleration" means a written notice sent to the
Borrowers pursuant to SECTION 9.2, accelerating the Obligations.
"Notice of Borrowing" has the meaning assigned to it in SECTION
2.2.
"Notice of Default" means a written notice sent to the Borrowers
notifying the Borrowers that an Event of Default has occurred.
"Obligations" means, as to each Borrower or Guarantor,
collectively, all liabilities of the Borrowers and the Guarantors, arising in
connection with or pursuant to the provisions of this Agreement, the Notes, or
the other Loan Documents, owing to the Administrative Agent, the Co-Agents or
the Lenders of any kind and description, now existing or hereafter arising,
whether due or not due, absolute or contingent, liquidated or unliquidated,
direct or indirect, express or implied, individually or jointly with others,
howsoever evidenced or acquired (including, without limitation, any interest
which accrues on any such amounts after the commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization of any
Borrower or Guarantor, whether or not allowed or allowable as a claim in any
such proceeding) including the payment and performance of all Indebtedness,
obligations and other liabilities of such Borrower or Guarantor and overdraft
coverage and account funding obligations in connection with the Cash Management
System, arising in connection with or pursuant to the provisions of this
Agreement, the Notes or the other Loan Documents; PROVIDED, HOWEVER, the
Obligations shall not include any Indebtedness, obligations or other liabilities
arising under the Existing Agreements, the Override Agreement and related loan
documents, the T-Co Interim Credit Agreement and related loan documents, or the
Metra Interim Credit Agreement and related loan documents.
14
<PAGE>
"Operating Lease" means, as to any Person, any lease of property
(whether real, personal or mixed) by such Person as lessee which is not a
Capital Lease.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or from the execution or delivery of, or otherwise with respect to, this
Agreement or any Note.
"Outstanding Pro Rata Share" for each Lender shall be, as of the
date of determination, the quotient, expressed as a percentage, obtained by
dividing (a) the then outstanding unpaid principal balance of such Lender's
Loans as of the close of banking business on the date of determination by (b)
the aggregate outstanding unpaid principal balance of all Loans as of close of
banking business on such date.
"Override Agreement" means that certain Override Agreement dated
as of July 31, 1995, among the Borrowers, the Existing Lenders, and Mellon Bank,
N.A. as Agent for the Existing Lenders restructuring the Existing Indebtedness,
as the same may be amended, modified, supplemented and restated from time to
time.
"Parent" means, with respect to any Lender, any Person
controlling such Lender directly or indirectly.
"Participant" has the meaning set forth in SECTION 13.8(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, collectively, those certain Liens, in
existence on the date hereof, described in SCHEDULE 8.2 and as permitted under
SECTION 8.2.
"Person" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, Governmental
Authority or any other form of entity not specifically listed herein.
"Plan" means at any time an employee pension benefit plan (other
than a Multi-employer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any
15
<PAGE>
time within the preceding five years been maintained, or contributed to, by any
Person which was at such time a member of the ERISA Group for employees of any
Person which was at such time a member of the ERISA Group.
"Pre-Closing Transit Expenditures" means expenses spent or
incurred by the Transit Division from July 1, 1995 through July 28, 1995.
"Prime Rate" means, for any day, a rate per annum equal to the
higher of (i) the rate of interest publicly announced by Mellon Bank, N.A. from
time to time as its Prime Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
"Professionals" means, collectively, all attorneys, accountants,
paraprofessionals, appraisers, auditors, inspectors, engineers, title insurance
companies, and environmental experts employed, retained, or internally used by
each of the Steering Committee Lenders or Agents in connection with the
Borrowers' performance of their Obligations or in asserting any of the Agents'
and Lenders' rights or remedies under this Agreement.
"Purchasing Lender" means any Lender whose Equalization Pro Rata
Share of all Loans exceeds its Outstanding Pro Rata Share of all Loans as of the
Equalization Date.
"Real Property" means all of the right, title and interest of
any Borrower or Guarantor in and to land, improvements and fixtures (to the
extent interests therein arise under the real property law of the jurisdiction
where located).
"Real Property Collateral" means, collectively, all of any
Borrower's or Guarantor's right, title and interest in and to the real property
more specifically described on SCHEDULE G attached hereto, including their fee
and leasehold interests in such real property, pledged by such Borrower or
Guarantor, in favor of the Collateral Agent for the benefit of the Lenders,
pursuant to the Mortgages.
"Real Property Lien" has the meaning assigned to it in SECTION
11.5(b)(ii).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reportable Event" means any of the events set forth under
Section 4043(b) of ERISA or the PBGC regulations thereunder for which notice to
the PBGC has not been waived by applicable law or administrative guidance.
16
<PAGE>
"Requirement of Law" means, as to any Person, collectively, (a)
the partnership agreement, certificate of incorporation, bylaws or other
organizational or governing documents of such Person; (b) any Federal, state or
local law, treaty, ordinance, rule or regulation; and (c) any order, decree or
determination of a court, arbitrator or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Restructuring" has the meaning assigned to it in RECITAL D.
"Restructuring Documents" means this Agreement, the Notes, the
Security Documents, each Guaranty, the Collateral Agent Agreement, the Override
Agreement, the Warrants, the Securities Purchase Agreement, the Intercreditor
Agreements, the Metra Interim Credit Agreement, the T-Co Interim Credit
Agreement, the Five Party Agreement, the Multiparty Agreement, the Security
Agreement dated as of the date hereof between MKO and Morgan Guaranty Trust
Company of New York, the Acknowledgement and Assumption Agreement dated as of
the date hereof by MKO, and any other of those documents listed on the Schedule
of Documents and therein specified to be executed and delivered, or caused to be
executed and delivered, by the Borrowers or the Guarantors in connection with
the Restructuring.
"Schedule for Notices" means the schedule annexed as SCHEDULE
D hereto, listing the name, address and wiring instructions for each Lender.
"Schedule of Documents" means the schedule annexed as SCHEDULE
C hereto, listing those documents to be delivered in connection with the
closing of the transactions contemplated by this Agreement and the other
Restructuring Documents.
"Schedule of Lenders" means the schedule annexed as SCHEDULE A
hereto, listing the name of each Lender, such Lender's Commitment and such
Lender's Applicable Pro Rata Share (other than such Lender's Outstanding Pro
Rata Share).
"Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of July 31, 1995 by and among MKD, the banks and
other financial institutions named therein and Mellon Bank, N.A., as agent.
"Security Agreements" means the MKD Security Agreement and the
MKO Security Agreement.
"Security Documents" means the Mortgages, the Security
Agreements, the Guaranty Security Agreements, the Financing Statements, the Ship
Mortgage and all documents,
17
<PAGE>
instruments and agreements now or hereafter executed or delivered pursuant
thereto or in connection therewith.
"Selling Lender" means any Lender whose Outstanding Pro Rata
Share of all Loans exceeds its Equalization Pro Rata Share of all Loans as of
the Equalization Date.
"Senior Permitted Liens" means any Permitted Lien that is senior
to the Lien of the Collateral Agent on any Collateral.
"Ship Mortgage" means the First Preferred Mortgage dated as of
April 11, 1995, as subsequently amended, executed by MKO in favor of Mellon
Bank, N.A. as "Mortgage Trustee" under and as defined in the Collateral Agent
Agreement, with respect to the vessel "Betty L."
"Single Employer Plan" means any Plan which is not a
Multi-employer Plan.
"Steering Committee Lenders" means that certain group of Lenders
acting as the Steering Committee, as such group is constituted on the Closing
Date and may be reconstituted from time to time.
"Subject Equipment" has the meaning set forth in SECTION 8.4.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means any Subsidiary of MKD or MKO.
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any payment
by either Borrower pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, EXCLUDING (i) in the case of each Lender and
the Agents, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which such Lender or the Agents (as
the case may be) is organized or in which its principal executive office is
located and (ii) in the case of each Lender, any United States withholding tax
imposed on such payments but only to the extent that such Lender is subject to
United States withholding tax at the time such Lender first becomes a party to
this Agreement.
"T-Co" has the meaning assigned to it in RECITAL D.
18
<PAGE>
"T-Co Interim Credit Agreement" means that certain $25,000,000
Credit Agreement dated as of July 31, 1995 among the Borrowers, Mellon Bank,
N.A. as the agent and the Lenders, as the same may be amended, modified,
supplemented and restated from time to time.
"T-Co Term Sheet" means the Term Sheet regarding the T-Co
Transaction attached hereto as EXHIBIT D.
"T-Co Transaction" has the meaning assigned to it in RECITAL
D.
"Termination Date" means March 31, 1996, or such earlier date as
the Commitments are terminated or the Loans are accelerated pursuant to SECTION
9.2.
"Transit Division" has the meaning assigned to it in RECITAL
D.
"Transit Division Intercreditor Agreement" means that certain
Intercreditor and Subordination Agreement dated July 31, 1995, by and among
Fidelity and Deposit Company of Maryland and Colonial American Casualty and
Surety Company, Mellon Bank, N.A., as agent and collateral agent for itself and
the other Lenders, Mellon Bank, N.A., as agent and collateral agent for itself
and the other Existing Lenders, Bank of America National Trust and Savings
Association, as agent for itself and the other Metra Lenders, Morgan Guaranty
Trust Company of New York and such other Persons that may be listed as
signatories thereto.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"Uniform Commercial Code" means the Uniform Commercial Code as
the same may, from to time, be in effect in the Commonwealth of Pennsylvania;
PROVIDED, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment perfection or priority of, or remedies with respect
to, the Collateral Agent's or Lenders' security interests in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the Commonwealth of Pennsylvania, the term "Uniform Commercial Code" shall
mean the
19
<PAGE>
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of the Loan Documents relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
"Warrants" means those certain warrants to purchase common
stock of MKD issued pursuant to the Securities Purchase Agreement.
1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
Generally Accepted Accounting Principles.
1.3. GENERAL CONSTRUCTION. As used in this Agreement, the
masculine, feminine and neuter genders, and the plural and singular numbers
shall be deemed to include the others in all cases where they would so apply.
"Includes" and "including" are not limiting, and "or" is not exclusive.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. THE LOANS.
From time to time until the Business Day preceding the
Termination Date, each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to make a loan (each a "Loan", and collectively, the
"Loans"), to the Borrowers during the periods listed below (each such period
being a "Borrowing Period") in a maximum amount equal to its Applicable Pro Rata
Share of the aggregate amount of the Loans set forth below opposite the
Borrowing Period for such Loan (the "Maximum Loan Amount"):
BORROWING PERIOD AGGREGATE AMOUNT OF LOANS
Closing Date - August 20, 1995 $ 110,900,000
August 21, 1995 - September 4, 1995 $ 115,900,000
September 5, 1995 - March 31, 1996 $ 129,000,000
20
<PAGE>
PROVIDED, that the aggregate principal amount of the Loans by such Lender
outstanding at any time during a Borrowing Period to the Borrowers shall not
exceed the amount of its Maximum Loan Amount and during the last Borrowing
Period, its Commitment, as such Maximum Loan Amount and Commitment may be
reduced pursuant to SECTION 2.9. Each Borrowing under this SECTION 2.1
shall be in an aggregate amount of $5,000,000 or multiples thereof;
PROVIDED, that during the last Borrowing Period set forth above, the amount
of any Borrowing which would cause the aggregate Loans to equal the maximum
aggregate amount of Loans permitted during such Borrowing Period need not equal
an integral multiple of $5,000,000. Subject to SECTION 2.9, amounts borrowed
hereunder and repaid or prepaid may be reborrowed. The Borrowers acknowledge
that, as of the Closing Date, taking into account the payment of Pre-Closing
Transit Expenditures pursuant to SECTION 5.1(q), the aggregate principal
amount of the outstanding Loans is $ 69,198,468.
2.2. NOTICE OF BORROWING. The Borrowers shall give notice to the
Administrative Agent by telephone, at the telephone number listed in the
Schedule for Notices, to Administrative Agent's account executive responsible
for Borrowers' account, confirmed immediately in writing, or in writing (by
facsimile at the address listed in the Schedule of Notices), substantially in
the form of EXHIBIT B, or to such other telephone or facsimile number as
Administrative Agent may designate, (a "Notice of Borrowing") no later than
12:00 Noon (Pittsburgh, Pennsylvania time) on the Business Day immediately
preceding a Borrowing Period, specifying:
(a) The date of such Borrowing;
(b) The aggregate amount of such Borrowing; and
(c) That the aggregate amount of such Borrowing, plus the
aggregate outstanding principal amount of the outstanding Loans, do not exceed
the aggregate amount of each Lender's Maximum Loan Amount or the Commitments and
that all the conditions described in Article V of this Agreement have been
satisfied.
2.3. NOTICE TO LENDERS; FUNDING OF LOANS.
(a) Subject to the provisions of SECTION 12.1, upon
receipt of a Notice of Borrowing, the Administrative Agent shall promptly notify
each Lender of the contents thereof and of such Lender's Applicable Pro Rata
Share (if any) of such Borrowing, and such Notice of Borrowing shall not
thereafter be revocable by the Borrowers.
(b) Subject to the provisions of SECTION 12.1, not later
than 1:00 p.m. (Pittsburgh, Pennsylvania time) on the date
21
<PAGE>
of each Borrowing, each Lender shall make available its Applicable Pro Rata
Share (if any) of such Borrowing, in Federal or other funds immediately
available in Pittsburgh, Pennsylvania, to the Administrative Agent at its
address referred to in the Schedule for Notices. Unless the Administrative
Agent determines that any applicable condition specified in ARTICLE V has not
been satisfied, the Administrative Agent will make the funds so received from
the Lenders available to the Borrowers at 3:00 p.m. (Pittsburgh, Pennsylvania
time) at the Administrative Agent's aforesaid address.
(c) Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's Applicable Pro Rata Share
(if any) of such Borrowing, the Administrative Agent may assume that such Lender
has made such Applicable Pro Rata Share available to the Administrative Agent on
the date of such Borrowing in accordance with subsection (b) of this SECTION
2.3 and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrowers on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such Applicable Pro Rata Share
available to the Administrative Agent, such Lender and the Borrowers severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Administrative Agent, at (i) in the case of the Borrowers, a rate
per annum equal to the Prime Rate plus three percent (3%), and (ii) in the case
of such Lender, the Federal Funds Rate. If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Lender's Loan included in such Borrowing for purposes of this
Agreement.
2.4. NOTES.
(a) The Loans of each Lender to the Borrowers shall be
evidenced by a single Note of the Borrowers payable to the order of such Lender
in an original principal amount equal to such Lender's Commitment.
(b) Upon receipt of each Lender's Note pursuant to SECTION
5.1(b), the Administrative Agent shall forward such Note to such Lender. Each
Lender shall record the date, amount and maturity of each Loan made by it to the
Borrowers and the date and amount of each payment of principal made by the
Borrowers with respect thereto, and may, if such Lender so elects in connection
with any transfer or enforcement of its Note, endorse on the schedule forming a
part thereof appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding; PROVIDED, that the failure of any
Lender to
22
<PAGE>
make any such recordation or endorsement shall not affect the obligations of
either Borrower hereunder or under the Notes absent manifest error. Each Lender
is hereby irrevocably authorized by each Borrower so to endorse its Note and to
attach to and make a part of any Note a continuation of any such schedule as and
when required.
2.5. MATURITY OF LOANS. Each Loan included in any Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the
Termination Date.
2.6. INTEREST RATES.
(a) Except as provided in SECTION 2.6(b), each Loan shall
bear interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Prime Rate for such day plus three percent (3%). Interest shall be payable each
calendar month on the last day of such month and on the Termination Date.
(b) Any overdue principal of or interest on any Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate. In addition, from and after the occurrence of any
Event of Default (including any Event of Default resulting from the filing of a
bankruptcy case) and continuing until such Event of Default is cured or has been
waived in writing by the Administrative Agent in accordance with the terms of
this Agreement, interest shall accrue on the Obligations at the Default Rate and
is payable on demand. Any interest, reasonable professional fees and expenses
of the Administrative Agent, the Co-Agents and the Collateral Agent, or other
reasonable professional fees, expenses and charges of the Steering Committee
Lenders due under SECTION 13.4, which are not paid as and when due, shall bear
interest at the Default Rate. The interest rate increase shall take effect
immediately upon the occurrence of an Event of Default, without prior notice to
Borrowers.
2.7. FEES.
(a) CLOSING FEE. The Borrowers shall pay to the
Administrative Agent for the benefit of the Lenders, on the Closing Date, a
closing fee of $1,290,000 to be distributed by the Administrative Agent to each
Lender in an amount equal to such Lender's Equalization Pro Rata Share.
(b) ADMINISTRATIVE AGENT'S FEE. The Borrowers shall pay to
the Administrative Agent on the Closing Date and monthly thereafter on the first
day of each month in advance, a non-refundable fee in an amount equal to $30,000
per month (the "Administrative Agent's Fee"). The Administrative Agent's Fee is
payable from the Closing Date until such time as the Borrowers
23
<PAGE>
and the Administrative Agent have no Obligations under this Agreement and the
other Loan Documents and the obligation to pay the Administrative Agent's Fee
shall survive the payment in full of the Obligations under this Agreement.
(c) BANK OF AMERICA'S FEE. The Borrowers shall pay to Bank
of America National Trust and Savings Association, as Co-Agent, on the Closing
Date and monthly thereafter on the first day of each month in advance, a
non-refundable fee in an amount equal to $30,000 per month (the "Bank of America
Fee"). The Bank of America Fee is payable from the Closing Date until such time
as the Borrowers and the Co-Agents have no Obligations under this Agreement and
the other Loan Documents and the obligation to pay the Bank of America Fee shall
survive the payment in full of the Obligations under this Agreement.
(d) COLLATERAL AGENT'S FEE. The Borrowers shall pay to the
Collateral Agent on the Closing Date and monthly thereafter on the first day of
each month in advance, a non-refundable fee in an amount equal to $30,000 per
month (the "Collateral Agent's Fee"). The Collateral Agent's Fee is payable
from the Closing Date until such time as the Borrowers and the Collateral Agent
have no Obligations under this Agreement and the other Loan Documents and the
obligation to pay the Collateral Agent's Fee shall survive the payment in full
of the Obligations under this Agreement.
(e) FEES CUMULATIVE. All fees payable under this Agreement
shall be cumulative, and fully earned on the date of payment.
2.8. OPTIONAL PREPAYMENTS.
(a) The Borrowers may, upon at least one Business Day's notice
to the Administrative Agent, prepay any Borrowing, in each case in whole at any
time, or from time to time in part in amounts aggregating $1,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay each Lender's Loans in an amount
equal to such Lender's Applicable Pro Rata Share of such prepayment.
(b) Upon receipt of a notice of prepayment pursuant to this
Section, the Administrative Agent shall promptly notify each Lender of the
contents thereof and of such Lender's Applicable Pro Rata Share of such
prepayment and such notice shall not thereafter be revocable by the Borrowers.
24
<PAGE>
2.9. MANDATORY PREPAYMENT.
(a) Immediately upon receipt by any Borrower or any
Consolidated Subsidiary (except Emkay Development Company, Inc.) or the
Administrative Agent of Net Cash Proceeds of (i) any sale, lease or other
disposition of assets (other than sales in the ordinary course of business,
sales under SECTION 8.4(ii), (iii), (iv), and (v), or sales of equipment
which are promptly replaced), (ii) issuance of capital stock by the Borrowers or
(iii) insurance proceeds, the Borrowers shall pay or cause to be paid such Net
Cash Proceeds to the Administrative Agent on account of the Obligations for the
benefit of Lenders; PROVIDED, HOWEVER, that so long as no Event of Default
exists and is continuing at the time such proceeds are received, and unless
otherwise set forth in the Security Documents, (x) the Borrowers may retain up
to an aggregate amount of $1,000,000 of insurance proceeds to rebuild or replace
insured property destroyed or damaged, if such property is capable of being
rebuilt or replaced within a reasonable period of time, (y) the Borrowers may
retain up to the first $10,000,000 of the Net Cash Proceeds from the first to
sell of the capital stock of the North Pacific Operations and McConnell Dowell
Corporation Limited, and (z) the Borrowers may retain up to $10,000,000, in
aggregate, of the Net Cash Proceeds from the sale of the capital stock of
Western Aircraft, Inc. and the funds repatriated from Morrison Knudsen
Engenharia S.A. pursuant to that certain Loan Agreement between MKD and Morrison
Knudsen Engenharia S.A. dated July 7, 1995. Amounts prepaid under this SECTION
2.9(a) may not be reborrowed and each Lender's Maximum Loan Amount and
Commitment shall be reduced in the amount of such Lender's Equalization Pro Rata
Share in such mandatory prepayment.
(b) Immediately upon receipt by the Borrowers of any repayment
or prepayment of the MK Rail Note, the Borrowers shall pay the amount of such
payment received in connection with the MK Rail Note to the Administrative Agent
on account of the Obligations for the benefit of the Lenders. Amounts prepaid
under this SECTION 2.9(b) may not be reborrowed and each Lender's Maximum Loan
Amount and Commitment shall be reduced in the amount of such Lender's
Equalization Pro Rata Share in such mandatory prepayment.
(c) In the event that the Borrowers repay or prepay any
payment of principal on any Indebtedness in connection with the Existing
Agreements, the Borrowers shall prepay the Obligations in full. Amounts
prepaid under this SECTION 2.9(c) may not be reborrowed and each Lender's
Maximum Loan Amount and Commitment shall be reduced in the amount of such
Lender's Equalization Pro Rata Share in such mandatory prepayment.
(d) To the extent funds are on deposit in the Collateral
Account, at the close of business on the last Business
25
<PAGE>
Day of each week, the Borrowers shall pay to the Administrative Agent, for the
benefit of the Lenders in respect of the Obligations, such funds pursuant to the
terms of the Cash Management System or otherwise. Amounts prepaid under this
SECTION 2.9(d) may be reborrowed.
(e) Immediately upon receipt by the Borrowers of any tax
refund, the Borrowers shall pay or cause to be paid the amount of such tax
refunds to the Administrative Agent on account of the Obligations for the
benefit of the Lenders. Amounts prepaid under this SECTION 2.9(e) may not be
reborrowed and each Lender's Maximum Loan Amount and Commitment shall be reduced
in the amount of such Lender's Equalization Pro Rata Share in such mandatory
prepayment.
(f) If at any time the aggregate principal amount of the Loans
of any Lender outstanding at any time exceeds the amount of such Lender's
Maximum Loan Amount or Commitment as such Lender's Maximum Loan Amount and
Commitment may be reduced pursuant to this SECTION 2.9, the Borrowers shall
immediately pay to the Administrative Agent for the benefit of such Lender, the
amount necessary to reduce the aggregate principal amount of such Loans to the
amount of such Lender's Maximum Loan Amount and Commitment.
2.10. APPLICATION OF PAYMENTS. All payments (including
prepayments), other than regularly scheduled interest payments, on the Loans or
on any of the other Obligations (other than Obligations under the Cash
Management System) shall be made to the Administrative Agent for application
against the Borrowers' Obligations as follows (regardless of how each Lender may
treat such payments for purposes of its own accounting): FIRST to then due
and outstanding fees, expenses or other charges of the Administrative Agent, the
Co-Agents, the Steering Committee Lenders or the Collateral Agent under this
Agreement or any of the other Loan Documents to the extent payable by the
Borrowers or the Guarantors; SECOND to then due interest on the Loans accrued
and unpaid prior to the date such funds are received by the Lenders; and THIRD
to the principal balance of the Loans (as provided in SECTION 12.2).
2.11. GENERAL PROVISIONS AS TO PAYMENTS. The Borrowers shall make
each payment of principal of, and interest on, the Loans and of fees and of all
other Obligations (other than Obligations payable under the Cash Management
System) hereunder, not later than 12:00 Noon (Pittsburgh, Pennsylvania time) on
the date when due, in Federal or other funds immediately available in
Pittsburgh, Pennsylvania, to the Administrative Agent at its address referred to
in the Schedule for Notices. Subject to the provisions of SECTION 2.10, the
Administrative Agent will promptly distribute to each Lender entitled to receive
a portion of such payment its Applicable Pro Rata Share (if any) of each
26
<PAGE>
such payment received by the Administrative Agent for the account of the
Lenders. The Borrowers agree to pay to the Administrative Agent, upon demand,
the amount of any payment received by the Administrative Agent pursuant to the
terms of the Cash Management System that is subsequently returned to any bank
that has transferred funds to the Concentration Account in accordance with the
Cash Management System, because such bank transferred funds in advance of final
collection and such funds are not finally collected. If such payment has
already been applied in accordance with SECTION 2.10 and is not paid by the
Borrowers within one (1) Business Day after the Administrative Agent's demand
therefor, then each Lender shall pay to the Administrative Agent the share of
such returned payment received by it. Upon receipt by the Administrative Agent
of any such payment from the Borrowers, or from the Lenders in the event the
Borrowers fail to make such payment after the Administrative Agent's demand, the
Administrative Agent shall pay such funds to Bank of America Illinois, Bank of
America National Trust and Savings Association or Key Bank of Idaho, as
appropriate, in such bank's capacity as a Deposit Bank in order to pay the bank
that transferred funds that were not finally collected and the Loans shall be
reinstated to the extent the Administrative Agent makes such payment. Whenever
any payment of principal of, or interest on, the Loans or of fees with respect
to the Loans or of any other Obligations shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended
by operation of law or otherwise, interest thereon shall be payable for such
extended time.
2.12. COMPUTATION OF INTEREST AND FEES. Interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
2.13. CASH MANAGEMENT SYSTEM. Each Borrower will establish, on or
prior to the Closing Date, and each Borrower will maintain until the Obligations
have been paid in full and all Commitments have been terminated, the Cash
Management System described in SCHEDULE F.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. INCREASED COST.
(a) If any Lender shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or
27
<PAGE>
administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Lender (or its Parent)
as a consequence of such Lender's obligations hereunder to a level below that
which such Lender (or its Parent) could have achieved but for such adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, within 15 days after demand by such Lender (with a copy
to the Administrative Agent), the Borrowers shall pay to such Lender such
additional amount or amounts as will compensate such Lender (or its Parent) for
such reduction.
(b) Each Lender will promptly notify the Borrowers and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
SECTION 3.1. A certificate of any Lender claiming compensation under this
SECTION 3.1 and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
3.2. TAXES.
(a) Any and all payments by either Borrower to or for the
account of any Lender or the Agents hereunder or under any Note or any other
Loan Document shall be made without deduction for any Taxes or Other Taxes;
PROVIDED, that if either Borrower shall be required by law to deduct any Taxes
or Other Taxes from any such payments, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 3.2) such Lender or
the Agents (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Borrower shall make
such deductions, (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law
and (iv) such Borrower shall furnish to the Administrative Agent, at its address
referred to in the Schedule for Notices, the original or a certified copy of a
receipt evidencing payment thereof.
(b) The Borrowers agree to indemnify each Lender and each
Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed or asserted by any jurisdiction on amounts payable under this
SECTION 3.2) paid by such Lender or the Agents (as the case may be) and any
liability
28
<PAGE>
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be paid within 15 days after such Lender or
the Agents (as the case may be) makes demand therefor.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Lender listed on the signature pages
hereof and on or prior to the date on which it becomes a Lender in the case of
each other Lender, and from time to time thereafter if requested in writing by
the Borrowers (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrowers with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which exempts the Lender from United
States withholding tax or reduces the rate of withholding tax on payments of
interest for the account of such Lender or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States.
(d) For any period with respect to which a Lender has failed
to provide the Borrowers with the appropriate form pursuant to SECTION 3.2(c)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Lender shall not be entitled to indemnification under SECTION
3.2(b) or (c) with respect to Taxes imposed by the United States on payments
by such Borrower; PROVIDED, that if a Lender, which is otherwise exempt from
or subject to a reduced rate of withholding tax, becomes subject to Taxes
because of its failure to deliver a form required hereunder, such Borrower shall
take such steps as such Lender shall reasonably request to assist such Lender to
recover such Taxes.
(e) If either Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to this SECTION 3.2, then such
Lender will change the jurisdiction of its lending office to an office it
maintains if, in the judgment of such Lender, such change (i) will eliminate or
reduce any such additional payment which may thereafter accrue and (ii) is not
otherwise disadvantageous to such Lender.
ARTICLE IV
SECURITY
4.1. THE BORROWERS' OBLIGATIONS. The Obligations of the Borrowers
to pay all sums due to the Agents and the Lenders and
29
<PAGE>
to perform all other covenants and agreements under this Agreement, the Notes
and the other Loan Documents to which the Borrowers are a party, shall be
secured to the extent provided in the Security Documents.
4.2. FURTHER ASSURANCES. The Borrowers shall, and shall cause the
Guarantors to, at their sole cost and expense, execute and deliver to the
Administrative Agent or the Collateral Agent for the benefit of the Lenders all
such further documents, instruments and agreements and agree to perform all such
other acts which may be required in the opinion of the Administrative Agent to
enable the Collateral Agent, the Agents and the Lenders to exercise and enforce
their respective rights as the secured parties or beneficiaries under the
Security Documents. To the extent permitted by applicable law, the Borrowers
hereby authorize the Collateral Agent or the Administrative Agent on behalf of
the Lenders to file Financing Statements and continuation statements with
respect to the security interests granted under the Security Documents in favor
of the Collateral Agent for the benefit of the Agents and the Lenders and to
execute such Financing Statements and continuation statements on behalf of the
Borrowers and the Guarantors.
ARTICLE V
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT. This
Agreement shall become effective only upon the satisfaction by the Borrowers of
the following conditions precedent, unless each Lender shall otherwise agree:
(a) RESTRUCTURING DOCUMENTS. The Administrative Agent shall
have received counterpart originals of this Agreement, the other Restructuring
Documents and all the other certificates, schedules, and other items as
specified in the Schedule of Documents attached hereto as SCHEDULE C, each
duly and validly executed and acknowledged, where appropriate, by or on behalf
of all the parties hereto or thereto (as the case may be).
(b) THE NOTES. The Administrative Agent shall have
received, for the benefit of each Lender, a Note conforming to the requirements
of SECTION 2.4 duly and validly executed on behalf of the Borrowers.
(c) LEGAL OPINION OF THE BORROWERS' COUNSEL. The
Administrative Agent shall have received, with an executed counterpart for each
Lender, the legal opinion of Jones, Day, Reavis & Pogue and of Hawley Troxell
Ennis & Hawley, counsel to the Borrowers and Guarantors, and such other counsel
approved by
30
<PAGE>
the Administrative Agent, dated the Closing Date, and addressed to the
Administrative Agent and the Co-Agents for the benefit of the Lenders, in form
and substance satisfactory to the Administrative Agent, and the Co-Agents.
(d) INSURANCE. The Administrative Agent shall have received
a certificate of the issuance of the insurance policies required by SECTION
7.7 and the Security Documents and the naming of the Administrative Agent, for
the benefit of the Lenders, as lender loss payee and/or additional insured (as
specified by the Administrative Agent) thereon under Form 438 BFU together with
certified copies of all existing insurance policies, where available.
(e) PERFECTION AND PRIORITY OF PERSONAL PROPERTY SECURITY
INTERESTS. The Administrative Agent shall have received evidence that the
Financing Statements have been filed as of the Closing Date with the corporate
filing officers in the appropriate locations and that the security interests
capable of being perfected by the filing of a Financing Statement on all of the
personal property Collateral are duly perfected and subject to no prior Liens
other than Permitted Liens. The Administrative Agent shall have received
evidence of Lien searches, through a date satisfactory to the Administrative
Agent, showing no Liens affecting the property covered by the Security Documents
other than those granted in favor of the Agents for the benefit of the Lenders
in connection herewith or Permitted Liens. The Administrative Agent shall have
received all certificates of stock to be delivered pursuant to the Security
Agreements.
(f) DESCRIPTIONS WITH RESPECT TO REAL PROPERTY COLLATERAL.
The Administrative Agent shall have received complete and correct legal
descriptions with respect to all Real Property Collateral.
(g) MORTGAGES; LANDLORD WAIVERS. The Mortgages, or
modifications thereof, each duly and validly executed and acknowledged, where
appropriate, by or on behalf of all the appropriate parties thereto, shall have
been duly recorded in the official real property records of the appropriate
offices of the respective counties (or parishes) in which the Real Property
Collateral relating thereto is located. The Administrative Agent shall have
received all landlord waivers, estoppel certificates and consents with respect
to any leasehold estates required by the Administrative Agent, in form and
substance satisfactory to the Administrative Agent.
(h) TITLE POLICIES. The Administrative Agent shall have
received with respect to each of the Mortgages, or modifications thereof, title
policies or title endorsements, as the case may be, from title companies
acceptable to the Administrative Agent dated as of the Closing Date. Each title
31
<PAGE>
policy shall (a) be in an amount not less than the amount set forth on SCHEDULE
5.1(h), (b) be issued at ordinary premium rates, (c) insure that the Mortgage
insured thereby creates a valid, first priority Lien on the Real Property
Collateral covered by the Mortgage, free and clear of all defects and
encumbrances except such standard printed exceptions contained in the policy
form referred to below as the Administrative Agent may, in its sole discretion,
permit and the Permitted Liens, (d) be in the form of ALTA Extended Coverage
Lenders' Policy -- 1970, (e) contain such endorsements and affirmative coverages
as the Administrative Agent may request, including endorsements for future
advances under this Agreement and for mechanic's liens and (f) where the
Administrative Agent requests, be accompanied by a Uniform Commercial Code
search. The Administrative Agent shall have received evidence satisfactory to
it that all premiums with respect to such policies have been paid by or on
behalf of the Borrowers.
(i) ENVIRONMENTAL INSPECTION. The Administrative Agent
shall have received a copy of the environmental inspection reports regarding all
real property currently leased or owned by the Borrowers, which reports (a)
shall be in form and substance satisfactory to the Administrative Agent and (b)
shall reveal no material violations of any Environmental Material Laws and no
other conditions which are unacceptable to the Administrative Agent in its sole
discretion.
(j) DEFAULTS UNDER INDEBTEDNESS. The Administrative Agent
shall have received a SCHEDULE 5.1(j), certified by the chief executive
officer and chief financial officer of each Borrower, describing any default or
failure of performance or any event which with the giving of notice, or lapse of
time, or both, would become a default by such Borrower under any indenture, loan
agreement, guaranty, promissory note or other Indebtedness to which the
Borrowers or any Guarantors are a party constituting a liability (contingent or
otherwise) equal to or in excess of $2,000,000.
(k) CONSENTS. The Administrative Agent shall have received
evidence reasonably satisfactory to it in its sole discretion that the Borrowers
and any Guarantors have obtained all requisite consents and approvals required
to be obtained from any Governmental Authority, Person or entity whatsoever, to
permit the transactions contemplated by the Restructuring Documents to be
consummated in accordance with their respective terms and conditions.
(l) DISBURSEMENT AUTHORIZATION. The Administrative Agent
shall have received a Notice of Borrowing regarding the disbursement of the
proceeds of the Loans, if any, to be made on the Closing Date.
32
<PAGE>
(m) PAYMENT OF FEES AND EXPENSES. The Borrowers shall have
paid all fees set forth in SECTION 2.7 that are payable on the Closing Date
and such other fees and expenses of the Steering Committee Lenders and their
Professionals set forth in that certain side letter dated July 31, 1995.
(n) PENDING AND THREATENED LITIGATION. The Administrative
Agent shall have received SCHEDULE 5.1(n) and shall have reviewed all such
pending or threatened litigation against the Borrowers and their Subsidiaries,
and such disclosures shall reveal no conditions unacceptable to the
Administrative Agent in its sole discretion.
(o) ASSET DISPOSITION PROGRAM. The Administrative Agent
shall have received the Asset Disposition Program.
(p) THE RESTRUCTURING. The Restructuring shall have been
consummated with all conditions to the effectiveness having been satisfied,
subject only to the execution of this Agreement and the other Loan Documents.
(q) CLOSING DATE PAYDOWN. The Borrowers shall have paid to
the Administrative Agent on behalf of Lenders an amount approximately equal to
the Pre-Closing Transit Expenditures, which amount Borrowers shall have received
from the initial advances under the T-Co Interim Credit Agreement and the Metra
Interim Credit Agreement.
(r) OTHER MATTERS. The Administrative Agent shall have
received all other documents, instruments, agreements, opinions, certificates,
insurance policies, consents and evidences of other legal matters, in form and
substance satisfactory to the Administrative Agent and its counsel, as the
Administrative Agent reasonably may request.
5.2. ADDITIONAL CONDITIONS PRECEDENT - SURRENDER OF EXISTING NOTES.
This Agreement shall become effective only after (i) the Existing Bridge Loan
Lenders shall have delivered the Existing Notes to the Administrative Agent for
cancellation and delivery to the Borrowers.
5.3. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of each of
the Lenders to make any Loans on any date is subject to the satisfaction by the
Borrowers, or the waiver by the Administrative Agent and the Majority Lenders,
of the conditions set forth below. Each Borrowing by the Borrowers shall
constitute a representation and warranty by the Borrowers to the Administrative
Agent and each such Lender, as of each such borrowing, that the conditions in
this SECTION 5.3 have been satisfied.
33
<PAGE>
(a) BORROWINGS. Receipt by the Administrative Agent of a
Notice of Borrowing as required by SECTION 2.2. Immediately after such
Borrowing, the aggregate outstanding principal amount of the Loans will not
exceed the aggregate amount of each Lender's Maximum Loan Amount or the
Commitments.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrowers and the Guarantors and each of them set forth in
this Agreement, the Notes or the other Restructuring Documents, or in any
certificate or opinion by or on behalf of the Borrowers and the Guarantors in
connection herewith, shall be correct on and as of the date of any requested
Loan as if made on and as of such date; PROVIDED, HOWEVER, the Borrowers
may, from time to time, amend SCHEDULE 6.8 (Material Contracts), SCHEDULE
6.20 (Subsidiaries) and SCHEDULE 6.26 (Employment and Investment Agreements)
by providing the Administrative Agent with amendments to such Schedules.
(c) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on the date of such requested Loan
or after giving effect to the Loans to be made on such date.
(d) NO VIOLATIONS. No Requirement of Law shall prohibit,
and no order, judgment or decree of any Governmental Authority shall, and no
litigation shall be pending which would enjoin, prohibit or restrain any Lender
from making a requested Loan.
(e) CERTIFICATE OF CHIEF FINANCIAL OFFICER REGARDING THE
BUDGET. Receipt by the Administrative Agent of a certificate of the chief
financial officer of each of the Borrowers (i) certifying the Borrowers'
compliance with the Budget for the period prior to the Borrowing and (ii)
setting forth projected uses for requested Loans.
(f) OFFICER'S CERTIFICATE. The Administrative Agent shall
have received a certificate of the chief executive officer and the chief
financial officer of each Borrower dated the date of such requested Loan, that
to the best of each officers' knowledge (i) each of the representations and
warranties contained in ARTICLE VI and in any other Loan Document is true and
correct on and as of the date of such requested Loan, with the same force and
effect as if made on and as of such date except to the extent such
representation or warranty was made solely as of an earlier date; (ii) all
obligations, covenants, agreements and conditions contained in this Agreement
and the Restructuring Documents to be performed or satisfied by each Borrower on
or prior to the date of such requested Loan have been performed or satisfied in
all respects or duly waived by the Majority Lenders or All Lenders as the case
may be; (iii) as of the date of such requested Loan and since June 26, 1995, no
34
<PAGE>
Material Adverse Effect has occurred (except as disclosed on SCHEDULE 6.19
hereto); (iv) no Default or Event of Default has occurred, or would result from
the making of such requested Loan; (v) the documents delivered to the
Administrative Agent by each Borrower and each of the Guarantors are true and
correct as of the date of such requested Loan; and (vi) no Liens have arisen or
been granted with respect to the Collateral other than Permitted Liens.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Lenders to enter into this
Agreement, and to make the Loans and other financial accommodations provided for
herein, the Borrowers hereby make the following representations and warranties
to the Agents and to each Lender:
6.1. ORGANIZATION AND QUALIFICATION. Each of the Borrowers and the
Guarantors is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and is duly qualified
and in good standing in each jurisdiction wherein the conduct of its business or
the ownership of its properties requires such qualification, except for those
jurisdictions in which the failure to be qualified and in good standing would
not have or result in a Material Adverse Effect or would not materially
adversely affect the ability of the Collateral Agent to collect any material
account receivable.
6.2. CORPORATE POWER AND AUTHORIZATION; BINDING EFFECT. Each of
the Borrowers and the Guarantors has the corporate power and has taken all
corporate action necessary to authorize it to execute, deliver, and perform this
Agreement and each of the other Restructuring Documents executed by it and to
grant the security interests and liens granted or created thereunder. This
Agreement constitutes, and when executed the other Restructuring Documents will
constitute, legal and valid obligations of each Borrower binding upon it and
enforceable in accordance with their respective terms, except as the
enforceability of each such Restructuring Document may be subject to or limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors and except as the
availability of equitable remedies are subject to the application of equitable
principles.
6.3. NO CONFLICT. The execution, delivery and performance of this
Agreement, the Notes, the other Restructuring Documents and the secured
financing transactions contemplated hereby, the use of proceeds thereof, and the
performance by the Borrowers and the Guarantors (a) do not conflict with or
violate
35
<PAGE>
any provision of the Articles of Incorporation or Certificate of Incorporation,
as the case may be, or By-Laws of any Borrower or any Guarantor, any material
Requirement of Law or any Contractual Obligation of any Borrower or any
Guarantor, (b) do not conflict with, constitute a default or require any consent
under any Contractual Obligation of any Borrower or any Guarantor, and (c) do
not result in the creation of any Lien other than a Permitted Lien upon any
property or assets of any Borrower or any Guarantor.
6.4. NO CONSENTS. All necessary consents, approvals and
authorizations of, filings with, and acts by or with respect to all Governmental
Authorities and other Persons (except possession of certain collateral or
filings with the appropriate Governmental Authorities necessary to perfect the
security interests under the Security Documents) required to be obtained, made
or taken by the Borrowers or the Guarantors in connection with the secured
financing transactions contemplated hereby or with the execution, delivery,
performance, validity or enforceability of this Agreement or the other
Restructuring Documents, have been obtained, made or taken, and remain in
effect. All applicable waiting periods have expired without any Governmental
Authority or other Person taking any action which restricts, prevents or imposes
materially adverse conditions upon the consummation of the secured financing
transactions contemplated hereby.
6.5. ABSENCE OF LITIGATION. Except as otherwise set forth in
SCHEDULE 5.1(n), there are no actions, suits, proceedings or other litigation
(including proceedings by or before any arbitrator or Governmental Authority)
pending, or, to the Borrowers' knowledge, threatened, against or affecting the
Borrowers or the Guarantors or any of their Consolidated Subsidiaries or, to the
knowledge of the Borrowers, any basis therefor, (a) which challenge the validity
or propriety of the secured financing transactions contemplated hereby, (b)
which could reasonably be expected to have or result in, individually or in the
aggregate, a Material Adverse Effect, or (c) which could materially affect the
ability of the Borrowers to perform their obligations under this Agreement or
the other Restructuring Documents.
6.6. NO DEFAULT UNDER THE RESTRUCTURING DOCUMENTS. No Default or
Event of Default has occurred and is continuing.
6.7. INDEBTEDNESS. Set forth on SCHEDULE 6.7A hereto is a
complete and correct list of all Indebtedness of the Borrowers and the
Guarantors in excess of $2,000,000, other than Contingent Obligations, and the
approximate aggregate principal amount thereof outstanding. Set forth on
SCHEDULE 6.7B is a complete and correct list of all Contingent Obligations for
which the principal amount outstanding or the amount for which the
36
<PAGE>
Borrowers or the Guarantors are liable exceeds $1,000,000, and the approximate
aggregate amount of such principal or of such liability outstanding.
6.8. MATERIAL CONTRACTS. Set forth on SCHEDULE 6.8 hereto is a
complete and accurate list of (a) each Material Contract, and (b) each Capital
Lease Obligation of the Borrowers and the Guarantors existing on the Closing
Date which exceeds $10,000,000 annually; other than as set forth in SCHEDULE
6.8 or otherwise disclosed in writing to the Administrative Agent, each such
Material Contract or Capital Lease is, and after giving effect to the
consummation of the transactions contemplated by the Restructuring Documents
will be, in full force and effect in accordance with the terms thereof. Except
as previously disclosed to the Administrative Agent and the Lenders or as listed
in SCHEDULE 6.8A hereto, there are no defaults by the Borrowers or the
Guarantors or, to the best of their knowledge, by any other party under any such
Material Contract which could reasonably be expected to have or result in a
Material Adverse Effect, or could reasonably be expected to affect the
Borrowers' or the Guarantors' ability to perform their Obligations under this
Agreement, the Notes and the other Restructuring Documents. Neither the
Borrowers nor the Guarantors are in default (nor has any event occurred which,
with notice or lapse of time or both would constitute a default) under any of
the Existing Agreements. The Borrowers and the Guarantors have delivered to the
Administrative Agent a true and complete copy of each Material Contract required
to be listed on SCHEDULE 6.8.
6.9. CORRECTNESS OF COLLATERAL SCHEDULES. The Certification of
Schedules listed as ITEM NO. 4.24 of the Schedule of Documents and delivered
to the Administrative Agent in connection herewith is complete and correct in
all material respects.
6.10. CORRECTNESS OF FINANCIAL INFORMATION. The financial
statements described in ITEM NO. 2.00 of the Schedule of Documents and
delivered to the Administrative Agent in connection herewith are true and
correct and (a) present fairly, in all material respects, the Consolidated
financial condition of the Borrowers, the Guarantors and their Consolidated
Subsidiaries as of the date thereof, (b) disclose all material liabilities of
the Borrowers, the Guarantors and their Consolidated Subsidiaries, whether
liquidated or unliquidated, fixed or contingent, that are required to be
disclosed under Generally Accepted Accounting Principles as of the date thereof,
and (c) have been prepared in accordance with Generally Accepted Accounting
Principles, consistently applied. Each of the Budget and the projections
described in ITEM NOS. 1.41 AND 2.4 of the Schedule of Documents and
delivered to Administrative Agent in connection herewith are based upon
reasonable estimates and assumptions, and reflect the reasonable estimates of
the Borrowers and their Consolidated
37
<PAGE>
Subsidiaries of the results of operations and other information projected
therein.
6.11. SECURITY DOCUMENTS. The Security Documents to which the
Borrowers and the Guarantors are a party create in favor of the Collateral Agent
for the benefit of the Lenders to secure the Obligations valid, and, upon the
proper filing by the Collateral Agent of Financing Statements at appropriate
offices, a first priority, perfected security interests in the property and
assets described in the Security Documents capable of being perfected by the
filing of a Financing Statement, subject only to Permitted Liens.
6.12. TAXES. The Borrowers and the Guarantors have filed all tax
returns which were required to be filed in any jurisdiction, and paid all taxes
shown thereon to be due or otherwise due upon the Borrowers and the Guarantors
or any of their properties, income or franchises, including interest,
assessments, fees and penalties (other than any immaterial amounts, which the
Borrowers or the Guarantors shall pay or make provision to pay), or have
provided adequate reserves for the payment thereof. To the best knowledge of
the Borrowers, no claims are threatened, pending or being asserted with respect
to, or in connection with any return referred to in this SECTION 6.12, which
could reasonably be expected to have or result in a Material Adverse Effect, or
could reasonably be expected to affect the Borrowers' ability to perform their
Obligations under this Agreement and the other Restructuring Documents.
6.13. NO BURDENSOME RESTRICTIONS. No Material Contract and no
material Requirement of Law relating to or otherwise affecting the Borrowers or
the Guarantors will result in a Material Adverse Effect.
6.14. JUDGMENTS. There are no outstanding or unpaid judgments
against the Borrowers or the Guarantors in excess of (a) $100,000 individually,
or (b) $2,000,000 in the aggregate, except as expressly set forth in SCHEDULE
6.14.
6.15. COMPLIANCE WITH LAWS. The Borrowers and the Guarantors are
not and will not be in violation of, or not in compliance with, any Requirement
of Law binding upon the Borrowers and the Guarantors or their properties and
assets, including any building, zoning, occupational safety and health
ordinances or regulations relating to their structure or equipment, or the
operation thereof or of its respective business, or any applicable fair
employment, equal opportunity or similar law, ordinance or regulation, the
noncompliance with which could reasonably be expected to have or result in a
Material Adverse Effect, and are not a party to any agreement or instrument, or
subject to any judgment, order, writ, rule,
38
<PAGE>
regulation, code or ordinance which could reasonably be expected to have or
result in a Material Adverse Effect.
6.16. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multi-employer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could reasonably result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Internal Revenue Code or
(iii) except as set forth on SCHEDULE 6.16, incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
6.17. GOVERNMENTAL AUTHORIZATIONS; PERMITS, LICENSES AND
ACCREDITATIONS; OTHER RIGHTS. The Borrowers and the Guarantors have all
licenses, permits, approvals, qualifications, consents, certificates of needs
and accreditations (where such are required) and other authorizations necessary
for the lawful conduct of their respective businesses or operations wherever now
conducted and as planned to be conducted, pursuant to all applicable statutes,
laws, ordinances, rules and regulations of all Governmental Authorities having,
asserting or claiming jurisdiction over the Borrowers or the Guarantors, except
where such failure could not have or result in a Material Adverse Effect.
Copies of all such licenses, permits, approvals, qualifications, consents and
other authorizations shall be provided to the Administrative Agent upon request.
Neither the Borrowers nor the Guarantors are in default under any of such
licenses, permits, approvals, consents, qualifications or authorizations and no
event has occurred, and no condition exists, which, with the giving of notice,
the passage of time, or both, would constitute a default thereunder or would
result in the suspension, revocation, impairment, forfeiture or non-renewal of
any such permit, license, authorization or accreditation, except where such
failure could not have or result in a Material Adverse Effect. The
continuation, validity and effectiveness of all material licenses, permits,
approvals, consents, qualifications and authorizations will not be adversely
affected by the transactions contemplated by this Agreement. The Borrowers know
of no reason why they or the Guarantors will not be able to maintain all
licenses, permits, approvals, consents, qualifications, accreditations and other
authorizations necessary or appropriate to own and operate their respective
current businesses and to obtain such licenses, permits, approvals,
39
<PAGE>
consents, qualifications and other authorizations necessary to own and operate
their respective current businesses, and otherwise conduct the business of the
Borrowers, the Guarantors and their Consolidated Subsidiaries as now conducted
and presently proposed to be conducted.
6.18. ENVIRONMENTAL MATTERS. In the ordinary course of their
business, the Borrowers conduct an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrowers, the Guarantors
and their Consolidated Subsidiaries, in the course of which they identify and
evaluate associated liabilities and costs (including any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Materials, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrowers have reasonably concluded that such
associated liabilities and costs, including the costs of compliance with
Environmental Laws, are unlikely to have or result in a Material Adverse Effect.
6.19. NO MATERIAL ADVERSE EFFECT. Since June 26, 1995, there has
been no Material Adverse Effect, other than as disclosed in SCHEDULE 6.19.
6.20. CONSOLIDATED SUBSIDIARIES; SUBSIDIARIES. Each of the
Borrowers' and the Guarantors' Consolidated Subsidiaries is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has all legal powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Set forth on SCHEDULE 6.20 is a
complete and correct list of each of the Borrower's Subsidiaries. Set forth on
SCHEDULE E is a complete and correct list of each of the Borrower's
wholly-owned Subsidiaries other than foreign wholly-owned subsidiaries, Emkay
Development Company, Inc. and Emkay Capital Investments, Inc.
6.21. MARGIN SECURITIES. Neither Borrower nor any Guarantor is
engaged principally in, nor has as one of its most important activities, the
business of extending credit for the purpose of purchasing or carrying "margin
stock" as that term is defined in Regulation U promulgated by the Board of
Governors of the Federal Reserve System, as now in effect. No part of the
40
<PAGE>
Indebtedness evidenced by the Notes, or Indebtedness otherwise created in
connection with this Agreement or the other Restructuring Documents, shall be
used, directly or indirectly, for the purpose of purchasing any such margin
stock. If requested by the Administrative Agent, the Borrowers shall furnish or
cause to be furnished to the Administrative Agent a statement, in conformity
with the requirements of Federal Reserve Form U-1 referred to in Regulation U,
to the foregoing effect.
6.22. INVESTMENT COMPANY ACT. Neither of the Borrowers nor any
Guarantor is an "investment company" nor a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as now in
effect.
6.23. BUSINESS LOCATIONS AND TRADE NAMES. Set forth on SCHEDULE
6.23A is a complete and correct list of each location where each of the
Borrowers and the Guarantors maintains its chief executive office, its principal
place of business, an office, a place of business or any material financial
records. Set forth on SCHEDULE 6.23B is a complete and correct list of each
name under or by which each Borrower and Guarantor conducts its business, or by
which each Borrower and Guarantor (or its predecessors in interest) has
conducted its business during the past five years.
6.24. TITLE TO REAL PROPERTY AND OTHER ASSETS. The Borrowers and
the Guarantors have good and marketable title (or good and marketable leasehold
interests with respect to leased property) to all their Real Property and all
personal property assets and fixtures subject to no Liens other than Permitted
Liens. The Borrowers and the Guarantors hold directly the fee and leasehold
interest in all facilities constituting the Real Property Collateral. As of the
Closing Date, there are no contracts or options by either Borrower, any
Guarantor or any of their Subsidiaries for the sale or lease of any of the Real
Property Collateral, except as set forth on SCHEDULE 6.24. All easements,
servitudes and rights of way necessary to the operations presently conducted or
proposed to be conducted at the facilities constituting the Real Property
Collateral have been obtained.
6.25. LABOR MATTERS. There are no controversies pending between the
Borrowers, the Guarantors or their Subsidiaries and their employees which may
constitute or result in a Material Adverse Effect.
6.26. EMPLOYMENT AND INVESTMENT AGREEMENTS. Set forth in SCHEDULE
6.26 is a complete and accurate list of (i) all employment agreements and
executive compensation arrangements to which any Borrower, any Guarantor or any
Subsidiary of a Borrower or a Guarantor is a party which provides for aggregate
compensation to any Person (assuming compliance with or
41
<PAGE>
satisfaction of all contingencies or conditions) of more than $150,000 per year,
and (ii) all agreements relating to the voting or disposition of any outstanding
shares of capital stock of each Borrower, Guarantor or any of their
Subsidiaries. The Borrowers and the Guarantors have delivered to the
Administrative Agent a true and complete copy of each of the agreements required
to be listed in SCHEDULE 6.26.
6.27. NO MISSTATEMENTS. Neither this Agreement, the Notes, the
other Restructuring Documents, nor any document, instrument and other agreement,
certificate, statement or other information referred to herein or expressly
furnished to the Administrative Agent or to any of the Lenders pursuant hereto
or thereto, contains any misstatement of a material fact or omits to state any
material fact or any fact necessary to make the statements contained herein or
therein not misleading on the date furnished or on the Closing Date, except as
otherwise subsequently disclosed to the Administrative Agent and all Lenders in
writing on or prior to the Closing Date.
6.28. RESTRUCTURING. The Restructuring has occurred.
6.29. MK RAIL LOCK BOX. Lock Box number 98485 maintained at
Bank of America Illinois is used solely for collections related to MK Rail and
not collections related to any Borrower or any Guarantor. No Borrower or
Guarantor has instructed any account debtor or other Person owing any monies to
such Borrower or such Guarantor to make any payment to Lock Box number 98485.
6.30. CASH MANAGEMENT SYSTEM. Each Borrower acknowledges that the
Cash Management System is part of this Agreement and each of the representations
and warranties made by each Borrower in the Cash Management System constitute
representations and warranties of this Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Loans or other amounts due hereunder are unpaid
or outstanding, any Obligations are unperformed or any of the Commitments are in
effect, the Borrowers, and, without duplication, each of them, shall, unless the
Majority Lenders shall otherwise agree:
7.1. FINANCIAL STATEMENTS; ADDITIONAL REPORTING REQUIREMENTS.
Furnish to the Administrative Agent:
(a) Not later than ten Business Days prior to the start of
each calendar quarter, a projected consolidating income statement for such
quarter and a weekly consolidating cash flow
42
<PAGE>
statement for such quarter in the form of the Budget, certified by the chief
financial officer as containing appropriate assumptions to the best of his
knowledge;
(b) Not later than three Business Days after each calendar
week, an unaudited consolidating cash flow statement in the form of the Budget
for such week setting forth a comparison to the Budget for such calendar week,
certified by the chief financial officer as complete and correct to the best of
his knowledge;
(c) Not later than the twenty-fifth (25th) day after each
calendar month, an unaudited consolidating income statement, balance sheet and
cash flow statement (including MK Rail Corporation on an equity basis using the
most current monthly information available), in each case for such month, and
setting forth a comparison to the projections for such calendar month and the
actual results for such calendar month in the previous fiscal year, certified by
the chief financial officer as complete and correct, subject to normal
accounting adjustments and without footnotes;
(d) As soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of MKD, a
Consolidated balance sheet of MKD and its Consolidated Subsidiaries as of the
end of such quarter and the related Consolidated statements of income and cash
flows for such quarter and for the portion of MKD's fiscal year ended at the end
of such quarter, setting forth in the case of such income and cash flows in
comparative form the figures for the corresponding quarter and the corresponding
portion of MKD's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, Generally Accepted Accounting
Principles and consistency by the chief financial officer, controller or
treasurer of MKD;
(e) As soon as available and in any event by April 15, 1996,
a Consolidated balance sheet of MKD and its Consolidated Subsidiaries as of the
end of such fiscal year and the related Consolidated statements of income,
retained earnings and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Securities and Exchange Commission by
independent public accountants of nationally recognized standing, together with
an unaudited annual report prepared on a consolidating basis in conformity with
Generally Accepted Accounting Principles;
(f) Promptly upon the mailing thereof to the shareholders of
MKD generally, copies of all financial statements, reports and proxy statements
so mailed;
43
<PAGE>
(g) Promptly upon the filing thereof, copies of all reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which MKD shall have filed with
the Securities and Exchange Commission;
(h) Promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities or any
Indebtedness of the Borrowers pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be furnished to the
Administrative Agent pursuant to any other clause of this SECTION 7.1;
(i) On a monthly basis a statement listing the outstanding
receivable and payable accounts between the Borrowers, and Affiliates of the
Borrowers; PROVIDED, HOWEVER, that any transfers or group of related
transfers of cash or other assets in excess of $1,000,000 between the Borrowers,
and Affiliates of the Borrowers, shall be reported on a weekly basis;
(j) On a monthly basis, within twenty five (25) days of the
close of the prior calendar month, a report outlining work status for jobs
involving either Borrower or any Consolidated Subsidiary valued by any Borrower
or Consolidated Subsidiary in excess of $10,000,000 certified by the chief
financial officer as complete and correct;
(k) On a monthly basis, within twenty five (25) days of the
close of the prior calendar month, a report outlining the status of each of the
Borrowers' backlog, certified by the chief financial officer as complete and
correct in the form attached hereto as SCHEDULE 7.1(k);
(l) On a monthly basis a report prepared by each of the
Borrowers' financial advisors regarding the status of asset sales by either
Borrower or any Consolidated Subsidiary (excluding the asset sales involving
AmeriBank) certified by the chief financial officer as complete and correct;
(m) As required under the Multiparty Agreement, reports
required to be delivered to the Bonding Company under the Multiparty Agreement;
(n) On a daily basis, each Borrower's daily cash balances and
outstanding loan balances;
(o) On a weekly basis, a report of any reductions of letter of
credit obligations under the Existing Agreements;
(p) On a weekly basis, the management operation reports
prepared for each of the Borrowers' divisions;
(q) No later than August 15, 1995, a draft of an operating
plan detailing projected operations through
44
<PAGE>
December 31, 1997, for each of the Borrowers' operating divisions and
Subsidiaries in a form acceptable to the Majority Lenders with the final
operating plan to be delivered by August 31, 1995; and
(r) From time to time such additional information regarding
the financial position, business, properties or operations of MKD, MKO and any
of their Consolidated Subsidiaries as the Administrative Agent, at the request
of any Lender, may reasonably request.
7.2. PROVISION OF NOTICES. Give notice to the Administrative Agent
of the occurrence of any of the following events not later than three (3)
Business Days after the Borrowers know of such event:
(a) DEFAULT. Any Default or Event of Default.
(b) OTHER DEFAULT OR LITIGATION. (i) Any default or event
of default under any Contractual Obligation of any Borrower or Guarantor of
greater than $1,000,000 or which could otherwise have or result in a Material
Adverse Effect; (ii) any litigation, investigation or proceeding which may exist
at any time between the Borrowers and any Governmental Authority; or (iii) any
other litigation, which, as relates to (i) or (ii) above, if adversely
determined, could (y) if the remedies prayed for do not include damages, have or
result in a Material Adverse Effect, and (z) if the remedies prayed for include
damages, would result in a liability equal to or in excess of $5,000,000 if the
claim is fully covered by insurance, and in excess of $1,000,000 if the claim is
not covered by insurance.
(c) REPORTABLE EVENTS. Except as provided on SCHEDULE
7.2(c)A, any Reportable Event with respect to any Single Employer Plan
maintained by the Borrowers or (b) the institution of proceedings or except as
provided on SCHEDULE 7.2(c)B the taking or expected taking of any other action
by the PBGC, any Borrower or any Commonly Controlled Entity to terminate,
withdraw or partially withdraw from any Single Employer Plan maintained by any
Borrower and with respect to a Multi-employer Plan, the reorganizational
insolvency of the Plan. In addition to such notice, the Borrowers shall as soon
as practicable deliver to the Administrative Agent and each Lender whichever of
the following may be applicable: (i) a certificate of the chief executive
officer and the chief financial officer of each Borrower setting forth details
as to such Reportable Event and the action, if any, that it or the Commonly
Controlled Entity proposes to take with respect thereto, together with the copy
of any notice of such Reportable Event that is required to be filed with PBGC,
or (ii) any notice delivered by PBGC evidencing its intent to institute such
proceedings or any notice to PBGC that such Plan is to be terminated, as the
case may be.
45
<PAGE>
(d) ENVIRONMENTAL MATTERS. (i) Any event which makes any of
the representations set forth in SECTION 6.18 inaccurate in any respect or
(ii) the receipt by any Borrower of any notice, order, directive or other
written communication from a Governmental Authority alleging violations of or
noncompliance with any Environmental Laws.
(e) MATERIAL CONTRACTS; MATERIAL OBLIGATIONS. (i) Any
proposed material amendment, change or modification to, or waiver of any
material provision of, or any termination of, any Material Contract, other than
amendments, changes, modifications, waivers or terminations in the ordinary
course of business as presently conducted, and (ii) any new Material Contract
which has not been previously disclosed to the Lender in financial reports or
otherwise in writing.
(f) CASUALTY LOSSES. Any casualty loss or losses, not
covered by insurance, in excess of $1,000,000.
(g) NOTICES RE: BONDING ISSUES. The receipt by any of the
Borrowers of any notice or other communication from the Bonding Company
regarding material changes in the Bonding Company's issuance of payment or
performance bonds in connection with the projects to be performed by the
Borrowers or their Consolidated Subsidiaries.
(h) NOTICES OF VIOLATION. The receipt by any Borrower of
any notice, order, directive or other written communication from a Governmental
Authority commencing an investigation or inquiry by any Governmental Authority
or alleging violations of or noncompliance with any Requirement of Law which
could reasonably be expected to have or result in a Material Adverse Effect.
(i) CHANGES TO SCHEDULES. Any changes to the information on
SCHEDULES 6.23A and 6.23B.
7.3. FILING OF RETURNS; PAYMENT OF TAXES. File all tax returns
when due and pay or cause to be paid before the same shall become delinquent and
before penalties have accrued thereon, all taxes, assessments and governmental
charges or levies imposed on the income, profits, franchises, property or
business of the Borrowers except to the extent and so long as (a) the same are
being contested in good faith by appropriate proceedings, and (b) as to which
adequate reserves in conformity with Generally Accepted Accounting Principles
with respect thereto have been provided on the books of the Borrowers.
7.4. MAINTENANCE OF EXISTENCE. Maintain and preserve, and, will
cause each Consolidated Subsidiary to maintain and preserve, its respective
existence as a corporation or other form of business organization, as the case
may be, and all rights,
46
<PAGE>
privileges, licenses, patents, patent rights, copyrights, trademarks, trade
names, franchises and other authority to the extent material and necessary for
the conduct of its respective business in the ordinary course as conducted from
time to time.
7.5. COMPLIANCE WITH LAWS. Comply, and cause each Consolidated
Subsidiary to comply, with all Requirements of Law in all material respects
except where the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
7.6. MAINTENANCE OF PROPERTIES. Maintain, preserve and keep all of
its buildings, tangible properties, equipment and other property and assets,
whether owned or leased, used and necessary in its business, in good repair,
working order and condition, and from time to time to make all necessary and
proper repairs and replacements so that at all times the utility, efficiency or
value thereof shall not be impaired in any material respect.
7.7. INSURANCE. Maintain (a) insurance (in addition to any
insurance required under the Security Documents) on all insurable property and
assets owned or leased by the Borrowers or the Guarantors in the manner, to the
extent and against at least such risks (in any event, including liability and
casualty, including hazard, fire and business interruption coverage) usually
done by owners of similar businesses and properties in similar geographic areas,
and adequate workers' compensation insurance and (b) appropriate self-insurance
reserve funds covering those risks for which the Borrowers or the Guarantors
presently self-insure, which self-insurance reserves shall be funded to the
extent from time to time required by the insurer for the Borrowers and the
Guarantors (which insurer shall be acceptable to the Administrative Agent) or
another excess insurance carrier for the Borrowers or the Guarantors acceptable
to the Administrative Agent. All such insurance shall be in such amounts and
form and with such insurance companies as are reasonably satisfactory to the
Administrative Agent and shall name the Collateral Agent, for the benefit of the
Lenders, as an additional insured. The Borrowers or the Guarantors shall
furnish the following to the Administrative Agent: (x) annually or at any time
upon written request, full information as to such insurance carried, including
the amounts of all self-insurance reserve funds; (y) lender loss payable
endorsements (Form 438 BFU) in favor of the Collateral Agent (for the benefit of
the Lenders), in form and substance satisfactory to the Administrative Agent;
and (z) at least annually and on such other times as reasonably requested by the
Administrative Agent, certificates of insurance from such insurance companies
and certified copies of such insurance policies. All policies of insurance
shall provide for not less than 30 days prior written cancellation notice to the
Administrative Agent.
47
<PAGE>
7.8. BOOKS AND RECORDS. Keep and maintain full and accurate books
of record and accounts of its operations, dealings and transactions in relation
to its business and activities, in conformity with Generally Accepted Accounting
Principles and all Requirements of Law.
7.9. COMPLIANCE WITH TERMS OF ALL REAL PROPERTY RELATED
AGREEMENTS. Make all payments and otherwise perform all of its obligations in
respect of all Real Property Collateral with respect to which the failure to so
perform could have a material adverse effect on the security afforded thereby,
and use its best efforts to keep, and take all action to keep, the leases on all
leaseholds in full force and effect, and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled, and
notify the Administrative Agent of any defaults of the Borrowers or any default
of any other party with respect to such leases and cooperate in all respects
with all actions of the Administrative Agent to cure such defaults.
7.10. HAZARDOUS MATERIALS. Except in compliance with all applicable
Environmental Laws, the Borrowers shall not and shall use its reasonable best
efforts not to cause or permit any other person or entity to, cause or permit
the presence, use, generation, manufacture, installation, release, discharge,
storage or disposal of any Hazardous Materials on, under, in or about any Real
Property owned by the Borrowers or any Subsidiary or any Real Property leased,
subleased, occupied or used by the Borrowers or any Subsidiary, or the
transportation of any Hazardous Materials to or from any such real property
unless such use or transportation is on a temporary basis incidental to the
conduct of its business in the ordinary course and is performed in a manner that
does not cause a material violation of any applicable Environmental Law. In the
event of any breach or violation of the foregoing, or in the event of any other
release or threatened release of Hazardous Materials on, under, in or about any
real property owned by the Borrowers or any real property leased, subleased,
occupied or used by the Borrowers, the Borrowers shall promptly commence and
diligently complete a clean-up or other remediation of any such environmental
contamination to the extent required by applicable Environmental Law using a
duly qualified, licensed and insured contractor. In the event of any release or
threatened release of Hazardous Material on, under, in or about any real
property owned by any Subsidiary or any real property leased, subleased,
occupied or used by any Subsidiary, the Borrowers shall cause such Subsidiary to
promptly commence and diligently complete a clean-up or other remediation of any
such environmental contamination to the extent required by applicable
Environmental Law using a duly qualified, licensed and insured contractor.
7.11. INTELLECTUAL PROPERTY ASSIGNMENTS. Execute intellectual
property assignments in form and substance
48
<PAGE>
satisfactory to the Administrative Agent, upon the Borrowers' applications with
any state or federal agency for or registration of any patents, trademarks or
other intellectual property or licenses thereof, and cooperate with the
Administrative Agent to have such assignments or other documents filed with the
appropriate state or federal agency.
7.12. FURTHER ASSURANCES. Perform, make, execute and deliver and
cause their Consolidated Subsidiaries to perform, make, execute and deliver all
such additional and further acts, things, deeds, occurrences and instruments as
the Administrative Agent or the Majority Lenders may reasonably require to
document and consummate the transactions contemplated hereby and to vest
completely in and ensure the Administrative Agent, the Co-Agents and the Lenders
their respective rights under this Agreement, the Notes and the other
Restructuring Documents.
7.13. INSPECTION OF PROPERTY, BOOKS AND RECORDS. Keep, and will
cause each Consolidated Subsidiary to keep, proper books of record and account
in which full, true and correct entries in conformity with Generally Accepted
Accounting Principles shall be made of all dealings and transactions in relation
to its business and activities; and will permit, and will cause each
Consolidated Subsidiary to permit, representatives and Professionals of the
Administrative Agent or any Steering Committee Lender, including Ernst & Young
(at the Borrowers' expense), to enter upon the Real Property Collateral, to take
and remove soil and groundwater samples from the Real Property Collateral, to
conduct tests on any part of the Real Property Collateral, to visit, inspect,
and appraise any of the Collateral, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants, all at such times and as often as may be desired.
7.14. USE OF PROCEEDS. The proceeds of the Loans made under this
Agreement will be used by the Borrowers for non Transit Division working capital
purposes in accordance with the Budget, including payment of joint venture
obligations, and for no other purpose. None of such proceeds will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the meaning of
Regulation U.
7.15. COMPLIANCE WITH ASSET DISPOSITION PROGRAM.
(a) Timely comply with the terms of their Asset Disposition
Program, subject to the restrictions of SECTIONS 8.3 AND 8.4.
49
<PAGE>
(b) Provide a brief description of any bona fide offer in excess
of $3,500,000 for any proposed disposition of assets.
7.16. STANDSTILL AGREEMENTS. Use their best efforts to obtain, by
August 15, 1995, standstill agreements through the Termination Date from all
banks or other financial institutions that are not party to the Override
Agreement and to which either Borrower has provided a guaranty of Indebtedness
of any Subsidiary.
7.17. CASH MANAGEMENT SYSTEM. Comply with each of the covenants
contained in the Cash Management System.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Loans or other amounts due hereunder are unpaid
or outstanding, any Obligations are unperformed or any of the Commitments are in
effect, the Borrowers shall not, unless the Majority Lenders shall otherwise
agree:
8.1. INDEBTEDNESS. Create, incur, assume or suffer to exist, or
permit any Consolidated Subsidiary to create, incur, assume or suffer to exist,
any Indebtedness, EXCEPT:
(a) Indebtedness of the Borrowers in connection with this
Agreement;
(b) Indebtedness existing, or relating to commitments
existing, on the Closing Date, all as set forth on SCHEDULE 8.1 and any
extensions, refundings or renewals thereof on terms satisfactory to the Majority
Lenders; PROVIDED, HOWEVER, that the principal amount thereof or the
interest rate thereon shall not be increased, nor shall the amortization
schedule thereof be shortened;
(c) Indebtedness with respect to financed insurance premiums
which is not past due;
(d) Indebtedness for performance or payment bonds incurred in
the ordinary course of the Borrowers' or any Consolidated Subsidiary's business;
(e) Purchase money Indebtedness with respect to Capital
Expenditures obtained from financing sources other than the Lenders ("Additional
Capital Expenditure Indebtedness"); PROVIDED, that (i) no Default or Event of
Default has occurred and is continuing at the time the Additional Capital
Expenditure Indebtedness is to be incurred, (ii) the amount of such
50
<PAGE>
Additional Capital Expenditure Indebtedness outstanding at any time shall in no
event exceed $1,000,000, and (iii) each of the Borrowers shall have delivered
notice to the Administrative Agent of its intention to incur any Additional
Capital Expenditure Indebtedness; or
(f) Indebtedness of McConnell Dowell Corporation Limited that
is not guaranteed by the Borrowers.
(g) Indebtedness of MKO pursuant to a guaranty of the
Corporate Card Account Agreement between American Express Travel Services,
Company, Inc. and MKO's wholly-owned Subsidiary, Rocky Mountain Remediation
Services Limited Liability, Inc.
8.2. NEGATIVE PLEDGE. Create, assume or suffer to exist, or permit
any Consolidated Subsidiary to create, assume or suffer to exist, any Lien on
any asset now owned or hereafter acquired by them, except:
(a) Liens of the Restructuring Documents including Liens of
the Bonding Company thereunder;
(b) Liens existing on the date of this Agreement securing
Indebtedness outstanding on the date of this Agreement which are listed on
SCHEDULE 8.2 hereto;
(c) Any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset; PROVIDED, that such Lien attaches to such asset concurrently with
or within 90 days after the acquisition thereof;
(d) Any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by any of
the foregoing clauses of this Section; PROVIDED, that such Indebtedness is not
increased and is not secured by any additional assets;
(e) Liens for taxes either not yet due or being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
any material danger of the sale, forfeiture or loss of any material asset and
the Borrowers shall maintain in accordance with Generally Accepted Accounting
Principles appropriate reserves therefor;
(f) Materialmen's, mechanic's, workmen's repairmen's or other
like Liens arising in the ordinary course of business (including those arising
under maintenance agreements entered into in the ordinary course of business)
securing obligations that are not overdue or are being contested in good faith
by appropriate proceedings so long as such proceedings do
51
<PAGE>
not involve any material danger of the sale, forfeiture or loss of any material
asset;
(g) Liens which are bonded in a manner reasonably satisfactory
to the Majority Lenders; and
(h) Liens permitted by the Ship Mortgage on the vessel thereby
encumbered.
8.3. PROHIBITION OF FUNDAMENTAL CHANGES. Directly or indirectly,
(whether in one transaction or a series of transactions), (a) enter into any
transaction of merger, consolidation or amalgamation; (b) liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell,
lease, transfer or otherwise dispose of all or a substantial part of its
respective business or assets; (d) acquire by purchase or otherwise all or
substantially all the business or assets, or stock or other evidence of
beneficial ownership, of any Person; (e) make any material change, which could
have an adverse effect on the Borrowers' ability to perform their Obligations
hereunder, in their present method of conducting business; (f) enter into any
agreement or transaction where they are bound to do or permit any of the
foregoing; or (g) permit any Consolidated Subsidiary to do any of the foregoing.
8.4. PROHIBITION ON SALE OF ASSETS.
Sell, transfer, convey, lease or otherwise dispose of, or permit
any Consolidated Subsidiary to sell, transfer, convey, lease, or otherwise
dispose of, all or any of the assets of the Borrowers and their Consolidated
Subsidiaries except (i) sales of inventory in the ordinary course of business;
(ii) sales of equipment not exceeding $50,000 for which no consent shall be
required; (iii) sales of equipment greater than $50,000 but less than $600,000
which sales shall require the consent of the Administrative Agent; (iv) sales of
equipment greater than $600,000 in the aggregate but less than $1,500,000 in the
aggregate which sales shall require the consent of the Majority Lenders; and (v)
sales of equipment in excess of $1,500,000 in the aggregate which sales shall
require the consent of All Lenders; provided, however, to the extent that any
such equipment constitutes equipment that is subject to the Equipment Asset Pool
Intercreditor Agreement and secures new bonds issued by the Bonding Company (the
"Subject Equipment"), the Borrower and the Consolidated Subsidiaries shall be
permitted to sell, transfer, convey, lease or otherwise dispose of any and all
Subject Equipment without the consent of the Lenders or the Agents and
notwithstanding Section 2.9(a) hereof, the Borrowers and the Consolidated
Subsidiaries (except Emkay Development Company, Inc.) shall be permitted to
retain the Net Cash Proceeds of such Subject Equipment so long as (x) such Net
Cash Proceeds are used
52
<PAGE>
to cash-collateralize new bonds obtained from the Bonding Company, and (y) such
Net Cash Proceeds are used as the first money to be expended to replace any such
Subject Equipment.
8.5. INVESTMENTS. Make or commit to make any loan, extension of
credit or capital contribution to, or purchase of any stock, bonds, notes,
debentures or other securities of, or make any other investment in any Person
(all such transactions being called "Investments"), or permit any Guarantor to
do any of the foregoing, except:
(a) Investments in Cash Equivalents;
(b) Investments existing on the Closing Date and set forth in
SCHEDULE 8.5 hereto and consented to by the Majority Lenders; and
(c) Investments made in any Person in accordance with the
Budget.
8.6. COMPLIANCE WITH ERISA.
(a) Terminate any Single Employer Plan maintained by any
Borrower or a Commonly Controlled Entity so as to result in any material
liability to PBGC.
(b) Engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Single Employer Plan maintained by any
Borrower or a Commonly Controlled Entity which would result in a material
liability for an excise tax or civil penalty in connection therewith.
(c) Incur or suffer to exist any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Single Employer Plan maintained by any Borrower or a Commonly
Controlled Entity.
(d) Allow or suffer to exist any event or condition, which
presents a material risk of incurring a material liability to PBGC by reason of
the termination of any Plan.
8.7. RESTRICTED PAYMENTS. (a) Declare, pay or make (i) any
dividends or other distributions with respect to their capital stock or rights
to acquire capital stock or any payment on account of such capital stock or
rights to acquire capital stock, or (ii) any prepayment of principal or
prepayment of interest on account of any of their Indebtedness, (b) set apart
assets for a sinking or any analogous fund for the purchase, redemption, or
retirement or other acquisition of, any shares of their capital stock or rights
to acquire capital stock or any of their Indebtedness, or (c) purchase, defease,
acquire or redeem
53
<PAGE>
any of their Indebtedness; PROVIDED, that the Borrowers may make required or
permitted payments or prepayments on the Loans.
8.8. TRANSACTIONS WITH AFFILIATES. Enter into any transaction, or
permit any Guarantor to enter into any transaction, including any purchase,
sale, lease or exchange of property or the rendering of any service, with any
Affiliate or employee; except transactions which are contemplated by this
Agreement or are in the ordinary course of such Borrower's or Guarantor's
business and are made in accordance with the Budget.
8.9. SALE/LEASE-BACKS. Enter into any arrangements, directly or
indirectly, with any Persons whereby a Borrower or Guarantor shall sell or
transfer any property, whether now owned or hereafter acquired in connection
with the rent or lease of (i) such property or (ii) other property which such
Borrower or Guarantor intends to use for substantially the same purpose or
purposes as the property so sold or transferred.
8.10. OPERATING LEASES. Incur, or permit any Guarantor to incur, at
any time any additional annual lease payments as lessee under Operating Leases,
excluding (i) scheduled increases in lease payments in connection with leases
existing on the Closing Date and as set forth in SCHEDULE 8.10 or replacements
of such leases upon expiration thereof and (ii) conversions of existing Capital
Leases to Operating Leases, so long as such conversion does not have the effect
of increasing total annual lease payments to the lessor; and (iii) lease
payments in connection with new Operating Leases, PROVIDED that the aggregate
annual lease payments for such Operating Leases shall not exceed $1,000,000.
8.11. CAPITAL EXPENDITURES. Make, or permit any Guarantor to make,
any Capital Expenditures other than (a) items included in the Budget for Mining,
Transit, Infrastructure, and EC&E or (b) other Capital Expenditures aggregating
not more than $1,000,000.
8.12. AMENDMENT OF CHARTER OR BYLAWS. Amend their, or any of the
Guarantors', articles of incorporation to revise, in any material respect, the
Borrowers' capital structure, or to change the names of the Borrowers, or make
any other material amendments thereto or to their bylaws without promptly
providing a copy thereof to the Administrative Agent.
8.13. NO CONSENT TO SUBORDINATION. Give their consent, permit any
Consolidated Subsidiary to give its consent, to the subordination of any of
their rights or claims (including any subordination in the form of an agreement
to defer remedies or extend maturities) to any right or claim of any other
Person other than subordination of the MK Rail Note in connection with the MK
Rail Global Settlement Agreement.
54
<PAGE>
8.14. INTERCOMPANY OBLIGATIONS. Adjust, settle or compromise, any
amounts receivable from any Subsidiary or Affiliate including, but not limited
to, accounts receivable, notes receivable, or any other intercompany account
reflected on the books of the Borrowers; PROVIDED, that the Borrowers may
adjust, settle or compromise any amounts receivable from any Subsidiary or
Affiliate if the aggregate amount of such adjustments, settlements, or
compromises does not exceed $500,000.
8.15. TRANSIT DIVISION OPERATIONS. Permit any customers of the
Transit Division as defined in the Transit Division Intercreditor Agreement to
make payments to the Borrowers into the "Accounts" as defined in the Cash
Management System, or fund any Transit Division operations or expenses through
funds from the Cash Management System.
ARTICLE IX
DEFAULTS
9.1. EVENTS OF DEFAULT. Any one or more of the following described
events shall constitute an Event of Default hereunder, whether such occurrence
shall be voluntary or involuntary, or occur or be effected by operation of law
or otherwise:
(a) Any Borrower shall fail to pay when due any principal,
interest, fees, expenses, or any other amount owing in respect of any of the
Loans or any of the other Obligations when due and payable pursuant to the terms
thereof or hereof;
(b) Any Borrower shall fail to observe or perform any covenant
contained in ARTICLE VIII;
(c) Any Borrower or any Guarantor shall fail to observe or
perform any covenant or agreement contained in this Agreement or the other
Restructuring Documents (other than those covered by clause (a) or (b) above)
for 10 days after written notice thereof has been given to any Borrower by the
Administrative Agent;
(d) Any representation or warranty of any Borrower or any
Guarantor set forth in this Agreement, the Notes or the other Restructuring
Documents or in any other certificate, opinion or other statement at any time
provided by or on behalf of any Borrower pursuant hereto shall prove to be in
any material respect false or misleading at the time given or deemed given;
(e) Any Borrower, any Guarantor or any Consolidated Subsidiary
shall fail to make any payment in respect of any Indebtedness when due or within
any applicable grace period, or
55
<PAGE>
any event or condition shall occur which results in the acceleration of the
maturity of any Indebtedness or set-off of such Indebtedness of any Borrower,
Guarantor or any Consolidated Subsidiary or enables (or, with the giving of
notice or lapse of time or both, would enable) the holder of such Indebtedness
or any Person acting on such holder's behalf to accelerate the maturity thereof;
(f) Any Borrower, any Guarantor or any Consolidated Subsidiary
shall commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its Indebtedness under
any bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its property, or shall consent
to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its Indebtedness as it becomes due, or shall take any corporate
action to authorize any of the foregoing;
(g) An involuntary case or other proceeding shall be commenced
against any Borrower, any Guarantor or any Consolidated Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
Indebtedness under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 20 days; or an order for relief shall
be entered against any Borrower or any Consolidated Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(h) Any writ of execution, attachment or garnishment or any
lien, any judgment or any other legal process to be issued against any Borrower
or any Guarantor or any of the property of any Borrower, any Guarantor or their
Subsidiaries (including the Collateral) which by itself or together with all
other such legal processes is for an amount in excess of $1,000,000 which shall
remain unvacated, unbonded or unstayed;
(i) The occurrence of any of the events specified in
subsections (a) through (g) of SECTION 6.1 of the Multiparty Agreement or the
project owner makes any demand under any indemnity agreement between the Bonding
Company and any Borrower;
(j) Actual disbursements of any type shall exceed the total
projected disbursements as set forth in the Budget by $10,000,000 in any one
week or $20,000,000 in the aggregate;
56
<PAGE>
(k) Actual Financing Shortfall shall exceed the projected
amount as set forth in the Budget by $10,000,000 in any one week or $20,000,000
in the aggregate;
(l) All or substantially all of the property of any
Borrower, Guarantor or any Consolidated Subsidiary shall be condemned, seized or
otherwise appropriated;
(m) Any Borrower, any Guarantor or any Consolidated
Subsidiary shall voluntarily suspend the transaction of substantially all of its
business for more than three consecutive Business Days;
(n) Any Borrower or any Commonly Controlled Entity shall
engage in (a) any "prohibited transaction" (as defined in ERISA or Section 4975
of the Code) involving any Single Employer Plan maintained by any Borrower or a
Commonly Controlled Entity, (b) any "accumulated funding deficiency" (as defined
in ERISA), whether or not waived, shall exist with respect to any Single
Employer Plan maintained by any Borrower or a Commonly Controlled Entity, (c) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution of
proceedings presents a material risk of termination of such Plan for purposes of
Title IV of ERISA, and, in the case of a Reportable Event, the continuance of
such Reportable Event unremedied for ten days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof, as the
case may be, (d) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (e) the withdrawal or partial withdrawal from any Multi-employer
Plan, (f) the reorganization or insolvency of a Single Employer Plan maintained
by any Borrower or a Commonly Controlled Entity or (g) it shall be determined
that Unfunded Liabilities exist and in each case in clauses (a) through (g)
above, such event or condition together with all other such events or
conditions, if any, would subject any Borrower to any tax, penalty or other
liabilities in excess of $1,000,000 or would otherwise have a Materially Adverse
Effect;
(o) Any person or group of persons (within the meaning of
Section 12 or 14 of the Securities Exchange Act of 1934, as amended), other than
the Existing Lenders (as defined in the Override Agreement), shall acquire
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of 35% or more of the
outstanding shares of common stock of MKD;
(p) Any of the Restructuring Documents or provisions thereof,
for any reason whatsoever, ceases to be valid
57
<PAGE>
and binding on any Borrower or any Guarantor or any Existing Lender or Lender or
the Bonding Company, or any Borrower or any Guarantor or any Existing Lender or
Lender or the Bonding Company shall so assert, or the Liens granted pursuant to
any of the Security Documents shall not constitute valid, perfected,
first-priority Liens on the properties and assets described therein, subject
only to the Permitted Liens, or any Borrower or any Guarantor shall be in
default under the Security Documents, subject to any cure periods contained
therein;
(q) Any other event or condition occurs or exists which could
have or result in a Material Adverse Effect;
(r) The occurrence of any breach or default under the
Multiparty Agreement or the Intercreditor Agreements;
(s) The T-Co Transaction shall not have been consummated in
the judgment of the Majority Lenders by September 1, 1995 pursuant to the terms
of the T-Co Term Sheet and to the extent not addressed in the T-Co Term Sheet,
on terms and conditions acceptable to the Majority Lenders;
(t) Breach of any representation, warranty, covenant,
obligation or undertaking set forth in the Cash Management System or any
agreement related thereto;
(u) There shall be any amendment or other modification of the
Metra Interim Credit Agreement or any related documents, excluding the budget
provided under the Metra Interim Credit Agreement, without the consent of the
Majority Lenders; PROVIDED, HOWEVER, that any amendment or modification of
the Metra Interim Credit Agreement or any related documents that increases the
commitments, the maximum principal, or the interest or fees payable under the
Metra Interim Credit Agreement shall require consent of All Lenders; or
(v) MKD shall not have delivered the Warrants under the
Override Agreement to the Agent under the Override Agreement pursuant to the
Securities Purchase Agreement on or before August 31, 1995.
9.2. THE LENDERS' REMEDIES. Upon the occurrence of an Event of
Default or at any time thereafter, after notice and the lapse of any cure
period, where applicable, and in each and every case, until such Event of
Default shall have been remedied or waived in writing in accordance with
SECTION 13.6, either one or both of the following actions may be taken (a)
upon the request of the Majority Lenders, the Administrative Agent shall, by
notice in writing to the Borrowers, terminate any or all of the Commitments,
whereupon such Commitments of the Lenders thereunder immediately shall
terminate; and (b) upon the request of the Majority Lenders, the Administrative
Agent shall, by notice in
58
<PAGE>
writing to the Borrowers (a "Notice of Acceleration") declare all the
Obligations due hereunder and under the Loan Documents to be immediately due and
payable, without presentment, demand, protest or notice of any kind (other than
notices provided herein), all of which are hereby expressly waived to the extent
permitted by applicable law; PROVIDED, HOWEVER, that upon the occurrence of
any event specified in either SECTION 9.1(f) or SECTION 9.1(g) (and, in the
case of SECTION 9.1(g), after the lapse of the 20 day period referred to
therein) the Commitments shall automatically terminate, and all amounts owing
under this Agreement, the Notes and the Loan Documents shall immediately be due
and payable in full without declaration or other notice (other than notices
provided herein) to the Borrowers. The Administrative Agent immediately, and
without expiration of any period of grace (other than that specifically provided
herein), may enforce payment of all Obligations of any Borrower to the
Administrative Agent and the Lenders and the Administrative Agent shall be
entitled to all remedies available hereunder and thereunder.
9.3. OTHER REMEDIES. Subject to the Intercreditor Agreements,
upon the occurrence of an Event of Default or at any time thereafter, after
notice and the lapse of any cure period, where applicable, and in each and every
case, until such Event of Default shall have been remedied or waived in writing
in accordance with SECTION 13.6, in addition to the remedies listed in
SECTION 9.2 upon the earlier of a Notice of Acceleration or acceleration of
the Obligations, the Lenders acting by and through the Administrative Agent and
the Collateral Agent shall have all rights, powers and remedies available under
each of the Loan Documents and applicable law, including (i) commencing judicial
or nonjudicial foreclosure proceedings against the Real Property Collateral,
(ii) enforcing the Collateral Agent's security interest in the Collateral by
means of one or more public or private sales thereof, (iii) taking possession of
all or any portion of the Collateral, in person or by means of a court appointed
receiver (who shall be appointed without regard to the value of Collateral
Agent's security), and (iv) exercising any or all of the rights of a beneficiary
or secured party pursuant to applicable law. All rights, powers and remedies of
the Agents or the Lenders in connection with each of the Loan Documents may be
exercised at any time or from time to time, are cumulative and not exclusive,
and shall be in addition to any other rights, powers or remedies provided by law
or equity. Upon the request of the Majority Lenders after the occurrence of an
Event of Default, the Administrative Agent shall instruct the Collateral Agent
to exercise any remedies under the Loan Documents, including collection of funds
in deposit accounts, foreclosure on Real Property Collateral, seeking a receiver
to take possession of any Collateral and/or the Real Property Collateral, and
commencement of or actions in court proceedings.
59
<PAGE>
9.4. WAIVERS BY BORROWERS. Except as otherwise provided for in
this Agreement and applicable law, the Borrowers waive (i) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Administrative Agent, the Co-Agents, the Collateral
Agent or the Lenders on which the Borrowers may in any way be liable and hereby
ratify and confirm whatever the Administrative Agent, the Co-Agents, the
Collateral Agent or the Lenders may do in this regard, (ii) all rights to notice
and a hearing prior to the Collateral Agent's taking possession or control of,
or replevy, attachment or levy upon, the Collateral, or any bond or security
which might be required by any court prior to allowing the Administrative Agent
or the Collateral Agent to exercise any of its remedies, and (iii) the benefit
of all valuation, appraisal and exemption laws. Each Borrower acknowledges that
it has been advised by counsel of its choice with respect to the effect of the
foregoing waivers and this Agreement, the other Loan Documents and the
transactions evidenced by this Agreement and the other Loan Documents,
generally.
ARTICLE X
THE ADMINISTRATIVE AGENT AND CO-AGENTS
10.1. APPOINTMENT. Each Lender hereby (a) irrevocably appoints
Mellon Bank, N.A. as the Administrative Agent and Mellon Bank, N.A. and Bank of
America National Trust and Savings Association as the Co-Agents of such Lender
under this Agreement and the other Loan Documents, and (b) irrevocably
authorizes the Administrative Agent and Co-Agents to take such action on its
behalf under the provisions of this Agreement and the other Loan Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent and Co-Agents by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding anything to the contrary herein, the
Administrative Agent and Co-Agents shall have no duties, except those expressly
set forth in this Agreement and the other Loan Documents, and no implied
covenants, responsibilities, duties, obligations or liabilities shall be read
into this Agreement and the other Loan Documents or otherwise exist against the
Administrative Agent and Co-Agents.
10.2. ADMINISTRATIVE AGENT, CO-AGENTS AND AFFILIATES. The
Administrative Agent and Co-Agents shall have the same rights and powers under
this Agreement as any other Lender and may exercise or refrain from exercising
the same as though it were not the
60
<PAGE>
Administrative Agent or Co-Agent, and the Administrative Agent, Co-Agents and
their Affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with either Borrower or any Subsidiary or Affiliate of
either Borrower as if it were not the Administrative Agent and Co-Agent
hereunder.
10.3. RETENTION OF DOCUMENTS AND INFORMATION TO THE LENDERS.
Administrative Agent shall deliver to each Lender any material documents and
written information required under this Agreement to be delivered by the
Borrowers to Administrative Agent within a reasonable period after the
Administrative Agent's receipt of such documents or information.
10.4. DELEGATION OF DUTIES. The Administrative Agent and each
Co-Agent may exercise any of its powers or execute any of its duties under this
Agreement and the other Loan Documents by or through one or more agents or
attorneys-in-fact and shall be entitled to take, and to rely on, advice of
counsel concerning all matters pertaining to such rights and duties. The
Administrative Agent and each and Co-Agent may utilize the services of such
agents and attorneys-in-fact as the Administrative Agent and each Co-Agent in
its sole discretion reasonably determines, and all fees and expenses of such
agents and attorneys-in-fact shall be paid by the Borrowers on demand. The
Administrative Agent and Co-Agents shall not be responsible for the negligence
or misconduct of any agents or attorneys-in-fact selected by the Administrative
Agent or Co-Agents with reasonable care.
10.5. LIMITATION OF LIABILITY. Neither the Administrative Agent,
the Co-Agents nor their officers, directors, employees, agents,
attorneys-in-fact or affiliates shall be (a) liable for any waiver, consent or
approval given or any action taken or omitted to be given or taken by them or by
such Person under or in connection with this Agreement or the other the Loan
Documents or (b) responsible for the consequences of any oversight or error in
judgment by them or such Person whatsoever, except for their or such Person's
own gross negligence or willful misconduct. The Administrative Agent and
Co-Agents shall not be responsible for (v) the execution, validity,
enforceability, effectiveness or genuineness of this Agreement or the other Loan
Documents, (w) the collectability of any amounts owing under this Agreement or
the other Loan Documents, (x) the value, sufficiency, enforceability or
collectability of any Collateral security therefor, (y) the failure by any
Borrower to perform its Obligations hereunder or (z) the truth, accuracy and
completeness of the recitals, statements, representations or warranties made by
any Borrower or any officer or agent thereof contained in this Agreement, the
other Loan Documents or in any certificate, report, statement or other document
referred to or provided for
61
<PAGE>
in, or received by the Administrative Agent or Co-Agents in connection with,
this Agreement or the other Loan Documents.
10.6. RELIANCE BY THE ADMINISTRATIVE AGENT AND CO-AGENTS. The
Administrative Agent and Co-Agents shall not have any obligation (a) to
ascertain or to inquire as to the observance or performance of any of the
conditions, covenants or agreements in this Agreement or the other Loan
Documents or in any document, instrument or agreement at any time constituting,
or intended to constitute, collateral security therefor, (b) to ascertain or
inquire as to whether any notice, consent, waiver or request delivered to them
shall have been duly authorized or is genuine, accurate and complete, or (c) to
inspect the properties, books or records of the Borrowers. The Administrative
Agent and each Co-Agent shall be entitled to rely, and shall be fully protected
in relying, (x) upon any writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document, instrument or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, or (y) upon advice and statements of legal counsel,
independent accountants and other experts selected by the Administrative Agent
and each Co-Agent. The Administrative Agent and each Co-Agent may deem and
treat each Lender party hereto or any Assignee as a Lender for all purposes
unless a written notice of the assignment, negotiation or transfer thereof, in
accordance with the provisions of this Agreement shall have been delivered to
the Administrative Agent or Co-Agents identifying the name of any successor or
Assignee. The Administrative Agent and each Co-Agent shall be entitled to fail
or refuse, and shall be fully protected in failing or refusing, to take any
action under this Agreement or the other Loan Documents unless (a) it first
shall receive such advice or concurrence of the Majority Lenders as it deems
appropriate, or (b) it first shall be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. In all cases the
Administrative Agent and each Co-Agent shall be fully protected in acting, or in
refraining from acting, under this Agreement or the Loan Documents in accordance
with a request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.
10.7. NOTICE OF DEFAULT. The Administrative Agent and Co-Agents
shall not be deemed to have knowledge or notice of the occurrence of any Event
of Default unless the Administrative Agent and each Co-Agent has received notice
from a Lender or the Borrowers referring to this Agreement, describing such
Event of Default and stating that such notice is a "notice of default." If the
Administrative Agent or Co-Agents receives such a notice or has actual knowledge
of the occurrence of an Event of Default,
62
<PAGE>
the Administrative Agent or Co-Agents promptly shall give notice thereof to the
Lenders. The Administrative Agent and Co-Agents shall take such action with
respect to such Event of Default as shall be directed by the Majority Lenders;
PROVIDED, HOWEVER, that unless and until the Administrative Agent and each
Co-Agent shall have received such directions, the Administrative Agent and each
Co-Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default as it deems advisable
in the best interests of the Lenders.
10.8. NON-RELIANCE ON THE ADMINISTRATIVE AGENT, CO-AGENTS AND THE
Other Lenders. Each Lender expressly acknowledges that neither the
Administrative Agent, Co-Agents nor any of their officers, directors, employees,
agents, attorneys-in-fact or affiliates has made any representations or
warranties to it. The Administrative Agent and each Co-Agent shall have no
obligation or liability to any of the Lenders regarding the creditworthiness or
financial condition of any Borrower. No act by the Administrative Agent or
Co-Agents hereinafter taken, including any review of the Borrowers, shall be
deemed to constitute any representation or warranty by the Administrative Agent
or Co-Agents to any Lender. Each Lender represents to the Administrative Agent
and each Co-Agent that, independently and without reliance upon the
Administrative Agent or Co-Agents or any other Lender and based on such
documents and information as it has deemed appropriate, it has made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrowers and has made
its own decision to make its Loans hereunder and to enter into this Agreement.
Each Lender also represents that, independently and without reliance upon the
Administrative Agent or Co-Agents or any other Lender, and based on such
documents and information as it deems appropriate at the time, it shall continue
to make its own credit analysis, appraisals and decisions in taking or not
taking action under this Agreement and the other Loan Documents and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Borrowers. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent or Co-Agents
hereunder, the Administrative Agent and Co-Agents shall have no obligation or
liability to provide any Lender with any credit or other information concerning
the business, operations, property, financial and other condition or
creditworthiness of the Borrowers which may come into the possession of either
of the Administrative Agent, the Co-Agents or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.9. COLLATERAL. Each of the Lenders represents to the
Administrative Agent, each Co-Agent and each of the other Lenders
63
<PAGE>
that it in good faith is not relying upon any "margin stock" (as defined in
Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.
10.10. INDEMNIFICATION. Each of the Lenders shall indemnify, defend
and hold harmless the Administrative Agent and each Co-Agent in its capacity as
such (to the extent not reimbursed by the Borrowers and without limiting the
obligation of the Borrowers to do so), ratably according to their Equalization
Pro Rata Share as of date demand for payment is made from and against any and
all claims, demands, lawsuits, costs, expenses, fees, liabilities, obligations,
losses, damages, actions, recoveries, judgments, suits, costs, expenses or
disbursements of any kind whatsoever, including interest, penalties and
attorneys' fees and costs, whether direct, indirect, consequential or
incidental, which at any time (including at any time following the payment of
all amounts payable under the Existing Agreements and the Restructuring
Documents) may be imposed on, incurred by or asserted against the Administrative
Agent or any Co-Agent in their capacity as such and not in their individual
capacity in any way relating to, resulting from or arising out of this
Agreement, or the Restructuring Documents, the transactions contemplated hereby
or any action taken or omitted by the Administrative Agent or any Co-Agent under
or in connection with any of the foregoing; PROVIDED, HOWEVER, that no
Lender shall be liable for the payment of any portion of such claims, demands,
lawsuits, costs, expenses, fees, liabilities, obligations, losses, damages,
actions, remedies, judgments, suits, costs, expenses or disbursements to the
extent such result from the Administrative Agent's or any Co-Agent's gross
negligence or willful misconduct. The agreements in this SECTION 10.10 shall
survive the payment of all amounts payable under Restructuring Documents and
shall be in addition to and not in lieu of any other indemnification agreements
set forth in the Restructuring Documents.
10.11. EACH AGENT IN ITS INDIVIDUAL CAPACITY. Each of the Agents in
its individual capacity, and its Affiliates, may make loans and other financial
accommodations to, accept deposits from and generally engage in any kind of
business with the Borrowers and their Subsidiaries as though such Agent was not
an Agent hereunder. With respect to its Existing Indebtedness and any other
Loans made or renewed by it, such Agent in its individual capacity shall have
the same benefits, rights, powers and privileges under this Agreement, and the
Loan Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms "Lender" and "Lenders" shall include such Agent in its
individual capacity.
10.12. SUCCESSOR ADMINISTRATIVE AGENT AND CO-AGENT. The
Administrative Agent and each Co-Agent may resign as such upon ten days' prior
written notice to the Lenders. The
64
<PAGE>
Administrative Agent and each Co-Agent shall concurrently provide the Borrowers
with a copy of such notice. If the Administrative Agent or either Co-Agent
shall resign as such under this Agreement, then the Majority Lenders shall
appoint from among the Lenders a successor agent for the Lenders. A successor
agent may also be appointed by the Majority Lenders if the Administrative Agent
or either Co-Agent ceases to have any Loans hereunder, and upon such appointment
of a successor agent the Administrative Agent or Co-Agent shall resign as such.
Upon acceptance of its appointment as the successor agent in writing, (a) such
successor agent shall succeed to the rights, powers, privileges and duties of
the Administrative Agent or Co-Agent, as the case may be, (b) the retiring
Administrative Agent or Co-Agent shall be discharged of all its obligations and
liabilities in such capacity under this Agreement, and the Loan Documents, (c)
the term "Administrative Agent" and "Co-Agents" shall mean such successor agent
effective upon its appointment, and (d) the retiring Administrative Agent's or
Co-Agent's rights, powers and duties as the Administrative Agent or Co-Agent as
the case may be shall be terminated, without any other or further act or deed on
the part of such former Administrative Agent or Co-Agent or any of the parties
to this Agreement or their successors and assigns. With respect to any actions
taken or omitted to be taken by the retiring Administrative Agent or Co-Agent
while it was the Administrative Agent or Co-Agent (for which retiring
Administrative Agent or Co-Agent may still have liability), the retiring
Administrative Agent or Co-Agent shall continue to receive the benefits of this
ARTICLE X, including SECTION 10.10.
10.13. APPLICABILITY OF SECTION TO THE BORROWERS. Notwithstanding
any other provision contained in this ARTICLE X, the rights and obligations of
the Borrowers under this Agreement shall not be affected by any provision
otherwise included in this ARTICLE X. The Borrowers shall be permitted to
rely on communications from the Administrative Agent which it reasonably
believes are made on behalf of the Administrative Agent and, if specified
therein, the Lenders, and except as otherwise set forth specifically herein, all
notices and payments to be made by the Borrowers hereunder shall be made to the
Administrative Agent. Further, if any Lender shall be in default hereunder,
such default shall not affect the right and obligations of the Borrowers
hereunder. The Administrative Agent shall provide the Borrowers with prompt
notice of any default by any Lender.
65
<PAGE>
ARTICLE XI
JOINT AND SEVERAL LIABILITY
11.1. JOINT AND SEVERAL LIABILITY. Each Borrower agrees that such
Borrower is jointly and severally liable for the Obligations hereunder and that
all Obligations of each Borrower now or hereafter existing under this Agreement,
whether for principal, interest, fees, indemnification, expenses or otherwise,
will be paid strictly in accordance with the terms of this Agreement and the
other Loan Documents regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or the Lenders with respect thereto. So long as the
Obligations have not been paid in full, the liability of each Borrower hereunder
shall be absolute and unconditional irrespective of:
(a) any taking, exchange, release, or nonperfection of any
Collateral or any release or amendment or waiver of or consent to departure from
any guaranty, for all or any of the Obligations; or
(b) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Borrower.
11.2. THE GUARANTEES. If and to the extent any Obligation of any
Borrower to the Administrative Agent or any Lender shall be considered an
obligation of guaranty or suretyship, each Borrower hereby unconditionally
guarantees the full and punctual payment (whether at stated maturity, upon
acceleration or otherwise) of the Obligations. Upon failure by either Borrower
to pay punctually any such amount, the other Borrower shall forthwith on demand
pay the amount not so paid at the place and in the manner specified in this
Agreement.
11.3. GUARANTEES UNCONDITIONAL. The Obligations of each Borrower
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) Any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the other Borrower under this Agreement,
any Note, the other Restructuring Documents or by operation of law or otherwise;
(b) Any modification or amendment of or supplement to this
Agreement, any Note or the other Restructuring Documents;
(c) Any release, impairment, non-perfection or invalidity of
any direct or indirect security for any Obligation
66
<PAGE>
of the other Borrower under this Agreement, any Note or the other Restructuring
Documents;
(d) Any change in the corporate existence, structure or
ownership of the other Borrower, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the other Borrower or its assets or any
resulting release or discharge of any Obligation of the other Borrower contained
in this Agreement, any Note or the other Restructuring Documents;
(e) The existence of any claim, set-off or other rights which
a Borrower may have at any time against the other Borrower, the Administrative
Agent, any Lender or any other Person, whether in connection herewith or any
unrelated transactions; PROVIDED, that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(f) Any invalidity or unenforceability relating to or against
the other Borrower for any reason of this Agreement, any Note or the other
Restructuring Documents, or any provision of applicable law or regulation
purporting to prohibit the payment by the other Borrower of the principal of or
interest on any Note or any other amount payable by it under this Agreement or
the other Restructuring Documents; or
(g) Any other act or omission to act or delay of any kind by
the other Borrower, the Administrative Agent, any Lender or any other Person or
any other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of its Obligations under
this Agreement, any Note or the other Restructuring Documents.
11.4. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. The Borrowers' Obligations hereunder shall remain in full force
and effect until the Commitments shall have terminated and the principal of and
interest on the Notes and all other amounts payable by the Borrowers under this
Agreement shall have been paid in full. If at any time any payment of the
principal of or interest on any Note or any other amount payable by a Borrower
under this Agreement is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of a Borrower or otherwise, the
other Borrower's Obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had been due but not made at such
time.
11.5. WAIVERS BY THE BORROWERS. The following waivers shall apply
to the guarantees under this ARTICLE XI:
(a) EACH BORROWER EXPRESSLY WAIVES THE RIGHT TO REQUIRE THE
ADMINISTRATIVE AGENT, THE CO-AGENTS, THE COLLATERAL
67
<PAGE>
AGENT OR ANY LENDER FIRST TO PURSUE THE OTHER BORROWER OR ANY OTHER PERSON, THE
COLLATERAL, OR ANY OTHER SECURITY OR GUARANTY THAT MAY BE HELD FOR THE
OBLIGATIONS, OR TO APPLY ANY SUCH SECURITY OR GUARANTY TO THE OBLIGATIONS BEFORE
SEEKING FROM SUCH BORROWER PAYMENT IN FULL OF ITS OBLIGATIONS TO THE
ADMINISTRATIVE AGENT AND THE LENDERS OR PROCEEDING AGAINST SUCH BORROWER FOR
SAME;
(b) EACH BORROWER ACKNOWLEDGES THAT:
(i) IF A DEFAULT OR EVENT OF DEFAULT OCCURS AND SUCH
BORROWER PAYS TO THE ADMINISTRATIVE AGENT AND THE LENDERS ALL OR PART OF THE
OBLIGATIONS, SUCH BORROWER WOULD HAVE A RIGHT TO PROCEED AGAINST THE OTHER
BORROWER TO THE EXTENT OF THE OBLIGATIONS SO PAID BY SUCH BORROWER AND TO HAVE
THE BENEFIT OF ANY SECURITY HELD BY THE ADMINISTRATIVE AGENT OR COLLATERAL AGENT
FOR THE OBLIGATIONS TO THE EXTENT OF THE OBLIGATIONS SO PAID BY THE BORROWER.
SUCH RIGHT IS COMMONLY KNOWN AS THE "RIGHT OF SUBROGATION."
(ii) IF AN EVENT OF DEFAULT OCCURS, THE ADMINISTRATIVE
AGENT, AMONG OTHER THINGS, MAY ENFORCE ANY LIEN UPON ANY INTEREST IN REAL
PROPERTY ("REAL PROPERTY LIEN") BY MEANS OF JUDICIAL ACTION OR BY NON-JUDICIAL
ACTION COMMONLY KNOWN AS A "NON-JUDICIAL FORECLOSURE," "TRUSTEE'S SALE" OR
"POWER OF SALE FORECLOSURE."
(iii) IF AN EVENT OF DEFAULT OCCURS, AND THE
ADMINISTRATIVE AGENT ENFORCES ANY REAL PROPERTY LIEN BY MEANS OF A NON-JUDICIAL
FORECLOSURE, TRUSTEE'S SALE OR POWER OF SALE FORECLOSURE, SUCH BORROWER'S RIGHT
OF SUBROGATION TO PROCEED AGAINST THE OTHER BORROWER WOULD BE EXTINGUISHED BY
THE OPERATION OF CALIFORNIA CODE OF CIVIL PROCEDURE ("CCP") SECTION 580 OR
SIMILAR LAWS, AND, IN SUCH CASE, SUCH BORROWER MIGHT HAVE A DEFENSE AGAINST
PAYMENT.
(iv) IF AN EVENT OF DEFAULT OCCURS, AND THE
ADMINISTRATIVE AGENT ENFORCES ANY REAL PROPERTY LIEN BY MEANS OF JUDICIAL
ACTION, SUCH BORROWER'S RIGHT TO PROCEED AGAINST THE OTHER BORROWER MIGHT BE
LIMITED BY THE OPERATION OF CCP SECTION 580 OR SIMILAR LAWS, IN WHICH CASE SUCH
BORROWER MIGHT HAVE A COMPLETE OR PARTIAL DEFENSE AGAINST PAYMENT.
NEVERTHELESS, SUCH BORROWER EXPRESSLY, KNOWINGLY AND
INTENTIONALLY WAIVES AND RELINQUISHES ANY AND ALL RIGHTS, DEFENSES OR BENEFITS
THE BORROWER MIGHT HAVE UNDER CCP SECTIONS 580(b) OR 580(d) OR SIMILAR LAWS.
(v) IN ADDITION, THE BORROWER WAIVES ALL RIGHTS AND
DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY THE LENDERS, EVEN THOUGH THAT
ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY
FOR A GUARANTEED
68
<PAGE>
OBLIGATION, HAS DESTROYED THE GUARANTOR'S RIGHTS OF SUBROGATION AND
REIMBURSEMENT AGAINST THE PRINCIPAL BY THE OPERATION OF CCP SECTION 580, OR
SIMILAR LAWS OR OTHERWISE.
(vi) SUCH BORROWER ALSO AGREES THAT THIS AGREEMENT WILL
REMAIN FULLY EFFECTIVE, AND SUCH BORROWER WILL BE LIABLE TO THE ADMINISTRATIVE
AGENT AND THE LENDERS FOR ANY OBLIGATIONS EVEN IF THE ADMINISTRATIVE AGENT SELLS
AN INTEREST IN REAL PROPERTY BY JUDICIAL FORECLOSURE ACTION AND SUCH BORROWER'S
RIGHTS AGAINST THE BORROWERS ARE LIMITED BY THE OPERATION OF CCP SECTIONS 580b
OR 580d OR SIMILAR LAWS; AND
(c) SUCH BORROWER AGREES THAT THE ADMINISTRATIVE AGENT AND THE
LENDERS SHALL BE UNDER NO OBLIGATION TO: MARSHAL ANY ASSETS IN FAVOR OF SUCH
PERSON, TO PROCEED FIRST AGAINST ANY OTHER PERSON OR ANY PROPERTY OF ANY OTHER
PERSON OR AGAINST ANY COLLATERAL, ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS
WITH RESPECT TO, OR SECURITY FOR, THE OBLIGATIONS, PURSUE ANY OTHER REMEDY IN
THE ADMINISTRATIVE AGENT'S OR ANY LENDER'S POWER THAT SUCH BORROWER MAY NOT BE
ABLE TO PURSUE ITSELF AND THAT MAY LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO
WHICH SUCH BORROWER HEREBY EXPRESSLY WAIVES.
EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE
A MATERIAL INDUCEMENT TO THE ADMINISTRATIVE AGENT'S, THE CO-AGENTS' AND EACH
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT THE ADMINISTRATIVE AGENT, THE
CO-AGENTS AND EACH LENDER ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE
DEALINGS WITH SUCH BORROWER. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL.
11.6. SUBROGATION. Each Borrower agrees that it shall have no right
of subrogation, contribution or reimbursement against the other Borrower until
the Obligations are paid in full. Each Borrower agrees upon making any payment
hereunder to be subrogated to the rights of the payee against the other Borrower
with respect to such payment or against any direct or indirect security
therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the
account of the other Borrower in respect thereof.
11.7. STAY OF ACCELERATION. In the event that acceleration of the
time for payment of any amount payable by either Borrower under this Agreement
or its Notes is stayed upon insolvency, bankruptcy or reorganization of such
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the other Borrower hereunder
forthwith on demand by the Administrative Agent made at the request of the
Majority Lenders.
69
<PAGE>
ARTICLE XII
TREATMENT OF LENDER'S APPLICABLE PRO RATA SHARES
12.1. FUNDING OF LOANS.
(a) Prior to the Equalization Date, each Lender's Applicable
Pro Rata Share of each Alpha Loan shall be such Lender's Alpha Pro Rata Share
and such Lender's Applicable Pro Rata Share of each Beta Loan shall be such
Lender's Beta Pro Rata Share. Each Lender acknowledges and agrees that until
the Equalization Date: (i) any Borrowing which would cause the aggregate amount
of all Loans to increase from an amount below $69,198,468 to an amount less than
the Equalization Date Loan Amount will consist of Alpha Loans to the extent of
the portion which would cause the aggregate amount of all Loans to equal
$69,198,468 and Beta Loans to the extent of the portion of the Borrowing which
would cause the aggregate amount of all Loans to exceed $69,198,468 but be less
than the Equalization Date Loan Amount and (ii) each Lender's share of any
Borrowing which would cause the aggregate amount of all Loans to exceed the
Equalization Date Loan Amount shall be the amount necessary such that
immediately after such Borrowing, each Lender's Outstanding Pro Rata Share shall
be equal to such Lender's Equalization Pro Rata Share.
(b) After the Equalization Date each Lender's Applicable Pro
Rata Share of the Loans shall be such Lender's Equalization Pro Rata Share.
12.2. PREPAYMENTS AND REPAYMENTS OF LOANS.
Prepayments and repayments to be applied to the principal
balance of the Loans shall be distributed by the Administrative Agent pursuant
to the requirements of SECTION 2.10 and SECTION 2.11 to the Lenders as
follows:
(i) until the Equalization Date, to the Lenders, each in
accordance with its Outstanding Pro Rata Share and (ii) on or after the
Equalization Date, to the Lenders, each in accordance with its Equalization Pro
Rata Share; PROVIDED that from and after acceleration of the Obligations: (a)
until the Equalization Date, payments (including receipt of proceeds of
Collateral) shall be based upon each Lender's Alpha Pro Rata Share but only to
the extent that, after giving effect to any such payment, the outstanding
balance of the Loans does not equal or exceed the Equalization Date Loan Amount
and (b) on or after the Equalization Date after giving effect to the payments
described in clause (a) above, payments (including receipt of proceeds of
Collateral) shall be based upon each Lender's Equalization Pro Rata Share.
70
<PAGE>
12.3. TREATMENT OF MAXIMUM LOAN AMOUNTS AND COMMITMENTS. Reductions
of each Lender's Maximum Loan Amount and Commitments pursuant to SECTION 2.9
shall be applied to each Lender's Maximum Loan Amount and Commitments based upon
such Lender's Equalization Pro Rata Share.
12.4. TREATMENT OF LOANS FOR VOTING PURPOSES. Any vote, consent or
other action to be taken by the Majority Lenders under the Loan Documents shall
be calculated based on each Lender's Equalization Pro Rata Share. Any vote,
consent or other action to be taken by All Lenders shall require the vote,
consent or other action of each of the Lenders.
12.5. EQUALIZATION OF APPLICABLE PRO RATA SHARES. On each date
prior to the Equalization Date upon which any Borrowings occur or payments or
prepayments on account of Loans are received by the Administrative Agent, and on
the Equalization Date, the Administrative Agent shall calculate the amount of
each Lender's Outstanding Pro Rata Share. In the event that the Equalization
Date shall have occurred for any reason other than clause (iv) of the definition
of "Equalization Date", then each Purchasing Lender shall purchase an assignment
in such portion of all Selling Lenders' Loans, for a purchase price in each case
equal to the outstanding principal amount of each such portion as shall cause
such Purchasing Lender's Outstanding Pro Rata Share to equal its Equalization
Pro Rata Share. Each Purchasing Lender shall satisfy its obligation under this
Section 12.5 by paying to the Administrative Agent on such Equalization Date an
amount equal to the aggregate amount due from it to all Selling Lenders in
immediately available funds no later than 1:00 p.m., (Pittsburgh, Pennsylvania
time). Administrative Agent shall distribute to each Selling Lender on such
date amounts due to such Selling Lender from funds paid to the Administrative
Agent by each Purchasing Lender in immediately available funds no later than
3:00 p.m. (Pittsburgh, Pennsylvania time). In the event any Purchasing Lender
fails to honor its purchase obligation under this Section 12.5, Administrative
Agent shall pay sums otherwise payable to such Purchasing Lender under Section
12.2 pro rata to each Selling Lender until such Purchasing Lender's Outstanding
Pro Rata Share of all Loans equals its Equalization Pro Rata Share for all
Loans.
12.6. ADMINISTRATIVE AGENT'S CALCULATION OF APPLICABLE PRO RATA
SHARES. The Administrative Agent's calculation of each Lender's Applicable Pro
Rata Share shall be binding upon each Lender absent manifest error.
71
<PAGE>
ARTICLE XIII
MISCELLANEOUS
13.1. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the Schedule for Notices attached hereto or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the Administrative Agent and the Borrowers. Each such
notice, request or other communication shall be effective, (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail,
seventy-two (72) hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when delivered at the address specified in this Section;
PROVIDED, that notices to the Administrative Agent under ARTICLE II or
ARTICLE III shall not be effective until received.
13.2. ENTIRE AGREEMENT. The execution and delivery of this
Agreement, the Notes and the other Loan Documents supersede all the negotiations
or stipulations concerning matters thereof which preceded or accompanied the
execution and delivery hereof and thereof. This Agreement, the Notes and the
other Loan Documents are intended, by the parties hereto and thereto, to be a
complete and exclusive statement of the terms and conditions hereof and thereof.
13.3. NO WAIVERS. No failure or delay by the Administrative Agent
or any Lender in exercising any right, power or privilege hereunder or under any
Note or the other Restructuring Documents shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
13.4. EXPENSES; INDEMNIFICATION.
(a) The Borrowers shall pay (i) all reasonable out-of-pocket
expenses of the Administrative Agent, the Co-Agents and the Steering Committee
Lenders as a group, as such group is constituted on the Closing Date (as set
forth in the attached SCHEDULE 13.4) and as such group may be reconstituted
from time to time, including reasonable fees and disbursements of the
Professionals retained by the Steering Committee Lenders as a whole, in
connection with the preparation and administration of this Agreement, any waiver
or consent hereunder or any amendment
72
<PAGE>
hereof or any Default or alleged Default hereunder, (ii) if an Event of Default
occurs, all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Co-Agents and each Steering Committee Lender, or their Professionals,
including the reasonable fees and disbursements of counsel (including allocated
costs of internal counsel), in connection with such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom, and (iii) all reasonable out-of-pocket legal fees and expenses of
each Lender accruing from and after the Termination Date in connection with
payment of the Obligations.
(b) The Borrowers agree to indemnify the Administrative Agent,
the Co-Agents and each Lender, their respective Affiliates and the respective
directors, officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including the
reasonable fees and disbursements of counsel (including allocated costs of
internal counsel), which may be incurred by such Indemnitee in connection with
any investigative, administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) brought or threatened (i)
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder or (ii) directly or indirectly resulting from,
arising out of, or is based upon (x) the presence, use, generation, manufacture,
installation, release, discharge, storage or disposal, at any time, of any
Hazardous Materials on, under, in or about, or the transportation of any such
materials to or from, any Real Property or real property owned, leased or
operated by Borrower or any Affiliate of Borrower (collectively, the "Subject
Property") or (y) the violation or alleged violation by Borrower or any
Affiliate of Borrower of any law, statute, ordinance, order, rule, regulation,
permit, judgment or license relating to the use, generation, manufacture,
installation, release, discharge, storage or disposal of Hazardous Materials to
or from the Subject Property; PROVIDED, that no Indemnitee shall have the
right to be indemnified hereunder (a) for such Indemnitee's own gross negligence
or willful misconduct or (b) in the case of any Lender, for its failure to
perform the duties expressly required to be performed by it by the terms of this
Agreement, in each case as determined by a court of competent jurisdiction.
13.5. SET-OFF; SHARING OF SET-OFFS.
(a) In addition to any rights and remedies of the Lenders
provided by law, the Lenders each shall have a security interest in any and all
deposits of the Borrowers (general or special, time or demand, provisional or
final) at any time held by any Lender which security interest shall secure the
Obligations. Upon the occurrence and during the continuance of
73
<PAGE>
an Event of Default, provided that it has first received the written consent of
the Administrative Agent, without prior notice to the Borrowers (any such notice
being specifically waived by the Borrowers to the fullest extent permitted by
applicable law) each Lender may set off and apply against any Obligations,
whether matured or unmatured, of the Borrowers to the Lenders, any amount owing
from the Lenders to the Borrowers. No Lender shall exercise any right of
set-off it may have against any Borrower or Guarantor in connection with the
Obligations without the prior written consent of the Administrative Agent. Each
Lender promptly shall notify the Borrowers and the Administrative Agent after
any such setoff and application made by any such Lender; PROVIDED, HOWEVER,
that failure to give such notice shall not affect the validity of such setoff
and application. Provided that an Event of Default described in either SECTION
9.1(f) or SECTION 9.1(g) has not occurred, Bank of America National Trust and
Savings Association expressly agrees that it will not exercise set-off rights
with respect to cash in the Cash Management System for application against any
Indebtedness, liabilities or other obligations of any of the Borrowers,
Guarantors or any Consolidated Subsidiaries under any agreements other than the
Loan Documents. Any such set-off rights will be subject to the Intercreditor
Agreements.
(b) Each Lender agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of principal and interest due to it which is greater
than the proportion received by any other Lender in respect of the aggregate
amount of principal and interest due to such other Lender, the Lender receiving
such proportionately greater payment shall purchase such participations in the
Loans held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Loans held by the Lenders shall be shared by the Lenders pro rata;
PROVIDED, that nothing in this Section shall impair the right of any Lender to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of Indebtedness of a Borrower
other than its Indebtedness hereunder. Each Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a Loan, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of such Borrower in the amount of such participation.
13.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement, the
Notes or the other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrowers, the
Administrative Agent, the Co-
74
<PAGE>
Agents and the Majority Lenders; PROVIDED, that
(i) the consent of All Lenders shall be required to amend, modify or waive any
provision relating to (a) a change in the amount or the time of payment of any
amount owing on any of the Loans, (b) a change in the rate of interest or fees
to be paid by the Borrowers with respect to any of the Loans, (c) a change in
the definitions of "All Lenders", "Majority Lenders", "Applicable Pro Rata
Share" or the definitions referred to therein, (d) any increase in the total
amounts of the Commitments or in any Lender's Maximum Loan Amount or Commitment
or any change that subjects any Lender to any additional obligation, (e) this
SECTION 13.6 or ARTICLE XII, (f) the release of any Guarantor or any
Borrower, (g) any change in lien priorities created by, or other material terms
of, the Intercreditor Agreements; and (h) release of any Collateral that is not
identified in the Asset Disposition Program (for which the consent of the
Majority Lenders shall be required) or otherwise permitted to be released in
connection with the Loan Documents; (ii) any change in the duties of or
indemnities in this Agreement in favor of any Lender or in a Lender's Applicable
Pro Rata Share shall require the consent of such Lender; and (iii) any change in
the duties of or indemnities in favor of the Agents shall require the consent of
the Administrative Agent. Notwithstanding anything to the contrary herein, the
Administrative Agent, the Co-Agents and the Majority Lenders may modify, amend,
restate, supplement or waive any provision of ARTICLE X, other than SECTION
10.13, and ARTICLE XII without the consent of the Borrowers; PROVIDED,
FURTHER, that amendments or waivers of this Agreement are subject to the
Intercreditor Agreements.
13.7. EFFECT OF WAIVERS; MODIFICATION OF DOCUMENTS. The
Administrative Agent's, the Co-Agents', the Collateral Agent's or the Lenders'
failure, at any time or times, to require strict performance by the Borrowers or
any other Person of any provision of this Agreement or any of the other Loan
Documents shall not waive, affect or diminish any right of the Administrative
Agent, the Co-Agents, the Collateral Agent or the Lenders thereafter to demand
strict compliance and performance therewith. Any suspension or waiver by the
Administrative Agent, the Co-Agents, the Collateral Agent or the Lenders of a
Default or Event of Default under this Agreement or any of the other Loan
Documents, shall not suspend, waive or affect any other Default or Event of
Default under this Agreement or any of the other Loan Documents, whether the
same is prior or subsequent thereto and whether of the same or of a different
type. No waiver of any provision of this Agreement or any other Loan Documents,
nor consent to any departure by the Borrowers, or any other person or entity
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent or the Majority Lenders or All Lenders,
as the case may be, necessary to effectuate such waiver or consent and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
75
<PAGE>
13.8. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that neither Borrower may assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of All
Lenders.
(b) Any Lender may at any time grant to one or more of the
Existing Lenders (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant by a
Lender of a participating interest to a Participant, whether or not upon notice
to the Borrowers and the Administrative Agent, such Lender shall remain
responsible for the performance of its obligations hereunder, and the Borrowers
and the Administrative Agent shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement pursuant to which any Lender may grant such a
participating interest shall provide that such Lender shall retain the sole
right and responsibility to enforce the Obligations of the Borrowers hereunder,
including the right to approve any amendment, modification or waiver of any
provision of this Agreement. The Borrowers agree that each Participant shall,
to the extent provided in its participation agreement, be entitled to the
benefits of ARTICLE III with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) below
shall be given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) Lenders may at any time assign to one or more of the
Existing Lenders or an Affiliate thereof (each an "Assignee") all of its rights
and obligations under this Agreement and the Notes or any part thereof, and such
Assignee shall assume such rights and obligations, pursuant to an assignment and
assumption agreement executed by such Assignee and such transferor Lender in
substantially the form attached hereto as EXHIBIT E. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor
Lender of an amount equal to the purchase price agreed to between such
transferor Lender and such Assignee, such Assignee shall be deemed to be a
Lender under this Agreement and shall have all of the rights and obligations of
a Lender with a Commitment as set forth in such instrument of assumption, and
the transferor Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Lender, the Administrative Agent and the Borrowers shall
make appropriate arrangements so that new Notes are issued to the Assignee and
an updated Schedule of Lenders is annexed to the Credit Agreement. If the
Assignee is not incorporated under the laws of the United States or a state
thereof, then it shall deliver to the Borrowers and the
76
<PAGE>
Administrative Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes in accordance with
SECTION 3.2.
13.9. HEADINGS AND CAPTIONS. The headings and captions used in this
Agreement, the Notes and the other Restructuring Documents are solely for the
purpose of reference and are not to be considered as construing or interpreting
the provisions hereof or thereof.
13.10. INTERPRETATION. Neither this Agreement, the Notes or the
other Restructuring Documents, nor any uncertainty or ambiguity herein or
therein shall be construed or resolved against the Administrative Agent, the
Co-Agents, the Lenders or the Borrowers, whether under any rule of construction
or otherwise. This Agreement, the Notes and the other Restructuring Documents
have been reviewed by all the parties hereto and thereto and shall be construed
and interpreted according to the ordinary meaning of the words used as to fairly
accomplish the purposes and intentions of all such parties.
13.11. INCONSISTENCIES WITH OTHER DOCUMENTS. In the event there is a
conflict or inconsistency between this Agreement, the Notes, the Loan Documents,
or the Restructuring Documents, the terms of this Agreement shall control except
that this Agreement shall be subject to the provisions of the MKO/MKD Asset Pool
Intercreditor Agreement; PROVIDED, HOWEVER, that any provision of the
Security Documents which imposes additional burdens on the Borrowers or further
restricts the rights of the Borrowers or gives the Lenders additional rights
shall not be deemed to be in conflict or inconsistent with this Agreement and
shall be given full force and effect.
13.12. SEVERABILITY. If any portion of this Agreement, the Notes and
the other Loan Documents shall be judged by a court of competent jurisdiction to
be unenforceable, the remaining portions shall be valid and enforceable to the
extent that the remaining terms thereof provide for the consummation of the
issuance of the Notes, the grant of collateral security therefor, and the
payment of principal and interest on the Loans substantially on the same terms
and subject to the same conditions as set forth herein and therein.
13.13. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
13.14. CONSENT TO JURISDICTION. THE BORROWERS HEREBY IRREVOCABLY
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, ANY
77
<PAGE>
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. THE BORROWERS HEREBY IRREVOCABLY CONSENT TO THE SERVICE OF A
SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING
BROUGHT BY THE ADMINISTRATIVE AGENT, THE CO-AGENTS OR ANY LENDER IN CONNECTION
WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS, ON BEHALF OF THEMSELVES AND THEIR PROPERTY, IN THE MANNER SPECIFIED
IN SECTION 13.1 (PROVIDED TELECOPY NOTICES MAY NOT BE USED FOR THIS PURPOSE).
NOTHING IN THIS SECTION 13.14 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT, THE CO-AGENTS OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE CO-AGENTS
OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWERS OR THEIR
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
13.15. WAIVER OF JURY TRIAL. THE ADMINISTRATIVE AGENT, THE
CO-AGENTS, EACH LENDER AND THE BORROWERS EACH HEREBY IRREVOCABLY WAIVES ITS
RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE
OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
13.16. CUMULATIVE REMEDIES. All rights and remedies provided in and
contemplated by this Agreement, the Notes and the other Restructuring Documents
are cumulative and not exclusive of any right or remedy otherwise provided
herein, therein, at law or in equity.
13.17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrowers set forth in this Agreement, the
Notes and the other Restructuring Documents and in any other certificate,
opinion or other statement provided at any time by or on behalf of the Borrowers
in connection herewith shall survive the execution of the delivery of this
Agreement, the Notes and the other Restructuring Documents and the payment of
all Loans and other amounts due hereunder.
13.18. RELATIONSHIP OF THE PARTIES. Neither the Administrative
Agent, the Co-Agents nor the Lenders shall be deemed partners or joint venturers
with the Borrowers or any Affiliate thereof in making this Agreement or by any
action taken hereunder.
13.19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
13.20. T-CO TERM SHEET. The parties hereto agree that by their
execution of this Agreement they approve the terms contained in the T-Co Term
Sheet provided that such agreement shall not be construed as a commitment and is
subject to all the provisions set forth in the preamble to the T-Co Term Sheet.
78
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWERS: MORRISON KNUDSEN CORPORATION
(a Delaware corporation)
By /s/ D. L Brigham
----------------------------------
Name: D. L. Brigham
-------------------------------
Title: VP and Treasurer
------------------------------
MORRISON KNUDSEN CORPORATION
(an Ohio corporation)
By /s/ D. L. Brigham
----------------------------------
Name: D. L. Brigham
-------------------------------
Title: VP and Treasurer
------------------------------
AGENTS AND LENDERS:
MELLON BANK, N.A., as Administrative Agent, a
Co-Agent and a Lender
By /s/ Kurt L. Hewett
----------------------------------
Name: Kurt L. Hewett
-------------------------------
Title: Vice President
------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as a Co-Agent and a Lender
By /s/ Henry Y. Yu
----------------------------------
Name: Henry Y. Yu
-------------------------------
Title: Senior Vice President
------------------------------
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
79
<PAGE>
LENDERS:
Bank of America Illinois CIBC Inc.
By: By: /s/ Robert N. Greer
------------------------ -----------------------
Name: Name: Robert N. Greer
---------------------- ---------------------
Title: Title: Vice President
--------------------- --------------------
Bank of Montreal Citibank, N.A.
By: /s/ James R. Easter By: /s/ Bradley I. Dietz
------------------------ ------------------------
Name: James R. Easter Name: Bradley I. Dietz
---------------------- ----------------------
Title: Account Manager Title: Vice President
--------------------- ---------------------
The Bank of Nova Scotia Credit Lyonnais, Canada
By: /s/ D. N. Gillespie By:
------------------------ ------------------------
Name: Name:
----------------------- ----------------------
Title: General Manager Title:
--------------------- ---------------------
The Bank of Tokyo, Ltd., Credit Lyonnais, New York Branch
Seattle Branch
By: /s/ M. Tomi By: /s/ David Bonington
------------------------ ------------------------
Name: M. Tomi Name: David Bonington
---------------------- ----------------------
Title: General Manager Title: Vice President
--------------------- ---------------------
Banque Nationale de Paris Deutsche Bank AG,
Los Angeles Branch and/or Cayman
Islands Branch
By: /s/ Katherine Wolfe
------------------------
Name: Katherine Wolfe
----------------------
Title: Vice President
--------------------- By: /s/ Patricia E. Apelian
------------------------
Name: Patricia E. Apelian
----------------------
By: /s/ William J. Latterran Title: Director
------------------------ ---------------------
Name:
----------------------
Title: Assistant Vice President By: /s/ Silvia Spear
--------------------- ------------------------
Name: Silvia Spear
----------------------
Title: Director
Banque Paribas ---------------------
By: /s/ John N. Cate
------------------------
Name: J. Gate The Hongkong and Shanghai
---------------------- Banking Corporation Limited
Title: GVP
By: /s/ Alan E. McLintock By: /s/ G. W. Maser
------------------------ ------------------------
Name: A. McLintock Name: G. W. Maser
---------------------- ----------------------
Title: Regional General Manager Title: Vice President
--------------------- ---------------------
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
80
<PAGE>
The Industrial Bank of Japan,
Limited, Los Angeles Agency San Paolo Bank SpA
By: /s/ Kazataka Kyoto By: /s/ Donald W. Brown
------------------------ ------------------------
Name: Kazataka Kyoto Name: Donald W. Brown
---------------------- ----------------------
Title: SVP Title: Branch Manager
--------------------- ---------------------
Key Bank of Idaho
By: /s/ Glen Binder
------------------------
By: Brett A. Tinker Name: Glen Binder
------------------------- ----------------------
Name: Brett A. Tinker Title: Vice President
----------------------- ---------------------
Title: /s/ Vice President Society National Bank
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency By: /s/ Nancy Terrill
------------------------
By: /s/ Curt M. Biren Name: Nancy Terrill
------------------------ ----------------------
Name: Curt M. Biren Title: Vice President
----------------------
Title: Vice President, Manager
--------------------- Union Bank of Switzerland
Morgan Guaranty Trust Company By: /s/ Thomas G. Jackson
------------------------
By: /s/ D. Linda Scheuplein Name: Thomas G. Jackson
------------------------ ----------------------
Name: D. Linda Scheuplein Title: Managing Director
---------------------- ---------------------
Title: Vice President
--------------------- By: /s/ Peter S. Humber
------------------------
Name: Peter S. Humber
----------------------
National Westminster Bank PLC Title: Vice President
---------------------
By: /s/ Theodore P. Nikolis Westdeutsche Landesbank
------------------------ Girozentrale, New York and
Name: Theodore P. Nikolis Cayman Islands Branches
----------------------
Title: Vice President - Counsel
--------------------- By: /s/ Michael F. McWalters
-------------------------
PNC Bank, N.A. Name: Michael F. McWalters
----------------------
Title: Managing Director
By: /s/ Thomas J. McCool
------------------------
Name: Thomas J. McCool By: /s/ Catherine Ruhland
---------------------- ------------------------
Title: Senior Vice President Name: Catherine Ruhland
--------------------- ----------------------
Title: Associate
---------------------
Royal Bank of Canada
By: /s/ Brian W. Dixon
------------------------
Name: Brian W. Dixon
----------------------
Title: Senior Manager
---------------------
81
<PAGE>
EXHIBITS AND SCHEDULES
[The Registrant agrees to provide the Securities and Exchange Commission, upon
request, with copies of the Exhibits and Schedules hereto.]
<PAGE>
Exhibit 4.2
8/9/95
Item 1.12
OVERRIDE AGREEMENT
dated as of
July 31, 1995
among
Morrison Knudsen Corporation,
a Delaware corporation,
Morrison Knudsen Corporation
an Ohio corporation,
The Banks and Other
Financial Institutions
Named Herein
and
Mellon Bank, N.A., as Agent
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS................................................ 2
1.1. Definitions................................................ 2
1.2. Accounting Terms and Determinations........................ 22
1.3. General Construction....................................... 22
ARTICLE II SATISFACTION OF THE BORROWERS' OBLIGATIONS UNDER EXISTING
AGREEMENTS................................................. 22
2.1. Acknowledgement of Obligations............................. 22
2.2. Conversion of Contingent to Funded Obligation.............. 22
2.3. Maturity of Existing Indebtedness; Termination Date........ 22
2.4. Deferred Payments and Amortization......................... 23
2.5. Interest Rates; Deferral of Interest and Letter
of Credit Fees............................................. 23
2.6. Payment of Deferred Interest............................... 24
2.7. Fees....................................................... 24
(a) The Agent's Fee........................................ 24
(b) The Collateral Agent's Fee............................. 24
(c) Fees Cumulative........................................ 25
2.8. Optional Prepayments....................................... 25
2.9. Mandatory Prepayment....................................... 25
2.10. Application of Payments.................................... 26
2.11. General Provisions as to Payments.......................... 26
2.12. Recalculation.............................................. 29
2.13. Delivery of Reallocation Certificates...................... 29
2.14. Computation of Interest and Fees........................... 30
2.15. Cash Management System..................................... 30
2.16. Taxes...................................................... 30
ARTICLE III ADDITIONAL AMENDMENTS TO THE EXISTING AGREEMENTS
AND EFFECT ON EXISTING AGREEMENTS.......................... 31
3.1. Waiver of Covenants........................................ 31
3.2. Non-Exercise of Certain Remedies Arising From Pre-existing
Defaults or Terminations................................... 32
3.3. Term....................................................... 32
3.4. Effect on Existing Agreements.............................. 33
ARTICLE IV SECURITY................................................... 33
4.1. The Borrowers' Obligations................................. 33
4.2. Further Assurances......................................... 34
ARTICLE V CONDITIONS PRECEDENT....................................... 34
5.1. Conditions Precedent to Effectiveness of Agreement......... 34
(a) Restructuring Documents................................ 34
(b) Consents............................................... 34
(c) Pending and Threatened Litigation...................... 35
(d) The Restructuring...................................... 35
(e) Other Matters.......................................... 35
i
<PAGE>
(f) Representations and Warranties......................... 35
(g) No Default or Event of Default......................... 35
(h) Defaults Under Indebtedness............................ 35
5.2. Additional Condition Precedent............................. 35
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................. 36
6.1. Organization and Qualification............................. 36
6.2. Corporate Power and Authorization; Binding Effect.......... 36
6.3. No Conflict................................................ 36
6.4. No Consents................................................ 36
6.5. Absence of Litigation...................................... 37
6.6. No Default under the Restructuring Documents............... 37
6.7. Indebtedness............................................... 37
6.8. Material Contracts......................................... 37
6.9. Correctness of Collateral Schedules........................ 38
6.10. Correctness of Financial Information....................... 38
6.11. Security Documents......................................... 38
6.12. Taxes...................................................... 38
6.13. No Burdensome Restrictions................................. 39
6.14. Judgments.................................................. 39
6.15. Compliance with Laws....................................... 39
6.16. Compliance with ERISA...................................... 39
6.17. Governmental Authorizations; Permits, Licenses and
Accreditations; Other Rights............................... 40
6.18. Environmental Matters...................................... 40
6.19. No Material Adverse Effect................................. 41
6.20. Consolidated Subsidiaries; Subsidiaries.................... 41
6.21. Margin Securities.......................................... 41
6.22. Investment Company Act..................................... 41
6.23. Business Locations and Trade Names......................... 41
6.24. Title to Real Property and Other Assets.................... 42
6.25. Labor Matters.............................................. 42
6.26. Employment and Investment Agreements....................... 42
6.27. No Misstatements........................................... 42
6.28. Restructuring.............................................. 42
6.29. MK Rail Lock Box........................................... 42
6.30. Cash Management System..................................... 43
ARTICLE VII AFFIRMATIVE COVENANTS...................................... 43
7.1. Financial Statements; Additional Reporting Requirements.... 43
7.2. Provision of Notices....................................... 45
7.3. Filing of Returns; Payment of Taxes........................ 47
7.4. Maintenance of Existence................................... 47
7.5. Compliance with Laws....................................... 47
7.6. Maintenance of Properties.................................. 47
7.7. Insurance.................................................. 47
7.8. Books and Records.......................................... 48
7.9. Compliance With Terms of All Real Property Related
Agreements................................................. 48
7.10. Hazardous Materials........................................ 48
ii
<PAGE>
7.11. Intellectual Property Assignments.......................... 49
7.12. Further Assurances......................................... 49
7.13. Inspection of Property, Books and Records.................. 49
7.14. Use of Proceeds............................................ 49
7.15. Compliance with Asset Disposition Program.................. 50
7.16. Standstill Agreements...................................... 50
7.17. Cash Management System..................................... 50
ARTICLE VIII NEGATIVE COVENANTS......................................... 50
8.1. Indebtedness............................................... 50
8.2. Negative Pledge............................................ 51
8.3. Prohibition of Fundamental Changes......................... 52
8.4. Prohibition on Sale of Assets.............................. 52
8.5. Investments................................................ 52
8.6. Compliance with ERISA...................................... 53
8.7. Restricted Payments........................................ 53
8.8. Transactions With Affiliates............................... 53
8.9. Sale/Lease-Backs........................................... 54
8.10. Operating Leases........................................... 54
8.11. Capital Expenditures....................................... 54
8.12. Amendment of Charter or Bylaws............................. 54
8.13. No Consent to Subordination................................ 54
8.14. Intercompany Obligations................................... 54
8.15. Transit Division Operations................................ 55
ARTICLE IX DEFAULTS................................................... 55
9.1. Events of Default.......................................... 55
9.2. The Existing Lenders' Remedies............................. 58
9.3. Other Remedies............................................. 59
9.4. Waivers by the Borrowers................................... 59
ARTICLE X THE AGENT.................................................. 60
10.1. Appointment................................................ 60
10.2. The Agent and Affiliates................................... 60
10.3. Retention of Documents and Information to the
Existing Lenders........................................... 60
10.4. Delegation of Duties....................................... 60
10.5. Limitation of Liability.................................... 61
10.6. Reliance by the Agent. ................................... 61
10.7. Notice of Default.......................................... 62
10.8. Non-Reliance on the Agent and the Other Existing Lenders... 62
10.9. Collateral................................................. 63
10.10. Indemnification............................................ 63
10.11. The Agent in its Individual Capacity....................... 63
10.12. The Successor Agent........................................ 64
10.13. Applicability of Section to The Borrowers.................. 64
10.14. Delivery to Agent of Existing Agreements................... 64
iii
<PAGE>
ARTICLE XI JOINT AND SEVERAL LIABILITY................................ 65
11.1. Joint and Several Liability................................ 65
11.2. The Guarantees............................................. 65
11.3. Guarantees Unconditional................................... 65
11.4. Discharge Only Upon Payment In Full; Reinstatement In Certain
Circumstances.............................................. 66
11.5. Waivers by The Borrowers................................... 66
11.6. Subrogation................................................ 68
11.7. Stay of Acceleration....................................... 68
ARTICLE XII MISCELLANEOUS.............................................. 68
12.1. Notices.................................................... 68
12.2. Entire Agreement........................................... 69
12.3. No Waivers................................................. 69
12.4. Expenses; Indemnification.................................. 69
12.5. Set-Off; Sharing Upon Set-Off Reductions in Liability and
Conversion Events.......................................... 70
12.6. Amendments and Waivers..................................... 73
12.7. Effect of Waivers; Modification of Documents............... 73
12.8. Successors and Assigns..................................... 74
12.9. Headings and Captions...................................... 75
12.10. Interpretation............................................. 75
12.11. Inconsistencies With Other Documents....................... 76
12.12. Severability............................................... 76
12.13. GOVERNING LAW.............................................. 76
12.14. CONSENT TO JURISDICTION.................................... 76
12.15. WAIVER OF JURY TRIAL....................................... 76
12.16. Cumulative Remedies........................................ 77
12.17. Survival of Representations and Warranties................. 77
12.18. Relationship of the Parties................................ 77
12.19. Counterparts............................................... 77
12.20. Voting Prior to Metra Reduction Equalization Event......... 77
12.21. T-Co Term Sheet............................................ 78
12.22. Payments to Metra Lenders.................................. 78
12.23. Affirmation of Payments of Obligations..................... 78
iv
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBIT A BUDGET
EXHIBIT B T-CO TERM SHEET
EXHIBIT C FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT D-1 FORM OF WARRANT FOR EXISTING LENDERS OTHER THAN WITH
RESPECT TO METRA OBLIGATIONS
EXHIBIT D-2 FORM OF WARRANT WITH RESPECT TO METRA OBLIGATIONS
SCHEDULE A SCHEDULE OF EXISTING LENDERS AND EXISTING AGREEMENTS
SCHEDULE B SCHEDULE OF DOCUMENTS
SCHEDULE C SCHEDULE FOR NOTICES
SCHEDULE D SCHEDULE OF GUARANTORS
SCHEDULE E CASH MANAGEMENT SYSTEM
SCHEDULE F SCHEDULE OF REAL PROPERTY COLLATERAL
SCHEDULE 1.1(a) SCHEDULE OF EXISTING CONTINGENT INDEBTEDNESS
SCHEDULE 1.1(b) SCHEDULE OF WARRANTS
SCHEDULE 5.1(c) SCHEDULE OF PENDING AND THREATENED LITIGATION
SCHEDULE 5.1(h) SCHEDULE OF FUNDED DEBT DEFAULTS
SCHEDULE 6.7A SCHEDULE OF INDEBTEDNESS
SCHEDULE 6.7B SCHEDULE OF CONTINGENT OBLIGATIONS
SCHEDULE 6.8 SCHEDULE OF MATERIAL CONTRACTS
SCHEDULE 6.8A SCHEDULE OF MATERIAL DEFAULTS
SCHEDULE 6.14 SCHEDULE OF JUDGMENTS
SCHEDULE 6.16 SCHEDULE OF MULTIEMPLOYER PLAN WITHDRAWAL LIABILITY
SCHEDULE 6.19 SCHEDULE OF MATERIAL ADVERSE EFFECTS
SCHEDULE 6.20 SCHEDULE OF SUBSIDIARIES
SCHEDULE 6.23A SCHEDULE OF BUSINESS LOCATIONS
SCHEDULE 6.23B SCHEDULE OF TRADE NAMES
SCHEDULE 6.24 SCHEDULE OF CONTRACTS OR OPTIONS FOR SALE OR LEASE OF
REAL PROPERTY COLLATERAL
SCHEDULE 6.26 SCHEDULE OF EMPLOYMENT AND INVESTMENT
AGREEMENTS
SCHEDULE 7.1(k) BACKLOG CERTIFICATE
SCHEDULE 7.2(c)(a) SCHEDULE OF REPORTABLE EVENTS
SCHEDULE 7.2(c)(b) SCHEDULE OF PLAN TERMINATIONS
SCHEDULE 8.1 SCHEDULE OF EXISTING INDEBTEDNESS
SCHEDULE 8.2 SCHEDULE OF PERMITTED LIENS
SCHEDULE 8.5 SCHEDULE OF PERMITTED INVESTMENTS
SCHEDULE 8.10 SCHEDULE OF OPERATING LEASES
SCHEDULE 12.4 SCHEDULE OF STEERING COMMITTEE LENDERS
v
<PAGE>
OVERRIDE AGREEMENT
This Override Agreement (the "Agreement") dated as of July 31, 1995
is entered into among Morrison Knudsen Corporation ("MKD"), a Delaware
corporation, and Morrison Knudsen Corporation ("MKO"), an Ohio corporation (each
a "Borrower" and collectively the "Borrowers"), and the banks and other
financial institutions named herein and whose names appear on the signature
pages hereof (each, together with its successors and assigns an "Existing
Lender" and collectively, the "Existing Lenders"), and Mellon Bank, N.A. as the
agent for the Existing Lenders (in such capacity, the "Agent").
The parties hereto agree as follows:
RECITALS
A. The Borrowers are currently indebted to certain of the Existing
Lenders (the "Bridge Loan Lenders") in the amount of approximately $77,000,000
(the "Bridge Loan"), pursuant to that certain Credit Agreement dated as of April
11, 1995, as amended April 25, 1995 and June 1, 1995 (the "Bridge Loan
Agreement").
B. MKO and MKD have obligations (funded, contingent or otherwise) of
$521,592,587 (the "Existing Indebtedness") to the Existing Lenders pursuant to
the terms of the respective loan agreements and other financing arrangements set
forth on the Schedule of Existing Lenders attached hereto as SCHEDULE A (as
heretofore amended and as amended hereby, the "Existing Agreements").
C. The Borrowers are currently indebted to Fidelity and Deposit Company
of Maryland and Colonial American Casualty and Surety Company and certain other
sureties for payment and/or performance bonds.
D. The Borrowers have requested, and the Existing Lenders, the Bridge
Loan Lenders, Fidelity and Deposit Company of Maryland and Colonial American
Casualty and Surety Company have agreed to, a restructuring of the Existing
Indebtedness and the Bridge Loan, the establishment of an interim credit
facility to finance the operations required in connection with the Metra
Contract (as hereinafter defined) (the "Metra Transaction"), and the
establishment of an as yet unformed and unnamed limited liability company
("T-Co") as contemplated by the terms of the T-Co Term Sheet (as hereinafter
defined) (the "T-Co Transaction"). The Borrowers anticipate that T-Co will be
formed by September 1, 1995, and that prior to such formation, certain of the
Existing Lenders will advance funds to MKO's transit division (the "Transit
Division") pursuant to various credit facilities as set forth in the T-Co Term
Sheet (the "Interim T-Co Transaction"). The restructuring of the Existing
Indebtedness, the Bridge Loan,
1
<PAGE>
the Metra Transaction and the Interim T-Co Transaction shall collectively be
referred to as the "Restructuring."
E. The Borrowers are in default under various provisions of the
Existing Agreements.
F. In connection with the Restructuring, the Borrowers have requested
the Existing Lenders to (i) make certain agreements concerning the respective
rights and remedies of the Existing Lenders under the Existing Agreements
arising from the defaults thereunder; and (ii) amend certain provisions of the
Existing Agreements. In addition, the Borrowers have requested the Bridge Loan
Lenders to amend and restate the Bridge Loan Agreement to, among other things,
increase the amount of the secured loans to up to approximately $129,000,000 to
be used for non-Transit Division working capital purposes.
G. The Existing Lenders have agreed to such requests on the terms and
conditions set forth herein and in the documents executed in connection
herewith, including the condition that the Borrowers secure their obligations
under this Agreement with substantially all of their assets other than certain
assets associated with the Transit Division.
In consideration of the foregoing, MKD, MKO, each of the Existing Lenders
and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Account" has the meaning assigned to it in SCHEDULE E.
"Additional Capital Expenditure Indebtedness" has the meaning
assigned to it in SECTION 8.1(e).
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. As used herein, the term "control" means possession, directly
or indirectly, or the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means Mellon Bank, N.A., in its capacity as the agent
for the Existing Lenders hereunder, and its successors in such capacity.
2
<PAGE>
"Agent's Fee" has the meaning assigned to it in SECTION
2.7(a).
"Aggregate Exposure" means, as of the date of determination, the
aggregate amount of the Exposure for all Existing Lenders.
"All Existing Lenders" means one hundred percent (100%) of the
Existing Lenders without regard to their Pro Rata Share.
"Asset Disposition Program" means a program designed by the
Borrowers setting forth a detailed list of actions to be taken by specified
dates with respect to the proposed disposition of assets, including dates when
materials are to be prepared and when solicitations are to be commenced relating
to the Borrowers or the following Subsidiaries: MK Rail; McConnell Dowell
Corporation Limited; AmeriBank; Morrison Knudsen Investments, Inc.; MK Pacific,
Inc.; G.W. Murphy Construction Company, Inc.; E.E. Black Limited; Black
Construction Corporation; Black Micro Corporation; and P.T.E.E. Black Indonesia.
For purposes of this Agreement, any disposition of MKO's interest under any
leases or subleases pertaining to real property in Fayette County, West
Virginia, shall be considered a disposition under the Asset Disposition Program.
"Assignee" has the meaning assigned to it in SECTION 12.8(c).
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multi-employer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Bonding Company" means, collectively, Fidelity and Deposit
Company of Maryland and Colonial American Casualty and Surety Company or any
such other Person that provides the Borrowers or their Subsidiaries with payment
or performance bonds.
"Borrower" means MKD or MKO and the "Borrowers" means both of
the foregoing.
"Bridge Loan" has the meaning assigned to it in RECITAL A.
"Bridge Loan Agreement" means the Bridge Loan Agreement referred
to in RECITAL A as amended and restated pursuant to that certain Amended and
Restated Credit Agreement dated as of July 31, 1995 among the Borrowers, the
Bridge Loan Lenders and the agents referred to therein, as the same may be
amended, modified, supplemented and restated from time to time.
3
<PAGE>
"Bridge Loan Lenders" has the meaning assigned to it in RECITAL
A.
"Budget" means the projections of the Borrowers for the period
from July 1, 1995 through the Termination Date attached hereto as EXHIBIT A or
such other budget submitted by the Borrowers and accepted by the Majority
Lenders as an acceptable substitute Budget.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York City, New York, Los Angeles,
California or Pittsburgh, Pennsylvania are authorized by law to close.
"Capital Expenditures" means, as to any Person, any expenditures
for the acquisition or construction of fixed assets which would be capitalized
on a balance sheet of such Person prepared in accordance with Generally Accepted
Accounting Principles.
"Capital Lease" means, as to any Person, any lease of property
by such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Generally Accepted Accounting Principles.
"Capital Lease Obligation" means, as to any Person,
collectively, the capitalized amount of the obligations of such Person and its
Subsidiaries under all Capital Leases.
"Cash Equivalent" means, at any time, (a) United States of
America government securities having a maturity not exceeding one year from the
date acquired, (b) commercial paper rated at least A-l+ by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc., having a maturity not
exceeding one year from the date acquired, (c) certificates of deposit or time
deposits of commercial banks with capital and undivided surplus of at least
$300,000,000 issuing commercial paper rated as described in the preceding clause
(b) and organized and existing under the laws of the United States or any State
thereof or the District of Columbia, having a maturity not exceeding one year
from the date acquired, and (d) time deposits (of one year or less) and demand
deposits with any FDIC insured bank, not exceeding the maximum amount insured
thereby.
"Cash Management System" means the Cash Management System set
forth on SCHEDULE E.
"Closing Date" means July 31, 1995, or such other later date on
which the Agent shall have determined that all conditions precedent set forth in
ARTICLE V have been satisfied in full or waived.
"Collateral" means collectively, all real and personal property,
fixtures and interests in such property and
4
<PAGE>
proceeds thereof presently owned or hereafter created or acquired by the
Borrowers or the Guarantors, including the Real Property Collateral, in which a
security interest, Mortgage or ship mortgage is granted in favor of the
Collateral Agent for the benefit of the Existing Lenders to secure the
Obligations.
"Collateral Agent" means the entity or person serving as the
"Collateral Agent and Mortgage Trustee" under and as defined in the Collateral
Agent Agreement, in its capacity as the agent or trustee for the Existing
Lenders, or any successor agent or trustee pursuant to the terms thereof.
"Collateral Agent Agreement" means the Collateral Agent
Agreement and Mortgage Trust dated as of July 31, 1995 among the Existing
Lenders, the Agent and the Collateral Agent.
"Commonly Controlled Entity" means a Person, which is under
common control with a Borrower within the meaning of Section 414(b) or Section
414(c) of the Internal Revenue Code.
"Concentration Account" has the meaning assigned to it in
SCHEDULE E.
"Consolidated," when used with respect to any of the terms
defined herein, refers to such terms as reflected in a consolidation of the
accounts or other items of the Borrowers and of the accounts or other items of
the Borrowers' Subsidiaries, if any, in conformity with Generally Accepted
Accounting Principles.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be Consolidated in accordance with
Generally Accepted Accounting Principles with those of the Borrowers in their
Consolidated financial statements if such statements were prepared as of such
date; PROVIDED, that any Consolidated Subsidiary which ceases to be a
Consolidated Subsidiary solely because it is classified as a discontinued
operation shall be deemed to be a Consolidated Subsidiary so long as it remains
a Subsidiary.
"Contingent Indebtedness Account" has the meaning assigned to
that term in SECTION 2.11(b).
"Contingent Obligations" means, as to any Person, collectively,
all Indebtedness, obligations or other liabilities of such Person guarantying or
in effect guarantying the payment or performance of any Indebtedness, obligation
or other liability, whether or not contingent (collectively, the "primary
obligations"), of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including any Indebtedness, obligation or other
liability of such Person (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital
5
<PAGE>
of the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, (d) for any
contingent reimbursement obligation of such Person in respect of any letter of
credit or any other financing accommodations, or (e) otherwise to assure or hold
harmless the owner of such primary obligation against loss with respect thereto.
"Contractual Obligation" means, as to any Person, collectively,
any Indebtedness, obligation or other liability of such Person (whether for the
payment of money or otherwise), now existing or hereafter arising, whether due
or not due, absolute or contingent, liquidated or unliquidated, direct or
indirect, express or implied, individually or jointly with others, pursuant to
the provisions of any security issued by such Person or any document, instrument
or agreement to which such Person is a party or by which such Person or any of
its property is or may be bound or affected.
"Conversion Event" shall mean (a) with respect to each of the
Metra Obligations and Existing Contingent Indebtedness which arises on account
of an Existing Letter of Credit, a Draw under the applicable Existing Letter of
Credit, (b) with respect to Existing Contingent Indebtedness which arises on
account of a guaranty by either Borrower, the delivery to the Agent of a
certificate by the Existing Lender who is the beneficiary of such guaranty
stating: (i) that all or a portion of the obligations so guaranteed have become
due and payable; (ii) that, but for the terms of SECTION 2.3 and ARTICLE III
of this Agreement, the Existing Lender would be entitled to seek immediate
payment from a Borrower pursuant to such guaranty, and (iii) the amount of such
payment, and (c) with respect to the Metra Obligations which arise under the
Metra Interim Credit Agreement, the occurrence of the Metra Final Accounting
Date.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" means a rate of interest equal to the Prime Rate
plus two percent (2%) per annum; PROVIDED, that to the extent the Default Rate
exceeds the Maximum Lawful Rate, the Default Rate shall be a rate equal to the
Maximum Lawful Rate.
"Deferral Period" means July 1, 1995 through the earlier of
March 31, 1996 and the Termination Date.
"Deferred Interest" means all interest on Existing Loans, all
Facility Fees and all Letter of Credit Fees, in each case, accruing during the
Deferral Period, other than Letter of
6
<PAGE>
Credit Fees in connection with the NYCTA/PB/Metro North Letters of Credit and
the Metra Letter of Credit, and shall include interest accruing on such
interest, Facility Fees and Letter of Credit Fees during the Deferral Period.
"Deposit Bank" has the meaning assigned to it in SCHEDULE E.
"Draw" means a payment by the issuer of an Existing Letter of
Credit on account of a presentation made to the issuer by the beneficiary
thereunder giving rise to a reimbursement obligation of the Borrowers or the
Guarantors which remains unpaid other than pursuant to SECTION 2.11.
"Environmental Laws" means all Federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any applicable judicial
or administrative interpretation thereof relating to the disposal of waste and
the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 ET
SEQ.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C. Sections 1801 ET SEQ.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. Sections 136 ET SEQ.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 ET SEQ.)
("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. Sections 2601
ET SEQ.); the Clean Air Act, as amended (42 U.S.C. Sections 7400 ET SEQ.); the
Federal Water Pollution Control Act, as amended (33 U.S.C. Sections 1251 ET
SEQ.); the Occupational Safety and Health Act, as amended (29 U.S.C. Sections
651 ET SEQ.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C.
Sections 300(f) ET SEQ.); and any and all regulations promulgated thereunder,
and all analogous state and local counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Equipment Asset Pool Intercreditor Agreement" means an
Intercreditor and Subordination Agreement, which may be entered into, by and
among Fidelity and Deposit Company of Maryland and Colonial American Casualty
and Surety Company, Mellon Bank, N.A., as agent and collateral agent for itself
and the other Bridge Loan Lenders, and Mellon Bank, N.A., as agent and
collateral agent for itself and the other Existing Lenders. (Nothing in this
Agreement shall imply that any party is obligated to enter into the Equipment
Asset Pool Intercreditor Agreement and each party shall decide, in its sole and
absolute discretion, whether to enter into such an agreement.)
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
7
<PAGE>
"ERISA Group" means the Borrowers and their Subsidiaries and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrowers or any of their Subsidiaries, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Event of Default" has the meaning set forth in SECTION 9.1.
"Existing Agreements" has the meaning assigned to it in RECITAL
B; PROVIDED that unless the context otherwise requires, all references to
Existing Agreements shall be references to the Existing Agreements as modified
by this Agreement.
"Existing Contingent Indebtedness" means the Existing
Indebtedness to the Existing Lenders listed on SCHEDULE 1.1(a) to the extent
outstanding from time to time.
"Existing Indebtedness" has the meaning assigned to it in
RECITAL B to the extent outstanding from time to time.
"Existing Lender" and "Existing Lenders" have the meanings
assigned to them in the preamble hereto, and shall include the Agent, in its
individual capacity.
"Existing Letters of Credit" means letters of credit issued by
the Existing Lenders and listed on SCHEDULE A to the extent outstanding from
time to time.
"Existing Loans" means for each Existing Lender, all funded
Existing Indebtedness of such Existing Lender to the extent outstanding from
time to time, including all Draws and all Liquidated Contingent Liabilities of
such Existing Lender.
"Exposure" means, with respect to each Existing Lender at any
time, the following: (a) such Existing Lender's share of the Metra Obligations;
(b) with respect to Existing Agreements listed under the heading "Funded Debt"
on the Schedule of Existing Lenders, the amount of principal owed by the
Borrowers to such Existing Lender under its Existing Agreement; (c) with respect
to Existing Agreements listed under the heading "Letter of Credit Facilities" on
the Schedule of Existing Lenders, such Existing Lender's share of the maximum
amount drawable under the Existing Letter of Credit of such Existing Lender, as
shown opposite such Existing Lenders name on the Schedule of Existing Lenders or
as subsequently reduced, and the principal amount of such Existing Lender's
Liquidated Contingent Liabilities with respect to such Existing Letter of
Credit; and (d) with respect to Existing Agreements listed under the heading
"Guarantee Obligations" on the Schedule of Existing Lenders, the maximum
aggregate principal amount of the Contingent Obligations of the Borrowers (or
either of them, but without duplication for
8
<PAGE>
both) to such Existing Lender under all such Existing Agreements at such time,
and the principal amount of such Existing Lender's Liquidated Contingent
Liabilities with respect to such Contingent Obligations.
"Facility Fees" means facility fees payable in respect of
Existing Agreements pursuant to the terms of the applicable Existing Agreements.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; PROVIDED, that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to Mellon Bank, N.A. on such day on such transactions as determined by
the Agent.
"Financing Shortfall" means the amounts set forth on the Budget
as "Financing Shortfall."
"Financing Statements" means any Uniform Commercial Code
financing statement on form UCC-1 or a comparable form executed pursuant to the
provisions of this Agreement or any of the other Loan Documents or any such
similar statement to be filed in Canada.
"Five Party Agreement" means that certain Five Party Agreement
dated as of July 31, 1995 among the Borrowers, the Bonding Company and Mellon
Bank, N.A. as agent under the T-Co Interim Credit Agreement.
"Form 10-K" means the annual report on Form 10-K as filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
"Form 10-Q means the report on Form 10-Q as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Generally Accepted Accounting Principles" means accounting
principles that are generally accepted and consistently applied and maintained
throughout the period indicated and that are consistent with the prior financial
practices of the Borrowers, except for changes mandated by the Financial
Accounting Standards Board or any similar accounting authority of comparable
standing.
9
<PAGE>
"Governmental Authority" means any nation, province, state or
other political subdivision thereof, any government or any natural person or
entity exercising executive, legislative, regulatory or administrative functions
of or pertaining to government.
"Guarantor" means each of the indirectly or directly
wholly-owned Subsidiaries of each Borrower listed on SCHEDULE D and
"Guarantors" means all of the foregoing.
"Guaranty" means a Guaranty Agreement dated as of July 31, 1995
made by a Guarantor in favor of the Agent for the benefit of the Existing
Lenders guarantying the Obligations.
"Guaranty Security Agreement" means a Security and Pledge
Agreement (Guaranty) dated as of July 31, 1995 between a Guarantor and the
Collateral Agent securing the Obligations under such Guarantor's Guaranty.
"Hazardous Materials" means (i) any substance, material or
waste, which is either (a) defined as, (b) included in the definition, listing
or identification of, or (c) otherwise regulated as, a "solid waste," "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous waste"
or "restricted hazardous waste" or other similar term or phrase under any
Environmental Laws, or (ii) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls, or radioactive substances.
"Indebtedness" of any Person means without duplication, any
obligation of such Person for borrowed money, including (a) any obligation of
such Person evidenced by bonds, debentures, notes or other similar debt
instruments, (b) any obligation of such Person for the deferred purchase price
of any property or services, except trade accounts payable of such Person with a
maturity of not greater than 90 days incurred in the ordinary course of such
Person's business, (c) any obligation of such Person as lessee under a Capital
Lease, (d) Contingent Obligations, (e) any reimbursement obligation in respect
of any letter of credit or any other financing accommodations, and (f) any
obligation for borrowed money which is non-recourse to such Person but which is
secured by a Lien on any asset of such Person.
"Individual Collateral" means with respect to any individual
Existing Lender or a group of Existing Lenders, any property owned or leased by
the Borrowers in which such Existing Lender or a group of Existing Lenders has a
security interest or lien prior in interest to the security interests and liens
granted or created pursuant to the Loan Documents; PROVIDED that such term
shall not include the property in which a security interest or lien has been or
is granted under the Restructuring Documents to secure either (i) the
obligations under the Bridge Loan Agreement or (ii) the obligations with respect
to the letter
10
<PAGE>
of credit issued by Morgan Guaranty Trust Company of New York backing the New
York City Transit Authority R-44 Project.
"Initial Exposure" means, with respect to each Existing Lender,
such Existing Lender's Exposure as of July 1, 1995.
"Intercreditor Agreements" means the Transit Division
Intercreditor Agreement, the MKO/MKD Asset Pool Intercreditor Agreement, and the
Equipment Asset Pool Intercreditor Agreement.
"Interim T-Co Transaction" has the meaning assigned to it in
RECITAL D.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
"Investments" has the meaning assigned to it in SECTION 8.5.
"Letter of Credit Fees" means fees payable in respect of
Existing Letters of Credit pursuant to the terms of the applicable Existing
Agreements.
"Lien" means, as to any asset, (a) any lien, charge, claim,
mortgage, security interest, pledge or other encumbrance of any kind with
respect to such asset, (b) any interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title retention agreement
relating to such asset, (c) any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
affecting such asset, or (d) any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction other than a precautionary
financing statement with respect to a lease that is not in the nature of a
security interest).
"Liquidated Contingent Liability" means, as to any Existing
Lender, the aggregate amount of all Initial Exposure with respect to which a
Conversion Event has occurred, less any reductions which may have occurred by
reason of Reductions in Liability or distributions under this Agreement pursuant
to SECTION 2.11.
"Loan Documents" means this Agreement, the Security Documents,
each Guaranty, the Collateral Agent Agreement, the Warrants, the Securities
Purchase Agreement, the Intercreditor Agreements, and any other of those
documents listed on the Schedule of Documents and therein specified to be
executed and
11
<PAGE>
delivered, or caused to be executed and delivered, by the Borrowers or the
Guarantors to the Agent, the Existing Lenders or the Collateral Agent in
connection with this Agreement; PROVIDED, that the Bridge Loan Agreement and
related loan documents, the T-Co Interim Credit Agreement and related loan
documents and the Metra Interim Credit Agreement and related loan documents
shall not be included in the definition of Loan Documents.
"Majority Lenders" means the Existing Lenders holding at least
sixty-six and two-thirds percent (66 2/3%) of the Pro Rata Shares.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
any Borrower, Guarantor or any of their Consolidated Subsidiaries; (b) the
ability of any Borrower, Guarantor or their Consolidated Subsidiaries to pay or
perform the Obligations under the Loan Documents in accordance with the terms
thereof; (c) the Collateral or the Collateral Agent's Liens on the Collateral or
the priority of any such Lien; or (d) the Existing Lenders' rights and remedies
under any Loan Documents or the other Restructuring Documents.
"Material Contract" means, as to the Borrowers or their
Consolidated Subsidiaries, a Contractual Obligation (a) the cancellation,
non-performance or non-renewal of which by any party thereto could have or
result in a Material Adverse Effect on the Borrowers or the Borrowers and their
Consolidated Subsidiaries taken as a whole or (b) which involves amounts,
payments or Indebtedness in excess of $10,000,000.
"Maximum Lawful Rate" means the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable under this Agreement.
"Metra" means the Commuter Rail Division of the Regional
Transportation Authority, d/b/a Metra/Metropolitan Rail.
"Metra Agent" means the agent under the Metra Interim Credit
Agreement.
"Metra Collateral" means collateral granted to the Metra Agent
for the benefit of Metra Lenders by MKO in connection with and solely for the
benefit of the Metra Interim Credit Agreement and related documents.
"Metra Contract" means that certain contract, as amended,
executed as of March 9, 1992, by and between Metra and MKO.
"Metra Exposure Reduction" means, as of the date of
determination, a percentage derived by dividing (a) the aggregate reduction in
Metra Obligations from and after July 1, 1995
12
<PAGE>
through the date of determination by (b) the amount of the Metra Obligations as
of July 1, 1995; PROVIDED, that for purposes of calculating whether the Metra
Reduction Equalization Event has occurred and for purposes of making any
distributions from the Metra Holdback pursuant to SECTION 2.11(e), the Metra
Exposure Reduction shall be calculated as the percentage derived by dividing (a)
the amount of the Metra Obligations as of July 1, 1995 less (i) Liquidated
Contingent Liability, if any, arising under the Metra Reimbursement Agreement
and (ii) if the Metra Agent has released, disposed of or collected upon all
Metra Collateral, the amounts owing under the Metra Interim Credit Agreement and
related documents, by (b) the amount of the Metra Obligations as of July 1,
1995.
"Metra Final Accounting Date" means the time at which the Metra
Agent shall have delivered to the Agent, the Metra Agent's written
certification: (a) that the Metra Agent has released, disposed of or collected
upon all Metra Collateral; (b) stating the amount of the Metra Exposure
Reduction as of such date; and (c) stating the amount of the Metra Obligations
as of such date.
"Metra Holdback" has the meaning assigned to it in SECTION
2.11(e).
"Metra Interim Credit Agreement" means that certain Revolving
Credit Agreement dated as of July 31, 1995 among MKO, Bank of America National
Trust and Savings Association as agent and the Metra Lenders.
"Metra Lenders" means those Existing Lenders that are banks
under the Metra Interim Credit Agreement in their capacity as banks under the
Metra Interim Credit Agreement and participants in the Metra Reimbursement
Agreement, and their respective successors and assigns.
"Metra Letter of Credit" means that certain letter of credit, as
amended, issued by Bank of America National Trust and Savings Association for
the benefit of Metra and for the account of MKO in connection with the Metra
Contract.
"Metra Obligations" means, as of the date of determination, (i)
the maximum amount drawable under the Metra Letter of Credit as such amount may
be reduced from time to time, (ii) principal amounts owing under the Metra
Reimbursement Agreement, and (iii) the principal amount available to be advanced
under the Metra Interim Credit Agreement plus principal amounts which are owing
thereunder.
"Metra Reduction Equalization Event" shall mean a time at which
the Non-Metra Exposure Reduction equals or exceeds the Metra Exposure Reduction.
13
<PAGE>
"Metra Reimbursement Agreement" means the reimbursement
agreement pursuant to which the Metra Letter of Credit was issued, as amended.
"Metra Transaction" has the meaning assigned to it in
RECITAL D.
"MKD" means Morrison Knudsen Corporation, a Delaware
corporation, and its successors.
"MKD Security Agreement" means the Pledge and Security Agreement
dated as of July 31, 1995, executed by MKD in favor of the Collateral Agent, for
the benefit of the Agent and the Existing Lenders, granting a security interest
in the personal property Collateral described therein.
"MKO" means Morrison Knudsen Corporation, an Ohio corporation,
and its successors.
"MKO/MKD Asset Pool Intercreditor Agreement" means that certain
Intercreditor and Subordination Agreement, dated as of July 31, 1995, by and
between Mellon Bank, N.A., as agent and collateral agent for itself and the
other Bridge Loan Lenders, and Mellon Bank, N.A., as agent and collateral agent
for itself and the other Existing Lenders.
"MKO Security Agreement" means the Pledge and Security Agreement
dated as of July 31, 1995, executed by MKO in favor of the Collateral Agent, for
the benefit of the Agent and the Existing Lenders, granting a security interest
in the personal property Collateral described therein.
"MK Rail" means MK Rail Corporation, a Delaware corporation.
"MK Rail Global Settlement Agreement" means the Global
Settlement Agreement dated as of June 15, 1995 by and among MKO, MK Rail and
MKD.
"MK Rail Note" means that certain Note dated June 26, 1995,
issued by MK Rail in favor of MKO in the amount of $52,200,000, which Note was
issued pursuant to the MK Rail Global Settlement Agreement.
"Mortgages" means, collectively, the fee and leasehold deeds of
trust and mortgages and any modifications thereto, executed by any Borrower or
Guarantor in favor of the Collateral Agent for the benefit of the Existing
Lenders, granting a lien on and security interest in the Real Property
Collateral.
"Multi-employer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or
14
<PAGE>
accruing an obligation to make contributions or has within the preceding five
plan years made contributions, including for these purposes any Person which
ceased to be a member of the ERISA Group during such five year period.
"Multiparty Agreement" means that certain Multi-Party Agreement
between the Bonding Company, the Borrowers and Mellon Bank N.A., as the
collateral agent under the Bridge Loan Agreement, dated as of April 11, 1995 as
amended April 25, 1995, May 31, 1995, June 7, 1995 and July 31, 1995.
"Net Cash Proceeds" means, with respect to either the sale or
refinancing of any asset of any Borrower or any Consolidated Subsidiary or any
other transaction identified in SECTION 2.9, all amounts payable to such
Borrower or such Consolidated Subsidiary as a result of such transaction after
payment of (i) all reasonable and customary closing costs, including brokerage
commissions, appraisal fees, recording fees, attorneys' fees, title insurance
premiums, inspection report charges, prepayment penalties payable to senior
lienholders, escrow credits in favor of the purchaser or financier, customary
prorations, transfer and other taxes, escrow fees, points and other loan fees,
and (ii) Indebtedness secured by Senior Permitted Liens on such asset.
"Non-Metra Exposure Reduction" means, as of the date of
determination, a percentage derived by dividing (a) the aggregate reductions in
the Existing Loans of all Existing Lenders outstanding as of July 1, 1995
through such date by (b) the aggregate amount of Existing Loans of all Existing
Lenders as of July 1, 1995.
"North Pacific Operations" means, collectively, the operations
of E.E. Black, Limited, G.W. Murphy Construction Company, Inc., Black Micro
Corporation, P.T.E.E. Black Indonesia, and Black Construction Corporation.
"Notice of Acceleration" means a written notice sent to the
Borrowers pursuant to SECTION 9.2, accelerating the Obligations.
"Notice of Default" means a written notice sent to the Borrowers
notifying the Borrowers that an Event of Default has occurred.
"NYCTA/PB/Metro North Letters of Credit" means the Existing
Letters of Credit issued by Morgan Guaranty Trust Company of New York, Citibank,
N.A. or PNC Bank, N.A. for the account of either Borrower for the benefit of the
New York City Transit Authority, Pitney Bowes Corporation or Metro North
Commuter Rail.
"Obligations" means, as to each Borrower or Guarantor,
collectively, all liabilities of the Borrowers and the
15
<PAGE>
Guarantors, arising in connection with or pursuant to the provisions of this
Agreement or the Loan Documents and the Existing Agreements, or the Metra
Interim Credit Agreement, owing to the Agent or the Existing Lenders of any kind
and description, now existing or hereafter arising, whether due or not due,
absolute or contingent, liquidated or unliquidated, direct or indirect, express
or implied, individually or jointly with others, howsoever evidenced or acquired
(including, without limitation, any interest which accrues on any such amounts
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of any Borrower or Guarantor, whether
or not allowed or allowable as a claim in any such proceeding), including the
payment and performance of all Indebtedness, obligations and other liabilities
of such Borrower or Guarantor and overdraft coverage and account funding
obligations in connection with the Cash Management System, arising in connection
with or pursuant to the Existing Agreements, this Agreement or the other Loan
Documents, but excluding the T-Co Interim Credit Agreement and related loan
documents.
"Operating Lease" means, as to any Person, any lease of property
(whether real, personal or mixed) by such Person as lessee which is not a
Capital Lease.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under the
Existing Agreements or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Existing Agreement.
"Participant" has the meaning set forth in SECTION 12.8(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Periodic Exposure" has the meaning set forth in SECTION 2.12.
"Permitted Liens" means, collectively, those certain Liens, in
existence on the date hereof, described in SCHEDULE 8.2 and as permitted under
SECTION 8.2.
"Person" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, Governmental
Authority or any other form of entity not specifically listed herein.
"Plan" means at any time an employee pension benefit plan (other
than a Multi-employer Plan) which is covered by Title
16
<PAGE>
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the ERISA Group or (ii)
has at any time within the preceding five years been maintained, or contributed
to, by any Person which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of the ERISA Group.
"Prime Rate" means, for any day, a rate per annum equal to the
higher of (i) the rate of interest publicly announced by Mellon Bank, N.A. from
time to time as its prime rate for such day and (ii) the sum of 1/2 of 1%
plus the Federal Funds Rate for such day.
"Professionals" means, collectively, all attorneys, accountants,
paraprofessionals, appraisers, auditors, inspectors, engineers, title insurance
companies, and environmental experts employed, retained, or internally used by
each of the Steering Committee Lenders, the Collateral Agent, or the Agent in
connection with the Borrowers' performance of the Obligations or in asserting
any of the Collateral Agent's, the Agent's and Existing Lenders' rights or
remedies under this Agreement.
"Pro Rata Share" means, for each Existing Lender, at any time,
the proportion that (i) such Existing Lender's Exposure bears to (ii) the
Aggregate Exposure; PROVIDED, that in calculating Pro Rata Shares for purposes
of distributions to the Existing Lenders or to the Contingent Indebtedness
Account under SECTION 2.11 and for purposes of voting under this Agreement,
(a) such Existing Lender's Exposure shall be reduced by any amounts being held
for its account in the Contingent Indebtedness Account pursuant to SECTION
2.11, and (b) the Aggregate Exposure shall be reduced by the aggregate amount
being held in the Contingent Indebtedness Account with respect to all Existing
Lenders.
"Pro Rata Share of the Deferred Interest" means, for any
Existing Lender at any time, the proportion that (i) the amount of accrued but
unpaid Deferred Interest owing to such Existing Lender at such time bears to
(ii) the amount of accrued but unpaid Deferred Interest owing to all Existing
Lenders at such time.
"Reallocation Certificate" means an Existing Lender's
reallocation certificate stating the current amount of such Existing Lender's
Existing Loans and describing all Conversion Events and the amount of all
Reductions in Liability which have occurred with respect to such Existing Lender
during the period from the date of the last such Reallocation Certificate (or,
in the case of the first such Reallocation Certificate, since July 1, 1995)
through the date of such Reallocation Certificate. Each Reallocation
Certificate shall additionally state: (a) the dates upon which each Conversion
Event described therein shall have occurred; (b) the date upon
17
<PAGE>
which each Reduction in Liability described therein arising by reason of a
reduction in Liquidated Contingent Liability has occurred; (c) the amount of
interest payable hereunder through the date of the Reallocation Certificate on
account of Existing Loans arising by reason of such Conversion Events described
therein; and (d) the amount of Letter of Credit Fees and Facility Fees accruing
under such Existing Lender's Existing Agreements.
"Real Property" means all of the right, title and interest of
any Borrower or Guarantor in and to land, improvements and fixtures (to the
extent interests therein arise under the real property law of the jurisdiction
where located).
"Real Property Collateral" means, collectively, all of any
Borrower's or Guarantor's right, title and interest in and to the real property
more specifically described on SCHEDULE F attached hereto, including their fee
and leasehold interests in such real property, pledged by such Borrower or
Guarantor, in favor of the Collateral Agent for the benefit of the Existing
Lenders, pursuant to the Mortgages.
"Real Property Lien" has the meaning assigned to it in SECTION
11.5(b)(ii).
"Recalculation" has the meaning assigned to it in SECTION
2.12.
"Reductions in Liability" means (a) with respect to Existing
Contingent Indebtedness, a reduction in the principal amount of Existing
Contingent Indebtedness which occurs by reason of (i) a reduction in the undrawn
portion of any Existing Letter of Credit for any reason other than a Conversion
Event, or (ii) a reduction in the principal amount of Contingent Obligations
under a guaranty for any reason other than a distribution under this Agreement
pursuant to SECTION 2.11; (b) a reduction in the principal amount of any
Liquidated Contingent Liability which occurs for any reason other than a
distribution under this Agreement pursuant to SECTION 2.11; and (c) with
respect to the Metra Obligations, a reduction in the Metra Obligations for any
reason other than a distribution under this Agreement pursuant to SECTION
2.11.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reportable Event" means any of the events set forth under
Section 4043(b) of ERISA or the PBGC regulations thereunder for which notice to
the PBGC has not been waived by applicable law or administrative guidance.
"Requirement of Law" means, as to any Person, collectively, (a)
the partnership agreement, certificate of incorporation, bylaws or other
organizational or governing
18
<PAGE>
documents of such Person; (b) any Federal, state or local law, treaty,
ordinance, rule or regulation; and (c) any order, decree or determination of a
court, arbitrator or other Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Restructuring" has the meaning assigned to it in RECITAL D.
"Restructuring Documents" means this Agreement, the Security
Documents, each Guaranty, the Collateral Agent Agreement, the Warrants, the
Securities Purchase Agreement, the Bridge Loan Agreement, the Intercreditor
Agreements, the Metra Interim Credit Agreement, the T-Co Interim Credit
Agreement, the Five Party Agreement, the Multiparty Agreement, the Security
Agreement dated as of the date hereof between MKO and Morgan Guaranty Trust
Company of New York, the Acknowledgement and Assumption Agreement dated as of
the date hereof by MKO, and any other of those documents listed on the Schedule
of Documents and therein specified to be executed and delivered, or caused to be
executed and delivered, by the Borrowers or the Guarantors in connection with
the Restructuring.
"Returned Payment" has the meaning assigned to it in SECTION
12.5(b).
"Schedule for Notices" means the schedule annexed as SCHEDULE
C hereto, listing the name, address and wiring instructions for each Existing
Lender.
"Schedule of Documents" means the schedule annexed as SCHEDULE
B hereto, listing those documents to be delivered in connection with the
closing of the transactions contemplated by this Agreement and the other
Restructuring Documents.
"Schedule of Existing Lenders" means the schedule annexed as
SCHEDULE A hereto, listing the name of each Existing Lender, such Existing
Lender's Initial Exposure, such Existing Lender's initial Pro Rata Share, and
such Existing Lender's Existing Agreements.
"Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of July 31, 1995 by and among MKD, the banks and
other financial institutions named therein and Mellon Bank, N.A., as agent.
"Security Agreements" means the MKD Security Agreement and the
MKO Security Agreement.
"Security Documents" means the Mortgages, the Security
Agreements, the Guaranty Security Agreements, the Financing Statements, the Ship
Mortgage and all documents,
19
<PAGE>
instruments and agreements now or hereafter executed or delivered pursuant
thereto or in connection therewith.
"Senior Permitted Liens" means any Permitted Lien that is senior
to the Lien of the Collateral Agent on any Collateral.
"Ship Mortgage" means the Second Preferred Mortgage dated as of
July 31, 1995, executed by MKO in favor of Mellon Bank, N.A. as "Mortgage
Trustee" under and as defined in the Collateral Agent Agreement, with respect to
the vessel "Betty L."
"Single Employer Plan" means any Plan which is not a
Multi-employer Plan.
"Steering Committee Lenders" means that certain group of
Existing Lenders acting as the Steering Committee, as such group is constituted
on the Closing Date and may be reconstituted from time to time.
"Subject Equipment" has the meaning set forth in SECTION 8.4.
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means any Subsidiary of MKD or MKO.
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any payment
by either Borrower pursuant to this Agreement or the other Restructuring
Documents, and all liabilities with respect thereto, EXCLUDING (i) in the case
of each Existing Lender, the Collateral Agent and the Agent, taxes imposed on
its income, and franchise or similar taxes imposed on it, by a jurisdiction
under the laws of which such Existing Lender, the Collateral Agent or the Agent
(as the case may be) is organized or in which its principal executive office is
located and (ii) in the case of each Existing Lender, any United States
withholding tax imposed on such payments but only to the extent that such
Existing Lender is subject to United States withholding tax at the time such
Existing Lender first becomes a party to this Agreement.
"T-Co" has the meaning assigned to it in RECITAL D.
"T-Co Interim Credit Agreement" means that certain $25,000,000
Credit Agreement dated as of July 31, 1995 among the Borrowers, Mellon Bank,
N.A. as the agent and the Existing Lenders, as the same may be amended,
modified, supplemented and restated from time to time.
20
<PAGE>
"T-Co Term Sheet" means the Term Sheet regarding the T-Co
Transaction attached hereto as EXHIBIT B.
"T-Co Transaction" has the meaning assigned to it in RECITAL
D.
"Termination Date" means December 31, 1996, or such earlier date
as the Obligations are accelerated pursuant to SECTION 9.2.
"Transit Division" has the meaning assigned to it in
RECITAL D.
"Transit Division Intercreditor Agreement" means that certain
Intercreditor and Subordination Agreement dated as of July 31, 1995, by and
among Fidelity and Deposit Company of Maryland and Colonial American Casualty
and Surety Company, Mellon Bank, N.A., as agent and collateral agent for itself
and the other Bridge Loan Lenders, Mellon Bank, N.A. as agent and collateral
agent for itself and the other Existing Lenders, Bank of America National Trust
and Savings Association, as agent for itself and the other Metra Lenders, Morgan
Guaranty Trust Company of New York, and such other Persons that may be listed as
signatories thereto.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"Uniform Commercial Code" means the Uniform Commercial Code as
the same may, from to time, be in effect in the Commonwealth of Pennsylvania;
PROVIDED, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of, or remedies with
respect to, the Collateral Agent's or Existing Lenders' security interests in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the Commonwealth of Pennsylvania, the term "Uniform
Commercial Code" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions of the Loan Documents relating
to such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
21
<PAGE>
"Warrants" means those certain Warrants in substantially the
form of EXHIBITS D-1 AND D-2 issued by MKD pursuant to the Securities Purchase
Agreement to the Existing Lenders listed on SCHEDULE 1.1(b) in the amounts set
forth on SCHEDULE 1.1(b).
1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
Generally Accepted Accounting Principles.
1.3. GENERAL CONSTRUCTION. As used in this Agreement, the
masculine, feminine and neuter genders, and the plural and singular numbers
shall be deemed to include the others in all cases where they would so apply.
"Includes" and "including" are not limiting, and "or" is not exclusive.
ARTICLE II
SATISFACTION OF THE BORROWERS'
OBLIGATIONS UNDER EXISTING AGREEMENTS
2.1. ACKNOWLEDGEMENT OF OBLIGATIONS. The Borrowers agree and
acknowledge that, as of July 1, 1995, they were obligated to the respective
Existing Lenders under their respective Existing Agreements in the amount of
each such Existing Lender's Initial Exposure.
2.2. CONVERSION OF CONTINGENT TO FUNDED OBLIGATION. Upon the
occurrence of a Conversion Event, the amount of the relevant Existing Lender's
Existing Loans shall be increased by the amount of the Liquidated Contingent
Liability arising by reason of such Conversion Event, and the amount of such
Existing Lender's Existing Contingent Indebtedness shall be decreased by a like
amount.
2.3. MATURITY OF EXISTING INDEBTEDNESS; TERMINATION DATE. Each
Existing Loan shall mature, and the principal amount thereof shall be due and
payable, on the Termination Date notwithstanding any earlier maturity date or
termination date in the Existing Agreements as in effect immediately prior to
the Closing Date. Any obligation of either Borrower or any Guarantor to prefund
or cash collateralize Existing Contingent Indebtedness or the Obligations under
the Metra Reimbursement Agreement is hereby suspended until the Termination
Date. On the Termination Date, Existing Lenders holding outstanding Existing
Contingent Indebtedness, and the Metra Lenders with respect to the Obligations
under the Metra Reimbursement Agreement, may require that such Existing
Contingent Indebtedness or Obligations under the Metra Reimbursement Agreement
be prepaid or cash collateralized pursuant to the terms of the applicable
Existing
22
<PAGE>
Agreements as in effect immediately prior to the Closing Date. Nothing in this
Agreement shall restrict or impair any Existing Lender's right to seek recovery
of Existing Contingent Indebtedness or Obligations under the Metra Reimbursement
Agreement, and interest, fees and other amounts payable in respect thereof from
any Person other than the Borrowers and the Guarantors.
2.4. DEFERRED PAYMENTS AND AMORTIZATION.
(a) Subject to the terms of this Agreement and other than with
respect to the Metra Interim Credit Agreement, each Existing Lender agrees to
defer payment of all unpaid principal due under its Existing Agreements from
July 1, 1995, until the Termination Date, except pursuant to SECTION 2.4(b).
(b) On September 30, 1996, the Borrowers shall pay to the
Agent for the benefit of the Existing Lenders in respect of the then unpaid
principal of their Existing Indebtedness, an amount equal to $100,000,000 plus
interest and fees accrued as of such date. Such payment shall be paid to the
Agent for the benefit of the Existing Lenders, shall be payable to each Existing
Lender in an amount equal to such Existing Lender's Pro Rata Share of such
payment as provided in SECTION 2.11, and applied to the Obligations as
provided in SECTION 2.10.
2.5. INTEREST RATES; DEFERRAL OF INTEREST AND LETTER OF CREDIT
FEES.
(a) Except as provided in SECTION 2.5(b), each Existing Loan
shall bear interest on the outstanding principal amount thereof, for each day
after July 1, 1995 until it becomes due, at a rate per annum equal to the Prime
Rate; PROVIDED, however, that interest owing on Existing Loans which arise by
reason of a Conversion Event shall begin to accrue as of the date of such
Conversion Event. Deferred Interest shall be paid as set forth in SECTION
2.6. The Deferred Interest accruing during each calendar month shall be
calculated as of the last day of such calendar month and interest on such amount
shall begin to accrue on the first day of the following calendar month.
Interest, Facility Fees and Letter of Credit Fees accruing after the Deferral
Period until the Termination Date shall be payable on the last day of each
calendar month and on the Termination Date. Except as provided in SECTION
2.5(b), interest shall accrue on the Deferred Interest at a rate per annum
equal to the Prime Rate and during the Deferral Period shall be added to the
Deferred Interest. Letter of Credit Fees and Facility Fees shall accrue in the
amounts provided under the applicable Existing Agreements. Letter of Credit
Fees with respect to the NYCTA/PB/Metro North Letters of Credit shall be paid
directly to the respective issuers thereof, and Letter of Credit Fees with
respect to the Metra Letter of Credit shall be paid directly to the Metra Agent.
23
<PAGE>
(b) Any Letter of Credit Fees, Facility Fees, principal of or
interest on any Existing Loan, any Deferred Interest and interest thereon and
any other amounts payable hereunder not paid in the time specified in this
Agreement (or to the extent applicable, the Existing Agreement) shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to the Default Rate. In addition, from and after the occurrence of any Event of
Default (including any Event of Default resulting from the filing of a
bankruptcy case) and continuing until such Event of Default is cured or has been
waived in writing in accordance with the terms of this Agreement, interest shall
accrue on the Obligations (other than Existing Contingent Indebtedness and the
Metra Obligations that do not constitute Existing Loans) at the Default Rate and
shall be payable on demand. Any interest, reasonable professional fees and
expenses of the Agent and the Collateral Agent, or other reasonable professional
fees, expenses and charges of the Steering Committee Lenders due under SECTION
12.4, which are not paid as and when due, shall bear interest at the Default
Rate and be payable on demand. The interest rate increase shall take effect
immediately upon the occurrence of an Event of Default, without prior notice to
the Borrowers.
2.6. PAYMENT OF DEFERRED INTEREST. The Deferred Interest shall be
repaid in six equal monthly installments, together with interest accruing on the
unpaid amount thereof, on the last day of each calendar month commencing on
April 30, 1996 (unless such Deferred Interest has been repaid pursuant to a
prepayment as provided in SECTION 2.8 and SECTION 2.9). Each such payment
shall be paid to the Agent for the benefit of the Existing Lenders, shall be
payable to each Existing Lender in an amount equal to such Existing Lender's Pro
Rata Share of the Deferred Interest as provided in SECTION 2.11.
2.7. FEES.
(a) THE AGENT'S FEE. The Borrowers shall pay to the Agent a
non-refundable monthly fee on the first day of each month in advance, in an
amount equal to $30,000 per month (the "Agent's Fee"), commencing the date the
obligations under the Bridge Loan Agreement are paid in full until such time as
the Borrowers and the Agent have no obligations under this Agreement and the
other Loan Documents (other than the Warrants). The obligation to pay the
Agent's Fee shall survive the payment in full of the Obligations under this
Agreement.
(b) THE COLLATERAL AGENT'S FEE. The Borrowers shall pay to
the Collateral Agent a non-refundable monthly fee on the first day of each month
in advance, in an amount equal to $30,000 per month (the "Collateral Agent's
Fee"), commencing the date the obligations under the Bridge Loan Agreement are
paid in full until such time as the Borrowers and the Collateral Agent have no
obligations under this Agreement and the other Loan Documents (other than the
Warrants). The obligation to pay the
24
<PAGE>
Collateral Agent's Fee shall survive the payment in full of the Obligations
under this Agreement.
(c) FEES CUMULATIVE. All fees payable under this Agreement
shall be cumulative, and fully earned on the date of payment.
2.8. OPTIONAL PREPAYMENTS.
(a) Subject to the terms and conditions of the Intercreditor
Agreements, the Borrowers may, upon at least one Business Day's notice to the
Agent, prepay all or any portion of the Existing Indebtedness and the Deferred
Interest, in each case in whole at any time, or from time to time in part in
amounts aggregating $1,000,000 or any larger multiple of $1,000,000, by paying
the principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be paid to the Agent
for the benefit of the Existing Lenders, shall be payable to each Existing
Lender in an amount equal to such Existing Lender's Pro Rata Share or Pro Rata
Share of Deferred Interest as provided in SECTION 2.11 and applied to the
Obligations as provided in SECTION 2.10.
(b) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Existing Lender of the contents
thereof and of such Existing Lender's Pro Rata Share or Pro Rata Share of
Deferred Interest of such prepayment and such notice shall not thereafter be
revocable by the Borrowers.
2.9. MANDATORY PREPAYMENT. Subject to the terms and conditions of
the Intercreditor Agreements, the Borrowers shall make prepayments as provided
in this SECTION 2.9. Each such prepayment shall be paid to the Agent for the
benefit of the Existing Lenders, shall be payable to each Existing Lender in an
amount equal to such Existing Lender's Pro Rata Share or Pro Rata Share of
Deferred Interest as provided in SECTION 2.11 and applied to the Obligations
as provided in SECTION 2.10.
(a) Immediately upon receipt by any Borrower or any
Consolidated Subsidiary or the Agent of Net Cash Proceeds of (i) any sale, lease
or other disposition of assets (other than sales in the ordinary course of
business, sales under SECTION 8.4(ii), (iii), (iv) and (v) or sales of
equipment which are promptly replaced), (ii) issuance of capital stock by the
Borrowers or (iii) insurance proceeds, the Borrowers shall pay or cause to be
paid such Net Cash Proceeds to the Agent on account of the Obligations for the
benefit of Existing Lenders; PROVIDED, HOWEVER, that so long as no Event of
Default exists and is continuing at the time such proceeds are received and
unless otherwise set forth in the Security Documents, (x) the Borrowers may
retain up to an aggregate amount of $1,000,000 of insurance proceeds to rebuild
or replace insured property destroyed or damaged, if such property is capable of
being rebuilt or replaced
25
<PAGE>
within a reasonable period of time, (y) the Borrowers may retain up to the first
$10,000,000 of the Net Cash Proceeds from the first to sell of the capital stock
of the North Pacific Operations and McConnell Dowell Corporation Limited, and
(z) the Borrowers may retain up to $10,000,000, in aggregate, of the Net Cash
Proceeds from the sale of the capital stock of Western Aircraft, Inc. and the
funds repatriated from Morrison Knudsen Engenharia S.A. pursuant to that certain
Loan Agreement between MKD and Morrison Knudsen Engenharia S.A. dated July 7,
1995.
(b) Immediately upon receipt by the Borrowers of any repayment
or prepayment of the MK Rail Note, the Borrowers shall pay the amount of such
payment received in connection with the MK Rail Note to the Agent on account of
the Obligations for the benefit of the Existing Lenders.
(c) Immediately upon receipt by the Borrowers of any tax
refund, the Borrowers shall pay or cause to be paid the amount of such tax
refunds to the Agent on account of the Obligations for the benefit of the
Existing Lenders.
2.10. APPLICATION OF PAYMENTS. Subject to Section 4.5 of the
Collateral Agent Agreement, all payments (including prepayments, but excluding
(a) payments made from proceeds of Metra Collateral, and (b) regularly scheduled
payments of interest, Facility Fees and Letter of Credit Fees not constituting
Deferred Interest), on any of the Obligations (other than Obligations under
the Cash Management System which shall be paid pursuant to Section 4.5 of the
Collateral Agent Agreement) shall be made to the Agent for application against
the Borrowers' Obligations as follows (regardless of how each Existing Lender
may treat such payments for purposes of its own accounting): FIRST to then
due and outstanding fees, expenses or other charges of the Agent, the Steering
Committee Lenders or the Collateral Agent under this Agreement or any of the
other Loan Documents to the extent payable by the Borrowers; SECOND to
interest on Deferred Interest (to the extent then due); THIRD ratably to then
due Letter of Credit Fees and interest on the Existing Loans (other than
Deferred Interest) accrued and unpaid prior to the date such funds are received
by the Existing Lenders; FOURTH to Deferred Interest (to the extent then due);
FIFTH to the unpaid principal amount of the Obligations including on account
of Existing Contingent Indebtedness and the Metra Obligations; SIXTH to all
other Obligations.
2.11. GENERAL PROVISIONS AS TO PAYMENTS.
(a) The Borrowers shall make each payment (other than payments
made from proceeds of Metra Collateral) of principal of, and interest on, the
Existing Loans and of fees and of all other Obligations (other than Obligations
payable under the Cash Management System, Letter of Credit Fees with respect to
the NYCTA/PB/Metro North Letters of Credit and Letter of Credit Fees with
respect to the Metra Letter of Credit), not later than
26
<PAGE>
12:00 Noon (Pittsburgh, Pennsylvania time) on the date when due, in Federal or
other funds immediately available in Pittsburgh, Pennsylvania, to the Agent at
its address referred to in the Schedule for Notices. Subject to the provisions
of SECTION 2.10 and this SECTION 2.11, the Agent will promptly distribute to
each Existing Lender its share of the interest, Facility Fees and Letter of
Credit Fees paid, and its Pro Rata Share of any principal payments made under
this Agreement and its Pro Rata Share of Deferred Interest of each such payment
received by the Agent for the account of the Existing Lenders (or, in the case
of payments to the Metra Lenders with respect to payments on the Metra
Obligations hereunder, Agent will promptly distribute to the Metra Agent the
aggregate amount payable based on all Metra Lenders' shares of the interest,
Facility Fees and Letter of Credit Fees paid, and their aggregate Pro Rata
Shares of any principal payments made under this Agreement and their aggregate
Pro Rata Shares of Deferred Interest of each such payment, for allocation and
distribution by the Metra Agent among the Metra Lenders and the "Issuing Banks"
under the Metra Reimbursement Agreement in accordance with the provisions of the
Metra Reimbursement Agreement). The Borrowers agree to pay to the Agent, upon
demand, the amount of any payment received by the Agent pursuant to the terms of
the Cash Management System that is subsequently returned to any bank that has
transferred funds to the Concentration Account in accordance with the Cash
Management System, because such bank transferred funds in advance of final
collection and such funds are not finally collected. If such payment has
already been applied in accordance with SECTION 2.10 and is not paid by the
Borrowers within one (1) Business Day after the Agent's demand therefor, then
each Existing Lender shall pay to the Agent the share of such returned payment
that it received. Upon receipt by the Agent of any such payment from the
Borrowers, or from the Existing Lenders in the event the Borrowers fail to make
such payment after the Agent's demand, the Agent shall pay such funds to Bank of
America Illinois, Bank of America National Trust and Savings Association or Key
Bank of Idaho, as appropriate, in such bank's capacity as a Deposit Bank in
order to pay the bank that transferred funds that were not finally collected and
the Borrowers' Obligations shall be reinstated to the extent the Agent makes
such payment. Whenever any payment in respect of the Obligations shall be due
on a day which is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon shall
be payable for such extended time.
(b) Each Existing Lender shall be entitled to its share of the
interest, Facility Fees and Letter of Credit Fees paid, its Pro Rata Share of
any principal payments made under this Agreement and its Pro Rata Share of
Deferred Interest, including on account of Existing Contingent Indebtedness and
the Metra Obligations. The Agent shall make the distributions on account of the
Existing Contingent Indebtedness and the Metra
27
<PAGE>
Obligations into an account established pursuant to SECTION 6.1 of the
Collateral Agent Agreement (the "Contingent Indebtedness Account").
(c) Subject to SECTION 2.11(e), in the event that Conversion
Events have occurred with respect to Existing Contingent Indebtedness or the
Metra Obligations since the date of the last Recalculation (or, in the case of
any Recalculations to occur as of October 1, 1995, since the Closing Date), the
Agent shall request the Collateral Agent to disburse funds from the Contingent
Indebtedness Account to the Agent for distribution to the Metra Agent for the
benefit of the Metra Lenders or to each holder of Existing Contingent
Indebtedness for which such a Conversion Event has occurred, to the extent
necessary to provide that each such holder or each Metra Lender, as the case may
be, shall receive cash bearing the same proportion to the amount of Existing
Contingent Indebtedness or the Metra Obligations that shall have become Existing
Loans at such time as the proportion that the aggregate amount of all principal
payments made under this Agreement with respect to any Existing Loans
outstanding on July 1, 1995 bears to the outstanding principal amount of such
Existing Loans as of July 1, 1995.
(d) If any Reductions in Liability shall occur at any time
with respect to any Existing Contingent Indebtedness or the Metra Obligations,
the Agent shall request the Collateral Agent to disburse excess funds which may
have arisen in the Contingent Indebtedness Account as follows: FIRST, the
Agent shall calculate the percentage that (i) the aggregate amount of all
principal payments made under this Agreement with respect to any Existing Loans
outstanding on July 1, 1995 bears to (ii) the outstanding principal amount of
such Existing Loans as of July 1, 1995; SECOND, the Agent shall determine the
amount of funds that should remain in the Contingent Indebtedness Account by
multiplying such percentage by the aggregate principal amount of all Existing
Contingent Indebtedness and Metra Obligations immediately after giving effect to
any such Reduction in Liability; and THIRD, to the extent that the amount of
funds on deposit in the Contingent Indebtedness Account exceeds the amount that
should remain on deposit, as so determined by the Agent, the Agent shall request
that the Collateral Agent deliver such excess to the Agent and the Agent shall
promptly distribute such amount in the same manner as if it were a new payment
to be distributed pursuant to this SECTION 2.11, including making a
distribution to the Contingent Indebtedness Account on account of the Existing
Contingent Indebtedness and the Metra Obligations as provided in SECTION
2.11(b).
(e) Funds that would otherwise have been distributed to the
Metra Agent for the benefit of the Metra Lenders pursuant to SECTIONS 2.11(b),
2.11(c) and 2.11(d) shall remain in the Contingent Indebtedness Account (the
"Metra Holdback") until the Metra Reduction Equalization Event. If the Metra
Reduction Equalization Event has occurred, the Agent shall
28
<PAGE>
distribute funds from the Metra Holdback to the Metra Agent for the benefit of
the Metra Lenders in the amount that would cause the Metra Exposure Reduction to
equal the Non-Metra Exposure Reduction as of the date of such distribution;
PROVIDED that, if the Metra Exposure Reduction exceeds the Non-Metra Exposure
Reduction and all interest, fees and costs under the Existing Loans accrued as
of the date of the distribution have not been paid in full (including Deferred
Interest), such funds shall not be disbursed from the Metra Holdback until such
time as such interest, fees and costs have been paid in full.
2.12. RECALCULATION. On the Closing Date and on the first day of
each calendar quarter, commencing with the calendar quarter beginning October 1,
1995, or at such other times as may be requested by the Majority Lenders, the
Agent shall recalculate (a "Recalculation") each Existing Lender's Existing
Contingent Indebtedness, Existing Loans and Metra Obligations on the basis of
Reallocation Certificates submitted pursuant to SECTION 2.13 to determine the
amount of each such Existing Lender's Exposure as of each such date (the
"Periodic Exposure"). For purposes of voting and of making distributions
pursuant to SECTION 2.11, the Agent shall use the Pro Rata Shares and Pro Rata
Shares of Deferred Interest determined as of the Closing Date, and thereafter
the Agent shall use the Pro Rata Shares and Pro Rata Shares of Deferred Interest
determined as of the most recent Recalculation. In the event that any such
Reallocation Certificate states that any Reductions in Liabilities have occurred
then the Agent shall: (a) recalculate each Existing Lender's Pro Rata Share;
(b) indicate to each Existing Lender who shall have experienced Reductions in
Liability, the amount, if any, by which such Existing Lender has received
distributions pursuant to this Agreement in excess of the amount such Existing
Lender would otherwise be entitled to receive under this Agreement and the
amount of Obligations, if any, to be purchased by such Existing Lender pursuant
to SECTION 12.5(b) by reason of any Reductions of Liability (in which event
such Existing Lender shall promptly comply with its obligations under SECTION
12.5(b) of this Agreement); and (c) comply with the Agent's obligations
regarding the Contingent Indebtedness Account as more particularly described in
SECTION 2.11 above. In the event that any such Reallocation Certificate
states that any Conversion Events have occurred, then the Agent shall (a)
determine the amount of interest then due and payable on account of any Existing
Loans which may have been created by such Conversion Event and so advise the
Borrowers and (b) comply with the Agent's obligations regarding the Contingent
Indebtedness Account as more particularly described in SECTION 2.11 above.
2.13. DELIVERY OF REALLOCATION CERTIFICATES. On the Closing Date
and no later than five (5) Business Days prior to the beginning of each calendar
quarter, commencing with the calendar quarter beginning October 1, 1995, each
Existing Lender who is the holder of Existing Loans or Existing Contingent
Indebtedness shall deliver to the Agent a current Reallocation
29
<PAGE>
Certificate, and the Metra Agent shall deliver to the Agent a current
Reallocation Certificate with respect to the Metra Obligations held by each
Metra Lender. In addition to Reallocation Certificates required under the first
sentence of this Section, within five (5) Business Days after request by the
Agent, any Existing Lender or the Metra Agent, as the case may be, shall deliver
to the Agent a current Reallocation Certificate. Should any Existing Lender or
the Metra Agent fail to comply with its obligations under this SECTION 2.13
the Agent may withhold distribution of funds otherwise payable to such Existing
Lender or the Metra Agent, as the case may be, under this Agreement until such
Existing Lender or the Metra Agent has so complied.
2.14. COMPUTATION OF INTEREST AND FEES. Interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
2.15. CASH MANAGEMENT SYSTEM. Each Borrower will establish, on or
prior to the Closing Date, and each Borrower will maintain until the Obligations
have been paid in full, the Cash Management System described in SCHEDULE E.
2.16. TAXES.
(a) Any and all payments by either Borrower to or for the
account of any Existing Lender or the Agent hereunder or any other Loan Document
shall be made without deduction for any Taxes or Other Taxes; PROVIDED, that
if either Borrower shall be required by law to deduct any Taxes or Other Taxes
from any such payments, (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this SECTION 2.16) such Existing Lender or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower shall make such
deductions, (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law
and (iv) such Borrower shall furnish to the Agent, at its address referred to in
the Schedule for Notices, the original or a certified copy of a receipt
evidencing payment thereof.
(b) The Borrowers agree to indemnify each Existing Lender and
the Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this SECTION 2.16) paid by such Existing Lender or the Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be paid within 15
days after such Existing Lender or the Agent (as the case may be) makes demand
therefor.
30
<PAGE>
(c) Each Existing Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each Existing Lender listed on the
signature pages hereof and on or prior to the date on which it becomes an
Existing Lender in the case of each other Existing Lender, and from time to time
thereafter if requested in writing by the Borrowers (but only so long as such
Existing Lender remains lawfully able to do so), shall provide the Borrowers
with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Existing Lender is entitled to benefits under an income tax treaty to which the
United States is a party which exempts the Existing Lender from United States
withholding tax or reduces the rate of withholding tax on payments of interest
for the account of such Existing Lender or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States.
(d) For any period with respect to which an Existing Lender
has failed to provide the Borrowers with the appropriate form pursuant to
SECTION 2.16(c) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which such form originally was
required to be provided), such Existing Lender shall not be entitled to
indemnification under SECTION 2.16(b) or 2.16(c) with respect to Taxes
imposed by the United States on payments by such Borrower; PROVIDED, that if
an Existing Lender, which is otherwise exempt from or subject to a reduced rate
of withholding tax, becomes subject to Taxes because of its failure to deliver a
form required hereunder, such Borrower shall take such steps as such Existing
Lender shall reasonably request to assist such Existing Lender to recover such
Taxes.
(e) If either Borrower is required to pay additional amounts
to or for the account of any Existing Lender pursuant to this SECTION 2.16,
then such Existing Lender will change the jurisdiction of its lending office to
an office it maintains if, in the judgment of such Existing Lender, such change
(i) will eliminate or reduce any such additional payment which may thereafter
accrue and (ii) is not otherwise disadvantageous to such Existing Lender.
ARTICLE III
ADDITIONAL AMENDMENTS TO THE EXISTING AGREEMENTS
AND EFFECT ON EXISTING AGREEMENTS
3.1. WAIVER OF COVENANTS. Except to the extent provided in the
last sentence of SECTION 3.4, each Existing Lender (a) waives the Borrowers'
and Guarantors' obligations to comply with any of the terms contained in the
Existing Agreements from the date hereof through the Termination Date, other
than
31
<PAGE>
(i) terms with respect to the payment of principal, interest and fees in respect
of the Existing Loans and payment of reimbursement obligations, interest thereon
and Letter of Credit Fees in respect of Existing Letters of Credit, and any
guaranty with respect to such payment (in each case, which terms shall be
modified as provided herein), and (ii) terms providing for the ongoing payment
of Letter of Credit Fees under the Metra Reimbursement Agreement and the
reimbursement agreements applicable to which the NYCTA/PB/Metro North Letters of
Credit were issued, (b) waives all defaults and events of default existing on
the Closing Date or which may arise on or after the Closing Date under any
Existing Agreement to which it is a party due to (i) the execution, delivery or
performance of the Loan Documents and the other Restructuring Documents, (ii)
the incurrence by the Borrowers and any of the Guarantors of obligations under
the Loan Documents and the other Restructuring Documents, and (iii) the granting
of the security interests, liens and mortgages to secure such obligations under
the Loan Documents and the other Restructuring Documents, (c) waives compliance
with the provisions in any Existing Agreement to which it is a party that may
result in the creation of a Lien under its Existing Agreement upon the
execution, delivery or performance of the Loan Documents or other Restructuring
Documents; (d) agrees that neither the execution and delivery nor performance of
the Loan Documents or the other Restructuring Documents by the Borrowers or the
Guarantors will conflict with or result in a default or creation of a Lien under
any Existing Agreement to which it is a party; and (e) waives all breaches and
defaults occurring or existing under the Existing Agreements on or prior to the
Closing Date. The Borrowers and each Existing Lender waive the obligations of
each Existing Lender to comply with the terms contained in the Existing
Agreements from and after the date of this Agreement, except to the extent
otherwise provided in the last sentence of SECTION 3.4.
3.2. NON-EXERCISE OF CERTAIN REMEDIES ARISING FROM PRE-EXISTING
DEFAULTS OR TERMINATIONS. Other than as provided in ARTICLE IX, each
Existing Lender agrees that it will not take any action to exercise any rights
or remedies it may have under its Existing Agreements, including any rights or
remedies it may have to accelerate the Borrowers' or the Guarantors' obligations
under its Existing Agreements (if not previously accelerated), to terminate its
Existing Agreements (if not previously terminated), or to enforce its interest
in its Individual Collateral other than Individual Collateral securing
obligations under the Metra Interim Credit Agreement, if such rights or remedies
arise solely because of the termination of its Existing Agreements or the
Borrowers' or the Guarantors' default under its Existing Agreements prior to the
date of this Agreement.
3.3. TERM. The rights and obligations of the Borrowers
arising under this Agreement with respect to any Existing Lender, and the rights
of such Existing Lender arising under this Agreement with respect to the
Borrowers, shall continue in full
32
<PAGE>
force and effect with respect to such Existing Lender including at all times
after the Termination Date unless and until the Borrowers shall have paid and
performed all of their obligations under such Existing Lender's Existing
Agreements, as modified by this Agreement.
3.4. EFFECT ON EXISTING AGREEMENTS. This Agreement supplements and
amends each Existing Lender's Existing Agreements and in the event of any
conflict between the terms hereof and the terms of any Existing Agreements or
any instruments, documents or agreements executed in connection therewith with
respect to the subject matter, the terms of this Agreement and the Loan
Documents shall govern and control. Each of the Existing Agreements and such
other related instruments, documents or agreements, and all obligations of the
Borrowers and Guarantors and all rights and remedies of each Existing Lender
thereunder, as existing prior to the execution of this Agreement, shall remain
in full force and effect except to the extent modified hereby or in conflict
with the terms of this Agreement and the other Loan Documents. Notwithstanding
anything to the contrary in this Agreement, (i) this Agreement shall not waive
or amend the provisions of Articles VII or X or Sections 11.02, 11.03(a), (b)
(except that Section 11.03(b) as it applies to each "Bank" (as defined in the
Credit Agreement described below) is hereby amended and restated as of the date
hereof by SECTION 12.4(b) of this Agreement), 11.07, 11.08, 11.09 or 11.10 of
the Credit Agreement dated as of March 31, 1994 among the Borrowers, the banks
listed therein and Morgan Guaranty Trust Company of New York, as Agent, the
respective definitions for all capitalized terms used therein and the notes
issued thereunder, it being understood that this Override Agreement constitutes
an amendment and restatement of all other provisions of such Credit Agreement,
and (ii) this Agreement shall not waive or amend the provisions of Sections
2.01(a), (c) or (d), 2.03(a), (c) or (d), 2.04, 2.05, 2.06, 2.08, 2.11(a)
(except with respect to the time and date of payment of the Borrowers) or (b),
2.12, 2.13, 2.14, Article IX, Article X (other than Sections 10.01(b), (c), (f)
and (g), 10.04 (except that Section 10.04(b) as it applies to any Metra Lender
is amended and restated as of the date hereof by SECTION 12.4(a) of this
Agreement), 10.05, 10.08 and 10.16) of the Metra Reimbursement Agreement or the
respective definitions and other definitional provisions for all capitalized
terms used therein, it being understood that this Agreement constitutes an
amendment and restatement of all other provisions of such Metra Reimbursement
Agreement.
ARTICLE IV
SECURITY
4.1. THE BORROWERS' OBLIGATIONS. The Obligations of the Borrowers
to pay all sums due to the Agent, the Collateral Agent and the Existing Lenders
and to perform all other covenants and
33
<PAGE>
agreements under this Agreement, the other Loan Documents and the Existing
Agreements, as modified by this Agreement, and the Metra Interim Credit
Agreement to which the Borrowers are a party, shall be secured to the extent
provided in the Security Documents and the Intercreditor Agreements.
4.2. FURTHER ASSURANCES. The Borrowers shall, and shall cause the
Guarantors to, at their sole cost and expense, execute and deliver to the Agent
or the Collateral Agent for the benefit of the Existing Lenders all such further
documents, instruments and agreements and hereby agree to perform all such other
acts which may be required in the opinion of the Agent to enable the Collateral
Agent, the Agent and the Existing Lenders to exercise and enforce their
respective rights as the secured parties or beneficiaries under the Security
Documents. To the extent permitted by applicable law, the Borrowers hereby
authorize the Collateral Agent or the Agent on behalf of the Existing Lenders to
file Financing Statements and continuation statements with respect to the
security interests granted under the Security Documents in favor of the
Collateral Agent for the benefit of the Agents and the Existing Lenders and to
execute such Financing Statements and continuation statements on behalf of the
Borrowers and the Guarantors. In addition to, and without in any respect
limiting the requirements of SECTIONS 2.12 AND 2.13, each Existing Lender
shall promptly certify such information regarding the Existing Indebtedness or
the Obligations as the Agent may request from time to time.
ARTICLE V
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT. This
Agreement shall become effective only upon the satisfaction by the Borrowers of
the following conditions precedent, unless each Existing Lender shall otherwise
agree:
(a) RESTRUCTURING DOCUMENTS. The Agent shall have received
counterpart originals of this Agreement, the other Restructuring Documents,
including the Warrants, and all the other certificates, schedules, and other
items as specified in the Schedule of Documents attached hereto as SCHEDULE B,
each duly and validly executed and acknowledged, where appropriate, by or on
behalf of all the parties hereto or thereto (as the case may be).
(b) CONSENTS. The Agent shall have received evidence
reasonably satisfactory to it in its sole discretion that the Borrowers and any
Guarantors have obtained all requisite consents and approvals required to be
obtained from any Governmental Authority, Person or entity whatsoever, to permit
the transactions contemplated by the Restructuring Documents to
34
<PAGE>
be consummated in accordance with their respective terms and conditions.
(c) PENDING AND THREATENED LITIGATION. The Agent shall have
received SCHEDULE 5.1(c) and shall have reviewed all such pending or
threatened litigation against the Borrowers and their Subsidiaries, and such
disclosures shall reveal no conditions unacceptable to the Agent in its sole
discretion.
(d) THE RESTRUCTURING. The Restructuring shall have been
consummated with all conditions to the effectiveness having been satisfied,
subject only to the execution of this Agreement and the other Loan Documents.
(e) OTHER MATTERS. The Agent shall have received all other
documents, instruments, agreements, opinions, certificates, insurance policies,
consents and evidences of other legal matters, in form and substance
satisfactory to the Agent and its counsel, as the Agent reasonably may request.
(f) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrowers and each of them set forth in this Agreement, or the
other Restructuring Documents or, in any certificate or opinion by or on behalf
of the Borrowers in connection herewith, shall be correct on and as of the date
of any requested Existing Loans as if made on and as of such date; PROVIDED,
HOWEVER, the Borrowers may, from time to time, amend SCHEDULE 6.8 (Material
Contracts), SCHEDULE 6.2 (Consolidated Subsidiaries) and SCHEDULE 6.26
(Employment and Investment Agreements) by providing the Agent with amendments to
such Schedules.
(g) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing, assuming the effectiveness of
this Agreement.
(h) DEFAULTS UNDER INDEBTEDNESS. The Agent shall have
received SCHEDULE 5.1(h), certified by the chief executive officer and chief
financial officer of each Borrower, describing any default or failure of
performance or any event which with the giving of notice, or lapse of time, or
both, would become a default by such Borrower under any indenture, loan
agreement, guaranty, promissory note or other Indebtedness to which the
Borrowers or any Guarantors are a party constituting a liability (contingent or
otherwise) equal to or in excess of $2,000,000.
5.2. ADDITIONAL CONDITION PRECEDENT. This Agreement shall become
effective only after each of the Existing Lenders shall have delivered to the
Agent a Reallocation Certificate for the period from July 1, 1995 through July
31, 1995.
35
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Agents and the Existing Lenders to enter
into this Agreement, the Borrowers hereby make the following representations and
warranties to the Agent and to each Existing Lender:
6.1. ORGANIZATION AND QUALIFICATION. Each of the Borrowers and the
Guarantors is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and is duly qualified
and in good standing in each jurisdiction wherein the conduct of its business or
the ownership of its properties requires such qualification, except for those
jurisdictions in which the failure to be qualified and in good standing would
not have or result in a Material Adverse Effect or would not materially
adversely affect the ability of the Collateral Agent to collect any material
account receivable.
6.2. CORPORATE POWER AND AUTHORIZATION; BINDING EFFECT. Each of
the Borrowers and the Guarantors has the corporate power and has taken all
corporate action necessary to authorize it to execute, deliver, and perform this
Agreement and each of the other Restructuring Documents executed by it and to
grant the security interests and liens granted or created thereunder. This
Agreement constitutes, and when executed the other Restructuring Documents will
constitute, legal and valid obligations of each Borrower binding upon it and
enforceable in accordance with their respective terms, except as the
enforceability of each such Restructuring Document may be subject to or limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors and except as the
availability of equitable remedies are subject to the application of equitable
principles.
6.3. NO CONFLICT. The execution, delivery and performance of this
Agreement, the other Restructuring Documents and the secured financing
transactions contemplated hereby, the use of proceeds thereof, and the
performance by the Borrowers and the Guarantors (a) do not conflict with or
violate any provision of the Articles of Incorporation or Certificate of
Incorporation, as the case may be, or By-Laws of any Borrower or any Guarantor,
any material Requirement of Law or any Contractual Obligation of any Borrower or
any Guarantor, (b) do not conflict with, constitute a default or require any
consent under any Contractual Obligation of any Borrower or any Guarantor, and
(c) do not result in the creation of any Lien other than a Permitted Lien upon
any property or assets of any Borrower or any Guarantor.
6.4. NO CONSENTS. All necessary consents, approvals and
authorizations of, filings with, and acts by or with respect to all Governmental
Authorities and other Persons (except possession of certain collateral or
filings with the appropriate
36
<PAGE>
Governmental Authorities necessary to perfect the security interests under the
Security Documents) required to be obtained, made or taken by the Borrowers or
the Guarantors in connection with the secured financing transactions
contemplated hereby or with the execution, delivery, performance, validity or
enforceability of this Agreement or the other Restructuring Documents, have been
obtained, made or taken, and remain in effect. All applicable waiting periods
have expired without any Governmental Authority or other Person taking any
action which restricts, prevents or imposes materially adverse conditions upon
the consummation of the secured financing transactions contemplated hereby.
6.5. ABSENCE OF LITIGATION. Except as otherwise set forth in
SCHEDULE 5.1(c), there are no actions, suits, proceedings or other litigation
(including proceedings by or before any arbitrator or Governmental Authority)
pending, or, to the Borrowers' knowledge, threatened, against or affecting the
Borrowers or the Guarantors or any of their Consolidated Subsidiaries or, to the
knowledge of the Borrowers, any basis therefor, (a) which challenge the validity
or propriety of the secured financing transactions contemplated hereby, (b)
which could reasonably be expected to have or result in, individually or in the
aggregate, a Material Adverse Effect, or (c) which could materially affect the
ability of the Borrowers to perform their obligations under this Agreement or
the other Restructuring Documents.
6.6. NO DEFAULT UNDER THE RESTRUCTURING DOCUMENTS. No Default or
Event of Default has occurred and is continuing.
6.7. INDEBTEDNESS. Set forth on SCHEDULE 6.7A hereto is a
complete and correct list of all Indebtedness of the Borrowers and the
Guarantors in excess of $2,000,000, other than Contingent Obligations, and the
approximate aggregate principal amount thereof outstanding. Set forth on
SCHEDULE 6.7B is a complete and correct list of all Contingent Obligations for
which the principal amount outstanding or the amount for which the Borrowers or
the Guarantors are liable exceeds $1,000,000, and the approximate aggregate
amount of such principal or of such liability outstanding.
6.8. MATERIAL CONTRACTS. Set forth on SCHEDULE 6.8 hereto is a
complete and accurate list of (a) each Material Contract, and (b) each Capital
Lease Obligation of the Borrowers and the Guarantors existing on the Closing
Date which exceeds $10,000,000 annually; other than as set forth in SCHEDULE
6.8 or otherwise disclosed in writing to the Agent, each such Material Contract
or Capital Lease is, and after giving effect to the consummation of the
transactions contemplated by the Restructuring Documents will be, in full force
and effect in accordance with the terms thereof. Except as previously disclosed
to the Agent and the Existing Lenders or as listed in SCHEDULE 6.8A hereto,
there are no defaults by the Borrowers or
37
<PAGE>
the Guarantors or, to the best of their knowledge, by any other party under any
such Material Contract which could reasonably be expected to have or result in a
Material Adverse Effect, or could reasonably be expected to affect the
Borrowers' or the Guarantors' ability to perform their Obligations under this
Agreement and the other Restructuring Documents. Neither the Borrowers nor the
Guarantors are in default (nor has any event occurred which, with notice or
lapse of time or both would constitute a default) under any of the Existing
Agreements. The Borrowers and the Guarantors have delivered to the Agent a true
and complete copy of each Material Contract required to be listed on SCHEDULE
6.8.
6.9. CORRECTNESS OF COLLATERAL SCHEDULES. The Certification of
Schedules listed as Item No. 4.24 of the Schedule of Documents and delivered to
the Agent in connection herewith are complete and correct in all material
respects.
6.10. CORRECTNESS OF FINANCIAL INFORMATION. The financial
statements described in Item No. 2.00 of the Schedule of Documents and delivered
to the Agent in connection herewith are true and correct and (a) present fairly,
in all material respects, the Consolidated financial condition of the Borrowers,
the Guarantors and their Consolidated Subsidiaries as of the date thereof, (b)
disclose all material liabilities of the Borrowers, the Guarantors and their
Consolidated Subsidiaries, whether liquidated or unliquidated, fixed or
contingent, that are required to be disclosed under Generally Accepted
Accounting Principles as of the date thereof, and (c) have been prepared in
accordance with Generally Accepted Accounting Principles, consistently applied.
Each of the Budget and the projections described in Item Nos. 1.41 and 2.4 of
the Schedule of Documents and delivered to Agent in connection herewith are
based upon reasonable estimates and assumptions, and reflect the reasonable
estimates of the Borrowers and their Consolidated Subsidiaries of the results of
operations and other information projected therein.
6.11. SECURITY DOCUMENTS. The Security Documents to which the
Borrowers and the Guarantors are a party create in favor of the Collateral Agent
for the benefit of the Existing Lenders to secure the Obligations valid, and,
upon the proper filing by the Collateral Agent of Financing Statements at
appropriate offices, a first priority, perfected security interests in the
property and assets described in the Security Documents capable of being
perfected by the filing of a Financing Statement, subject only to Permitted
Liens.
6.12. TAXES. The Borrowers and the Guarantors have filed all tax
returns which were required to be filed in any jurisdiction, and paid all taxes
shown thereon to be due or otherwise due upon the Borrowers and the Guarantors
or any of their properties, income or franchises, including interest,
assessments, fees and penalties (other than any immaterial
38
<PAGE>
amounts, which the Borrowers or the Guarantors shall pay or make provision to
pay), or have provided adequate reserves for the payment thereof. To the best
knowledge of the Borrowers, no claims are threatened, pending or being asserted
with respect to, or in connection with any return referred to in this SECTION
6.12, which could reasonably be expected to have or result in a Material
Adverse Effect, or could reasonably be expected to affect the Borrowers' ability
to perform their Obligations under this Agreement and the other Restructuring
Documents.
6.13. NO BURDENSOME RESTRICTIONS. No Material Contract and no
material Requirement of Law relating to or otherwise affecting the Borrowers or
the Guarantors will result in a Material Adverse Effect.
6.14. JUDGMENTS. There are no outstanding or unpaid judgments
against the Borrowers or the Guarantors in excess of (a) $100,000 individually,
or (b) $2,000,000 in the aggregate, except as expressly set forth in SCHEDULE
6.14.
6.15. COMPLIANCE WITH LAWS. The Borrowers and the Guarantors are
not and will not be in violation of, or not in compliance with, any Requirement
of Law binding upon the Borrowers and the Guarantors or their properties and
assets, including any building, zoning, occupational safety and health
ordinances or regulations relating to their structure or equipment, or the
operation thereof or of its respective business, or any applicable fair
employment, equal opportunity or similar law, ordinance or regulation, the
noncompliance with which could reasonably be expected to have or result in a
Material Adverse Effect, and are not a party to any agreement or instrument, or
subject to any judgment, order, writ, rule, regulation, code or ordinance which
could reasonably be expected to have or result in a Material Adverse Effect.
6.16. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multi-employer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could reasonably result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Internal Revenue Code or
(iii) except as set forth on SCHEDULE 6.16, incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
39
<PAGE>
6.17. GOVERNMENTAL AUTHORIZATIONS; PERMITS, LICENSES AND
ACCREDITATIONS; OTHER RIGHTS. The Borrowers and the Guarantors have all
licenses, permits, approvals, qualifications, consents, certificates of needs
and accreditations (where such are required) and other authorizations necessary
for the lawful conduct of their respective businesses or operations wherever now
conducted and as planned to be conducted, pursuant to all applicable statutes,
laws, ordinances, rules and regulations of all Governmental Authorities having,
asserting or claiming jurisdiction over the Borrowers or the Guarantors, except
where such failure could not have or result in a Material Adverse Effect.
Copies of all such licenses, permits, approvals, qualifications, consents and
other authorizations shall be provided to the Agent upon request. Neither the
Borrowers nor the Guarantors are in default under any of such licenses, permits,
approvals, consents, qualifications or authorizations and no event has occurred,
and no condition exists, which, with the giving of notice, the passage of time,
or both, would constitute a default thereunder or would result in the
suspension, revocation, impairment, forfeiture or non-renewal of any such
permit, license, authorization or accreditation, except where such failure could
not have or result in a Material Adverse Effect. The continuation, validity and
effectiveness of all material licenses, permits, approvals, consents,
qualifications and authorizations will not be adversely affected by the
transactions contemplated by this Agreement. The Borrowers know of no reason
why they or the Guarantors will not be able to maintain all licenses, permits,
approvals, consents, qualifications, accreditations and other authorizations
necessary or appropriate to own and operate their respective current businesses
and to obtain such licenses, permits, approvals, consents, qualifications and
other authorizations necessary to own and operate their respective current
businesses, and otherwise conduct the business of the Borrowers, the Guarantors
and their Consolidated Subsidiaries as now conducted and presently proposed to
be conducted.
6.18. ENVIRONMENTAL MATTERS. In the ordinary course of their
business, the Borrowers conduct an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrowers, the Guarantors
and their Consolidated Subsidiaries, in the course of which they identify and
evaluate associated liabilities and costs (including any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Materials, and any actual or potential liabilities to
third parties, including employees, and any
40
<PAGE>
related costs and expenses). On the basis of this review, the Borrowers have
reasonably concluded that such associated liabilities and costs, including the
costs of compliance with Environmental Laws, are unlikely to have or result in a
Material Adverse Effect.
6.19. NO MATERIAL ADVERSE EFFECT. Since June 26, 1995, there has
been no Material Adverse Effect, other than as disclosed in SCHEDULE 6.19.
6.20. CONSOLIDATED SUBSIDIARIES; SUBSIDIARIES. Each of the
Borrowers' and the Guarantors' Consolidated Subsidiaries is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and has all legal powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted. Set forth on SCHEDULE 6.20 is a
complete and correct list of each of the Borrower's Subsidiaries. Set forth on
SCHEDULE D is a complete and correct list of each of the Borrower's
wholly-owned Subsidiaries other than foreign wholly-owned subsidiaries, Emkay
Development Company, Inc. and Emkay Capital Investments, Inc.
6.21. MARGIN SECURITIES. Neither Borrower nor any Guarantor is
engaged principally in, nor has as one of its most important activities, the
business of extending credit for the purpose of purchasing or carrying "margin
stock" as that term is defined in Regulation U promulgated by the Board of
Governors of the Federal Reserve System, as now in effect. No part of the
Existing Indebtedness or Indebtedness otherwise created in connection with this
Agreement or the other Restructuring Documents, shall be used, directly or
indirectly, for the purpose of purchasing any such margin stock. If requested
by the Agent, the Borrowers shall furnish or cause to be furnished to the Agent
a statement, in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U, to the foregoing effect.
6.22. INVESTMENT COMPANY ACT. Neither of the Borrowers nor any
Guarantor is an "investment company" nor a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as now in
effect.
6.23. BUSINESS LOCATIONS AND TRADE NAMES. Set forth on SCHEDULE
6.23A is a complete and correct list of each location where each of the
Borrowers and the Guarantors maintains its chief executive office, its principal
place of business, an office, a place of business or any material financial
records. Set forth on SCHEDULE 6.23B is a complete and correct list of each
name under or by which each Borrower and Guarantor conducts its business, or by
which each Borrower and Guarantor (or its predecessors in interest) has
conducted its business during the past five years.
41
<PAGE>
6.24. TITLE TO REAL PROPERTY AND OTHER ASSETS. The Borrowers and
the Guarantors have good and marketable title (or good and marketable leasehold
interests with respect to leased property) to all their Real Property and all
personal property assets and fixtures subject to no Liens other than Permitted
Liens. The Borrowers and the Guarantors hold directly the fee and leasehold
interest in all facilities constituting the Real Property Collateral. As of the
Closing Date, there are no contracts or options by either Borrower, any
Guarantor or any of their Subsidiaries for the sale or lease of any of the Real
Property Collateral, except as set forth on SCHEDULE 6.24. All easements,
servitudes and rights of way necessary to the operations presently conducted or
proposed to be conducted at the facilities constituting the Real Property
Collateral have been obtained.
6.25. LABOR MATTERS. There are no controversies pending between the
Borrowers, the Guarantors or their Subsidiaries and their employees which may
constitute or result in a Material Adverse Effect.
6.26. EMPLOYMENT AND INVESTMENT AGREEMENTS. Set forth in SCHEDULE
6.26 is a complete and accurate list of (i) all employment agreements and
executive compensation arrangements to which any Borrower, any Guarantor or any
Subsidiary of a Borrower or a Guarantor is a party which provides for aggregate
compensation to any Person (assuming compliance with or satisfaction of all
contingencies or conditions) of more than $150,000 per year, and (ii) all
agreements relating to the voting or disposition of any outstanding shares of
capital stock of each Borrower, Guarantor or any of their Subsidiaries. The
Borrowers and the Guarantors have delivered to the Agent a true and complete
copy of each of the agreements required to be listed in SCHEDULE 6.26.
6.27. NO MISSTATEMENTS. Neither this Agreement, the other
Restructuring Documents, nor any document, instrument and other agreement,
certificate, statement or other information referred to herein or expressly
furnished to the Agent or to any of the Existing Lenders pursuant hereto or
thereto, contains any misstatement of a material fact or omits to state any
material fact or any fact necessary to make the statements contained herein or
therein not misleading on the date furnished or on the Closing Date, except as
otherwise subsequently disclosed to the Agent and all Existing Lenders in
writing on or prior to the Closing Date.
6.28. RESTRUCTURING. The Restructuring has occurred.
6.29. MK RAIL LOCK BOX. Lock Box number 98485 maintained at Bank of
America Illinois is used solely for collections related to MK Rail and not
collections related to any Borrower or any Guarantor. No Borrower or Guarantor
has instructed any
42
<PAGE>
account debtor or other person owing any monies to such Borrower or such
Guarantor to make any payment to Lock Box number 98485.
6.30. CASH MANAGEMENT SYSTEM. Each Borrower acknowledges that the
Cash Management System is part of this Agreement and that each of the
representations and warranties made by each Borrower in the Cash Management
System constitutes representations and warranties of this Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as this Agreement is in effect the Borrowers, and,
without duplication, each of them, shall, unless the Majority Lenders shall
otherwise agree:
7.1. FINANCIAL STATEMENTS; ADDITIONAL REPORTING REQUIREMENTS.
Furnish to the Agent:
(a) Not later than ten (10) Business Days prior to the start
of each calendar quarter, a projected consolidating income statement for such
quarter and a weekly consolidating cash flow statement for such quarter in the
form of the Budget, certified by the chief financial officer as containing
appropriate assumptions to the best of his knowledge;
(b) Not later than three (3) Business Days after each calendar
week, an unaudited consolidating cash flow statement in the form of the Budget
for such week setting forth a comparison to the Budget for such calendar week,
certified by the chief financial officer as complete and correct to the best of
his knowledge;
(c) Not later than the twenty-fifth (25th) day after each
calendar month, an unaudited consolidating income statement, balance sheet and
cash flow statement (including MK Rail on an equity basis using the most current
monthly information available), in each case for such month, and setting forth a
comparison to the projections for such calendar month and the actual results for
such calendar month in the previous fiscal year, certified by the chief
financial officer as complete and correct, subject to normal accounting
adjustments and without footnotes;
(d) As soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of MKD, a
Consolidated balance sheet of MKD and its Consolidated Subsidiaries as of the
end of such quarter and the related Consolidated statements of income and cash
flows for such quarter and for the portion of MKD's fiscal year ended at the end
of such quarter, setting forth in the case of such income and cash flows in
comparative form the figures for the corresponding
43
<PAGE>
quarter and the corresponding portion of MKD's previous fiscal year, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, Generally Accepted Accounting Principles and consistency by the
chief financial officer, controller or treasurer of MKD;
(e) As soon as available and in any event by April 15, 1996, a
Consolidated balance sheet of MKD and its Consolidated Subsidiaries as of the
end of such fiscal year and the related Consolidated statements of income,
retained earnings and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Securities and Exchange Commission by
independent public accountants of nationally recognized standing, together with
an unaudited annual report prepared on a consolidating basis in conformity with
Generally Accepted Accounting Principles;
(f) Promptly upon the mailing thereof to the shareholders of
MKD generally, copies of all financial statements, reports and proxy statements
so mailed;
(g) Promptly upon the filing thereof, copies of all reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which MKD shall have filed with
the Securities and Exchange Commission;
(h) Promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities or any
Indebtedness of the Borrowers pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be furnished to the
Agent pursuant to any other clause of this SECTION 7.1;
(i) On a monthly basis a statement listing the outstanding
receivable and payable accounts between the Borrowers, and Affiliates of the
Borrowers; PROVIDED, HOWEVER, that any transfers or group of related
transfers of cash or other assets in excess of $1,000,000 between the Borrowers,
and Affiliates of the Borrowers, shall be reported on a weekly basis;
(j) On a monthly basis, within twenty five (25) days of the
close of the prior calendar month, a report outlining work status for jobs
involving either Borrower or any Consolidated Subsidiary valued by any Borrower
or Consolidated Subsidiary in excess of $10,000,000 certified by the chief
financial officer as complete and correct;
(k) On a monthly basis, within twenty five (25) days of the
close of the prior calendar month, a report outlining the status of each of the
Borrowers' backlog, certified by the chief financial officer as complete and
correct in the form attached hereto as SCHEDULE 7.1(k);
44
<PAGE>
(l) On a monthly basis a report prepared by each of the
Borrowers' financial advisors regarding the status of asset sales by either
Borrower or any Consolidated Subsidiary (excluding the asset sales involving
AmeriBank and Western Aircraft, Inc.), certified by the chief financial officer
as complete and correct;
(m) As required under the Multiparty Agreement, reports
required to be delivered to the Bonding Company under the Multiparty Agreement;
(n) On a daily basis, each Borrower's daily cash balances and
outstanding loan balances;
(o) On a weekly basis, a report of any reductions of letter of
credit obligations under the Existing Agreements;
(p) On a weekly basis, the management operation reports
prepared for each of the Borrowers' divisions;
(q) From time to time such additional information regarding
the financial position, business, properties or operations of MKD, MKO and any
of their Consolidated Subsidiaries as the Agent, at the request of any Existing
Lender, may reasonably request; and
(r) No later than August 15, 1995, a draft of an operating
plan detailing projected operations through December 31, 1997, for each of the
Borrowers' operating divisions and Subsidiaries in a form acceptable to the
Majority Lenders with the final operating plan to be delivered by August 31,
1995.
7.2. PROVISION OF NOTICES. Give notice to the Agent of the
occurrence of any of the following events not later than three (3) Business Days
after the Borrowers know of such event:
(a) DEFAULT. Any Default or Event of Default.
(b) OTHER DEFAULT OR LITIGATION. (i) Any default or event
of default under any Contractual Obligation of any Borrower or Guarantor of
greater than $1,000,000 or which could otherwise have or result in a Material
Adverse Effect; (ii) any litigation, investigation or proceeding which may exist
at any time between the Borrowers and any Governmental Authority; or (iii) any
other litigation, which, as relates to (i) or (ii) above, if adversely
determined, could (y) if the remedies prayed for do not include damages, have or
result in a Material Adverse Effect, and (z) if the remedies prayed for include
damages, would result in a liability equal to or in excess of $5,000,000 if the
claim is fully covered by insurance, and in excess of $1,000,000 if the claim is
not covered by insurance.
(c) REPORTABLE EVENTS. Except as provided on SCHEDULE
7.2(c)A, any Reportable Event with respect to any Single
45
<PAGE>
Employer Plan maintained by the Borrowers or (b) the institution of proceedings
or except as provided on SCHEDULE 7.2(c)B the taking or expected taking of any
other action by the PBGC, any Borrower or any Commonly Controlled Entity to
terminate, withdraw or partially withdraw from any Single Employer Plan
maintained by any Borrower and with respect to a Multi-employer Plan, the
reorganizational insolvency of the Plan. In addition to such notice, the
Borrowers shall as soon as practicable deliver to the Agent and each Existing
Lender whichever of the following may be applicable: (i) a certificate of the
chief executive officer and the chief financial officer of each Borrower setting
forth details as to such Reportable Event and the action, if any, that it or the
Commonly Controlled Entity proposes to take with respect thereto, together with
the copy of any notice of such Reportable Event that is required to be filed
with PBGC, or (ii) any notice delivered by PBGC evidencing its intent to
institute such proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be.
(d) ENVIRONMENTAL MATTERS. (i) Any event which makes any of
the representations set forth in SECTION 6.18 inaccurate in any respect or
(ii) the receipt by any Borrower of any notice, order, directive or other
written communication from a Governmental Authority alleging violations of or
noncompliance with any Environmental Laws.
(e) MATERIAL CONTRACTS; MATERIAL OBLIGATIONS. (i) Any
proposed material amendment, change or modification to, or waiver of any
material provision of, or any termination of, any Material Contract, other than
amendments, changes, modifications, waivers or terminations in the ordinary
course of business as presently conducted, and (ii) any new Material Contract
which has not been previously disclosed to the Existing Lender in financial
reports or otherwise in writing.
(f) CASUALTY LOSSES. Any casualty loss or losses, not
covered by insurance, in excess of $1,000,000.
(g) NOTICES RE: BONDING ISSUES. The receipt by any of the
Borrowers of any notice or other communication from the Bonding Company
regarding material changes in the Bonding Company's issuance of payment or
performance bonds in connection with the projects to be performed by the
Borrowers or their Consolidated Subsidiaries.
(h) NOTICES OF VIOLATION. The receipt by any Borrower of
any notice, order, directive or other written communication from a Governmental
Authority commencing an investigation or inquiry by any Governmental Authority
or alleging violations of or noncompliance with any Requirement of Law which
could reasonably be expected to have or result in a Material Adverse Effect.
46
<PAGE>
(i) CHANGES TO SCHEDULES. Any changes to the information on
SCHEDULES 6.23A and 6.23B.
7.3. FILING OF RETURNS; PAYMENT OF TAXES. File all tax returns
when due and pay or cause to be paid before the same shall become delinquent and
before penalties have accrued thereon, all taxes, assessments and governmental
charges or levies imposed on the income, profits, franchises, property or
business of the Borrowers except to the extent and so long as (a) the same are
being contested in good faith by appropriate proceedings, and (b) as to which
adequate reserves in conformity with Generally Accepted Accounting Principles
with respect thereto have been provided on the books of the Borrowers.
7.4. MAINTENANCE OF EXISTENCE. Maintain and preserve, and, will
cause each Consolidated Subsidiary to maintain and preserve, its respective
existence as a corporation or other form of business organization, as the case
may be, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, trade names, franchises and other authority to the
extent material and necessary for the conduct of its respective business in the
ordinary course as conducted from time to time.
7.5. COMPLIANCE WITH LAWS. Comply, and cause each Consolidated
Subsidiary to comply, with all Requirements of Law in all material respects
except where the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
7.6. MAINTENANCE OF PROPERTIES. Maintain, preserve and keep all of
its buildings, tangible properties, equipment and other property and assets,
whether owned or leased, used and necessary in its business, in good repair,
working order and condition, and from time to time to make all necessary and
proper repairs and replacements so that at all times the utility, efficiency or
value thereof shall not be impaired in any material respect.
7.7. INSURANCE. Maintain (a) insurance (in addition to any
insurance required under the Security Documents) on all insurable property and
assets owned or leased by the Borrowers or the Guarantors in the manner, to the
extent and against at least such risks (in any event, including liability and
casualty, including hazard, fire and business interruption coverage) usually
done by owners of similar businesses and properties in similar geographic areas,
and adequate workers' compensation insurance and (b) appropriate self-insurance
reserve funds covering those risks for which the Borrowers or the Guarantors
presently self-insure, which self-insurance reserves shall be funded to the
extent from time to time required by the insurer for the Borrowers and the
Guarantors (which insurer shall be acceptable to the Agent) or another excess
insurance carrier for the Borrowers or the Guarantors acceptable to the Agent.
All such insurance shall be in such amounts and form and with such insurance
companies as are reasonably satisfactory to the Agent
47
<PAGE>
and shall name the Collateral Agent, for the benefit of the Existing Lenders, as
an additional insured. The Borrowers or the Guarantors shall furnish the
following to the Agent: (x) annually or at any time upon written request, full
information as to such insurance carried, including the amounts of all
self-insurance reserve funds; (y) lender loss payable endorsements (Form 438
BFU) in favor of the Collateral Agent (for the benefit of the Existing Lenders),
in form and substance satisfactory to the Agent; and (z) at least annually and
on such other times as reasonably requested by the Agent, certificates of
insurance from such insurance companies and certified copies of such insurance
policies. All policies of insurance shall provide for not less than 30 days
prior written cancellation notice to the Agent.
7.8. BOOKS AND RECORDS. Keep and maintain full and accurate books
of record and accounts of its operations, dealings and transactions in relation
to its business and activities, in conformity with Generally Accepted Accounting
Principles and all Requirements of Law.
7.9. COMPLIANCE WITH TERMS OF ALL REAL PROPERTY RELATED
AGREEMENTS. Make all payments and otherwise perform all of its obligations in
respect of all Real Property Collateral with respect to which the failure to so
perform could have a material adverse effect on the security afforded thereby,
and use its best efforts to keep, and take all action to keep, the leases on all
leaseholds in full force and effect, and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled, and
notify the Agent of any defaults of the Borrowers or any default of any other
party with respect to such leases and cooperate in all respects with all actions
of the Agent to cure such defaults.
7.10. HAZARDOUS MATERIALS. Except in compliance with all applicable
Environmental Laws, the Borrowers shall not and shall use its reasonable best
efforts not to cause or permit any other person or entity to, cause or permit
the presence, use, generation, manufacture, installation, release, discharge,
storage or disposal of any Hazardous Materials on, under, in or about any real
property owned by the Borrowers or any Subsidiary or any real property leased,
subleased, occupied or used by the Borrowers or any Subsidiary, or the
transportation of any Hazardous Materials to or from any such real property
unless such use or transportation is on a temporary basis incidental to the
conduct of its business in the ordinary course and is performed in a manner that
does not cause a material violation of any applicable Environmental Law. In the
event of any breach or violation of the foregoing, or in the event of any other
release or threatened release of Hazardous Materials on, under, in or about any
Real Property owned by the Borrowers or any Real Property leased, subleased,
occupied or used by the Borrowers, the Borrowers shall promptly commence and
diligently complete a clean-up or other remediation of any such environmental
contamination to the extent required by applicable Environmental
48
<PAGE>
Law using a duly qualified, licensed and insured contractor. In the event of
any release or threatened release of Hazardous Material on, under, in or about
any real property owned by any Subsidiary or any real property leased,
subleased, occupied or used by any Subsidiary, the Borrowers shall cause such
Subsidiary to promptly commence and diligently complete a clean-up or other
remediation of any such environmental contamination to the extent required by
applicable Environmental Law using a duly qualified, licensed and insured
contractor.
7.11. INTELLECTUAL PROPERTY ASSIGNMENTS. Execute intellectual
property assignments in form and substance satisfactory to the Agent, upon the
Borrowers' applications with any state or federal agency for or registration of
any patents, trademarks or other intellectual property or licenses thereof, and
cooperate with the Agent to have such assignments or other documents filed with
the appropriate state or federal agency.
7.12. FURTHER ASSURANCES. Perform, make, execute and deliver and
cause their Consolidated Subsidiaries to perform, make, execute and deliver all
such additional and further acts, things, deeds, occurrences and instruments as
the Agent or the Majority Lenders may reasonably require to document and
consummate the transactions contemplated hereby and to vest completely in and
ensure the Agent and the Existing Lenders their respective rights under this
Agreement and the other Restructuring Documents.
7.13. INSPECTION OF PROPERTY, BOOKS AND RECORDS. Keep, and will
cause each Consolidated Subsidiary to keep, proper books of record and account
in which full, true and correct entries in conformity with Generally Accepted
Accounting Principles shall be made of all dealings and transactions in relation
to its business and activities; and will permit, and will cause each
Consolidated Subsidiary to permit, representatives and Professionals of the
Agent or any Steering Committee Lender, including Ernst & Young (at the
Borrowers' expense), to enter upon the Real Property Collateral, to take and
remove soil and groundwater samples from the Real Property Collateral, to
conduct tests on any part of the Real Property Collateral, to visit, inspect,
and appraise any of the Collateral, to examine and make abstracts from any of
their respective books and records and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants, all at such times and as often as may be desired.
7.14. USE OF PROCEEDS. None of the proceeds of the Existing Loans
have been or will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.
49
<PAGE>
7.15. COMPLIANCE WITH ASSET DISPOSITION PROGRAM.
(a) Timely comply with the terms of their Asset Disposition
Program, subject to the restrictions of SECTIONS 8.3 AND 8.4.
(b) Provide a brief description of any bona fide offer in excess
of $3,500,000 for any proposed disposition of assets.
7.16. STANDSTILL AGREEMENTS. Use their best efforts to obtain by
August 15, 1995 standstill agreements through the Termination Date from all
banks or other financial institutions that are not party to this Agreement and
to which either Borrower has provided a guaranty of Indebtedness of any
Subsidiary.
7.17. CASH MANAGEMENT SYSTEM. Comply with each of the covenants
contained in the Cash Management System.
ARTICLE VIII
NEGATIVE COVENANTS
So long as this Agreement is in effect, the Borrowers shall not,
unless the Majority Lenders shall otherwise agree:
8.1. INDEBTEDNESS. Create, incur, assume or suffer to exist, or
permit any Consolidated Subsidiary to create, incur, assume or suffer to exist,
any Indebtedness, EXCEPT:
(a) Indebtedness of the Borrowers in connection with this
Agreement;
(b) Indebtedness existing, or relating to commitments
existing, on the Closing Date, all as set forth on SCHEDULE 8.1 and any
extensions, refundings or renewals thereof on terms satisfactory to the Majority
Lenders;
(c) Indebtedness with respect to financed insurance premiums
which is not past due;
(d) Indebtedness for performance guaranties and performance or
payment bonds incurred in the ordinary course of the Borrowers' or any
Consolidated Subsidiary's business;
(e) Purchase money Indebtedness with respect to Capital
Expenditures obtained from financing sources other than the Existing Lenders
("Additional Capital Expenditure Indebtedness"); PROVIDED, that (i) no Default
or Event of Default has occurred and is continuing at the time the Additional
Capital Expenditure Indebtedness is to be incurred, (ii) the amount of such
Additional Capital Expenditure Indebtedness outstanding at
50
<PAGE>
any time shall in no event exceed $1,000,000, and (iii) each of the Borrowers
shall have delivered notice to the Agent of its intention to incur any
Additional Capital Expenditure Indebtedness;
(f) Indebtedness of McConnell Dowell Corporation Limited that
is not guaranteed by the Borrowers; or
(g) Indebtedness of MKO pursuant to a guaranty of the
Corporate Card Account Agreement between American Express Travel Services
Company, Inc. and MKO's wholly-owned subsidiary Rocky Mountain Remediation
Services Limited Liability, Inc.
8.2. NEGATIVE PLEDGE. Create, assume or suffer to exist, or permit
any Consolidated Subsidiary to create, assume or suffer to exist, any Lien on
any asset now owned or hereafter acquired by them, except:
(a) Liens of the Restructuring Documents including Liens of
the Bonding Company thereunder;
(b) Liens existing on the date of this Agreement securing
Indebtedness outstanding on the date of this Agreement which are listed on
SCHEDULE 8.2 hereto;
(c) Any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset; PROVIDED, that such Lien attaches to such asset concurrently with
or within 90 days after the acquisition thereof;
(d) Any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by any of
the foregoing clauses of this Section; provided that such Indebtedness is not
increased and is not secured by any additional assets;
(e) Liens for taxes either not yet due or being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
any material danger of the sale, forfeiture or loss of any material asset and
the Borrowers shall maintain in accordance with Generally Accepted Accounting
Principles appropriate reserves therefor;
(f) Materialmen's, mechanic's, workmen's repairmen's or other
like Liens arising in the ordinary course of business (including those arising
under maintenance agreements entered into in the ordinary course of business)
securing obligations that are not overdue or are being contested in good faith
by appropriate proceedings so long as such proceedings do not involve any
material danger of the sale, forfeiture or loss of any material asset;
51
<PAGE>
(g) Liens which are bonded in a manner reasonably satisfactory
to the Majority Lenders; and
(h) Liens permitted by the Ship Mortgage on the vessel thereby
encumbered.
8.3. PROHIBITION OF FUNDAMENTAL CHANGES. Directly or indirectly,
(whether in one transaction or a series of transactions), (a) enter into any
transaction of merger, consolidation or amalgamation; (b) liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell,
lease, transfer or otherwise dispose of all or a substantial part of its
respective business or assets; (d) acquire by purchase or otherwise all or
substantially all the business or assets, or stock or other evidence of
beneficial ownership, of any Person; (e) make any material change, which could
have an adverse effect on the Borrowers' ability to perform their Obligations
hereunder, in their present method of conducting business; (f) enter into any
agreement or transaction where they are bound to do or permit any of the
foregoing; or (g) permit any Consolidated Subsidiary to do any of the foregoing.
8.4. PROHIBITION ON SALE OF ASSETS. Sell, transfer, convey, lease
or otherwise dispose of, or permit any Consolidated Subsidiary to sell,
transfer, convey, lease, or otherwise dispose of, all or any of the assets of
the Borrowers and their Consolidated Subsidiaries except (i) sales of inventory
in the ordinary course of business; (ii) sales of equipment not exceeding
$50,000 for which no consent shall be required; (iii) sales of equipment greater
than $50,000 but less than $600,000 which sales shall require the consent of the
Agent; (iv) sales of equipment greater than $600,000 in the aggregate but less
than $1,500,000 in the aggregate which sales shall require the consent of the
Majority Lenders; and (v) sales of equipment in excess of $1,500,000 in the
aggregate which sales shall require the consent of All Lenders; provided,
however, to the extent that any such equipment constitutes equipment that is
subject to the Equipment Asset Pool Intercreditor Agreement and secures new
bonds issued by the Bonding Company (the "Subject Equipment"), the Borrower and
the Consolidated Subsidiaries shall be permitted to sell, transfer, convey,
lease or otherwise dispose of any and all Subject Equipment without the consent
of the Existing Lenders or the Agents and notwithstanding SECTION 2.9(a)
hereof, the Borrowers and the Consolidated Subsidiaries (except Emkay
Development Company, Inc.) shall be permitted to retain the Net Cash Proceeds of
such Subject Equipment so long as (x) such Net Cash Proceeds are used to
cash-collateralize new bonds obtained from the Bonding Company, and (y) such Net
Cash Proceeds are used as the first money to be expended to replace any such
Subject Equipment.
8.5. INVESTMENTS. Make or commit to make any loan, extension of
credit or capital contribution to, or purchase of
52
<PAGE>
any stock, bonds, notes, debentures or other securities of, or make any other
investment in any Person (all such transactions being called "Investments"), or
permit any Guarantor to do any of the foregoing, except:
(a) Investments in Cash Equivalents;
(b) Investments existing on the Closing Date and set forth in
SCHEDULE 8.5 hereto and consented to by the Majority Lenders; and
(c) Investments made in any Person in accordance with the
Budget.
8.6. COMPLIANCE WITH ERISA.
(a) Terminate any Single Employer Plan maintained by any
Borrower or a Commonly Controlled Entity so as to result in any material
liability to PBGC.
(b) Engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Single Employer Plan maintained by any
Borrower or a Commonly Controlled Entity which would result in a material
liability for an excise tax or civil penalty in connection therewith.
(c) Incur or suffer to exist any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Single Employer Plan maintained by any Borrower or a Commonly
Controlled Entity.
(d) Allow or suffer to exist any event or condition, which
presents a material risk of incurring a material liability to PBGC by reason of
the termination of any Plan.
8.7. RESTRICTED PAYMENTS. (a) Declare, pay or make (i) any
dividends or other distributions with respect to their capital stock or rights
to acquire capital stock or any payment on account of such capital stock or
rights to acquire capital stock, or (ii) any prepayment of principal or
prepayment of interest on account of any of their Indebtedness, (b) set apart
assets for a sinking or any analogous fund for the purchase, redemption, or
retirement or other acquisition of, any shares of their capital stock or rights
to acquire capital stock or any of their Indebtedness, or (c) purchase, defease,
acquire or redeem any of their Indebtedness; PROVIDED, that the Borrowers may
make required or permitted payments or prepayments on account of Indebtedness
under the Restructuring Documents.
8.8. TRANSACTIONS WITH AFFILIATES. Enter into any transaction, or
permit any Guarantor to enter into any transaction, including any purchase,
sale, lease or exchange of property or the rendering of any service, with any
Affiliate or employee; except transactions which are contemplated by this
53
<PAGE>
Agreement or are in the ordinary course of such Borrower's or Guarantor's
business and are made in accordance with the Budget.
8.9. SALE/LEASE-BACKS. Enter into any arrangements, directly or
indirectly, with any Persons whereby a Borrower or Guarantor shall sell or
transfer any property, whether now owned or hereafter acquired in connection
with the rent or lease of (i) such property or (ii) other property which such
Borrower or Guarantor intends to use for substantially the same purpose or
purposes as the property so sold or transferred.
8.10. OPERATING LEASES. Incur, or permit any Guarantor to incur, at
any time any additional annual lease payments as lessee under Operating Leases,
excluding (i) scheduled increases in lease payments in connection with leases
existing on the Closing Date and as set forth in SCHEDULE 8.10 or replacements
of such leases upon expiration thereof and (ii) conversions of existing Capital
Leases to Operating Leases, so long as such conversion does not have the effect
of increasing total annual lease payments to the lessor; and (iii) lease
payments in connection with new Operating Leases, PROVIDED that the aggregate
annual lease payments for such Operating Leases shall not exceed $1,000,000.
8.11. CAPITAL EXPENDITURES. Make, or permit any Guarantor to make,
any Capital Expenditures other than (a) items included in the Budget for Mining,
Transit, Infrastructure, and EC&E or (b) other Capital Expenditures aggregating
not more than $1,000,000.
8.12. AMENDMENT OF CHARTER OR BYLAWS. Amend their, or any of the
Guarantors', articles of incorporation to revise, in any material respect, the
Borrowers' capital structure, or to change the names of the Borrowers, or make
any other material amendments thereto or to their bylaws without promptly
providing a copy thereof to the Agent.
8.13. NO CONSENT TO SUBORDINATION. Give their consent, or permit
any Consolidated Subsidiary to give its consent, to the subordination of any of
their rights or claims (including any subordination in the form of an agreement
to defer remedies or extend maturities) to any right or claim of any other
Person other than subordination of the MK Rail Note in connection with the MK
Rail Global Settlement Agreement.
8.14. INTERCOMPANY OBLIGATIONS. Adjust, settle or compromise any
amounts receivable from any Subsidiary or Affiliate including accounts
receivable, notes receivable, or any other intercompany account reflected on the
books of the Borrowers; PROVIDED, that the Borrowers may adjust, settle or
compromise any amounts receivable from any Subsidiary or Affiliate if the
aggregate amount of such adjustments, settlements, or compromises does not
exceed $500,000.
54
<PAGE>
8.15. TRANSIT DIVISION OPERATIONS. Permit any customers of the
Transit Division to make payments to the Borrowers into the Accounts, or fund
any Transit Division operations or expenses through funds from the Accounts or
from proceeds of the Loans under the Bridge Loan Agreement.
ARTICLE IX
DEFAULTS
9.1. EVENTS OF DEFAULT. Any one or more of the following described
events shall constitute an Event of Default hereunder, whether such occurrence
shall be voluntary or involuntary, or occur or be effected by operation of law
or otherwise:
(a) Any Borrower shall fail to pay when due any principal,
interest, fees, expenses, or any other amount owing in respect of the
Obligations when due and payable pursuant to the terms thereof or hereof and as
modified by ARTICLE II and ARTICLE III;
(b) Any Borrower shall fail to observe or perform any covenant
contained in ARTICLE VIII;
(c) Any Borrower or any Guarantor shall fail to observe or
perform any covenant or agreement contained in this Agreement or the other
Restructuring Documents (other than those covered by clause (a) or (b) above)
for 10 days after written notice thereof has been given to any Borrower by the
Agent;
(d) Any representation or warranty of any Borrower or any
Guarantor set forth in this Agreement, or the other Restructuring Documents or
in any other certificate, opinion or other statement at any time provided by or
on behalf of any Borrower pursuant hereto shall prove to be in any material
respect false or misleading at the time given or deemed given;
(e) Any Borrower, any Guarantor or any Consolidated Subsidiary
shall fail to make any payment in respect of any Indebtedness when due or within
any applicable grace period, or any event or condition shall occur which results
in the acceleration of the maturity of any Indebtedness or set-off of such
Indebtedness of any Borrower, Guarantor or any Consolidated Subsidiary or
enables (or, with the giving of notice or lapse of time or both, would enable)
the holder of such Indebtedness or any Person acting on such holder's behalf to
accelerate the maturity thereof;
(f) Any Borrower, any Guarantor or any Consolidated Subsidiary
shall commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its Indebtedness under
any bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the
55
<PAGE>
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its Indebtedness as it becomes due, or shall take any corporate action to
authorize any of the foregoing;
(g) An involuntary case or other proceeding shall be commenced
against any Borrower, any Guarantor or any Consolidated Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
Indebtedness under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 20 days; or an order for relief shall
be entered against any Borrower or any Consolidated Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(h) Any writ of execution, attachment or garnishment or any
lien, any judgment or any other legal process to be issued against any Borrower
or any Guarantor or any of the property of any Borrower, any Guarantor or their
Subsidiaries (including the Collateral) which by itself or together with all
other such legal processes is for an amount in excess of $1,000,000 which shall
remain unvacated, unbonded or unstayed;
(i) The occurrence of any of the events specified in
subsections (a) through (g) of SECTION 6.1 of the Multiparty Agreement or the
project owner makes any demand under any indemnity agreement between the Bonding
Company and any Borrower;
(j) Actual disbursements of any type shall exceed the total
projected disbursements as set forth in the Budget by $10,000,000 in any one
week or $20,000,000 in the aggregate;
(k) Actual Financing Shortfall shall exceed the projected
amount as set forth in the Budget by $10,000,000 in any one week or $20,000,000
in the aggregate;
(l) All or substantially all of the property of any
Borrower, Guarantor or any Consolidated Subsidiary shall be condemned, seized or
otherwise appropriated;
(m) Any Borrower, any Guarantor or any Consolidated
Subsidiary shall voluntarily suspend the transaction of substantially all of its
business for more than three consecutive Business Days;
56
<PAGE>
(n) Any Borrower or any Commonly Controlled Entity shall
engage in (a) any "prohibited transaction" (as defined in ERISA or Section 4975
of the Code) involving any Single Employer Plan maintained by any Borrower or a
Commonly Controlled Entity, (b) any "accumulated funding deficiency" (as defined
in ERISA), whether or not waived, shall exist with respect to any Single
Employer Plan maintained by any Borrower or a Commonly Controlled Entity, (c) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution of
proceedings presents a material risk of termination of such Plan for purposes of
Title IV of ERISA, and, in the case of a Reportable Event, the continuance of
such Reportable Event unremedied for ten days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof, as the
case may be, (d) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (e) the withdrawal or partial withdrawal from any Multi-employer
Plan, (f) the reorganization or insolvency of a Single Employer Plan maintained
by any Borrower or a Commonly Controlled Entity or (g) it shall be determined
that Unfunded Liabilities exist, and in each case in clauses (a) through (g)
above, such event or condition together with all other such events or
conditions, if any, would subject any Borrower to any tax, penalty or other
liabilities in excess of $1,000,000 or would otherwise have a Materially Adverse
Effect;
(o) Any person or group of persons (within the meaning of
Section 12 or 14 of the Securities Exchange Act of 1934, as amended), other than
the Existing Lenders, shall acquire beneficial ownership (within the meaning of
Rule 13d-3 promulgated by the Securities and Exchange Commission under said Act)
of 35% or more of the outstanding shares of common stock of MKD;
(p) Any of the Restructuring Documents or provisions thereof,
for any reason whatsoever, ceases to be valid and binding on any Borrower or any
Guarantor or any Bridge Loan Lender or Existing Lender or the Bonding Company,
or any Borrower or any Guarantor or any Bridge Loan Lender or Existing Lender or
the Bonding Company shall so assert, or the Liens granted pursuant to any of the
Security Documents shall not constitute valid, perfected, first-priority Liens
on the properties and assets described therein, subject only to the Permitted
Liens, or any Borrower or any Guarantor shall be in default under the Security
Documents, subject to any cure periods contained therein;
(q) Any other event or condition occurs or exists which could
have or result in a Material Adverse Effect;
57
<PAGE>
(r) The occurrence of any breach or default under the
Multiparty Agreement or the Intercreditor Agreements;
(s) The T-Co Transaction shall not have been consummated in
the judgment of the Majority Lenders by September 1, 1995 pursuant to the terms
of the T-Co Term Sheet and to the extent not addressed in the T-Co Term Sheet,
on terms and conditions acceptable to the Majority Lenders;
(t) Breach of any representation, warranty, covenant,
obligation or undertaking set forth in the Cash Management System or any
agreement related thereto;
(u) There shall be any amendment or other modification of the
Metra Interim Credit Agreement or any related documents excluding the budget
provided under the Metra Interim Credit Agreement without the consent of the
Majority Lenders; PROVIDED, HOWEVER that any amendment or modification of
the Metra Interim Credit Agreement or any related documents that increases the
commitments, the maximum principal, or the interest or fees payable under the
Metra Interim Credit Agreement shall require the consent of All Existing
Lenders.
(v) MKD shall not have delivered the Warrants to the Agent
pursuant to the Securities Purchase Agreement on or before August 31, 1995.
9.2. THE EXISTING LENDERS' REMEDIES. Subject to the Intercreditor
Agreements, upon the occurrence of an Event of Default or at any time
thereafter, after notice and the lapse of any cure period, where applicable, and
in each and every case, until such Event of Default shall have been remedied or
waived in writing in accordance with SECTION 12.6, upon the request of the
Majority Lenders, the Agent shall, by notice in writing to the Borrowers (a
"Notice of Acceleration") declare all the Obligations due hereunder, under the
other Loan Documents, under the Existing Agreements and under the Metra Interim
Credit Agreement to be immediately due and payable, without presentment, demand,
protest or notice of any kind (other than notices provided herein), all of which
are hereby expressly waived to the extent permitted by applicable law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in either
SECTION 9.1(f) or SECTION 9.1(g) (and, in the case of SECTION 9.1(g),
after the lapse of the 20 day period referred to therein) all amounts owing
under this Agreement, the other Loan Documents and the Existing Agreements
immediately shall automatically be due and payable in full without declaration
or other notice (other than notices provided herein) to the Borrowers. The
Agent immediately, and without expiration of any period of grace (other than
that specifically provided herein), may enforce payment of all Obligations of
any Borrower to the Agent and the Existing Lenders and the Agent shall be
entitled to all remedies available hereunder and thereunder.
58
<PAGE>
9.3. OTHER REMEDIES. Subject to the Intercreditor Agreements,
upon the occurrence of an Event of Default or at any time thereafter, after
notice and the lapse of any cure period, where applicable, and in each and every
case, until such Event of Default shall have been remedied or waived in writing
in accordance with SECTION 12.6, in addition to the remedies listed in
SECTION 9.2 upon the earlier of a Notice of Acceleration or acceleration of
the Obligations, the Existing Lenders acting by and through the Agent and the
Collateral Agent shall have all rights, powers and remedies available under each
of the Restructuring Documents and applicable law, including (i) commencing
judicial or nonjudicial foreclosure proceedings against the Real Property
Collateral, (ii) enforcing the Collateral Agent's security interest in the
Collateral by means of one or more public or private sales thereof, (iii) taking
possession of all or any portion of the Collateral, in person or by means of a
court appointed receiver (who shall be appointed without regard to the value of
Collateral Agent's security), and (iv) exercising any or all of the rights of a
beneficiary or secured party pursuant to applicable law. All rights, powers and
remedies of the Agents or the Existing Lenders in connection with each of the
Restructuring Documents may be exercised at any time or from time to time, are
cumulative and not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity. Upon the request of the Majority
Lenders after the occurrence of an Event of Default, the Agent shall instruct
the Collateral Agent to exercise any remedies under the Restructuring Documents,
including collection of funds in deposit accounts, foreclosure on Real Property
Collateral, seeking a receiver to take possession of any Collateral and/or the
Real Property Collateral, and commencement of or actions in court proceedings.
9.4. WAIVERS BY THE BORROWERS. Except as otherwise provided for in
this Agreement and applicable law, the Borrowers waive (i) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Agent, the Collateral Agent or the Existing Lenders on
which the Borrowers may in any way be liable and hereby ratify and confirm
whatever the Agent, the Collateral Agent or the Existing Lenders may do in this
regard, (ii) all rights to notice and a hearing prior to the Collateral Agent's
taking possession or control of, or replevy, attachment or levy upon, the
Collateral, or any bond or security which might be required by any court prior
to allowing the Agent or the Collateral Agent to exercise any of its remedies,
and (iii) the benefit of all valuation, appraisal and exemption laws. Each
Borrower acknowledges that it has been advised by counsel of its choice with
respect to the effect of the foregoing waivers and this Agreement, the other
Restructuring
59
<PAGE>
Documents and the transactions evidenced by this Agreement and the other
Restructuring Documents, generally.
ARTICLE X
THE AGENT
10.1. APPOINTMENT. Each Existing Lender hereby (a) irrevocably
appoints Mellon Bank, N.A. as the Agent of such Existing Lender under this
Agreement and the other Loan Documents and, subject to the last sentence of
SECTION 3.1, the Existing Agreements, and (b) irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding anything to the contrary herein, the Agent shall have
no duties, except those expressly set forth in this Agreement and the other Loan
Documents, and no implied covenants, responsibilities, duties, obligations or
liabilities shall be read into this Agreement and the other Loan Documents or
otherwise exist against the Agent.
10.2. THE AGENT AND AFFILIATES. The Agent shall have the same
rights and powers under this Agreement as any other Existing Lender and may
exercise or refrain from exercising the same as though it were not the Agent,
and the Agent, and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with either Borrower or any Subsidiary
or Affiliate of either Borrower as if it were not the Agent hereunder.
10.3. RETENTION OF DOCUMENTS AND INFORMATION TO THE EXISTING
LENDERS. The Agent shall deliver to each Existing Lender any material
documents and written information required under this Agreement to be delivered
by the Borrowers to the Agent within a reasonable period after the Agent's
receipt of such documents or information.
10.4. DELEGATION OF DUTIES. The Agent may exercise any of its
powers or execute any of its duties under this Agreement and the other Loan
Documents by or through one or more agents or attorneys-in-fact and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to such rights and duties. The Agent may utilize the services of
such agents and attorneys-in-fact as the Agent in its sole discretion reasonably
determines, and all fees and expenses of such agents and attorneys-in-fact shall
be paid by the Borrowers on demand. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Agent with reasonable care.
60
<PAGE>
10.5. LIMITATION OF LIABILITY. Neither the Agent nor their
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(a) liable for any waiver, consent or approval given or any action taken or
omitted to be given or taken by them or by such Person under or in connection
with this Agreement or the other the Loan Documents or (b) responsible for the
consequences of any oversight or error in judgment by them or such Person
whatsoever, except for their or such Person's own gross negligence or willful
misconduct. The Agent shall not be responsible for (v) the execution, validity,
enforceability, effectiveness or genuineness of this Agreement or the other Loan
Documents or Existing Agreements, (w) the collectability of any amounts owing
under this Agreement or the other Loan Documents or Existing Agreements, (x) the
value, sufficiency, enforceability or collectability of any Collateral security
therefor, (y) the failure by any Borrower to perform its Obligations hereunder
or (z) the truth, accuracy and completeness of the recitals, statements,
representations or warranties made by any Borrower or any officer or agent
thereof contained in this Agreement, the other Loan Documents or Existing
Agreements or in any certificate, report, statement or other document referred
to or provided for in, or received by the Agent in connection with, this
Agreement or the other Loan Documents or Existing Agreements.
10.6. RELIANCE BY THE AGENT. The Agent shall not have any
obligation (a) to ascertain or to inquire as to the observance or performance of
any of the conditions, covenants or agreements in this Agreement or the other
Loan Documents or in any document, instrument or agreement at any time
constituting, or intended to constitute, collateral security therefor, (b) to
ascertain or inquire as to whether any notice, consent, waiver or request
delivered to them shall have been duly authorized or is genuine, accurate and
complete, or (c) to inspect the properties, books or records of the Borrowers.
The Agent shall be entitled to rely, and shall be fully protected in relying,
(x) upon any writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document, instrument or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, or (y) upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent may deem and
treat each Existing Lender party hereto or any Assignee as an Existing Lender
for all purposes unless a written notice of the assignment, negotiation or
transfer thereof, in accordance with the provisions of this Agreement shall have
been delivered to the Agent identifying the name of any successor or Assignee.
The Agent shall be entitled to fail or refuse, and shall be fully protected in
failing or refusing, to take any action under this Agreement or the other Loan
Documents unless (a) it first shall receive such advice or concurrence of the
Majority Lenders as it deems appropriate, or (b) it first shall be indemnified
to its satisfaction by the Existing Lenders against any and all
61
<PAGE>
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. In all cases the Agent shall be fully
protected in acting, or in refraining from acting, under this Agreement or the
Loan Documents in accordance with a request of the Majority Lenders, and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Existing Lenders and all future holders of Existing Indebtedness.
10.7. NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless the Agent
has received notice from an Existing Lender or the Borrowers referring to this
Agreement, describing such Event of Default and stating that such notice is a
"notice of default." If the Agent receives such a notice or has actual
knowledge of the occurrence of an Event of Default, the Agent promptly shall
give notice thereof to the Existing Lenders. The Agent shall take such action
with respect to such Event of Default as shall be directed by the Majority
Lenders; PROVIDED, HOWEVER, that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Event of
Default as it deems advisable in the best interests of the Existing Lenders.
10.8. NON-RELIANCE ON THE AGENT AND THE OTHER EXISTING LENDERS.
Each Existing Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it. The Agent shall have no
obligation or liability to any of the Existing Lenders regarding the
creditworthiness or financial condition of any Borrower. No act by the Agent
hereinafter taken, including any review of the Borrowers, shall be deemed to
constitute any representation or warranty by the Agent to any Existing Lender.
Each Existing Lender represents to the Agent that, independently and without
reliance upon the Agent or any other Existing Lender and based on such documents
and information as it has deemed appropriate, it has made its own appraisal of
and investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and has made its own decision to
enter into this Agreement. Each Existing Lender also represents that,
independently and without reliance upon the Agent or any other Existing Lender,
and based on such documents and information as it deems appropriate at the time,
it shall continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Borrowers. Except for notices, reports and other
documents expressly required to be furnished to the Existing Lenders by the
Agent hereunder, the Agent shall have no obligation or liability to provide any
Existing Lender with any credit or other
62
<PAGE>
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Borrowers which may come into the
possession of either of the Agent or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.9. COLLATERAL. Each of the Existing Lenders represents to the
Agent and each of the other Existing Lenders that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
10.10. INDEMNIFICATION. Each of the Existing Lenders shall
indemnify, defend and hold harmless the Agent in its capacity as such (to the
extent not reimbursed by the Borrowers and without limiting the obligation of
the Borrowers to do so), ratably according to their Pro Rata Share as of date
demand for payment is made from and against any and all claims, demands,
lawsuits, costs, expenses, fees, liabilities, obligations, losses, damages,
actions, recoveries, judgments, suits, costs, expenses or disbursements of any
kind whatsoever, including interest, penalties and attorneys' fees and costs,
whether direct, indirect, consequential or incidental, which at any time
(including at any time following the payment of all amounts payable under the
Existing Agreements and the Restructuring Documents) may be imposed on, incurred
by or asserted against the Agent in its capacity as such and not in its
individual capacity in any way relating to, resulting from or arising out of
this Agreement, or the Restructuring Documents, the transactions contemplated
hereby or any action taken or omitted by the Agent under or in connection with
any of the foregoing; PROVIDED, HOWEVER, that no Existing Lender shall be
liable for the payment of any portion of such claims, demands, lawsuits, costs,
expenses, fees, liabilities, obligations, losses, damages, actions, remedies,
judgments, suits, costs, expenses or disbursements to the extent such result
from the Agent's gross negligence or willful misconduct. The agreements in this
SECTION 10.10 shall survive the payment of all amounts payable under
Restructuring Documents and shall be in addition to and not in lieu of any other
indemnification agreements set forth in the Restructuring Documents.
10.11. THE AGENT IN ITS INDIVIDUAL CAPACITY. The Agent in its
individual capacity, and its Affiliates, may make loans and other financial
accommodations to, accept deposits from and generally engage in any kind of
business with the Borrowers and their Subsidiaries as though the Agent was not
the Agent hereunder. With respect to its Existing Indebtedness and any other
Indebtedness made or renewed by it, the Agent in its individual capacity shall
have the same benefits, rights, powers and privileges under this Agreement, and
the Loan Documents as any Existing Lender and may exercise the same as though it
were not the Agent, and the terms "Existing Lender" and "Existing Lenders" shall
include the Agent in its individual capacity.
63
<PAGE>
10.12. THE SUCCESSOR AGENT. The Agent may resign as such upon ten
days' prior written notice to the Existing Lenders. The Agent shall
concurrently provide the Borrowers with a copy of such notice. If the Agent
shall resign as such under this Agreement, then the Majority Lenders shall
appoint from among the Existing Lenders a successor agent for the Existing
Lenders. A successor agent may also be appointed by the Majority Lenders if the
Agent ceases to have any Existing Indebtedness, and upon such appointment of a
successor agent the Agent shall resign as such. Upon acceptance of its
appointment as the successor agent in writing, (a) such successor agent shall
succeed to the rights, powers, privileges and duties of the Agent as the case
may be, (b) the retiring Agent shall be discharged of all its obligations and
liabilities in such capacity under this Agreement, and the Loan Documents, (c)
the term "Agent" shall mean such successor agent effective upon its appointment,
and (d) the retiring Agent's rights, powers and duties as the Agent as the case
may be shall be terminated, without any other or further act or deed on the part
of such former Agent or any of the parties to this Agreement or their successors
and assigns. With respect to any actions taken or omitted to be taken by the
retiring Agent while it was the Agent (for which retiring Agent may still have
liability), the retiring Agent shall continue to receive the benefits of this
ARTICLE X, including SECTION 10.10.
10.13. APPLICABILITY OF SECTION TO THE BORROWERS. Notwithstanding
any other provision contained in this ARTICLE X, the rights and obligations of
the Borrowers under this Agreement shall not be affected by any provision
otherwise included in this ARTICLE X. The Borrowers shall be permitted to
rely on communications from the Agent which it reasonably believes are made on
behalf of the Agent and, if specified therein, the Existing Lenders, and except
as otherwise set forth specifically herein, all notices and payments to be made
by the Borrowers hereunder shall be made to the Agent. Further, if any Existing
Lender shall be in default hereunder, such default shall not affect the right
and obligations of the Borrowers hereunder. The Agent shall provide the
Borrowers with prompt notice of any default by any Existing Lender.
10.14. DELIVERY TO AGENT OF EXISTING AGREEMENTS. If requested by the
Agent in order to enforce any of the rights or remedies of the Existing Lenders
under the Loan Documents, each Existing Lender shall deliver to the Agent the
originals of any promissory notes or other Existing Agreements held by such
Existing Lender evidencing the Existing Indebtedness, and if requested by the
Agent from time to time for any other reason shall deliver to the Agent copies
of any such promissory notes or other Existing Agreements.
64
<PAGE>
ARTICLE XI
JOINT AND SEVERAL LIABILITY
11.1. JOINT AND SEVERAL LIABILITY. Each Borrower agrees that such
Borrower is jointly and severally liable for the Obligations hereunder and that
all Obligations of each Borrower now or hereafter existing under this Agreement,
whether for principal, interest, fees, indemnification, expenses or other wise,
will be paid strictly in accordance with the terms of this Agreement and the
other Restructuring Documents regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or the Existing Lenders with respect thereto. So long as
the Obligations have not been paid in full, the liability of each Borrower
hereunder shall be absolute and unconditional irrespective of:
(a) any taking, exchange, release, or nonperfection of any
Collateral or any release or amendment or waiver of or consent to departure from
any guaranty, for all or any of the Obligations; or
(b) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Borrower.
11.2. THE GUARANTEES. If and to the extent any Obligation of any
Borrower to the Agent or any Existing Lender shall be considered an obligation
of guaranty or suretyship, each Borrower hereby unconditionally guarantees the
full and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the Obligations. Upon failure by either Borrower to pay
punctually any such amount, the other Borrower shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in this Agreement.
11.3. GUARANTEES UNCONDITIONAL. The Obligations of each Borrower
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) Any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the other Borrower under this Agreement,
the Existing Agreements, the other Restructuring Documents or by operation of
law or otherwise;
(b) Any modification or amendment of or supplement to this
Agreement, the Existing Agreements or the other Restructuring Documents;
(c) Any release, impairment, non-perfection or invalidity of
any direct or indirect security for any Obligation
65
<PAGE>
of the other Borrower under this Agreement, the Existing Agreements or the other
Restructuring Documents;
(d) Any change in the corporate existence, structure or
ownership of the other Borrower, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the other Borrower or its assets or any
resulting release or discharge of any Obligation of the other Borrower contained
in this Agreement, the Existing Agreements or the other Restructuring Documents;
(e) The existence of any claim, set-off or other rights which
a Borrower may have at any time against the other Borrower, the Agent, any
Existing Lender or any other Person, whether in connection herewith or any
unrelated transactions; PROVIDED, that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory counterclaim;
(f) Any invalidity or unenforceability relating to or against
the other Borrower for any reason of this Agreement, the Existing Agreements or
the other Restructuring Documents, or any provision of applicable law or
regulation purporting to prohibit the payment by the other Borrower of the
principal, interest or any other amount payable by it under this Agreement or
the other Restructuring Documents; or
(g) Any other act or omission to act or delay of any kind by
the other Borrower, the Agent, any Existing Lender or any other Person or any
other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of its Obligations under
this Agreement, the Existing Agreements or the other Restructuring Documents.
11.4. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. The Borrowers' Obligations hereunder shall remain in full force
and effect until the Obligations have been paid in full. If at any time any
payment of the principal of or interest on any Existing Indebtedness or any
other amount payable by a Borrower under this Agreement is rescinded or must be
otherwise restored or returned upon the insolvency, bankruptcy or reorganization
of a Borrower or otherwise, the other Borrower's Obligations hereunder with
respect to such payment shall be reinstated at such time as though such payment
had been due but not made at such time.
11.5. WAIVERS BY THE BORROWERS. The following waivers shall apply
to the guarantees under this ARTICLE XI:
(a) EACH BORROWER EXPRESSLY WAIVES THE RIGHT TO REQUIRE THE
AGENT, THE COLLATERAL AGENT OR ANY EXISTING LENDER FIRST TO PURSUE THE OTHER
BORROWER OR ANY OTHER PERSON, THE COLLATERAL, OR ANY OTHER SECURITY OR GUARANTY
THAT MAY BE HELD FOR THE OBLIGATIONS, OR TO APPLY ANY SUCH SECURITY OR GUARANTY
TO
66
<PAGE>
THE OBLIGATIONS BEFORE SEEKING FROM SUCH BORROWER PAYMENT IN FULL OF ITS
OBLIGATIONS TO THE AGENT AND THE EXISTING LENDERS OR PROCEEDING AGAINST SUCH
BORROWER FOR SAME;
(b) EACH BORROWER ACKNOWLEDGES THAT:
(i) IF A DEFAULT OR EVENT OF DEFAULT OCCURS AND SUCH
BORROWER PAYS TO THE AGENT AND THE EXISTING LENDERS ALL OR PART OF THE
OBLIGATIONS, SUCH BORROWER WOULD HAVE A RIGHT TO PROCEED AGAINST THE OTHER
BORROWER TO THE EXTENT OF THE OBLIGATIONS SO PAID BY SUCH BORROWER AND TO HAVE
THE BENEFIT OF ANY SECURITY HELD BY THE AGENT OR COLLATERAL AGENT FOR THE
OBLIGATIONS TO THE EXTENT OF THE OBLIGATIONS SO PAID BY THE BORROWER. SUCH
RIGHT IS COMMONLY KNOWN AS THE "RIGHT OF SUBROGATION."
(ii) IF AN EVENT OF DEFAULT OCCURS, THE AGENT, AMONG
OTHER THINGS, MAY ENFORCE ANY LIEN UPON ANY INTEREST IN REAL PROPERTY ("REAL
PROPERTY LIEN") BY MEANS OF JUDICIAL ACTION OR BY NON-JUDICIAL ACTION COMMONLY
KNOWN AS A "NON-JUDICIAL FORECLOSURE," "TRUSTEE'S SALE" OR "POWER OF SALE
FORECLOSURE."
(iii) IF AN EVENT OF DEFAULT OCCURS, AND THE AGENT
ENFORCES ANY REAL PROPERTY LIEN BY MEANS OF A NON-JUDICIAL FORECLOSURE,
TRUSTEE'S SALE OR POWER OF SALE FORECLOSURE, SUCH BORROWER'S RIGHT OF
SUBROGATION TO PROCEED AGAINST THE OTHER BORROWER WOULD BE EXTINGUISHED BY THE
OPERATION OF CALIFORNIA CODE OF CIVIL PROCEDURE ("CCP") SECTION 580 OR SIMILAR
LAWS, AND, IN SUCH CASE, SUCH BORROWER MIGHT HAVE A DEFENSE AGAINST PAYMENT.
(iv) IF AN EVENT OF DEFAULT OCCURS, AND THE AGENT
ENFORCES ANY REAL PROPERTY LIEN BY MEANS OF JUDICIAL ACTION, SUCH BORROWER'S
RIGHT TO PROCEED AGAINST THE OTHER BORROWER MIGHT BE LIMITED BY THE OPERATION OF
CCP SECTION 580 OR SIMILAR LAWS, IN WHICH CASE SUCH BORROWER MIGHT HAVE A
COMPLETE OR PARTIAL DEFENSE AGAINST PAYMENT.
NEVERTHELESS, SUCH BORROWER EXPRESSLY, KNOWINGLY AND
INTENTIONALLY WAIVES AND RELINQUISHES ANY AND ALL RIGHTS, DEFENSES OR BENEFITS
THE BORROWER MIGHT HAVE UNDER CCP SECTIONS 580(b) OR 580(d) OR SIMILAR LAWS.
(v) IN ADDITION, THE BORROWER WAIVES ALL RIGHTS AND
DEFENSES ARISING OUT OF AN ELECTION OF REMEDIES BY THE EXISTING LENDERS, EVEN
THOUGH THAT ELECTION OF REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT
TO SECURITY FOR A GUARANTEED OBLIGATION, HAS DESTROYED THE GUARANTOR'S RIGHTS OF
SUBROGATION AND REIMBURSEMENT AGAINST THE PRINCIPAL BY THE OPERATION OF CCP
SECTION 580, OR SIMILAR LAWS OR OTHERWISE.
(vi) SUCH BORROWER ALSO AGREES THAT THIS AGREEMENT WILL
REMAIN FULLY EFFECTIVE, AND SUCH BORROWER WILL BE LIABLE TO THE AGENT AND THE
EXISTING LENDERS FOR ANY OBLIGATIONS EVEN IF THE AGENT SELLS AN INTEREST IN REAL
PROPERTY BY JUDICIAL
67
<PAGE>
FORECLOSURE ACTION AND SUCH BORROWER'S RIGHTS AGAINST THE BORROWERS ARE LIMITED
BY THE OPERATION OF CCP SECTIONS 580b OR 580d OR SIMILAR LAWS.
(c) SUCH BORROWER AGREES THAT THE AGENT AND THE EXISTING
LENDERS SHALL BE UNDER NO OBLIGATION TO: MARSHAL ANY ASSETS IN FAVOR OF SUCH
PERSON, TO PROCEED FIRST AGAINST ANY OTHER PERSON OR ANY PROPERTY OF ANY OTHER
PERSON OR AGAINST ANY COLLATERAL, ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS
WITH RESPECT TO, OR SECURITY FOR, THE OBLIGATIONS, PURSUE ANY OTHER REMEDY IN
THE AGENT'S OR ANY EXISTING LENDER'S POWER THAT SUCH BORROWER MAY NOT BE ABLE TO
PURSUE ITSELF AND THAT MAY LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO WHICH
SUCH BORROWER HEREBY EXPRESSLY WAIVES.
EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE
A MATERIAL INDUCEMENT TO THE AGENT'S, THE CO-AGENTS' AND EACH EXISTING LENDER'S
ENTERING INTO THIS AGREEMENT AND THAT THE AGENT, THE CO-AGENTS AND EACH EXISTING
LENDER ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE DEALINGS WITH SUCH
BORROWER. EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE
FOREGOING WAIVERS WITH ITS LEGAL COUNSEL.
11.6. SUBROGATION. Each Borrower agrees that it shall have no right
of subrogation, contribution or reimbursement against the other Borrower until
the Obligations are paid in full. Each Borrower agrees upon making any payment
hereunder to be subrogated to the rights of the payee against the other Borrower
with respect to such payment or against any direct or indirect security
therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the
account of the other Borrower in respect thereof.
11.7. STAY OF ACCELERATION. In the event that acceleration of the
time for payment of any amount payable by either Borrower under this Agreement
is stayed upon insolvency, bankruptcy or reorganization of such Borrower, all
such amounts otherwise subject to acceleration under the terms of this Agreement
shall nonetheless be payable by the other Borrower hereunder forthwith on demand
by the Agent made at the request of the Majority Lenders.
ARTICLE XII
MISCELLANEOUS
12.1. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the Schedule for Notices attached hereto or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the Agent and the
68
<PAGE>
Borrowers. Each such notice, request or other communication shall be effective,
(i) if given by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received, (ii) if given
by mail, seventy-two (72) hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid or (iii) if given
by any other means, when delivered at the address specified in this Section;
PROVIDED, that notices to the Agent under ARTICLE II shall not be
effective until received.
12.2. ENTIRE AGREEMENT. The execution and delivery of this
Agreement and the other Loan Documents supersede all the negotiations or
stipulations concerning matters thereof which preceded or accompanied the
execution and delivery hereof and thereof. This Agreement, and the other Loan
Documents are intended, by the parties hereto and thereto, to be a complete and
exclusive statement of the terms and conditions hereof and thereof.
12.3. NO WAIVERS. No failure or delay by the Agent or any Lender in
exercising any right, power or privilege hereunder or under the other
Restructuring Documents shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
12.4. EXPENSES; INDEMNIFICATION.
(a) The Borrowers shall pay (i) all reasonable out-of-pocket
expenses of the Agent and the Steering Committee Lenders as a group, as such
group is constituted on the Closing Date (as set forth in the attached Schedule
12.4) and as such group may be reconstituted from time to time including
reasonable fees and disbursements of the Professionals retained by the Steering
Committee Lenders as a whole, in connection with the preparation and
administration of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder, (ii) if an Event
of Default occurs, all reasonable out-of-pocket expenses incurred by the Agent
and each Steering Committee Lender, or their Professionals, including the
reasonable fees and disbursements of counsel (including allocated costs of
internal counsel), in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom,
and (iii) all reasonable out-of-pocket legal fees and expenses of each Existing
Lender accruing from and after the Termination Date in connection with payment
of the Obligations.
(b) The Borrowers agree to indemnify the Agent and each
Existing Lender, their respective Affiliates and the respective directors,
officers, agents and employees of the foregoing (each an "Indemnitee") and hold
each Indemnitee
69
<PAGE>
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including the reasonable fees and disbursements of counsel
(including allocated costs of internal counsel), which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened (i) relating to or arising out of this Agreement or any
actual or proposed use of proceeds of Existing Loans hereunder or (ii) directly
or indirectly resulting from, arising out of, or based upon (x) the presence,
use, generation, manufacture, installation, release, discharge, storage or
disposal, at any time, of any Hazardous Materials on, under, in or about, or the
transportation of any such materials to or from, any Real Property or real
property owned, leased or operated by Borrower or any Affiliate of Borrower
(collectively, the "Subject Property") or (y) the violation or alleged violation
by Borrower or any Affiliate of Borrower of any law, statute, ordinance, order,
rule, regulation, permit, judgment or license relating to the use, generation,
manufacture, installation, release, discharge, storage or disposal of Hazardous
Materials to or from the Subject Property; PROVIDED, that no Indemnitee shall
have the right to be indemnified hereunder (a) for such Indemnitee's own gross
negligence or willful misconduct or (b) in the case of any Existing Lender, for
its failure to perform the duties expressly required to be performed by it by
the terms of this Agreement, in each case as determined by a court of competent
jurisdiction.
12.5. SET-OFF; SHARING UPON SET-OFF REDUCTIONS IN LIABILITY AND
CONVERSION EVENTS.
(a) In addition to any rights and remedies of the Existing
Lenders provided by law, the Existing Lenders each shall have a security
interest in any and all deposits of the Borrowers (general or special, time or
demand, provisional or final) at any time held by any Existing Lender which
security interest shall secure the Obligations. Upon the occurrence and during
the continuance of an Event of Default, provided that it has first received the
written consent of the Agent, without prior notice to the Borrowers (any such
notice being specifically waived by the Borrowers to the fullest extent
permitted by applicable law) each Existing Lender may set off and apply against
any Obligations, whether matured or unmatured, of the Borrowers to the Existing
Lenders, any amount owing from the Existing Lenders to the Borrowers. No
Existing Lender shall exercise any right of set-off it may have against any
Borrower or Guarantor in connection with the Obligations without the prior
written consent of the Agent. Each Existing Lender promptly shall notify the
Borrowers and the Agent after any such setoff and application made by any such
Existing Lender; PROVIDED, HOWEVER, that failure to give such notice shall
not affect the validity of such setoff and application. Provided that an Event
of Default described in either SECTION 9.1(f) or SECTION 9.1(g) has not
occurred, Bank of America National Trust and Savings Association expressly
agrees
70
<PAGE>
that it will not exercise set-off rights with respect to cash in the Cash
Management System for application against any Indebtedness, liabilities or other
obligations of any of the Borrowers, Guarantors or any Consolidated Subsidiaries
under any agreements, other than the Existing Agreements and the other
Restructuring Documents, excluding the T-Co Interim Credit Agreement. Any such
set-off rights will be subject to the Intercreditor Agreements.
(b) Each Existing Lender (other than (1) the Metra Lenders
solely with respect to the Metra Collateral and the Letter of Credit Fees under
the Metra Reimbursement Agreement, and (2) Citibank, N.A., Morgan Guaranty Trust
Company of New York and PNC Bank, N.A. with respect to Letter of Credit Fees
under the reimbursement agreements under which the NYCTA/PB/Metro North Letters
of Credit were issued) agrees that:
(i) to the extent that it shall receive or shall have
received or collect, in respect of any of the Obligations, any payment or
distribution of any cash or other property of any Borrower or any Guarantor at
any time, including by payment or distribution from any Borrower or any
Guarantor, by exercise of any right of set-off or counterclaim by liquidation of
Collateral, by reason of Conversion Events or Reductions in Liability, as a
distribution in a bankruptcy, insolvency or similar proceeding or otherwise, and
any such payment or distribution results in such Existing Lender's receiving or
having received more than it would otherwise be entitled to receive under
SECTIONS 2.10 or 2.11, such Existing Lender shall promptly deliver the same
to the Agent in cash or the form received (except for the endorsement or the
assignment of or by such Existing Lender where necessary), and subject to
SECTION 12.5(d), the Agent shall promptly distribute the same to all Existing
Lenders in the same manner as if it were a payment to be distributed pursuant to
SECTION 2.11 (and such payment shall be applied as provided in SECTION
2.10), including making a distribution to the Contingent Indebtedness Account
on account of the Existing Contingent Indebtedness and the Metra Obligations as
provided in SECTION 2.11(b), and until so delivered, the same shall be held in
trust by such Existing Lender as property of all Existing Lenders; and
(ii) to the extent that any payment or other transfer
made under this Agreement on account of the principal portion of any Obligations
shall be recovered (a "Returned Payment") from any Existing Lender pursuant to
any preference, fraudulent transfer of similar provision under any bankruptcy,
insolvency or similar law or otherwise, each other Existing Lender shall
purchase from such Existing Lender a participation in its Pro Rata Share of such
Returned Payment;
PROVIDED, that nothing in this Section shall impair the right of any Existing
Lender (other than Bank of America National Trust and Savings Association with
respect to the Cash Management
71
<PAGE>
System) to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of Indebtedness of a
Borrower other than its Existing Indebtedness; AND PROVIDED FURTHER, that
no Existing Lender shall be required to purchase any such participation pursuant
to this SECTION 12.5(b) because of a Reduction in Liability, except to the
extent such Existing Lender has, as determined pursuant to SECTION 2.12,
received amounts under this Agreement in excess of the amount that it is
otherwise entitled to receive under this Agreement.
(c) To the extent that any Existing Lender is required by the
provisions of SECTION 12.5(b) to purchase a participation in the Existing
Loans of one or more other Existing Lenders, such purchase shall be effected by
(i) the payment to the Agent by the Existing Lender making such purchase of the
amount required to be paid, and (ii) the Agent's distribution of the amount or
amounts required to be paid to the respective Existing Lender or Existing
Lenders from whom such purchase is required to be made. To the extent that any
Existing Lender is required by the provisions of SECTION 12.5(b) to purchase a
participation in the Existing Contingent Indebtedness or the Contingent
Obligations with respect to the Metra Reimbursement Agreement of one or more
other Existing Lenders, such purchase shall be effected by (x) the payment to
the Agent by the Existing Lender making such purchase of the amount required to
be paid, and (y) the Agent's distribution into the Contingent Indebtedness
Account pursuant to SECTION 2.11(b) of the amount or amounts required to be
paid for the account of the respective Existing Lender or Existing Lenders from
whom such purchase is required to be made; PROVIDED that funds held in the
Contingent Indebtedness Account may be applied by the Agent to effect the
purchase of a participation by Existing Lenders on whose behalf such funds are
held. Each Borrower agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in Existing
Indebtedness, whether or not acquired pursuant to the foregoing arrangements,
may exercise any rights of set-off or counterclaim and other rights with respect
to such participation as fully as if such holder of a participation were a
direct creditor of such Borrower in the amount of such participation.
(d) The Existing Lenders shall deliver to the Agent any
distributions of property other than cash (distributions of cash shall be
treated as provided in SECTION 12.5(b)) received from the Borrowers, the
Guarantors or their successors in interest on account of the Obligations in
connection with any recapitalization of the Borrowers (other than a
recapitalization in connection with any bankruptcy or insolvency proceeding)
that the Existing Lenders receive on account of the Obligations (other than the
Metra Lenders with respect to the Metra Collateral in connection with the Metra
Interim Credit Agreement). The Agent shall deposit such property with the
Collateral Agent and upon the liquidation of such property, such property shall
be
72
<PAGE>
distributed to the Existing Lenders as provided in SECTION 2.11 and applied to
the Obligations as provided in SECTION 2.10.
(e) Each Existing Lender agrees to the provisions of this
SECTION 12.5 on behalf of any assignee under its Existing Agreement or the
Metra Interim Credit Agreement.
12.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement or
the other Loan Documents other than the Warrants may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Borrowers, the Agent and the Majority Lenders; PROVIDED, that (i) the consent
of All Existing Lenders shall be required to amend, modify or waive any
provision relating to (a) a change in the amount or the time of payment of any
amount owing on any of the Existing Indebtedness, (b) a change in the rate
of interest or fees to be paid by the Borrowers with respect to any of the
Existing Indebtedness, (c) a change in the definitions of "All Lenders,"
"Conversion Event," "Exposure," "Liquidated Contingent Liability," "Majority
Lenders," "Metra Exposure Reduction," "Metra Final Accounting Date," "Metra
Reduction Equalization Event," "Non-Metra Exposure Reduction," "Pro Rata Share,"
"Pro Rata Share of Deferred Interest," "Reductions in Liability," or the
definitions referred to therein, (d) any change that subjects any Existing
Lender to any additional obligation, (e) this SECTION 12.6, SECTION 2.11,
SECTION 12.5(b), SECTION 12.20, or SECTION 12.22, (f) the release of any
Guarantor or any Borrower, (g) any change in the lien priorities created by, or
other material terms of, the Intercreditor Agreements, and (h) release of any
Collateral that is not identified in the Asset Disposition Program (for which
the consent of the Majority Lenders shall be required) or otherwise permitted to
be released in connection with the Loan Documents; (ii) any change in the
duties of or indemnities in this Agreement in favor of any Existing Lender or in
an Existing Lender's Pro Rata Share or Pro Rata Share of Deferred Interest shall
require the consent of such Existing Lender; and (iii) any change in the duties
of or indemnities in favor of the Agent shall require the consent of the Agent.
Notwithstanding anything to the contrary herein, the Agent and the Majority
Lenders may modify, amend, restate, supplement or waive any provision of
ARTICLE X, other than SECTION 10.13, without the consent of the Borrowers;
AND PROVIDED FURTHER that amendments or waivers of this Agreement are
subject to the Intercreditor Agreements.
12.7. EFFECT OF WAIVERS; MODIFICATION OF DOCUMENTS. The Agent's,
the Collateral Agent's or the Existing Lenders' failure, at any time or times,
to require strict performance by the Borrowers or any other Person of any
provision of this Agreement or any of the other Loan Documents shall not waive,
affect or diminish any right of the Agent, the Collateral Agent or the Existing
Lenders thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by the Agent, the Collateral Agent or the Existing Lenders
of a Default or Event of Default under this Agreement or any of the other Loan
73
<PAGE>
Documents, shall not suspend, waive or affect any other Default or Event of
Default under this Agreement or any of the other Loan Documents, whether the
same is prior or subsequent thereto and whether of the same or of a different
type. Subject to SECTION 12.20 and the Intercreditor Agreements, no waiver of
any provision of this Agreement or any other Loan Documents, nor consent to any
departure by the Borrowers, or any other person or entity therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Agent or the Majority Lenders or All Existing Lenders, as the case may be,
necessary to effectuate such waiver or consent and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
12.8. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that neither Borrower may assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of All
Existing Lenders.
(b) Prior to the earlier to occur of September 1, 1995, or the
consummation of the T-Co Transaction any Existing Lender may at any time grant
to one or more of the Existing Lenders (each a "Participant") participating
interests in or any or all of its Existing Indebtedness. After the earlier to
occur of September 1, 1995, or the consummation of the T-Co Transaction, any
Existing Lender may at any time grant a participating interest in its Existing
Indebtedness to any Person. In the event of any such grant by an Existing
Lender of a participating interest to a Participant, whether or not upon notice
to the Borrowers and the Agent, such Existing Lender shall remain responsible
for the performance of its obligations hereunder, and the Borrowers and the
Agent shall continue to deal solely and directly with such Existing Lender in
connection with such Existing Lender's rights and obligations under this
Agreement. Any agreement pursuant to which any Existing Lender may grant such a
participating interest shall provide that such Existing Lender shall retain the
sole right and responsibility to enforce the Obligations of the Borrowers
hereunder, including the right to approve any amendment, modification or waiver
of any provision of this Agreement. The Borrowers agree that each Participant
shall, to the extent provided in its participation agreement, be entitled to the
benefits of ARTICLE II with respect to its participating interest. An
assignment or other transfer which is not permitted by subsection (c) below
shall be given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) Prior to the earlier to occur of September 1, 1995, or the
consummation of the T-Co Transaction, any Existing
74
<PAGE>
Lender may at any time assign to one or more of the Existing Lenders (each an
"ASSIGNEE") all of its rights and obligations under this Agreement or its
Existing Agreements, as modified hereby or any part thereof, and such Assignee
shall assume such rights and obligations, pursuant to an assignment and
assumption agreement executed by such Assignee and such transferor Existing
Lender in substantially the form attached hereto as EXHIBIT C. After the
earlier to occur of September 1, 1995 or consummation of the T-Co Transaction,
any Existing Lender may at any time assign to any Person (each an "ASSIGNEE")
all of its rights and obligations under this Agreement or its Existing
Agreements, as modified hereby, or any part thereof, and such Assignee shall
assume such rights and obligations, pursuant to an assignment and assumption
agreement executed by such Assignee and such transferor Existing Lender in
substantially the form attached hereto as EXHIBIT C. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor
Existing Lender of an amount equal to the purchase price agreed to between such
transferor Existing Lender and such Assignee, such Assignee shall be deemed to
be an Existing Lender under this Agreement and shall have all of the rights and
obligations of an Existing Lender with a proportionate share of the transferor
Existing Lender's Pro Rata Share and Pro Rata Share of Deferred Interest, if
any, as set forth in such instrument of assumption, and the transferor Existing
Lender shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required.
(d) Notwithstanding anything to the contrary in the foregoing,
the assignment and transfer of rights and obligations of the Metra Lenders shall
also be subject to any conditions or limitations set forth in the Metra Interim
Credit Agreement and the Metra Reimbursement Agreement.
(e) Each Existing Lender agrees that it shall not assign all
or any portion of its interests under its Existing Agreements or the Metra
Interim Credit Agreement unless the assignee has agreed to be bound by SECTION
12.5.
12.9. HEADINGS AND CAPTIONS. The headings and captions used in this
Agreement and the other Restructuring Documents are solely for the purpose of
reference and are not to be considered as construing or interpreting the
provisions hereof or thereof.
12.10. INTERPRETATION. Neither this Agreement or the other
Restructuring Documents, nor any uncertainty or ambiguity herein or therein
shall be construed or resolved against the Agent, the Existing Lenders or the
Borrowers, whether under any rule of construction or otherwise. This Agreement
and the other Restructuring Documents have been reviewed by all the parties
hereto and thereto and shall be construed and interpreted according to the
ordinary meaning of the words used as to fairly accomplish the purposes and
intentions of all such parties.
75
<PAGE>
12.11. INCONSISTENCIES WITH OTHER DOCUMENTS. In the event there is a
conflict or inconsistency between this Agreement and the other Loan Documents,
FIRST the terms of the MKO/MKD Asset Pool Intercreditor Agreement shall
control and SECOND the terms of this Agreement shall control; PROVIDED,
HOWEVER, that any provision of the Security Documents which imposes additional
burdens on the Borrowers or further restricts the rights of the Borrowers or
gives the Existing Lenders additional rights shall not be deemed to be in
conflict or inconsistent with this Agreement and shall be given full force and
effect.
12.12. SEVERABILITY. If any portion of this Agreement, and the other
Loan Documents shall be judged by a court of competent jurisdiction to be
unenforceable, the remaining portions shall be valid and enforceable to the
extent that the remaining terms thereof provide for the grant of collateral
security for the Obligations under this Agreement, and the payment of principal
and interest on the Existing Loans substantially on the same terms and subject
to the same conditions as set forth herein and therein.
12.13. GOVERNING LAW. THIS AGREEMENT, AND THE OTHER LOAN DOCUMENTS,
UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
12.14. CONSENT TO JURISDICTION. THE BORROWERS HEREBY IRREVOCABLY
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
EXISTING AGREEMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE BORROWERS HEREBY IRREVOCABLY
CONSENT TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY
ACTION, CLAIM OR PROCEEDING BROUGHT BY THE AGENT OR ANY EXISTING LENDER IN
CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE EXISTING
AGREEMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF THEMSELVES AND THEIR
PROPERTY, IN THE MANNER SPECIFIED IN SECTION 12.1 (PROVIDED TELECOPY NOTICES
MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION 12.14 SHALL AFFECT
THE RIGHT OF THE AGENT OR ANY EXISTING LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY EXISTING
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWERS OR THEIR
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
12.15. WAIVER OF JURY TRIAL. THE AGENT, EACH EXISTING LENDER AND THE
BORROWERS EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE EXISTING
AGREEMENTS,
76
<PAGE>
ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.
12.16. CUMULATIVE REMEDIES. All rights and remedies provided in and
contemplated by this Agreement, and the other Restructuring Documents are
cumulative and not exclusive of any right or remedy otherwise provided herein,
therein, at law or in equity.
12.17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrowers set forth in this Agreement, and
the other Restructuring Documents and in any other certificate, opinion or other
statement provided at any time by or on behalf of the Borrowers in connection
herewith shall survive the execution of the delivery of this Agreement, and the
other Restructuring Documents and the payment of all Existing Loans and other
amounts due hereunder.
12.18. RELATIONSHIP OF THE PARTIES. Neither the Agent nor the
Existing Lenders shall be deemed partners or joint venturers with the Borrowers
or any Affiliate thereof in making this Agreement or by any action taken
hereunder.
12.19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
12.20. VOTING PRIOR TO METRA REDUCTION EQUALIZATION EVENT. Any vote
(a) after the T-Co Transaction has been consummated, at any time at which the
Metra Exposure Reduction exceeds the Non-Metra Exposure Reduction, with respect
to the following:
(i) the reduction in the amount or a postponement of the time
of payment of any amount owing on any of the Obligations,
(ii) the reduction of the rate of interest or fees to be paid
by the Borrowers with respect to any of the Obligations,
(iii) the release of any Guarantor or Borrower,
(iv) the release or subordination of any lien on any Collateral
that is not identified in the Asset Disposition Program,
(v) the conversion of all or any portion of the Obligations to
equity or some other form of property,
(vi) the sale, transfer, or other disposition of all or
substantially all of the capital stock or assets of a Guarantor or a Borrower,
or of a business unit or units of a Guarantor or a Borrower, other than assets
described in the Asset Disposition Program; and
(b) with respect to any instruction to the Collateral Agent to sell or
otherwise dispose of property (other than cash) received in
77
<PAGE>
connection with a recapitalization of any Borrower or any Guarantor, including
property received in connection with the events specified in subclauses (a)(v)
and (a)(vi) of this SECTION 12.20;
shall require the consent of All Existing Lenders, PROVIDED that if one Metra
Lender does not consent and all other Existing Lenders do consent, such vote
shall be deemed to be All Existing Lenders (i.e., if one Metra Lender does not
consent, the requisite vote will have been obtained and if two Metra Lenders do
not consent, the requisite vote will not have been obtained); PROVIDED
FURTHER that (x) no such action shall affect the rights or remedies of the
Metra Lenders with respect to the Metra Collateral or the right of the Metra
Lenders to recover all Obligations owing under the Metra Interim Credit
Agreement and related documents in accordance with the terms of the Metra
Interim Credit Facility and related documents from proceeds of the Metra
Collateral, and (y) any such action shall equally affect an amount of each
Existing Lender's Exposure equal to a common percentage of such Existing
Lender's Initial Exposure. The provisions of this SECTION 12.20 shall be
construed as applying only to any amendments, waivers or modifications to this
Agreement or of the rights and remedies of the Existing Lenders under this
Agreement or the other Loan Documents to the extent that both before and after
giving effect to such amendment, waiver or modification, the Non-Metra Exposure
Reduction does not exceed the Metra Exposure Reduction. This SECTION 12.20
shall not apply in a bankruptcy proceeding.
12.21. T-CO TERM SHEET. The parties hereto agree that by their
execution of this Agreement they agree to the terms contained in the T-Co Term
Sheet provided that such agreement shall not be construed as a commitment and is
subject to all the provisions set forth in the preamble to the T-Co Term Sheet.
12.22. PAYMENTS TO METRA LENDERS. Each Metra Lender hereby agrees,
for the benefit of each Existing Lender with any Obligations other than Metra
Obligations, that notwithstanding any provision of any writing to the contrary,
no Metra Lender shall be entitled to receive any payment or distribution at any
time in respect of any Metra Obligations (other than proceeds of the Metra
Collateral and Letter of Credit Fees) prior to the Metra Reduction Equalization
Event. If any such payments are received they shall be paid to the Agent
pursuant to SECTION 12.5.
12.23. AFFIRMATION OF PAYMENTS OF OBLIGATIONS. Nothing contained in
SECTIONS 2.10, 2.11 or 12.5, or any other provision of this Agreement, is
intended to or shall impair the obligations of the Borrowers and the Guarantors,
which are absolute and unconditional, to pay all amounts owing in respect of the
Obligations as and when the same shall become due and payable in accordance with
their terms.
78
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWERS: MORRISON KNUDSEN CORPORATION
(a Delaware corporation)
By /s/ D.L. BRIGHAM
----------------------------------
Name: D.L. Brigham
-------------------------------
Title: Vice President and Treasurer
------------------------------
MORRISON KNUDSEN CORPORATION
(an Ohio corporation)
By /s/ D.L. BRIGHAM
----------------------------------
Name: D.L. Brigham
-------------------------------
Title: Vice President and Treasurer
------------------------------
AGENT AND LENDERS:
MELLON BANK, N.A., as Agent and an Existing
Lender
By /s/ ALAN J. KOPOLOW
----------------------------------
Name: Alan J. Kopolow
-------------------------------
Title: Vice President
------------------------------
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
79
<PAGE>
LENDERS:
Bank of America National Trust CIBC Inc.
and Savings Association
By: /s/ ROBERT N. GREER
------------------------
By: /s/ HENRY V. YU Name: Robert N. Greer
------------------------ ----------------------
Name: Henry V. Yu Title: Vice President
---------------------- ---------------------
Title: Senior Vice President
---------------------- Citibank, N.A.
Bank of Montreal
By: /s/ BRADLEY I. DIETZ
------------------------
By: /s/ JAMES R. EASTER Name: Bradley I. Dietz
------------------------ ----------------------
Name: James R. Easter Title: Vice President
---------------------- ---------------------
Title: Account Manager
--------------------- Credit Lyonnais, Canada
The Bank of Nova Scotia
By: /s/ DANIEL ARPIN
------------------------
By: /s/ D.N. GILLESPIE Name: Daniel Arpin
------------------------ ----------------------
Name: D.N. Gillespie Title: Vice President, Corporate Banking
---------------------- ---------------------
Title: Assistant General Manager
---------------------
By: /s/ RITA FARLEY
------------------------
The Bank of Tokyo, Ltd., Name: Rita Farley
Seattle Branch ----------------------
Title: Manager, Corporate Banking
---------------------
By: /s/ M. TOMI
------------------------ Credit Lyonnais, New York Branch
Name: M. Tomi
----------------------
Title: General Manager By: /s/ DAVID BONINGTON
--------------------- ------------------------
Name: David Bonington
Banque Nationale de Paris ----------------------
Title: Vice President
---------------------
By: /s/ KATHERINE WOLFE
------------------------ Deutsche Bank AG,
Name: Katherine Wolfe Los Angeles Branch and/or Cayman
---------------------- Islands Branch
Title: Vice President
---------------------
By: /s/ PATRICIA E. APELIAN
------------------------
By: /s/ WILLIAM J. LATTERRAN Name: Patricia E. Apelian
------------------------ ----------------------
Name: William J. Latterran Title: Director
---------------------- ---------------------
Title: Assistant Vice President
---------------------
By: /s/ SILVIA SPEAR
Banque Paribas ------------------------
Name: Silvia L. Spear
----------------------
By: /s/ JOHN N. CATE Title: Director
------------------------ ---------------------
Name: John N. Cate
---------------------- The Hongkong and Shanghai
Title: G.V.P. Banking Corporation Limited
---------------------
By: /s/ G.W. MASER
By: /s/ ALAN E. McLINTOCK ------------------------
------------------------ Name: G.W. Maser
Name: Alan E. McLintock ---------------------
---------------------- Title: Vice President
Title: Regional General Manager --------------------
---------------------
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
80
<PAGE>
The Industrial Bank of Japan, San Paolo Bank SpA
Limited, Los Angeles Agency
By: /s/ DONALD W. BROWN
---------------------
By: /s/ KAZUTAKA KYOTO Name: Donald W. Brown
------------------------ -------------------
Name: Kazutaka Kyoto Title: Branch Manager
---------------------- ------------------
Title: SVP
---------------------
Key Bank of Idaho By: /s/ GLEN BINDER
---------------------
Name: Glen Binder
-------------------
Title: Vice President
------------------
By: /s/ BRET A. TINKER
------------------------
Name: Bret A. Tinker Society National Bank
----------------------
Title: Vice President
---------------------
The Long-Term Credit Bank of By: /s/ NANCY TERRILL
Japan, Ltd., Los Angeles Agency ------------------------
Name: Nancy Terrill
----------------------
Title: Vice President
---------------------
By: /s/ CURT M. BIREN Union Bank of Switzerland
------------------------
Name: Curt M. Biren
----------------------
Title: Vice President, Manager
---------------------
By: /s/ THOMAS G. JACKSON
------------------------
Morgan Guaranty Trust Company Name: Thomas G. Jackson
----------------------
Title: Managing Director
---------------------
By: /s/ D. LINDA SCHEUPLEIN
------------------------
Name: D. Linda Scheuplein By: /s/ PETER S. HUMBER
---------------------- ------------------------
Title: Vice President Name: Peter S. Humber
--------------------- ----------------------
Title: Vice President
---------------------
National Westminster Bank PLC
Westdeutsche Landesbank
Girozentrale, New York and
By: /s/ THEODORE P. NIKOLIS Cayman Islands Branches
------------------------
Name: Theodore P. Nikolis
----------------------
Title: Vice President and Counsel
---------------------
By: /s/ MICHAEL F. McWALTERS
------------------------
PNC Bank, N.A. Name: Michael F. McWalters
----------------------
Title: Managing Director
---------------------
By: /s/ THOMAS J. McCOOL
------------------------
Name: Thomas J. McCool By: /s/ CATHERINE RUHLAND
---------------------- ------------------------
Title: Senior Vice President Name: Catherine Ruhland
--------------------- ----------------------
Title: Associate
---------------------
Royal Bank of Canada
By: /s/ BRIAN W. DIXON
------------------------
Name: Brian W. Dixon
----------------------
Title: Senior Manager
---------------------
81
<PAGE>
EXHIBITS AND SCHEDULES
[The Registrant agrees to provide the Securities and Exchange
Commission, upon request, with copies of the Exhibits and Schedules
hereto.]
<PAGE>
Exhibit 4.4
Item 1.23
$25,000,000
CREDIT AGREEMENT
DATED AS OF
JULY 31, 1995,
AMONG
MORRISON KNUDSEN CORPORATION,
A DELAWARE CORPORATION,
AND
MORRISON KNUDSEN CORPORATION,
AN OHIO CORPORATION,
AS BORROWERS
THE BANKS AND OTHER FINANCIAL INSTITUTIONS LISTED HEREIN
AS LENDERS
AND
MELLON BANK, N.A.,
AS AGENT
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.................................................. 2
1.1. Definitions.................................................. 2
1.2. Accounting Terms and Determinations.......................... 17
1.3. General Construction......................................... 17
ARTICLE II AMOUNT AND TERMS OF THE LOANS................................ 17
2.1. The Loans.................................................... 17
2.2. Notice of Borrowing.......................................... 18
2.3. Notice to Lenders; Funding of Loans.......................... 18
2.4. Notes........................................................ 19
2.5. Maturity of Loans............................................ 20
2.6. Interest Rates............................................... 20
2.7. Optional Prepayments......................................... 20
2.8. Mandatory Prepayment......................................... 20
2.9. Application of Payments...................................... 21
2.10. General Provisions as to Payments............................ 21
2.11. Computation of Interest and Fees............................. 22
2.12. Cash Management System....................................... 22
ARTICLE III CHANGE IN CIRCUMSTANCES...................................... 22
3.1. Increased Cost............................................... 22
3.2. Taxes........................................................ 23
ARTICLE IV SECURITY..................................................... 24
4.1. The Borrowers' Obligations................................... 24
4.2. Further Assurances........................................... 24
ARTICLE V CONDITIONS PRECEDENT......................................... 24
5.1. Conditions Precedent to Effectiveness of Agreement........... 24
(a) Restructuring Documents................................ 25
(b) The Notes.............................................. 25
(c) The Letter of Credit................................... 25
(d) Legal Opinion of the Borrowers' Counsel................ 25
(e) Perfection and Priority of Personal Property Security
Interests.............................................. 25
(f) Consents............................................... 25
(g) Disbursement Authorization............................. 25
(h) Payment of Fees and Expenses........................... 25
(i) Pending and Threatened Litigation...................... 26
(j) The Restructuring...................................... 26
(k) Other Matters.......................................... 26
5.2. Conditions Precedent to All Loans............................ 26
(a) Borrowings............................................. 26
(b) Representations and Warranties......................... 26
(c) No Default or Event of Default......................... 26
(d) No Violations.......................................... 26
i
<PAGE>
(e) Certificate of Chief Financial Officer
Regarding the Budget....................................27
(f) Officer's Certificate.................................. 27
ARTICLE VI REPRESENTATIONS AND WARRANTIES............................... 27
6.1. Organization and Qualification............................... 27
6.2. Corporate Power and Authorization; Binding Effect............ 27
6.3. No Conflict.................................................. 28
6.4. No Consents.................................................. 28
6.5. Absence of Litigation........................................ 28
6.6. No Default under the Restructuring Documents................. 29
6.7. Correctness of Schedules..................................... 29
6.8. Correctness of Financial Information......................... 29
6.9. Security Documents........................................... 29
6.10. Taxes........................................................ 29
6.11. No Burdensome Restrictions................................... 30
6.12. Judgments.................................................... 30
6.13. Compliance with Laws......................................... 30
6.14. Compliance with ERISA........................................ 30
6.15. Governmental Authorizations; Permits, Licenses and
Accreditations; Other Rights................................ 30
6.16. Environmental Matters........................................ 31
6.17. No Material Adverse Effect................................... 31
6.18. Consolidated Subsidiaries; Subsidiaries...................... 31
6.19. Margin Securities............................................ 32
6.20. Investment Company Act....................................... 32
6.21. Business Locations and Trade Names........................... 32
6.22. Title to Real Property and Other Assets...................... 32
6.23. Labor Matters................................................ 32
6.24. No Misstatements............................................. 32
6.25. Restructuring................................................ 33
6.26. Cash Management System....................................... 33
ARTICLE VII AFFIRMATIVE COVENANTS........................................ 33
7.1. Financial Statements; Additional Reporting Requirements...... 33
7.2. Provision of Notices......................................... 35
7.3. Filing of Returns; Payment of Taxes.......................... 36
7.4. Maintenance of Existence..................................... 37
7.5. Compliance with Laws......................................... 37
7.6. Maintenance of Properties.................................... 37
7.7. Insurance.................................................... 37
7.8. Books and Records............................................ 38
7.9. Hazardous Materials.......................................... 38
7.10. Further Assurances........................................... 38
7.11. Inspection of Property, Books and Records.................... 38
7.12. Use of Proceeds.............................................. 39
7.13. Standstill Agreements........................................ 39
7.14. Cash Management System....................................... 39
ii
<PAGE>
ARTICLE VIII NEGATIVE COVENANTS..................................... 39
8.1. Indebtedness................................................. 39
8.2. Negative Pledge.............................................. 40
8.3. Prohibition of Fundamental Changes........................... 41
8.4. Prohibition on Sale of Assets................................ 41
8.5. Intentionally Omitted........................................ 42
8.6. Compliance with ERISA........................................ 42
8.7. Restricted Payments.......................................... 42
8.8. Transactions With Affiliates................................. 42
8.9. Intentionally Omitted........................................ 42
8.10. Operating Leases............................................. 42
8.11. Capital Expenditures......................................... 43
8.12. Amendment of Charter or Bylaws............................... 43
8.13. No Consent to Subordination.................................. 43
8.14. Intercompany Obligations..................................... 43
ARTICLE IX DEFAULTS..................................................... 43
9.1. Events of Default............................................ 43
9.2. The Lenders' Remedies........................................ 47
(a) Occurrence of A Special Event of Default............... 47
(b) Occurrence of A Standard Event of Default.............. 47
9.3. Other Remedies............................................... 48
9.4. Waivers by Borrowers......................................... 48
ARTICLE X THE AGENT.................................................... 49
10.1. Appointment.................................................. 49
10.2. Agent and Affiliates......................................... 49
10.3. Retention of Documents and Information to the Lenders........ 49
10.4. Delegation of Duties......................................... 49
10.5. Limitation of Liability...................................... 49
10.6. Reliance by the Agent........................................ 50
10.7. Notice of Default............................................ 51
10.8. Non-Reliance on the Agent and the Other Lenders.............. 51
10.9. Collateral................................................... 51
10.10. Indemnification.............................................. 52
10.11. Agent in its Individual Capacity............................. 52
10.12. Successor Agent.............................................. 52
10.13. Applicability of Section to the Borrowers.................... 53
10.14. Authorization to Agent to Enter Into and Abide By Five-Party
Agreement.................................................... 53
ARTICLE XI JOINT AND SEVERAL LIABILITY.................................. 53
11.1. Joint and Several Liability.................................. 53
11.2. The Guarantees............................................... 54
11.3. Guarantees Unconditional..................................... 54
11.4. Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances................................................ 55
11.5. Waivers by the Borrowers..................................... 55
11.6. Subrogation.................................................. 56
11.7. Stay of Acceleration......................................... 56
iii
<PAGE>
ARTICLE XII MISCELLANEOUS................................................ 56
12.1. Notices...................................................... 56
12.2. Entire Agreement............................................. 56
12.3. No Waivers................................................... 56
12.4. Expenses; Indemnification.................................... 57
12.5. Set-Off; Sharing of Set-Offs................................. 58
12.6. Amendments and Waivers....................................... 59
12.7. Effect of Waivers; Modification of Documents................. 59
12.8. Successors and Assigns....................................... 60
12.9. Headings and Captions........................................ 61
12.10. Interpretation............................................... 61
12.11. Inconsistencies With Other Documents......................... 61
12.12. Severability................................................. 61
12.13. GOVERNING LAW................................................ 61
12.14. CONSENT TO JURISDICTION...................................... 61
12.15. WAIVER OF JURY TRIAL......................................... 62
12.16. Cumulative Remedies.......................................... 62
12.17. Survival of Representations and Warranties................... 62
12.18. Relationship of the Parties.................................. 62
12.19. Counterparts................................................. 62
12.20. T-Co Term Sheet.............................................. 62
iv
<PAGE>
EXHIBITS AND SCHEDULES
EXHIBIT A FORM OF PROMISSORY NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C BUDGET
EXHIBIT D T-CO TERM SHEET
EXHIBIT E FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
SCHEDULE A SCHEDULE OF LENDERS
SCHEDULE B PART 1: SCHEDULE OF THE EXISTING LENDERS
SCHEDULE B PART 2: EXISTING AGREEMENTS
SCHEDULE C SCHEDULE OF DOCUMENTS
SCHEDULE D SCHEDULE FOR NOTICES
SCHEDULE E CASH MANAGEMENT SYSTEM
SCHEDULE 6.5 SCHEDULE OF PENDING AND THREATENED LITIGATION
SCHEDULE 6.12 SCHEDULE OF JUDGMENTS
SCHEDULE 6.14 SCHEDULE OF MULTIEMPLOYER PLAN WITHDRAWAL LIABILITY
SCHEDULE 6.17 SCHEDULE OF MATERIAL ADVERSE EFFECTS
SCHEDULE 6.18 SCHEDULE OF SUBSIDIARIES
SCHEDULE 6.21A SCHEDULE OF EACH BORROWER'S BUSINESS LOCATIONS
SCHEDULE 6.21B SCHEDULE OF EACH BORROWER'S TRADE NAMES
SCHEDULE 7.1(k) BACKLOG CERTIFICATE
SCHEDULE 7.2(c)(A) SCHEDULE OF REPORTABLE EVENTS
SCHEDULE 7.2(c)(B) SCHEDULE OF PLAN TERMINATIONS
SCHEDULE 8.1 SCHEDULE OF EXISTING INDEBTEDNESS
SCHEDULE 8.2 SCHEDULE OF PERMITTED LIENS
SCHEDULE 8.5 SCHEDULE OF PERMITTED INVESTMENTS
SCHEDULE 8.10 SCHEDULE OF OPERATING LEASES
SCHEDULE 12.4 SCHEDULE OF STEERING COMMITTEE LENDERS
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of July 31, 1995,
is entered into among MORRISON KNUDSEN CORPORATION ("MKD"), a Delaware
corporation, and MORRISON KNUDSEN CORPORATION ("MKO"), an Ohio corporation (each
a "Borrower," and collectively, the "Borrowers"), the banks and other financial
institutions named on SCHEDULE A hereto (the "Schedule of Lenders") and whose
signatures appear on the signature pages hereto (each, together with its
successors and assigns, a "Lender," and collectively, the "Lenders"), and Mellon
Bank, N.A., as agent for the Lenders (in such capacity, the "Agent").
The parties hereto agree as follows:
RECITALS
A. MKO and MKD have obligations (funded, contingent or otherwise) in
excess of $521,600,000 (the "Existing Indebtedness") to certain lenders or their
predecessors in interest (the "Existing Lenders") pursuant to the terms of the
respective loan agreements and other financing arrangements set forth on the
Schedule of the Existing Lenders attached hereto as SCHEDULE B (the "Existing
Agreements").
B. The Borrowers are entering into that certain Amended and Restated
Credit Agreement of even date herewith (the "Bridge Loan Agreement"), pursuant
to which certain of the Existing Lenders (the "Bridge Loan Lenders") are
continuing to make loans and other financial accommodations available to the
Borrowers (the "Bridge Loan").
C. The Borrowers are currently indebted to Fidelity and Deposit Company
of Maryland and Colonial American Casualty and Surety Company and certain other
sureties for payment and/or performance bonds.
D. The Borrowers have requested, and the Lenders, the Existing Lenders,
Fidelity and Deposit Company of Maryland, and Colonial American Casualty and
Surety Company have agreed to, a restructuring of the Existing Indebtedness and
the Bridge Loan, the establishment of an interim credit facility to finance the
operations required in connection with the Metra Contract, (as hereinafter
defined) (the "Metra Transaction"), and the establishment of an as yet
unformed and unnamed limited liability company ("T-Co"), as contemplated by the
terms of the T-Co Term Sheet (as hereinafter defined) (the "T-Co Transaction").
The Borrowers anticipate that T-Co will be formed by September 1, 1995, and that
prior to such formation, certain of the Lenders will advance funds to MKO's
transit division (the "Transit Division") pursuant to various credit facilities
as set forth in the T-Co Term Sheet. The restructuring of the Existing
1
<PAGE>
Indebtedness, the Bridge Loan, the Metra Transaction, and the Interim T-Co
Transaction (as defined below) shall collectively be referred to as the
"Restructuring."
E. In connection with the Restructuring, the Borrowers have requested
that the Lenders provide loans to the Transit Division to be used solely for
financing of Non-Metra Transit Expenditures (as defined below) (the "Interim
T-Co Transaction"). The full amount of the loans being provided under this
Agreement is being guaranteed by the Bonding Company, and such guaranty is being
backed by a letter of credit. Pursuant to the Five Party Agreement (as defined
below), the Bonding Company is being given certain rights with regard to this
Agreement.
F. The Lenders are willing to agree to the above requests on the terms
and conditions set forth herein and in the documents executed in connection
herewith, including the condition that MKO secure the Borrowers' Obligations
under this Agreement with the Collateral described in the Security Agreement (as
defined below).
In consideration of the foregoing, MKD, MKO, the Agent and each of the
Lenders hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Additional Capital Expenditure Indebtedness" has the meaning
assigned to it in SECTION 8.1(e).
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. As used herein, the term "control" means possession, directly
or indirectly, or the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agent" means Mellon Bank, N.A., in its capacity as agent for
the Lenders hereunder, and its successors in such capacity.
"All Lenders" means one hundred percent (100%) of the Lenders
listed on SCHEDULE A without regard to their Pro Rata Share.
"Assignee" has the meaning assigned to it in SECTION 12.8(c).
2
<PAGE>
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multi-employer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Bonding Company" means, collectively, Fidelity and Deposit
Company of Maryland and Colonial American Casualty and Surety Company or any
such other Person that provides the Borrowers or their Subsidiaries with payment
or performance bonds.
"Bonding Company Reimbursement Agreement" means that certain
Indemnification and Reimbursement Agreement dated as of July 31, 1995 among the
Borrowers and the Bonding Company.
"Borrower" means MKD or MKO and the "Borrowers" means both of
the foregoing.
"Borrowing" means a borrowing consisting of Loans made on the
same day.
"Bridge Loan" has the meaning assigned to it in RECITAL B.
"Bridge Loan Agreement" has the meaning assigned to it in
RECITAL B.
"Bridge Loan Lenders" has the meaning assigned to it in RECITAL
B.
"Budget" means the projections of the Borrowers for the period
from July 1, 1995 through the Termination Date attached hereto as EXHIBIT C or
such other budget submitted by the Borrowers and accepted by the Majority
Lenders and the Bonding Company as an acceptable substitute Budget.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banks in New York, New York, Los Angeles, California or
Pittsburgh, Pennsylvania are authorized by law to close.
"Capital Expenditures" means, as to any Person, any expenditures
for the acquisition or construction of fixed assets which would be capitalized
on a balance sheet of such Person prepared in accordance with Generally Accepted
Accounting Principles.
"Capital Lease" means, as to any Person, any lease of property
by such Person as lessee which would be capitalized on a balance sheet of such
Person prepared in accordance with Generally Accepted Accounting Principles.
"Cash Equivalent" means, at any time, (a) United States of
America government securities having a maturity not
3
<PAGE>
exceeding one year from the date acquired, (b) commercial paper rated at least
A-l+ by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc.,
having a maturity not exceeding one year from the date acquired, (c)
certificates of deposit or time deposits of commercial banks with capital and
undivided surplus of at least $300,000,000 issuing commercial paper rated as
described in the preceding clause (b) and organized and existing under the laws
of the United States or any State thereof or the District of Columbia, having a
maturity not exceeding one year from the date acquired, and (d) time deposits
(of one year or less) and demand deposits with any FDIC insured bank, not
exceeding the maximum amount insured thereby.
"Cash Management System" means the Cash Management System set
forth on SCHEDULE E.
"Closing Date" means July 31, 1995, or such other later date on
which the Agent shall have determined that all conditions precedent set forth in
ARTICLE V have been satisfied in full or waived.
"Collateral" means collectively, all personal property and
interests in such property and proceeds thereof, presently owned or hereafter
created or acquired by MKO or MKD in which a security interest is granted in
favor of the Collateral Agent for the benefit of the Lenders to secure the
Obligations.
"Collateral Agent" means the entity or person serving as the
"Collateral Agent" under and as defined in the Collateral Agent Agreement, in
its capacity as agent for the Lenders, or any successor agent pursuant to the
terms thereof.
"Collateral Agent Agreement" means the Collateral Agent
Agreement dated as of July 31, 1995, among the Lenders, the Agent and the
Collateral Agent.
"Commitment" means, with respect to each Lender, the amount set
forth opposite the name of such Lender on the Schedule of Lenders as such
Lender's commitment.
"Commonly Controlled Entity" means a Person which is under
common control with a Borrower within the meaning of Section 414(b) or Section
414(c) of the Internal Revenue Code.
"Concentration Account" has the meaning assigned to it in
SCHEDULE E.
"Consolidated," when used with respect to any of the terms
defined herein, refers to such terms as reflected in a consolidation of the
accounts or other items of the Borrowers and of the accounts or other items of
the Borrowers' Subsidiaries, if any, in conformity with Generally Accepted
Accounting Principles.
4
<PAGE>
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be Consolidated in accordance with
Generally Accepted Accounting Principles with those of the Borrowers in their
Consolidated financial statements if such statements were prepared as of such
date; PROVIDED, that any Consolidated Subsidiary which ceases to be a
Consolidated Subsidiary solely because it is classified as a discontinued
operation shall be deemed to be a Consolidated Subsidiary so long as it remains
a Subsidiary.
"Contingent Obligations" means, as to any Person, collectively,
all Indebtedness, obligations or other liabilities of such Person guarantying or
in effect guarantying the payment or performance of any Indebtedness, obligation
or other liability, whether or not contingent (collectively, the "primary
obligations"), of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including any Indebtedness, obligation or other
liability of such Person (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) with regard to any contingent
reimbursement obligation of such Person in respect of any letter of credit or
any other financing accommodations, or (e) otherwise to assure or hold harmless
the owner of such primary obligation against loss with respect thereto.
"Contractual Obligation" means, as to any Person, collectively,
any Indebtedness, obligation or other liability of such Person (whether for the
payment of money or otherwise), now existing or hereafter arising, whether due
or not due, absolute or contingent, liquidated or unliquidated, direct or
indirect, express or implied, individually or jointly with others, pursuant to
the provisions of any security issued by such Person or any document, instrument
or agreement to which such Person is a party or by which such Person or any of
its property is or may be bound or affected.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Default Rate" means a rate of interest equal to the Prime Rate
plus two percent (2%) per annum, PROVIDED, that to the extent the Default Rate
exceeds the Maximum Lawful Rate, the Default Rate shall be a rate equal to the
Maximum Lawful Rate.
5
<PAGE>
"Deposit Bank" has the meaning assigned to it in
SCHEDULE E.
"Environmental Laws" means all Federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any applicable judicial
or administrative interpretation thereof relating to the disposal of waste and
the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601 ET
SEQ.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49
U.S.C. Sections 1801 ET SEQ.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. Sections 136 ET SEQ.); the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901 ET SEQ.)
("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. Sections 2601
ET SEQ.); the Clean Air Act, as amended (42 U.S.C. Sections 7400 ET SEQ.); the
Federal Water Pollution Control Act, as amended (33 U.S.C. Sections
1251 ET SEQ.); the Occupational Safety and Health Act, as amended (29 U.S.C.
Sections 651 ET SEG.) ("OSHA"); and the Safe Drinking Water Act, as amended
(42 U.S.C. Sections 300(f) ET SEQ.); and any and all regulations promulgated
thereunder, and all analogous state and local counterparts or equivalents and
any transfer of ownership notification or approval statutes.
"Equipment Asset Pool Intercreditor Agreement" means an
Intercreditor and Subordination Agreement that may be entered into by and among
Fidelity and Deposit Company of Maryland and Colonial American Casualty and
Surety Company, Mellon Bank, N.A. as agent and collateral agent for itself and
the other Bridge Loan Lenders and Mellon Bank, N.A., as agent and collateral
agent for itself and the other Existing Lenders. (Nothing in this Agreement
shall imply that any party is obligated to enter into the Equipment Asset Pool
Intercreditor Agreement and each party shall decide, in its sole and absolute
discretion, whether to enter into such an agreement.)
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Borrowers and their Subsidiaries and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrowers or any of their Subsidiaries, are treated as a single employer under
Section 414 of the Internal Revenue Code.
"Event of Default" has the meaning set forth in SECTION 9.1.
6
<PAGE>
"Existing Agreements" has the meaning assigned to it in RECITAL
A; PROVIDED that, unless the context otherwise requires, all references to
Existing Agreements shall be references to the Existing Agreements as modified
by the Override Agreement.
"Existing Indebtedness" has the meaning assigned to it in
RECITAL A.
"Existing Lenders" has the meaning assigned to it in RECITAL
A.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; PROVIDED, that (i) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if no such rate is so published on such next succeeding
Business Day, then the Federal Funds Rate for such day shall be the average rate
quoted to Mellon Bank, N.A. on such day on such transactions as determined by
the Agent.
"Financing Shortfall" means the amounts set forth on the Budget
as "Financing Shortfall."
"Financing Statements" means any Uniform Commercial Code
financing statement on form UCC-1 or a comparable form executed pursuant to the
provisions of this Agreement or any of the other Loan Documents or any such
similar statement to be filed in Canada.
"Five Party Agreement" means that certain Five Party Agreement
dated as of July 31, 1995 among the Borrowers, the Bonding Company and the
Agent.
"Form 10-K" means the annual report on Form 10-K as filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934.
"Form 10-Q" means the report on Form 10-Q as filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Generally Accepted Accounting Principles" means accounting
principles that are generally accepted and consistently applied and maintained
throughout the period indicated and that are consistent with the prior financial
practices of the Borrowers, except for changes mandated by the
7
<PAGE>
Financial Accounting Standards Board or any similar accounting authority of
comparable standing.
"Governmental Authority" means any nation, province, state or
other political subdivision thereof, any government or any natural person or
entity exercising executive, legislative, regulatory or administrative functions
of or pertaining to government.
"Guarantor" means the Bonding Company and each other Person that
has executed or hereafter executes a guaranty or a support, put or other similar
agreement in favor of Agent or Lenders in connection with this Agreement.
"Guaranty" means the Guaranty Agreement of even date herewith
made by the Bonding Company in favor of Agent for the benefit of the Lenders.
"Hazardous Materials" means (i) any substance, material or
waste, which is either (a) defined as, (b) included in the definition, listing
or identification of, or (c) otherwise regulated as, a "solid waste," "hazardous
waste," "hazardous material," "hazardous substance," "extremely hazardous waste"
or "restricted hazardous waste" or other similar term or phrase under any
Environmental Laws, or (ii) petroleum or any fraction or by-product thereof,
asbestos, polychlorinated biphenyls, or radioactive substances.
"Indebtedness" of any Person means without duplication, any
obligation of such Person for borrowed money, including (a) any obligation of
such Person evidenced by bonds, debentures, notes or other similar debt
instruments, (b) any obligation of such Person for the deferred purchase price
of any property or services, except trade accounts payable of such Person with a
maturity of not greater than 90 days incurred in the ordinary course of such
Person's business, (c) any obligation of such Person as lessee under a Capital
Lease, (d) Contingent Obligations, (e) any reimbursement obligation in respect
of any letter of credit or any other financing accommodations, and (f) any
obligation for borrowed money which is non-recourse to such Person but which is
secured by a Lien on any asset of such Person.
"Intercreditor Agreements" means the Transit Division
Intercreditor Agreement, the Equipment Asset Pool Intercreditor Agreement and
the MKO/MKD Asset Pool Intercreditor Agreement.
"Interim T-Co Transaction" has the meaning assigned to it in
RECITAL E.
"Internal Revenue Code" means the Internal Revenue Code of 1986,
as amended, or any successor statute.
8
<PAGE>
"Investments" has the meaning assigned to it in SECTION 8.5.
"Lender" and "Lenders" have the meanings assigned to them in the
preamble hereto, and shall include the Agent, in its individual capacity.
"Letter of Credit" means the Letter of Credit supporting the
obligations under the Guaranty from a lending institution acceptable to All
Lenders and in form and substance satisfactory to All Lenders with an expiry
date satisfactory to All Lenders.
"Lien" means, as to any asset, (a) any lien, charge, claim,
mortgage, security interest, pledge or other encumbrance of any kind with
respect to such asset, (b) any interest of a vendor or lessor under any
conditional sale agreement, Capital Lease or other title retention agreement
relating to such asset, (c) any reservation, exception, encroachment, easement,
right-of-way, covenant, condition, restriction, lease or other title exception
affecting such asset, or (d) any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction other than a precautionary
financing statement with respect to a lease that is not in the nature of a
security interest).
"Loan" and "Loans" have the meanings assigned to them in
SECTION 2.1.
"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Guaranty, the Collateral Agent Agreement, the Intercreditor
Agreements, the Five Party Agreement, and any other of those documents listed on
the Schedule of Documents and therein specified to be executed and delivered, or
caused to be executed and delivered, by the Borrowers or the Bonding Company to
the Agent, the Lenders or the Collateral Agent in connection with this
Agreement; PROVIDED, that the Existing Agreements and related documents, the
Bridge Loan Agreement and related documents, the Override Agreement and related
documents, the Metra Letter of Credit and related documents, and the Metra
Interim Credit Agreement and related documents shall not be included in the
definition of Loan Documents.
"Majority Lenders" means the Lenders holding at least sixty six
and two-thirds percent (66 2/3%) of the Pro Rata Shares.
"Material Adverse Effect" means a material adverse effect on (a)
the business, assets, operations, prospects or
9
<PAGE>
financial or other condition of any Borrower or any of its Consolidated
Subsidiaries; (b) the ability of any Borrower or its Consolidated Subsidiaries
to pay or perform the Obligations under the Loan Documents in accordance with
the terms thereof; (c) the Collateral or the Collateral Agent's Liens on the
Collateral or the priority of any such Lien; or (d) the Lenders' rights and
remedies under any Loan Documents or the other Restructuring Documents.
"Material Contract" means, as to the Borrowers or their
Consolidated Subsidiaries, a Contractual Obligation (a) the cancellation,
non-performance or non-renewal of which by any party thereto could have or
result in a Material Adverse Effect on the Borrowers or the Borrowers and their
Consolidated Subsidiaries taken as a whole or (b) which involves amounts,
payments or Indebtedness in excess of $10,000,000.
"Maximum Lawful Rate" means the highest rate of interest
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable under this Agreement.
"Metra" means the Commuter Rail Division of the Regional
Transportation Authority, d/b/a Metra/Metropolitan Rail.
"Metra Contract" means that certain contract, as amended,
executed as of March 9, 1992, by and between Metra and MKO.
"Metra Interim Credit Agreement" means that certain Revolving
Credit Agreement dated as of July 31, 1995, among MKO, Bank of America National
Trust and Savings Association, as agent, and the financial institutions named
therein as lenders.
"Metra Lenders" means the banks under the Metra Interim Credit
Agreement in their capacity as banks under the Metra Interim Credit Agreement
and issuers of the Metra Letter of Credit.
"Metra Letter of Credit" means that certain letter of credit, as
amended and issued by Bank of America National Trust and Savings Association for
the benefit of Metra and for the account of MKO in connection with the Metra
Contract.
"Metra Transaction" has the meaning assigned to it in RECITAL
D.
"MKD" means Morrison Knudsen Corporation, a Delaware
corporation, and its successors.
"MKO" means Morrison Knudsen Corporation, an Ohio corporation,
and its successors.
10
<PAGE>
"MKO/MKD Asset Pool Intercreditor Agreement" means that certain
Intercreditor and Subordination Agreement, dated as of July 31, 1995, by and
between Mellon Bank, N.A., as agent and collateral agent for itself and the
other Bridge Loan Lenders and Mellon Bank, N.A., as agent and collateral agent
for itself and certain Existing Lenders under the Override Agreement.
"MK Rail" means MK Rail Corporation, a Delaware corporation.
"MK Rail Global Settlement Agreement" means the Global
Settlement Agreement dated as of June 15, 1995, by and among MKO, MK Rail and
MKD.
"MK Rail Note" means that certain Note dated June 26, 1995,
issued by MK Rail Corporation in favor of MKO in the amount of $52,200,000,
which Note was issued pursuant to the MK Rail Global Settlement Agreement.
"Multi-employer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Multiparty Agreement" means that certain agreement between the
Bonding Company, Borrowers and Mellon Bank, N.A., as collateral agent under the
Bridge Loan Agreement, dated as of April 11, 1995, as amended on April 25, 1995,
May 31, 1995, June 7, 1995 and July 31, 1995.
"Net Cash Proceeds" means, with respect to either the sale or
refinancing of any asset of any Borrower or any Consolidated Subsidiary, all
amounts payable to such Borrower or such Consolidated Subsidiary as a result of
such transaction after payment of (i) all reasonable and customary closing
costs, including brokerage commissions, appraisal fees, recording fees,
attorneys' fees, title insurance premiums, inspection report charges, prepayment
penalties payable to senior lienholders, escrow credits in favor of the
purchaser or financier, customary prorations, transfer and other taxes, escrow
fees, points and other loan fees, and (ii) Indebtedness secured by Senior
Permitted Liens on such asset.
"Non-Metra Contracts" means all contracts with customers of the
Transit Division other than the Metra Contract.
"Non-Metra Transit Expenditures" means direct costs, indirect
costs, and allocated overhead (allocated 71.1% to the Non-Metra Contracts and
28.9% to the Metra Contract) for the Non-Metra Contracts; PROVIDED, HOWEVER,
that allocated overhead shall not include "401(k) and SERP" expenses, "Legal and
Audit
11
<PAGE>
Services", "Professional and Consulting Services" and "Audit Services",
"Professional and Consulting Services" and "Other Outside Services", as those
terms are used in the 1995 Proposed Overhead Budget attached as an exhibit to
the Multi-Party Agreement.
"Notes" means promissory notes of a Borrower, substantially in
the form of EXHIBIT A hereto, evidencing the obligation of such Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Acceleration" means a written notice sent to the
Borrowers pursuant to SECTION 9.2, accelerating the Obligations.
"Notice of Borrowing" has the meaning assigned to it in SECTION
2.2.
"Obligations" means, as to each Borrower, collectively, all
liabilities of the Borrowers, arising in connection with or pursuant to the
provisions of this Agreement, the Notes, or the other Loan Documents, owing to
the Agent or the Lenders of any kind and description, now existing or hereafter
arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, direct or indirect, express or implied, individually or jointly
with others, howsoever evidenced or acquired (including, without limitation, any
interest which accrues on any such amounts after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of any Borrower, whether or not allowed or allowable as a claim
in any such proceeding) including the payment and performance of all
Indebtedness, obligations and other liabilities of such Borrower and overdraft
coverage and account funding obligations in connection with the Cash Management
System, arising in connection with or pursuant to the provisions of this
Agreement, the Notes or the other Loan Documents; PROVIDED, HOWEVER, the
Obligations shall not include any Indebtedness, obligations or other liabilities
arising under the Existing Agreements and related documents, the Bridge Loan
Agreement and related documents, the Override Agreement and related documents,
the Metra Letter of Credit and related documents, or the Metra Interim Credit
Agreement and related documents.
"Operating Lease" means, as to any Person, any lease of property
(whether real, personal or mixed) by such Person as lessee which is not a
Capital Lease.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies,
which arise from any payment made pursuant to this Agreement or under any Note
or from the execution or delivery of, or otherwise with respect to, this
Agreement or any Note.
12
<PAGE>
"Override Agreement" means that certain Override Agreement dated
as of July 31, 1995, among the Borrowers, the Existing Lenders, and Mellon Bank,
N.A., as Agent for the Existing Lenders restructuring the Existing Indebtedness,
as the same may be amended, modified, supplemented and restated from time to
time.
"Parent" means, with respect to any Lender, any Person
controlling such Lender directly or indirectly.
"Participant" has the meaning set forth in SECTION 12.8(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means, collectively, those certain Liens, in
existence on the date hereof, described in SCHEDULE 8.2 and as permitted under
SECTION 8.2.
"Person" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, Governmental
Authority or any other form of entity not specifically listed herein.
"Plan" means at any time an employee pension benefit plan (other
than a Multi-employer Plan) which is covered by Title IV of ERISA or subject to
the minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means, for any day, a rate per annum equal to the
higher of (i) the rate of interest publicly announced by Mellon Bank, N.A. from
time to time as its Prime Rate for such day and (ii) the sum of the Federal
Funds Rate for such day plus one half of one percent (.50%).
"Professionals" means, collectively, all attorneys, accountants,
paraprofessionals, appraisers, auditors, inspectors, engineers, title insurance
companies, and environmental experts employed, retained, or internally used by
each of the Steering Committee Lenders or the Agent in connection with the
Borrowers' performance of their Obligations or in asserting any of the Agent's
and Lenders' rights or remedies under this Agreement.
13
<PAGE>
"Pro Rata Share" means, with respect to each Lender, the
percentage set forth opposite the name of such Lender on the Schedule of
Lenders, as such Lender's pro rata share.
"Real Property" means all of the right, title and interest of
any Borrower in and to land, improvements and fixtures (to the extent interests
therein arise under the real property law of the jurisdiction where located).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Reportable Event" means any of the events set forth under
Section 4043(b) of ERISA or the PBGC regulations thereunder for which notice to
the PBGC has not been waived by applicable law or administrative guidance.
"Requirement of Law" means, as to any Person, collectively, (a)
the partnership agreement, certificate of incorporation, bylaws or other
organizational or governing documents of such Person; (b) any Federal, state or
local law, treaty, ordinance, rule or regulation; and (c) any order, decree or
determination of a court, arbitrator or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Restructuring" has the meaning assigned to it in RECITAL D.
"Restructuring Documents" means this Agreement, the Notes, the
Security Agreement, the Guaranty, the Collateral Agent Agreement, the Override
Agreement, the Warrants, the Securities Purchase Agreement, the Intercreditor
Agreements, the Metra Interim Credit Agreement, the Bridge Loan Agreement, the
Security Agreement dated as of the date hereof between MKO and Morgan Guaranty
Trust Company of New York, the Acknowledgement and Assumption Agreement by MKO
dated as of the date hereof, and any other of those documents listed on the
Schedule of Documents and therein specified to be executed and delivered, or
caused to be executed and delivered, by the Borrowers, the Consolidated
Subsidiaries or the Bonding Company, or any other Person in connection with the
Restructuring.
"Schedule for Notices" means the schedule annexed as SCHEDULE
D hereto, listing the name, address and wiring instructions for each Lender.
"Schedule of Documents" means the schedule annexed as SCHEDULE
C hereto, listing those documents to be delivered in connection with the
closing of the transactions contemplated by this Agreement and the other
Restructuring Documents.
14
<PAGE>
"Schedule of Lenders" means the schedule annexed as SCHEDULE A
hereto, listing the name of each Lender, such Lender's Commitment, and such
Lender's Pro Rata Share.
"Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of July 31, 1995 by and among MKD, the banks and
other financial institutions named therein and Mellon Bank, N.A., as agent.
"Security Agreement" means the Pledge and Security Agreement
dated as of July 31, 1995, executed by MKO in favor of the Collateral Agent, on
behalf of the Lenders and the Agent, granting a security interest in the
personal property collateral described therein.
"Security Documents" means the Security Agreement, the Guaranty,
the Financing Statements and all documents, instruments and agreements now or
hereafter executed or delivered pursuant thereto or in connection therewith.
"Senior Permitted Liens" means any Permitted Lien that is senior
to the Lien of the Collateral Agent on any Collateral.
"Ship Mortgage" means the First Preferred Mortgage dated as of
April 11, 1995, as subsequently amended, executed by MKO in favor of Mellon
Bank, N.A. as "Mortgage Trustee" under and as defined in the Collateral Agent
Agreement, with respect to the vessel "Betty L."
"Single Employer Plan" means any Plan which is not a
Multi-employer Plan.
"Special Event of Default" means an Event of Default described
in subsections (f), (g), (t), (u), or (x) of SECTION 9.1, an Event of Default
arising from the Borrowers' failure to pay the Obligations upon the Termination
Date, or an Event of Default arising from the Borrowers' failure to pay interest
when due under Section 2.6(a); provided that the failure to pay interest shall
not become a Special Event of Default unless such interest payment shall remain
unpaid on the third Business Day after the Agent notifies the Bonding Company of
the non-payment of interest.
"Standard Event of Default" means any Event of Default that is
not a Special Event of Default.
"Steering Committee Lenders" means that certain group of Lenders
acting as the Steering Committee, as such group is constituted on the Closing
Date and may be reconstituted from time to time.
"Subject Equipment" has the meaning set forth in SECTION 8.4.
15
<PAGE>
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by such Person;
unless otherwise specified, "Subsidiary" means any Subsidiary of MKD or MKO.
"Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings with respect to any payment
by either Borrower pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, EXCLUDING (i) in the case of each Lender and
the Agent, taxes imposed on its income, and franchise or similar taxes imposed
on it, by a jurisdiction under the laws of which such Lender or the Agent (as
the case may be) is organized or in which its principal executive office is
located and (ii) in the case of each Lender, any United States withholding tax
imposed on such payments but only to the extent that such Lender is subject to
United States withholding tax at the time such Lender first becomes a party to
this Agreement.
"T-Co" has the meaning assigned to it in RECITAL D.
"T-Co Term Sheet" means the Term Sheet regarding the T-Co
Transaction attached hereto as EXHIBIT D.
"T-Co Transaction" has the meaning assigned to it in
RECITAL D.
"Termination Date" means the earlier of (i) September 1, 1995,
or such earlier date as the Commitments are terminated or the Loans are
accelerated pursuant to SECTION 9.2, or (ii) the closing date of the
acquisition of the assets of the Transit Division by T-Co.
"Transit Division" has the meaning assigned to it in
RECITAL D.
"Transit Division Intercreditor Agreement" means that certain
Intercreditor and Subordination Agreement dated as of July 31, 1995, by and
among Fidelity and Deposit Company of Maryland and Colonial American Casualty
and Surety Company, Mellon Bank, N.A., as agent and collateral agent for itself
and the other Bridge Loan Lenders, Mellon Bank, N.A., as agent and collateral
agent for itself and the other Existing Lenders, Bank of America National Trust
and Savings Association, as agent for itself and the other Metra Lenders, Morgan
Guaranty Trust Company of New York and such other Persons that may be listed as
signatories thereto.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan
16
<PAGE>
termination basis using the assumptions prescribed by the PBGC for purposes of
Section 4044 of ERISA, exceeds (ii) the fair market value of all Plan assets
allocable to such liabilities under Title IV of ERISA (excluding any accrued but
unpaid contributions), all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Uniform Commercial Code" means the Uniform Commercial Code as
the same may, from to time, be in effect in the Commonwealth of Pennsylvania;
PROVIDED, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment perfection or priority of, or remedies with respect
to, Lenders' security interests in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the Commonwealth of
Pennsylvania, the term "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions of the Loan Documents relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
"Warrants" means those certain warrants to purchase common stock
of MKD issued pursuant to the Securities Purchase Agreement.
1.2. ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
Generally Accepted Accounting Principles.
1.3. GENERAL CONSTRUCTION. As used in this Agreement, the
masculine, feminine and neuter genders, and the plural and singular numbers
shall be deemed to include the others in all cases where they would so apply.
"Includes" and "including" are not limiting, and "or" is not exclusive.
ARTICLE II
AMOUNT AND TERMS OF THE LOANS
2.1. THE LOANS.
From time to time until the Business Day preceding the
Termination Date, each Lender severally agrees, on the terms and conditions set
forth in this Agreement, to make a loan (each
17
<PAGE>
a "Loan", and collectively, the "Loans"), to the Borrowers pursuant to this
SECTION 2.1 in amounts such that the aggregate principal amount of the Loans
by such Lender outstanding at any one time does not exceed such Lender's
Commitment. Each Borrowing under this SECTION 2.1 shall be in an aggregate
amount of $500,000 or multiples thereof; PROVIDED, that the amount of any
Borrowing which would cause the aggregate Loans to equal the maximum aggregate
amount of Loans permitted under this Agreement need not equal an integral
multiple of $500,000. Amounts borrowed hereunder and repaid or prepaid may be
reborrowed. Notwithstanding the foregoing and any other provision of this
Agreement, the maximum principal amount of all Loans outstanding at any one time
shall not exceed Twenty Four Million Six Hundred Thousand Dollars ($24,600,000).
2.2. NOTICE OF BORROWING. The Borrowers shall give notice to the
Agent by telephone, at the telephone number listed in the Schedule for Notices,
to Agent's account executive responsible for Borrowers' account, confirmed
immediately in writing, or in writing (by facsimile at the address listed in the
Schedule for Notices), substantially in the form of EXHIBIT B, or to such
other telephone or facsimile number as Agent may designate, (a "Notice of
Borrowing") no later than 12:00 Noon (Pittsburgh, Pennsylvania time) on the
Business Day immediately preceding the requested Loan, specifying:
(a) The date of such Borrowing;
(b) The aggregate amount of such Borrowing; and
(c) That the aggregate amount of such Borrowing, plus the
aggregate outstanding principal amount of the outstanding Loans, do not exceed
the aggregate amount of the Commitments and that all the conditions described in
Article V of this Agreement have been satisfied.
The Borrowers shall deliver a Notice of Borrowing to the Agent
on the Business Day prior to the Closing Date in an amount equal to or greater
than the amount of Non-Metra Transit Expenditures spent or incurred by Borrowers
from and after July 1, 1995.
2.3. NOTICE TO LENDERS; FUNDING OF LOANS.
(a) Upon receipt of a Notice of Borrowing, the Agent shall
promptly notify each Lender of the contents thereof and of such Lender's Pro
Rata Share of such Borrowing, and such Notice of Borrowing shall not thereafter
be revocable by the Borrowers.
(b) Not later than 1:00 p.m. (Pittsburgh, Pennsylvania time)
on the date of each Borrowing, each Lender shall make available its Pro Rata
Share of such Borrowing, in Federal or other funds immediately available in
Pittsburgh,
18
<PAGE>
Pennsylvania, to the Agent at its address referred to in the Schedule for
Notices. Unless the Agent determines that any applicable condition specified in
ARTICLE V has not been satisfied, the Agent will make the funds so received
from the Lenders available to the Borrowers at 3:00 p.m. (Pittsburgh,
Pennsylvania time) at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Agent such Lender's Pro Rata Share of such Borrowing, the Agent may assume
that such Lender has made such Pro Rata Share available to the Agent on the date
of such Borrowing in accordance with subsection (b) of this SECTION 2.3 and
the Agent may, in reliance upon such assumption, make available to the Borrowers
on such date a corresponding amount. If and to the extent that such Lender
shall not have so made such Pro Rata Share available to the Agent, such Lender
and the Borrowers severally agree to repay to the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Agent, at (i) in the case of the Borrowers, a rate per annum equal
to the Prime Rate, and (ii) in the case of such Lender, the Federal Funds Rate.
If such Lender shall repay to the Agent such corresponding amount, such amount
so repaid shall constitute such Lender's Loan included in such Borrowing for
purposes of this Agreement.
2.4. NOTES.
(a) The Loans of each Lender to the Borrowers shall be
evidenced by a single Note of the Borrowers payable to the order of such Lender
in an original principal amount equal to such Lender's Commitment.
(b) Upon receipt of each Lender's Note pursuant to SECTION
5.1(b), the Agent shall forward such Note to such Lender. Each Lender shall
record the date, amount and maturity of each Loan made by it to the Borrowers
and the date and amount of each payment of principal made by the Borrowers with
respect thereto, and may, if such Lender so elects in connection with any
transfer or enforcement of its Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding; PROVIDED, that the failure of any Lender
to make any such recordation or endorsement shall not affect the obligations of
either Borrower hereunder or under the Notes absent manifest error. Each Lender
is hereby irrevocably authorized by each Borrower so to endorse its Note and to
attach to and make a part of any Note a continuation of any such schedule as and
when required.
19
<PAGE>
2.5. MATURITY OF LOANS. Each Loan included in any Borrowing shall
mature, and the principal amount thereof shall be due and payable, on the
Termination Date.
2.6. INTEREST RATES.
(a) Except as provided in SECTION 2.6(b), each Loan shall
bear interest on the outstanding principal amount thereof, for each day from the
date such Loan is made until it becomes due, at a rate per annum equal to the
Prime Rate for such day. Interest shall be payable each calendar month on the
last day of such month and on the Termination Date.
(b) Any overdue principal of or interest on any Loan shall
bear interest, payable on demand, for each day until paid at a rate per annum
equal to the Default Rate. In addition, from and after the occurrence of any
Special Event of Default (including any Event of Default resulting from the
filing of a bankruptcy case) and continuing until such Event of Default is cured
or has been waived in writing by the Agent in accordance with the terms of this
Agreement, interest shall accrue on the Obligations at the Default Rate and is
payable on demand. Any interest, reasonable professional fees and expenses of
the Agent, or other reasonable professional fees, expenses and charges of the
Steering Committee Lenders due under SECTION 12.4, which are not paid as and
when due, shall bear interest at the Default Rate. The interest rate increase
shall take effect immediately upon the occurrence of a Special Event of Default,
without prior notice to Borrowers.
2.7. OPTIONAL PREPAYMENTS.
(a) Subject to the terms and conditions of the Intercreditor
Agreements, the Borrowers may, upon at least one Business Day's notice to the
Agent, prepay any Borrowing, in each case in whole at any time, or from time to
time in part in amounts aggregating $1,000,000 or any larger multiple of
$1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment. Each such optional prepayment shall
be paid to the Agent on account of the Obligations for the benefit of the
Lenders and applied to prepay each Lender's Loans in an amount equal to such
Lender's Pro Rata Share of such prepayment.
(b) Upon receipt of a notice of prepayment pursuant to this
Section, the Agent shall promptly notify each Lender of the contents thereof and
of such Lender's Pro Rata Share of such prepayment and such notice shall not
thereafter be revocable by the Borrowers.
2.8. MANDATORY PREPAYMENT. If at any time the aggregate principal
amount of the Loans of any Lender outstanding at any time exceeds the amount of
such Lender's Commitment, the Borrowers shall immediately pay to the Agent, for
the benefit of
20
<PAGE>
such Lender, the amount necessary to reduce the aggregate principal amount of
such Loans to the amount of such Lender's Commitment.
2.9. APPLICATION OF PAYMENTS. All payments (including
prepayments), other than regularly scheduled interest payments, on the Loans or
on any of the other Obligations (other than Obligations under the Cash
Management System) shall be made to the Agent for application against the
Borrowers' Obligations as follows (regardless of how each Lender may treat such
payments for purposes of its own accounting): FIRST to then due and
outstanding fees, expenses or other charges of the Agent, or the Steering
Committee Lenders under this Agreement or any of the other Loan Documents to the
extent payable by the Borrowers; SECOND to then due interest on the Loans
accrued and unpaid prior to the date such funds are received by the Lenders; and
THIRD to the principal balance of the Loans.
2.10. GENERAL PROVISIONS AS TO PAYMENTS. The Borrowers shall make
each payment of principal of, and interest on, the Loans and of fees and of all
other Obligations (other than Obligations payable under the Cash Management
System) hereunder, not later than 12:00 Noon (Pittsburgh, Pennsylvania time) on
the date when due, in Federal or other funds immediately available in
Pittsburgh, Pennsylvania, to the Agent at its address referred to in the
Schedule for Notices. Subject to the provisions of SECTION 2.9, the Agent
will promptly distribute to each Lender entitled to receive a portion of such
payment its Pro Rata Share of each such payment received by the Agent for the
account of the Lenders. The Borrowers agree to pay to the Agent, upon demand,
the amount of any payment received by the Agent pursuant to the terms of the
Cash Management System that is subsequently returned to any bank that has
transferred funds to the Concentration Account in accordance with the Cash
Management System, because such bank transferred funds in advance of final
collection and such funds are not finally collected. If such payment has
already been applied in accordance with SECTION 2.9 and is not paid by the
Borrowers within one (1) Business Day after the Agent's demand therefor, then
each Lender shall pay to the Agent the share of such returned payment received
by it. Upon receipt by Agent of any such payment from the Borrowers, or from
the Lenders in the event the Borrowers fail to make such payment after Agent's
demand, Agent shall pay such funds to Bank of America Illinois, Bank of America
National Trust and Savings Association or Key Bank of Idaho, as appropriate, in
such bank's capacity as a Deposit Bank in order to pay the bank that transferred
funds that were not finally collected and the Loans shall be reinstated to the
extent the Agent makes such payment. Whenever any payment of principal of, or
interest on, the Loans or of fees with respect to the Loans or of any other
Obligations shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next succeeding Business Day. If the
date for any payment of principal is extended by
21
<PAGE>
operation of law or otherwise, interest thereon shall be payable for such
extended time.
2.11. COMPUTATION OF INTEREST AND FEES. Interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
2.12. CASH MANAGEMENT SYSTEM. Each Borrower will establish, on or
prior to the Closing Date, and each Borrower will maintain until the Obligations
have been paid in full and all Commitments have been terminated, the Cash
Management System described in SCHEDULE E.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. INCREASED COST.
(a) If any Lender shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Lender (or its Parent) as a consequence of such Lender's
obligations hereunder to a level below that which such Lender (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, within 15 days
after demand by such Lender (with a copy to the Agent), the Borrowers shall pay
to such Lender such additional amount or amounts as will compensate such Lender
(or its Parent) for such reduction.
(b) Each Lender will promptly notify the Borrowers and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Lender to compensation pursuant to this SECTION 3.1.
A certificate of any Lender claiming compensation under this SECTION 3.1 and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive in the absence of manifest error. In determining such amount,
such Lender may use any reasonable averaging and attribution methods.
22
<PAGE>
3.2. TAXES.
(a) Any and all payments by either Borrower to or for the
account of any Lender or the Agent hereunder or under any Note or any other Loan
Document shall be made without deduction for any Taxes or Other Taxes;
PROVIDED, that if either Borrower shall be required by law to deduct any Taxes
or Other Taxes from any such payments, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 3.2) such Lender or
the Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Borrower shall make such
deductions, (iii) such Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable law
and (iv) such Borrower shall furnish to the Agent, at its address referred to in
the Schedule for Notices, the original or a certified copy of a receipt
evidencing payment thereof.
(b) The Borrowers agree to indemnify each Lender and the Agent
for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable under this SECTION
3.2) paid by such Lender or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto. This indemnification shall be paid within 15 days after such Lender or
the Agent (as the case may be) makes demand therefor.
(c) Each Lender organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Lender listed on the signature pages
hereof and on or prior to the date on which it becomes a Lender in the case of
each other Lender, and from time to time thereafter if requested in writing by
the Borrowers (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrowers with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which exempts the Lender from United
States withholding tax or reduces the rate of withholding tax on payments of
interest for the account of such Lender or certifying that the income receivable
pursuant to this Agreement is effectively connected with the conduct of a trade
or business in the United States.
(d) For any period with respect to which a Lender has failed
to provide the Borrowers with the appropriate form pursuant to SECTION 3.2(c)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), such Lender shall not be entitled to indemnification under
23
<PAGE>
SECTION 3.2(b) or (c) with respect to Taxes imposed by the United States on
payments by such Borrower; PROVIDED, that if a Lender, which is otherwise
exempt from or subject to a reduced rate of withholding tax, becomes subject to
Taxes because of its failure to deliver a form required hereunder, such Borrower
shall take such steps as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
(e) If either Borrower is required to pay additional amounts
to or for the account of any Lender pursuant to this SECTION 3.2, then such
Lender will change the jurisdiction of its lending office to an office it
maintains if, in the judgment of such Lender, such change (i) will eliminate or
reduce any such additional payment which may thereafter accrue and (ii) is not
otherwise disadvantageous to such Lender.
ARTICLE IV
SECURITY
4.1. THE BORROWERS' OBLIGATIONS. The Obligations of the Borrowers
to pay all sums due to the Agent and the Lenders and to perform all other
covenants and agreements under this Agreement, the Notes and the other Loan
Documents to which the Borrowers are a party, shall be secured to the extent
provided in the Security Documents.
4.2. FURTHER ASSURANCES. The Borrowers shall, at their sole cost
and expense, execute and deliver to the Agent or the Collateral Agent for the
benefit of the Lenders all such further documents, instruments and agreements
and agree to perform all such other acts which may be required in the opinion of
the Agent to enable the Collateral Agent, the Agent and the Lenders to exercise
and enforce their respective rights as the secured parties or beneficiaries
under the Security Documents. To the extent permitted by applicable law, the
Borrowers hereby authorize the Collateral Agent or the Agent on behalf of the
Lenders to file Financing Statements and continuation statements with respect to
the security interests granted under the Security Documents in favor of the
Collateral Agent for the benefit of the Agent and the Lenders and to execute
such Financing Statements and continuation statements on behalf of the
Borrowers.
ARTICLE V
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AGREEMENT. This
Agreement shall become effective only upon the satisfaction by the Borrowers of
the following conditions precedent, unless each Lender shall otherwise agree:
24
<PAGE>
(a) RESTRUCTURING DOCUMENTS. The Agent shall have received
counterpart originals of this Agreement, the other Restructuring Documents and
all the other certificates, schedules, and other items as specified in the
Schedule of Documents attached hereto as SCHEDULE C, each duly and validly
executed and acknowledged, where appropriate, by or on behalf of all the parties
hereto or thereto (as the case may be).
(b) THE NOTES. The Agent shall have received, for the
benefit of each Lender, a Note conforming to the requirements of SECTION 2.4
duly and validly executed on behalf of the Borrowers.
(c) THE LETTER OF CREDIT. The Agent shall have received the
Letter of Credit issued on behalf of the Bonding Company in its favor for the
benefit of the Lenders.
(d) LEGAL OPINION OF THE BORROWERS' COUNSEL. The Agent
shall have received, with an executed counterpart for each Lender, the legal
opinion of Jones, Day, Reavis & Pogue and of Hawley Troxell Ennis & Hawley,
counsel to the Borrowers, and such other counsel approved by the Agent, dated
the Closing Date, and addressed to the Agent, for the benefit of the Lenders, in
form and substance satisfactory to the Agent.
(e) PERFECTION AND PRIORITY OF PERSONAL PROPERTY SECURITY
INTERESTS. The Agent shall have received evidence that the Financing
Statements have been filed as of the Closing Date with the corporate filing
officers in the appropriate locations and that the security interests capable of
being perfected by the filing of a Financing Statement on all of the personal
property Collateral are duly perfected and subject to no prior Liens other than
Permitted Liens. The Agent shall have received evidence of Lien searches,
through a date satisfactory to the Agent, showing no Liens affecting the
property covered by the Security Documents other than those granted in favor of
the Agent for the benefit of the Lenders in connection herewith or Permitted
Liens.
(f) CONSENTS. The Agent shall have received evidence
reasonably satisfactory to it in its sole discretion that the Borrowers and the
Guarantor have obtained all requisite consents and approvals required to be
obtained from any Governmental Authority, Person or entity whatsoever, to permit
the transactions contemplated by the Restructuring Documents to be consummated
in accordance with their respective terms and conditions.
(g) DISBURSEMENT AUTHORIZATION. The Agent shall have
received the Notice of Borrowing to be received prior to the Closing Date as set
forth in SECTION 2.2.
(h) PAYMENT OF FEES AND EXPENSES. The Borrowers shall have
paid all fees and expenses of the Steering Committee
25
<PAGE>
Lenders and their Professionals set forth in that certain side letter dated July
31, 1995.
(i) PENDING AND THREATENED LITIGATION. The Agent shall have
received SCHEDULE 6.5 and shall have reviewed all such pending and threatened
litigation against the Borrowers and their Subsidiaries, and such disclosures
shall reveal no conditions unacceptable to the Agent in its sole discretion.
(j) THE RESTRUCTURING. The Restructuring shall have been
consummated with all conditions to the effectiveness having been satisfied,
subject only to the execution of this Agreement and the other Loan Documents.
(k) OTHER MATTERS. The Agent shall have received all other
documents, instruments, agreements, opinions, certificates, insurance policies,
consents and evidences of other legal matters, in form and substance
satisfactory to the Agent and its counsel, as the Agent reasonably may request.
5.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of each of
the Lenders to make any Loans on any date is subject to the satisfaction by the
Borrowers, or the waiver by the Agent and the Majority Lenders, of the
conditions set forth below. Each Borrowing by the Borrowers shall constitute a
representation and warranty by the Borrowers to the Agent and each such Lender,
as of each such borrowing, that the conditions in this SECTION 5.2 have been
satisfied.
(a) BORROWINGS. Receipt by the Agent of a Notice of
Borrowing as required by SECTION 2.2. Immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not exceed the
aggregate amount of the Commitments.
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Borrowers and each of them set forth in this Agreement, the
Notes or the other Restructuring Documents, or in any certificate or opinion by
or on behalf of the Borrowers in connection herewith, shall be correct on and as
of the date of any requested Loan as if made on and as of such date; PROVIDED,
HOWEVER, the Borrowers may, from time to time, amend SCHEDULE 6.18
(Subsidiaries) by providing the Agent with amendments thereto.
(c) NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of
Default shall have occurred and be continuing on the date of such requested Loan
or after giving effect to the Loans to be made on such date.
(d) NO VIOLATIONS. No Requirement of Law shall prohibit,
and no order, judgment or decree of any Governmental Authority shall, and no
litigation shall be pending which enjoins, prohibits or restrains any Lender
from making a requested Loan.
26
<PAGE>
(e) CERTIFICATE OF CHIEF FINANCIAL OFFICER REGARDING THE
BUDGET. Receipt by the Agent of a certificate of the Vice President of
Financial Administration for the Transit Division (i) certifying the Borrowers'
compliance with the Budget for the period prior to the Borrowing and (ii)
setting forth projected uses for requested Loans.
(f) OFFICER'S CERTIFICATE. The Agent shall have received a
certificate of the chief executive officer and the chief financial officer of
each Borrower dated the date of such requested Loan, that to the best of each
officers' knowledge (i) each of the representations and warranties contained in
ARTICLE VI and in any other Loan Document is true and correct on and as of the
date of such requested Loan, with the same force and effect as if made on and as
of such date except to the extent such representation or warranty was made
solely as of an earlier date; (ii) all obligations, covenants, agreements and
conditions contained in this Agreement and the Restructuring Documents to be
performed or satisfied by each Borrower on or prior to the date of such
requested Loan have been performed or satisfied in all respects or duly waived
by the Majority Lenders or All Lenders as the case may be; (iii) as of the date
of such requested Loan and since June 26, 1995, no Material Adverse Effect has
occurred (except as disclosed on SCHEDULE 6.17 hereto); (iv) no Default or
Event of Default has occurred, or would result from the making of such requested
Loan; (v) the documents delivered to the Agent by each Borrower are true and
correct as of the date of such requested Loan; and (vi) no Liens have arisen or
been granted with respect to the Collateral other than Permitted Liens.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this
Agreement, and to make the Loans and other financial accommodations provided for
herein, the Borrowers hereby make the following representations and warranties
to the Agent and to each Lender:
6.1. ORGANIZATION AND QUALIFICATION. Each of the Borrowers is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation and is duly qualified and in good standing in
each jurisdiction wherein the conduct of its business or the ownership of its
properties requires such qualification, except for those jurisdictions in which
the failure to be qualified and in good standing would not have or result in a
Material Adverse Effect or would not materially adversely affect the ability of
the Collateral Agent to collect any material account receivable.
6.2. CORPORATE POWER AND AUTHORIZATION; BINDING EFFECT. Each of
the Borrowers has the corporate power and has taken all
27
<PAGE>
corporate action necessary to authorize it to execute, deliver, and perform this
Agreement and each of the other Restructuring Documents executed by it and to
grant the security interests and liens granted or created thereunder. This
Agreement constitutes, and when executed the other Restructuring Documents will
constitute, legal and valid obligations of each Borrower binding upon it and
enforceable in accordance with their respective terms, except as the
enforceability of each such Restructuring Document may be subject to or limited
by bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar laws relating to or affecting the rights of creditors and except as the
availability of equitable remedies are subject to the application of equitable
principles.
6.3. NO CONFLICT. The execution, delivery and performance of this
Agreement, the Notes, the other Restructuring Documents and the secured
financing transactions contemplated hereby, the use of proceeds thereof, and the
performance by the Borrowers (a) do not conflict with or violate any provision
of the Articles of Incorporation or Certificate of Incorporation, as the case
may be, or By-Laws of any Borrower, any material Requirement of Law or any
Contractual Obligation of any Borrower, (b) do not conflict with, constitute a
default or require any consent under any Contractual Obligation of any Borrower,
and (c) do not result in the creation of any Lien other than a Permitted Lien
upon any property or assets of any Borrower.
6.4. NO CONSENTS. All necessary consents, approvals and
authorizations of, filings with, and acts by or with respect to all Governmental
Authorities and other Persons required to be obtained, made or taken by the
Borrowers in connection with the secured financing transactions contemplated
hereby or with the execution, delivery, performance, validity or enforceability
of this Agreement or the other Restructuring Documents, have been obtained, made
or taken, and remain in effect. All applicable waiting periods have expired
without any Governmental Authority or other Person taking any action which
restricts, prevents or imposes materially adverse conditions upon the
consummation of the secured financing transactions contemplated hereby.
6.5. ABSENCE OF LITIGATION. Except as otherwise set forth in
SCHEDULE 6.5, there are no actions, suits, proceedings or other litigation
(including proceedings by or before any arbitrator or Governmental Authority)
pending, or, to the Borrowers' knowledge, threatened, against or affecting the
Borrowers or any of their Consolidated Subsidiaries or, to the knowledge of the
Borrowers, any basis therefor, (a) which challenge the validity or propriety of
the secured financing transactions contemplated hereby, (b) which could
reasonably be expected to have or result in, individually or in the aggregate, a
Material Adverse Effect, or (c) which could materially affect the ability of the
Borrowers to perform their obligations under this Agreement or the other
Restructuring Documents.
28
<PAGE>
6.6. NO DEFAULT UNDER THE RESTRUCTURING DOCUMENTS. No Default or
Event of Default has occurred and is continuing.
6.7. CORRECTNESS OF SCHEDULES. The Certification of Schedules
listed as ITEM NO. 4.24 of the Schedule of Documents and delivered to the
Agent in connection herewith is complete and correct in all material respects.
6.8. CORRECTNESS OF FINANCIAL INFORMATION. The financial
statements described in ITEM NO. 2.00 of the Schedule of Documents and
delivered to the Agent in connection herewith are true and correct and (a)
present fairly, in all material respects, the Consolidated financial condition
of the Borrowers and their Consolidated Subsidiaries as of the date thereof, (b)
disclose all material liabilities of the Borrowers and their Consolidated
Subsidiaries, whether liquidated or unliquidated, fixed or contingent, that are
required to be disclosed under Generally Accepted Accounting Principles as of
the date thereof, and (c) have been prepared in accordance with Generally
Accepted Accounting Principles, consistently applied. Each of the Budget and
the projections described in ITEM NOS. 1.41 AND 2.4 of the Schedule of
Documents and delivered to Agent in connection herewith are based upon
reasonable estimates and assumptions, and reflect the reasonable estimates of
the Borrowers and their Consolidated Subsidiaries of the results of operations
and other information projected therein.
6.9. SECURITY DOCUMENTS. The Security Documents to which the
Borrowers are a party create in favor of the Collateral Agent for the benefit of
the Lenders to secure the Obligations valid, and, upon the proper filing by the
Collateral Agent of Financing Statements at appropriate offices, a first
priority, perfected security interests in the property and assets described in
the Security Documents capable of being perfected by the filing of a Financing
Statement, subject only to Permitted Liens.
6.10. TAXES. The Borrowers have filed all tax returns which were
required to be filed in any jurisdiction, and paid all taxes shown thereon to be
due or otherwise due upon the Borrowers or any of their properties, income or
franchises, including interest, assessments, fees and penalties (other than any
immaterial amounts, which the Borrowers shall pay or make provision to pay), or
have provided adequate reserves for the payment thereof. To the best knowledge
of the Borrowers, no claims are threatened, pending or being asserted with
respect to, or in connection with any return referred to in this SECTION 6.10,
which could reasonably be expected to have or result in a Material Adverse
Effect, or could reasonably be expected to affect the Borrowers' ability to
perform their Obligations under this Agreement and the other Restructuring
Documents.
29
<PAGE>
6.11. NO BURDENSOME RESTRICTIONS. No Material Contract and no
material Requirement of Law relating to or otherwise affecting the Borrowers
will result in a Material Adverse Effect.
6.12. JUDGMENTS. There are no outstanding or unpaid judgments
against the Borrowers in excess of (a) $100,000 individually, or (b) $2,000,000
in the aggregate, except as expressly set forth in SCHEDULE 6.12.
6.13. COMPLIANCE WITH LAWS. The Borrowers are not and will not be
in violation of, or not in compliance with, any Requirement of Law binding upon
the Borrowers or their properties and assets, including any building, zoning,
occupational safety and health ordinances or regulations relating to their
structure or equipment, or the operation thereof or of its respective business,
or any applicable fair employment, equal opportunity or similar law, ordinance
or regulation, the noncompliance with which could reasonably be expected to have
or result in a Material Adverse Effect, and are not a party to any agreement or
instrument, or subject to any judgment, order, writ, rule, regulation, code or
ordinance which could reasonably be expected to have or result in a Material
Adverse Effect.
6.14. COMPLIANCE WITH ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multi-employer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could reasonably result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the Internal Revenue Code or
(iii) except as set forth on SCHEDULE 6.14, incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
6.15. GOVERNMENTAL AUTHORIZATIONS; PERMITS, LICENSES AND
ACCREDITATIONS; OTHER RIGHTS. The Borrowers have all licenses, permits,
approvals, qualifications, consents, certificates of needs and accreditations
(where such are required) and other authorizations necessary for the lawful
conduct of their respective businesses or operations wherever now conducted and
as planned to be conducted, pursuant to all applicable statutes, laws,
ordinances, rules and regulations of all Governmental Authorities having,
asserting or claiming jurisdiction over the Borrowers, except where such failure
could not have or result in a Material Adverse Effect. Copies of all such
licenses, permits, approvals, qualifications, consents and other authorizations
shall be provided to the Agent upon request. The Borrowers are
30
<PAGE>
not in default under any of such licenses, permits, approvals, consents,
qualifications or authorizations and no event has occurred, and no condition
exists, which, with the giving of notice, the passage of time, or both, would
constitute a default thereunder or would result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such permit, license, authorization
or accreditation, except where such failure could not have or result in a
Material Adverse Effect. The continuation, validity and effectiveness of all
material licenses, permits, approvals, consents, qualifications and
authorizations will not be adversely affected by the transactions contemplated
by this Agreement. The Borrowers know of no reason why they will not be able to
maintain all licenses, permits, approvals, consents, qualifications,
accreditations and other authorizations necessary or appropriate to own and
operate their respective current businesses and to obtain such licenses,
permits, approvals, consents, qualifications and other authorizations necessary
to own and operate their respective current businesses, and otherwise conduct
the business of the Borrowers and their Consolidated Subsidiaries as now
conducted and presently proposed to be conducted.
6.16. ENVIRONMENTAL MATTERS. In the ordinary course of their
business, the Borrowers conduct an ongoing review of the effect of Environmental
Laws on the business, operations and properties of the Borrowers and their
Consolidated Subsidiaries, in the course of which they identify and evaluate
associated liabilities and costs (including any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by law or as
a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat, any costs or liabilities in connection with off-site disposal
of wastes or Hazardous Materials, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrowers have reasonably concluded that such
associated liabilities and costs, including the costs of compliance with
Environmental Laws, are unlikely to have or result in a Material Adverse Effect.
6.17. NO MATERIAL ADVERSE EFFECT. Since June 26, 1995, there has
been no Material Adverse Effect, other than as disclosed in SCHEDULE 6.17.
6.18. CONSOLIDATED SUBSIDIARIES; SUBSIDIARIES. Each of the
Borrowers' Consolidated Subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, and has all legal powers and all material
governmental licenses,
31
<PAGE>
authorizations, consents and approvals required to carry on its business as now
conducted. Set forth on SCHEDULE 6.18 is a complete and correct list of each
of the Borrower's Subsidiaries.
6.19. MARGIN SECURITIES. Neither Borrower is engaged principally
in, nor has as one of its most important activities, the business of extending
credit for the purpose of purchasing or carrying "margin stock" as that term is
defined in Regulation U promulgated by the Board of Governors of the Federal
Reserve System, as now in effect. No part of the Indebtedness evidenced by the
Notes, or Indebtedness otherwise created in connection with this Agreement or
the other Restructuring Documents, shall be used, directly or indirectly, for
the purpose of purchasing any such margin stock. If requested by the Agent, the
Borrowers shall furnish or cause to be furnished to the Agent a statement, in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U, to the foregoing effect.
6.20. INVESTMENT COMPANY ACT. Neither of the Borrowers is an
"investment company" nor a company "controlled" by an investment company within
the meaning of the Investment Company Act of 1940, as now in effect.
6.21. BUSINESS LOCATIONS AND TRADE NAMES. Set forth on SCHEDULE
6.21A is a complete and correct list of each location where each of the
Borrowers maintains its chief executive office, its principal place of business,
an office, a place of business or any material financial records. Set forth on
SCHEDULE 6.21B is a complete and correct list of each name under or by which
each Borrower conducts its business, or by which each Borrower (or its
predecessors in interest) has conducted its business during the past five years.
6.22. TITLE TO REAL PROPERTY AND OTHER ASSETS. The Borrowers have
good and marketable title (or good and marketable leasehold interests with
respect to leased property) to all their Real Property and all personal property
assets and fixtures subject to no Liens other than Permitted Liens.
6.23. LABOR MATTERS. There are no controversies pending between the
Borrowers or their Subsidiaries and their employees which may constitute or
result in a Material Adverse Effect.
6.24. NO MISSTATEMENTS. Neither this Agreement, the Notes, the
other Restructuring Documents, nor any document, instrument and other agreement,
certificate, statement or other information referred to herein or expressly
furnished to the Agent or to any of the Lenders pursuant hereto or thereto,
contains any misstatement of a material fact or omits to state any material fact
or any fact necessary to make the statements contained herein or therein not
misleading on the date furnished or on the Closing Date, except as otherwise
subsequently disclosed to the Agent and all Lenders in writing on or prior to
the Closing Date.
32
<PAGE>
6.25. RESTRUCTURING. The Restructuring has occurred.
6.26. CASH MANAGEMENT SYSTEM. Each Borrower acknowledges that the
Cash Management System is part of this Agreement and each of the representations
and warranties made by each Borrower in the Cash Management System constitute
representations and warranties of this Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Loans or other amounts due hereunder are unpaid
or outstanding, any Obligations are unperformed or any of the Commitments are in
effect, the Borrowers, and, without duplication, each of them, shall, unless the
Majority Lenders shall otherwise agree:
7.1. FINANCIAL STATEMENTS; ADDITIONAL REPORTING REQUIREMENTS.
Furnish to the Agent:
(a) Not later than ten (10) Business Days prior to the start
of each calendar quarter, a projected consolidating income statement for such
quarter and a weekly consolidating cash flow statement for such quarter in the
form of the Budget, certified by the Vice President of Financial Administration
for the Transit Division as containing appropriate assumptions to the best of
his knowledge;
(b) Not later than three (3) Business Days after each calendar
week, an unaudited consolidating cash flow statement in the form of the Budget
for such week setting forth a comparison to the Budget for such calendar week,
certified by the Vice President of Financial Administration for the Transit
Division as complete and correct to the best of his knowledge;
(c) Not later than the twenty-fifth (25th) day after each
calendar month, an unaudited consolidating income statement, balance sheet and
cash flow statement (including MK Rail Corporation on an equity basis using the
most current monthly information available), in each case for such month, and
setting forth a comparison to the projections for such calendar month and the
actual results for such calendar month in the previous fiscal year, certified by
the chief financial officer as complete and correct, subject to normal
accounting adjustments and without footnotes;
(d) As soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of MKD, a
Consolidated balance sheet of MKD and its Consolidated Subsidiaries as of the
end of such quarter and the related Consolidated statements of income and cash
flows for such quarter and for the portion of MKD's fiscal year ended at the end
33
<PAGE>
of such quarter, setting forth in the case of such income and cash flows in
comparative form the figures for the corresponding quarter and the corresponding
portion of MKD's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, Generally Accepted Accounting
Principles and consistency by the chief financial officer, controller or
treasurer of MKD;
(e) As soon as available and in any event by April 15, 1996, a
Consolidated balance sheet of MKD and its Consolidated Subsidiaries as of the
end of such fiscal year and the related Consolidated statements of income,
retained earnings and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on in a manner acceptable to the Securities and Exchange Commission by
independent public accountants of nationally recognized standing, together with
an unaudited annual report prepared on a consolidating basis in conformity with
Generally Accepted Accounting Principles;
(f) Promptly upon the mailing thereof to the shareholders of
MKD generally, copies of all financial statements, reports and proxy statements
so mailed;
(g) Promptly upon the filing thereof, copies of all reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which MKD shall have filed with
the Securities and Exchange Commission;
(h) Promptly after the furnishing thereof, copies of any
statement or report furnished to any other holder of the securities or any
Indebtedness of the Borrowers pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be furnished to the
Agent pursuant to any other clause of this SECTION 7.1;
(i) On a weekly basis a statement listing the outstanding
receivable and payable accounts relating to the Transit Division between the
Borrowers, and Affiliates of the Borrowers;
(j) On a monthly basis, within twenty five (25) days of the
close of the prior calendar month, a report outlining work status for jobs
involving the Transit Division valued in excess of $10,000,000, certified by the
chief financial officer as complete and correct;
(k) On a monthly basis, within twenty five (25) days of the
close of the prior calendar month, a report outlining the status of the Transit
Division's backlog, certified by the chief financial officer as complete and
correct in the form attached hereto as SCHEDULE 7.1(k);
34
<PAGE>
(l) As required under the Multiparty Agreement, reports
required to be delivered to the Bonding Company under the Multiparty Agreement.
(m) On a daily basis, each Borrower's daily cash balances and
outstanding loan balances;
(n) On a weekly basis, the management operation reports
prepared for the Transit Division;
(o) No later than August 15, 1995, a draft of an operating
plan detailing projected operations through December 31, 1997 for each of the
Borrowers' operating divisions and Subsidiaries in a form acceptable to the
Majority Lenders with the final operating plan to be delivered by August 31,
1995; and
(p) From time to time such additional information regarding
the financial position, business, properties or operations of MKD, MKO and any
of their Consolidated Subsidiaries as the Agent, at the request of any Lender,
may reasonably request.
7.2. PROVISION OF NOTICES. Give notice to the Agent of the
occurrence of any of the following events not later than three (3) Business Days
after the Borrowers know of such event:
(a) DEFAULT. Any Default or Event of Default.
(b) OTHER DEFAULT OR LITIGATION. (i) Any default or event
of default under any Contractual Obligation of any Borrower of greater than
$1,000,000 or which could otherwise have or result in a Material Adverse Effect;
(ii) any litigation, investigation or proceeding which may exist at any time
between the Borrowers and any Governmental Authority; or (iii) any other
litigation, which, as relates to (i) or (ii) above, if adversely determined,
could (y) if the remedies prayed for do not include damages, have or result in a
Material Adverse Effect, and (z) if the remedies prayed for include damages,
would result in a liability equal to or in excess of $5,000,000 if the claim is
fully covered by insurance, and in excess of $1,000,000 if the claim is not
covered by insurance.
(c) REPORTABLE EVENTS. Except as provided on SCHEDULE
7.2(c)A, any Reportable Event with respect to any Single Employer Plan
maintained by the Borrowers or (b) the institution of proceedings or except as
provided on SCHEDULE 7.2(c)B the taking or expected taking of any other action
by the PBGC, any Borrower or any Commonly Controlled Entity to terminate,
withdraw or partially withdraw from any Single Employer Plan maintained by any
Borrower and with respect to a Multi-employer Plan, the reorganizational
insolvency of the Plan. In addition to such notice, the Borrowers shall as soon
as practicable deliver to the Agent and each Lender whichever of the following
may be
35
<PAGE>
applicable: (i) a certificate of the chief executive officer and the chief
financial officer of each Borrower setting forth details as to such Reportable
Event and the action, if any, that it or the Commonly Controlled Entity proposes
to take with respect thereto, together with the copy of any notice of such
Reportable Event that is required to be filed with PBGC, or (ii) any notice
delivered by PBGC evidencing its intent to institute such proceedings or any
notice to PBGC that such Plan is to be terminated, as the case may be.
(d) ENVIRONMENTAL MATTERS. (i) Any event which makes any of
the representations set forth in SECTION 6.16 inaccurate in any respect or
(ii) the receipt by any Borrower of any notice, order, directive or other
written communication from a Governmental Authority alleging violations of or
noncompliance with any Environmental Laws.
(e) MATERIAL CONTRACTS; MATERIAL OBLIGATIONS. (i) Any
proposed material amendment, change or modification to, or waiver of any
material provision of, or any termination of, any Material Contract, other than
amendments, changes, modifications, waivers or terminations in the ordinary
course of business as presently conducted, and (ii) any new Material Contract
which has not been previously disclosed to the Lender in financial reports or
otherwise in writing.
(f) CASUALTY LOSSES. Any casualty loss or losses, not
covered by insurance, in excess of $1,000,000.
(g) NOTICES RE: BONDING ISSUES. The receipt by any of the
Borrowers of any notice or other communication from the Bonding Company
regarding material changes in the Bonding Company's issuance of payment or
performance bonds in connection with the projects to be performed by the
Borrowers or their Consolidated Subsidiaries.
(h) NOTICES OF VIOLATION. The receipt by any Borrower of
any notice, order, directive or other written communication from a Governmental
Authority commencing an investigation or inquiry by any Governmental Authority
or alleging violations of or noncompliance with any Requirement of Law which
could reasonably be expected to have or result in a Material Adverse Effect.
(i) CHANGES TO SCHEDULES. Any changes to the information
on SCHEDULES 6.21A AND 6.21B.
7.3. FILING OF RETURNS; PAYMENT OF TAXES. File all tax returns
when due and pay or cause to be paid before the same shall become delinquent and
before penalties have accrued thereon, all taxes, assessments and governmental
charges or levies imposed on the income, profits, franchises, property or
business of the Borrowers except to the extent and so long as (a) the same are
being contested in good faith by appropriate
36
<PAGE>
proceedings, and (b) as to which adequate reserves in conformity with Generally
Accepted Accounting Principles with respect thereto have been provided on the
books of the Borrowers.
7.4. MAINTENANCE OF EXISTENCE. Maintain and preserve, and, will
cause each Consolidated Subsidiary to maintain and preserve, its respective
existence as a corporation or other form of business organization, as the case
may be, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, trade names, franchises and other authority to the
extent material and necessary for the conduct of its respective business in the
ordinary course as conducted from time to time.
7.5. COMPLIANCE WITH LAWS. Comply, and cause each Consolidated
Subsidiary to comply, with all Requirements of Law in all material respects
except where the necessity of compliance therewith is contested in good faith by
appropriate proceedings.
7.6. MAINTENANCE OF PROPERTIES. Maintain, preserve and keep all of
its buildings, tangible properties, equipment and other property and assets,
whether owned or leased, used and necessary in its business, in good repair,
working order and condition, and from time to time to make all necessary and
proper repairs and replacements so that at all times the utility, efficiency or
value thereof shall not be impaired in any material respect.
7.7. INSURANCE. Maintain (a) insurance (in addition to any
insurance required under the Security Documents) on all insurable property and
assets owned or leased by the Borrowers in connection with the Transit Division
in the manner, to the extent and against at least such risks (in any event,
including liability and casualty, including hazard, fire and business
interruption coverage) usually done by owners of similar businesses and
properties in similar geographic areas, and adequate workers' compensation
insurance and (b) appropriate self-insurance reserve funds covering those risks
for which the Borrowers presently self-insure, which self-insurance reserves
shall be funded to the extent from time to time required by the insurer for the
Borrowers (which insurer shall be acceptable to the Agent) or another excess
insurance carrier for the Borrowers acceptable to the Agent. All such insurance
shall be in such amounts and form and with such insurance companies as are
reasonably satisfactory to the Agent. The Borrowers shall furnish the following
to the Agent: (x) annually or at any time upon written request, full information
as to such insurance carried, including the amounts of all self-insurance
reserve funds; and (y) at least annually and on such other times as reasonably
requested by the Agent, certificates of insurance from such insurance companies
and certified copies of such insurance policies. All policies of insurance
shall provide for not less than 30 days prior written cancellation notice to the
Agent.
37
<PAGE>
7.8. BOOKS AND RECORDS. Keep and maintain full and accurate books
of record and accounts of its operations, dealings and transactions in relation
to its business and activities, in conformity with Generally Accepted Accounting
Principles and all Requirements of Law.
7.9. HAZARDOUS MATERIALS. Except in compliance with all applicable
Environmental Laws, the Borrowers shall not and shall use its reasonable best
efforts not to cause or permit any other Person or entity to, cause or permit
the presence, use, generation, manufacture, installation, release, discharge,
storage or disposal of any Hazardous Materials on, under, in or about any Real
Property owned by the Borrowers or any Subsidiary or any Real Property leased,
subleased, occupied or used by the Borrowers or any Subsidiary, or the
transportation of any Hazardous Materials to or from any such real property
unless such use or transportation is on a temporary basis incidental to the
conduct of its business in the ordinary course and is performed in a manner that
does not cause a material violation of any applicable Environmental Law. In the
event of any breach or violation of the foregoing, or in the event of any other
release or threatened release of Hazardous Materials on, under, in or about any
real property owned by the Borrowers or any real property leased, subleased,
occupied or used by the Borrowers, the Borrowers shall promptly commence and
diligently complete a clean-up or other remediation of any such environmental
contamination to the extent required by applicable Environmental Law using a
duly qualified, licensed and insured contractor. In the event of any release or
threatened release of Hazardous Material on, under, in or about any real
property owned by any Subsidiary or any real property leased, subleased,
occupied or used by any Subsidiary, the Borrowers shall cause such Subsidiary to
promptly commence and diligently complete a clean-up or other remediation of any
such environmental contamination to the extent required by applicable
Environmental Law using a duly qualified, licensed and insured contractor.
7.10. FURTHER ASSURANCES. Perform, make, execute and deliver all
such additional and further acts, things, deeds, occurrences and instruments as
the Agent or the Majority Lenders may reasonably require to document and
consummate the transactions contemplated hereby and to vest completely in and
ensure the Agent and the Lenders of their respective rights under this
Agreement, the Notes and the other Restructuring Documents.
7.11. INSPECTION OF PROPERTY, BOOKS AND RECORDS. Keep, and will
cause each Consolidated Subsidiary to keep, proper books of record and account
in which full, true and correct entries in conformity with Generally Accepted
Accounting Principles shall be made of all dealings and transactions in relation
to its business and activities; and will permit, and will cause each
Consolidated Subsidiary to permit, representatives and Professionals of the
Agent or any Steering Committee Lender, including Ernst & Young (at the
Borrowers' expense), to examine and make abstracts from
38
<PAGE>
any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants, all at such times and as often as may be
desired.
7.12. USE OF PROCEEDS. The proceeds of the Loans made under this
Agreement will be used by the Borrowers for financing of Non-Metra Transit
Expenditures only in accordance with the Budget, and for no other purpose. None
of such proceeds will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.
7.13. STANDSTILL AGREEMENTS. Use their best efforts to obtain by
August 15, 1995, standstill agreements through the Termination Date from all
banks or other financial institutions that are not party to the Override
Agreement and to which either Borrower has provided a guaranty of Indebtedness
of any Subsidiary.
7.14. CASH MANAGEMENT SYSTEM. Comply with each of the covenants
contained in the Cash Management System.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Loans or other amounts due hereunder are unpaid
or outstanding, any Obligations are unperformed or any of the Commitments are in
effect, the Borrowers shall not, unless the Majority Lenders shall otherwise
agree:
8.1. INDEBTEDNESS. Create, incur, assume or suffer to exist, any
Indebtedness, EXCEPT:
(a) Indebtedness of the Borrowers in connection with this
Agreement;
(b) Indebtedness existing, or relating to commitments
existing, on the Closing Date, all as set forth on SCHEDULE 8.1 and any
extensions, refundings or renewals thereof on terms satisfactory to the Majority
Lenders; PROVIDED, HOWEVER, that the principal amount thereof or the
interest rate thereon shall not be increased, nor shall the amortization
schedule thereof be shortened;
(c) Indebtedness with respect to financed insurance premiums
which is not past due;
(d) Indebtedness for performance or payment bonds incurred in
the ordinary course of the Borrowers' or any Consolidated Subsidiary's business;
39
<PAGE>
(e) Purchase money Indebtedness with respect to Capital
Expenditures obtained from financing sources other than the Lenders ("Additional
Capital Expenditure Indebtedness"); PROVIDED, that (i) no Default or Event of
Default has occurred and is continuing at the time the Additional Capital
Expenditure Indebtedness is to be incurred, (ii) the amount of such Additional
Capital Expenditure Indebtedness outstanding at any time shall in no event
exceed $1,000,000, and (iii) each of the Borrowers shall have delivered notice
to the Agent of its intention to incur any Additional Capital Expenditure
Indebtedness; or
(f) Indebtedness of McConnell Dowell Corporation Limited that
is not guaranteed by the Borrowers.
(g) Indebtedness of MKO pursuant to a guaranty of the
Corporate Card Account Agreement between American Express Travel Services,
Company, Inc. and MKO's wholly-owned Subsidiary, Rocky Mountain Remediation
Services Limited Liability, Inc.
8.2. NEGATIVE PLEDGE. Create, assume or suffer to exist, or permit
any Lien on any collateral on which Bonding Company has been granted a security
interest, whether now owned or hereafter acquired by them, except:
(a) Liens of the Restructuring Documents and the Liens of the
Bonding Company described in the Intercreditor Agreements;
(b) Liens existing on the date of this Agreement securing
Indebtedness outstanding on the date of this Agreement which are listed on
SCHEDULE 8.2 hereto;
(c) Any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring
such asset; PROVIDED, that such Lien attaches to such asset concurrently with
or within 90 days after the acquisition thereof;
(d) Any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by any of
the foregoing clauses of this Section; PROVIDED, that such Indebtedness is not
increased and is not secured by any additional assets;
(e) Liens for taxes either not yet due or being contested in
good faith by appropriate proceedings so long as such proceedings do not involve
any material danger of the sale, forfeiture or loss of any material asset and
the Borrowers shall maintain in accordance with Generally Accepted Accounting
Principles appropriate reserves therefor;
(f) Materialmen's, mechanic's, workmen's repairmen's or other
like Liens arising in the ordinary course of
40
<PAGE>
business (including those arising under maintenance agreements entered into in
the ordinary course of business) securing obligations that are not overdue or
are being contested in good faith by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any material asset;
(g) Liens which are bonded in a manner reasonably satisfactory
to the Majority Lenders; and
(h) Liens permitted by the Ship Mortgage on the vessel thereby
encumbered.
8.3. PROHIBITION OF FUNDAMENTAL CHANGES. Directly or indirectly,
(whether in one transaction or a series of transactions), (a) enter into any
transaction of merger, consolidation or amalgamation; (b) liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); (c) convey, sell,
lease, transfer or otherwise dispose of all or a substantial part of its
respective business or assets; (d) acquire by purchase or otherwise all or
substantially all the business or assets, or stock or other evidence of
beneficial ownership, of any Person; (e) make any material change, which could
have an adverse effect on the Borrowers' ability to perform their Obligations
hereunder, in their present method of conducting business; or (f) enter into any
agreement or transaction where they are bound to do or permit any of the
foregoing.
8.4. PROHIBITION ON SALE OF ASSETS.
Sell, transfer, convey, lease or otherwise dispose of, all or
any of the assets of the Borrowers constituting assets of MKO's Transit Division
except (i) sales of inventory in the ordinary course of business; (ii) sales
of equipment not exceeding $50,000 for which no consent shall be required; (iii)
sales of equipment greater than $50,000 but less than $600,000 which sales shall
require the consent of the Administrative Agent; (iv) sales of equipment greater
than $600,000 in the aggregate but less than $1,500,000 in the aggregate which
sales shall require the consent of the Majority Lenders; and (v) sales of
equipment in excess of $1,500,000 in the aggregate which sales shall require the
consent of All Lenders; PROVIDED, HOWEVER, to the extent that any such
equipment constitutes equipment that is subject to the Equipment Asset Pool
Intercreditor Agreement and secures new bonds issued by the Bonding Company (the
"Subject Equipment"), the Borrower shall be permitted to sell, transfer, convey,
lease or otherwise dispose of any and all Subject Equipment without the consent
of the Lenders or the Agents and the Borrowers shall be permitted to retain the
Net Cash Proceeds of such Subject Equipment so long as (x) such Net Cash
Proceeds are used to cash-collateralize new bonds obtained from the Bonding
Company, and (y) such Net Cash Proceeds are used as the first money to be
expended to replace any such Subject Equipment.
41
<PAGE>
8.5. INTENTIONALLY OMITTED.
8.6. COMPLIANCE WITH ERISA.
(a) Terminate any Single Employer Plan maintained by any
Borrower or a Commonly Controlled Entity so as to result in any material
liability to PBGC.
(b) Engage in any "prohibited transaction" (as defined in
Section 4975 of the Code) involving any Single Employer Plan maintained by any
Borrower or a Commonly Controlled Entity which would result in a material
liability for an excise tax or civil penalty in connection therewith.
(c) Incur or suffer to exist any material "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
involving any Single Employer Plan maintained by any Borrower or a Commonly
Controlled Entity.
(d) Allow or suffer to exist any event or condition, which
presents a material risk of incurring a material liability to PBGC by reason of
the termination of any Plan.
8.7. RESTRICTED PAYMENTS. (a) Declare, pay or make (i) any
dividends or other distributions with respect to their capital stock or rights
to acquire capital stock or any payment on account of such capital stock or
rights to acquire capital stock, or (ii) any prepayment of principal or
prepayment of interest on account of any of their Indebtedness; (b) set apart
assets for a sinking or any analogous fund for the purchase, redemption, or
retirement or other acquisition of, any shares of their capital stock or rights
to acquire capital stock or any of their Indebtedness; or (c) purchase, defease,
acquire or redeem any of their Indebtedness; PROVIDED, that the Borrowers may
make required or permitted payments or prepayments on the Loans.
8.8. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including any purchase, sale, lease or exchange of property or the rendering of
any service, with any Affiliate or employee, except transactions which are
contemplated by this Agreement or are in the ordinary course of the Borrowers'
businesses and are made in accordance with the Budget.
8.9. INTENTIONALLY OMITTED.
8.10. OPERATING LEASES. Incur at any time any additional annual
lease payments as lessee in connection with the operations of the Transit
Division under Operating Leases, excluding (i) scheduled increases in lease
payments in connection with leases existing on the Closing Date and as set forth
in SCHEDULE 8.10 or replacements of such leases upon expiration thereof and
(ii) conversions of existing Capital Leases to Operating Leases, so long as such
conversion does not have the effect of increasing total annual lease payments to
the lessor;
42
<PAGE>
and (iii) lease payments in connection with new Operating Leases, PROVIDED
that the aggregate annual lease payments for such Operating Leases shall not
exceed $1,000,000.
8.11. CAPITAL EXPENDITURES. Make any Capital Expenditures in
connection with the operations of the Transit Division other than (a) items
included in the Budget for the Transit Division, or (b) other Capital
Expenditures aggregating not more than $1,000,000.
8.12. AMENDMENT OF CHARTER OR BYLAWS. Amend their articles of
incorporation to revise, in any material respect, the Borrowers' capital
structure, or to change the names of the Borrowers, or make any other material
amendments thereto or to their bylaws without promptly providing a copy thereof
to the Agent.
8.13. NO CONSENT TO SUBORDINATION. Give their consent to the
subordination of any of their rights or claims with respect to the operations of
the Transit Division (including any subordination in the form of an agreement to
defer remedies or extend maturities) to any right or claim of any other Person
other than subordination of the MK Rail Note in connection with the MK Rail
Global Settlement Agreement.
8.14. INTERCOMPANY OBLIGATIONS. Adjust, settle or compromise, any
amounts receivable from any Subsidiary or Affiliate with respect to the
operations of the Transit Division including, but not limited to, accounts
receivable, notes receivable, or any other intercompany account reflected on the
books of the Borrowers; PROVIDED, that the Borrowers may adjust, settle or
compromise any amounts receivable from any Subsidiary or Affiliate if the
aggregate amount of such adjustments, settlements, or compromises does not
exceed $500,000.
ARTICLE IX
DEFAULTS
9.1. EVENTS OF DEFAULT. Any one or more of the following described
events shall constitute an Event of Default hereunder, whether such occurrence
shall be voluntary or involuntary, or occur or be effected by operation of law
or otherwise:
(a) Any Borrower shall fail to pay when due any principal,
interest, fees, expenses, or any other amount owing in respect of any of the
Loans or any of the other Obligations when due and payable pursuant to the terms
thereof or hereof;
(b) Any Borrower shall fail to observe or perform any covenant
contained in ARTICLE VIII;
43
<PAGE>
(c) Any Borrower shall fail to observe or perform any covenant
or agreement contained in this Agreement or the other Restructuring Documents
(other than those covered by clause (a) or (b) above) for 10 days after written
notice thereof has been given to any Borrower by the Agent;
(d) Any representation or warranty of any Borrower set forth
in this Agreement, the Notes or the other Restructuring Documents or in any
other certificate, opinion or other statement at any time provided by or on
behalf of any Borrower pursuant hereto shall prove to be in any material respect
false or misleading at the time given or deemed given;
(e) Any Borrower shall fail to make any payment in respect of
any Indebtedness when due or within any applicable grace period, or any event or
condition shall occur which results in the acceleration of the maturity of any
Indebtedness or set-off of such Indebtedness of any Borrower or enables (or,
with the giving of notice or lapse of time or both, would enable) the holder of
such Indebtedness or any Person acting on such holder's behalf to accelerate the
maturity thereof;
(f) Any Borrower shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its Indebtedness under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its Indebtedness as it
becomes due, or shall take any corporate action to authorize any of the
foregoing;
(g) An involuntary case or other proceeding shall be commenced
against any Borrower seeking liquidation, reorganization or other relief with
respect to it or its Indebtedness under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 20 days; or an order for
relief shall be entered against any Borrower under the federal bankruptcy laws
as now or hereafter in effect;
(h) Any writ of execution, attachment or garnishment, or any
lien, any judgment or any other legal process to be issued against any Borrower
or any of the property of any Borrower, which by itself or together with all
other such legal processes is for an amount in excess of $1,000,000 which shall
remain unvacated, unbonded or unstayed;
44
<PAGE>
(i) The occurrence of any of the events specified in
subsections (a) through (g) of Section 6.1 of the Multiparty Agreement or the
project owner makes any demand under any indemnity agreement between the Bonding
Company and any Borrower;
(j) Actual disbursements of any type shall exceed the total
projected disbursements as set forth in the Budget by $10,000,000 in any one
week or $20,000,000 in the aggregate;
(k) Actual Financing Shortfall shall exceed the projected
amount as set forth in the Budget by $10,000,000 in any one week or $20,000,000
in the aggregate;
(l) All or substantially all of the property of any Borrower
shall be condemned, seized or otherwise appropriated;
(m) Any Borrower shall voluntarily suspend the transaction
of substantially all of its business for more than three consecutive Business
Days;
(n) Any Borrower or any Commonly Controlled Entity shall
engage in (a) any "prohibited transaction" (as defined in ERISA or Section 4975
of the Code) involving any Single Employer Plan maintained by any Borrower or a
Commonly Controlled Entity, (b) any "accumulated funding deficiency" (as defined
in ERISA), whether or not waived, shall exist with respect to any Single
Employer Plan maintained by any Borrower or a Commonly Controlled Entity, (c) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or institution of
proceedings presents a material risk of termination of such Plan for purposes of
Title IV of ERISA, and, in the case of a Reportable Event, the continuance of
such Reportable Event unremedied for ten days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof, as the
case may be, (d) any Single Employer Plan shall terminate for purposes of Title
IV of ERISA, (e) the withdrawal or partial withdrawal from any Multi-employer
Plan, (f) the reorganization or insolvency of a Single Employer Plan maintained
by any Borrower or a Commonly Controlled Entity or (g) it shall be determined
that Unfunded Liabilities exist, and in each case in clauses (a) through (g)
above, such event or condition together with all other such events or
conditions, if any, would subject any Borrower to any tax, penalty or other
liabilities in excess of $1,000,000 or would otherwise have a Materially Adverse
Effect;
(o) Any person or group of persons (within the meaning of
Section 12 or 14 of the Securities Exchange Act of 1934, as amended), other than
the Existing Lenders (as defined in the Override Agreement) shall acquire
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities
45
<PAGE>
and Exchange Commission under said Act) of 35% or more of the outstanding shares
of common stock of MKD;
(p) Any of the Restructuring Documents or provisions thereof,
for any reason whatsoever, ceases to be valid and binding on any Borrower or any
Existing Lender or Lender or the Bonding Company, or any Borrower or any
Existing Lender or Lender or the Bonding Company shall so assert, or the Liens
granted pursuant to any of the Security Documents shall not constitute valid,
perfected, first-priority Liens on the properties and assets described therein,
subject only to the Permitted Liens, or any Borrower shall be in default under
the Security Documents, subject to any cure periods contained therein;
(q) Any other event or condition occurs or exists which could
have or result in a Material Adverse Effect;
(r) The occurrence of any breach or default under the
Multiparty Agreement or the Intercreditor Agreements;
(s) Total disbursements relating to the Transit Division
exceed the total disbursements set forth in the Budget by $3,000,000 on a
cumulative basis, which disbursements shall first be increased on the first
Business Day following the Closing Date;
(t) The delivery of any notice purporting to terminate, cancel
or revoke the Guaranty or the Letter of Credit as to either existing or future
advances hereunder, the allegations by the Bonding Company that either the
Guaranty or the Letter of Credit is invalid or unenforceable in any respect, or
termination, cancellation or revocation of the Guaranty or the Letter of Credit
or the occurrence of an "Event of Default" as defined in the Guaranty;
(u) The T-Co Transaction shall not have been consummated in
the judgment of the Majority Lenders by September 1, 1995 pursuant to the terms
of the T-Co Term Sheet and to the extent not addressed in the T-Co Term Sheet,
on terms and conditions acceptable to the Majority Lenders;
(v) Breach of any representation, warranty, covenant,
obligation or undertaking set forth in the Cash Management System or any
agreement related thereto;
(w) The occurrence of any "Event of Default" as defined in the
Bonding Company Reimbursement Agreement;
(x) The Bridge Loan shall mature, whether by reason of the
occurrence of the stated maturity date or by acceleration; or
(y) MKD shall not have delivered the Warrants under the
Override Agreement to the Agent under the Override Agreement
46
<PAGE>
pursuant to the Securities Purchase Agreement on or before August 31, 1995.
9.2. THE LENDERS' REMEDIES.
(a) OCCURRENCE OF A SPECIAL EVENT OF DEFAULT. Upon the
occurrence of a Special Event of Default or at any time thereafter, after notice
and the lapse of any cure period, where applicable, and in each and every case,
until such Event of Default shall have been remedied or waived in writing in
accordance with SECTION 12.6, either one or both of the following actions may
be taken: (a) upon the request of the Majority Lenders, the Agent shall, by
notice in writing to the Borrowers, terminate any or all of the Commitments,
whereupon such Commitments of the Lenders thereunder immediately shall
terminate; and (b) upon the request of the Majority Lenders, the Agent shall, by
notice in writing to the Borrowers (a "Notice of Acceleration") declare all the
Obligations due hereunder and under the Loan Documents to be immediately due and
payable, without presentment, demand, protest or notice of any kind (other than
notices provided herein), all of which are hereby expressly waived to the extent
permitted by applicable law; PROVIDED, HOWEVER, that upon the occurrence
of any event specified in either SECTION 9.1(f) or SECTION 9.1(g) (and, in
the case of SECTION 9.1(g), after the lapse of the 20 day period referred to
therein) the Commitments shall automatically terminate, and all amounts owing
under this Agreement, the Notes and the other Loan Documents immediately shall
automatically be due and payable in full without declaration or other notice
(other than notices provided herein) to the Borrowers. Upon the occurrence of a
Special Event of Default, the Agent immediately, and without expiration of any
period of grace (other than that specifically provided herein), may enforce
payment of all Obligations of any Borrower to the Agent and the Lenders and the
Agent shall be entitled to all remedies available hereunder and thereunder.
(b) OCCURRENCE OF A STANDARD EVENT OF DEFAULT. Upon the
occurrence of a Standard Event of Default, the Agent shall follow the procedures
set forth in the Five-Party Agreement. Upon instructions from the Bonding
Company, the Agent may waive such Event of Default or may, by notice in writing
to the Borrowers, terminate any or all of the Commitments, whereupon such
Commitments of the Lenders thereunder immediately shall terminate and may
deliver a Notice of Acceleration declaring all the Obligations due hereunder and
under the Loan Documents to be immediately due and payable, without presentment,
demand, protest or notice of any kind (other than notices provided herein), all
of which are hereby expressly waived to the extent permitted by applicable law.
The Agent immediately, and without expiration of any period of grace (other than
that specifically provided herein), may enforce payment of all Obligations of
any Borrower to the Agent and the Lenders and the Agent shall be entitled to all
remedies available hereunder and thereunder.
47
<PAGE>
9.3. OTHER REMEDIES. Subject to the Intercreditor Agreements, upon
the occurrence of an Event of Default or at any time thereafter, after notice
and the lapse of any cure period, where applicable, and in each and every case,
until such Event of Default shall have been remedied or waived in writing in
accordance with SECTION 12.6, in addition to the remedies listed in SECTION
9.2 upon the earlier of a Notice of Acceleration or acceleration of the
Obligations, the Lenders acting by and through the Agent shall have all rights,
powers and remedies available under each of the Loan Documents and applicable
law, including (i) enforcing the Collateral Agent's security interest in the
Collateral by means of one or more public or private sales thereof, (ii) taking
possession of all or any portion of the Collateral, in person or by means of a
court appointed receiver (who shall be appointed without regard to the value of
Collateral Agent's security), and (iii) exercising any or all of the rights of a
beneficiary or secured party pursuant to applicable law. All rights, powers and
remedies of the Agent or the Lenders in connection with each of the Loan
Documents may be exercised at any time or from time to time, are cumulative and
not exclusive, and shall be in addition to any other rights, powers or remedies
provided by law or equity. Upon the request of the Majority Lenders after the
occurrence of an Event of Default, the Agent shall instruct the Collateral Agent
to exercise any remedies under the Loan Documents, including collection of funds
in deposit accounts and commencement of or actions in court proceedings.
9.4. WAIVERS BY BORROWERS. Except as otherwise provided for in
this Agreement and applicable law, the Borrowers waive (i) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by the Agent, the Collateral Agent or the Lenders on which the
Borrowers may in any way be liable and hereby ratify and confirm whatever the
Agent, the Collateral Agent or the Lenders may do in this regard, (ii) all
rights to notice and a hearing prior to the Collateral Agent's taking possession
or control of, or replevy, attachment or levy upon, the Collateral, or any bond
or security which might be required by any court prior to allowing the Agent or
the Collateral Agent to exercise any of its remedies, and (iii) the benefit of
all valuation, appraisal and exemption laws. Each Borrower acknowledges that it
has been advised by counsel of its choice with respect to the effect of the
foregoing waivers and this Agreement, the other Loan Documents and the
transactions evidenced by this Agreement and the other Loan Documents,
generally.
48
<PAGE>
ARTICLE X
THE AGENT
10.1. APPOINTMENT. Each Lender hereby (a) irrevocably appoints
Mellon Bank, N.A. as the Agent of such Lender under this Agreement and the other
Loan Documents, and (b) irrevocably authorizes the Agent to take such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding anything to the contrary herein, the Agent shall have no duties,
except those expressly set forth in this Agreement and the other Loan Documents,
and no implied covenants, responsibilities, duties, obligations or liabilities
shall be read into this Agreement and the other Loan Documents or otherwise
exist against the Agent.
10.2. AGENT AND AFFILIATES. The Agent shall have the same rights
and powers under this Agreement as any other Lender and may exercise or refrain
from exercising the same as though it were not the Agent, and the Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with either Borrower or any Subsidiary or Affiliate of either
Borrower as if it were not the Agent hereunder.
10.3. RETENTION OF DOCUMENTS AND INFORMATION TO THE LENDERS. Agent
shall deliver to each Lender any material documents and written information
required under this Agreement to be delivered by the Borrowers to Agent within a
reasonable period after the Agent's receipt of such documents or information.
10.4. DELEGATION OF DUTIES. The Agent may exercise any of its
powers or execute any of its duties under this Agreement and the other Loan
Documents by or through one or more agents or attorneys-in-fact and shall be
entitled to take, and to rely on, advice of counsel concerning all matters
pertaining to such rights and duties. The Agent may utilize the services of
such agents and attorneys-in-fact as the Agent in its sole discretion reasonably
determines, and all fees and expenses of such agents and attorneys-in-fact shall
be paid by the Borrowers on demand. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by the
Agent with reasonable care.
10.5. LIMITATION OF LIABILITY. Neither the Agent, nor its officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (a)
liable for any waiver, consent or approval given or any action taken or omitted
to be given or taken by them or by such Person under or in connection with this
Agreement or the other the Loan Documents or (b) responsible for the
consequences of any oversight or error in judgment by them or
49
<PAGE>
such Person whatsoever, except for their or such Person's own gross negligence
or willful misconduct. The Agent shall not be responsible for (v) the
execution, validity, enforceability, effectiveness or genuineness of this
Agreement or the other Loan Documents, (w) the collectability of any amounts
owing under this Agreement or the other Loan Documents, (x) the value,
sufficiency, enforceability or collectability of any Collateral security
therefore, (y) the failure by any Borrower to perform its Obligations hereunder
or (z) the truth, accuracy and completeness of the recitals, statements,
representations or warranties made by any Borrower or any officer or agent
thereof contained in this Agreement, the other Loan Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent in connection with, this Agreement or the other Loan
Documents.
10.6. RELIANCE BY THE AGENT. The Agent shall not have any
obligation (a) to ascertain or to inquire as to the observance or performance of
any of the conditions, covenants or agreements in this Agreement or the other
Loan Documents or in any document, instrument or agreement at any time
constituting, or intended to constitute, collateral security therefor, (b) to
ascertain or inquire as to whether any notice, consent, waiver or request
delivered to it shall have been duly authorized or is genuine, accurate and
complete, or (c) to inspect the properties, books or records of the Borrowers.
The Agent shall be entitled to rely, and shall be fully protected in relying,
(x) upon any writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document, instrument or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, or (y) upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent may deem and
treat each Lender party hereto or any Assignee as a Lender for all purposes
unless a written notice of the assignment, negotiation or transfer thereof, in
accordance with the provisions of this Agreement, shall have been delivered to
the Agent identifying the name of any successor or Assignee. The Agent shall be
entitled to fail or refuse, and shall be fully protected in failing or refusing,
to take any action under this Agreement or the other Loan Documents unless (a)
it first shall receive such advice or concurrence of the Majority Lenders as it
deems appropriate, or (b) it first shall be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. In all cases the
Agent shall be fully protected in acting, or in refraining from acting, under
this Agreement or the Loan Documents in accordance with a request of the
Majority Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Notes.
50
<PAGE>
10.7. NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless the Agent
has received notice from a Lender or the Borrowers referring to this Agreement,
describing such Event of Default and stating that such notice is a "notice of
default." If the Agent receives such a notice or has actual knowledge of the
occurrence of an Event of Default, the Agent promptly shall give notice thereof
to the Lenders. The Agent shall take such action with respect to such Event of
Default as shall be directed by the Majority Lenders; PROVIDED, HOWEVER,
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Event of Default as it deems advisable in the
best interests of the Lenders.
10.8. NON-RELIANCE ON THE AGENT AND THE OTHER LENDERS. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it. The Agent shall have no obligation or
liability to any of the Lenders regarding the creditworthiness or financial
condition of any Borrower. No act by the Agent hereinafter taken, including any
review of the Borrowers, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent that,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, it has made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Borrowers and has made
its own decision to make its Loans hereunder and to enter into this Agreement.
Each Lender also represents that, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
deems appropriate at the time, it shall continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Borrowers. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agent hereunder, the Agent shall have no obligation or liability
to provide any Lender with any credit or other information concerning the
business, operations, property, financial and other condition or
creditworthiness of the Borrowers which may come into the possession of either
the Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
10.9. COLLATERAL. Each of the Lenders represents to the Agent and
each of the other Lenders that it in good faith is not relying upon any "margin
stock" (as defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
51
<PAGE>
10.10. INDEMNIFICATION. Each of the Lenders shall indemnify, defend
and hold harmless the Agent in its capacity as such (to the extent not
reimbursed by the Borrowers and without limiting the obligation of the Borrowers
to do so), ratably according to their Pro Rata Share, from and against any and
all claims, demands, lawsuits, costs, expenses, fees, liabilities, obligations,
losses, damages, actions, recoveries, judgments, suits, costs, expenses or
disbursements of any kind whatsoever, including interest, penalties and
attorneys' fees and costs, whether direct, indirect, consequential or
incidental, which at any time (including at any time following the payment of
all amounts payable under the Existing Agreements and the Restructuring
Documents) may be imposed on, incurred by or asserted against the Agent in its
capacity as such and not in its individual capacity in any way relating to,
resulting from or arising out of this Agreement, or the Restructuring Documents,
the transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; PROVIDED, HOWEVER, that
no Lender shall be liable for the payment of any portion of such claims,
demands, lawsuits, costs, expenses, fees, liabilities, obligations, losses,
damages, actions, remedies, judgments, suits, costs, expenses or disbursements
to the extent such result from the Agent's gross negligence or willful
misconduct. The agreements in this SECTION 10.10 shall survive the payment of
all amounts payable under the Restructuring Documents and shall be in addition
to and not in lieu of any other indemnification agreements set forth in the
Restructuring Documents.
10.11. AGENT IN ITS INDIVIDUAL CAPACITY. Agent, in its individual
capacity, and its Affiliates may make loans and other financial accommodations
to, accept deposits from, and generally engage in any kind of business with, the
Borrowers and their Subsidiaries as though Agent was not the Agent hereunder.
With respect to its Existing Indebtedness and any other Loans made or renewed by
it, Agent in its individual capacity shall have the same benefits, rights,
powers and privileges under this Agreement and the Loan Documents as any Lender
and may exercise the same as though it were not Agent, and the terms "Lender"
and "Lenders" shall include Agent in its individual capacity.
10.12. SUCCESSOR AGENT. The Agent may resign as such upon ten days'
prior written notice to the Lenders. The Agent shall concurrently provide the
Borrowers with a copy of such notice. If the Agent shall resign as such under
this Agreement, then the Majority Lenders shall appoint from among the Lenders a
successor agent for the Lenders. A successor agent may also be appointed by the
Majority Lenders if the Agent ceases to have any Loans hereunder, and upon such
appointment of a successor agent the Agent shall resign as such. Upon
acceptance of its appointment as the successor agent in writing, (a) such
successor agent shall succeed to the rights, powers, privileges and duties of
the Agent, (b) the retiring Agent shall be discharged of all its obligations and
liabilities in such capacity under this Agreement
52
<PAGE>
and the Loan Documents, (c) the term "Agent" shall mean such successor agent
effective upon its appointment, and (d) the retiring Agent's rights, powers and
duties as the Agent shall be terminated, without any other or further act or
deed on the part of such former Agent or any of the parties to this Agreement or
their successors and assigns. With respect to any actions taken or omitted to
be taken by the retiring Agent while it was the Agent (for which retiring Agent
may still have liability), the retiring Agent shall continue to receive the
benefits of this ARTICLE X, including SECTION 10.8.
10.13. APPLICABILITY OF SECTION TO THE BORROWERS. Notwithstanding
any other provision contained in this ARTICLE X, the rights and obligations of
the Borrowers under this Agreement shall not be affected by any provision
otherwise included in this ARTICLE X. The Borrowers shall be permitted to
rely on communications from the Agent which it reasonably believes are made on
behalf of the Agent and, if specified therein, the Lenders, and except as
otherwise set forth specifically herein, all notices and payments to be made by
the Borrowers hereunder shall be made to the Agent. Further, if any Lender
shall be in default hereunder, such default shall not affect the rights and
obligations of the Borrowers hereunder. The Agent shall provide the Borrowers
with prompt notice of any default by any Lender.
10.14. AUTHORIZATION TO AGENT TO ENTER INTO AND ABIDE BY FIVE-PARTY
Agreement. Each Lender authorizes the Agent to enter into the Five-Party
Agreement on behalf of the Lenders and to act in accordance with the terms of
the Five-Party Agreement. In the event that there is a conflict between the
terms of this Agreement and the terms of the Five-Party Agreement, the Agent is
authorized to comply with the terms of the Five-Party Agreement.
ARTICLE XI
JOINT AND SEVERAL LIABILITY
11.1. JOINT AND SEVERAL LIABILITY. Each Borrower agrees that such
Borrower is jointly and severally liable for the Obligations hereunder and that
all Obligations of each Borrower now or hereafter existing under this Agreement,
whether for principal, interest, fees, indemnification, expenses or otherwise,
will be paid strictly in accordance with the terms of this Agreement and the
other Loan Documents regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Agent or the Lenders with respect thereto. So long as the Obligations have not
been paid in full, the liability of each Borrower hereunder shall be absolute
and unconditional irrespective of:
(a) any taking, exchange, release or nonperfection of any
Collateral or any release or amendment or waiver of or
53
<PAGE>
consent to departure from any guaranty, for all or any of the Obligations; or
(b) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, any Borrower.
11.2. THE GUARANTEES. If and to the extent any Obligation of any
Borrower to the Agent or any Lender shall be considered an obligation of
guaranty or suretyship, each Borrower hereby unconditionally guarantees the full
and punctual payment (whether at stated maturity, upon acceleration or
otherwise) of the Obligations. Upon failure by either Borrower to pay
punctually any such amount, the other Borrower shall forthwith on demand pay the
amount not so paid at the place and in the manner specified in this Agreement.
11.3. GUARANTEES UNCONDITIONAL. The Obligations of each Borrower
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(a) Any extension, renewal, settlement, compromise, waiver or
release in respect of any Obligation of the other Borrower under this Agreement,
any Note, the other Restructuring Documents or by operation of law or otherwise;
(b) Any modification or amendment of or supplement to this
Agreement, any Note or the other Restructuring Documents;
(c) Any release, impairment, non-perfection or invalidity of
any direct or indirect security for any Obligation of the other Borrower under
this Agreement, any Note or the other Restructuring Documents;
(d) Any change in the corporate existence, structure or
ownership of the other Borrower, or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the other Borrower or its assets or any
resulting release or discharge of any Obligation of the other Borrower contained
in this Agreement, any Note or the other Restructuring Documents;
(e) The existence of any claim, set-off or other rights which
a Borrower may have at any time against the other Borrower, the Agent, any
Lender or any other Person, whether in connection herewith or any unrelated
transactions; PROVIDED, that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(f) Any invalidity or unenforceability relating to or against
the other Borrower for any reason of this Agreement, any Note or the other
Restructuring Documents, or any provision of applicable law or regulation
purporting to prohibit the payment by the other Borrower of the principal of or
interest on
54
<PAGE>
any Note or any other amount payable by it under this Agreement or the other
Restructuring Documents; or
(g) Any other act or omission to act or delay of any kind by
the other Borrower, the Agent, any Lender or any other Person or any other
circumstance whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of its Obligations under this
Agreement, any Note or the other Restructuring Documents.
11.4. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
Circumstances. The Borrowers' Obligations hereunder shall remain in full force
and effect until the Commitments shall have terminated and the principal of and
interest on the Notes and all other amounts payable by the Borrowers under this
Agreement shall have been paid in full. If at any time any payment of the
principal of or interest on any Note or any other amount payable by a Borrower
under this Agreement is rescinded or must be otherwise restored or returned upon
the insolvency, bankruptcy or reorganization of a Borrower or otherwise, the
other Borrower's Obligations hereunder with respect to such payment shall be
reinstated at such time as though such payment had been due but not made at such
time.
11.5. WAIVERS BY THE BORROWERS. The following waivers shall apply
to the guarantees under this ARTICLE XI:
(a) EACH BORROWER EXPRESSLY WAIVES THE RIGHT TO REQUIRE THE
AGENT, THE COLLATERAL AGENT OR ANY LENDER FIRST TO PURSUE THE OTHER BORROWER OR
ANY OTHER PERSON, THE COLLATERAL, OR ANY OTHER SECURITY OR GUARANTY THAT MAY BE
HELD FOR THE OBLIGATIONS, OR TO APPLY ANY SUCH SECURITY OR GUARANTY TO THE
OBLIGATIONS BEFORE SEEKING FROM SUCH BORROWER PAYMENT IN FULL OF ITS OBLIGATIONS
TO THE AGENT AND THE LENDERS OR PROCEEDING AGAINST SUCH BORROWER FOR SAME; AND
(b) SUCH BORROWER AGREES THAT THE AGENT AND THE LENDERS SHALL
BE UNDER NO OBLIGATION TO: MARSHAL ANY ASSETS IN FAVOR OF SUCH PERSON; TO
PROCEED FIRST AGAINST ANY OTHER PERSON OR ANY PROPERTY OF ANY OTHER PERSON OR
AGAINST ANY COLLATERAL; ENFORCE FIRST ANY OTHER GUARANTY OBLIGATIONS WITH
RESPECT TO, OR SECURITY FOR, THE OBLIGATIONS; OR PURSUE ANY OTHER REMEDY IN THE
AGENT'S OR ANY LENDER'S POWER THAT SUCH BORROWER MAY NOT BE ABLE TO PURSUE
ITSELF AND THAT MAY LIGHTEN SUCH BORROWER'S BURDEN, ANY RIGHT TO WHICH SUCH
BORROWER HEREBY EXPRESSLY WAIVES.
EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE
A MATERIAL INDUCEMENT TO THE AGENT'S AND EACH LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT THE AGENT AND EACH LENDER ARE RELYING UPON THE FOREGOING
WAIVERS IN THEIR FUTURE DEALINGS WITH SUCH BORROWER. EACH BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL.
55
<PAGE>
11.6. SUBROGATION. Each Borrower agrees that it shall have no right
of subrogation, contribution or reimbursement against the other Borrower until
the Obligations are paid in full. Each Borrower agrees upon making any payment
hereunder to be subrogated to the rights of the payee against the other Borrower
with respect to such payment or against any direct or indirect security
therefor, or otherwise to be reimbursed, indemnified or exonerated by or for the
account of the other Borrower in respect thereof.
11.7. STAY OF ACCELERATION. In the event that acceleration of the
time for payment of any amount payable by either Borrower under this Agreement
or its Notes is stayed upon insolvency, bankruptcy or reorganization of such
Borrower, all such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by the other Borrower hereunder
forthwith on demand by the Agent made at the request of the Majority Lenders.
ARTICLE XII
MISCELLANEOUS
12.1. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the Schedule for Notices attached hereto or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the Agent and the Borrowers. Each such notice, request
or other communication shall be effective, (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this Section
and confirmation of receipt is received, (ii) if given by mail, seventy-two (72)
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; PROVIDED, that
notices to the Agent under ARTICLE II or ARTICLE III shall not be effective
until received.
12.2. ENTIRE AGREEMENT. The execution and delivery of this
Agreement, the Notes and the other Loan Documents supersede all the negotiations
or stipulations concerning matters thereof which preceded or accompanied the
execution and delivery hereof and thereof. This Agreement, the Notes and the
other Loan Documents are intended, by the parties hereto and thereto, to be a
complete and exclusive statement of the terms and conditions hereof and thereof.
12.3. NO WAIVERS. No failure or delay by the Agent or any Lender in
exercising any right, power or privilege hereunder or under any Note or the
other Restructuring Documents shall operate
56
<PAGE>
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
12.4. EXPENSES; INDEMNIFICATION.
(a) The Borrowers shall pay (i) all reasonable out-of-pocket
expenses of the Agent and the Steering Committee Lenders as a group, as such
group is constituted on the Closing Date (as set forth on the attached SCHEDULE
12.4) and as such group may be reconstituted from time to time, including
reasonable fees and disbursements of the Professionals retained by the Steering
Committee Lenders as a whole, in connection with the preparation and
administration of this Agreement, any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder, (ii) if an Event
of Default occurs, all reasonable out-of-pocket expenses incurred by the Agent
and each Steering Committee Lender, or their Professionals, including the
reasonable fees and disbursements of counsel (including allocated costs of
internal counsel), in connection with such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom,
and (iii) all reasonable out-of-pocket legal fees and expenses of each Lender
accruing from and after the Termination Date in connection with payment of the
Obligations.
(b) The Borrowers agree to indemnify the Agent and each
Lender, their respective Affiliates and the respective directors, officers,
agents and employees of the foregoing (each an "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind, including the reasonable fees and disbursements
of counsel (including allocated costs of internal counsel), which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) brought or threatened (i) relating to or arising out of this
Agreement or any actual or proposed use of proceeds of Loans hereunder or (ii)
directly or indirectly resulting from, arising out of, or based upon (x) the
presence, use, generation, manufacture, installation, release, discharge,
storage or disposal, at any time, of any Hazardous Materials on, under, in or
about, or the transportation of any such materials to or from, any Real Property
or Real Property owned, leased or operated by Borrower or any Affiliate of
Borrower (collectively, the "Subject Property") or (y) the violation or alleged
violation by Borrower or any Affiliate of Borrower of any law, statute,
ordinance, order, rule, regulation, permit, judgment or license relating to the
use, generation, manufacture, installation, release, discharge, storage or
disposal of Hazardous Materials to or from the Subject Property; PROVIDED,
that no Indemnitee shall have the right to be indemnified hereunder (a) for such
Indemnitee's own
57
<PAGE>
gross negligence or willful misconduct or (b) in the case of any Lender, for its
failure to perform the duties expressly required to be performed by it by the
terms of this Agreement, in each case as determined by a court of competent
jurisdiction.
12.5. SET-OFF; SHARING OF SET-OFFS.
(a) In addition to any rights and remedies of the Lenders
provided by law, the Lenders each shall have a security interest in any and all
deposits of the Borrowers (general or special, time or demand, provisional or
final) at any time held by any Lender which security interest shall secure the
Obligations. Upon the occurrence and during the continuance of an Event of
Default, provided that it has first received the written consent of the Agent,
without prior notice to the Borrowers (any such notice being specifically waived
by the Borrowers to the fullest extent permitted by applicable law) each Lender
may set off and apply against any Obligations, whether matured or unmatured, of
the Borrowers to the Lenders, any amount owing from the Lenders to the
Borrowers. No Lender shall exercise any right of set-off it may have against
any Borrower or Guarantor in connection with the Obligations without the prior
written consent of the Agent. Each Lender promptly shall notify the Borrowers
and the Agent after any such setoff and application made by any such Lender;
PROVIDED, HOWEVER, that failure to give such notice shall not affect the
validity of such setoff and application. Provided that an Event of Default
described in either SECTION 9.1(f) or SECTION 9.1(g) has not occurred, Bank
of America National Trust and Savings Association expressly agrees that it will
not exercise set-off rights with respect to cash in the Cash Management System
for application against any Indebtedness, liabilities or other obligations of
any of the Borrowers or any of their Consolidated Subsidiaries under any
agreements other than the Loan Documents. Any such set-off rights will be
subject to the Intercreditor Agreements.
(b) Each Lender agrees that if it shall, by exercising any
right of set-off or counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of principal and interest due to it which is greater
than the proportion received by any other Lender in respect of the aggregate
amount of principal and interest due to such other Lender, the Lender receiving
such proportionately greater payment shall purchase such participations in the
Loans held by the other Lenders, and such other adjustments shall be made, as
may be required so that all such payments of principal and interest with respect
to the Loans held by the Lenders shall be shared by the Lenders pro rata;
PROVIDED, that nothing in this Section shall impair the right of any Lender to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of Indebtedness of a Borrower
other than its Indebtedness hereunder. Each Borrower agrees, to the fullest
extent it may effectively do so under applicable law, that any holder of a
participation in a Loan, whether or not
58
<PAGE>
acquired pursuant to the foregoing arrangements, may exercise rights of set-off
or counterclaim and other rights with respect to such participation as fully as
if such holder of a participation were a direct creditor of such Borrower in the
amount of such participation.
12.6. AMENDMENTS AND WAIVERS. Any provision of this Agreement, the
Notes or the other Loan Documents may be amended or waived only if permitted by
the Five-Party Agreement and if, but only if, such amendment or waiver is in
writing and is signed by the Borrowers, the Agent and the Majority Lenders;
PROVIDED, that (i) the consent of All Lenders shall be required to amend,
modify or waive any provision relating to (a) a change in the amount or the time
of payment of any amount owing on any of the Loans, (b) a change in the rate of
interest or fees to be paid by the Borrowers with respect to any of the Loans,
(c) a change in the definitions of "All Lenders", "Majority Lenders" or "Pro
Rata Share," (d) any increase in the total amounts of the Commitments or in any
Lender's Commitment or any change that subjects any Lender to any additional
obligation, (e) this SECTION 12.6, (f) the release of any Guarantor or any
Borrower, and (g) any change in the terms of the Letter of Credit; (ii) any
change in the duties of or indemnities in this Agreement in favor of any Lender
or in a Lender's Pro Rata Share shall require the consent of such Lender; and
(iii) any change in the duties of or indemnities in favor of the Agent shall
require the consent of the Agent. Notwithstanding anything to the contrary
herein, the Agent and the Majority Lenders may modify, amend, restate,
supplement or waive any provision of ARTICLE XI, other than SECTION 10.12,
without the consent of the Borrowers; PROVIDED, FURTHER, that amendments or
waivers of this Agreement are subject to the Intercreditor Agreements and to the
Five-Party Agreement.
12.7. EFFECT OF WAIVERS; MODIFICATION OF DOCUMENTS. The Agent's,
the Collateral Agent's, or the Lenders' failure, at any time or times, to
require strict performance by the Borrowers or any other Person of any provision
of this Agreement or any of the other Loan Documents shall not waive, affect or
diminish any right of the Agent, the Collateral Agent or the Lenders thereafter
to demand strict compliance and performance therewith. Any suspension or waiver
by the Agent or the Lenders of a Default or Event of Default under this
Agreement or any of the other Loan Documents, shall not suspend, waive or affect
any other Default or Event of Default under this Agreement or any of the other
Loan Documents, whether the same is prior or subsequent thereto and whether of
the same or of a different type. No waiver of any provision of this Agreement
or any other Loan Documents, nor consent to any departure by the Borrowers, or
any other person or entity therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Agent or the Majority Lenders or All
Lenders, as the case may be, necessary to effectuate such waiver or consent and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
59
<PAGE>
12.8. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that neither Borrower may assign or otherwise transfer any of
its rights under this Agreement without the prior written consent of All
Lenders.
(b) Any Lender may at any time grant to one or more of the
Existing Lenders (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant by a
Lender of a participating interest to a Participant, whether or not upon notice
to the Borrowers and the Agent, such Lender shall remain responsible for the
performance of its obligations hereunder, and the Borrowers and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement pursuant to
which any Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the Obligations
of the Borrowers hereunder, including the right to approve any amendment,
modification or waiver of any provision of this Agreement. The Borrowers agree
that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of ARTICLE III with respect to its
participating interest. An assignment or other transfer which is not permitted
by subsection (c) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance with this
subsection (b).
(c) Lenders may at any time assign to one or more of the
Existing Lenders or an Affiliate thereof (each an "Assignee") all of its rights
and obligations under this Agreement and the Notes or any part thereof, and such
Assignee shall assume such rights and obligations, pursuant to an assignment and
assumption agreement executed by such Assignee and such transferor Lender in
substantially the form attached hereto as EXHIBIT E. Upon execution and
delivery of such instrument and payment by such Assignee to such transferor
Lender of an amount equal to the purchase price agreed to between such
transferor Lender and such Assignee, such Assignee shall be deemed to be a
Lender under this Agreement and shall have all of the rights and obligations of
a Lender with a Commitment as set forth in such instrument of assumption, and
the transferor Lender shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Lender, the Agent and the Borrowers shall make appropriate
arrangements so that new Notes are issued to the Assignee and an updated
Schedule of Lenders is annexed to the Credit Agreement. If the Assignee is not
incorporated under the laws of the United States or a state thereof, then it
shall deliver to the Borrowers and the Agent
60
<PAGE>
certification as to its exemption from deduction or withholding of any United
States federal income taxes in accordance with SECTION 3.2.
12.9. HEADINGS AND CAPTIONS. The headings and captions used in this
Agreement, the Notes and the other Restructuring Documents are solely for the
purpose of reference and are not to be considered as construing or interpreting
the provisions hereof or thereof.
12.10. INTERPRETATION. Neither this Agreement, the Notes or the
other Restructuring Documents, nor any uncertainty or ambiguity herein or
therein shall be construed or resolved against the Agent, the Lenders or the
Borrowers, whether under any rule of construction or otherwise. This Agreement,
the Notes and the other Restructuring Documents have been reviewed by all the
parties hereto and thereto and shall be construed and interpreted according to
the ordinary meaning of the words used as to fairly accomplish the purposes and
intentions of all such parties.
12.11. INCONSISTENCIES WITH OTHER DOCUMENTS. In the event there is a
conflict or inconsistency between this Agreement the Notes, the Loan Documents,
or the Restructuring Documents, the terms of this Agreement shall control except
that this Agreement shall be subject to the provisions of the Intercreditor
Agreements and subject to the Five-Party Agreement; PROVIDED, HOWEVER,
that any provision of the Security Documents which imposes additional burdens on
the Borrowers or further restricts the rights of the Borrowers or gives the
Lenders additional rights shall not be deemed to be in conflict or inconsistent
with this Agreement and shall be given full force and effect.
12.12. SEVERABILITY. If any portion of this Agreement, the Notes and
the other Loan Documents shall be judged by a court of competent jurisdiction to
be unenforceable, the remaining portions shall be valid and enforceable to the
extent that the remaining terms thereof provide for the consummation of the
issuance of the Notes, the grant of collateral security therefor, and the
payment of principal and interest on the Loans substantially on the same terms
and subject to the same conditions as set forth herein and therein.
12.13. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
12.14. CONSENT TO JURISDICTION. THE BORROWERS HEREBY IRREVOCABLY
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES AND THE OTHER LOAN
DOCUMENTS, ANY
61
<PAGE>
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. THE BORROWERS HEREBY IRREVOCABLY CONSENT TO THE SERVICE OF A
SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING
BROUGHT BY THE AGENT OR ANY LENDER IN CONNECTION WITH THIS AGREEMENT, THE NOTES
OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER,
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF THEMSELVES AND
THEIR PROPERTY, IN THE MANNER SPECIFIED IN SECTION 12.1 (PROVIDED TELECOPY
NOTICES MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION 12.14
SHALL AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY LENDER TO
BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWERS OR THEIR PROPERTIES IN THE
COURTS OF ANY OTHER JURISDICTIONS.
12.15. WAIVER OF JURY TRIAL. THE AGENT, EACH LENDER AND THE
BORROWERS EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT
TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS.
12.16. CUMULATIVE REMEDIES. All rights and remedies provided in and
contemplated by this Agreement, the Notes and the other Restructuring Documents
are cumulative and not exclusive of any right or remedy otherwise provided
herein, therein, at law or in equity.
12.17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrowers set forth in this Agreement, the
Notes and the other Restructuring Documents and in any other certificate,
opinion or other statement provided at any time by or on behalf of the Borrowers
in connection herewith shall survive the execution and delivery of this
Agreement, the Notes and the other Restructuring Documents and the payment of
all Loans and other amounts due hereunder.
12.18. RELATIONSHIP OF THE PARTIES. Neither the Agent nor the
Lenders shall be deemed partners or joint venturers with the Borrowers or any
Affiliate thereof in making this Agreement or by any action taken hereunder.
12.19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
12.20. T-CO TERM SHEET. The parties hereto agree that by their
execution of this Agreement they approve the terms contained in the T-Co Term
Sheet provided that such agreement shall not be considered as a commitment and
is subject to all of the provisions set forth in the preamble to the T-Co Term
Sheet.
62
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
BORROWERS: MORRISON KNUDSEN CORPORATION
(a Delaware corporation)
By /s/ D.L. Brigham
-------------------------------
Name: D.L. Brigham
-------------------------------
Title: Vice President and Treasurer
-------------------------------
MORRISON KNUDSEN CORPORATION
(an Ohio corporation)
By /s/ D.L. Brigham
-------------------------------
Name: D.L. Brigham
-------------------------------
Title: Vice President and Treasurer
-------------------------------
AGENT AND LENDERS:
MELLON BANK, N.A., as Agent and a Lender
By /s/ Alan J. Kopolow
-------------------------------
Name: Alan J. Kopolow
-------------------------------
Title: Senior Vice President
-------------------------------
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /S/ Henry Y. Vu
-------------------------------
Name: Henry Y. Vu
-------------------------------
Title: Senior Vice President
-------------------------------
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
63
<PAGE>
LENDERS:
Bank of America Illinois CIBC Inc.
By: By: /s/ Robert N. Greer
----------------------- ------------------------
Name: Name: Robert N. Greer
----------------------- ------------------------
Title: Title: Vice President
----------------------- ------------------------
Bank of Montreal Citibank, N.A.
By: /s/ James R. Easter By: /s/ Bradley I. Dietz
----------------------- -----------------------
Name: James R. Easter Name: Bradley I. Dietz
----------------------- -----------------------
Title: Account Manager Title: Vice President
----------------------- -----------------------
The Bank of Nova Scotia Credit Lyonnais, Canada
By: /s/ D.N. Gillespie By:
----------------------- -----------------------
Name: D.N. Gillespie Name:
----------------------- -----------------------
Title: General Manager Title:
----------------------- -----------------------
The Bank of Tokyo, Ltd., Credit Lyonnais, New York Branch
Seattle Branch
By: /s/ M. Tomi By: /s/ David Bonington
----------------------- ------------------------
Name: M. Tomi Name: David Bonington
----------------------- ------------------------
Title: General Manager Title: Vice President
----------------------- ------------------------
Banque Nationale de Paris Deutsche Bank AG,
Los Angeles Branch and/or Cayman
Islands Branch
By: /s/ Katherine Wolfe
-----------------------
Name: Katherine Wolfe
-----------------------
Title: Vice President By: /s/ Patricia E. Apelian
----------------------- ------------------------
Name: Patricia E. Apelian
------------------------
By: /s/ William J. Latterman Title: Director
------------------------ ------------------------
Name: William J. Latterman
------------------------
Title: Assistant Vice President By: /s/ Silvia L. Spear
------------------------
Name: Silvia L. Spear
------------------------
Banque Paribas Title: Director
------------------------
By: /s/ John N. Cate
------------------------ The Hongkong and Shanghai
Name: John N. Cate Banking Corporation Limited
------------------------
Title: G.V.P.
------------------------
By: /s/ Alan E. McLintock By: /s/ G.W. Maser
------------------------- ------------------------
Name: Alan E. McLintock Name: G.W. Maser
------------------------- ------------------------
Title: Regional General Manager Title: Vice President
------------------------ ------------------------
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
64
<PAGE>
The Industrial Bank of Japan, San Paolo Bank SpA
Limited, Los Angeles Agency
By: /s/ Donald W. Brown
--------------------------
By: /s/ Kazutaka Kyoto Name: Donald W. Brown
--------------------------- --------------------------
Name: Kazutaka Kyoto Title: Branch Manager
---------------------------
Title:
Key Bank of Idaho By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________ Society National Bank
Title:______________________
The Long-Term Credit Bank of By:_________________________
Japan, Ltd., Los Angeles Agency Name:_______________________
Title:______________________
By:_________________________ Union Bank of Switzerland
Name:_______________________
Title:______________________
By:_________________________
Morgan Guaranty Trust Company Name:_______________________
Title:______________________
By:_________________________
Name:_______________________ By:_________________________
Title:______________________ Name:_______________________
Title:______________________
National Westminster Bank PLC
Westdeutsche Landesbank
Girozentrale, New York and
By:_________________________ Cayman Islands Branches
Name:_______________________
Title:______________________
By:_________________________
PNC Bank, N.A. Name:_______________________
Title:______________________
By:_________________________
Name:_______________________ By:_________________________
Title:______________________ Name:_______________________
Title:______________________
Royal Bank of Canada
By:_________________________
Name:_______________________
Title:______________________
65
<PAGE>
EXHIBIT A
FORM OF PROMISSORY NOTE
See attached
<PAGE>
EXHIBIT B
FORM OF NOTICE OF BORROWING
See attached
<PAGE>
EXHIBIT C
BUDGET
See attached
<PAGE>
EXHIBIT D
T-CO TERM SHEET
See attached
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
See attached
<PAGE>
SCHEDULE A
SCHEDULE OF LENDERS
See attached
<PAGE>
SCHEDULE B
PART 1
SCHEDULE OF THE EXISTING LENDERS
See attached
<PAGE>
SCHEDULE B
PART 2
EXISTING AGREEMENTS
See attached
<PAGE>
SCHEDULE C
SCHEDULE OF DOCUMENTS
See attached
<PAGE>
SCHEDULE D
SCHEDULE FOR NOTICES
See attached
<PAGE>
SCHEDULE E
CASH MANAGEMENT SYSTEM
See attached
<PAGE>
SCHEDULE 6.5
SCHEDULE OF PENDING AND THREATENED LITIGATION
See attached
<PAGE>
SCHEDULE 6.12
SCHEDULE OF JUDGMENTS
See attached
<PAGE>
SCHEDULE 6.14
SCHEDULE OF MULTIEMPLOYER PLAN WITHDRAWAL LIABILITY
See attached
<PAGE>
SCHEDULE 6.17
SCHEDULE OF MATERIAL ADVERSE EFFECTS
See attached
<PAGE>
SCHEDULE 6.18
SCHEDULE OF SUBSIDIARIES
See attached
<PAGE>
SCHEDULE 6.21A
SCHEDULE OF EACH BORROWER'S BUSINESS LOCATIONS
See attached
<PAGE>
SCHEDULE 6.21B
SCHEDULE OF EACH BORROWER'S TRADE NAMES
See attached
<PAGE>
SCHEDULE 7.1(k)
BACKLOG CERTIFICATE
See attached
<PAGE>
SCHEDULE 7.2(c)(a)
SCHEDULE OF REPORTABLE EVENTS
See attached
<PAGE>
SCHEDULE 7.2(c)(b)
SCHEDULE OF PLAN TERMINATIONS
See attached
<PAGE>
SCHEDULE 8.1
SCHEDULE OF EXISTING INDEBTEDNESS
See attached
<PAGE>
SCHEDULE 8.2
SCHEDULE OF PERMITTED LIENS
See attached
<PAGE>
SCHEDULE 8.5
SCHEDULE OF PERMITTED INVESTMENTS
See attached
<PAGE>
SCHEDULE 8.10
SCHEDULE OF OPERATING LEASES
See attached
<PAGE>
SCHEDULE 12.4
SCHEDULE OF STEERING COMMITTEE LENDERS
See attached
<PAGE>
Exhibit 4.6
WARRANT
To Purchase Common Stock of
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
No. of Shares of Common Stock: 9,415,696
Issued August ___, 1995
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS.......................................................... 1
2. EXERCISE OF WARRANT.................................................. 6
2.1 Manner of Exercise........................................... 6
2.2 Payment of Taxes............................................. 7
2.3 Continued Validity........................................... 7
3. TRANSFER, DIVISION AND COMBINATION................................... 8
3.1 Transfer..................................................... 8
3.2 Division and Combination..................................... 8
3.3 Expenses..................................................... 8
3.4 Maintenance of Books......................................... 8
4. ADJUSTMENTS.......................................................... 9
4.1 Prepayment of Obligations under Override Agreement........... 9
4.2 Stock Dividends, Subdivisions and Combinations............... 9
4.3 Other Provisions Applicable to Adjustments Under This
Section...................................................... 10
4.4 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets........................................ 10
5. NOTICES TO WARRANT HOLDERS........................................... 11
5.1 Notice of Adjustments........................................ 11
5.2 Notice of Certain Corporate Action........................... 12
6. NO IMPAIRMENT........................................................ 12
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY; PREFERRED STOCK.............. 12
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS................... 13
9. RESTRICTIONS ON TRANSFERABILITY...................................... 13
9.1 Restrictive Legend........................................... 13
9.2 Notice of Proposed Transfers; Requests for Registration...... 14
9.3 Termination of Restrictions.................................. 15
9.4 Listing on Securities Exchange............................... 15
10. SUPPLYING INFORMATION................................................ 15
11. LOSS OR MUTILATION................................................... 16
12. OFFICE OF THE COMPANY................................................ 16
13. FINANCIAL AND BUSINESS INFORMATION................................... 16
13.1 Filings...................................................... 16
13.2 Quarterly Information........................................ 17
13.3 Annual Information........................................... 17
i
<PAGE>
14. THE COMPANY'S REPURCHASE OF THE WARRANT.............................. 17
14.1 Option to Repurchase Warrant................................. 17
14.2 Determination and Payment of Repurchase Price................ 18
14.3 Pro Rata Repurchase of Warrants.............................. 19
15. APPRAISAL............................................................ 19
16. LIMITATION OF LIABILITY.............................................. 19
17. MISCELLANEOUS........................................................ 20
17.1 Nonwaiver and Expenses....................................... 20
17.2 Notice Generally............................................. 20
17.4 Remedies..................................................... 21
17.5 Successors and Assigns....................................... 21
17.6 Amendment.................................................... 22
17.7 Severability................................................. 22
17.8 Headings..................................................... 22
17.9 GOVERNING LAW................................................ 22
17.10 CONSENT TO JURISDICTION...................................... 22
17.11 MUTUAL WAIVER OF JURY TRIAL.................................. 23
ii
<PAGE>
EXHIBITS
EXHIBIT A Subscription Form
EXHIBIT B Assignment Form
EXHIBIT C Schedule of Holders of Antecedent Debt Warrants as of
Closing Date
iii
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT OR STATE LAW, THE RULES AND REGULATIONS
THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
No. of Shares of
Common Stock: 9,415,696
WARRANT
To Purchase Common Stock of
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
THIS IS TO CERTIFY THAT EACH OF THE RESPECTIVE PERSONS LISTED ON
EXHIBIT C HERETO, or its registered assigns, is entitled, at any time during
the Exercise Period (as hereinafter defined), to purchase from MORRISON KNUDSEN
CORPORATION, a Delaware corporation (the "Company"), the respective number of
shares of Common Stock (as hereinafter defined and subject to adjustment as
provided herein) set forth opposite its name on EXHIBIT C hereto, in whole
or in part, including fractional parts, at a purchase price of $6.75 per
share, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.
"Appraised Value" shall mean, in respect of any share of Common
Stock on any date herein specified, the fair market value of such share of
Common Stock (determined without giving effect to any discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or the fact
that the Company may have no class of equity registered under the Exchange Act)
as of the last day of the most recent fiscal month prior to such date specified,
based on the value of the Company as a whole, as determined by an investment
banking firm selected in accordance with the terms of SECTION 15 on the basis
of a sale
1
<PAGE>
between a willing seller and buyer, neither acting under any compulsion, divided
by the number of Fully Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock
on any date herein specified, the consolidated book value of the Company
applicable to Common Stock as of the last day of any fiscal month immediately
preceding such date, divided by the number of Fully Diluted Outstanding shares
of Common Stock as determined in accordance with GAAP by a firm of independent
certified public accountants of recognized national standing selected by the
Company and reasonably acceptable to the Majority Holders.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
Commonwealth of Pennsylvania.
"Closing Date" shall mean July 31, 1995.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, par value One Dollar and Sixty-Six and Two-Thirds
Cents ($1.66-2/3) per share, of the Company as constituted on the Closing Date,
and any capital stock into which such Common Stock may thereafter be changed,
and shall also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares of Common Stock
upon any reclassification thereof which is not preferred as to dividends or
assets over any other class of stock of the Company, and (ii) shares of common
stock of any successor or acquiring corporation (as defined in SECTION 4.4)
received by or distributed to the holders of Common Stock in the circumstances
contemplated by SECTION 4.4.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified on which there shall then be a public
market for the Common Stock, the average of the daily market prices for 30
consecutive Business Days commencing 45 days before such date. The daily market
price for each such Business Day shall be (i) the last sale price on such day on
the principal stock exchange on which such Common Stock is then listed or
admitted to trading, (ii) if no sale takes place on such day on any such
exchange, the average of the last
2
<PAGE>
reported closing bid and asked prices on such day as officially quoted on any
such exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, (a) the average of the last reported closing bid
and asked prices on such day in the over-the-counter market, as furnished by
NASDAQ or by the National Quotation Bureau, Inc. if not reported on NASDAQ, (b)
if neither such corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business, or
(c) if there is no such firm, as furnished by any member of the NASD selected
mutually by the Majority Holders and the Company or, if they cannot agree upon
such selection, as selected by two such members of the NASD, one of which shall
be selected by the Majority Holders and one of which shall be selected by the
Company. If, on such date, there shall not then be a public market for the
Common Stock, the "Current Market Price" shall mean the higher of (x) the Book
Value per share of Common Stock at such date, and (y) the Appraised Value per
share of Common Stock as of such date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant
is exercisable pursuant to SECTION 2.1.
"Expiration Date" shall mean July 31, 2000.
"Fully Diluted Outstanding" shall mean, when used with reference
to Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant, and any other options,
warrants or other rights to purchase or receive Common Stock outstanding on such
date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
"Holder" shall mean the Person or Persons in whose name the
Warrant set forth herein is registered on the books of the Company maintained
for such purpose.
"Initial Exercise Date" shall mean the earliest to occur of (i)
December 31, 1996, (ii) the occurrence of a payment default under Section 9.1(a)
of the Override Agreement, and in the case of a payment default NOT involving
the payment of
3
<PAGE>
principal, interest, Letter of Credit Fees (as defined in the Override
Agreement) or Facility Fees (as defined in the Override Agreement) the
continuance of such default beyond two (2) Business Days after written notice
thereof to the Company, and (iii) the Repayment Event.
"Majority Holders" shall mean the holders of Warrants exercisable
for a number of shares of not less than 66-2/3% of the aggregate number of
shares of Common Stock then purchasable upon exercise of all Warrants, whether
or not then exercisable.
"Metra Warrant" shall mean the Warrant to Purchase Common Stock
of the Company, issued of even date herewith in the form attached as Exhibit D-2
to the Override Agreement, and any amendments thereto, and all warrants issued
upon transfer, division or combination of, or in substitution for, such warrant.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Obligations" shall have the meaning set forth in the Override
Agreement.
"Other Property" shall have the meaning set forth in SECTION
4.4.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any Subsidiary thereof, and shall include all
shares issuable in respect of any certificates representing fractional interests
in shares of Common Stock.
"Override Agreement" shall mean that certain Override Agreement
of even date herewith among the Company, Morrison Knudsen Corporation, an Ohio
corporation, the banks and other financial institutions that are parties
thereto, and Mellon Bank, N.A., as agent, as supplemented, amended, modified or
restated from time to time.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Public Company" shall have the meaning set forth in SECTION
13.1.
4
<PAGE>
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement of even date herewith between the Company, the
Holders of this Warrant and the holders of the Metra Warrant.
"Repayment Event" shall mean the payment and satisfaction in full
(or the provision in a manner satisfactory to the holder of any Obligations for
all liability of the obligor with respect thereto), in accordance with the terms
and provisions of the Override Agreement, of all Obligations (including, without
limitation, all Obligations with respect to Existing Contingent Indebtedness and
the Metra Letter of Credit (each as defined in the Override Agreement), or the
making of final provisions for the satisfaction of all Obligations but excluding
any contingent indemnity obligations unless such obligations are due or
payable).
"Repurchase Price" shall have the meaning set forth in SECTION
14.2.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in SECTION
9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which an aggregate of more than 50% of the outstanding stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in SECTION
9.2.
"Warrants" shall mean this Warrant, and any amendments thereto,
and all warrants issued upon transfer, division or combination of, or in
substitution for, this Warrant. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.
5
<PAGE>
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
SECTION 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 MANNER OF EXERCISE. From and after the Initial Exercise Date
and until 5:00 p.m., Idaho time, on the Expiration Date, Holder may exercise
this Warrant, on any Business Day, for all or any part of the number of shares
of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at One Morrison Knudsen
Plaza, 720 Park Boulevard, Boise, Idaho 83712, or at the office or agency
designated by the Company pursuant to SECTION 12: (a) a written notice of
Holder's election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased; (b) payment of the Warrant
Price in the manner specified below; and (c) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as EXHIBIT A, duly executed by Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute and deliver to Holder a
certificate or certificates representing the aggregate number of shares of
Common Stock issuable upon such exercise. The stock certificate or certificates
so delivered shall be, to the extent possible, in such denomination or
denominations as such Holder shall request in the notice and shall be registered
in the name of Holder or, subject to SECTION 9, such other names as shall be
designated in the notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates of Common Stock shall be deemed to have
been issued, and Holder or any other Person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the notice, together with the payment as set forth
below, and this Warrant are received by the Company as described above and all
taxes, if any, required to be paid by Holder pursuant to SECTION 2.2 prior to
the issuance of such shares of Common Stock, have been paid or Holder has agreed
to pay such taxes when finally determined. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be
6
<PAGE>
identical with this Warrant, or, at the request of Holder, appropriate notation
may be made on this Warrant and the same returned to Holder. Notwithstanding
any provision herein to the contrary, the Company shall not be required to
register shares of Warrant Stock in the name of any Person who acquired this
Warrant (or part hereof) or any Warrant Stock otherwise than in accordance with
this Warrant.
Payment of the Warrant Price shall be made at the option of the
Holder (i) by certified or official bank check payable to the order of the
Company, (ii) by cancellation of indebtedness, if any, owed by the Company to
such Holder, (iii) by receiving from the Company the number of shares of Common
Stock equal to (x) the number of shares of Common Stock as to which this Warrant
is being exercised, MINUS (y) the number of shares of Common Stock having a
value, based on the Current Market Price on the date of such exercise, equal to
the Warrant Price, or (iv) by a combination thereof.
2.2 PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid, nonassessable, free of liens or encumbrances (except for the
restrictive legend provided for herein) and without any preemptive rights. The
Company shall pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to, the issue of the
Common Stock hereunder, unless such tax or charge is imposed by law upon Holder,
in which case such taxes or charges shall be paid by Holder. The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of Common
Stock issuable upon exercise of this Warrant in any name other than that of
Holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or the Person
designated to receive such shares has agreed in writing to pay such tax or
charge or it has been established to the satisfaction of the Company that no
such tax or other charge is due.
2.3 CONTINUED VALIDITY. A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under SECTIONS 9, 10, 13,
14 and 17 of this Warrant. The Company will, at the time of each exercise of
this Warrant, in whole or in part, upon the request of the holder of the shares
of Common Stock issued upon such exercise hereof, acknowledge in writing, in
form reasonably satisfactory to such holder, its continuing obligation to afford
to such holder all such rights; PROVIDED, HOWEVER, that if such holder shall
fail to make any
7
<PAGE>
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 TRANSFER. Subject to compliance with SECTIONS 9 AND 14,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
SECTION 2.1 or the office or agency designated by the Company pursuant to
SECTION 12, together with a written assignment of this Warrant substantially
in the form of EXHIBIT B hereto duly executed by Holder or its agent or
attorney and if such transfer is not to be made pursuant to SECTION 14, funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to SECTION 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with SECTION 9, may be exercised
by a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued. If requested by the Company, a new Holder shall acknowledge in
writing, in form reasonably satisfactory to the Company, such Holder's
continuing obligations under SECTIONS 9 AND 14 of this Warrant.
3.2 DIVISION AND COMBINATION. Subject to SECTION 9, this Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with SECTION
3.1 and with SECTION 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 EXPENSES. The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under this
SECTION 3.
3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration, and the registration of
transfer, of the Warrants.
8
<PAGE>
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this SECTION 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this SECTION 4 at the
time of such event.
4.1 PREPAYMENT OF OBLIGATIONS UNDER OVERRIDE AGREEMENT. If the
Repayment Event occurs on or prior to the earlier of the Initial Exercise Date
and September 30, 1996, then the number of shares of Common Stock for which this
Warrant is exercisable immediately after the occurrence of such event shall be
adjusted as follows:
- --------------------------------------------------------------------------------
If the Repayment Event occurs Then the number of shares of
during the following period Common Stock for which this
Warrant is exercisable
immediately prior to such
event is reduced by
- --------------------------------------------------------------------------------
Closing Date through June 30, 100%
1996
- --------------------------------------------------------------------------------
July 1 1996 through 50%
September 30, 1996
- --------------------------------------------------------------------------------
4.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock;
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price in effect immediately
prior to the occurrence of such event, multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
9
<PAGE>
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment.
4.3 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
pursuant to this SECTION 4, of the number of shares of Common Stock for which
this Warrant is exercisable:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this SECTION 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of an adjustment
pursuant to SECTION 4.1 or a subdivision or combination of shares of the
Common Stock, as provided for in SECTION 4.2) up to, but not beyond the date
of exercise of this Warrant (or date of repurchase by the Company under SECTION
14) if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than one percent (1%) of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other adjustments
required by this SECTION 4 and not previously made, would result in a minimum
adjustment or on the date of exercise or repurchase. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) FRACTIONAL INTERESTS. In computing adjustments under this
SECTION 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
4.4 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger,
10
<PAGE>
consolidation or disposition of assets, shares of common stock of the successor
or acquiring corporation, or any cash, shares of stock or other securities or
property of any nature whatsoever (including warrants or other subscription or
purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by or distributed
to the holders of Common Stock of the Company, then each Holder shall have the
right thereafter to receive, upon exercise of such Holder's Warrant, the number
of shares of common stock of the successor or acquiring corporation and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation shall expressly assume the due and punctual observance
and performance of each and every covenant and condition of this Warrant to be
performed and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the Company) in order to
provide for adjustments of the shares of Common Stock for which this Warrant is
exercisable, which adjustments shall be as nearly equivalent as practicable to
the adjustments provided for in this SECTION 4. For purposes of this SECTION
4.4, "common stock of the successor or acquiring corporation" shall include
stock of such corporation of any class which is not preferred as to dividends or
rights on liquidation over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon a specified date or
the happening of a specified event and any warrants or other rights to subscribe
for or purchase any such stock. The foregoing provisions of this SECTION 4.4
shall similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or dispositions of assets.
5. NOTICES TO WARRANT HOLDERS
5.1 NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to SECTION 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated, specifying the number of shares of
Common Stock for which this Warrant is exercisable and (if such adjustment was
made pursuant to SECTION 4.4) describing the number and kind of
11
<PAGE>
any other shares of stock or Other Property for which this Warrant is
exercisable, and any change in the purchase price or prices thereof, after
giving effect to such adjustment or change. The Company shall promptly cause a
signed copy of such certificate to be delivered to each Holder in accordance
with SECTION 17.2. The Company shall keep at its office or agency designated
pursuant to SECTION 12 copies of all such certificates and cause the same to
be available for inspection at said office during normal business hours by any
Holder or any prospective purchaser of a Warrant designated by a Holder thereof.
5.2 NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be
entitled to the same rights to receive notice of corporate action as any holder
of Common Stock.
6. NO IMPAIRMENT
The Company shall not by any action avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock, upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY; PREFERRED STOCK
From and after the Closing Date, the Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
12
<PAGE>
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority under any federal or state law (otherwise than as provided in SECTION
9) before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered or qualified.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of SECTION
4 refers to the taking of a record of such holders, the Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
SECTION 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act and state law, with respect to the Transfer of
any Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this SECTION 9.
9.1 RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this SECTION 9, each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate,
13
<PAGE>
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and are subject
to the conditions specified in a certain Warrant dated as of August ___,
1995, originally issued by Morrison Knudsen Corporation. No transfer of
the shares represented by this certificate shall be valid or effective
until such conditions and any requirements of federal and state law have
been fulfilled. A copy of the form of said Warrant is on file with the
Secretary of Morrison Knudsen Corporation. The holder of this
certificate, by acceptance of this certificate, agrees to be bound by
the provisions of such Warrant."
(b) Except as otherwise provided in this SECTION 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, and may not be
transferred in violation of such Act or state law, the rules and
regulations thereunder or the provisions of this Warrant."
9.2 NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior
to any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common Stock
shall give 10 days prior written notice (a "Transfer Notice") to the Company of
such holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and shall deliver to the Company a
certificate of such holder representing and warranting that the proposed
Transfer of such Warrants or such Restricted Common Stock may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and certificate, the Company shall, within five days thereof, so notify
the holder of such Warrants or such Restricted Common Stock and such holder
shall thereupon be entitled to Transfer such Warrants or such Restricted Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate,
if any, evidencing such shares of Restricted Common Stock issued upon such
Transfer shall bear the restrictive legend set forth in SECTION 9.1(a), and
each Warrant issued upon such Transfer shall bear the restrictive legend set
forth in SECTION 9.1(b). The holder of the Warrants or the Restricted Common
Stock, as the case may be, giving the Transfer Notice shall not be entitled to
transfer and shall not transfer such Warrants or such Restricted Common Stock
until receipt of notice from the Company under this SECTION 9.2(a).
14
<PAGE>
The holders of Warrants and Warrant Stock shall have the right to
request registration of such Warrant Stock pursuant to and in accordance with
the terms of the Registration Rights Agreement.
9.3 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of SECTION 9, the restrictions imposed by this SECTION 9 upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of SECTION 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock
issuable upon the exercise of the Warrants) (i) when and so long as such
security shall have been effectively registered under the Securities Act and
disposed of pursuant thereto or (ii) when the Company shall have received an
opinion of counsel reasonably satisfactory to it that such legend is not
required in order to ensure compliance with the Securities Act. Whenever the
restrictions imposed by this SECTION 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON , 19 , AND ARE
OF NO FURTHER FORCE AND EFFECT."
All Warrants thereafter issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this SECTION 9 shall terminate as to any share of
Restricted Common Stock, as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in SECTION 9.1(a).
9.4 LISTING ON SECURITIES EXCHANGE. So long as the Company shall
list any shares of Common Stock on any securities exchange, it will, at its
expense, list thereon, maintain and, when necessary, increase such listing of,
all shares of Common Stock issued or, to the extent permissible under the
applicable securities exchange rules, issuable upon the exercise of this
Warrant, so long as any shares of Common Stock shall be so listed during the
Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with each holder of a Warrant or Restricted
Common Stock in supplying such information as may be reasonably necessary for
such holder to complete and file any
15
<PAGE>
information reporting forms presently or hereafter required by the Commission as
a condition to the availability of an exemption from the Securities Act for the
sale of any Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it, and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
PROVIDED, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant. The Company
shall notify Holder in writing prior to any change of the address of the office
at which the Warrants may be presented.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 FILINGS. So long as the Company is a "Public Company" (as
hereinafter defined), the Company will file with the Commission on or before the
due date all regular or periodic reports required to be filed pursuant to the
Exchange Act, and will deliver to the Holder, promptly upon its becoming
available, one copy of each report, notice or proxy statement sent by the
Company to its shareholders generally, and one copy of each regular or periodic
report (including, without limitation, reports on Form 8-K) pursuant to the
Exchange Act or any registration statement, prospectus or written communication
(other than transmittal letters and other communications that are not publicly
available) pursuant to the Securities Act, filed by the Company with (i) the
Commission or (ii) any securities exchange on which shares of the Common Stock
are listed.
For purposes of this SECTION 13, the term "Public Company"
shall mean a company (i) that is subject to the reporting requirements of
Section 15(d) of the Exchange Act, or (ii) any of whose securities are
registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
16
<PAGE>
13.2 QUARTERLY INFORMATION. During any period in which the Company
is not a Public Company, as soon as available and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Company, the Company will deliver to the Agent a consolidated balance sheet
of the Company and its consolidated Subsidiaries as of the end of such quarter
and the related consolidated statements of income and cash flows for such
quarter and for the portion of the Company's fiscal year ended at the end of
such quarter, setting forth in the case of such income and cash flows in
comparative form the figures for the corresponding quarter and the corresponding
portion of the Company's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP, and consistency by
the chief financial officer, controller or treasurer of the Company.
13.3 ANNUAL INFORMATION. During any period in which the Company is
not a Public Company, as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, the Company will deliver to the
Agent a consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on in a manner acceptable to the Commission by
Deloitte & Touche or other independent public accountants of nationally
recognized standing, together with an unaudited annual report prepared on a
consolidating basis in conformity with GAAP.
14. THE COMPANY'S REPURCHASE OF THE WARRANT
14.1 OPTION TO REPURCHASE WARRANT. From time to time on or after
the Initial Exercise Date and until the Expiration Date, the Company shall have
the right, upon not less than thirty (30) days prior written notice to any
Holder, to repurchase from such Holder, from any source of funds legally
available therefor, on the date and in the manner set forth in SECTION 14.2,
all or any part of the Warrant then held by such Holder for an amount
determined by multiplying (x) the number of shares of Common Stock subject to
such Warrant or portion thereof being repurchased, by (y) the difference between
(i) 110% of the higher of the Current Market Price per share of Common Stock and
the Current Warrant Price per share of Common Stock as of the date of such
notice, and (ii) the Current Warrant Price per share of Common Stock as of the
date of such notice; PROVIDED, HOWEVER, that nothing herein shall preclude
the exercise by Holder of any portion of this Warrant exercisable at any time
prior to such repurchase.
17
<PAGE>
14.2 DETERMINATION AND PAYMENT OF REPURCHASE PRICE.
(a) The purchase price for any repurchase pursuant to this
SECTION 14 (the "Repurchase Price") shall be determined within ten (10) days
of the date of the repurchase notice given by the Company pursuant to SECTION
14.1, and shall be payable in cash from any source of funds legally available
therefor within ten (10) days following the date of such determination of the
Repurchase Price. On the date of any repurchase of this Warrant pursuant to
this SECTION 14, each Holder shall assign to the Company such Holder's Warrant
or portion thereof being repurchased, without any representations (other than a
representation that such Holder owns such Warrant free and clear of any liens,
pledges or encumbrances), by the surrender of such Holder's Warrant at the
principal office of the Company referred to in SECTION 2.1 against payment
therefor of the Repurchase Price by, at the option of such Holder, and subject
to the immediately following sentence, (i) wire transfer to an account in a bank
located in the United States designated by such Holder for such purpose or (ii)
a certified or official bank check drawn on a member of the New York Clearing
House payable to the order of such Holder. If less than all of any Holder's
Warrant is being repurchased, the Company shall, pursuant to SECTION 3, cancel
such Warrant and issue in the name of, and deliver to, such Holder a new Warrant
for the portion not being repurchased.
(b) Each Holder of Warrants shall have the right at any time to
object to the determination of the Repurchase Price pursuant to this SECTION
14 by specifying in writing to the Company the nature of its objection and,
unless such objection is resolved by agreement of the Company and such Holder,
the Company and such Holder shall each have the right to subject the disputed
determination to separate firms of independent accountants of recognized
national standing for a joint resolution of the objection of such Holder (which
firms of independent accountants may, in either case, be the firms of
accountants regularly retained by the Company or such Holder). If such firms
cannot jointly resolve the objection of such Holder, then, unless otherwise
directed by agreement of the Company and such Holder, such firms shall in their
sole discretion choose another firm of independent certified public accountants
of recognized national standing, which is not the regular auditor of such Holder
or the Company, which firm shall resolve such objection. In either case, for
purposes hereof the determination so made shall be conclusive and binding on the
Company, such Holder and all Persons claiming under or through any of them, and
any adjustment in the determination of the Repurchase Price per share of Common
Stock resulting from such determination shall be made. The cost of any such
determination shall be borne by the Company if it results in an increase of the
aggregate Repurchase Price for all shares of Common Stock issuable upon the
exercise hereof and by such Holder if it results in no adjustment or a decrease
of the
18
<PAGE>
aggregate Repurchase Price for all shares of Common Stock issuable upon the
exercise hereof.
(c) Any repurchase by the Company of all or any portion of the
Warrant pursuant to SECTION 14.1 which is delayed by (1) the failure of the
Company to determine the Repurchase Price within the time periods required in
SECTION 14.3(a) or (2) an objection by any Holder of the Warrant to any such
determination pursuant to SECTION 14.3(b) shall be consummated within ten (10)
days after, as the case may be, the determination of the Repurchase Price or the
resolution of such objection.
(d) In the event that the determination of the Repurchase Price
requires an opinion from an investment banking firm or accounting firm, all
costs and fees associated therewith shall, except to the extent otherwise
provided in SECTION 14.3(b) above, be paid by the Company.
14.3 PRO RATA REPURCHASE OF WARRANTS. Notwithstanding anything to
the contrary contained in this SECTION 14, any repurchase by the Company of
this Warrant or any portion thereof shall be made pro rata and on the same terms
with respect to all Warrants and all Metra Warrants then outstanding, and any
obligation of Holder pursuant to this SECTION 14 to sell this Warrant or any
portion thereof to the Company is conditioned upon the Company's compliance with
such requirement.
15. APPRAISAL
If required under this Warrant, the determination of the Appraised Value
per share of Common Stock shall be made by an investment banking firm of
nationally recognized standing selected by the Company and acceptable to the
Majority Holders. If the investment banking firm selected by the Company is not
acceptable to the Majority Holders and the Company and the Majority Holders
cannot agree on a mutually acceptable investment banking firm, then the Majority
Holders and the Company shall each choose one such investment banking firm and
the respective chosen firms shall agree on another investment banking firm which
shall make the determination. The Company shall retain, at its sole cost, such
investment banking firms as may be necessary for the determination of Appraised
Value required by the terms of this Warrant.
16. LIMITATION OF LIABILITY
No provision hereof (including, without limitation, any of the
provisions under Section 7), in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
19
<PAGE>
whether such liability is asserted by the Company, or by creditors of the
Company.
17. MISCELLANEOUS
17.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
17.2 NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration or other communication hereunder to be made pursuant to
the terms of this Warrant shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address or facsimile transmission number appearing on the books of the
Company maintained for such purpose.
(b) If to the Company at:
Morrison Knudsen Corporation
One Morrison Knudsen Plaza
720 Park Boulevard
Boise, Idaho 83712
Attention: Douglas L. Brigham
Facsimile: (208) 386-5922
with a copy to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Attention: David S. Kurtz, Esq.
Facsimile: (312) 782-8585
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Each such notice, demand,
request, consent, approval, declaration, delivery other communication shall be
effective, (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this SECTION 17.2 and confirmation of receipt is
received, (ii) if given by mail, seventy-two (72)
20
<PAGE>
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered at the address specified in this SECTION 17.2. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration, delivery or other communication to the person designated above to
receive a copy shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration, delivery or other
communication.
17.3 INDEMNIFICATION. In addition to the indemnities provided in
the Registration Rights Agreement, the Company agrees to indemnify and hold
harmless Holder, its officers, directors, employees, agents, and attorneys from
and against any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon, incurred by or asserted against Holder
relating to or arising out of (i) Holder's exercise of this Warrant and/or
ownership of any shares of Warrant Stock issued in consequence thereof, or (ii)
any litigation to which Holder is made a party in its capacity as a stockholder
or warrant holder of the Company; PROVIDED, HOWEVER, that the Company will
not be liable hereunder to the extent that any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final non-appealable judgment by a
court to have resulted from either (i) Holder's gross negligence or willful
misconduct, (ii) actions or omissions taken or not taken by Holder in any
capacity other than as a stockholder or warrant holder of the Company, or (iii)
any violation of federal or state securities laws by Holder, which is not caused
by any action or inaction of the Company.
17.4 REMEDIES. Each holder of Warrants and Warrant Stock, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under SECTIONS 9, 10, 13 AND 14 of this Warrant. Each party agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of SECTION 9, 10, 13 OR 14 of this
Warrant and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
17.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of SECTIONS
3.1 AND 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and assigns of Holder. The provisions of this Warrant are intended to be for
the benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
21
<PAGE>
17.6 AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders; PROVIDED, HOWEVER, that no such Warrant
may be modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable (including, without limitation, by way of
amendment of SECTION 4.1), to increase the price at which such shares may be
purchased upon exercise of such Warrant (before giving effect to any adjustment
as provided therein), or to modify the time period during which such Warrant may
be exercised, without the prior written consent of the Holder thereof; AND
PROVIDED FURTHER, that no such Warrant may be modified or amended unless the
"Majority Holders" as defined under the Metra Warrant have agreed to the same
modification or amendment of the Metra Warrant.
17.7 SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
17.8 HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
17.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
17.10 CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY
CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER
PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY HOLDER OR ANY HOLDER OF
WARRANT STOCK IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF
ITSELF AND ITS PROPERTY, IN THE MANNER SPECIFIED IN SECTION 17.2 (PROVIDED
TELECOPY NOTICES MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION
17.10 SHALL AFFECT THE RIGHT OF HOLDER OR ANY HOLDER OF WARRANT STOCK TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF HOLDER
OR ANY HOLDER OF WARRANT STOCK TO BRING ANY ACTION OR PROCEEDING AGAINST THE
COMPANY OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
22
<PAGE>
17.11 MUTUAL WAIVER OF JURY TRIAL. HOLDER, EACH HOLDER OF WARRANT
STOCK AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: August ___, 1995
MORRISON KNUDSEN CORPORATION
By:__________________________
Name:
Title:
Attest:
_________________________
Secretary
23
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of the attached Warrant irrevocably
exercises such Warrant for the purchase of ____ Shares of Common Stock of
Morrison Knudsen Corporation, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in such Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and/or any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ________________ whose address is ____________ and, if such
shares of Common Stock (or other securities or property) shall not include all
of the shares of Common Stock issuable as provided in such Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
___________________________________
(Name of Registered Owner)
___________________________________
(Signature of Registered Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
24
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under such Warrant, with respect to the number of
shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF
COMMON STOCK
and does hereby irrevocably constitute and appoint _____________
attorney-in-fact to register such transfer on the books of Morrison Knudsen
Corporation maintained for the purpose, with full power of substitution in the
premises.
Dated: Print Name:
----------------- ------------------------
Signature:
-----------------------
Witness:
-------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
25
<PAGE>
EXHIBIT C to Antecedent Debt Warrant
WARRANT ALLOCATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BANK SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Bank of America National Trust and Savings Association 1,424,673
- --------------------------------------------------------------------------------
Banque Nationale de Paris 983,874
- --------------------------------------------------------------------------------
Citibank, N.A. 161,539
- --------------------------------------------------------------------------------
Credit Lyonnais, New York Branch 380,829
- --------------------------------------------------------------------------------
Credit Lyonnais, Canada 342,767
- --------------------------------------------------------------------------------
Deutsche Bank AG, Los Angeles Branch and/or 788,149
Cayman Islands Branch
- --------------------------------------------------------------------------------
The Industrial Bank of Japan, Limited, Los Angeles Agency 1,226,710
- --------------------------------------------------------------------------------
Key Bank of Idaho 144,816
- --------------------------------------------------------------------------------
Mellon Bank, N.A. 1,597,892
- --------------------------------------------------------------------------------
Morgan Guaranty Trust Company 788,149
- --------------------------------------------------------------------------------
National Westminster Bank PLC 788,149
- --------------------------------------------------------------------------------
Society National Bank 788,149
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL 9,415,696
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 4.7
WARRANT
To Purchase Common Stock of
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
No. of Shares of Common Stock: 4,613,695
Issued August ___, 1995
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS.............................................................. 1
2. EXERCISE OF WARRANT...................................................... 6
2.1 Manner of Exercise.............................................. 6
2.2 Payment of Taxes................................................ 7
2.3 Continued Validity.............................................. 7
3. TRANSFER, DIVISION AND COMBINATION....................................... 8
3.1 Transfer........................................................ 8
3.2 Division and Combination........................................ 8
3.3 Expenses........................................................ 8
3.4 Maintenance of Books............................................ 8
4. ADJUSTMENTS............................................................. 9
4.1 Prepayment of Obligations under Override Agreement.............. 9
4.2 Stock Dividends, Subdivisions and Combinations.................. 9
4.3 Other Provisions Applicable to Adjustments Under This Section... 10
4.4 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets........................................... 10
5. NOTICES TO WARRANT HOLDERS.............................................. 11
5.1 Notice of Adjustments........................................... 11
5.2 Notice of Certain Corporate Action.............................. 12
6. NO IMPAIRMENT........................................................... 12
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH
OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY; PREFERRED STOCK.............. 12
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS...................... 13
9. RESTRICTIONS ON TRANSFERABILITY......................................... 13
9.1 Restrictive Legend.............................................. 14
9.2 Notice of Proposed Transfers; Requests for Registration......... 14
9.3 Termination of Restrictions..................................... 15
9.4 Listing on Securities Exchange.................................. 15
10. SUPPLYING INFORMATION................................................... 16
11. LOSS OR MUTILATION...................................................... 16
12. OFFICE OF THE COMPANY................................................... 16
13. FINANCIAL AND BUSINESS INFORMATION...................................... 16
13.1 Filings......................................................... 16
13.2 Quarterly Information........................................... 17
13.3 Annual Information.............................................. 17
i
<PAGE>
14. THE COMPANY'S REPURCHASE OF THE WARRANT................................. 17
14.1 Option to Repurchase Warrant.................................... 17
14.2 Determination and Payment of Repurchase Price................... 18
14.3 Pro Rata Repurchase of Warrants................................. 19
15. APPRAISAL............................................................... 19
16. LIMITATION OF LIABILITY................................................. 19
17. MISCELLANEOUS........................................................... 20
17.1 Nonwaiver and Expenses.......................................... 20
17.2 Notice Generally................................................ 20
17.4 Remedies........................................................ 21
17.5 Successors and Assigns.......................................... 21
17.6 Amendment....................................................... 22
17.7 Severability.................................................... 22
17.8 Headings........................................................ 22
17.9 GOVERNING LAW................................................... 22
................................................................ 22
17.10 CONSENT TO JURISDICTION......................................... 22
17.11 MUTUAL WAIVER OF JURY TRIAL..................................... 23
ii
<PAGE>
EXHIBITS
EXHIBIT A Subscription Form
EXHIBIT B Assignment Form
EXHIBIT C Schedule of Holders of Metra Warrants as of Closing Date
iii
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT OR STATE LAW, THE RULES AND REGULATIONS
THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
No. of Shares of
Common Stock: 4,613,695
WARRANT
To Purchase Common Stock of
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
THIS IS TO CERTIFY THAT EACH OF THE RESPECTIVE PERSONS LISTED ON
EXHIBIT C HERETO, or its registered assigns, is entitled, at any time during
the Exercise Period (as hereinafter defined), to purchase from MORRISON KNUDSEN
CORPORATION, a Delaware corporation (the "Company"), the respective number of
shares of Common Stock (as hereinafter defined and subject to adjustment as
provided herein) set forth opposite its name on EXHIBIT C hereto, in whole
or in part, including fractional parts, at a purchase price of $6.75 per
share, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.
"Antecedent Debt Warrant" shall mean the Warrant to Purchase
Common Stock of the Company, issued of even date herewith in the form attached
as Exhibit D-1 to the Override Agreement, and any amendments thereto, and all
warrants issued upon transfer, division or combination of, or in substitution
for, such warrant.
"Appraised Value" shall mean, in respect of any share of Common
Stock on any date herein specified, the fair market value of such share of
Common Stock (determined without
1
<PAGE>
giving effect to any discount for (i) a minority interest or (ii) any lack of
liquidity of the Common Stock or the fact that the Company may have no class of
equity registered under the Exchange Act) as of the last day of the most recent
fiscal month prior to such date specified, based on the value of the Company as
a whole, as determined by an investment banking firm selected in accordance with
the terms of SECTION 15 on the basis of a sale between a willing seller and
buyer, neither acting under any compulsion, divided by the number of Fully
Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock
on any date herein specified, the consolidated book value of the Company
applicable to Common Stock as of the last day of any fiscal month immediately
preceding such date, divided by the number of Fully Diluted Outstanding shares
of Common Stock as determined in accordance with GAAP by a firm of independent
certified public accountants of recognized national standing selected by the
Company and reasonably acceptable to the Majority Holders.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
Commonwealth of Pennsylvania.
"Closing Date" shall mean July 31, 1995.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, par value One Dollar and Sixty-Six and Two-Thirds
Cents ($1.66-2/3) per share, of the Company as constituted on the Closing Date,
and any capital stock into which such Common Stock may thereafter be changed,
and shall also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares of Common Stock
upon any reclassification thereof which is not preferred as to dividends or
assets over any other class of stock of the Company, and (ii) shares of common
stock of any successor or acquiring corporation (as defined in SECTION 4.4)
received by or distributed to the holders of Common Stock in the circumstances
contemplated by SECTION 4.4.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified on which there
2
<PAGE>
shall then be a public market for the Common Stock, the average of the daily
market prices for 30 consecutive Business Days commencing 45 days before such
date. The daily market price for each such Business Day shall be (i) the last
sale price on such day on the principal stock exchange on which such Common
Stock is then listed or admitted to trading, (ii) if no sale takes place on such
day on any such exchange, the average of the last reported closing bid and asked
prices on such day as officially quoted on any such exchange, (iii) if the
Common Stock is not then listed or admitted to trading on any stock exchange,
(a) the average of the last reported closing bid and asked prices on such day in
the over-the-counter market, as furnished by NASDAQ or by the National Quotation
Bureau, Inc. if not reported on NASDAQ, (b) if neither such corporation at the
time is engaged in the business of reporting such prices, as furnished by any
similar firm then engaged in such business, or (c) if there is no such firm, as
furnished by any member of the NASD selected mutually by the Majority Holders
and the Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority Holders
and one of which shall be selected by the Company. If, on such date, there
shall not then be a public market for the Common Stock, the "Current Market
Price" shall mean the higher of (x) the Book Value per share of Common Stock at
such date, and (y) the Appraised Value per share of Common Stock as of such
date.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant
is exercisable pursuant to SECTION 2.1.
"Expiration Date" shall mean July 31, 2000.
"Fully Diluted Outstanding" shall mean, when used with reference
to Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant, and any other options,
warrants or other rights to purchase or receive Common Stock outstanding on such
date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
3
<PAGE>
"Holder" shall mean the Person or Persons in whose name the
Warrant set forth herein is registered on the books of the Company maintained
for such purpose.
"Initial Exercise Date" shall mean the earliest to occur of (i)
December 31, 1996, (ii) the occurrence of a payment default under Section 9.1(a)
of the Override Agreement, and in the case of a payment default NOT involving
the payment of principal, interest, Letter of Credit Fees (as defined in the
Override Agreement) or Facility Fees (as defined in the Override Agreement) the
continuance of such default beyond two (2) Business Days after written notice
thereof to the Company, and (iii) the Repayment Event.
"Majority Holders" shall mean the holders of Warrants exercisable
for a number of shares of not less than 66-2/3% of the aggregate number of
shares of Common Stock then purchasable upon exercise of all Warrants, whether
or not then exercisable.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Obligations" shall have the meaning set forth in the Override
Agreement.
"Other Property" shall have the meaning set forth in SECTION
4.4.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any Subsidiary thereof, and shall include all
shares issuable in respect of any certificates representing fractional interests
in shares of Common Stock.
"Override Agreement" shall mean that certain Override Agreement
of even date herewith among the Company, Morrison Knudsen Corporation, an Ohio
corporation, the banks and other financial institutions that are parties
thereto, and Mellon Bank, N.A., as agent, as supplemented, amended, modified or
restated from time to time.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Public Company" shall have the meaning set forth in SECTION
13.1.
4
<PAGE>
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement of even date herewith between the Company, the
Holders of this Warrant and the holders of the Antecedent Debt Warrant.
"Repayment Event" shall mean the payment and satisfaction in full
(or the provision in a manner satisfactory to the holder of any Obligations for
all liability of the obligor with respect thereto), in accordance with the terms
and provisions of the Override Agreement, of all Obligations (including, without
limitation, all Obligations with respect to Existing Contingent Indebtedness and
the Metra Letter of Credit (each as defined in the Override Agreement), or the
making of final provisions for the satisfaction of all Obligations but excluding
any contingent indemnity obligations unless such obligations are due or
payable).
"Repurchase Price" shall have the meaning set forth in SECTION
14.2.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in SECTION
9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which an aggregate of more than 50% of the outstanding stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in SECTION
9.2.
"Warrants" shall mean this Warrant, and any amendments thereto,
and all warrants issued upon transfer, division or combination of, or in
substitution for, this Warrant. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.
5
<PAGE>
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
SECTION 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased
by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 MANNER OF EXERCISE. From and after the Initial Exercise Date
and until 5:00 p.m., Idaho time, on the Expiration Date, Holder may exercise
this Warrant, on any Business Day, for all or any part of the number of shares
of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at One Morrison Knudsen
Plaza, 720 Park Boulevard, Boise, Idaho 83712, or at the office or agency
designated by the Company pursuant to SECTION 12: (a) a written notice of
Holder's election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased; (b) payment of the Warrant
Price in the manner specified below; and (c) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as EXHIBIT A, duly executed by Holder or its agent or attorney.
Upon receipt thereof, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute and deliver to Holder a
certificate or certificates representing the aggregate number of shares of
Common Stock issuable upon such exercise. The stock certificate or certificates
so delivered shall be, to the extent possible, in such denomination or
denominations as such Holder shall request in the notice and shall be registered
in the name of Holder or, subject to SECTION 9, such other names as shall be
designated in the notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates of Common Stock shall be deemed to have
been issued, and Holder or any other Person so designated to be named therein
shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the notice, together with the payment as set forth
below, and this Warrant are received by the Company as described above and all
taxes, if any, required to be paid by Holder pursuant to SECTION 2.2 prior to
the issuance of such shares of Common Stock, have been paid or Holder has agreed
to pay such taxes when finally determined. If this Warrant shall have been
exercised in part, the Company shall, at the time of delivery of the certificate
or certificates representing Warrant Stock, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased shares of Common
Stock called for by this Warrant, which new Warrant shall in all other respects
be
6
<PAGE>
identical with this Warrant, or, at the request of Holder, appropriate notation
may be made on this Warrant and the same returned to Holder. Notwithstanding
any provision herein to the contrary, the Company shall not be required to
register shares of Warrant Stock in the name of any Person who acquired this
Warrant (or part hereof) or any Warrant Stock otherwise than in accordance with
this Warrant.
Payment of the Warrant Price shall be made at the option of the
Holder (i) by certified or official bank check payable to the order of the
Company, (ii) by cancellation of indebtedness, if any, owed by the Company to
such Holder, (iii) by receiving from the Company the number of shares of Common
Stock equal to (x) the number of shares of Common Stock as to which this Warrant
is being exercised, MINUS (y) the number of shares of Common Stock having a
value, based on the Current Market Price on the date of such exercise, equal to
the Warrant Price, or (iv) by a combination thereof.
2.2 PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid, nonassessable, free of liens or encumbrances (except for the
restrictive legend provided for herein) and without any preemptive rights. The
Company shall pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to, the issue of the
Common Stock hereunder, unless such tax or charge is imposed by law upon Holder,
in which case such taxes or charges shall be paid by Holder. The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of Common
Stock issuable upon exercise of this Warrant in any name other than that of
Holder, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or the Person
designated to receive such shares has agreed in writing to pay such tax or
charge or it has been established to the satisfaction of the Company that no
such tax or other charge is due.
2.3 CONTINUED VALIDITY. A holder of shares of Common Stock issued
upon the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under SECTIONS 9, 10, 13,
14 and 17 of this Warrant. The Company will, at the time of each exercise of
this Warrant, in whole or in part, upon the request of the holder of the shares
of Common Stock issued upon such exercise hereof, acknowledge in writing, in
form reasonably satisfactory to such holder, its continuing obligation to afford
to such holder all such rights; PROVIDED, HOWEVER, that if such holder shall
fail to make any
7
<PAGE>
such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 TRANSFER. Subject to compliance with SECTIONS 9 AND 14,
transfer of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
SECTION 2.1 or the office or agency designated by the Company pursuant to
SECTION 12, together with a written assignment of this Warrant substantially
in the form of EXHIBIT B hereto duly executed by Holder or its agent or
attorney and if such transfer is not to be made pursuant to SECTION 14, funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to SECTION 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with SECTION 9, may be exercised
by a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued. If requested by the Company, a new Holder shall acknowledge in
writing, in form reasonably satisfactory to the Company, such Holder's
continuing obligations under SECTIONS 9 AND 14 of this Warrant.
3.2 DIVISION AND COMBINATION. Subject to SECTION 9, this Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with SECTION
3.1 and with SECTION 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 EXPENSES. The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under this
SECTION 3.
3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration, and the registration of
transfer, of the Warrants.
8
<PAGE>
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this SECTION 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this SECTION 4 at the
time of such event.
4.1 PREPAYMENT OF OBLIGATIONS UNDER OVERRIDE AGREEMENT. If the
Repayment Event occurs on or prior to the earlier of the Initial Exercise Date
and September 30, 1996, then the number of shares of Common Stock for which this
Warrant is exercisable immediately after the occurrence of such event shall be
adjusted as follows:
- -------------------------------------------------------------------------------
If the Repayment Event occurs Then the number of shares of
during the following period Common Stock for which this
Warrant is exercisable
immediately prior
to such event is reduced by
- -------------------------------------------------------------------------------
Closing Date through June 30, 100%
1996
- -------------------------------------------------------------------------------
July 1, 1996 through 50%
December 31, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
January 1, 1997 through 25%
June 30, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
the Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock;
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant
9
<PAGE>
Price in effect immediately prior to the occurrence of such event, multiplied by
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.3 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION.
The following provisions shall be applicable to the making of adjustments
pursuant to this SECTION 4, of the number of shares of Common Stock for which
this Warrant is exercisable:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by
this SECTION 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of an adjustment
pursuant to SECTION 4.1 or a subdivision or combination of shares of the
Common Stock, as provided for in SECTION 4.2) up to, but not beyond the date
of exercise of this Warrant (or date of repurchase by the Company under SECTION
14) if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than one percent (1%) of the shares of
Common Stock for which this Warrant is exercisable immediately prior to the
making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried
forward and made as soon as such adjustment, together with other adjustments
required by this SECTION 4 and not previously made, would result in a minimum
adjustment or on the date of exercise or repurchase. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) FRACTIONAL INTERESTS. In computing adjustments under this
SECTION 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
4.4 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation), or sell,
transfer or
10
<PAGE>
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then each Holder shall have the right thereafter to receive, upon exercise of
such Holder's Warrant, the number of shares of common stock of the successor or
acquiring corporation and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of the shares of Common Stock for
which this Warrant is exercisable, which adjustments shall be as nearly
equivalent as practicable to the adjustments provided for in this SECTION 4.
For purposes of this SECTION 4.4, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or rights on liquidation over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are convertible into or exchangeable for any such stock, either immediately or
upon a specified date or the happening of a specified event and any warrants or
other rights to subscribe for or purchase any such stock. The foregoing
provisions of this SECTION 4.4 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or dispositions of
assets.
5. NOTICES TO WARRANT HOLDERS
5.1 NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to SECTION 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was
11
<PAGE>
calculated, specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to SECTION
4.4) describing the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in the purchase
price or prices thereof, after giving effect to such adjustment or change. The
Company shall promptly cause a signed copy of such certificate to be delivered
to each Holder in accordance with SECTION 17.2. The Company shall keep at its
office or agency designated pursuant to SECTION 12 copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder thereof.
5.2 NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be
entitled to the same rights to receive notice of corporate action as any holder
of Common Stock.
6. NO IMPAIRMENT
The Company shall not by any action avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock, upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
necessary to enable the Company to perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY; PREFERRED STOCK
From and after the Closing Date, the Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant
12
<PAGE>
and payment therefor in accordance with the terms of such Warrant, shall be duly
and validly issued and fully paid and nonassessable, and not subject to
preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority under any federal or state law (otherwise than as provided in SECTION
9) before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered or qualified.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of SECTION
4 refers to the taking of a record of such holders, the Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock transfer
books or Warrant transfer books so as to result in preventing or delaying the
exercise or transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
SECTION 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act and state law, with respect to the Transfer of
any Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees
to be bound by the provisions of this SECTION 9.
13
<PAGE>
9.1 RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this SECTION 9, each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and are
subject to the conditions specified in a certain Warrant dated
as of August ___, 1995, originally issued by Morrison Knudsen
Corporation. No transfer of the shares represented by this
certificate shall be valid or effective until such conditions
and any requirements of federal and state law have been fulfilled.
A copy of the form of said Warrant is on file with the Secretary
of Morrison Knudsen Corporation. The holder of this certificate,
by acceptance of this certificate, agrees to be bound by the provisions
of such Warrant."
(b) Except as otherwise provided in this SECTION 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby have
not been registered under the Securities Act of 1933, as
amended, and may not be transferred in violation of such Act or
state law, the rules and regulations thereunder or the
provisions of this Warrant."
9.2 NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior
to any Transfer or attempted Transfer of any Warrants or any shares of
Restricted Common Stock, the holder of such Warrants or Restricted Common Stock
shall give 10 days prior written notice (a "Transfer Notice") to the Company of
such holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and shall deliver to the Company a
certificate of such holder representing and warranting that the proposed
Transfer of such Warrants or such Restricted Common Stock may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and certificate, the Company shall, within five days thereof, so notify
the holder of such Warrants or such Restricted Common Stock and such holder
shall thereupon be entitled to Transfer such Warrants or such Restricted Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate,
if any, evidencing such shares of Restricted Common Stock issued upon such
Transfer shall bear the restrictive legend set forth in SECTION 9.1(a), and
each Warrant issued upon such Transfer shall
14
<PAGE>
bear the restrictive legend set forth in SECTION 9.1(b). The holder of the
Warrants or the Restricted Common Stock, as the case may be, giving the Transfer
Notice shall not be entitled to transfer and shall not transfer such Warrants or
such Restricted Common Stock until receipt of notice from the Company under this
SECTION 9.2(a).
The holders of Warrants and Warrant Stock shall have the right to
request registration of such Warrant Stock pursuant to and in accordance with
the terms of the Registration Rights Agreement.
9.3 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of SECTION 9, the restrictions imposed by this SECTION 9 upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of SECTION 9.1 shall terminate as to any particular
Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock
issuable upon the exercise of the Warrants) (i) when and so long as such
security shall have been effectively registered under the Securities Act and
disposed of pursuant thereto or (ii) when the Company shall have received an
opinion of counsel reasonably satisfactory to it that such legend is not
required in order to ensure compliance with the Securities Act. Whenever the
restrictions imposed by this SECTION 9 shall terminate as to this Warrant, as
hereinabove provided, the Holder hereof shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing the following
legend in place of the restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON ___________________, 19___,
AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants thereafter issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this SECTION 9 shall terminate as to any share of
Restricted Common Stock, as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in SECTION 9.1(a).
9.4 LISTING ON SECURITIES EXCHANGE. So long as the Company shall
list any shares of Common Stock on any securities exchange, it will, at its
expense, list thereon, maintain and, when necessary, increase such listing of,
all shares of Common Stock issued or, to the extent permissible under the
applicable securities exchange rules, issuable upon the exercise of this
Warrant, so long as any shares of Common Stock shall be so listed during the
Exercise Period.
15
<PAGE>
10. SUPPLYING INFORMATION
The Company shall cooperate with each holder of a Warrant or Restricted
Common Stock in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it, and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
PROVIDED, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant. The Company
shall notify Holder in writing prior to any change of the address of the office
at which the Warrants may be presented.
13. FINANCIAL AND BUSINESS INFORMATION
13.1 FILINGS. So long as the Company is a "Public Company" (as
hereinafter defined), the Company will file with the Commission on or before the
due date all regular or periodic reports required to be filed pursuant to the
Exchange Act, and will deliver to the Holder, promptly upon its becoming
available, one copy of each report, notice or proxy statement sent by the
Company to its shareholders generally, and one copy of each regular or periodic
report (including, without limitation, reports on Form 8-K) pursuant to the
Exchange Act or any registration statement, prospectus or written communication
(other than transmittal letters and other communications that are not publicly
available) pursuant to the Securities Act, filed by the Company with (i) the
Commission or (ii) any securities exchange on which shares of the Common Stock
are listed.
16
<PAGE>
For purposes of this SECTION 13, the term "Public Company"
shall mean a company (i) that is subject to the reporting requirements
of Section 15(d) of the Exchange Act, or (ii) any of whose securities are
registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
13.2 QUARTERLY INFORMATION. During any period in which the Company
is not a Public Company, as soon as available and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Company, the Company will deliver to the Agent a consolidated balance sheet
of the Company and its consolidated Subsidiaries as of the end of such quarter
and the related consolidated statements of income and cash flows for such
quarter and for the portion of the Company's fiscal year ended at the end of
such quarter, setting forth in the case of such income and cash flows in
comparative form the figures for the corresponding quarter and the corresponding
portion of the Company's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP, and consistency by
the chief financial officer, controller or treasurer of the Company.
13.3 ANNUAL INFORMATION. During any period in which the Company is
not a Public Company, as soon as available and in any event within 90 days after
the end of each fiscal year of the Company, the Company will deliver to the
Agent a consolidated balance sheet of the Company and its consolidated
Subsidiaries as of the end of such fiscal year and the related consolidated
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on in a manner acceptable to the Commission by
Deloitte & Touche or other independent public accountants of nationally
recognized standing, together with an unaudited annual report prepared on a
consolidating basis in conformity with GAAP.
14. THE COMPANY'S REPURCHASE OF THE WARRANT
14.1 OPTION TO REPURCHASE WARRANT. From time to time on or after
the Initial Exercise Date and until the Expiration Date, the Company shall have
the right, upon not less than thirty (30) days prior written notice to any
Holder, to repurchase from such Holder, from any source of funds legally
available therefor, on the date and in the manner set forth in SECTION 14.2,
all or any part of the Warrant then held by such Holder for an amount
determined by multiplying (x) the number of shares of Common Stock subject to
such Warrant or portion thereof being repurchased, by (y) the difference between
(i) 110% of the higher of the Current Market Price per share of Common Stock and
the Current Warrant Price per share of Common Stock as of the date of such
notice, and (ii) the Current Warrant Price per share of Common Stock as of the
date of such notice; PROVIDED, HOWEVER, that nothing herein shall preclude
the exercise by Holder of any
17
<PAGE>
portion of this Warrant exercisable at any time prior to such repurchase.
14.2 DETERMINATION AND PAYMENT OF REPURCHASE PRICE.
(a) The purchase price for any repurchase pursuant to this
SECTION 14 (the "Repurchase Price") shall be determined within ten (10) days
of the date of the repurchase notice given by the Company pursuant to SECTION
14.1, and shall be payable in cash from any source of funds legally available
therefor within ten (10) days following the date of such determination of the
Repurchase Price. On the date of any repurchase of this Warrant pursuant to
this SECTION 14, each Holder shall assign to the Company such Holder's Warrant
or portion thereof being repurchased, without any representations (other than a
representation that such Holder owns such Warrant free and clear of any liens,
pledges or encumbrances), by the surrender of such Holder's Warrant at the
principal office of the Company referred to in SECTION 2.1 against payment
therefor of the Repurchase Price by, at the option of such Holder, and subject
to the immediately following sentence, (i) wire transfer to an account in a bank
located in the United States designated by such Holder for such purpose or (ii)
a certified or official bank check drawn on a member of the New York Clearing
House payable to the order of such Holder. If less than all of any Holder's
Warrant is being repurchased, the Company shall, pursuant to SECTION 3, cancel
such Warrant and issue in the name of, and deliver to, such Holder a new Warrant
for the portion not being repurchased.
(b) Each Holder of Warrants shall have the right at any time to
object to the determination of the Repurchase Price pursuant to this SECTION
14 by specifying in writing to the Company the nature of its objection and,
unless such objection is resolved by agreement of the Company and such Holder,
the Company and such Holder shall each have the right to subject the disputed
determination to separate firms of independent accountants of recognized
national standing for a joint resolution of the objection of such Holder (which
firms of independent accountants may, in either case, be the firms of
accountants regularly retained by the Company or such Holder). If such firms
cannot jointly resolve the objection of such Holder, then, unless otherwise
directed by agreement of the Company and such Holder, such firms shall in their
sole discretion choose another firm of independent certified public accountants
of recognized national standing, which is not the regular auditor of such Holder
or the Company, which firm shall resolve such objection. In either case, for
purposes hereof the determination so made shall be conclusive and binding on the
Company, such Holder and all Persons claiming under or through any of them, and
any adjustment in the determination of the Repurchase Price per share of Common
Stock resulting from such determination shall be made. The cost of any such
determination shall be borne by the Company if it results in an increase of the
aggregate Repurchase Price for all shares of Common Stock issuable upon the
exercise hereof and by
18
<PAGE>
such Holder if it results in no adjustment or a decrease of the aggregate
Repurchase Price for all shares of Common Stock issuable upon the exercise
hereof.
(c) Any repurchase by the Company of all or any portion of the
Warrant pursuant to SECTION 14.1 which is delayed by (1) the failure of the
Company to determine the Repurchase Price within the time periods required in
SECTION 14.3(a) or (2) an objection by any Holder of the Warrant to any such
determination pursuant to SECTION 14.3(b) shall be consummated within ten (10)
days after, as the case may be, the determination of the Repurchase Price or the
resolution of such objection.
(d) In the event that the determination of the Repurchase Price
requires an opinion from an investment banking firm or accounting firm, all
costs and fees associated therewith shall, except to the extent otherwise
provided in SECTION 14.3(b) above, be paid by the Company.
14.3 PRO RATA REPURCHASE OF WARRANTS. Notwithstanding anything to
the contrary contained in this SECTION 14, any repurchase by the Company of
this Warrant or any portion thereof shall be made pro rata and on the same terms
with respect to all Warrants and all Antecedent Debt Warrants then outstanding,
and any obligation of Holder pursuant to this SECTION 14 to sell this Warrant
or any portion thereof to the Company is conditioned upon the Company's
compliance with such requirement.
15. APPRAISAL
If required under this Warrant, the determination of the Appraised Value
per share of Common Stock shall be made by an investment banking firm of
nationally recognized standing selected by the Company and acceptable to the
Majority Holders. If the investment banking firm selected by the Company is not
acceptable to the Majority Holders and the Company and the Majority Holders
cannot agree on a mutually acceptable investment banking firm, then the Majority
Holders and the Company shall each choose one such investment banking firm and
the respective chosen firms shall agree on another investment banking firm which
shall make the determination. The Company shall retain, at its sole cost, such
investment banking firms as may be necessary for the determination of Appraised
Value required by the terms of this Warrant.
16. LIMITATION OF LIABILITY
No provision hereof (including, without limitation, any of the
provisions under Section 7), in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase
19
<PAGE>
price of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company, or by creditors of the Company.
17. MISCELLANEOUS
17.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
17.2 NOTICE GENERALLY. Any notice, demand, request, consent,
approval, declaration or other communication hereunder to be made pursuant to
the terms of this Warrant shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last
known address or facsimile transmission number appearing on the books of the
Company maintained for such purpose.
(b) If to the Company at:
Morrison Knudsen Corporation
One Morrison Knudsen Plaza
720 Park Boulevard
Boise, Idaho 83712
Attention: Douglas L. Brigham
Facsimile: (208) 386-5922
with a copy to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Attention: David S. Kurtz, Esq.
Facsimile: (312) 782-8585
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Each such notice, demand,
request, consent, approval, declaration, delivery other communication shall be
effective, (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this SECTION 17.2 and confirmation
20
<PAGE>
of receipt is received, (ii) if given by mail, seventy-two (72) hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the address specified in this SECTION 17.2. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration, delivery
or other communication to the person designated above to receive a copy shall in
no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration, delivery or other communication.
17.3 INDEMNIFICATION. In addition to the indemnities provided in
the Registration Rights Agreement, the Company agrees to indemnify and hold
harmless Holder, its officers, directors, employees, agents, and attorneys from
and against any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon, incurred by or asserted against Holder
relating to or arising out of (i) Holder's exercise of this Warrant and/or
ownership of any shares of Warrant Stock issued in consequence thereof, or (ii)
any litigation to which Holder is made a party in its capacity as a stockholder
or warrant holder of the Company; PROVIDED, HOWEVER, that the Company will
not be liable hereunder to the extent that any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees,
expenses or disbursements are found in a final non-appealable judgment by a
court to have resulted from either (i) Holder's gross negligence or willful
misconduct, (ii) actions or omissions taken or not taken by Holder in any
capacity other than as a stockholder or warrant holder of the Company, or (iii)
any violation of federal or state securities laws by Holder, which is not caused
by any action or inaction of the Company.
17.4 REMEDIES. Each holder of Warrants and Warrant Stock, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under SECTIONS 9, 10, 13 AND 14 of this Warrant. Each party agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of SECTION 9, 10, 13 OR 14 of this
Warrant and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
17.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of SECTIONS
3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and assigns of Holder. The provisions of this Warrant are intended to be for
the benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
21
<PAGE>
17.6 AMENDMENT. This Warrant and all other Warrants may be modified
or amended or the provisions hereof waived with the written consent of the
Company and the Majority Holders; PROVIDED, HOWEVER, that no such Warrant
may be modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable (including, without limitation, by way of
amendment of SECTION 4.1), to increase the price at which such shares may be
purchased upon exercise of such Warrant (before giving effect to any adjustment
as provided therein), or to modify the time period during which such Warrant may
be exercised, without the prior written consent of the Holder thereof; AND
PROVIDED FURTHER, that no such Warrant may be modified or amended unless the
"Majority Holders" as defined under the Antecedent Debt Warrant have agreed to
the same modification or amendment of the Antecedent Debt Warrant.
17.7 SEVERABILITY. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
17.8 HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
17.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
17.10 CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY
CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY
HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER
PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY HOLDER OR ANY HOLDER OF
WARRANT STOCK IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF
ITSELF AND ITS PROPERTY, IN THE MANNER SPECIFIED IN SECTION 17.2 (PROVIDED
TELECOPY NOTICES MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION
17.10 SHALL AFFECT THE RIGHT OF HOLDER OR ANY HOLDER OF WARRANT STOCK TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF HOLDER
OR ANY HOLDER OF WARRANT STOCK TO BRING ANY ACTION OR PROCEEDING AGAINST THE
COMPANY OR ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
22
<PAGE>
17.11 MUTUAL WAIVER OF JURY TRIAL. HOLDER, EACH HOLDER OF WARRANT
STOCK AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: August ___, 1995
MORRISON KNUDSEN CORPORATION
By:__________________________
Name:
Title:
Attest:
_________________________
Secretary
23
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of the attached Warrant irrevocably
exercises such Warrant for the purchase of ____ Shares of Common Stock of
Morrison Knudsen Corporation, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in such Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and/or any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ________________ whose address is ____________ and, if such
shares of Common Stock (or other securities or property) shall not include all
of the shares of Common Stock issuable as provided in such Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
___________________________________
(Name of Registered Owner)
___________________________________
(Signature of Registered Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name
as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
24
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under such Warrant, with respect to the number of
shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF
COMMON STOCK
and does hereby irrevocably constitute and appoint ________________________
attorney-in-fact to register such transfer on the books of Morrison Knudsen
Corporation maintained for the purpose, with full power of substitution in the
premises.
Dated:________________________ Print Name:________________________________
Signature:_________________________________
Witness:___________________________________
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
25
<PAGE>
EXHIBIT C to Metra Warrant
METRA WARRANT ALLOCATION
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
BANK SHARES
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Bank of America National Trust and Savings Association 364,239
- ---------------------------------------------------------------------------
Bank of Montreal 242,826
- ---------------------------------------------------------------------------
The Bank of Nova Scotia 242,826
- ---------------------------------------------------------------------------
The Bank of Tokyo, Ltd., Seattle Branch 315,674
- ---------------------------------------------------------------------------
Banque Nationale de Paris 291,391
- ---------------------------------------------------------------------------
Banque Paribas 315,674
- ---------------------------------------------------------------------------
CIBC Inc. 315,674
- ---------------------------------------------------------------------------
Credit Lyonnais, New York Branch 315,674
- ---------------------------------------------------------------------------
The Hongkong and Shanghai Banking Corporation Limited 242,826
- ---------------------------------------------------------------------------
The Long-Term Credit Bank of Japan, Ltd., 315,674
Los Angeles Agency
- ---------------------------------------------------------------------------
National Westminster Bank PLC 242,826
- ---------------------------------------------------------------------------
Royal Bank of Canada 242,826
- ---------------------------------------------------------------------------
San Paolo Bank SpA 534,217
- ---------------------------------------------------------------------------
Union Bank of Switzerland 315,674
- ---------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale, 315,674
New York and Cayman Islands Branches
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
TOTAL 4,613,695
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<PAGE>
Exhibit 4.9
Item 1.19
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("Agreement"), dated as of July
31, 1995, between MORRISON KNUDSEN CORPORATION, a Delaware corporation (the
"Company"), the banks and other financial institutions whose signatures appear
on the signature pages hereto (together with its successors and assigns, each a
"Purchaser" and collectively, the "Purchasers"), and Mellon Bank. N.A., as agent
for the Purchasers and certain other parties under the "Override Agreement" as
hereinafter defined (in such capacity, the "Agent"), is made with reference to
the following facts:
RECITALS
WHEREAS, the Company and Morrison Knudsen Corporation, an Ohio
corporation (each a "Borrower" and collectively, the "Borrowers"), the
Purchasers and certain other banks and other financial institutions (each an
"Existing Lender" and collectively, the "Existing Lenders"), and the Agent are
concurrently entering into that certain Override Agreement of even date herewith
(as supplemented, amended, modified or restated from time to time, the "Override
Agreement"), pursuant to which the Existing Lenders have, among other things,
made certain agreements concerning their respective rights and remedies arising
from the Borrowers' defaults under the "Existing Agreements" (as defined in the
Override Agreement) and amended certain provisions of the Existing Agreements;
WHEREAS, those Existing Lenders that are also Purchasers are willing
to enter into the Override Agreement, but only upon the condition, among others,
that the Company agree to sell to the respective Purchasers warrants (each a
"Warrant" and collectively the "Warrants") to purchase an aggregate of
14,029,391 shares of the Company's Common Stock, par value One Dollar and
Sixty-Six and Two-Thirds Cents ($1.66-2/3) per share, allocated among the
individual Purchasers in the respective amounts set forth in EXHIBITS A-1 AND
A-2 hereto (the "Warrant Allocations"); and
WHEREAS, in order to coordinate the delivery of the Warrants to the
respective purchasers, the Company and the Purchasers have agreed to have the
Company issue the Warrants to the respective Purchasers in accordance with their
respective Warrant Allocations and to deliver the Warrants to Agent on behalf of
and for transmittal to the respective Purchasers.
<PAGE>
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS
1.1 DEFINED TERMS. Unless otherwise defined herein, terms
defined in the Override Agreement are used herein as therein defined.
1.2 ACCOUNTING TERMS. Any accounting term used in this
Agreement shall have the meaning customarily given to such term in accordance
with Generally Accepted Accounting Principles.
1.3 CERTAIN MATTERS OF CONSTRUCTION. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole, including the schedules and exhibits hereto, as the same
may from time to time be amended or supplemented, and not to any particular
section, subsection or clause contained in this Agreement. References to this
"Agreement" shall mean this Securities Purchase Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative. Any reference to a "Section"
shall refer to the applicable Section of this Agreement, unless specifically
indicated to the contrary. The term "including" shall not be limiting or
exclusive.
2. PURCHASE OF THE WARRANTS
2.1 PURCHASE OF THE WARRANTS. Each Purchaser agrees to
subscribe for and purchase from the Company, and the Company agrees to authorize
as necessary and to sell and issue to such Purchaser a Warrant to purchase
shares of the Company's Common Stock in accordance with such Purchaser's Warrant
Allocation, in consideration of, among other things, such Purchaser's agreement
to enter into the Override Agreement. The Warrants and the Warrant Stock (as
defined therein) shall be referred to collectively herein as the "Securities."
2.2 ISSUANCE OF WARRANTS; DIVISION AMONG INDIVIDUAL PURCHASERS.
The closing of the purchase and sale of the Warrants (the "Closing") shall take
place at such date and time and place as the parties hereto shall agree;
provided that the Closing shall take place as soon as is practicable after such
time as the Company is able to make its representations and warranties under
Section 4.2, and in no event shall the Closing take place later than August 31,
1995. At Closing, in consideration of, among other things, the Purchasers
entering into the Override Agreement, the Company will deliver to the Agent (a)
a single
2
<PAGE>
Warrant in the form of Exhibit D-1 to the Override Agreement (the "Antecedent
Debt Warrant"), issued to the Purchasers listed on EXHIBIT A-1 hereto
according to the Warrant Allocation set forth therein, and (b) a single Warrant
in the form of Exhibit D-2 to the Override Agreement (the "Metra Warrant"),
issued to the Purchasers listed on EXHIBIT A-2 hereto according to the Warrant
Allocation set forth therein. Immediately after Closing, (i) the single
Antecedent Debt Warrant will be divided in accordance with Section 3.2 thereof
into separate Warrants for each individual Purchaser thereof, (ii) the Company
will deliver to the Agent such separate Warrants in exchange for the single
Antecedent Debt Warrant, (iii) the single Metra Warrant will be divided in
accordance with Section 3.2 thereof into separate Warrants for each individual
Purchaser thereof, and (iv) the Company will deliver to the Agent such separate
Warrants in exchange for the single Metra Warrant. Upon receipt of such
separate Warrants, the Agent shall deliver each of them to the respective
Purchasers thereof.
2.3 ORIGINAL ISSUE DISCOUNT. The Company and each Purchaser
hereby acknowledge and agree that there is no original issue discount with
respect to the Warrants and, for all tax and accounting purposes, each of them
shall treat the Warrants in such manner.
3. EACH PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser makes the following representations and warranties to
the Company, each and all of which shall survive the execution and delivery of
this Agreement and the Closing:
3.1 INVESTMENT REPRESENTATIONS. Such Purchaser is purchasing
the Securities for its own account and not with a view to the distribution
thereof. Such Purchaser agrees that it will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any of the
Securities (or solicit any offers to buy, purchase, or otherwise acquire or take
a pledge of any of the Securities), except in compliance with the Securities Act
of 1933, as amended (the "Securities Act") and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations under the
Securities Act and the Exchange Act.
Such Purchaser (a) is an institutional "accredited investor" within
the meaning of subparagraph (a) of Rule 501 under the Securities Act; (b) has
had an opportunity to investigate the business and financial condition of the
Company, and to obtain such information as it requires from the officers and
directors, as applicable, of the Company; (c) has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of purchasing the Securities; (d) is aware that it may be required to
bear the
3
<PAGE>
economic risk of an investment in the Securities for an indefinite period of
time and is able to bear such risk for an indefinite period of time; and (e) is
not purchasing any Securities on behalf of any managed accounts.
4. COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties to
the Agent and each Purchaser, each and all of which shall survive the execution
and delivery of this Agreement and the Closing; provided the Company shall not
be required to make any representation or warranty under Section 4.2 with
respect to any matters arising from or in connection with its application to the
New York Stock Exchange, until the Closing:
4.1 AUTHORIZED AND OUTSTANDING SHARES OF CAPITAL STOCK. After
giving effect to the Closing, the authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, par value One Dollar and
Sixty-Six and Two-Thirds Cents ($1.66-2/3) per share, of which 33,490,664 shares
are issued and outstanding, and 10,000,000 shares of Preferred Stock, par value
Ten Cents (10CENTS) per share, none of which shares are issued and outstanding.
Except for the Securities and the commitments, warrants, options, or other
matters described in EXHIBIT B hereto, after giving effect to the Closing and
as of the date hereof, there is no commitment, contingent or otherwise, of the
Company to issue any shares of any class of capital stock of the Company or any
securities convertible into such capital stock, warrants, options or other such
rights or securities.
4.2 AUTHORIZATION OF AGREEMENT AND ISSUANCE OF SECURITIES. The
Company is authorized to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, including the
issuance of the Warrants. Upon delivery of the Warrants to the Agent, the
Warrants will have been duly executed and issued and, when delivered in exchange
for the consideration set forth in SECTION 2.1, will constitute the legal,
valid and binding obligation of the Company, enforceable in accordance with its
terms. The issuance of the Warrant Stock has been duly authorized and, when
issued upon exercise of, and pursuant to, the Warrants, will have been validly
issued and will be fully paid and non-assessable, free and clear of all pledges,
liens, encumbrances and preemptive rights. 14,029,391 shares of Common Stock
have been duly reserved for issuance pursuant to the Warrants.
4.3 SECURITIES LAWS. In reliance on, among other things, the
investment representations contained in SECTION 3.1, the offer, issuance, sale
and delivery of the Warrants as provided in this Agreement, and the offer,
issuance, sale and delivery of any Warrant Stock that may be issued to any
Purchaser
4
<PAGE>
upon exercise of, and pursuant to, the Warrants, are exempt from the
registration requirements of Section 5 of the Securities Act and all applicable
state securities laws.
5. COVENANTS
The Company covenants and agrees that from and after the date hereof
(except as otherwise provided herein, or unless Purchasers then holding the
beneficial interest in at least sixty-six and two-thirds percent (66-2/3%) of
the Securities (the "Required Purchasers") have given their prior written
consent), so long as any Purchaser is the beneficial holder of any Securities:
5.1 BOOKS AND RECORDS. The Company shall keep adequate records
and books of account with respect to its business activities in which proper
entries, reflecting all of its financial transactions, are made in accordance
with Generally Accepted Accounting Principles. The Company shall permit the
Agent or its officers, employees, and/or agents, during normal business hours
(or at such other times as may reasonably be requested by the Agent), as
frequently as the Agent deems appropriate, to inspect such records and books of
account and the properties and facilities of the Company, and the Company shall
provide extracts and/or photocopies of such records and books of account as
reasonably requested by the Agent at no cost to the Agent. The rights set forth
in this SECTION 5.1 shall not negate any other rights that the Agent may have
under any applicable law.
5.2 FINANCIAL AND BUSINESS INFORMATION.
(a) FILINGS. So long as the Company is a "Public Company"
(as hereinafter defined), the Company will file with the Securities and Exchange
Commission (the "Commission") on or before the due date all regular or periodic
reports required to be filed pursuant to the Exchange Act, and will deliver to
the Agent, promptly upon its becoming available, one copy of each report, notice
or proxy statement sent by the Company to its shareholders generally, and one
copy of each regular or periodic report (including, without limitation, reports
on Form 8-K) pursuant to the Exchange Act or any registration statement,
prospectus or written communication (other than transmittal letters and other
communications that are not publicly available) pursuant to the Securities Act,
filed by the Company with (i) the Commission or (ii) any securities exchange on
which shares of the Common Stock are listed. For purposes of this SECTION
5.2, the term "Public Company" shall mean a company (i) that is subject to the
reporting requirements of Section 15(d) of the Exchange Act, or (ii) any of
whose securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
5
<PAGE>
(b) QUARTERLY REPORTS. During any period in which the
Company is not a Public Company, as soon as available and in any event within 45
days after the end of each of the first three quarters of each fiscal year of
the Company, the Company will deliver to the Agent a Consolidated balance sheet
of the Company and its Consolidated Subsidiaries as of the end of such quarter
and the related Consolidated statements of income and cash flows for such
quarter and for the portion of the Company's fiscal year ended at the end of
such quarter, setting forth in the case of such income and cash flows in
comparative form the figures for the corresponding quarter and the corresponding
portion of the Company's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, Generally Accepted
Accounting Principles and consistency by the chief financial officer, controller
or treasurer of the Company;
(c) ANNUAL INFORMATION. During any period in which the
Company is not a Public Company, as soon as available and in any event within 90
days after the end of each fiscal year of the Company, the Company will deliver
to the Agent a Consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and the related Consolidated
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on in a manner acceptable to the Commission by
Deloitte & Touche or other independent public accountants of nationally
recognized standing, together with an unaudited annual report prepared on a
consolidating basis in conformity with Generally Accepted Accounting Principles.
5.3 TAX COMPLIANCE. The Company shall pay all transfer, excise
or similar taxes (not including income or franchise taxes) in connection with
the issuance, sale, delivery or transfer by the Company to the Agent or any
Purchaser of the Securities and shall save the Agent, each Purchaser, and any
other holder of the Securities harmless without limitation as to time against
any and all liabilities with respect to such taxes. The Company shall not be
responsible for any taxes in connection with the transfer of the Securities by
the holder thereof. The obligations of the Company under this SECTION 5.3
shall survive the payment, prepayment or redemption of the Securities and the
termination of this Agreement.
5.4 OPINION. At the Closing, the Company shall deliver the
opinions in the forms attached as EXHIBIT D hereto.
6. CONDITIONS PRECEDENT
The obligation of the Purchasers to purchase the Warrants pursuant
to SECTION 2.1 is subject to the satisfaction
6
<PAGE>
of each of the conditions precedent set forth in Article V of the Override
Agreement and the delivery of the opinion described in SECTION 5.4 unless each
Purchaser shall otherwise agree.
7. SECURITIES LAW LEGEND
The Warrants and each certificate representing the Warrant Stock
shall bear a legend substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM.
8. INDEMNIFICATION
The Company agrees to indemnify and hold harmless the Agent and each
Purchaser from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees and
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigations or defense, including those incurred upon any appeal) (each,
an "Indemnified Claim") which may be imposed upon, incurred by or asserted
against the Agent or such Purchaser in any manner relating to or arising out of
any untrue representation, breach of warranty or failure to perform any
covenants by the Company contained herein or in any certificate delivered
pursuant hereto; PROVIDED, that the Company shall not be liable for any
indemnification to the Agent or such Purchaser to the extent that any
Indemnified Claim was solely the result of its own gross negligence or willful
misconduct.
9. CONSIDERATION OF CERTAIN MATTERS
The Company acknowledges that the Purchasers may from time to time
request the Agent or another representative designated by the Required
Purchasers, to assist them on certain matters that may arise from time to time
in connection with the Purchasers' acquisition or sale of the Securities,
including, without limitation, coordinating any filings or notices that may be
required under federal securities laws. If the Agent or such other
representative agrees to assist on any such matters, the Company shall reimburse
the Agent or such other representative for its reasonable costs and expenses
incurred in connection therewith.
10. MISCELLANEOUS
10.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing
7
<PAGE>
(including bank wire, facsimile transmission or similar writing) and shall be
given to such party at its address or facsimile number set forth on the Schedule
for Notices attached as EXHIBIT C hereto, or such other address or facsimile
number as such party may hereafter specify for the purpose by notice to the
Agent and the Company. Each such notice, request or other communication shall
be effective, (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this SECTION 10.1 and confirmation of receipt is
received, (ii) if given by mail, seventy-two (72) hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in this SECTION 10.1.
10.2 BINDING EFFECT; ASSIGNABILITY; BENEFITS. Except as
otherwise provided herein, this Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors and
permitted assigns. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by the
Company, the Agent, or any Purchaser without the prior written consent of each
other party hereto, which consent shall not unreasonably be withheld;
PROVIDED, that any successor agent for Agent appointed under the Override
Agreement shall automatically succeed to the rights, powers, privileges, and
duties of the Agent hereunder. Nothing in this Agreement, express or implied,
is intended or shall be construed to give any Person other than the parties to
this Agreement or their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
10.3 APPLICABILITY OF AGENCY PROVISIONS IN OVERRIDE AGREEMENT.
The Company, the Agent and each Purchaser acknowledge and agree that the
provisions of Article X of the Override Agreement apply generally to this
Agreement and any actions taken hereunder; PROVIDED, that solely with respect
to the application of those provisions to this Agreement and any actions taken
hereunder, each reference to "Existing Lender" or "Existing Lenders" shall be
deemed a reference to "Purchaser" or "Purchasers", each reference to "Majority
Lenders" shall be deemed a reference to "Required Purchasers", and each
reference to "Pro Rata Share" shall be deemed a reference to "Warrant
Allocations". If there is no longer an "Agent" acting under the Override
Agreement, any delivery or notice required to be made or given by the Company to
the Agent shall be delivered directly to each Purchaser then holding the
beneficial interest in any of the Securities.
10.4 AMENDMENTS AND WAIVERS. Any provision of this Agreement may
be amended or waived if, but only if, such
8
<PAGE>
amendment or waiver is in writing and is signed by the Company, the Agent and
the Required Purchasers; PROVIDED, that (i) the consent of one hundred percent
(100%) of the Purchasers ("All Purchasers") shall be required to amend, modify
or waive any provision relating to (a) a change in the definitions of "Required
Purchasers", "All Purchasers" or "Warrant Allocations", or (b) any change that
subjects any Purchaser to any additional obligation, or (c) this SECTION
10.4; (ii) any change in the duties of or indemnities in favor of any
Purchaser or in a Purchaser's Warrant Allocations shall require the consent of
such Purchaser; and (iii) any change in the duties of or indemnities in favor of
the Agent shall require the consent of the Agent.
10.5 EFFECT OF WAIVERS; MODIFICATION OF DOCUMENTS. The Agent's
or the Purchasers' failure, at any time or times, to require strict performance
by the Company or any other Person of any provision of this Agreement shall not
waive, affect or diminish any right of the Agent or the Purchasers to demand
strict compliance and performance therewith. Any suspension or waiver by the
Agent or the Purchasers of any default under this Agreement shall not suspend,
waive or affect any other default under this Agreement, whether the same is
prior or subsequent thereto and whether of the same or of a different type. No
waiver of any provision of this Agreement, nor consent to any departure by the
Company or any other Person therefrom shall in any event be effective unless the
same shall be in writing and signed by the Agent or the Required Purchasers or
All Purchasers, as the case may be, necessary to effectuate such waiver or
consent and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
10.6 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
10.7 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
10.8 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
10.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
9
<PAGE>
COMMONWEALTH OF PENNSYLVANIA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF
LAW PRINCIPLES THEREOF.
10.10 CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY
CONSENT TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY
HEREBY IRREVOCABLY CONSENT TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER
PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY THE AGENT OR ANY PURCHASER
IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF AND ITS
PROPERTY, IN THE MANNER SPECIFIED IN SECTION 10.1 (PROVIDED TELECOPY NOTICES
MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION 10.10 SHALL AFFECT
THE RIGHT OF THE AGENT OR ANY PURCHASER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE AGENT OR ANY PURCHASER TO
BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTIES IN THE
COURTS OF ANY OTHER JURISDICTIONS.
10.11 WAIVER OF JURY TRIAL. THE AGENT, EACH PURCHASER AND
THE COMPANY EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
10
<PAGE>
IN WITNESS WHEREOF, the Company, the Agent and each of the
Purchasers have executed this Securities Purchase Agreement as of the day and
year first above written.
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
By: /s/ Douglas L. Brigham
-------------------------
Douglas L. Brigham
Treasurer
MELLON BANK, N.A.,
as the Agent for the Purchasers
and as a Purchaser
By: /s/ Alan J. Kopolow
-------------------------
Alan J. Kopolow
Vice President
[ADDITIONAL SIGNATURES FOR PURCHASERS CONTINUED ON NEXT PAGE]
11
<PAGE>
PURCHASERS:
Bank of America National Trust Banque Paribas
and Savings Association
By: /s/ John N. Cate
-------------------------
By: /s/ Henry Y. Yu Name: John N. Cate
------------------------- -----------------------
Name: Henry Y. Yu Title: GVP
----------------------- ----------------------
Title: Vice President
----------------------
Bank of Montreal By: /s/ Alan E. McLintock
-------------------------
Name: Alan E. McLintock
-----------------------
Title: Regional General Manager
----------------------
By: /s/ James R. Easter
-------------------------
Name: James R. Easter
-----------------------
Title: Account Manager CIBC Inc.
----------------------
The Bank of Nova Scotia By: /s/ Robert N. Greer
-------------------------
Name: Robert N. Greer
-----------------------
By: /s/ D. N. Gillespie Title: Vice President
------------------------- ----------------------
Name: D. N. Gillespie
-----------------------
Title: General Manager Citibank, N.A.
----------------------
The Bank of Tokyo, Ltd.,
Seattle Branch By: /s/ Bradley I. Dietz
-------------------------
Name: Bradley I. Dietz
-----------------------
Title: Vice President
----------------------
By: /s/ M. Tomi
-------------------------
Name: M. Tomi Credit Lyonnais, New York
----------------------- Branch
Title: General Manager
----------------------
Banque Nationale de Paris
By: /s/ David Bonington
-------------------------
Name: David Bonington
-----------------------
By: /s/ Katherine Wolfe Title: Vice President
------------------------- ----------------------
Name: Katherine Wolfe
-----------------------
Title: Vice President
----------------------
By: /s/ William J. Latterman
-------------------------
Name: William J. Latterman
-----------------------
Title: Assistant Vice President
----------------------
[ADDITIONAL SIGNATURES FOR PURCHASERS CONTINUED ON NEXT PAGE]
<PAGE>
Deutsche Bank AG, Morgan Guaranty Trust Company
Los Angeles Branch and/or
Cayman Islands Branch
By: /s/ D. Linda Scheuplein
-------------------------
Name: D. Linda Scheuplein
-----------------------
By: /s/ Patricia E. Apelian Title: Vice President
------------------------- ----------------------
Name: Patricia E. Apelian
-----------------------
Title: Director National Westminster Bank PLC
----------------------
By: /s/ Silvia L. Spear By: /s/ Theodore P. Nikolis
------------------------- -------------------------
Name: Silvia L. Spear Name: Theodore P. Nikolis
----------------------- -----------------------
Title: Director Title: Vice President and Counsel
---------------------- ----------------------
The Hongkong and Shanghai Royal Bank of Canada
Banking Corporation Limited
By: /s/ Brian W. Dixon
-------------------------
By: /s/ G. W. Masek Name: Brian W. Dixon
------------------------- -----------------------
Name: G. W. Masek Title: Senior Manger
----------------------- ----------------------
Title: Vice President
----------------------
San Paolo Bank SpA
The Industrial Bank of Japan,
Limited, Los Angeles Agency
By: /s/
-------------------------
Name:
-----------------------
By: /s/ Kazutaka Kiyoto Title:
------------------------- ----------------------
Name: Kazutaka Kiyoto
-----------------------
Title: S.V.P.
----------------------
By: /s/
-------------------------
Name:
-----------------------
Key Bank of Idaho Title:
----------------------
By: /s/ Bret A. Tinker Society National Bank
-------------------------
Name: Bret A. Tinker
-----------------------
Title: Vice President
----------------------
By: /s/ Nancy Terrill
-------------------------
The Long-Term Credit Bank of Name: Nancy Terrill
Japan, Ltd., Los Angeles -----------------------
Agency Title: Vice President
----------------------
By: /s/ Curt M. Biren
-------------------------
Name: Curt M. Biren
-----------------------
Title: Vice President, Manager
----------------------
[ADDITIONAL SIGNATURES FOR PURCHASERS CONTINUED ON NEXT PAGE]
<PAGE>
Union Bank of Switzerland
By: /s/ Thomas G. Jackson
-------------------------
Name: Thomas G. Jackson
-----------------------
Title: Managing Director
----------------------
By: /s/ Peter S. Humber
-------------------------
Name: Peter S. Humber
-----------------------
Title: Vice President
----------------------
Westdeutsche Landesbank
Girozentrale, New York and
Cayman Islands Branches
By: /s/ S. Battinelli
-------------------------
Name: S. Battinelli
-----------------------
Title: V.P.
----------------------
By: /s/ Michael F. McWalters
-------------------------
Name: Michael F. McWalters
-----------------------
Title: Managing Director
----------------------
<PAGE>
[ADDITIONAL PURCHASER SIGNATURES]
Credit Lyonnais, Canada
By:_________________________
Name:_______________________
Title:______________________
<PAGE>
Exhibit 4.11
Item 1.20A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of July 31, 1995, is
made by and between MORRISON KNUDSEN CORPORATION, a Delaware corporation (the
"Company"), and the banks and other financial institutions whose signatures
appear on the signature pages hereto (together with its successors and assigns,
each a "Purchaser" and collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company, the Purchasers and certain other parties are
entering into that certain Override Agreement of even date herewith (the
"Override Agreement"), and in connection therewith, the Company and the
Purchasers also are entering into a Securities Purchase Agreement of even date
herewith (the "Purchase Agreement"), pursuant to which the Company agreed to
issue and sell to the Purchasers, and the Purchasers agreed to purchase from the
Company, warrants to purchase common stock of the Company in exchange for, among
other things, certain accommodations being made by the Purchasers under the
Override Agreement;
WHEREAS, in order to induce the Purchasers to enter into the
Purchase Agreement and to purchase warrants for common stock, the Company is
agreeing to provide registration rights with respect to shares of the Company's
Common Stock, par value One Dollar and Sixty-Six and Two-Thirds Cents
($1.66-2/3) per share, held by the Purchasers (the "Common Stock");
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS. Unless otherwise defined herein, terms defined
in the Antecedent Debt Warrant are used herein as therein defined, and the
following shall have (unless otherwise provided elsewhere in this Registration
Rights Agreement) the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement, including
all amendments, modifications and supplements and any exhibits or schedules to
any of the foregoing, and shall refer to the Agreement as the same may be in
effect at the time such reference becomes operative.
"Antecedent Debt Warrant" shall have the meaning set forth in the
Purchase Agreement.
<PAGE>
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Metra Warrant" shall have the meaning set forth in the Purchase
Agreement.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Registrable Securities" shall mean the Warrant Stock and the shares
of Common Stock purchasable upon exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Warrants" shall mean collectively the Warrants (as defined in the
Antecedent Debt Warrant) and the Warrants (as defined in the Metra Warrant).
"Warrant Stock" shall mean collectively the Warrant Stock (as
defined in the Antecedent Debt Warrant) and the Warrant Stock (as defined in the
Metra Warrant).
2. REQUIRED REGISTRATION. After receipt of a written request
made on or prior to July 31, 2003 from the holders of Registrable Securities
representing at least an aggregate of fifty percent (50%) of the total of
Registrable Securities not previously sold in a public sale, requesting that the
Company effect the registration of Warrant Stock issuable upon the exercise of
such holder's Warrants or of any of such holder's Warrant Stock under the
Securities Act and specifying the intended method or methods of disposition
thereof, the Company shall promptly notify all holders of Warrants and Warrant
Stock in writing of the receipt of such request and each such holder, in lieu of
exercising its rights under SECTION 3, may elect (by written notice sent to
the Company within 10 Business Days from the date of such holder's receipt of
the aforementioned Company's notice) to have its shares of Warrant Stock
included in such registration thereof pursuant to this SECTION 2. Thereupon
the Company shall, as expeditiously as is possible, use its best efforts to
effect the registration under the Securities Act of all shares of Warrant Stock
which the Company has been so requested to register by such holders for sale,
all to the extent
2
<PAGE>
required to permit the disposition (in accordance with the intended method or
methods thereof, as aforesaid) of the Warrant Stock so registered; PROVIDED,
HOWEVER, that the Company shall not be required to effect more than two (2)
registrations of any Registrable Securities pursuant to this SECTION 2.
3. INCIDENTAL REGISTRATION. If the Company at any time, on or
prior to July 31, 2003, proposes to file on its behalf and/or on behalf of any
of its security holders (the "demanding security holders") a Registration
Statement under the Securities Act (a "Registration Statement") on any form
(other than a Registration Statement on Form S-4 or S-8 or any successor form
for securities to be offered in a transaction of the type referred to in Rule
145 under the Securities Act or to employees of the Company pursuant to any
employee benefit plan, respectively) for the general registration of securities
with respect to its Common Stock or any other class of equity security (as
defined in Section 3(a)(11) of the Exchange Act) of the Company, it will give
written notice to all holders of Warrants or Warrant Stock at least 45 days
before the initial filing with the Commission of such Registration Statement,
which notice shall set forth the intended method of disposition of the
securities proposed to be registered by the Company. The notice shall offer to
include in such filing the aggregate number of shares of Warrant Stock, and the
number of shares of Common Stock into which such Warrants are exercisable, as
such holders may request. Nothing herein shall preclude the Company from
discontinuing the registration of its securities being effected on its behalf or
on behalf of the demanding security holders at any time prior to the effective
date of the Registration Statement relating thereto.
Each holder of any such Registrable Securities desiring to have
Warrant Stock registered under this SECTION 3 shall advise the Company in
writing within 30 days after the date of receipt of such offer from the Company,
setting forth the number of shares of such Warrant Stock and shares of Common
Stock into which such Warrants are exercisable for which registration is
requested. The Company shall thereupon include in such filing the number of
shares of Warrant Stock and shares of common stock into which such Warrants are
exercisable for which registration is so requested and shall use its best
efforts to effect registration under the Securities Act of such shares. Except
as otherwise provided in SECTION 5, all expenses of such registration shall be
borne by the Company.
4. REGISTRATION PROCEDURES. If the Company is required by the
provisions of SECTION 2 OR 3 to use its best efforts to effect the
registration of any of its securities under the Securities Act, the Company
will, as expeditiously as possible:
3
<PAGE>
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of 180 days;
(c) furnish to any selling security holders such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such selling security holders may reasonably request;
(d) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions within the United States and Puerto Rico as
each holder of such securities shall request (provided, however, the Company
shall not be obligated to qualify as a foreign corporation to do business under
the laws of any jurisdiction in which it is not then qualified or to file any
general consent to service of process), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such Registration
Statement;
(e) unless waived in writing by each holder of securities
being included in such registration, use its best efforts to obtain from a
nationally recognized underwriter or investment banker a firm commitment
(pursuant to an underwriting agreement in customary form) to underwrite the
public offering of the securities covered by such Registration Statement;
(f) furnish, at the request of any holder requesting
registration of Registrable Securities pursuant to SECTION 2, on the date that
such shares of Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date that the Registration Statement with
respect to such shares of Registrable Securities becomes effective, (1) a copy
of an opinion in form and substance satisfactory to such holder, dated such
date, of the independent counsel representing the Company for the purposes of
such
4
<PAGE>
registration, addressed to the underwriters, if any, and to the holders making
such request, substantially to the effect that such Registration Statement has
become effective under the Securities Act and that (i) to the best knowledge of
such counsel, no stop order suspending the effectiveness thereof has been issued
and no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (ii) the Registration Statement, the
related prospectus, and each amendment or supplement thereto, comply as to form
in all material respects with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder (except that such
counsel need express no opinion as to financial statements and data contained
therein), (iii) the descriptions in the Registration Statement or the
prospectus, or any amendment or supplement thereto, of all legal matters and
contracts and other legal documents or instruments are accurate and fairly
present the information required to be shown, and (iv) such counsel does not
know of any legal or governmental proceedings, pending or contemplated, required
to be described in the Registration Statement or prospectus, or any amendment or
supplement thereto, which are not described as required, nor of any contracts or
documents or instruments of a character required to be described in the
Registration Statement or prospectus, or any amendment or supplement thereto, or
to be filed as exhibits to the Registration Statement which are not described
and filed or incorporated by reference as required; such counsel shall also
confirm that it has no reason to believe that either the Registration Statement
or the prospectus, or any amendment or supplement thereto (other than financial
statements and data as to which such counsel need make no statement) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which made, not misleading; and (2) a letter dated
such date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the holders making such request
(or if such accountants are unable to deliver such letter to such holders under
applicable professional rules or guidelines, then to the Company) stating that
they are independent certified public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the financial
statements and other financial data of the Company included in the Registration
Statement or the prospectus, or any amendment or supplement thereto, comply as
to form in all material respects with the applicable accounting requirements of
the Securities Act and, if permitted under applicable professional rules or
guidelines, that such opinion is rendered for the benefit of the selling
security holders and that they have a right to rely thereon. Such opinion of
counsel shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as such holders of
Registrable Securities may reasonably request.
5
<PAGE>
Such letter from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five Business Days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
the holders of such securities may reasonably request;
(g) enter into customary agreements (including an
underwriting agreement in customary form containing standard indemnification
provisions) and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities; and
otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, but not later than 18 months after the effective
date of the Registration Statement, an earnings statement covering the period of
at least 12 months beginning with the first full month after the effective date
of such Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act.
5. EXPENSES; LIMITATIONS ON REGISTRATION. All expenses
incurred in complying with this Agreement, including, without limitation, all
registration and filing fees (including all expenses incident to filing with the
NASD), printing expenses, fees and disbursements of counsel for the Company, the
reasonable fees and expenses of counsel for the selling security holders
(selected by those holding a majority of the shares being registered), expenses
of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to SECTION 4(d), shall be paid by the Company, except that
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more than 180 days
after the effective date of such Registration Statement because any holder of
Registrable Securities has not effected the disposition of the securities
requested to be registered shall be paid by such holder; and
(b) the Company shall not be liable for any fees, discounts
or commissions to any underwriter or any fees or disbursements of counsel for
any underwriter in respect of the securities sold by such holder of Registrable
Securities.
It shall be a condition precedent to the obligation of the Company
to take any action pursuant to this Agreement in respect of the securities which
are to be registered at the request of any holder of Registrable Securities that
such holder shall furnish to the Company such information as may be deemed
necessary by the Company under the Securities Act with respect to such holder,
including information regarding the securities held
6
<PAGE>
by such holder and the intended method of disposition thereof as the Company
shall reasonably request and as shall be required in connection with the action
taken by the Company.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless the holder of such Registrable Securities,
such holder's directors and officers, and each other Person, if any, who
controls such holder within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or controlling Person may become subject under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any alleged untrue statement of any material fact
contained in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such holder or such director, officer or controlling Person for any
legal or any other expenses reasonably incurred by such holder or such director,
officer or controlling Person in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any alleged untrue
statement or alleged omission made in such Registration Statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder
specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of such holder or
such director, officer or controlling Person, and shall survive the transfer of
such securities by such holder.
(b) Each holder of Registrable Securities agrees to
indemnify and hold harmless the Company, its directors and officers and each
other Person, if any, who controls the Company within the meaning of the
Securities Act against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or any such Person
may become subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon written information provided to
the Company by such holder of such Warrant or Warrant Stock specifically for use
7
<PAGE>
therein and contained, on the effective date thereof, in any Registration
Statement under which securities were registered under the Securities Act at the
request of such holder, any final prospectus contained therein, or any amendment
or supplement thereto; PROVIDED, HOWEVER, that such holder's obligation
under this SECTION 6(b) to indemnify and hold harmless the Company shall in no
event exceed, with respect to all such obligations, the lesser of the proceeds
received by such selling security holder from the sale of the Registrable
Securities through such offering, or the damage attributable solely to the
inclusion of such written information in such Registration Statement,
prospectus, or amendment or supplement suffered by the Person or Persons whose
claims gave rise to such losses, claims, damages or liabilities; and FURTHER
PROVIDED, HOWEVER, that no such indemnity shall exist with respect to any
Person making claims or demands to whom the Company or any other Person
responsible for delivering a final Prospectus to such claimant failed to deliver
such prospectus as amended or supplemented.
(c) If the indemnification provided for in this SECTION 6
from the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified parties in connection with the actions that resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include any legal
or other fees or expenses reasonably incurred by such party in connection with
any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this SECTION 6(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall
8
<PAGE>
be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
7. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding
the other provisions of this Agreement, the Company shall not be obligated to
register the Registrable Securities of any holder if (x) in the opinion of
counsel to the Company reasonably satisfactory to the holder and its counsel
(or, if the holder has engaged an investment banking firm, to such investment
banking firm and its counsel), the sale or other disposition of such stock, in
the manner proposed by such holder (or by such investment banking firm), may be
effected without registering such stock under the Securities Act, and (y) the
failure of the Company to register such stock will not result in a reduction in
the net proceeds to be received by such holder in connection with such sale or
other disposition.
8. MISCELLANEOUS.
(a) NOTICES. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
facsimile transmission or similar writing) and shall be given to such party at
its address or facsimile number set forth on the Schedule for Notices attached
as Exhibit A hereto, or such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the Company. Each such notice,
request or other communication shall be effective, (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in Exhibit A
and confirmation of receipt is received, (ii) if given by mail, seventy-two (72)
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when delivered at the address specified in this SECTION 8(a).
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties hereto including any Person to whom Registrable Securities are
transferred.
(c) AMENDMENTS AND WAIVERS. This Agreement may be
modified or amended or the provisions hereof waived with the written consent of
each of (i) the Company, (ii) the Majority Holders (as defined in the Antecedent
Debt Warrant) and (iii) the Majority Holders (as defined in the Metra Warrant).
(d) SECTION AND OTHER HEADINGS. The section and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.
9
<PAGE>
(e) SEVERABILITY. In the event that any one or more of
the provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
(f) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
(h) CONSENT TO JURISDICTION. THE COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN PITTSBURGH, PENNSYLVANIA IN ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS. THE COMPANY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A
SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING
BROUGHT BY ANY PURCHASER IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR
OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON
BEHALF OF ITSELF AND ITS PROPERTY, IN THE MANNER SPECIFIED IN SECTION 8(a)
(PROVIDED TELECOPY NOTICES MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS
SECTION 8(h) SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY PURCHASER TO BRING
ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS PROPERTIES IN THE COURTS OF
ANY OTHER JURISDICTIONS.
(i) WAIVER OF JURY TRIAL. EACH PURCHASER AND THE COMPANY
EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.
10
<PAGE>
IN WITNESS WHEREOF, the Company and Purchasers have executed this
Agreement as of the date first above written.
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
By /s/ Douglas L. Brigham
------------------------
Douglas L. Brigham
Treasurer
[ADDITIONAL SIGNATURES FOR PURCHASERS CONTINUED ON NEXT PAGE]
11
<PAGE>
PURCHASERS:
Bank of America National Trust Banque Paribas
and Savings Association
By:
By: -------------------------
------------------------- Name:
Name: -----------------------
----------------------- Title:
Title: ----------------------
----------------------
Bank of Montreal By:
-------------------------
Name:
-----------------------
Title:
By:_________________________
Name:_______________________
Title:______________________ CIBC Inc.
The Bank of Nova Scotia By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________ Citibank, N.A.
The Bank of Tokyo, Ltd.,
Seattle Branch By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________ Credit Lyonnais, New York
Title:______________________ Branch
Banque Nationale de Paris
By:_________________________
Name:_______________________
By:_________________________ Title:______________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________
[ADDITIONAL SIGNATURES FOR PURCHASERS CONTINUED ON NEXT PAGE]
12
<PAGE>
Deutsche Bank AG, Mellon Bank, N.A.,
Los Angeles Branch and/or
Cayman Islands Branch
By:_________________________
Name:_______________________
By:_________________________ Title:______________________
Name:_______________________
Title:______________________ Morgan Guaranty Trust Company
By:_________________________ By:_________________________
Name:_______________________ Name:_______________________
Title:______________________ Title:______________________
The Hongkong and Shanghai National Westminster Bank PLC
Banking Corporation Limited
By:_________________________
By:_________________________ Name:_______________________
Name:_______________________ Title:______________________
Title:______________________
Royal Bank of Canada
The Industrial Bank of Japan,
Limited, Los Angeles Agency By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________ San Paolo Bank SpA
Key Bank of Idaho By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________ By:_________________________
Name:_______________________
The Long-Term Credit Bank of Title:______________________
Japan, Ltd., Los Angeles Agency
Society National Bank
By:_________________________
Name:_______________________ By:_________________________
Title:______________________ Name:_______________________
Title:______________________
[ADDITIONAL SIGNATURES FOR PURCHASERS CONTINUED ON NEXT PAGE]
13
<PAGE>
Union Bank of Switzerland
By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________
Westdeutsche Landesbank
Girozentrale, New York and
Cayman Islands Branches
By:_________________________
Name:_______________________
Title:______________________
By:_________________________
Name:_______________________
Title:______________________
14
<PAGE>
[ADDITIONAL PURCHASER SIGNATURES]
Credit Lyonnais, Canada
By:_________________________
Name:_______________________
Title:______________________
15
<PAGE>
Exhibit 4.10
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT ("Agreement"), dated as of July 31,
1995, between MORRISON KNUDSEN CORPORATION, a Delaware corporation (the
"Company") and FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a Maryland corporation
(the "Purchaser") and Purchaser as agent for certain cosureties and other
reinsurers (in such capacity, the "Agent"), is made with reference to the
following facts:
RECITALS
WHEREAS, the Company and Morrison Knudsen Corporation, an Ohio
corporation and the Purchaser are concurrently entering into that certain
Indemnification and Reimbursement Agreement dated of even date herewith and
certain other agreements in connection therewith (collectively, the "Surety
Reimbursement Agreements");
WHEREAS, the Purchaser is willing to enter into the Surety
Reimbursement Agreements, but only upon the condition, among others, that the
Company agrees to sell to the Purchaser warrants (each a "Warrant" and
collectively the "Warrants") to purchase an aggregate of 830,039 shares of the
Company's Common Stock, par value One Dollar and Sixty-Six and Two-Thirds Cents
($1.66-2/3) per share.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS
1.1 DEFINED TERMS. Unless otherwise defined herein, capitalized
terms used herein shall have the respective meanings ascribed to them in the
Override Agreement of even date herewith among MK and certain banks and other
financial institutions named therein.
1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement
shall have the meaning customarily given to such term in accordance with
Generally Accepted Accounting Principles.
1.3 CERTAIN MATTERS OF CONSTRUCTION. The words "herein," "hereof"
and "hereunder" and other words of similar
<PAGE>
import refer to this Agreement as a whole, including the schedules and exhibits
hereto, as the same may from time to time be amended or supplemented, and not to
any particular section, subsection or clause contained in this Agreement.
References to this "Agreement" shall mean this Securities Purchase Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative. Any reference to
a "Section" shall refer to the applicable Section of this Agreement, unless
specifically indicated to the contrary. The term "including" shall not be
limiting or exclusive.
2. PURCHASE OF THE WARRANTS
2.1 PURCHASE OF THE WARRANTS. The Purchaser agrees to subscribe for
and purchase from the Company, and the Company agrees to authorize as necessary
and to sell and issue to the Purchaser a Warrant to purchase 830,039 shares of
the Company's Common Stock, in consideration of, among other things, the
Purchaser's agreement to enter into the Surety Reimbursement Agreements. The
Warrants and the Warrant Stock (as defined therein) shall be referred to
collectively herein as the "Securities."
2.2 ISSUANCE OF WARRANTS; DIVISION AMONG INDIVIDUAL PURCHASERS. The
closing of the purchase and sale of the Warrants (the "Closing") shall take
place at such date and time and place as the parties hereto shall agree;
provided that the Closing shall take place as soon as is practicable after such
time as the Company is able to make its representations and warranties under
Section 4.2, and in no event shall the Closing take place later than August 31,
1995. At Closing, in consideration of, among other things, the Purchaser
entering into the Surety Reimbursement Agreements, the Company will deliver to
the Purchaser a single Warrant in the form of Exhibit A attached hereto.
2.3 ORIGINAL ISSUE DISCOUNT. The Company and the Purchaser hereby
acknowledge and agree that there is no original issue discount with respect to
the Warrants and, for all tax and accounting purposes, each of them shall treat
the Warrants in such manner.
3. PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser makes the following representations and warranties to
the Company, each and all of which shall survive the execution and delivery of
this Agreement and the Closing:
3.1 INVESTMENT REPRESENTATIONS. The Purchaser is purchasing the
Securities for its own account and not with a view
2
<PAGE>
to the distribution thereof, except for distributing such Securities to certain
cosureties and other reinsurers. The Purchaser agrees that it will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of any of the Securities (or solicit any offers to buy,
purchase, or otherwise acquire or take a pledge of any of the Securities),
except as otherwise provided herein and in compliance with the Securities Act of
1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations under the
Securities Act and the Exchange Act.
The Purchaser (a) is an institutional "accredited investor" within
the meaning of subparagraph (a) of Rule 501 under the Securities Act; (b) has
had an opportunity to investigate the business and financial condition of the
Company, and to obtain such information as it requires from the officers and
directors, as applicable, of the Company; (c) has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of purchasing the Securities; (d) is aware that it may
be required to bear the economic risk of an investment in the Securities for
an indefinite period of time and is able to bear such risk for an indefinite
period of time; and (e) is not purchasing any Securities on behalf of any
managed accounts.
4. COMPANY'S REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties to the
Agent and the Purchaser, each and all of which shall survive the execution and
delivery of this Agreement and the Closing; provided the Company shall not be
required to make any representation or warranty under Section 4.2 with respect
to any matters arising from or in connection with its application to the New
York Stock Exchange, until the Closing.
4.1 AUTHORIZED AND OUTSTANDING SHARES OF CAPITAL STOCK. After giving
effect to the Closing, the authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, par value One Dollar and Sixty-Six and Two-
Thirds Cents ($1.66-2/3) per share, of which 33,490,664 shares are issued and
outstanding, and 10,000,000 shares of Preferred Stock, par value Ten Cents
(10CENTS) per share, none of which shares are issued and outstanding. Except
for the Securities and the commitments, warrants, options, or other matters
described in EXHIBIT B hereto, after giving effect to the Closing and as of the
date hereof, there is no commitment, contingent or otherwise, of the Company to
issue any shares of any class of capital stock of the Company or any securities
convertible into such capital stock, warrants, options or other such rights or
securities.
3
<PAGE>
4.2 AUTHORIZATION OF AGREEMENT AND ISSUANCE OF SECURITIES. The
Company is authorized to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, including the
issuance of the Warrants. Upon delivery of the Warrants to the Purchaser, the
Warrants will have been duly executed and issued and, when delivered in exchange
for the consideration set forth in SECTION 2.1, will constitute the legal, valid
and binding obligation of the Company, enforceable in accordance with its terms.
The issuance of the Warrant Stock has been duly authorized and, when issued upon
exercise of, and pursuant to, the Warrants, will have been validly issued and
will be fully paid and non-assessable, free and clear of all pledges, liens,
encumbrances and preemptive rights. 830,039 shares of Common Stock have been
duly reserved for issuance pursuant to the Warrants.
4.3 SECURITIES LAWS. In reliance on, among other things, the
investment representations contained in SECTION 3.1, the offer, issuance, sale
and delivery of the Warrants as provided in this Agreement, and the offer,
issuance, sale and delivery of any Warrant Stock that may be issued to the
Purchaser upon exercise of, and pursuant to, the Warrants, are exempt from the
registration requirements of Section 5 of the Securities Act and all applicable
state securities laws.
5. COVENANTS
The Company covenants and agrees that from and after the date hereof,
except as otherwise provided herein, or unless the Purchaser has given its prior
written consent:
5.1 BOOKS AND RECORDS. The Company shall keep adequate records and
books of account with respect to its business activities in which proper
entries, reflecting all of its financial transactions, are made in accordance
with Generally Accepted Accounting Principles. The Company shall permit the
Agent or its officers, employees, and/or agents, during normal business hours
(or at such other times as may reasonably be requested by the Agent), as
frequently as the Agent deems appropriate, to inspect such records and books of
account and the properties and facilities of the Company, and the Company shall
provide extracts and/or photocopies of such records and books of account as
reasonably requested by the Agent at no cost to the Agent. The rights set forth
in this SECTION 5.1 shall not negate any other rights that the Agent may have
under any applicable law.
4
<PAGE>
5.2 FINANCIAL AND BUSINESS INFORMATION.
(a) FILINGS. So long as the Company is a "Public Company" (as
hereinafter defined), the Company will file with the Securities and Exchange
Commission (the "Commission") on or before the due date all regular or periodic
reports required to be filed pursuant to the Exchange Act, and will deliver to
the Agent, promptly upon its becoming available, one copy of each report, notice
or proxy statement sent by the Company to its shareholders generally, and one
copy of each regular or periodic report (including, without limitation, reports
on Form 8-K) pursuant to the Exchange Act or any registration statement,
prospectus or written communication (other than transmittal letters and other
communications that are not publicly available) pursuant to the Securities Act,
filed by the Company with (i) the Commission or (ii) any securities exchange on
which shares of the Common Stock are listed. For purposes of this SECTION 5.2,
the term "Public Company" shall mean a company (i) that is subject to the
reporting requirements of Section 15(d) of the Exchange Act, or (ii) any of
whose securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act.
(b) QUARTERLY REPORTS. During any period in which the Company
is not a Public Company, as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal year of the
Company, the Company will deliver to the Agent a Consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of the end of such quarter and
the related Consolidated statements of income and cash flows for such quarter
and for the portion of the Company's fiscal year ended at the end of such
quarter, setting forth in the case of such income and cash flows in comparative
form the figures for the corresponding quarter and the corresponding portion of
the Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, Generally Accepted Accounting
Principles and consistency by the chief financial officer, controller or
treasurer of the Company;
(c) ANNUAL INFORMATION. During any period in which the Company
is not a Public Company, as soon as available and in any event within 90 days
after the end of each fiscal year of the Company, the Company will deliver to
the Agent a Consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such fiscal year and the related Consolidated
statements of income, retained earnings and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on in a manner acceptable to the Commission by
Deloitte & Touche or other independent public accountants of nationally
recognized standing, together with an unaudited annual report
5
<PAGE>
prepared on a consolidating basis in conformity with Generally Accepted
Accounting Principles.
5.3 TAX COMPLIANCE. The Company shall pay all transfer, excise or
similar taxes (not including income or franchise taxes) in connection with the
issuance, sale, delivery or transfer by the Company to the Agent or the
Purchaser of the Securities and shall save the Agent, the Purchaser, and any
other holder of the Securities harmless without limitation as to time against
any and all liabilities with respect to such taxes. The Company shall not be
responsible for any taxes in connection with the transfer of the Securities by
the holder thereof. The obligations of the Company under this SECTION 5.3 shall
survive the payment, prepayment or redemption of the Securities and the
termination of this Agreement.
5.4 OPINION. At the Closing, the Company shall deliver the opinions
in the forms attached as Exhibit D hereto.
6. [INTENTIONALLY OMITTED]
7. SECURITIES LAW LEGEND
The Warrants and each certificate representing the Warrant Stock shall
bear a legend substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("THE ACT"), AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM.
8. INDEMNIFICATION
The Company agrees to indemnify and hold harmless the Agent and the
Purchaser from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees and
expenses (including reasonable attorneys' fees and disbursements and other costs
of investigations or defense, including those incurred upon any appeal) (each,
an "Indemnified Claim") which may be imposed upon, incurred by or asserted
against the Agent or the Purchaser in any manner relating to or arising out of
any untrue representation, breach of warranty or failure to perform any
covenants by the Company contained herein or in any certificate delivered
pursuant hereto; PROVIDED, that the Company shall not be liable for any
indemnification to the Agent or the Purchaser to the extent that any Indemnified
Claim was solely the result of its own gross negligence or willful misconduct.
6
<PAGE>
9. CONSIDERATION OF CERTAIN MATTERS
The Company acknowledges that the Purchaser may from time to time
request the Agent or another representative to assist them on certain matters
that may arise from time to time in connection with their acquisition or sale of
the Securities, including, without limitation, coordinating any filings or
notices that may be required under federal securities laws. If the Agent or
such other representative agrees to assist on any such matters, the Company
shall reimburse the Agent or such other representative for its reasonable costs
and expenses incurred in connection therewith.
10. MISCELLANEOUS
10.1 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, facsimile transmission
or similar writing) and shall be given to such party at its address or facsimile
number set forth on the Schedule for Notices attached as EXHIBIT C hereto, or
such other address or facsimile number as such party may hereafter specify for
the purpose by notice to the Agent and the Company. Each such notice, request
or other communication shall be effective, (i) if given by facsimile
transmission, when transmitted to the facsimile number specified in this
SECTION 10.1 and confirmation of receipt is received, (ii) if given by mail,
seventy-two (72) hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid, or (iii) if given by any
other means, when delivered at the address specified in this SECTION 10.1.
10.2 BINDING EFFECT; ASSIGNABILITY; BENEFITS. Except as otherwise
provided herein, this Agreement shall be binding upon and inure to the benefit
of the parties to this Agreement and their respective successors and permitted
assigns. Neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by the Company, the
Agent, or the Purchaser without the prior written consent of each other party
hereto, which consent shall not unreasonably be withheld. Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
Person other than the parties to this Agreement or their respective successors
or permitted assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
10.3 AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company, the Agent and the Purchaser.
7
<PAGE>
10.4 EFFECT OF WAIVERS; MODIFICATION OF DOCUMENTS. The Agent's or the
Purchaser's failure, at any time or times, to require strict performance by the
Company or any other Person of any provision of this Agreement shall not waive,
affect or diminish any right of the Agent or the Purchaser to demand strict
compliance and performance therewith. Any suspension or waiver by the Agent or
the Purchaser of any default under this Agreement shall not suspend, waive or
affect any other default under this Agreement, whether the same is prior or
subsequent thereto and whether of the same or of a different type. No waiver of
any provision of this Agreement, nor consent to any departure by the Company or
any other Person therefrom shall in any event be effective unless the same shall
be in writing and signed by the Agent or the Purchaser, as the case may be,
necessary to effectuate such waiver or consent and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
10.5 SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
10.6 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
10.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT
REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
10.9 CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY CONSENT
TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
BALTIMORE, MARYLAND IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER,
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY HEREBY
IRREVOCABLY CONSENT TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS
IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY THE AGENT OR ANY PURCHASER IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF AND ITS
PROPERTY, IN THE MANNER SPECIFIED IN SECTION 10.1
8
<PAGE>
(PROVIDED TELECOPY NOTICES MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS
SECTION 10.10 SHALL AFFECT THE RIGHT OF THE AGENT OR THE PURCHASER TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
AGENT OR THE PURCHASER TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR
ITS PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
10.10 WAIVER OF JURY TRIAL. THE AGENT, PURCHASER AND THE COMPANY
EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS.
9
<PAGE>
IN WITNESS WHEREOF, the Company, the Agent and the Purchaser have
executed this Securities Purchase Agreement as of the day and year first above
written.
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
By:__________________________
Douglas L. Brigham
Treasurer
FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a
Maryland corporation
as Purchaser and as Agent
By:_________________________
Title:______________________
<PAGE>
Exhibit 4.13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDEMNIFICATION AND
REIMBURSEMENT AGREEMENT
Dated as of July 31, 1995
among
MORRISON KNUDSEN CORPORATION,
an Ohio corporation,
MORRISON KNUDSEN CORPORATION,
a Delaware corporation,
FIDELITY AND DEPOSIT COMPANY OF MARYLAND,
a Maryland corporation,
and
COLONIAL AMERICAN CASUALTY AND SURETY COMPANY,
a Maryland corporation,
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitional Provisions . . . . . . . . . . . . . . . . . . 7
ARTICLE II
REIMBURSEMENT OBLIGATIONS. . . . . . . . . . . . 8
2.01 Reimbursements. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.02 Obligations Absolute. . . . . . . . . . . . . . . . . . . . . . . 8
2.03 Computation of Interest.. . . . . . . . . . . . . . . . . . . . . 9
2.04 Payments by the MK Group. . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 9
3.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . 9
3.02 Corporate Authorization; No Contravention . . . . . . . . . . . . 10
3.03 Governmental Authorization. . . . . . . . . . . . . . . . . . . . 10
3.04 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.06 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 11
3.08 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
AFFIRMATIVE COVENANTS. . . . . . . . . . . . . 12
4.01 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 12
4.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.03 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . 13
4.04 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . 13
4.05 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 13
4.06 Inspection of Property and Books and Records. . . . . . . . . . . 14
4.07 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 14
4.08 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . 14
4.09 Inventory Levels. . . . . . . . . . . . . . . . . . . . . . . . . 14
4.10 Notice of Borrowing Under $25,000,000 Credit
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.11 Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.12 Withholding Payments. . . . . . . . . . . . . . . . . . . . . . . 15
5.01 Mergers, Consolidations, Purchases and Sales. . . . . . . . . . . 15
5.02 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . 16
5.03 Change in Business. . . . . . . . . . . . . . . . . . . . . . . . 16
5.04 Change in Structure . . . . . . . . . . . . . . . . . . . . . . . 16
5.05 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . . 16
5.06 Other Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.07 Operations Relating to Transit Division . . . . . . . . . . . . . 16
i
<PAGE>
ARTICLE VI
EVENTS OF DEFAULT. . . . . . . . . . . . . . 16
6.01 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Representation or Warranty. . . . . . . . . . . . . . . . . . 16
(c) Other Defaults. . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Non-Payment of Other Indebtedness . . . . . . . . . . . . . . 17
(e) Acceleration of Other Indebtedness. . . . . . . . . . . . . . 17
(f) Other Obligations . . . . . . . . . . . . . . . . . . . . . . 17
(g) Bankruptcy or Insolvency. . . . . . . . . . . . . . . . . . . 17
(h) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . 18
(i) Monetary Judgments. . . . . . . . . . . . . . . . . . . . . . 18
(j) Non-Monetary Judgments. . . . . . . . . . . . . . . . . . . . 18
(k) Loss of Licenses. . . . . . . . . . . . . . . . . . . . . . . 18
(l) Change in Control . . . . . . . . . . . . . . . . . . . . . . 19
(m) Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.02 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.03 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
MISCELLANEOUS. . . . . . . . . . . . . . . 19
7.01 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . 19
7.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.03 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . 20
7.04 Costs, Expenses and Certain Fees. . . . . . . . . . . . . . . . . 20
7.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . 21
7.07 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 22
7.08 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.09 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.10 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.11 Governing Law and Jurisdiction. . . . . . . . . . . . . . . . . . 22
7.12 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . 23
7.13 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 23
ii
<PAGE>
INDEMNIFICATION AND REIMBURSEMENT AGREEMENT
This Indemnification and Reimbursement Agreement is entered into as of
July 31, 1995, among Morrison Knudsen Corporation, an Ohio corporation (the
"MKO"), Morrison Knudsen Corporation, a Delaware corporation (the "MKD"), (MKO
and MKD, collectively, the "MK GROUP"), and Fidelity and Deposit Company of
Maryland, a Maryland corporation, and Colonial American Casualty and Surety
Company, a Maryland corporation (collectively, the "BONDING COMPANY").
PRELIMINARY STATEMENT
The Bonding Company has guaranteed certain obligations of the MK Group
pursuant to a Guaranty Agreement (the "Guaranty") in the form of Exhibit A
attached hereto and has arranged for the Guaranty to be supported by the
NationsBank Letter of Credit (as hereinafter defined).
The Bonding Company is unwilling to provide the Guaranty and the
NationsBank Letter of Credit unless the repayment obligations set forth herein
are the joint and several obligations of the MK Group and the parties hereby
acknowledge that the Bonding Company is extending the Guaranty and the
NationsBank Letter of Credit in reliance on such joint and several obligations.
NOW, THEREFORE, in consideration of the above-recited extension of
credit, and other consideration, the sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities, by
contract or otherwise. Without limitation, any director, executive officer
or beneficial
<PAGE>
owner of 5% or more of the equity of a Person shall for the purposes of
this Agreement, be deemed to control the other Person.
"AGREEMENT" means this Indemnification and Reimbursement Agreement, as
amended, supplemented or modified from time to time.
"BONDING COMPANY" means, collectively, Fidelity and Deposit Company of
Maryland, a Maryland corporation, and Colonial American Casualty and Surety
Company, a Maryland corporation.
"BONDING COMPANY'S PAYMENT OFFICE" means the address set forth for the
Bonding Company pursuant to Section 7.02.
"BRIDGE LOAN AGREEMENT" has the meaning given to it in the $25,000,000
Credit Agreement.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or Baltimore are authorized
or required by law to close.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of a Person
or any of its Subsidiaries under any leasing or similar arrangement which,
in accordance with GAAP, is classified as a capital lease.
"CHANGE IN CONTROL" shall have occurred if (i) any person or group of
persons (within the meaning of Section 13 or 14 of the Securities Exchange
Act of 1934, as amended) (other than Lenders to the MK Group) shall have
acquired beneficial ownership (within the meaning of Rule 13d promulgated
by the Securities and Exchange Commission under said Act) of 35% or more of
the outstanding shares of common stock of MKD, or (ii) MKO ceases to be a
wholly-owned subsidiary of MKD.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning given to it in the Pledge and Security
Agreement dated as of July 31, 1995, between the Bonding Company and MKO.
"COMPLIANCE CERTIFICATE" means a certificate of a Responsible Officer
substantially in the form of Exhibit 4.01(d).
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or of any
2
<PAGE>
agreement, undertaking, contract, indenture, mortgage, deed of trust or
other instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"DEFAULT" means any event which, with the giving of notice, the lapse
of time, or both, would constitute an Event of Default.
"DEFAULT RATE" means a rate of interest equal to the Prime Rate plus
two percent (2%) per annum, provided, that to the extent the Default Rate
exceeds the Maximum Lawful Rate, the Default Rate shall be equal to the
Maximum Lawful Rate.
"DOCUMENTS" includes any and all instruments, documents, agreements,
certificates and other writings, however evidenced.
"DOLLARS" and "$" means lawful money of the United States.
"EVENT OF DEFAULT" means any of the events specified in Section 6.01.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such other entity as
may be in general use by significant segments of the U.S. accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTY" means that certain guaranty agreement dated as of July 31,
1995, among the Bonding Company and Mellon Bank, N.A. as agent for certain
banks and other financial institutions named therein in the form of Exhibit
A attached hereto.
3
<PAGE>
"INDEMNIFIED LIABILITIES" has the meaning specified in Section 7.05.
"INDEMNIFIED PERSON" has the meaning specified in Section 7.05.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors or
other, similar arrangement; in each case (a) and (b), whether under U.S.
Federal, State or foreign law.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, those created by, arising under or evidenced by any conditional
sale or other title retention agreement, the interest of a lessor under a
Capital Lease Obligation, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as
debtor, under the UCC or any comparable law) and any contingent or other
agreement to provide any of the foregoing.
"LIQUIDATION DATE" means the date on which an Obligation that is
contingent becomes a Liquidated Obligation, including any date on which any
payment is made by or on behalf of the Bonding Company under the Guaranty
or the date of any draw under the NationsBank Letter of Credit.
"LIQUIDATED OBLIGATION" means any Obligation that has become
determinable as a sum certain, including any Obligation resulting from any
payment by or on behalf of the Bonding Company under the Guaranty or the
date of any draw under the NationsBank Letter of Credit.
"MATERIAL ADVERSE EFFECT" means a material adverse change in, or a
material adverse effect upon, any of (a) the operations, business,
properties, condition (financial or otherwise) or prospects of the MK Group
taken as a whole, (b) the ability of the MK Group to perform under this
Agreement or any document or agreement relating to this Agreement or (c)
the legality, validity, binding effect or enforceability of this Agreement
or any document or agreement relating to this Agreement.
4
<PAGE>
"MAXIMUM LAWFUL RATE" means the highest rate of interest permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable under this Agreement.
"METRA CONTRACT" has the meaning given to it in the $25,000,000 Credit
Agreement.
"MKD" means Morrison Knudsen Corporation, a Delaware corporation.
"MKO" means Morrison Knudsen Corporation, an Ohio corporation.
"MORTGAGE" means any deed of trust, mortgage or other document
creating a Lien on real property or any interest in real property.
"MULTI-PARTY AGREEMENT" has the meaning given to it in the $25,000,000
Credit Agreement.
"NATIONSBANK LETTER OF CREDIT" means an irrevocable letter of credit
in the face amount of $25,000,000 dated on or about the date hereof, issued
by NationsBank, N.A. in favor of Mellon Bank, N.A. as agent for certain
banks and other financial institutions.
"NON-METRA TRANSIT EXPENDITURES" means direct costs, indirect costs,
and allocated overhead (allocated 71.1% to the Non-Metra Contracts and
28.9% to the Metra Contract) for the Non-Metra Contracts; PROVIDED,
HOWEVER, that allocated overhead shall not include "401(k) and SERP"
expenses, "Legal and Audit Services", "Professional and Consulting
Services" and Audit Services", "Professional and Consulting Services" and
"Other Outside Services", as those terms are used in the Morrison Knudsen
Corporation 1995 Proposed Overhead Budget, attached hereto as Exhibit B.
"OBLIGATIONS" means all indebtedness, advances, debts, liabilities,
obligations, covenants and duties owing by the MK Group to the Bonding
Company or any other Person required to be reimbursed or indemnified under
this Agreement, of any kind or nature, present or future; provided,
however, that "Obligations" shall not be deemed to include any amount paid
by the Bonding Company pursuant to Section 10.13 of the Guaranty.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving the MK Group , the ordinary course of such Person's business,
substantially as conducted by any such Person prior to or as of the Closing
Date, and
5
<PAGE>
undertaken by such Person in good faith and not for purposes of evading any
covenant or restriction in this Agreement.
"PERMITTED LIENS" has the meaning given to it in the $25,000,000
Credit Agreement.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"PRIME RATE" means the rate of interest publicly announced by Mellon
Bank, N.A. from time to time as its Prime Rate.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its Property
is subject.
"RESPONSIBLE OFFICER" means, for the MK Group, the Chief Executive
Officer or the President of the MK Group , and with respect to financial
matters, the Chief Financial Officer or the Treasurer of the MK Group.
"REVOLVING CREDIT AGREEMENT" means that certain Credit Agreement dated
as of July 31, 1995, between MKO and Bank of America National Trust and
Savings Association as agent for certain banks and other financial
institutions named therein.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries of
the Person, or a combination thereof.
"TRANSIT DIVISION" means MKO's transit division.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"UNITED STATES" and "U.S." each means the United States of America.
6
<PAGE>
"$25,000,000 CREDIT AGREEMENT" means that certain Credit Agreement
dated July 31, 1995 among MKD, MKO and Mellon Bank, N.A. as agent for
certain banks and other financial institutions named therein.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified herein or therein, all terms defined
in this Agreement shall have the defined meanings when used in any certificate
or other document made or delivered pursuant hereto.
(b) All accounting terms not expressly defined herein shall be
construed, except where the context otherwise requires, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, schedule and
exhibit references are to this Agreement unless otherwise specified. The
meaning of defined terms shall be equally applicable to the singular and plural
forms of the defined terms. The term "including" is not limiting and means
"including without limitation".
(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the words "to"
and "until" each mean "to but excluding," and the word "through" means "to and
including."
(e) References to agreements and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement or the Guaranty Agreement.
(f) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) The captions and headings of this Agreement Are for convenience
of reference only and shall not affect the construction of this Agreement.
7
<PAGE>
ARTICLE II
REIMBURSEMENT OBLIGATIONS
2.01 REIMBURSEMENTS. The MK Group, jointly and severally, agrees to
reimburse the Bonding Company for the full amount of any Liquidated Obligation
upon demand, together with interest thereon from the Liquidation Date. Each
Liquidated Obligation shall bear interest at a rate per annum equal to the
Default Rate; PROVIDED, HOWEVER, that at least one day of such interest shall be
payable even if the MK Group reimburses the Bonding Company on the Liquidation
Date in the full amount of such Liquidated Obligation.
2.02 OBLIGATIONS ABSOLUTE. The obligations of the MK Group under this
Agreement to reimburse the Bonding Company in accordance with Section 2.01
hereof shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances, including
the following:
(a) any lack of validity or enforceability of this Agreement, the
NationsBank Letter of Credit, or the Guaranty;
(b) the existence of any claim, set-off, defense or other right that
the MK Group may have at any time against the Bonding Company or any other
Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the $25,000,000 Credit Agreement or other
Documents relating thereto or any unrelated transaction;
(c) any certificate or other document presented under the NationsBank
Letter of Credit or the Guaranty proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(d) any payment by the Bonding Company under the Guaranty or and
drawing under the NationsBank Letter of Credit, notwithstanding the fact
that it may subsequently be determined that those may have been a valid
defense to payment under the Guaranty or the NationsBank Letter of Credit;
(e) any release or amendment or waiver of or consent to departure
from any guarantee for all or any of the obligations of the MK Group in
respect of this Agreement; or
8
<PAGE>
(f) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, any
member of the MK Group.
2.03 COMPUTATION OF INTEREST.
(a) All computations of interest under this Agreement shall be made
on the basis of a 360-day year and actual days elapsed, which results in more
interest being paid than if computed on the basis of a 365-day year. Interest
shall accrue during each period during which interest is computed from the first
day thereof to the last day thereof.
(b) Each determination of an interest rate by the Bonding Company
pursuant to any provision of this Agreement shall be conclusive and binding on
the MK Group in the absence of manifest error. The Bonding Company will, at the
request of MKD or MKO, deliver to MKD or MKO, as the case may be, a statement
showing the quotations used by the Bonding Company in determining any interest
rate.
2.04 PAYMENTS BY THE MK GROUP.
(a) All payments (including prepayments) to be made by the MK Group
on account of reimbursements, interest, and other sums due hereunder shall be
made without set-off or counterclaim and shall be made to the Bonding Company,
at the Bonding Company's Payment Office, in dollars and in immediately available
funds no later than 11:00 a.m. (Baltimore time) on the date when due.
(b) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The MK Group, jointly and severally, represents and warrants to the Bonding
Company that:
3.01 CORPORATE EXISTENCE AND POWER. Each member of the MK Group:
9
<PAGE>
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver and perform its obligations under this Agreement;
(c) is duly qualified as a foreign corporation, licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in Section 3.01(c) or Section 3.01(d), to the
extent that the failure to do so could not have a Material Adverse Effect.
3.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by each member of the MK Group of this Agreement have been duly
authorized by all necessary corporate action and do not and will not:
(a) contravene the terms of that Person's certificate of
incorporation, bylaws or other organizational document;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any indenture, agreement, lease, instrument,
Contractual Obligation, injunction, order, decree or undertaking to which such
Person is a party; or
(c) violate any Requirement of Law.
3.03 GOVERNMENTAL AUTHORIZATION. Except for those that have been obtained
as of the date hereof, no approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority is necessary
or required in connection with the execution, delivery, performance or
enforcement against the MK Group of the Agreement or any other instrument or
agreement required hereunder to be made by the MK Group.
3.04 BINDING EFFECT. This Agreement constitutes the legal, valid and
binding obligations of the MK Group , to the extent any such Person is a party
thereto, enforceable against such Person in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of
10
<PAGE>
creditors' rights generally or by equitable principles relating to
enforceability.
3.05 LITIGATION. Except as set forth in SCHEDULE 3.05 hereto, there are
no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the MK Group, threatened or contemplated at law, in equity, in
arbitration or before any Governmental Authority, against the MK Group , or any
of their respective properties which:
(a) purport to affect or pertain to this Agreement, or any of the
transactions contemplated hereby or thereby; or
(b) if determined adversely to the MK Group could reasonably be
expected to have a Material Adverse Effect. No injunction, writ, temporary
restraining order or any order of any nature has been issued by any court
or other Governmental Authority purporting to enjoin or restrain the
execution, delivery and performance of this Agreement or any document or
agreement relating to this Agreement, or directing that this transactions
provided for herein or therein not be consummated as herein or therein
provided.
3.06 TITLE TO PROPERTIES. The MK Group has good record and marketable
title in fee simple to or valid leasehold interests in all its property, except
for such defects in title as could not, individually or in the aggregate, have a
Material Adverse Effect. The property of the MK Group constituting Collateral
is free and clear of all Liens or rights of others, except Permitted Liens.
3.07 TAXES. Each member of the MK Group has filed all Federal and other
material tax returns and reports required to be filed and have paid all Federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP and no Notice of Lien has been filed or recorded. There is no
proposed tax assessment against the MK Group which would, if the assessment were
made, have a Material Adverse Effect.
3.08 FULL DISCLOSURE. None of the representations or warranties made by
the MK Group in this Agreement or any document or agreement relating to this
Agreement as of the date of such representations and warranties, and none of the
statements contained in each exhibit, report, statement or certificate furnished
by or on behalf of the MK Group in this Agreement or any document or agreement
relating to this Agreement contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements
11
<PAGE>
made therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE IV
AFFIRMATIVE COVENANTS
The MK Group covenants and agrees that, so long as the NationsBank Letter
of Credit and/or the Guaranty is outstanding or other amount due hereunder shall
remain unpaid, unless the Bonding Company waives compliance in writing:
4.01 FINANCIAL STATEMENTS. The MK Group shall deliver to the Bonding
Company in form and detail satisfactory to the Bonding Company:
(a) the financial statements and reports required of the MK Group in
accordance with the terms of the Multi-Party Agreement and the $25,000,000
Credit Agreement; and
(b) promptly, such additional financial and other information as the
Bonding Company may from time to time reasonably request.
4.02 NOTICES. The MK Group shall promptly notify the Bonding Company:
(a) of the occurrence of any Default or Event of Default and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any (i) breach or non-performance of, or any default under any
Contractual Obligation of the MK Group which could result in a Material Adverse
Effect; or (ii) dispute, litigation, investigation, proceeding or suspension
which may exist at any time between the MK Group and any Governmental Authority
which could result in a Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the MK Group (i) in which the amount of
damages claimed is $20,000,000 (or its equivalent in another currency or
currencies) or more, (ii) in which injunctive or similar relief is sought and
which, if adversely determined, could have a Material Adverse Effect, or (iii)
in which the relief sought is an injunction or other stay of the performance of
this Agreement or any document or agreement relating to this Agreement or the
operations of the MK Group;
(d) upon becoming aware of any Material Adverse Effect subsequent to
the date hereof;
12
<PAGE>
Each notice pursuant to this Section shall be accompanied by a written
statement by a Responsible Officer of the MK Group, setting forth details of the
occurrence referred to therein and stating what action the MK Group proposes to
take with respect thereto.
4.03 PRESERVATION OF CORPORATE EXISTENCE, ETC. Subject to the provisions
of Section 5.01, the MK Group shall:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its State or jurisdiction of
incorporation;
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business;
(c) use its reasonable efforts, in the ordinary course and consistent
with past practice, to preserve its business organization and preserve the
goodwill and business of the customers, suppliers and others having business
relations with it; and
(d) preserve or renew all of its registered trademarks, trade names
and service marks, the non-preservation of which could have a Material Adverse
Effect.
4.04 PAYMENT OF OBLIGATIONS. The MK Group shall pay and discharge as the
same shall become due and payable, all their respective obligations and
liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the MK Group;
(b) all lawful claims which, if unpaid, might by law become a Lien
upon its property; and
(c) all Indebtedness as and when due and payable but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
4.05 COMPLIANCE WITH LAWS. The MK Group shall comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act), except such as may be contested in good faith or as to which a bona fide
dispute may exist.
13
<PAGE>
4.06 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The MK Group shall
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the MK
Group. The MK Group will permit representatives of the Bonding Company to visit
and inspect any of their respective properties, to examine their respective
corporate, financial and operating records anti make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, employees and independent public
accountants, all at the expense of the MK Group and at such reasonable times
during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the MK Group; PROVIDED, HOWEVER, when an Event of
Default exists the Bonding Company may visit and inspect at the expense of the
MK Group such properties at any time during business hours and without advance
notice.
4.07 FURTHER ASSURANCES. The MK Group shall ensure that all written
information, exhibits and reports furnished to the Bonding Company do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Bonding Company and correct any defect or
error that may be discovered therein or in any related document or agreement or
in the execution, acknowledgement or recordation thereof.
4.08 APPLICATION OF PROCEEDS.
(a) Except for the payment of fees associated with the NationsBank
Letter of Credit, the proceeds of any borrowings under the $25,000,000 Credit
Agreement shall be applied solely to the payment of Non-Metra Transit
Expenditures incurred from and after July 1, 1995 and shall not be applied to
any other cost, expense or liability of any nature whatsoever;
(b) The proceeds of any receivables from any assets constituting
Collateral shall be applied solely to reduce the indebtedness due under the
$25,000,000 Credit Agreement; and
(c) No less frequently than weekly (commencing on August 4, 1995), the
MK Group shall provide to the Bonding Company a certificate from the chief
financial officer of MKD certifying, to the best of his knowledge, to the
matters specified in (a) and (b) above.
4.09 INVENTORY LEVELS. The MK Group shall maintain not less than
$260,000,000 of Transit Division inventory. The MK Group shall ensure that the
trade payables with respect to the
14
<PAGE>
Transit Division shall not remain outstanding in excess of $33,000,000 (other
than trade payables due to Nippon).
4.10 NOTICE OF BORROWING UNDER $25,000,000 CREDIT AGREEMENT. The MK Group
shall provide the Bonding Company with an exact written copy of any Notice of
Borrowing (as defined in the $25,000,000 Credit Agreement) (by telex or
facsimile transmission pursuant to the terms of Section 7.02 hereof) at least
one Business Day in advance of providing such notice to the Agent in accordance
with the terms of the Credit Agreement. The Company shall not authorize a
request for the Agent to transfer funds pursuant to Section 9 of Schedule E to
the T-Co Interim Credit Agreement if there is an Event of Default (as defined in
Credit Agreement), or the occurrence of a Default that with the passage of time
would become an Event of Default.
4.11 GUARANTY. The MK Group expressly acknowledges that, pursuant to
Section 2.1 of the Guaranty, the Bonding Company has the right to terminate the
Guaranty with respect to advances made under the $25,000,000 Credit Agreement
after providing written notice in accordance with the terms of the Guaranty.
4.12 WITHHOLDING PAYMENTS. Concurrent with the payment of any payroll
obligations to employees of the MK Group with respect to Transit Division
operations, the Vice-President and Treasurer of MKD shall certify in writing to
the Bonding Company that all withholding, 401(k), pension, retirement or other
amounts payable to any plan trustee or Governmental Authority with respect to
such payroll have been paid in full to such plan trustee or Governmental
Authority in immediately available funds.
ARTICLE V
NEGATIVE COVENANTS
The MK Group hereby covenants and agrees that, so long as the
NationsBank Letter of Credit and/or the Guaranty is outstanding or any amount
payable hereunder shall remain unpaid, unless the Bonding Company waives
compliance in writing:
5.01 MERGERS, CONSOLIDATIONS, PURCHASES AND SALES. The MK Group shall
not:
(a) be a party to any merger or consolidation;
(b) transfer, convey, lease or otherwise dispose of all or any
Transit Division Assets, except for sales of cars to customers of the Transit
Division in the Ordinary Course of Business.
15
<PAGE>
5.02 TRANSACTIONS WITH AFFILIATES. The MK Group shall not enter into any
transaction with any Affiliate of MKO or MKD or of any such Subsidiary except as
contemplated by this Agreement or in the Ordinary Course of Business and
pursuant to the reasonable requirements of the business of the MK Group or such
Affiliate and upon fair and reasonable terms no less favorable to the MK Group
or such Affiliate than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the MK Group.
5.03 CHANGE IN BUSINESS. The MK Group shall not engage in any material
line of business substantially different from those lines of business carried on
by it on the date hereof.
5.04 CHANGE IN STRUCTURE. The MK Group shall not make any changes in its
capital structure (including, without limitation, in the terms of its
outstanding stock) or amend its certificate of incorporation or bylaws if, as a
result, there would be a reasonable likelihood of having a Material Adverse
Change.
5.05 ACCOUNTING CHANGES. The MK Group shall not make any significant
change in accounting treatment and reporting practices, except as required by
GAAP, or change the fiscal year of the MK Group.
5.06 OTHER CONTRACTS. The MK Group shall not enter into any employment
contracts or other arrangements whose terms, including salaries, benefits and
other compensation, are not normal and customary in the industry.
5.07 OPERATIONS RELATING TO TRANSIT DIVISION. (a) The MK Group shall not
enter into any new agreements or make any new commitments with respect to the
Transit Division, except in the Ordinary Course of Business and consistent with
industry practice and (b) disbursements allocated to the Metra Contract shall
not exceed receipts under the Metra Contract plus amounts drawn under the
Revolving Credit Agreement.
ARTICLE VI
EVENTS OF DEFAULT
6.01 EVENT OF DEFAULT. Any of the following events shall constitute an
"Event of Default":
(a) NON-PAYMENT. The MK Group fails to reimburse the Bonding Company
for the full amount of any Liquidation Obligation in accordance with the terms
of this Agreement; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
the MK Group herein, in any related document or
16
<PAGE>
agreement, which is contained in any certificate, document or financial or other
statement furnished at any time under this Agreement, or in or related document
or agreement, shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or
(c) OTHER DEFAULTS. The MK Group fails to perform or observe any
term or covenant contained in this Agreement (other than those covered in clause
(a) or (b) above) or any document or agreement relating to this Agreement for 10
days after written notice thereof has been given to the MK Group by the Bonding
Company; or
(d) NON-PAYMENT OF OTHER INDEBTEDNESS. The MK Group shall default in
the payment when due (or within any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness of or Indebtedness guaranteed by
the MK Group (other than any Indebtedness of any entity of the MK Group to any
other entity of the MK Group) which other Indebtedness shall in the aggregate
exceed $1,000,000; or
(e) ACCELERATION OF OTHER INDEBTEDNESS. Any event or condition shall
occur which results in the acceleration of the maturity of any Indebtedness of
or Indebtedness guaranteed by the MK Group (other than any Indebtedness of any
entity of the MK Group to any other entity of the MK Group) or enables the
holder or holders of such other Indebtedness or any trustee or agent for such
holders (any required notice of default having been given) to accelerate the
maturity of such other Indebtedness, which other Indebtedness shall in the
aggregate exceed $1,000,000; or
(f) OTHER OBLIGATIONS. The MK Group shall default in the payment
when due, whether by acceleration or otherwise, or in the performance or
observance (subject to any applicable grace period) of (i) any obligation or
agreement of the MK Group to or with the Bonding Company, or (ii) any material
obligation or agreement of the MK Group to or with any other Person (other than
(x) any such material obligation or agreement constituting or related to
Indebtedness, (y) trade accounts payable, and (z) any material obligation or
agreement of any entity of the MK Group to any other entity of the MK Group),
except only to the extent that the existence of any such default is being
contested by the MK Group in good faith and by appropriate proceedings and the
MK Group shall have set aside on its books such reserves or other appropriate
provisions therefor as may be required by GAAP; or
(g) BANKRUPTCY OR INSOLVENCY. The MK Group (i) becomes insolvent or
generally fails to pay, or admit in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course substantially as it is conducted on the Closing
17
<PAGE>
Date; (iii) commences any Insolvency Proceeding or files any petition or answer
in any Insolvency Proceeding; (iv) acquiesces in the appointment of a receiver,
trustee, custodian or liquidator for itself or a substantial portion of its
property, assets or business or effects a plan or other arrangement with its
creditors; (v) admits the material allegations of a petition filed against it in
any Insolvency Proceeding, or (vi) takes any action to effectuate any of the
foregoing; or
(h) INVOLUNTARY PROCEEDINGS. Any involuntary Insolvency Proceeding
is commenced or filed against the MK Group or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against a
substantial part of the MK Group's assets and any such proceedings or petition
shall not be dismissed, or such writ, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; or
(i) MONETARY JUDGMENTS. One or more final judgments, orders or
decrees shall be entered against the MK Group involving in the aggregate a
liability (not fully covered by insurance) of $20,000,000 or more, excluding
those judgments or decrees (i) that shall have been outstanding less than 30
calendar days from the entry thereof, (ii) for and to the extent to which the MK
Group is insured and with respect to which the insurer has assumed
responsibility in writing or for and to the extent to which the MK Group is
otherwise indemnified if the terms of such indemnification and the Person
providing such indemnification are satisfactory to the Bonding Company, or (iii)
that have been stayed pending appeal, provided that no execution or enforcement
is then possible; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against the MK Group which does or could be expected to
have a Material Adverse Effect, and either (i) enforcement proceedings shall
have been commenced by any Person upon such judgment or order or (ii) there
shall be any period of ten consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise, shall not
be in effect; or
(k) LOSS OF LICENSES. Any Governmental Authority shall revoke or
fail to renew any license, permit or franchise of the MK Group or the MK Group
shall for any reason lose any license, permit or franchise or the MK Group shall
suffer the imposition of any restraining order, escrow, suspension or impound of
funds in connection with any proceeding (judicial or administrative) with
respect to any license, permit or franchise, and any of such could result in a
Material Adverse Effect on the MK Group; or
18
<PAGE>
(l) CHANGE IN CONTROL. Any Change in Control shall occur; or
(m) WARRANTS. Pursuant to that certain Securities Purchase Agreement
dated of even date herewith between MKD and Fidelity and Deposit Company of
Maryland (the "Purchase Agreement"), the Company fails to issue the Warrants (as
defined in the Purchase Agreement) to Fidelity and Deposit Company of Maryland
prior to the Closing Date (as defined in the Purchase Agreement).
(n) OTHER EVENTS OF DEFAULT. The occurrence of an "Event of Default"
as defined in any of (i) the Override Agreement dated as of July 31, 1995, among
MKO, MKD and Mellon Bank, N.A. as agent for certain other banks and financial
institutions named therein (ii) the Bridge Loan Agreement (iii) the $25,000,000
Credit Agreement, or (iv) the Revolving Credit Agreement.
6.02 REMEDIES. If any Event of Default occurs, the Bonding Company may
exercise all rights and remedies available to it under this Agreement or
applicable law.
6.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement.
ARTICLE VII
MISCELLANEOUS
7.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other document or agreement relating to this Agreement and
no consent with respect to any departure by the MK Group therefrom, shall be
effective unless the same shall be in writing and signed by the Bonding Company
and the MK Group, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given.
7.02 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, telegraphic, telex, facsimile transmission or cable communication) and
mailed, telegraphed, telexed or delivered, (i) if to the MK Group, to its
address specified on the signature pages hereof, (ii) if to the Bonding Company,
to its address specified on the signature pages hereof; or, as to the MK Group
or the Bonding Company, to such
19
<PAGE>
other address as shall be designated by such party in a written notice to the
other parties, and as to each other party, at such other address as shall be
designated by such party in a written notice to the MK Group and the Bonding
Company. All notices, requests, and other communications provided for hereunder
shall, if sent by facsimile, telegraphic, or telexed transmission, be confirmed
in writing (other than by facsimile, telegraphic, or telex transmission) sent by
overnight delivery.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery.
(c) The Bonding Company shall be entitled to rely on the authority of
any Person purporting to be a Person authorized by the MK Group to give such
notice and the Bonding Company shall not have any liability to the MK Group or
other Person on account of any action taken or not taken by the Bonding Company
in reliance upon such telephonic or facsimile notice. The obligation of the MK
Group to repay the Obligations shall not be affected in any way or to any extent
by any failure by the Bonding Company to receive written confirmation of any
telephonic or facsimile notice or the receipt by the Bonding Company of a
confirmation which is at variance with the terms understood by the Bonding
Company to be contained in the telephonic or facsimile notice.
7.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Bonding Company, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
7.04 COSTS, EXPENSES AND CERTAIN FEES. The MK Group, jointly and
severally, agrees:
(a) to pay or reimburse the Bonding Company on demand for all costs
and expenses incurred in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to, this Agreement, and any other documents prepared in connection
herewith or therewith (including, without limitation, obtaining and maintaining
the NationsBank Letter of Credit), and the consummation of the transactions
contemplated hereby and thereby, including the reasonable costs and expenses of
counsel to the Bonding Company (and the allocated cost of internal counsel) with
respect thereto;
20
<PAGE>
(b) in the event any Bonding Company takes any action in connection
with the enforcement or preservation of any rights under this Agreement or any
document or agreement relating thereto (including, without limitation, any
"workout" or restructuring of this Agreement or any related document or
agreement), to pay or reimburse the Bonding Company on demand for all costs and
expenses incurred by it in connection with the enforcement or preservation of
any rights thereunder, including, without limitation, costs, fees and out-of-
pocket expenses of counsel (and the allocated cost of internal counsel) to the
Bonding Company;
(c) to pay or reimburse the Bonding Company on demand for all
appraisal (including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), search and filing fees, incurred or sustained by the Bonding
Company in connection with the matters referred to under paragraphs (a) and (b)
above, but, in the case of an appraisal, only to the extent it was reasonable to
obtain such appraisal.
7.05 INDEMNITY. The MK Group shall pay, indemnify, and hold the Bonding
Company and their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including fees and
expenses of counsel and allocated costs of internal counsel) of any kind or
nature whatsoever with respect to the enforcement, performance and
administration of this Agreement, the Guaranty, and the NationsBank Letter of
Credit Documents, or the transactions contemplated herein, and with respect to
any investigation, litigation or proceeding related to this Agreement, the
Guaranty, or the NationsBank Letter of Credit (whether or not any Indemnified
Person is a party thereto) (all the foregoing, collectively, the "INDEMNIFIED
LIABILITIES"); PROVIDED, that the MK Group shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities arising from (i)
the gross negligence or willful misconduct of such Indemnified Person or (ii)
legal fees associated with disputes initiated by the Bonding Company solely
between or among the parties to the Guaranty Agreement or the NationsBank Letter
of Credit including, but not limited to, any amounts paid by the Bonding Company
under Section 10.13 of the Guaranty. The agreements in this section shall
survive payment of all other Obligations.
7.06 MARSHALLING; PAYMENTS SET ASIDE. The Bonding Company shall be under
no obligation to marshall any assets in favor of the MK Group or any other
Person or against or in payment of any or all of the Obligations. To the extent
that the MK Group makes a payment or payments to the Bonding Companies, or the
Bonding
21
<PAGE>
Companies enforce their Liens, and such payment or payments or the proceeds of
such enforcement or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party in connection with any Insolvency Proceeding, or
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement had not
occurred.
7.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the MK Group may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Bonding Company.
7.08 COUNTERPARTS. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts, each of which,
when so executed, shall be deemed an original, and all of said counterparts
taken together shall be deemed to constitute but one and the same instrument.
7.09 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality of or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
7.10 TIME. Time is of the essence as to each term or provision of this
Agreement.
7.11 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF MARYLAND.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE STATE AND FEDERAL COURTS LOCATED IN BALTIMORE, MARYLAND, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH MEMBER OF THE MK GROUP AND THE
BONDING COMPANY CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
JURISDICTION OF THOSE COURTS. EACH MEMBER OF THE MK GROUP, AND THE BONDING
COMPANY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH MEMBER OF THE
MK GROUP AND THE BONDING COMPANY WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER
22
<PAGE>
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY MARYLAND LAW.
7.12 WAIVER OF JURY TRIAL. EACH MEMBER OF THE MK GROUP AND THE BONDING
COMPANY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
EACH MEMBER OF THE MK GROUP AND THE BONDING COMPANY AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
7.13 ENTIRE AGREEMENT. This Agreement embodies the entire Agreement and
understanding among the MK Group and the Bonding Company with respect to the
subject matter hereof and supersedes all prior or contemporaneous agreements and
understandings of such persons, verbal or written, relating to the subject
matter hereof.
7.14 INTERPRETATION. This Agreement is the result of negotiations between
and has been reviewed by counsel to the Bonding Company and the MK Group, and is
the product of all parties hereto. Accordingly, this Agreement shall not be
construed against the Bonding Company merely because of the Bonding Company's
involvement in the preparation of such documents and agreements.
23
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed effective as of the
day and year first above written.
BONDING COMPANY:
FIDELITY AND DEPOSIT COMPANY OF MARYLAND
300 Saint Paul Place
Baltimore, Maryland 21202
By: /s/
Name:
Title:
COLONIAL AMERICAN CASUALTY AND SURETY COMPANY
300 Saint Paul Place
Baltimore, Maryland 21202
By: /s/
Name:
Title:
[MORE SIGNATURES ON FOLLOWING PAGE]
<PAGE>
MK GROUP:
MORRISON-KNUDSEN CORPORATION,
a Delaware corporation
Morrison Knudsen Plaza
P.O. Box 73
Boise, Idaho 82729
By: /s/ D.L. Brigham
Name: D.L. Brigham
Title: VP & Treasurer
MORRISON-KNUDSEN CORPORATION,
an Ohio corporation
Morrison Knudsen Plaza
P.O. Box 73
Boise, Idaho 82729
By: /s/ D.L. Brigham
Name: D.L. Brigham:
Title: VP & Treasurer:
<PAGE>
Exhibit 4.8
WARRANT
To Purchase Common Stock of
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
No. of Shares of Common Stock: 830,039
Issued August ___, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------------
2.1 Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . 6
------------------
2.2 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------------
2.3 Continued Validity . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------
3. TRANSFER, DIVISION AND COMBINATION. . . . . . . . . . . . . . . . . . . 8
----------------------------------
3.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
--------
3.2 Division and Combination . . . . . . . . . . . . . . . . . . . . . 9
------------------------
3.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------
3.4 Maintenance of Books . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------
4. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-----------
4.1 Prepayment of Obligations under Override Agreement . . . . . . . . 9
--------------------------------------------------
4.2 Stock Dividends, Subdivisions and Combinations . . . . . . . . . . 9
----------------------------------------------
4.3 Other Provisions Applicable to Adjustments Under This Section 10
-------------------------------------------------------------
4.4 Reorganization, Reclassification, Merger, Consolidation or
----------------------------------------------------------
Disposition of Assets. . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
5. NOTICES TO WARRANT HOLDERS. . . . . . . . . . . . . . . . . . . . . . . 12
--------------------------
5.1 Notice of Adjustments. . . . . . . . . . . . . . . . . . . . . . . 12
---------------------
5.2 Notice of Certain Corporate Action . . . . . . . . . . . . . . . . 12
----------------------------------
6. NO IMPAIRMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
-------------------------------------------------------------------
APPROVAL OF ANY GOVERNMENTAL AUTHORITY; PREFERRED STOCK . . . . . . . . 13
-------------------------------------------------------
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. . . . . . . . . . . 13
--------------------------------------------------
9. RESTRICTIONS ON TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . 14
-------------------------------
9.1 Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
9.2 Notice of Proposed Transfers; Requests for Registration. . . . . . 15
-------------------------------------------------------
9.3 Termination of Restrictions. . . . . . . . . . . . . . . . . . . . 15
---------------------------
9.4 Listing on Securities Exchange . . . . . . . . . . . . . . . . . . 16
------------------------------
10. SUPPLYING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------------------
11. LOSS OR MUTILATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------
12. OFFICE OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 16
---------------------
13. FINANCIAL AND BUSINESS INFORMATION. . . . . . . . . . . . . . . . . . . 17
----------------------------------
13.1 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------
13.2 Quarterly Information. . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
13.3 Annual Information . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------
14. THE COMPANY'S REPURCHASE OF THE WARRANT . . . . . . . . . . . . . . . . 18
---------------------------------------
<PAGE>
14.1 Option to Repurchase Warrant . . . . . . . . . . . . . . . . . . . 18
----------------------------
14.2 Determination and Payment of Repurchase Price. . . . . . . . . . . 18
---------------------------------------------
14.3 Pro Rata Repurchase of Warrants. . . . . . . . . . . . . . . . . . 19
-------------------------------
15. APPRAISAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------
16. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . 20
-----------------------
17. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------
17.1 Nonwaiver and Expenses . . . . . . . . . . . . . . . . . . . . . . 20
----------------------
17.2 Notice Generally . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------
17.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------
17.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 22
----------------------
17.6 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
---------
17.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------
17.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------
17.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------- 22
17.10 CONSENT TO JURISDICTION 23
-----------------------
17.11 MUTUAL WAIVER OF JURY TRIAL 23
---------------------------
<PAGE>
EXHIBITS
--------
EXHIBIT A Subscription Form
EXHIBIT B Assignment Form
EXHIBIT C Schedule of Sureties for Whom F&D Holds the Warrant
EXHIBIT D-1 Form of Antecedent Debt Warrant
EXHIBIT D-2 Form of Metra Warrant
<PAGE>
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED IN VIOLATION OF SUCH ACT OR STATE LAW, THE RULES AND REGULATIONS
THEREUNDER OR THE PROVISIONS OF THIS WARRANT.
No. of Shares of
Common Stock: 830,039
WARRANT
To Purchase Common Stock of
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
THIS IS TO CERTIFY THAT FIDELITY AND DEPOSIT COMPANY OF MARYLAND ON
BEHALF OF ITSELF AND CERTAIN COSURETIES AND OTHER REINSURERS (in such capacity,
"F&D"), or its registered assigns, is entitled, at any time during the Exercise
Period (as hereinafter defined), to purchase from MORRISON KNUDSEN CORPORATION,
a Delaware corporation (the "Company"), up to 830,039 shares of Common Stock
(as hereinafter defined and subject to adjustment as provided herein), in whole
or in part, including fractional parts, at a purchase price of $6.75 per share,
all on the terms and conditions and pursuant to the provisions hereinafter set
forth.
1. DEFINITIONS
-----------
As used in this Warrant, the following terms have the respective meanings
set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.
"Antecedent Debt Warrant" shall mean the Warrant to Purchase Common
Stock of the Company, issued of even date herewith in the form attached as
Exhibit D-1 hereto, and any amendments thereto, and all warrants issued upon
transfer, division or combination of, or in substitution for, such warrant.
"Appraised Value" shall mean, in respect of any share of Common
Stock on any date herein specified, the fair market value of such share of
Common Stock (determined without giving effect to any discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or the fact
that
1
<PAGE>
the Company may have no class of equity registered under the Exchange Act)as of
the last day of the most recent fiscal month prior to such date specified,
based on the value of the Company as a whole, as determined by an investment
banking firm selected in accordance with the terms of SECTION 15 on the basis of
a sale between a willing seller and buyer, neither acting under any compulsion,
divided by the number of Fully Diluted Outstanding shares of Common Stock.
"Book Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the consolidated book value of the Company applicable
to Common Stock as of the last day of any fiscal month immediately preceding
such date, divided by the number of Fully Diluted Outstanding shares of Common
Stock as determined in accordance with GAAP by a firm of independent certified
public accountants of recognized national standing selected by the Company and
reasonably acceptable to the Majority Holders.
"Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the
Commonwealth of Pennsylvania.
"Closing Date" shall mean July 31, 1995.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, par value One Dollar and Sixty-Six and Two-Thirds
Cents ($1.66-2/3) per share, of the Company as constituted on the Closing Date,
and any capital stock into which such Common Stock may thereafter be changed,
and shall also include (i) capital stock of the Company of any other class
(regardless of how denominated) issued to the holders of shares of Common Stock
upon any reclassification thereof which is not preferred as to dividends or
assets over any other class of stock of the Company, and (ii) shares of common
stock of any successor or acquiring corporation (as defined in SECTION 4.4)
received by or distributed to the holders of Common Stock in the circumstances
contemplated by SECTION 4.4.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified on which there shall then be a public
market for the Common Stock, the average of the daily market prices for 30
consecutive Business Days
2
<PAGE>
commencing 45 days before such date. The daily market price for each such
Business Day shall be (i) the last sale price on such day on the principal stock
exchange on which such Common Stock is then listed or admitted to trading,
(ii) if no sale takes place on such day on any such exchange, the average of the
last reported closing bid and asked prices on such day as officially quoted on
any such exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, (a) the average of the last reported closing bid
and asked prices on such day in the over-the-counter market, as furnished by
NASDAQ or by the National Quotation Bureau, Inc. if not reported on NASDAQ,
(b) if neither such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (c) if there is no such firm, as furnished by any member of the
NASD selected mutually by the Majority Holders and the Company or, if they
cannot agree upon such selection, as selected by two such members of the NASD,
one of which shall be selected by the Majority Holders and one of which shall be
selected by the Company. If, on such date, there shall not then be a public
market for the Common Stock, the "Current Market Price" shall mean the higher of
(x) the Book Value per share of Common Stock at such date, and (y) the Appraised
Value per share of Common Stock as of such date.
"Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, the price at which a share of Common Stock
may be purchased pursuant to this Warrant on such date, which price shall
initially be $6.75 per share.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this Warrant
is exercisable pursuant to SECTION 2.1.
"Expiration Date" shall mean July 31, 2000.
"Fully Diluted Outstanding" shall mean, when used with reference to
Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant, and any other options,
warrants or other rights to purchase or receive Common Stock outstanding on such
date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
3
<PAGE>
"Holder" shall mean the Person or Persons in whose name the Warrant
set forth herein is registered on the books of the Company maintained for such
purpose.
"Initial Exercise Date" shall mean the earliest to occur of
(i) December 31, 1996, (ii) the occurrence of a payment default under the
Reimbursement Agreement, and (iii) the Repayment Event.
"Lender Warrants" shall mean the Metra Warrant and the Antecedent
Debt Warrant.
"Majority Holders" shall mean the holders of Warrants exercisable
for a number of shares of not less than 66-2/3% of the aggregate number of
shares of Common Stock then purchasable upon exercise of all Warrants, whether
or not then exercisable.
"Metra Warrant" shall mean the Warrant to Purchase Common Stock of
the Company, issued of even date herewith in the form attached as Exhibit D-2
hereto, and any amendments thereto, and all warrants issued upon transfer,
division or combination of, or in substitution for such warrant.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Other Property" shall have the meaning set forth in SECTION 4.4.
"Outstanding" shall mean, when used with reference to Common Stock,
at any date as of which the number of shares thereof is to be determined, all
issued shares of Common Stock, except shares then owned or held by or for the
account of the Company or any Subsidiary thereof, and shall include all shares
issuable in respect of any certificates representing fractional interests in
shares of Common Stock.
"Reimbursement Agreement" shall mean that certain Indemnification
and Reimbursement Agreement, dated as of July 31, 1995, among the Company,
Morrison Knudsen Corporation, an Ohio corporation, Colonial American Casualty
and Surety Company, and Fidelity & Deposit Company of Maryland, as supplemented,
amended, modified or restated from time to time.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
4
<PAGE>
"Public Company" shall have the meaning set forth in SECTION 13.1.
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement of even date herewith between the Company and the
Holders of this Warrant.
"Repayment Event" shall mean the payment and satisfaction in full
(or the provision in a manner satisfactory to the holder of any "Obligations"
for all liability of the obligor with respect thereto), in accordance with the
terms and provisions of the Reimbursement Agreement and the Agreement of
Indemnity (the "Agreement of Indemnity"), dated as of July 1, 1992 among
Colonial American Casualty and Surety Company, Fidelity and Deposit Company of
Maryland, the Company and the other parties thereto, of all Obligations (as
defined in the Reimbursement Agreement and all obligations of the Company in
respect of transit division performance and/or payment bonds, under the
Agreement of Indemnity including, without limitation, all obligations with
respect to existing contingent indebtedness, or the making of final provisions
for the satisfaction of all such obligations, subject to any limitations on the
foregoing obligations as may be agreed to by the parties pursuant to Section
I.C.3 of the Term Sheet; it being expressly understood that to the extent such
obligations have been fully cash collateralized as contemplated by Section I.C.3
of the Term Sheet, such obligations shall be deemed paid and satisfied in full.
"Repurchase Price" shall have the meaning set forth in
SECTION 14.2.
"Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
SECTION 9.1(A).
"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean, with respect to any Person, any
corporation of which an aggregate of more than 50% of the outstanding stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person.
5
<PAGE>
"Term Sheet" means that certain Term Sheet of even date herewith
among the Company, Morrison Knudsen Corporation, an Ohio corporation, the
Holders of this Warrant and the other parties thereto.
"Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in SECTION 9.2.
"Warrants" shall mean this Warrant, and any amendments thereto, and
all warrants issued upon transfer, division or combination of, or in
substitution for, this Warrant. All Warrants shall at all times be identical as
to terms and conditions and date, except as to the number of shares of Common
Stock for which they may be exercised.
"Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
SECTION 2.1, multiplied by (ii) the Current Warrant Price as of the date of such
exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by
the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 MANNER OF EXERCISE. From and after the Initial Exercise Date and
until 5:00 p.m., Idaho time, on the Expiration Date, Holder may exercise this
Warrant, on any Business Day, for all or any part of the number of shares of
Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at One Morrison Knudsen
Plaza, 720 Park Boulevard, Boise, Idaho 83712, or at the office or agency
designated by the Company pursuant to SECTION 12: (a) a written notice of
Holder's election to exercise this Warrant, which notice shall specify the
number of shares of Common Stock to be purchased; (b) payment of the Warrant
Price in the manner specified below; and (c) this Warrant. Such notice shall be
substantially in the form of the subscription form appearing at the end of this
Warrant as EXHIBIT A, duly executed by Holder or its agent or attorney. Upon
receipt thereof, the Company shall, as promptly as practicable, and in any event
within five (5) Business Days thereafter, execute and deliver to Holder a
certificate or certificates representing the aggregate number of shares of
Common Stock issuable upon such exercise. The stock certificate
6
<PAGE>
or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as such Holder shall request in the notice and
shall be registered in the name of Holder or, subject to SECTION 9, such other
names as shall be designated in the notice. This Warrant shall be deemed to
have been exercised and such certificate or certificates of Common Stock shall
be deemed to have been issued, and Holder or any other Person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the notice, together with the payment as
set forth below, and this Warrant are received by the Company as described above
and all taxes, if any, required to be paid by Holder pursuant to SECTION 2.2
prior to the issuance of such shares of Common Stock, have been paid or Holder
has agreed to pay such taxes when finally determined. If this Warrant shall
have been exercised in part, the Company shall, at the time of delivery of the
certificate or certificates representing Warrant Stock, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased shares of
Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder. Notwithstanding any provision herein to the contrary, the Company shall
not be required to register shares of Warrant Stock in the name of any Person
who acquired this Warrant (or part hereof) or any Warrant Stock otherwise than
in accordance with this Warrant.
Payment of the Warrant Price shall be made at the option of the
Holder (i) by certified or official bank check payable to the order of the
Company, (ii) by cancellation of indebtedness, if any, owed by the Company to
such Holder, (iii) by receiving from the Company the number of shares of Common
Stock equal to (x) the number of shares of Common Stock as to which this Warrant
is being exercised, MINUS (y) the number of shares of Common Stock having a
value, based on the Current Market Price on the date of such exercise, equal to
the Warrant Price, or (iv) by a combination thereof.
2.2 PAYMENT OF TAXES. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid, nonassessable, free of liens or encumbrances (except for the
restrictive legend provided for herein) and without any preemptive rights. The
Company shall pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to, the issue of the
Common Stock hereunder, unless such tax or charge is imposed by law upon Holder,
in which case such taxes or charges shall be paid by Holder. The Company shall
not be required, however, to pay any tax or other charge imposed in connection
with any transfer involved in the issue of any certificate for shares of Common
Stock issuable upon exercise of this Warrant in any name other than that of
Holder, and in such case the Company shall not be required to issue or deliver
any
7
<PAGE>
stock certificate until such tax or other charge has been paid or the Person
designated to receive such shares has agreed in writing to pay such tax or
charge or it has been established to the satisfaction of the Company that no
such tax or other charge is due.
2.3 CONTINUED VALIDITY. A holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under SECTIONS 9, 10, 13,
14 AND 17 of this Warrant. The Company will, at the time of each exercise of
this Warrant, in whole or in part, upon the request of the holder of the shares
of Common Stock issued upon such exercise hereof, acknowledge in writing, in
form reasonably satisfactory to such holder, its continuing obligation to afford
to such holder all such rights; PROVIDED, HOWEVER, that if such holder shall
fail to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 TRANSFER. Subject to compliance with SECTIONS 9 AND 14, transfer
of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose, upon
surrender of this Warrant at the principal office of the Company referred to in
SECTION 2.1 or the office or agency designated by the Company pursuant to
SECTION 12, together with a written assignment of this Warrant substantially in
the form of EXHIBIT B hereto duly executed by Holder or its agent or attorney
and if such transfer is not to be made pursuant to SECTION 14, funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall, subject to
SECTION 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with SECTION 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued. If requested by the Company, a new Holder shall acknowledge in
writing, in form reasonably satisfactory to the Company, such Holder's
continuing obligations under SECTIONS 9 AND 14 of this Warrant.
8
<PAGE>
3.2 DIVISION AND COMBINATION. Subject to SECTION 9, this Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with
SECTION 3.1 and with SECTION 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 EXPENSES. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
SECTION 3.
3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration, and the registration of
transfer, of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this SECTION 4. The Company shall give each Holder notice of any event
described below which requires an adjustment pursuant to this SECTION 4 at the
time of such event.
4.1 PREPAYMENT OF OBLIGATIONS UNDER OVERRIDE AGREEMENT. The number of
shares of Common Stock for which this Warrant is exercisable immediately after
the occurrence of a Repayment Event shall be adjusted as follows:
- ------------------------------------------------------------------------------
If the Repayment Event occurs Then the number of shares of Common Stock
during the following period for which this Warrant is exercisable
immediately prior to such event is reduced
by
- ------------------------------------------------------------------------------
Closing Date through June 30, 100%
1996
- ------------------------------------------------------------------------------
July 1, 1996 through 50%
December 31, 1996
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
4.2 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend
9
<PAGE>
payable in, or other distribution of, Additional Shares of Common Stock;
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price in effect immediately
prior to the occurrence of such event, multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment.
4.3 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments pursuant
to this SECTION 4, of the number of shares of Common Stock for which this
Warrant is exercisable:
(a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this
SECTION 4 shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of an adjustment pursuant to
SECTION 4.1 or a subdivision or combination of shares of the Common Stock, as
provided for in SECTION 4.2) up to, but not beyond the date of exercise of this
Warrant (or date of repurchase by the Company under SECTION 14) if such
adjustment either by itself or with other adjustments not previously made adds
or subtracts less than one percent (1%) of the shares of Common Stock for which
this Warrant is exercisable immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum amount (except as
aforesaid) which is postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this SECTION 4 and not
previously made, would result in a minimum adjustment or on the date of exercise
or repurchase. For the purpose of any adjustment, any specified event shall be
deemed to have occurred at the close of business on the date of its occurrence.
10
<PAGE>
(b) FRACTIONAL INTERESTS. In computing adjustments under this
SECTION 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.
(c) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver
such dividend or distribution, then thereafter no adjustment shall be required
by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
4.4 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation), or sell,
transfer or otherwise dispose of all or substantially all its property, assets
or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Holder's Warrant, the number of shares of common stock of
the successor or acquiring corporation and Other Property receivable upon or as
a result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event. In case of
any such reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by the Company and all the
obligations and liabilities hereunder, subject to such modifications as may be
deemed appropriate (as determined by resolution of the Board of Directors of the
Company) in order to provide for adjustments of the shares of Common Stock for
which this Warrant is exercisable, which adjustments shall be as nearly
equivalent as practicable to the adjustments provided for in this SECTION 4.
For purposes of this SECTION 4.4, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or rights on liquidation over any other class of stock
of such corporation and which is not subject to redemption and shall also
include any evidences of indebtedness, shares of stock or other securities which
are
11
<PAGE>
convertible into or exchangeable for any such stock, either immediately or upon
a specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this SECTION 4.4 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or dispositions of assets.
5. NOTICES TO WARRANT HOLDERS
5.1 NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to SECTION 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated, specifying the number of shares of
Common Stock for which this Warrant is exercisable and (if such adjustment was
made pursuant to SECTION 4.4) describing the number and kind of any other shares
of stock or Other Property for which this Warrant is exercisable, and any change
in the purchase price or prices thereof, after giving effect to such adjustment
or change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with SECTION 17.2. The Company
shall keep at its office or agency designated pursuant to SECTION 12 copies of
all such certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder or any prospective purchaser
of a Warrant designated by a Holder thereof.
5.2 NOTICE OF CERTAIN CORPORATE ACTION. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of Common
Stock.
6. NO IMPAIRMENT
The Company shall not by any action avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms. Without limiting the
generality of the foregoing, the Company will (a) not increase the par value of
any shares of Common Stock receivable upon the exercise of this Warrant above
the amount payable therefor upon such exercise immediately prior to such
increase in par value, (b) take all such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock, upon the exercise of this Warrant, and
(c) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory
12
<PAGE>
body having jurisdiction thereof as may be necessary to enable the Company to
perform its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the
obligations of the Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY; PREFERRED STOCK
From and after the Closing Date, the Company shall at all times reserve
and keep available for issuance upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority under any federal or state law (otherwise than as provided in
SECTION 9) before such shares may be so issued, the Company will in good faith
and as expeditiously as possible and at its expense endeavor to cause such
shares to be duly registered or qualified.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to the
holders of its Common Stock with respect to which any provision of SECTION 4
refers to the taking of a record of such holders, the Company will in each such
case take such a
13
<PAGE>
record and will take such record as of the close of business on a Business Day.
The Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise or transfer of any
Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred, hypothecated
or assigned before satisfaction of the conditions specified in this SECTION 9,
which conditions are intended to ensure compliance with the provisions of the
Securities Act and state law, with respect to the Transfer of any Warrant or any
Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by the
provisions of this SECTION 9.
9.1 RESTRICTIVE LEGEND.
(a) Except as otherwise provided in this SECTION 9, each
certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and are
subject to the conditions specified in a certain Warrant dated as
of August ___, 1995, originally issued by Morrison Knudsen
Corporation. No transfer of the shares represented by this
certificate shall be valid or effective until such conditions and
any requirements of federal and state law have been fulfilled. A
copy of the form of said Warrant is on file with the Secretary of
Morrison Knudsen Corporation. The holder of this certificate, by
acceptance of this certificate, agrees to be bound by the
provisions of such Warrant."
(b) Except as otherwise provided in this SECTION 9, each Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, and may not be
transferred in violation of such Act or state law, the rules and
regulations thereunder or the provisions of this Warrant."
14
<PAGE>
9.2 NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to
any Transfer or attempted Transfer of any Warrants or any shares of Restricted
Common Stock, the holder of such Warrants or Restricted Common Stock shall give
10 days prior written notice (a "Transfer Notice") to the Company of such
holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and shall deliver to the Company a
certificate of such holder representing and warranting that the proposed
Transfer of such Warrants or such Restricted Common Stock may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and certificate, the Company shall, within five days thereof, so notify
the holder of such Warrants or such Restricted Common Stock and such holder
shall thereupon be entitled to Transfer such Warrants or such Restricted Common
Stock, in accordance with the terms of the Transfer Notice. Each certificate,
if any, evidencing such shares of Restricted Common Stock issued upon such
Transfer shall bear the restrictive legend set forth in SECTION 9.1(a), and each
Warrant issued upon such Transfer shall bear the restrictive legend set forth in
SECTION 9.1(b). The holder of the Warrants or the Restricted Common Stock, as
the case may be, giving the Transfer Notice shall not be entitled to transfer
and shall not transfer such Warrants or such Restricted Common Stock until
receipt of notice from the Company under this SECTION 9.2(a).
The holders of Warrants and Warrant Stock shall have the right to request
registration of such Warrant Stock pursuant to and in accordance with the terms
of the Registration Rights Agreement.
9.3 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing
provisions of SECTION 9, the restrictions imposed by this SECTION 9 upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of SECTION 9.1 shall terminate as to any particular Warrant
or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the Warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such legend is not required in order
to ensure compliance with the Securities Act. Whenever the restrictions imposed
by this SECTION 9 shall terminate as to this Warrant, as hereinabove provided,
the Holder hereof shall be entitled to receive from the Company, at the expense
of the Company, a new Warrant bearing the following legend in place of the
restrictive legend set forth hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT
CONTAINED IN SECTION 9 HEREOF TERMINATED ON , 19 , AND
ARE OF NO FURTHER FORCE AND EFFECT."
15
<PAGE>
All Warrants thereafter issued upon registration of transfer, division or
combination of, or in substitution for, any Warrant or Warrants entitled to bear
such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this SECTION 9 shall terminate as to any share of
Restricted Common Stock, as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
set forth in SECTION 9.1(a).
9.4 LISTING ON SECURITIES EXCHANGE. So long as the Company shall list
any shares of Common Stock on any securities exchange, it will, at its expense,
list thereon, maintain and, when necessary, increase such listing of, all shares
of Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant, so long
as any shares of Common Stock shall be so listed during the Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with each holder of a Warrant or Restricted
Common Stock in supplying such information as may be reasonably necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of an
exemption from the Securities Act for the sale of any Warrant or Restricted
Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it, and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
PROVIDED, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant. The Company
shall notify Holder in writing prior to any change of the address of the office
at which the Warrants may be presented.
16
<PAGE>
13. FINANCIAL AND BUSINESS INFORMATION
13.1 FILINGS. So long as the Company is a "Public Company" (as
hereinafter defined), the Company will file with the Commission on or before the
due date all regular or periodic reports required to be filed pursuant to the
Exchange Act, and will deliver to the Holder, promptly upon its becoming
available, one copy of each report, notice or proxy statement sent by the
Company to its shareholders generally, and one copy of each regular or periodic
report (including, without limitation, reports on Form 8-K) pursuant to the
Exchange Act or any registration statement, prospectus or written communication
(other than transmittal letters and other communications that are not publicly
available) pursuant to the Securities Act, filed by the Company with (i) the
Commission or (ii) any securities exchange on which shares of the Common Stock
are listed.
For purposes of this SECTION 13, the term "Public Company" shall
mean a company (i) that is subject to the reporting requirements of
Section 15(d) of the Exchange Act, or (ii) any of whose securities are
registered pursuant to Section 12(b) or 12(g) of the Exchange Act.
13.2 QUARTERLY INFORMATION. During any period in which the Company is
not a Public Company, as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company, the Company will deliver to the Agent a consolidated balance sheet of
the Company and its consolidated Subsidiaries as of the end of such quarter and
the related consolidated statements of income and cash flows for such quarter
and for the portion of the Company's fiscal year ended at the end of such
quarter, setting forth in the case of such income and cash flows in comparative
form the figures for the corresponding quarter and the corresponding portion of
the Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP, and consistency by the chief
financial officer, controller or treasurer of the Company.
13.3 ANNUAL INFORMATION. During any period in which the Company is not
a Public Company, as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, the Company will deliver to the Agent a
consolidated balance sheet of the Company and its consolidated Subsidiaries as
of the end of such fiscal year and the related consolidated statements of
income, retained earnings and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Commission by Deloitte & Touche or
other independent public accountants of nationally recognized standing, together
with an unaudited annual report prepared on a consolidating basis in conformity
with GAAP.
17
<PAGE>
14. THE COMPANY'S REPURCHASE OF THE WARRANT
14.1 OPTION TO REPURCHASE WARRANT. From time to time on or after the
Initial Exercise Date and until the Expiration Date, the Company shall have the
right, upon not less than thirty (30) days prior written notice to any Holder,
to repurchase from such Holder, from any source of funds legally available
therefor, on the date and in the manner set forth in SECTION 14.2, all or any
part of the Warrant then held by such Holder for an amount determined by
multiplying (x) the number of shares of Common Stock subject to such Warrant or
portion thereof being repurchased, by (y) the difference between (i) 110% of the
higher of the Current Market Price per share of Common Stock and the Current
Warrant Price per share of Common Stock as of the date of such notice, and
(ii) the Current Warrant Price per share of Common Stock as of the date of such
notice; PROVIDED, HOWEVER, that nothing herein shall preclude the exercise by
Holder of any portion of this Warrant exercisable at any time prior to such
repurchase.
14.2 DETERMINATION AND PAYMENT OF REPURCHASE PRICE.
(a) The purchase price for any repurchase pursuant to this
SECTION 14 (the "Repurchase Price") shall be determined within ten (10) days of
the date of the repurchase notice given by the Company pursuant to SECTION 14.1,
and shall be payable in cash from any source of funds legally available therefor
within ten (10) days following the date of such determination of the Repurchase
Price. On the date of any repurchase of this Warrant pursuant to this
SECTION 14, each Holder shall assign to the Company such Holder's Warrant or
portion thereof being repurchased, without any representations (other than a
representation that such Holder owns such Warrant free and clear of any liens,
pledges or encumbrances), by the surrender of such Holder's Warrant at the
principal office of the Company referred to in SECTION 2.1 against payment
therefor of the Repurchase Price by, at the option of such Holder, and subject
to the immediately following sentence, (i) wire transfer to an account in a bank
located in the United States designated by such Holder for such purpose or
(ii) a certified or official bank check drawn on a member of the New York
Clearing House payable to the order of such Holder. If less than all of any
Holder's Warrant is being repurchased, the Company shall, pursuant to SECTION 3,
cancel such Warrant and issue in the name of, and deliver to, such Holder a new
Warrant for the portion not being repurchased.
(b) Each Holder of Warrants shall have the right at any time to
object to the determination of the Repurchase Price pursuant to this SECTION 14
by specifying in writing to the Company the nature of its objection and, unless
such objection is resolved by agreement of the Company and such Holder, the
Company and such Holder shall each have the right to subject the disputed
determination to separate firms of independent accountants of recognized
national standing for a joint resolution of the
18
<PAGE>
objection of such Holder (which firms of independent accountants may, in either
case, be the firms of accountants regularly retained by the Company or such
Holder). If such firms cannot jointly resolve the objection of such Holder,
then, unless otherwise directed by agreement of the Company and such Holder,
such firms shall in their sole discretion choose another firm of independent
certified public accountants of recognized national standing, which is not the
regular auditor of such Holder or the Company, which firm shall resolve such
objection. In either case, for purposes hereof the determination so made shall
be conclusive and binding on the Company, such Holder and all Persons claiming
under or through any of them, and any adjustment in the determination of the
Repurchase Price per share of Common Stock resulting from such determination
shall be made. The cost of any such determination shall be borne by the Company
if it results in an increase of the aggregate Repurchase Price for all shares of
Common Stock issuable upon the exercise hereof and by such Holder if it results
in no adjustment or a decrease of the aggregate Repurchase Price for all shares
of Common Stock issuable upon the exercise hereof.
(c) Any repurchase by the Company of all or any portion of the
Warrant pursuant to SECTION 14.1 which is delayed by (1) the failure of the
Company to determine the Repurchase Price within the time periods required in
SECTION 14.3(a) or (2) an objection by any Holder of the Warrant to any such
determination pursuant to SECTION 14.3(b) shall be consummated within ten (10)
days after, as the case may be, the determination of the Repurchase Price or the
resolution of such objection.
(d) In the event that the determination of the Repurchase Price
requires an opinion from an investment banking firm or accounting firm, all
costs and fees associated therewith shall, except to the extent otherwise
provided in SECTION 14.3(b) above, be paid by the Company.
14.3 PRO RATA REPURCHASE OF WARRANTS. Notwithstanding anything to the
contrary contained in this SECTION 14, any repurchase by the Company of this
Warrant or any portion thereof shall be made pro rata and on the same terms with
respect to all Warrants and all Lender Warrants then outstanding, and any
obligation of Holder pursuant to this SECTION 14 to sell this Warrant or any
portion thereof to the Company is conditioned upon the Company's compliance with
such requirement.
15. APPRAISAL
If required under this Warrant, the determination of the Appraised Value
per share of Common Stock shall be made by an investment banking firm of
nationally recognized standing selected by the Company and acceptable to the
Majority Holders. If the investment banking firm selected by the Company is not
acceptable to the Majority Holders and the Company and the
19
<PAGE>
Majority Holders cannot agree on a mutually acceptable investment banking firm,
then the Majority Holders and the Company shall each choose one such investment
banking firm and the respective chosen firms shall agree on another investment
banking firm which shall make the determination. The Company shall retain, at
its sole cost, such investment banking firms as may be necessary for the
determination of Appraised Value required by the terms of this Warrant.
16. LIMITATION OF LIABILITY
No provision hereof (including, without limitation, any of the provisions
under Section 7), in the absence of affirmative action by Holder to purchase
shares of Common Stock, and no enumeration herein of the rights or privileges of
Holder hereof, shall give rise to any liability of such Holder for the purchase
price of any Common Stock or as a stockholder of the Company, whether such
liability is asserted by the Company, or by creditors of the Company.
17. MISCELLANEOUS
17.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
17.2 NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration or other communication hereunder to be made pursuant to the terms of
this Warrant shall be in writing (including bank wire, facsimile transmission or
similar writing) and shall be addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at its last known
address or facsimile transmission number appearing on the books of the Company
maintained for such purpose.
20
<PAGE>
(b) If to the Company at:
Morrison Knudsen Corporation
One Morrison Knudsen Plaza
720 Park Boulevard
Boise, Idaho 83712
Attention: Douglas L. Brigham
Facsimile: (208) 386-5922
with a copy to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Attention: David S. Kurtz, Esq.
Facsimile: (312) 782-8585
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Each such notice, demand,
request, consent, approval, declaration, delivery other communication shall be
effective, (i) if given by facsimile transmission, when transmitted to the
facsimile number specified in this SECTION 17.2 and confirmation of receipt is
received, (ii) if given by mail, seventy-two (72) hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in this SECTION 17.2. Failure or delay in delivering copies of any
notice, demand, request, consent, approval, declaration, delivery or other
communication to the person designated above to receive a copy shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, delivery or other communication.
17.3 INDEMNIFICATION. In addition to the indemnities provided in the
Registration Rights Agreement, the Company agrees to indemnify and hold harmless
Holder, its officers, directors, employees, agents, and attorneys from and
against any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon, incurred by or asserted against Holder
relating to or arising out of (i) Holder's exercise of this Warrant and/or
ownership of any shares of Warrant Stock issued in consequence thereof, or
(ii) any litigation to which Holder is made a party in its capacity as a
stockholder or warrant holder of the Company; PROVIDED, HOWEVER, that the
Company will not be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final non-
appealable judgment by a court to have resulted from either (i) Holder's gross
negligence or willful misconduct, (ii) actions or omissions taken or not taken
by Holder in any capacity other
21
<PAGE>
than as a stockholder or warrant holder of the Company, or (iii) any violation
of federal or state securities laws by Holder, which is not caused by any action
or inaction of the Company.
17.4 REMEDIES. Each holder of Warrants and Warrant Stock, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under
SECTIONS 9, 10, 13 AND 14 of this Warrant. Each party agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of the provisions of SECTION 9, 10, 13 OR 14 of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
17.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of SECTIONS 3.1
AND 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant, and shall be
enforceable by any such Holder.
17.6 AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Majority Holders; PROVIDED, HOWEVER, that no such Warrant may be
modified or amended to reduce the number of shares of Common Stock for which
such Warrant is exercisable (including, without limitation, by way of amendment
of SECTION 4.1), or to increase the price at which such shares may be purchased
upon exercise of such Warrant (before giving effect to any adjustment as
provided therein), or to modify the time period during which such Warrant may be
exercised without the prior written consent of the Holder thereof.
17.7 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
17.8 HEADINGS. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
17.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND, WITHOUT REFERENCE
TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
22
<PAGE>
17.10 CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY CONSENTS
TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
BALTIMORE, MARYLAND IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY
ACTION, CLAIM OR PROCEEDING BROUGHT BY HOLDER OR ANY HOLDER OF WARRANT STOCK IN
CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF AND ITS
PROPERTY, IN THE MANNER SPECIFIED IN SECTION 17.2 (PROVIDED TELECOPY NOTICES MAY
NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION 17.10 SHALL AFFECT THE
RIGHT OF HOLDER OR ANY HOLDER OF WARRANT STOCK TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF HOLDER OR ANY HOLDER OF
WARRANT STOCK TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
17.11 MUTUAL WAIVER OF JURY TRIAL. HOLDER, EACH HOLDER OF WARRANT STOCK
AND THE COMPANY EACH HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS WARRANT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: August ___, 1995
MORRISON KNUDSEN CORPORATION
By:__________________________
Name:
Title:
Attest:
_________________________
Secretary
23
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of the attached Warrant irrevocably
exercises such Warrant for the purchase of ____ Shares of Common Stock of
Morrison Knudsen Corporation, and herewith makes payment therefor, all at the
price and on the terms and conditions specified in such Warrant and requests
that certificates for the shares of Common Stock hereby purchased (and/or any
securities or other property issuable upon such exercise) be issued in the name
of and delivered to ________________ whose address is ____________ and, if such
shares of Common Stock (or other securities or property) shall not include all
of the shares of Common Stock issuable as provided in such Warrant, that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.
___________________________________
(Name of Registered Owner)
___________________________________
(Signature of Registered Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
24
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under such Warrant, with respect to the number of
shares of Common Stock set forth below:
NAME AND ADDRESS OF ASSIGNEE NO. OF SHARES OF
COMMON STOCK
and does hereby irrevocably constitute and appoint _____________
attorney-in-fact to register such transfer on the books of Morrison Knudsen
Corporation maintained for the purpose, with full power of substitution in the
premises.
Dated: Print Name:
--------------- --------------------------------
Signature:
--------------------------------
Witness:
--------------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.
25
<PAGE>
Exhibit 4.12
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement, dated as of July 31, 1995, is made
by and between MORRISON KNUDSEN CORPORATION, a Delaware corporation (the
"Company"), and FIDELITY AND DEPOSIT COMPANY OF MARYLAND, a Maryland corporation
(the "Purchaser") and Purchaser as agent for the persons listed on certain
cosureties and other reinsurers.
W I T N E S S E T H:
WHEREAS, the Company and Morrison Knudsen Corporation, an Ohio
corporation, and the Purchaser are entering into that certain Indemnification
and Reimbursement Agreement of even date herewith and certain other agreements
in connection therewith (collectively, the "Surety Reimbursement Agreements")
and the Company and the Purchaser also are entering into a Securities Purchase
Agreement of even date herewith (the "Purchase Agreement"), pursuant to which
the Company agreed to issue and sell to the Purchaser, and the Purchaser agreed
to purchase from the Company, warrants to purchase common stock of the Company
in exchange for, among other things, certain accommodations being made by the
Purchaser under the Surety Reimbursement Agreements;
WHEREAS, in order to induce the Purchaser to enter into the Purchase
Agreement and to purchase warrants for common stock, the Company is agreeing to
provide registration rights with respect to shares of the Company's Common
Stock, par value One Dollar and Sixty-Six and Two-Thirds Cents ($1.66-2/3) per
share, held by the Purchaser (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS. Unless otherwise defined herein, terms defined in
the Warrant are used herein as therein defined, and the following shall have
(unless otherwise provided elsewhere in this Registration Rights Agreement) the
following respective meanings (such meanings being equally applicable to both
the singular and plural form of the terms defined):
"Agreement" shall mean this Registration Rights Agreement, including
all amendments, modifications and supplements and any exhibits or schedules to
any of the foregoing, and shall refer to the Agreement as the same may be in
effect at the time such reference becomes operative.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act and other federal
securities laws.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.
"NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Registrable Securities" shall mean the Warrant Stock and the shares
of Common Stock purchasable upon exercise of the Warrants.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"Warrants" shall mean collectively the Warrants (as defined in the
Purchase Agreement).
2. Intentionally Omitted.
3. INCIDENTAL REGISTRATION. If the Company at any time proposes to
file on its behalf and/or on behalf of any of its security holders (the
"demanding security holders") a Registration Statement under the Securities Act
(a "Registration Statement") on any form (other than a Registration Statement on
Form S-4 or S-8 or any successor form for securities to be offered in a
transaction of the type referred to in Rule 145 under the Securities Act or to
employees of the Company pursuant to any employee benefit plan, respectively)
for the general registration of securities with respect to its Common Stock or
any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company, it will give written notice to all holders of
Warrants or Warrant Stock at least 45 days before the initial filing with the
Commission of such Registration Statement, which notice shall set forth the
intended method of disposition of the securities proposed to be registered by
the Company. The notice shall offer to include in such filing the aggregate
number of shares of Warrant Stock, and the number of shares of Common Stock into
which such Warrants are exercisable, as such holders may request. Nothing
herein shall preclude the Company from discontinuing the registration of its
securities being effected on its behalf or on behalf of the demanding security
holders at any time prior to the effective date of the Registration Statement
relating thereto.
Each holder of any such Registrable Securities desiring to have
Warrant Stock registered under this SECTION 3 shall advise the Company in
writing within 30 days after the date of receipt of such offer from the Company,
setting forth the number of shares of such Warrant Stock and shares of Common
Stock
2
<PAGE>
into which such Warrants are exercisable for which registration is requested.
The Company shall thereupon include in such filing the number of shares of
Warrant Stock and shares of common stock into which such Warrants are
exercisable for which registration is so requested and shall use its best
efforts to effect registration under the Securities Act of such shares. Except
as otherwise provided in SECTION 5, all expenses of such registration shall be
borne by the Company.
4. REGISTRATION PROCEDURES. If the Company is required by the
provisions of SECTION 3 to use its best efforts to effect the registration of
any of its securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to cause such
Registration Statement to become and remain effective for a period of time
required for the disposition of such securities by the holders thereof;
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement until
the earlier of such time as all of such securities have been disposed of in a
public offering or the expiration of 180 days;
(c) furnish to any selling security holders such number of
copies of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such selling security holders may reasonably request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as each
holder of such securities shall request (provided, however, the Company shall
not be obligated to qualify as a foreign corporation to do business under the
laws of any jurisdiction in which it is not then qualified or to file any
general consent to service of process), and do such other reasonable acts and
things as may be required of it to enable such holder to consummate the
disposition in such jurisdiction of the securities covered by such Registration
Statement;
(e) unless waived in writing by each holder of securities being
included in such registration, use its best efforts to obtain from a nationally
recognized underwriter or
2
<PAGE>
investment banker a firm commitment (pursuant to an underwriting agreement in
customary form) to underwrite the public offering of the securities covered by
such Registration Statement;
(f) furnish, at the request of any holder requesting
registration of Registrable Securities pursuant to SECTION 3, on the date that
such shares of Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such Registrable Securities are not being
sold through underwriters, on the date that the Registration Statement with
respect to such shares of Registrable Securities becomes effective, (1) a copy
of an opinion in form and substance satisfactory to such holder, dated such
date, of the independent counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to the holders
making such request, substantially to the effect that such Registration
Statement has become effective under the Securities Act and that (i) to the best
knowledge of such counsel, no stop order suspending the effectiveness thereof
has been issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act, (ii) the Registration
Statement, the related prospectus, and each amendment or supplement thereto,
comply as to form in all material respects with the requirements of the
Securities Act and the applicable rules and regulations of the Commission
thereunder (except that such counsel need express no opinion as to financial
statements and data contained therein), (iii) the descriptions in the
Registration Statement or the prospectus, or any amendment or supplement
thereto, of all legal matters and contracts and other legal documents or
instruments are accurate and fairly present the information required to be
shown, and (iv) such counsel does not know of any legal or governmental
proceedings, pending or contemplated, required to be described in the
Registration Statement or prospectus, or any amendment or supplement thereto,
which are not described as required, nor of any contracts or documents or
instruments of a character required to be described in the Registration
Statement or prospectus, or any amendment or supplement thereto, or to be filed
as exhibits to the Registration Statement which are not described and filed or
incorporated by reference as required; such counsel shall also confirm that it
has no reason to believe that either the Registration Statement or the
prospectus, or any amendment or supplement thereto (other than financial
statements and data as to which such counsel need make no statement) contains
any untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which made, not misleading; and (2) a letter dated
such date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the holders making such request
(or if such accountants are unable to deliver such letter to such holders under
applicable professional rules or
4
<PAGE>
guidelines, then to the Company) stating that they are independent certified
public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements and other financial data
of the Company included in the Registration Statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act and, if permitted
under applicable professional rules or guidelines, that such opinion is rendered
for the benefit of the selling security holders and that they have a right to
rely thereon. Such opinion of counsel shall additionally cover such other legal
matters with respect to the registration in respect of which such opinion is
being given as such holders of Registrable Securities may reasonably request.
Such letter from the independent certified public accountants shall additionally
cover such other financial matters (including information as to the period
ending not more than five Business Days prior to the date of such letter) with
respect to the registration in respect of which such letter is being given as
the holders of such securities may reasonably request;
(g) enter into customary agreements (including an underwriting
agreement in customary form containing standard indemnification provisions) and
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable Securities; and otherwise use its
best efforts to comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as reasonably
practicable, but not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering the period of at least
12 months beginning with the first full month after the effective date of such
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act.
5. EXPENSES; LIMITATIONS ON REGISTRATION. All expenses incurred in
complying with this Agreement, including, without limitation, all registration
and filing fees (including all expenses incident to filing with the NASD),
printing expenses, fees and disbursements of counsel for the Company, the
reasonable fees and expenses of counsel for the selling security holders
(selected by those holding a majority of the shares being registered), expenses
of any special audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any jurisdictions
pursuant to SECTION 4(D), shall be paid by the Company, except that
(a) all such expenses in connection with any amendment or
supplement to the Registration Statement or prospectus filed more than 180 days
after the effective date of such Registration Statement because any holder of
Registrable
5
<PAGE>
Securities has not effected the disposition of the securities requested to be
registered shall be paid by such holder; and
(b) the Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of counsel for any
underwriter in respect of the securities sold by such holder of Registrable
Securities.
It shall be a condition precedent to the obligation of the Company to
take any action pursuant to this Agreement in respect of the securities which
are to be registered at the request of any holder of Registrable Securities that
such holder shall furnish to the Company such information as may be deemed
necessary by the Company under the Securities Act with respect to such holder,
including information regarding the securities held by such holder and the
intended method of disposition thereof as the Company shall reasonably request
and as shall be required in connection with the action taken by the Company.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless the holder of such Registrable Securities,
such holder's directors and officers, and each other Person, if any, who
controls such holder within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such holder
or any such director or officer or controlling Person may become subject under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any alleged untrue statement of any material fact
contained in any Registration Statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse such holder or such director, officer or controlling Person for any
legal or any other expenses reasonably incurred by such holder or such director,
officer or controlling Person in connection with investigating or defending any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any alleged untrue
statement or alleged omission made in such Registration Statement, preliminary
prospectus, prospectus or amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by such holder
specifically for use therein. Such indemnity shall remain in full force and
effect regardless of any investigation
6
<PAGE>
made by or on behalf of such holder or such director, officer or controlling
Person, and shall survive the transfer of such securities by such holder.
(b) Each holder of Registrable Securities agrees to indemnify
and hold harmless the Company, its directors and officers and each other Person,
if any, who controls the Company within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or several, to which
the Company or any such director or officer or any such Person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon written information provided to the Company by
such holder of such Warrant or Warrant Stock specifically for use therein and
contained, on the effective date thereof, in any Registration Statement under
which securities were registered under the Securities Act at the request of such
holder, any final prospectus contained therein, or any amendment or supplement
thereto; PROVIDED, HOWEVER, that such holder's obligation under this
SECTION 6(b) to indemnify and hold harmless the Company shall in no event
exceed, with respect to all such obligations, the lesser of the proceeds
received by such selling security holder from the sale of the Registrable
Securities through such offering, or the damage attributable solely to the
inclusion of such written information in such Registration Statement,
prospectus, or amendment or supplement suffered by the Person or Persons whose
claims gave rise to such losses, claims, damages or liabilities; and FURTHER
PROVIDED, HOWEVER, that no such indemnity shall exist with respect to any Person
making claims or demands to whom the Company or any other Person responsible for
delivering a final Prospectus to such claimant failed to deliver such prospectus
as amended or supplemented.
(c) If the indemnification provided for in this SECTION 6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified parties in connection with the actions that resulted
in such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified
7
<PAGE>
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this SECTION 6(c) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
7. CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. Notwithstanding the
other provisions of this Agreement, the Company shall not be obligated to
register the Registrable Securities of any holder if (x) in the opinion of
counsel to the Company reasonably satisfactory to the holder and its counsel
(or, if the holder has engaged an investment banking firm, to such investment
banking firm and its counsel), the sale or other disposition of such stock, in
the manner proposed by such holder (or by such investment banking firm), may be
effected without registering such stock under the Securities Act, and (y) the
failure of the Company to register such stock will not result in a reduction in
the net proceeds to be received by such holder in connection with such sale or
other disposition.
8. MISCELLANEOUS.
(a) NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, facsimile
transmission or similar writing) and shall be given to such party at its address
or facsimile number set forth on the Schedule for Notices attached as Exhibit A
hereto, or such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Company. Each such notice, request or
other communication shall be effective, (i) if given by facsimile transmission,
when transmitted to the facsimile number specified in Exhibit A and confirmation
of receipt is received, (ii) if given by mail, seventy-two (72) hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (iii) if given by any other means, when delivered at
the address specified in this SECTION 8(a).
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and
8
<PAGE>
assigns of each of the parties hereto including any Person to whom Registrable
Securities are transferred.
(c) AMENDMENTS AND WAIVERS. This Agreement may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Majority Holders.
(d) SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(e) SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision or provisions in every other respect
and the remaining provisions of this Agreement shall not be in any way impaired.
(f) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND,
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
(h) CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY
CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
BALTIMORE, MARYLAND IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER,
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. THE COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS
IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY ANY PURCHASER IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH
RIGHTS AND OBLIGATIONS, ON BEHALF OF ITSELF AND ITS PROPERTY, IN THE MANNER
SPECIFIED IN SECTION 8(a) (PROVIDED TELECOPY NOTICES MAY NOT BE USED FOR THIS
PURPOSE). NOTHING IN THIS SECTION 8(h) SHALL AFFECT THE RIGHT OF ANY PURCHASER
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF ANY PURCHASER TO BRING ANY ACTION OR PROCEEDING AGAINST THE COMPANY OR ITS
PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
(i) WAIVER OF JURY TRIAL. EACH PURCHASER AND THE COMPANY EACH
HEREBY IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION,
CLAIM OR OTHER PROCEEDING ARISING OUT
9
<PAGE>
OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
10
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser have executed this
Agreement as of the date first above written.
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
By ______________________________
Douglas L. Brigham
Treasurer
FIDELITY AND DEPOSIT
COMPANY OF MARYLAND,
a Maryland corporation
as Agent and as Purchaser
By:______________________________
Name:____________________________
Title:___________________________
11
<PAGE>
Exhibit 4.5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
Dated as of July 31, 1995
among
MORRISON KNUDSEN CORPORATION,
an Ohio corporation,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS............................................. 2
1.01 Defined Terms................................................. 2
1.02 Other Definitional Provisions................................. 12
ARTICLE II. AMOUNT AND TERMS OF CREDIT...............................13
2.01 The Loans..................................................... 13
2.02 Minimum Amount of Each Borrowing.............................. 13
2.03 Notice of Borrowing........................................... 13
2.04 Disbursement of Funds......................................... 14
2.05 Notes......................................................... 14
2.06 Pro Rata Borrowings........................................... 15
2.07 Computation of Fees and Interest.............................. 16
2.08 Payments by the Company....................................... 16
2.09 Prepayments................................................... 17
2.10 Sharing of Payments, Etc...................................... 17
2.11 Guaranty...................................................... 18
2.12 Security Agreement............................................ 18
2.13 Leasehold Mortgage............................................ 18
2.14 Operating Account and Metra Payment Account................... 18
2.15 Agent Administration Fee...................................... 19
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY.................. 19
3.01 Taxes......................................................... 19
3.02 Increased Costs and Reduction of Return....................... 22
3.03 Certificates of Banks......................................... 23
3.04 Survival...................................................... 23
ARTICLE IV CONDITIONS PRECEDENT.................................... 23
4.01 Conditions to the Effectiveness of this Agreement............. 23
(a) Agreement............................................... 23
(b) Notes................................................... 24
(c) Guaranty and Security Agreement......................... 24
(d) Resolutions; Incumbency................................. 24
(e) Articles of Incorporation; Bylaws and Good Standing..... 24
(f) Legal Opinions.......................................... 25
(g) Payment of Fees......................................... 25
(h) Certificate............................................. 25
(i) Approved Budget......................................... 25
(j) Financing Statements.................................... 25
(k) Metra Side Letter....................................... 25
(l) Landlord's Agreement.................................... 26
(m) Landlord's Agreement.................................... 26
(n) Recording of Leasehold Mortgage......................... 26
(o) Subordination Agreement................................. 26
(p) Intercreditor Arrangements.............................. 26
(q) Global Restructuring.................................... 26
(r) Metra Payment Instruction Letter and Acknowledgement of
Receipt................................................. 27
(s) Other Documents......................................... 27
<PAGE>
4.02 Conditions to Each Borrowing................................. 27
(a) Notice of Borrowing..................................... 27
(b) Continuation of Representations and Warranties.......... 27
(c) No Existing Default..................................... 27
ARTICLE V REPRESENTATIONS AND WARRANTIES.......................... 27
5.01 Corporate Existence and Power................................. 27
5.02 Corporate Authorization; No Contravention..................... 28
5.03 Governmental Authorization.................................... 28
5.04 Binding Effect................................................ 29
5.05 No Default.................................................... 29
5.06 Use of Proceeds............................................... 29
5.07 Regulated Entities............................................ 29
5.08 The Contract.................................................. 29
5.09 Full Disclosure............................................... 30
5.10 Collateral.................................................... 30
5.11 Security Documents............................................ 30
5.12 Bank Accounts................................................. 31
ARTICLE VI AFFIRMATIVE COVENANTS................................... 31
6.01 Notices....................................................... 31
6.02 Use of Proceeds............................................... 31
6.03 Full Disclosure............................................... 32
6.04 Contract Information.......................................... 32
6.05 Performance of Contract....................................... 32
6.06 Access to Ernst & Young LLP................................... 32
6.07 Further Assurances............................................ 32
ARTICLE VII NEGATIVE COVENANTS...................................... 33
7.01 Limitation on Liens on Collateral............................. 33
7.02 Bank Accounts................................................. 33
ARTICLE VIII EVENTS OF DEFAULT....................................... 33
8.01 Event of Default.............................................. 33
(a) Non-Payment............................................. 33
(b) Representation or Warranty.............................. 34
(c) Other Defaults.......................................... 34
(d) Event of Default Under the Override Agreement........... 34
(e) Bankruptcy or Insolvency................................ 34
(f) Involuntary Proceedings................................. 34
(g) Drawing under Letter of Credit.......................... 34
(h) Guarantor Defaults...................................... 34
(i) Security Documents..................................... 35
8.02 Remedies...................................................... 35
8.03 Rights Not Exclusive.......................................... 35
ARTICLE IX THE AGENT............................................... 35
9.01 Appointment and Authorization................................. 35
9.02 Delegation of Duties.......................................... 36
9.03 Liability of Agent............................................ 36
9.04 Reliance by Agent............................................. 37
9.05 Notice of Default............................................. 37
9.06 Credit Decision............................................... 37
9.07 Indemnification of Agent...................................... 38
<PAGE>
9.08 Agent in Individual Capacity.................................. 39
9.09 Successor Agent............................................... 39
9.10 Collateral Matters............................................ 39
ARTICLE X MISCELLANEOUS........................................... 40
10.01 Amendments and Waivers....................................... 40
10.02 Notices...................................................... 41
10.03 No Waiver; Cumulative Remedies............................... 42
10.04 Costs, Expenses and Certain Fees............................. 42
10.05 Indemnity.................................................... 43
10.06 Marshalling; Payments Set Aside.............................. 43
10.07 Successors and Assigns....................................... 43
10.08 Assignments, Participations, etc............................. 44
10.09 Set-off...................................................... 46
10.10 Notification of Addresses, Lending Offices, Etc.............. 47
10.11 Counterparts................................................. 47
10.12 Severability................................................. 47
10.13 Time......................................................... 47
10.14 Governing Law and Jurisdiction............................... 47
10.15 Waiver of Jury Trial......................................... 47
10.16 Entire Agreement............................................. 48
10.17 Interpretation............................................... 48
10.18 Limitation on Agent's Liability.............................. 48
<PAGE>
SCHEDULES
SCHEDULE I - NOTICE ADDRESSES AND COMMITMENTS OF BANKS
SCHEDULE II - LIST OF COMPANY ACCOUNTS HOLDING METRA
RELATED FUNDS
SCHEDULE III- LIMITATIONS ON LIENS AND OTHER MATTERS
EXHIBITS
EXHIBIT A - FORM OF NOTE
EXHIBIT B-1 - FORM OF NOTICE OF BORROWING
EXHIBIT B-2 - FORM OF DISBURSEMENT REQUEST
EXHIBIT C - FORM OF GUARANTY
EXHIBIT D - FORM OF SECURITY AGREEMENT
EXHIBIT E-1 - FORM OF OPINION OF INTERNAL COUNSEL
EXHIBIT E-2A- FORM OF OPINION OF JONES DAY
EXHIBIT E-2B- FORM OF LEASEHOLD MORTGAGE OPINION OF JONES DAY
EXHIBIT E-3 - FORM OF OPINION OF HAWLEY TROXELL
EXHIBIT F - FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT G - FORM OF LEASEHOLD MORTGAGE
EXHIBIT H - APPROVED BUDGET
EXHIBIT I - FORM OF METRA PAYMENT INSTRUCTION LETTER AND
ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT J - FORM OF METRA CONSENT LETTER
EXHIBIT K - FORM OF MONTHLY RAIL CAR REPORT
<PAGE>
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement is entered into as of July 31,
1995, among Morrison Knudsen Corporation, an Ohio corporation (the "COMPANY"),
the several financial institutions parties to this Agreement (collectively, the
"BANKS"; individually, a "Bank"), and Bank of America National Trust and
Savings Association, as agent for the Banks (the "AGENT").
PRELIMINARY STATEMENT
Prior to the date hereof the Company, the Agent and certain of the
Banks entered into that certain Standby Letter of Credit Reimbursement Agreement
dated as of August 4, 1992, as amended by that certain Waiver and Amendment to
Credit Agreement dated as of December 22, 1992, by that certain Waiver and
Second Amendment to Standby Letter of Credit and Reimbursement Agreement dated
as of August 9, 1994, by that certain Third Amendment to Standby Letter of
Credit and Reimbursement Agreement dated as of December 28, 1994 and by that
certain Fourth Amendment to Standby Letter of Credit and Reimbursement Agreement
dated as of July 21, 1995, and as further modified by those certain Waivers to
Standby Letter of Credit and Reimbursement Agreement dated as of August 6, 1993
and as of March 31, 1994 (as so amended and modified, the "REIMBURSEMENT
AGREEMENT").
Pursuant to the Reimbursement Agreement, Bank of America National
Trust and Savings Association, in its capacity as issuing bank, issued a letter
of credit (as amended to the date hereof, the "LETTER OF CREDIT") for the
benefit of Metra (as defined herein) and for the account of the Company, which
Letter of Credit is in the form of Exhibit 2.01 to the Reimbursement Agreement.
Certain defaults have occurred and are continuing under the
Reimbursement Agreement.
The Company has requested that the Banks provide revolving credit
to the Company on the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:
1
<PAGE>
ARTICLE I.
DEFINITIONS
1.01 DEFINED TERMS. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of voting
securities, by contract or otherwise. Without limitation, any director,
executive officer or beneficial owner of 5% or more of the equity of a
Person shall for the purposes of this Agreement, be deemed to control the
other Person.
"AGENT" means Bank of America National Trust and Savings
Association in its capacity as agent for the Banks hereunder and under
certain of the Related Documents, and any successor agent.
"AGENT'S PAYMENT OFFICE" means the address for payments set forth
on Schedule I hereto in relation to the Agent.
"AGENT-RELATED PERSONS" has the meaning specified in Section
9.03.
"AGGREGATE COMMITMENT" means the combined Commitments of the
Banks in an amount equal to Fifteen Million Dollars ($15,000,000).
"AGREEMENT" means this Revolving Credit Agreement, as amended,
supplemented or modified from time to time.
"AMENDED AND RESTATED BRIDGE LOAN AGREEMENT" means the Amended
and Restated Credit Agreement dated as of the date hereof and entered
into among the Company, the Guarantor, certain financial institutions,
Mellon Bank, N.A., as administrative agent, and BofA and Mellon Bank,
N.A., as co-agents.
"APPROVED BUDGET" shall mean a weekly budget prepared by the
Company which lists by line-item category the costs and expenses
anticipated to be incurred, and income and other funding anticipated to
be received (including payments by Metra under the Contract), in each
case by the Company in respect of the performance of its duties and
obligations under the Contract for each week from July 1, 1995 through
September 30, 1995, which budget shall be attached hereto as
2
<PAGE>
EXHIBIT H, together with any amendments or supplements thereto agreed to
in writing by the Majority Banks.
"ASSIGNEE" has the meaning specified in Section 10.08.
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in Section
10.08(a).
"BANK AFFILIATE" means a Person engaged primarily in the business
of commercial banking and that is a Subsidiary of a Bank or of a Person
of which a Bank is a Subsidiary, which Person has combined capital and
surplus in excess of $200,000,000 or the equivalent in other currencies.
"BANKS" has the meaning given to it in the first paragraph of
this Agreement and shall include each Assignee under an Assignment and
Acceptance delivered pursuant to Section 10.08(a) hereof.
"BOFA" means Bank of America National Trust and Savings
Association, a national banking association.
"BONDING COMPANY" means Fidelity and Deposit Company of Maryland
and Colonial American Casualty and Surety Company.
"BORROWING" means a borrowing of Loans on a given date.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco are
authorized or required by law to close.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
regarding capital adequacy, of any bank or of any corporation controlling
a bank.
"CAPITAL LEASE OBLIGATIONS" means all monetary obligations of a
Person or any of its Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, is classified as a capital
lease.
"LOAN PROCEEDS ACCOUNT" has the meaning given to it in Section
2.14.
"CLOSING DATE" means the date on which all conditions precedent
set forth in Section 4.01 are satisfied or waived.
"CODE" means the Internal Revenue Code of 1986, as amended.
3
<PAGE>
"COLLATERAL" means all property of the Company in which a
security interest is being granted to the Agent on behalf of the Agent
and the Banks pursuant to the Security Agreement.
"COLLATERAL INTERCREDITOR AGREEMENT" means that certain
Intercreditor and Subordination Agreement (Transit Division Asset Pool)
dated as of the date hereof among Bonding Company, Mellon Bank, N.A., as
agent on behalf of certain groups of lenders, and the Agent.
"COMMITMENT" means, for each Bank, the commitment of such Bank to
make Loans to the Company in an amount as set forth as the "Commitment"
for such Bank on Schedule I hereto for such Bank.
"COMMITMENT PERCENTAGE" means, as to any Bank, the percentage
equivalent of such Bank's Commitment divided by the Aggregate
Commitments.
"COMPANY" means Morrison Knudsen Corporation, an Ohio
corporation.
"CONSOLIDATED" when used with respect to any of the terms defined
herein, refers to such terms as reflected in a consolidation of the
accounts or other items of the Company or the Guarantor and of the
accounts or other items of the Company's or the Guarantor's Subsidiaries,
if any, in conformity with GAAP.
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or
other entity the accounts of which would be Consolidated in accordance
with GAAP with those of the Company or the Guarantor in its Consolidated
financial statements if such statements were prepared as of such date;
PROVIDED, that any Consolidated Subsidiary which ceases to be a
Consolidated Subsidiary solely because it is classified as a discontinued
operation shall be deemed to be a Consolidated Subsidiary so long as it
remains a Subsidiary.
"CONTRACT" has the meaning given to it in Section 6.02.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or
any of its property is bound.
"DEFAULT" means any event which, with the giving of notice, the
lapse of time, or both, would constitute an Event of Default.
4
<PAGE>
"DISBURSEMENT REQUEST" has the meaning given to it in Section
2.03(b).
"DOCUMENTS" includes any and all instruments, documents,
agreements, certificates and other writings, however evidenced.
"DOLLARS" and "$" means lawful money of the United States.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under
the laws of the United States, or any state thereof, and having combined
capital and surplus of at least $200,000,000; (b) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, having combined capital and
surplus of at least $200,000,000, or the equivalent in other currencies,
provided that such bank is acting through a branch or agency located in
the United States; or (c) a Bank Affiliate.
"EVENT OF DEFAULT" means any of the events specified in Section
8.01.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the rates
for the last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"FORM 4224" has the meaning given to it in Section 3.01(f)(i).
"FORM 1001" has the meaning given to it in Section 3.01(f)(i).
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such other entity
as may be in general use by significant segments of the U.S. accounting
5
<PAGE>
profession, which are applicable to the circumstances as of the date of
determination.
"GLOBAL RESTRUCTURING" means the transaction contemplated by that
certain Final Term Sheet for Morrison Knudsen Global Restructure,
including the Interim Financing Transaction and the T-Co Transaction.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity owned
or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"GUARANTOR" means Morrison Knudsen Corporation, a Delaware
corporation.
"GUARANTY" has the meaning given to it in Section 2.11.
"GUARANTY OBLIGATIONS" of a Person means, without duplication, all
obligations and liabilities of such Person, absolute or contingent, due or
to become due, now existing or hereafter arising, under: (i) any guaranty
or other instrument, document or agreement whereby such Person becomes or
is a guarantor or surety of, or otherwise becomes or is responsible in any
manner (whether by agreement to purchase any obligations, stock, assets,
goods or services, or to supply or advance any funds, assets, goods or
services, or otherwise) with respect to, any undertaking of any other
Person, or (ii) any agreement to purchase stock of, to make any other
equity investment in, or to make advances to, any other Person;
EXCLUDING, HOWEVER, (x) the endorsement, in the ordinary course of
collection, of instruments payable to it or its order, and (y) any
guaranty of performance entered into in the ordinary course of business
and not involving any Lien on any asset of the Guarantor or any of its
Subsidiaries.
"INCREMENTAL L/C REDUCTION AMOUNT" means, on any date, the sum of
the amounts by which the amount available to be drawn by Metra under the
Letter of Credit has been reduced pursuant to the delivery by Metra of
reduction certificates in the form of Exhibit B to the Letter of Credit
from and after July 1, 1995 to such date.
"INDEBTEDNESS" of any Person means, on a consolidated basis and
without duplication:
(i) any obligation of such Person for borrowed money,
including, without limitation, (a) any
6
<PAGE>
obligation of such Person evidenced by bonds, debentures, notes or
other similar debt instruments, (b) any Indebtedness guaranteed by
such Person and any other Guaranty Obligations of such Person, and
(c) any obligation for borrowed money which is non-recourse to such
Person but which is secured by a Lien on any asset of such Person
(limited, however, to the lesser of: (x) the amount of the debt
secured, and (y) the greater of fair market or book value of the
assets subject to the Lien);
(ii) any obligation of such Person for the deferred purchase
price of any property or services, except Trade Accounts Payable;
(iii) any Capital Lease Obligations of such Person and
obligations of such Person under any Rate Contract;
(iv) any reimbursement obligation of such Person with respect
to any letter of credit, whether such reimbursement obligation is
absolute or contingent, matured or unmatured; and
(v) any Indebtedness of any third party secured by a Lien on
any asset of such Person, whether or not such Indebtedness is
assumed by such Person (limited, however, to the lesser of: (x) the
amount of the debt secured, and (y) the greater of fair market or
book value of the assets subject to such Lien).
For all purposes of this definition:
(a) the Indebtedness shall include a portion of the Indebtedness
of any partnership or joint venture in which such Person is a general
partner or a joint venturer equal to a ratable share of such Indebtedness
based on respective percentage ownership or equity interests of such
Person and other general partners or joint venturers;
(b) in the instance of non-recourse debt of a partnership or joint
venture in which such Person is a general partner or joint venturer, the
portion of such debt included in Indebtedness shall be limited to the
lesser of (i) the ratable share described in (a) above, and (ii) such
Person's total equity interest (whether paid in capital, partnership
contribution, capital surplus or partnership profits) in such partnership
or joint venture; and
(c) as used in this definition, references to such Person shall
include the Consolidated Subsidiaries of such Person.
"INDEMNIFIED PERSON" has the meaning specified in subsection
10.05.
7
<PAGE>
"INDEMNIFIED LIABILITIES" has the meaning specified in subsection
10.05.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors or
other, similar arrangement; in each case (a) and (b) under U.S. Federal,
State or foreign law.
"INTERIM FINANCING TRANSACTION" means the transaction contemplated
by the Global Restructuring pursuant to which the Banks and other lenders
and financial institutions commit to provide funding to the Company
concurrently with commitment by the Banks to make the Loans hereunder.
"LEASEHOLD MORTGAGE" has the meaning given to it in Section 2.13.
"LENDING OFFICE" means, with respect to any Bank, the office or
offices of the Bank specified as its "Lending Office" opposite its name on
Schedule I, or such other office or offices of the Bank as it may from
time to time specify to the Company and the Agent.
"LETTER OF CREDIT" has the meaning given to it in the recitals
hereto.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory or
other) or preference, priority or other security interest or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a
lessor under a Capital Lease Obligation, any financing lease having
substantially the same economic effect as any of the foregoing, or the
filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the UCC or any comparable law) and any
contingent or other agreement to provide any of the foregoing.
"LOAN" AND "LOANS" each has the meaning given to it in Section
2.01.
"MAJORITY BANKS" means at any time Banks holding 66-2/3% of the
outstanding Loans, or if no Loans are outstanding, Banks holding at least
66-2/3% of the Commitments.
8
<PAGE>
"MATERIAL ADVERSE EFFECT" means (i) a material adverse change in,
or a material adverse effect upon, any of (a) the operations, business,
properties, condition (financial or otherwise) or prospects of the Company
or the Company and its Consolidated Subsidiaries taken as a whole; (b) the
ability of the Company to perform under any Related Document; or (c) the
legality, validity, binding effect or enforceability of any Related
Document; or (ii) a material adverse change in, or a material adverse
effect upon, any of (a) the operations, business, properties, condition
(financial or otherwise) or prospects of the Guarantor or the Guarantor
and its Consolidated Subsidiaries taken as a whole; (b) the ability of the
Guarantor to perform under any Related Document; or (c) the legality,
validity, binding effect or enforceability of any Related Document.
"MATURITY DATE" means September 1, 1995.
"METRA" means the Commuter Rail Division of the Regional
Transportation Authority, an Illinois corporation.
"METRA PAYMENT ACCOUNT" has the meaning given to it in Section
2.14 hereof.
"METRA PAYMENT INSTRUCTION LETTER" has the meaning given to it in
Section 2.14 hereof.
"MORTGAGE" means any deed of trust, mortgage or other document
creating a Lien on real property or any interest in real property.
"NOTE" has the meaning given to it in Section 2.05.
"NOTICE OF BORROWING" has the meaning given to it in Section 2.03.
"NOTICE OFFICE" mean the office of the Agent listed on Schedule I
hereto, or such other office as the Agent shall designate in writing as
such to the other parties hereto.
"OBLIGATIONS" means all Indebtedness, advances, debts,
liabilities, obligations, covenants and duties owing by the Company to any
Bank, the Agent, or any other Person required to be paid or indemnified
under any Related Document, of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument,
arising under this Agreement or under any other Related Document, whether
or not for the payment of money, whether arising by reason of an extension
of credit, loan, guaranty, indemnification or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and
however acquired and including any obligations accruing after the
commencement of an Insolvency Proceeding
9
<PAGE>
against the Company or the Guarantor; PROVIDED, HOWEVER, that the
Obligations shall not include Indebtedness, obligations or other
liabilities to the Agent, the Banks or any other Person arising under the
Reimbursement Agreement, the Amended and Restated Bridge Loan Agreement or
the T-Co Credit Agreement.
"OECD" has the meaning given to it in the definition of the term
"Eligible Assignee."
"OPERATING ACCOUNT" has the meaning given to it in Section 2.14
hereof.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving the Guarantor or any Subsidiary of the Guarantor, the ordinary
course of such Person's business, substantially as conducted by any such
Person prior to or as of the Closing Date, and undertaken by such Person
in good faith and not for purposes of evading any covenant or restriction
in any Related Document.
"OTHER TAXES" has the meaning specified in subsection 3.01(b).
"OVERRIDE AGREEMENT" means that certain Override Agreement dated
as of the date hereof among the Company, the Guarantor, the financial
institutions parties thereto and Mellon Bank, N.A., as agent.
"PARTICIPANT" has the meaning specified in subsection 10.08(d).
"PERMITTED LIENS" has the meaning given to it in Section 7.01.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"RATE CONTRACT" means interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot
and forward contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange
rates.
"REFERENCE RATE" means the higher of:
(a) the rate of interest publicly announced from time to time by
BofA in San Francisco, California, as its reference rate. It is a rate
set by BofA based upon various factors including BofA's costs and desired
return, general economic conditions and other factors, and is used as a
10
<PAGE>
reference point for pricing some loans, which may be priced at, above, or
below such announced rate; and
(b) one-half percent per annum above the Federal Funds Rate.
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
"REIMBURSEMENT AGREEMENT" has the meaning given to it in the
recitals hereof.
"RELATED DOCUMENT" means any of this Agreement, each Note, each
Security Document or any document or agreement relating to this Agreement,
any Note, or any Security Document; provided that such term shall exclude
the Collateral Intercreditor Agreement, the Reimbursement Agreement, the
Override Agreement, the Amended and Restated Bridge Loan Agreement and the
T-Co Credit Agreement.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon
the Person or any of its property or to which the Person or any of its
assets is subject.
"RESPONSIBLE OFFICER" means, for the Company or the Guarantor, the
Chief Executive Officer or the President of the Company or the Guarantor,
as appropriate, and with respect to financial matters, the Chief Financial
Officer or the Treasurer of the Company or the Guarantor, as appropriate.
"SECURITY AGREEMENT" has the meaning given to it in Section 2.12.
"SECURITY DOCUMENTS" means the Guaranty, the Security Agreement,
the Leasehold Mortgage, any financing statements filed pursuant to the
Security Agreement, and all other documents, instruments and agreements
now or hereafter executed or delivered pursuant thereto or in connection
therewith.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than 50%
of the voting stock or other equity interests is owned or controlled
directly or indirectly by the Person, or one or more of the Subsidiaries
of the Person, or a combination thereof.
"T-CO CREDIT AGREEMENT" means the Interim T-Co Credit Agreement
dated as of the date hereof and entered into among
11
<PAGE>
the Company, the Guarantor, certain financial institutions and Mellon
Bank, N.A., as agent.
"T-CO TRANSACTION" means the proposed transaction by which the
Company will spin off certain of its assets and liabilities relating the
Company's transit division (including the Company's obligations under the
Contract and all of the Collateral) into a separate operating company
which will continue to be a wholly-owned Subsidiary of the Company or the
Guarantor.
"TAXES" has the meaning specified in subsection 3.01(a).
"TRADE ACCOUNTS PAYABLE" of a Person means trade accounts payable
of such Person with a maturity of not greater than 90 days incurred in the
ordinary course of such Person's business.
"TRANSFEREE" has the meaning specified in subsection 10.08(e).
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction.
"UNITED STATES" and "U.S." each means the United States of
America.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto.
(b) All accounting terms not expressly defined herein shall be
construed, except where the context otherwise requires, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
schedule and exhibit references are to this Agreement unless otherwise
specified. The meaning of defined terms shall be equally applicable to the
singular and plural forms of the defined terms. The term "including" is not
limiting and means "including without limitation".
(d) In the computation of periods of time from a specified date to
a later specified date, the word "from" means "from and including"; the words
"to" and "until" each mean "to but excluding," and the word "through" means "to
and including."
12
<PAGE>
(e) References to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are not
prohibited by the terms of any Related Document.
(f) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation.
(g) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
ARTICLE II
AMOUNT AND TERMS OF CREDIT
2.01 THE LOANS. Subject to and upon the terms and conditions set forth
herein, each Bank severally agrees, at any time and from time to time on and
after the Closing Date and prior to the Maturity Date, to make a loan or loans
(each a "LOAN" and collectively, the "LOANS") to the Company, which Loans
may be prepaid and reborrowed in accordance with the provisions hereof;
PROVIDED, HOWEVER, that (i) the aggregate principal amount of Loans
outstanding from any Bank shall at no time exceed the Commitment of such Bank
and (ii) the aggregate principal amount of Loans outstanding from all Banks
shall at no time exceed the then current Incremental L/C Reduction Amount.
Unless repaid in full prior thereto, all Loans shall be due and payable on the
Maturity Date.
2.02 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal amount
of each Borrowing shall not be less than $500,000.
13
<PAGE>
2.03 NOTICE OF BORROWING AND DISBURSEMENT REQUEST.
(a) Whenever the Company desires to make a Borrowing hereunder it
shall give the Agent at its Notice Office at least one Business Day's prior
irrevocable notice of each Loan to be made hereunder, PROVIDED THAT any such
notice shall be deemed to have been given on a certain day only if given before
11:00 a.m. (San Francisco time) on such day. Each such notice (each, a "NOTICE
OF BORROWING") (i) shall be irrevocable, (ii) shall be given by the Company in
the form of EXHIBIT B-1, appropriately completed to specify the date of such
Borrowing (which shall be a Business Day) and the aggregate principal amount of
the Loans to be made pursuant to such Borrowing (which amount, when added to the
aggregate principal amount of Loans then outstanding, shall not exceed the
Incremental L/C Reduction Amount as of the date of such Borrowing), and (iii)
shall be delivered no earlier than one calendar week after the previously
delivered Notice of Borrowing. The Agent shall promptly give each Bank notice
of such proposed Borrowing, of such Bank's Commitment Percentage thereof and of
the other matters required by the immediately preceding sentence to be specified
in the Notice of Borrowing.
(b) Whenever the Company desires a disbursement of amounts from
the Loan Proceeds Account to the Operating Account hereunder it shall give the
Agent at its Notice Office irrevocable notice of each such disbursement to be
made hereunder, PROVIDED THAT any such notice shall be deemed to have been
given on a certain day only if given before 11:00 a.m. (San Francisco time) on
such day. Each such notice (each, a "DISBURSEMENT REQUEST") (i) shall be
irrevocable, (ii) shall be given by the Company in the form of EXHIBIT B-2,
appropriately completed to specify the date of such disbursement (which shall be
a Business Day) and the aggregate principal amount of such disbursement, and
(iii) shall be delivered no more often than twice in any calendar week. The
Agent shall promptly give each Bank notice of such disbursement or proposed
disbursement.
2.04 DISBURSEMENT OF FUNDS.
(a) No later than 11:00 a.m. (San Francisco time) on the date
specified in each Notice of Borrowing, each Bank will make available, through
such Bank's Lending Office, its Commitment Percentage of each Borrowing
requested to be made on such date, in Dollars and in immediately available funds
at the Agent's Payment Office and, upon receipt thereof, the Agent will deposit
the aggregate of the amounts made available by the Banks into the Loan Proceeds
Account. Unless the Agent shall have been notified by any Bank prior to the
date of Borrowing that such Bank does not intend to make available to the Agent
such Bank's portion of any Borrowing to be made on such date, the Agent may
assume that such Bank has made such amount available to the Agent on such date
of Borrowing and the Agent may, in reliance upon such assumption, make available
to the Loan Proceeds Account a corresponding amount. If such corresponding
amount is not in
14
<PAGE>
fact made available to the Agent by such Bank, the Agent shall be entitled to
recover such corresponding amount from such Bank on demand. If such Bank does
not pay such corresponding amount forthwith upon the Agent's demand therefor,
the Agent may either (i) withdraw any such corresponding amount from the Loan
Proceeds Account or (ii) notify the Company and the Company shall immediately
pay such corresponding amount to the Agent. The Agent shall also be entitled to
recover on demand from such Bank or the Company interest on such corresponding
amount in respect of each day from the date such corresponding amount was made
available by the Agent to the Company until the date such corresponding amount
is recovered by the Agent, at a rate per annum equal to (a) if recovered from
such Bank, the Federal Funds Rate and (b) if recovered from the Company, the
Reference Rate for the first two Business Days after demand by the Agent and
thereafter at a rate per annum for overdue payments as provided in Section
2.08(c) hereof. Nothing in this Section 2.04 shall be deemed to relieve any
Bank of its obligation to make Loans hereunder or to prejudice any rights which
the Company may have against any Bank as a result of any failure by such Bank to
make Loans hereunder.
(b) No later than 2:00 p.m. (San Francisco time) on the date
specified in each Disbursement Request and provided the applicable conditions to
a disbursement have been satisfied, the Agent will transfer the amounts
requested in the Disbursement Request from the Loan Proceeds Account to the
Operating Account. The Agent shall have no duty to or liability to confirm the
information contained in any Disbursement Request and its sole duty thereunder
shall be to disburse the amounts specified in a Disbursement Request conforming
on its face to the requirements of Section 2.03(b) to the Operating Account.
2.05 NOTES.
(a) The Company's obligation to pay the principal of, and interest
on, each of the Loans made by each Bank shall be evidenced by a promissory note
issued to such Bank (the "Note") duly executed and delivered by the Company
substantially in the form of Exhibit A hereto with blanks appropriately
completed in conformity herewith.
(b) The Note issued to each Bank shall (i) be payable to the order
of such Bank and be dated the Closing Date, (ii) be in a stated principal amount
equal to such Bank's Commitment and be payable in the principal amount of the
Loans evidenced thereby, (iii) mature, with respect to each Loan evidenced
thereby, on the Maturity Date, (iv) be subject to prepayments as provided in
Section 2.09, (v) bear interest as provided in Section 2.07 and (vi) be entitled
to the benefits of the Security Documents.
(c) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect
15
<PAGE>
thereof (which records shall, absent manifest error, be final and conclusive and
binding on all parties hereto) and will prior to any transfer of its Note
endorse on the reverse side thereof the outstanding principal amount of Loans
evidenced thereby. Failure to make any such notation shall not affect the
Company's obligations in respect of such Loans.
2.06 PRO RATA BORROWINGS. All Borrowings of Loans under this Agreement
shall be made by the Banks pro rata on the basis of their Commitment Percentage.
It is understood that no Bank shall be responsible for any default by any other
Bank of its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder regardless of
the failure of any other Bank to make its Loans hereunder.
2.07 COMPUTATION OF FEES AND INTEREST.
(a) All computations of fees (other than as provided in Section
2.15) and interest under this Agreement shall be made on the basis of a 360-day
year and actual days elapsed, which results in more interest being paid than if
computed on the basis of a 365-day year. Interest and fees shall accrue during
each period during which interest or such fees are computed from the first day
thereof to the last day thereof. Interest on each Loan shall be computed at and
accrue at the Reference Rate from and including the date on which each Loan is
made available to the Loan Proceeds Account.
(b) Each determination of an interest rate by the Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Company and the Banks in the absence of manifest error. The Agent will, at the
request of the Company or any Bank, deliver to the Company or the Bank, as the
case may be, a statement showing the quotations used by the Agent in determining
any interest rate.
(c) Accrued interest shall be payable (i) monthly in arrears on the
last Business Day of each calendar month, (ii) on the date of any repayment of
principal that reduces the outstanding principal amount of the Loans to zero,
(iii) at maturity (whether by acceleration or otherwise) of the Loans and (iv)
after such maturity, on demand.
2.08 PAYMENTS BY THE COMPANY.
(a) All payments (including prepayments) to be made by the Company
on account of principal, interest, fees, and other sums due hereunder shall be
made without set-off or counterclaim and shall be made to the Agent, for the
account of the Banks, except as otherwise provided in this Agreement, at the
Agent's Payment Office, in Dollars and in immediately available funds no later
than 11:00 a.m. (San Francisco time) on the date when due. In the case of
principal, interest, fees and other amounts which
16
<PAGE>
are paid to the Agent for the account or benefit of all of the Banks the Agent
will promptly distribute to each Bank its Commitment Percentage of such
principal, interest, fees, or other amounts, in like funds as received. Any
payment which is received by the Agent later than 11:00 a.m. (San Francisco
time) shall be deemed to have been received on the immediately succeeding
Business Day.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.
(c) In the event that any principal, interest (to the extent
permitted by law), fee, or any other amount due hereunder from the Company is
not paid on the date when due, such principal, interest, fee or other amount
shall thereafter bear interest at the Reference Rate plus 2%.
(d) All payments (including prepayments), other than regularly
scheduled interest payments, on the Loans or on any of the other Obligations
shall be made to the Agent for application as follows (regardless of how the
Company may treat such payment for purposes of its own accounting): first, to
then due and outstanding fees, expenses or other charges of the Agent under this
Agreement or any of the other Related Documents to the extent payable by the
Company; second, to then due interest on the Loans accrued and unpaid prior to
the date such funds are received by the Banks and third, to the principal
balance of the Loans.
2.09 PREPAYMENTS.
(a) The Company shall have the right to prepay the Loans in whole
or in part without penalty, premium or fee from time to time on the following
terms and conditions: (i) the Company shall give the Agent at its Notice Office
at least one Business Day's prior notice of its intent to prepay the Loans and
the amount of such prepayment, which notice the Agent shall promptly transmit to
each of the Banks, PROVIDED THAT for the purposes of this clause (i) any
notice received after 11:00 a.m. (San Francisco time) shall not be deemed
delivered until the following Business Day; (ii) each partial prepayment of
Loans shall be in an aggregate principal amount of at least $1,000,000 and
$1,000,000 multiples in excess thereof and (iii) each prepayment in respect of
any Loans shall be applied as provided in Section 2.08.
(b) On any day on which amounts are deposited into the Metra
Payment Account, the Agent shall apply all such amounts in accordance with
Section 2.08(d); PROVIDED THAT (i) any amounts deposited into the Metra
Payment Account after 11:00 a.m. (San Francisco time) shall not be deemed
deposited until the following
17
<PAGE>
Business Day; and (ii) each prepayment in respect of any Loans shall be applied
as provided in Section 2.08.
2.10 SHARING OF PAYMENTS, ETC. If, other than as expressly
contemplated herein, any Bank shall obtain on account of its Note or this
Agreement any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise) in excess of its Commitment Percentage of
payments on account of its Note or this Agreement obtained by all the Banks,
such Bank shall forthwith (a) notify the Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by them as shall be
necessary to cause such purchasing Bank to share the excess payment ratably with
each of them; PROVIDED, HOWEVER, that if all or any portion of such excess
payment is thereafter recovered from the purchasing Bank, such purchase shall to
that extent be rescinded and each other Bank shall repay to the purchasing Bank
the purchase price paid thereto together with an amount equal to such paying
Bank's Commitment Percentage (according to the proportion of (i) the amount of
such paying Bank's required repayment to (ii) the total amount so recovered from
the purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Company agrees
that any Bank so purchasing a participation from another Bank pursuant to this
Section 2.10 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off, but subject to Section 10.09)
with respect to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation. Each Bank involved
in the purchase of a participation under this Section 2.10 or in a refund under
this Section 2.10 shall notify the Agent of the details of such purchase or
refund. The Agent shall keep records (which shall be conclusive and binding in
the absence of manifest error), of participations purchased pursuant to this
Section 2.10 and shall in each case notify the Banks following any such
purchases.
2.11 GUARANTY. All obligations of the Company under this Agreement and
all other Related Documents shall be unconditionally guaranteed by the Guarantor
pursuant to a guaranty and agreement (the "GUARANTY") in the form of EXHIBIT
C attached hereto.
2.12 SECURITY AGREEMENT. All obligations of the Company under this
Agreement and all other Related Documents shall be secured by a lien and
security interest in the Collateral pursuant to a security agreement (the
"SECURITY AGREEMENT") in the form of EXHIBIT D attached hereto.
2.13 LEASEHOLD MORTGAGE. All obligations of the Company under this
Agreement and all other Related Documents shall be secured by a lien and
security interest in certain real property of the Company located in Chicago,
Illinois pursuant to a Leasehold Mortgage, Assignment of Rents, Security
Agreement and
18
<PAGE>
Fixture Filing (the "LEASEHOLD MORTGAGE") in the form of EXHIBIT G attached
hereto.
2.14 LOAN PROCEEDS ACCOUNT AND METRA PAYMENT ACCOUNT. The Company has
instructed the Agent to establish at the Agent's Payment Office (i) an account
into which all Borrowings will be deposited (the "LOAN PROCEEDS ACCOUNT") and
which will be maintained by the Agent in the name of the Company, and (ii) a
deposit account owned and controlled by the Agent into which Metra will be
irrevocably instructed, pursuant to the payment instruction letter in the form
of EXHIBIT I hereof (the "METRA PAYMENT INSTRUCTION LETTER"), to make all
payments or into which the Agent will deposit all amounts received by it from
Metra, in each case in respect of the Contract (the "METRA PAYMENT ACCOUNT").
The Company has established or will establish an operating account of the
Company with another financial institution into which all disbursements from the
Loan Proceeds Account will be transferred and from which all disbursements in
respect of the Company's performance of the Contract will initially be made
(such account, the "OPERATING ACCOUNT"). The Company authorizes the Agent to
disclose any information as to withdrawals, deposits or other activity in the
Loan Proceeds Account to the Banks. The Company acknowledges and agrees that
its sole and exclusive access to the Loan Proceeds Account shall be pursuant to
disbursements requested under Section 2.03(b) hereof.
2.15 AGENT ADMINISTRATION FEE. The Company shall pay a non-refundable
administration fee to the Agent for Agent's own account in an amount equal to
$30,000 for each calendar month from the Closing Date to the date upon which
this Agreement and the Commitments are terminated and the Loans have been repaid
in full. Such fee in respect of July and August, 1995 shall be payable in
advance on the Closing Date, and thereafter shall be payable in advance on the
first Business Day of each month.
2.16 ADDITIONAL SECURITY. All obligations of the Company under this
Agreement and all other Related Documents shall be secured by the liens and
security interests granted pursuant to the "Security Documents" (as defined in
the Override Agreement) including the "Ship Mortgage" (as defined in the
Override Agreement.)
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Subject to subsection 3.01(g), any and all payments by the
Company to each Bank or the Agent under this Agreement or any other Related
Document shall be made free and clear of, and without deduction or withholding
for, any and all
19
<PAGE>
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of each Bank
and the Agent, such taxes (including income taxes or franchise taxes) as are
imposed on or measured by each Bank's or the Agent's net income by the
jurisdiction under the laws of which such Bank or the Agent, as the case may be,
is organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Related Documents (hereinafter referred to as "OTHER TAXES").
(c) Subject to subsection 3.01(g), the Company shall indemnify and
hold harmless each Bank and the Agent for the full amount of Taxes or Other
Taxes (including without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 3.01) paid by the Bank or the
Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days from the date the Bank or the Agent
makes written demand therefor.
(d) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Agent, then, subject to subsection 3.01(g):
(i) the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to
additional sums payable under this Section 3.01) such Bank or the Agent,
as the case may be, receives an amount equal to the sum it would have
received had no such deductions been made;
(ii) the Company shall make such deductions; and
(iii) the Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
20
<PAGE>
(f) Each Bank which is a foreign person (i.e., a person other than
a United States person for United States Federal income tax purposes) agrees
that:
(i) it shall, no later than the Closing Date (or, in the case of a
Bank which becomes a party hereto pursuant to Section 10.08 after the
Closing Date, the date upon which the Bank becomes a party hereto) deliver
to the Agent (and the Agent shall deliver a copy thereof to the Company)
two accurate and complete signed originals of Internal Revenue Service
Form 4224 or any successor thereto ("FORM 4224"), or two accurate and
complete signed originals of Internal Revenue Service Form 1001 or any
successor thereto ("FORM 1001"), as appropriate, in each case indicating
that the Bank is on the date of delivery thereof entitled to receive
payment of principal, interest and fees under this Agreement free from
withholding of United States Federal income tax;
(ii) if at any time such Bank makes any changes necessitating a new
Form 4224 or Form 1001, it shall with reasonable promptness deliver to the
Agent (and the Agent shall deliver a copy thereof to the Company) in
replacement for, or in addition to, the forms previously delivered by it
hereunder, two accurate and complete signed originals of Form 4224, or two
accurate and complete signed originals of Form 1001, as appropriate, in
each case indicating that such Bank is on the date of delivery thereof
entitled to receive payment of reimbursements, interest, fees, and other
sums under this Agreement free from withholding of United States Federal
income tax;
(iii) it shall (to the extent it may lawfully do so), before or
promptly after the occurrence of any event (including the passing of time
but excluding any event mentioned in (ii) above) requiring a change or
renewal in the most recent Form 4224 or Form 1001 previously delivered by
such Bank, deliver to the Agent (and the Agent shall deliver a copy
thereof to the Company) two accurate and complete original signed copies
of Form 4224 or Form 1001 in replacement for the forms previously
delivered by such Bank; and
(iv) it shall, promptly upon the Agent's or the Company's
reasonable request to that effect, deliver to the Agent (and the Agent
shall deliver a copy thereof to the Company) such other forms or similar
documentation as may be required from time to time by any applicable law,
treaty, rule or regulation in order to establish such Bank's tax status
for withholding purposes.
(g) The Company will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to subsection 3.01(d)(i)
to any Bank for the account of any Lending Office of such Bank:
21
<PAGE>
(i) if the obligation to pay such additional amounts would not
have arisen but for a failure by such Bank to comply with its obligations
under subsection 3.01(f) in respect of such Lending Office;
(ii) if such Bank shall have delivered to the Agent for delivery to
the Company a Form 4224 in respect of such Lending Office pursuant to
subsection 3.01(f), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or in the official interpretation of such law or
regulations by any Governmental Authority charged with the interpretation
or administration thereof (whether or not having the force of law) after
the date of delivery of such Form 4224; or
(iii) if the Bank shall have delivered to the Agent for delivery to
the Company a Form 1001 in respect of such Lending Office pursuant to
Section 3.01(f), and such Bank shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income
tax in respect of payments by the Company hereunder for the account of
such Lending Office for any reason other than a change in United States
law or regulations or any applicable tax treaty or regulations or in the
official interpretation of any such law, treaty or regulations by any
Governmental Authority charged with the interpretation or administration
thereof (whether or not having the force of law) after the date of
delivery of such Form 1001.
(h) If, at any time, the Agent or the Company requests any Bank to
deliver any forms or other documentation pursuant to subsection 3.01(f)(iv),
then the Company shall, on demand of such Bank through the Agent, reimburse such
Bank for any costs and expenses (including expenses of outside legal counsel and
the allocated costs of in-house counsel) reasonably incurred by such Bank in the
preparation or delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any
Bank or the Agent pursuant to subsection 3.01(d), then such Bank shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue if such change in
the judgment of such Bank is not otherwise disadvantageous to such Bank.
(j) If the Internal Revenue Service or any other Federal, state,
municipal or other authority within the United States (including any agency or
subdivision thereof) asserts a claim that the Agent did not properly withhold
tax from amounts
22
<PAGE>
paid to or for the account of a Bank (because the appropriate tax form was not
delivered, was not properly executed, because the Bank was not entitled to
exemption or reduction of withholding tax, or for any other reason), then that
Bank shall indemnify the Agent (to the extent the Agent has not been reimbursed
therefor by the Company) for all amounts paid directly or indirectly by the
Agent as tax or otherwise, including penalties and interest (and any taxes
imposed by any jurisdiction on the amounts payable tb the Agent hereunder),
together with all costs, expenses, and attorneys' fees (including the allocated
costs for in-house legal services).
3.02 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Bank shall determine that, due to either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
any increase in the cost to such Bank of agreeing to issue, amend, maintain,
fund, or participate in this Agreement, any Loans, or its Commitment hereunder,
then the Company shall be liable for, and shall from time to time, upon demand
therefor by such Bank (with a copy of such demand to the Agent), pay to the
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction
after the date hereof of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by such Bank (or its Lending Office) or any
corporation controlling such Bank, with any request, guideline or directive
regarding capital adequacy (whether or not having the force of law) of any such
central bank or other authority, affects or would affect the amount of capital
required or expected to be maintained by such Bank or any corporation
controlling such Bank and (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy and such Bank's desired
return on capital) determines that the amount of such capital is increased as a
consequence of its obligation under this Agreement, then such Bank shall
promptly notify the Company of such determination and, upon demand of such Bank
(and such Bank shall deliver a copy of such demand to the Agent), the Company
shall immediately pay to such Bank, from time to time as specified by such Bank,
additional amounts sufficient to compensate the Bank for such increase.
3.03 CERTIFICATES OF BANKS. Any Bank claiming reimbursement or
compensation pursuant to this Article III shall deliver to the Company (with a
copy to the Agent) a certificate
23
<PAGE>
setting forth in reasonable detail the amount payable to the Bank hereunder and
such certificate shall be conclusive and binding on the Company in the absence
of manifest error.
3.04 SURVIVAL. The agreements and obligations of the Company contained
in this Article III and of the Banks contained in Section 3.01(j) shall survive
the payment in full of all other obligations of the Company under this
Agreement.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 CONDITIONS TO THE EFFECTIVENESS OF THIS AGREEMENT. The
effectiveness of this Agreement is subject to the condition that the Agent shall
have received on or before the Closing Date all of the following, in form and
substance satisfactory to the Agent, its counsel, and each Bank, and in
sufficient copies for each Bank:
(a) AGREEMENT. This Agreement executed by the Company and each
of the Banks;
(b) NOTES. A Note dated the Closing Date, executed by the
Company and payable to each Bank in the principal amount of such Bank's
Commitment hereunder.
(c) GUARANTY AND SECURITY AGREEMENT. The Guaranty shall have
been executed and delivered by the Guarantor and the Security Agreement shall
have been executed and delivered by the Company;
(d) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the boards of directors of the
Company and the Guarantor approving and authorizing the execution,
delivery and performance by such Person of this Agreement, the Guaranty,
and the other Related Documents to be delivered hereunder by such Person
and authorizing the incurring of Indebtedness in connection with this
Agreement and the Notes, certified as of the Closing Date by the Secretary
or an Assistant Secretary of the Company and of the Guarantor; and
(ii) A certificate of the Secretary or Assistant Secretary of each
of the Company, the Guarantor, and each Subsidiary of the Company
certifying the names and true signatures of the officers of the such
Person authorized to execute and deliver, as applicable, this Agreement,
and all other Related Documents to be delivered hereunder to be executed
by such Person;
24
<PAGE>
(e) ARTICLES OF INCORPORATION; BYLAWS AND GOOD STANDING. Each
of the following documents:
(i) the articles or certificate of incorporation of each of the
Company and the Guarantor as in effect on the Closing Date, certified by
the Secretary of State of the State of incorporation of the Company or the
Guarantor, as appropriate, as of a recent date and by the Secretary or
Assistant Secretary of each of the Company and the Guarantor as of the
Closing Date and the bylaws of the Company and the Guarantor as in effect
on the Closing Date, certified by the Secretary or Assistant Secretary of
the Company or the Guarantor, as appropriate, as of the Closing Date; and
(ii) a good standing certificate as of a recent date for Company
from the Secretary of State of the State of Ohio and good standing
certificates as of a recent date from the States of California, Delaware,
Idaho, Illinois, and New York evidencing the qualification of the Company
to do business as a foreign corporation in such States, together with
bring-down certificates of all such certificates by telex or telecopy,
dated the Closing Date, and a good standing certificate as of a recent
date for the Guarantor from the Secretary of State of the State of
Delaware and good standing certificate as of a recent date from the State
of Idaho evidencing the qualification of the Guarantor to do business as a
foreign corporation in State of Idaho, together with bring-down
certificates of all such certificates by telex or telecopy, dated the
Closing Date, and certified copies of certificates dated not greater than
one year prior to the Closing Date evidencing the qualification and the
Company or the Guarantor, as appropriate, to do business as a foreign
corporation in each other state where the Company or the Guarantor is
qualified to do business as a foreign corporation;
(f) LEGAL OPINIONS. An opinion of internal counsel to the
Company and the Guarantor addressed to the Agent and the Banks, substantially in
the form of EXHIBIT E-1, opinions of Jones, Day, Reavis & Pogue, special
counsel to the Company and the Guarantor, addressed to the Agent and the Banks,
substantially in the form of EXHIBIT E-2A and EXHIBIT E-2B and an opinion of
Hawley Troxell Ennis & Hawley, special counsel to the Company and the Guarantor,
substantially in the form of EXHIBIT E-3;
(g) PAYMENT OF FEES. The Company shall have paid (i) all
accrued and unpaid costs, fees and expenses (including, without limitation,
legal fees and expenses) to the Closing Date, including any arising under
Sections 3.01 and 10.04 and (ii) to the Agent, a non-refundable administrative
fee as provided in Section 2.15 in an amount equal to $60,000;
25
<PAGE>
(h) CERTIFICATE. A certificate signed by a Responsible Officer
of the Company, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article V are
true and correct on and as of such date, as though made on and as of such
date; and
(ii) no Default or Event of Default exists or would result from the
transactions contemplated by this Agreement;
(i) APPROVED BUDGET. A copy of the Approved Budget;
(j) FINANCING STATEMENTS. Acknowledgement copies or other
evidence of submission for filing of proper financing statements (Form UCC-1)
under the UCC of each jurisdiction listed in the schedules to the Security
Agreement to perfect the security interest created in the Collateral pursuant to
the Security Agreement;
(k) METRA SIDE LETTER. A letter agreement in the form of
EXHIBIT J hereto executed and delivered by the Company, the Agent, Bonding
Company, the several other parties thereto and Metra;
(l) LANDLORD'S AGREEMENT. The lessor of the Hornell, New York
leasehold interest of the Company shall have executed and delivered a Landlord's
Agreement granting to the Agent certain rights in respect of Collateral located
on the premises constituting the leasehold interest and agreeing to such other
matters as shall have been requested by the Agent or any Bank;
(m) LANDLORD'S AGREEMENT. The lessor of the Chicago, Cook
County, Illinois leasehold interest of the Company shall have executed and
delivered a Landlord's Agreement granting to the Agent certain rights in respect
of Collateral located on the premises constituting the leasehold interest,
consenting to the recording of the Leasehold Mortgage and agreeing to such other
matters as shall have been requested by the Agent or any Bank;
(n) RECORDING OF LEASEHOLD MORTGAGE. The Leasehold Mortgage
shall have been recorded in the official records of Cook County, Illinois;
(o) SUBORDINATION AGREEMENT. Evidence that a Subordination
Agreement, in form and substance satisfactory to the Banks, executed and
delivered by the Agent, Bonding Company and Mellon Bank, N.A. as collateral
agent (the "COLLATERAL AGENT") under that certain Amended and Restated
Collateral Agent Agreement and Mortgage Trust dated as of July 31, 1995 among
the Company and certain other parties, shall have been recorded in the official
records of Cook County Illinois, pursuant to which the lien and security
interest of the Collateral Agent in the Chicago, Illinois leasehold property
shall be subordinated to the
26
<PAGE>
lien and security interest created in favor of the Agent under the Leasehold
Mortgage;
(p) INTERCREDITOR ARRANGEMENTS. The Collateral Intercreditor
Agreement shall have been executed by all parties thereto and shall have become
effective and the certain other intercreditor agreements between or among the
Company, the Guarantor, the Collateral Agent, Bonding Company and certain other
creditors of the Company, the Guarantor and the Guarantor's Subsidiaries in
respect of certain other collateral of the Company, the Guarantor and the
Guarantor's Subsidiaries shall have been executed and delivered by the parties
thereto and shall have become effective;
(q) GLOBAL RESTRUCTURING. Each of the Override Agreement, the
Amended and Restated Bridge Loan Agreement, the T-Co Credit Agreement and each
of the other agreements contemplated by the Interim Financing Transaction shall
have closed concurrently herewith and each of the lenders or other institutions
agreeing to provide advances or financial accommodations to the Company pursuant
to the Interim Financing Transaction shall have committed to do so, subject only
to the conditions set forth in the documentation relating thereto and each of
the Company, the Guarantor, such lenders and Fidelity and Deposit Company of
Maryland shall have executed a term sheet for the T-Co Transaction;
(r) METRA PAYMENT INSTRUCTION LETTER AND ACKNOWLEDGEMENT OF
RECEIPT. The Metra Payment Instruction Letter executed by the Company,
directing Metra to make all payment in respect of the Contract directly to the
Agent, together with the Acknowledgement of Receipt executed by Metra, pursuant
to which Metra acknowledges receipt of the Metra Payment Instruction Letter; and
(s) OTHER DOCUMENTS. Such other approvals, opinions or
documents as any Bank may reasonably request.
4.02 CONDITIONS TO EACH BORROWING OR DISBURSEMENT. The obligation of
each Bank to make any Loan or the obligation of the Agent to make any
disbursement to the Operating Account is subject in each instance to the
satisfaction or waiver of the following conditions:
(a) NOTICE OF BORROWING OR DISBURSEMENT REQUEST. The Agent
shall have received a Notice of Borrowing or Disbursement Request, as the case
may be (and schedules thereto) from the Company in accordance with the terms and
conditions set forth in Section 2.03 hereof;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made by the Company contained in Article V shall
be true and correct in all material respects on and as of the date of such Loan
or disbursement with the same
27
<PAGE>
effect as if made on and as of such date of Loan or disbursement; and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from such Loan or disbursement.
Each Notice of Borrowing or Disbursement Request delivered to the Agent shall
constitute a representation and warranty by the Company hereunder as of the date
of each such Notice of Borrowing or Disbursement Request and as of the date upon
which the Borrowing is being requested that the conditions in Section 4.02 have
been satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
5.01 CORPORATE EXISTENCE AND POWER. The Company, the Guarantor and
each of their respective Consolidated Subsidiaries:
(a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver and perform its obligations under the Related Documents;
(c) is duly qualified as a foreign corporation, licensed and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in Section 5.01(c) or Section 5.01(d), to the
extent that the failure to do so could not have a Material Adverse Effect, and
except to the extent that all of the following are true: (i) each Consolidated
Subsidiary for which the representation and warranty in either Section 5.01(a)
or (b) above are not true is a Consolidated Subsidiary of the Guarantor other
than the Company, has net worth less than $500,000, and had annual revenue for
its most recent fiscal year less than $1,000,000, (ii) the Consolidated
Subsidiaries for which the representation and warranty in either Section 5.01(a)
or (b) above are not true have net worth less than $5,000,000 in the aggregate,
and had revenue, in their most recent fiscal year, less than $10,000,000 in the
aggregate, and (iii) the failure of
28
<PAGE>
the representation and warranty in Section 5.01(a) or (b) above to be true does
not have a Material Adverse Effect.
5.02 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Company, the Guarantor and their respective
Consolidated Subsidiaries of this Agreement and any other Related Document to
which such Person is party, have been duly authorized by all necessary corporate
action and do not and will not:
(a) contravene the terms of that Person's certificate of
incorporation, bylaws or other organization document;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any indenture, agreement, lease, instrument,
Contractual Obligation, injunction, order, decree or undertaking to which such
Person is a party except as set forth in Schedule III; or
(c) violate any Requirement of Law.
5.03 GOVERNMENTAL AUTHORIZATION. Except for those that have been
obtained as of the date hereof and as set forth in Schedule III, no approval,
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority is necessary or required in connection with the
execution, delivery, performance or enforcement against the Company, the
Guarantor or any of their respective Consolidated Subsidiaries of the Agreement
or any other Related Document or any other instrument or agreement required
hereunder to be made by the Company, the Guarantor, or any of their respective
Consolidated Subsidiaries.
5.04 BINDING EFFECT. This Agreement and each other Related Document to
which the Company, the Guarantor or any of their respective Consolidated
Subsidiaries is a party constitute the legal, valid and binding obligations of
the Company, the Guarantor, and such Consolidated Subsidiaries to the extent any
such Person is a party thereto, enforceable against such Person in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
5.05 NO DEFAULT. No Default or Event of Default exists or would result
from the incurring of obligations by the Company under this Agreement or any
other Related Document.
5.06 USE OF PROCEEDS. Proceeds of each Loan hereunder shall be used
solely as provided in Section 6.02 hereof.
5.07 REGULATED ENTITIES. None of the Company, the Guarantor, any
Person controlling the Company or the Guarantor,
29
<PAGE>
or any Consolidated Subsidiaries of the Company or the Guarantor, is (a) an
"Investment Company" within the meaning of the Investment Company Act of 1940;
or (b) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code or any other Federal or state statute or regulation limiting its
ability to incur Indebtedness.
5.08 THE CONTRACT.
(a) The Contract has been executed and delivered by the Company,
and the execution, delivery and performance by the Company, the Guarantor and
their respective Consolidated Subsidiaries of the Contract and any related
documents and agreements to which such Person is party, have been duly
authorized by all necessary corporate action and do not and will not:
(i) contravene the terms of that Person's certificate of
incorporation, bylaws or other organization document;
(ii) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any indenture, agreement, lease,
instrument, Contractual Obligation, injunction, order, decree or
undertaking to which such Person is a party; or
(iii) violate any Requirement of Law.
(b) Except as has been made or obtained prior to the date hereof,
no approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority is necessary or required in
connection with the execution, delivery, performance or enforcement against the
Company, the Guarantor or any of their respective Consolidated Subsidiaries of
the Contract or any other documents and agreements related thereto.
(c) The Contract and the other documents and agreements related
thereto to which the Company, the Guarantor or any of their respective
Consolidated Subsidiaries is a party are in full force and effect and constitute
the legal, valid and binding obligations of the Company, the Guarantor and such
Consolidated Subsidiaries to the extent any such Person is a party thereto,
enforceable against such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
5.09 FULL DISCLOSURE. None of the representations or warranties made
by the Company, the Guarantor, or any of their respective Consolidated
Subsidiaries in the Related Documents as of the date of such representations and
warranties, and none of
30
<PAGE>
the statements contained in each exhibit, report, statement or certificate
furnished by or on behalf of the Company, the Guarantor, or any of their
respective Consolidated Subsidiaries in connection with the Related Documents,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading.
5.10 COLLATERAL. The Collateral (as defined in the Security Agreement)
constitutes all of the personal property (including goods, inventory, equipment,
work in process, general intangibles and other personal property assets) of the
Company held or used or required to be held or used by the Company in connection
with the performance of its duties and obligations under the Contract. The
granting of the lien and security interest in the Collateral to the Agent on
behalf of itself and the Banks pursuant to the Security Documents does not
violate any Requirement of Law.
5.11 SECURITY DOCUMENTS. (a) The Leasehold Mortgage creates in favor
of the Agent for the benefit of the Agent and the Banks a valid mortgage upon
the Chicago, Cook County, Illinois leasehold property. Upon the filing of
Leasehold Mortgage with the Cook County Recorder's Office and upon the release
or subordination of the mortgage in favor of the Collateral Agent on behalf of
certain other lenders in respect of the leasehold interest encumbered thereby
(which release or subordination shall occur prior to or on the Closing Date),
the Agent's mortgage in the leasehold interest encumbered thereby shall be a
first priority mortgage in such leasehold interest.
(b) The Security Agreement creates in favor of the Agent for the benefit
of the Agent and the Banks a valid security interest in the Collateral. Upon
the filing of financing statements at the offices listed in the schedules to the
Security Agreement and upon the effectiveness of the Collateral Intercreditor
Agreement which subordinates the security interests granted to certain other
Persons in respect of the Collateral (which effectiveness shall occur prior to
or on the Closing Date), the Agent's security interest in the Collateral shall
be, subject only to the Collateral Intercreditor Agreement, a first priority,
perfected security interest in all such assets which are capable of being
perfected by the filing of a financing statement under applicable law, subject
only to Permitted Liens.
5.12 BANK ACCOUNTS. Other than the Loan Proceeds Account, the
Operating Account and the other accounts listed on Schedule II hereto, the
Company does not maintain any bank, deposit or other account from which the
Company disburses funds in respect of its performance of the Contract.
ARTICLE VI
31
<PAGE>
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have any
Commitment hereunder, or any Loan is outstanding or other amount due hereunder
shall remain unpaid, unless the Majority Banks waive compliance in writing:
6.01 NOTICES. The Company shall promptly notify the Agent and each Bank
of the occurrence of any Default or Event of Default and of the occurrence or
existence of any event or circumstance that foreseeably will become a Default or
Event of Default.
Each notice pursuant to this Section shall be accompanied by a
written statement by a Responsible Officer of the Company or the Guarantor, as
appropriate, setting forth details of the occurrence referred to therein and
stating what action the Company or the Guarantor, as appropriate, proposes to
take with respect thereto.
6.02 USE OF PROCEEDS. The Company shall use the proceeds of each Loan
solely (i) for the purpose set forth in the schedule attached to the applicable
Notice of Borrowing, and (ii) to fund the Company's performance of its
obligations under the Proposal/Contract (Rev. 1/24/92), between Metra and the
Company, and all exhibits, schedules, amendments and supplements thereto,
awarded March 9, 1992 (the "CONTRACT").
6.03 FULL DISCLOSURE. The Company shall ensure that all written
information, exhibits and reports furnished to the Agent or the Banks do not and
will not contain any untrue statement of a material fact and do not and will not
omit to state any material fact or any fact necessary to make the statements
contained therein not misleading in light of the circumstances in which made,
and will promptly disclose to the Agent and the Banks and correct any defect or
error that may be discovered therein or in any Related Document or in the
execution, acknowledgement or recordation thereof.
6.04 CONTRACT INFORMATION. The Company shall provide to the Agent and
each Bank as soon as the same become available but not later than 15 days after
the end of each month, a current schedule of Metra rail cars delivered,
payments, and Letter of Credit status substantially in the form of EXHIBIT K
hereto, together with a schedule of the type and car number of each Metra rail
car delivered during the month.
6.05 PERFORMANCE OF CONTRACT. The Company shall perform in a timely
manner all of its duties and obligations under the Contract and shall not
abandon, reject or otherwise fail to comply with the Contract.
6.06 ACCESS TO FINANCIAL ADVISORS AND OTHER PROFESSIONALS. The Company
shall grant to the financial advisors and other
32
<PAGE>
professionals of the Agent or the Banks access to its books and records
sufficient to such financial advisors or other professionals to monitor
performance by the Company with the Contract and the Approved Budget and to
verify the use of proceeds of Borrowings and disbursements.
6.07 FURTHER ASSURANCES. The Company shall, at its sole cost and
expense, execute and deliver to the Agent for the benefit of the Agent and the
Banks all such further documents, instruments and agreements and agree to
perform all such other acts which may be required in the opinion of the Agent or
any Bank to enable the Agent and the Banks to exercise and enforce their
respective rights as the secured parties or beneficiaries under the Security
Documents. To the extent permitted by applicable law, the Company hereby
authorizes the Agent on behalf of the Agent and the Banks to file financing
statements and continuation statements with respect to the security interests
granted under the Security Documents in favor of the Agent for the benefit of
the Agent and the Banks and to execute such financing statements and
continuation statements on behalf of the Company.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank
shall have any Commitment hereunder, or any Loan is outstanding or any amount
payable hereunder shall remain unpaid, unless the Majority Banks waive
compliance in writing:
7.01 LIMITATION ON LIENS ON COLLATERAL. The Company shall not directly
or indirectly make, create, incur, assume or suffer to exist any Lien upon or
with respect to any part of the Collateral, whether now owned or hereafter
acquired, other than the following ("PERMITTED LIENS"):
(a) any Lien created under any Related Document;
(b) Liens in favor of any Person to the extent that such Liens are
expressly subject to the priority and subordination agreements set forth in the
Collateral Intercreditor Agreement; and
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary Course
of Business which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any material asset.
33
<PAGE>
7.02 BANK ACCOUNTS. Other than the Loan Proceeds Account, the
Operating Account and the accounts listed on Schedule II hereto, the Company
shall not establish or maintain any bank, deposit or operating account from
which the Company makes disbursements or funds its operations in respect of its
performance of the Contract (including general administrative expenses of the
Company which have been fairly allocated to the Contract). The Company shall
not use or expend any funds in the Loan Proceeds Account or the Operating
Account for any purpose other than to fund the performance of the Contract
(including general administrative expenses of the Company which have been fairly
allocated to the Contract).
ARTICLE VIII
EVENTS OF DEFAULT
8.01 EVENT OF DEFAULT. Any of the following events shall constitute an
"Event of Default":
(a) NON-PAYMENT. The Company fails to pay when due any amount
of principal of any Loan or any interest, fees or any other amount payable
hereunder or pursuant to any other Related Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty
by the Company or any of its Consolidated Subsidiaries or the Guarantor herein,
in any Related Document or which is contained in any certificate, document or
financial or other statement furnished at any time under this Agreement, or in
or under any Related Document, shall prove to have been incorrect in any
material respect on or as of the date made or deemed made; or
(c) OTHER DEFAULTS. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any Related Document; or
(d) EVENT OF DEFAULT UNDER THE OVERRIDE AGREEMENT. An Event of
Default (as defined in the Override Agreement) shall have occurred and be
continuing or the Collateral Agent (as defined in the Override Agreement) shall
have instituted any enforcement proceedings against the Guarantor or any of its
Subsidiaries or any of their assets in connection with the Indebtedness to which
the Override Agreement relates; or
(e) BANKRUPTCY OR INSOLVENCY. The Company or any of its
Subsidiaries (i) becomes insolvent or generally fails to pay, or admits in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (ii)
voluntarily ceases to conduct its business in the ordinary course substantially
as it is conducted on the Closing Date; (iii) commences any Insolvency
Proceeding or files any petition or answer in any Insolvency
34
<PAGE>
Proceeding; (iv) acquiesces in the appointment of a receiver, trustee, custodian
or liquidator for itself or a substantial portion of its property, assets or
business or effects a plan or other arrangement with its creditors; (v) admits
the material allegations of a petition filed against it in any Insolvency
Proceeding, or (vi) takes any action to effectuate any of the foregoing; or
(f) INVOLUNTARY PROCEEDINGS. Any involuntary Insolvency
Proceeding is commenced or filed against the Company or any Subsidiary or any
writ, judgment, warrant of attachment, execution or similar process, is issued
or levied against a substantial part of the Company's or any of its
Subsidiaries' assets and any such proceedings or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; or
(g) DRAWING UNDER LETTER OF CREDIT. Metra shall have presented
a demand for payment on the Letter of Credit; or
(h) GUARANTOR DEFAULTS. The Guarantor shall fail in any
material respect to perform or observe any term, covenant or agreement in the
Guaranty; or any event described at paragraphs (e) or (f) shall occur with
respect to the Guarantor; or
(i) SECURITY DOCUMENTS. The Guaranty, the Security Agreement,
the Leasehold Mortgage or any other Security Document shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and affect, or
the Company, the Guarantor or any other Person shall contest in any manner the
validity or enforceability thereof or deny that it has any further liability or
obligation thereunder; or the Agent shall cease to have a first priority
mortgage on the Chicago, Cook County, Illinois leasehold property or a the first
priority, perfected security interest in the Collateral, subject only to
Permitted Liens.
8.02 REMEDIES. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks, (a) declare the
Commitments of each Bank to be terminated, whereupon such Commitments shall
forthwith be terminated; (b) declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon and all other amounts
payable hereunder to be immediately due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Company; or (c) exercise all rights and remedies available to it
under this Agreement or the other Related Documents or applicable law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in clause
(e) or (f) of Section 8.01 above or upon the occurrence with respect to the
Guarantor of any event described in paragraphs (e) or (f) of Section 8.01 (in
the case of
35
<PAGE>
such reference to clause (f) upon the expiration of the 60 day period mentioned
herein), the Commitment of each Bank shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Agent or any Bank.
8.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Related Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity, or
under any other instrument, document or agreement.
ARTICLE IX
THE AGENT
9.01 APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints, designates and authorizes the Agent to enter into the Related
Documents to which it is a party and to take such action on its behalf under the
provisions of this Agreement and each other Related Document and to exercise
such powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or any other Related Document, together with such powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary contained elsewhere in this Agreement or in any other Related Document,
the Agent shall not have any duties or responsibilities, except those expressly
set forth herein, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Related Document or otherwise exist
against the Agent. Without limiting the generality of the foregoing sentence,
the use of the term "agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine or any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or reflect only
an administrative relationship between independent contracting parties.
9.02 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Related Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.03 LIABILITY OF AGENT. None of the Agent, its Affiliates, or any of
their respective officers, directors, employees, agents, or attorneys-in-fact
(collectively, the "AGENT-RELATED PERSONS") shall (i) be liable for any action
taken
36
<PAGE>
or omitted to be taken by any of them under or in connection with this Agreement
or any Related Document or the transaction contemplated thereby (except for its
own gross negligence or willful misconduct) or (ii) be responsible in any manner
to any of the Banks for any recital, statement, representation or warranty made
by the Company or any Subsidiary or Affiliate of the Company or any officer
thereof contained in this Agreement or in any other Related Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Related Document, or the value of the Collateral or any other collateral,
or the validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Related Document, or for any failure of the Company
or any other party to any Related Document to perform its obligations hereunder
or thereunder. No Agent-Related Person shall be under any obligation to any
Bank to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other
Related Document, or to inspect the properties, books or records of the Company,
the Guarantor, or any of its Subsidiaries.
9.04 RELIANCE BY AGENT.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Related Document unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Related Document in accordance with a request or consent of the
Majority Banks and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.01, each Bank which authorizes the Agent to release its
signature page to this Agreement shall be deemed to have consented to, approved
of, accepted or to be satisfied with, each of the conditions required to be
consented to, approved of, accepted by or satisfactory to, such Bank.
37
<PAGE>
9.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees payable
to the Agent for the account of the Banks, unless the Agent shall have received
written notice from a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Banks. The Agent shall take such action
with respect to such Default or Event of Default as shall be requested by the
Majority Banks in accordance with Article VIII; PROVIDED, HOWEVER, that
unless and until the Agent shall have received any such request, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interests of the Banks.
9.06 CREDIT DECISION. Each Bank expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company, the Guarantor, and their Subsidiaries and Affiliates shall be
deemed to constitute any representation or warranty by the Agent to any Bank.
Each Bank represents to the Agent that it has, independently and without
reliance upon the Agent and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company, the Guarantor, and their Subsidiaries and
Affiliates and all applicable bank regulatory laws relating to the transaction
contemplated hereby and made its own decision to enter into this Agreement and
extend credit to the Company hereunder. Each Bank also represents that it will,
independently and without reliance upon the Agent and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Related Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company and the Guarantor. Except for notices, reports
and other documents expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of the
Company or the Guarantor which may come into the possession of any of the
Agent-Related Persons.
9.07 INDEMNIFICATION OF AGENT. The Banks shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), ratably
according to the
38
<PAGE>
respective amounts of their Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind whatsoever which may at any time
(including at any time following the repayment of the Obligations) be imposed
on, incurred by, or asserted against any such Person in any way relating to or
arising out of this Agreement or any Related Document or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; PROVIDED, HOWEVER, that no
Bank shall be liable for the payment to the Agent-Related Persons of any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent promptly upon demand for its
ratable share of any costs or out-of-pocket expenses (including fees and
expenses of counsel and the allocated cost of in-house counsel) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Related Document, or any
document contemplated by or referred to herein to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Company. The
obligations of the Banks under this Section 9.07 shall survive the payment of
all Obligations hereunder.
9.08 AGENT IN INDIVIDUAL CAPACITY. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Company and its Subsidiaries and Affiliates as though
BofA were not the Agent hereunder and without notice to or consent of the Banks.
The Banks acknowledge that, pursuant to such activities, BofA or its Affiliates
may receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or to such Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans and
Commitment, BofA shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not the Agent, and
the terms "Bank" and "Banks" shall include BofA in its individual capacity.
9.09 SUCCESSOR AGENT. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If the
Agent shall resign as Agent under this Agreement, the Majority Banks, with the
consent of the Company (which consent shall not be unreasonably withheld), shall
appoint from among the Banks a successor agent for the Banks. If no
39
<PAGE>
successor agent is appointed prior to the effective date of the resignation of
the Agent, the Agent shall appoint, after consulting with the Banks and the
Company, a successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent and the retiring Agent's rights, powers and
duties as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article IX and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement.
9.10 COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all the Banks, without
the necessity of any notice to or further consent from the Banks, from time to
time to take any action with respect to any collateral or the security
agreements and other documents relating to such collateral which may be
necessary to perfect and maintain perfected the security interest in and Liens
upon such collateral.
(b) The Banks irrevocably authorize the Agent, at its option and
in its discretion, to release any Lien granted to or held by the Agent upon any
collateral for the Obligations (i) upon termination of the Commitments and
payment in full of all the Obligations payable under this Agreement and under
any other Related Document; (ii) constituting assets sold or to be sold or
disposed of as part of or in connection with any disposition permitted
hereunder; (iii) constituting assets in which the Company or any Subsidiary of
the Company owned no interest at the time the Lien was granted or at any time
thereafter; (iv) constituting assets leased to the Company, the Guarantor, or
any Subsidiary of the Guarantor under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by the Company or such Subsidiary to
be, renewed or extended; (v) consisting of an instrument evidencing Indebtedness
or other debt instrument, if the indebtedness evidenced thereby has been paid in
full; or (vi) if approved, authorized or ratified in writing by the Majority
Banks as provided in subsection 10.01(f). Upon request by the Agent at any
time, the Banks will confirm in writing the Agent's authority to release
particular types or items of collateral pursuant to this subsection 9.10(b).
ARTICLE X
MISCELLANEOUS
10.01 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Related Document and no consent with
respect to any departure by the Company
40
<PAGE>
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks, and then such waiver shall be effective only in the specific
instance and for the specific purpose for which given; PROVIDED, HOWEVER,
that no such waiver, amendment, or consent shall, unless in writing and signed
by all the Banks do any of the following:
(a) increase the Commitment of any Bank or subject any Bank to any
additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due hereunder or under any Related Document;
(c) reduce the principal of, or the rate of interest of any Loan,
or of any fees or other amounts payable hereunder or under any Related Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder;
(e) amend this Section 10.01 or Section 2.10;
(f) release the Guarantor from its obligations under Section 2 of
the Guaranty or any amendment of Section 2 of the Guaranty; or
(g) extend the Maturity Date beyond September 1, 1995;
and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks, or all Banks
if so required by this Agreement, affect the rights or duties of the Agent under
this Agreement or any other Related Document.
10.02 NOTICES.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, telegraphic, telex, facsimile transmission or cable communication) and
mailed, telegraphed, telexed or delivered, (i) if to the Company, to its address
specified on Schedule I hereof, (ii) if to any Bank, to its Lending Office, and
(iii) if to the Agent, to its Notice Office; or, as to the Company, to such
other address as shall be designated by the Company in a written notice to the
other parties, and as to each other party, at such other address as shall be
designated by such party in a written notice to all other parties. All notices,
requests, and other communications provided for hereunder shall, if sent by
facsimile, telegraphic, or telexed transmission, be confirmed in writing (other
than by
41
<PAGE>
facsimile, telegraphic, or telex transmission) sent by overnight delivery.
(b) All such notices and communications shall, when transmitted by
overnight delivery, telegraphed, telecopied by facsimile, telexed or cabled, be
effective when delivered for overnight delivery or to the telegraph company,
transmitted by telecopier, confirmed by telex answerback or delivered to the
cable company, respectively, or if delivered, upon delivery, except that notices
pursuant to Article II or VIII shall not be effective until actually received by
the Agent.
(c) The Company acknowledges and agrees that the agreement of the
Agent and the Banks in Article II herein to receive certain notices by telephone
and facsimile is solely for the convenience and at the request of the Company.
The Agent and Banks shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice and the
Agent and the Banks shall not have any liability to the Company or other Person
on account of any action taken or not taken by the Agent and the Banks in
reliance upon such telephonic or facsimile notice. The obligation of the
Company to repay the Obligations shall not be affected in any way or to any
extent by any failure by the Agent and the Banks to receive written confirmation
of any telephonic or facsimile notice or the receipt by the Agent and the Banks
of a confirmation which is at variance with the terms understood by the Agent
and the Banks to be contained in the telephonic or facsimile notice.
10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
10.04 COSTS, EXPENSES AND CERTAIN FEES. The Company shall, whether or
not the transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Agent on demand for all costs and
expenses incurred in connection with the development, preparation, delivery,
administration and execution of, and any amendment, supplement, waiver or
modification to, this Agreement, any Related Document and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable costs and
expenses of counsel to the Agent (and the allocated cost of internal counsel)
with respect thereto;
(b) in the event the Agent takes any action in connection with the
enforcement or preservation of any rights (including in connection with any
Insolvency Proceeding,
42
<PAGE>
"workout" or restructuring regarding the Company, this Agreement or any Related
Document), pay or reimburse the Agent on demand for all costs and expenses
incurred by them in connection with such enforcement or preservation of any
rights (including in connection with any Insolvency Proceeding, "workout" or
restructuring regarding the Company, this Agreement or any Related Document)
under this Agreement, any Related Document, and any such other documents,
including costs, fees and out-of-pocket expenses of counsel (and the allocated
cost of internal counsel) to the Agent; and
(c) pay or reimburse the Agent on demand for all appraisal
(including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), search and filing fees, incurred or sustained by the Agent
in connection with the matters referred to under paragraphs (a) and (b) above,
but, in the case of an appraisal, only to the extent it was reasonable to obtain
such appraisal.
10.05 INDEMNITY. The Company shall pay, indemnify, and hold each Bank,
the Agent and each of their respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses or disbursements (including
fees and expenses of counsel and allocated costs of internal counsel) of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration (including any action taken or not taken by an
Indemnified Person pursuant to Section 10.02 hereof) of this Agreement and any
other Related Documents or the transactions contemplated herein, and with
respect to any investigation, litigation or proceeding related to this Agreement
or any Related Document or the use hereof or thereof (whether or not any
Indemnified Person is a party thereto) (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"); PROVIDED, that the Company shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this section shall survive payment of all
other Obligations.
10.06 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor the Banks
shall be under any obligation to marshall any assets in favor of the Company or
any other Person or against or in payment of any or all of the Obligations. To
the extent that the Company makes a payment or payments to the Agent or the
Banks, or the Agent or the Banks enforce their Liens or exercise their rights of
set-off, and such payment or payments or the proceeds of such enforcement or
set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party in connection with any Insolvency
43
<PAGE>
Proceeding, or otherwise, then to the extent of such recovery the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
10.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Bank.
10.08 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Prior to the Maturity Date, the Commitments, Loan and
obligations of any Bank may not be assigned. From and after the Maturity Date,
any Bank may, with the written consent of the Agent, at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
the Agent shall be required in connection with any assignment and delegation by
a Bank to a Bank Affiliate of such Bank) (each an "ASSIGNEE") all or any
ratable part of all of the Commitments, Loans and the other rights and
obligations of such Bank hereunder, in a minimum amount of $1,000,000;
PROVIDED, HOWEVER, that (i) the Company and may continue to deal solely and
directly with such Bank in connection with the interest so assigned to an
Assignee until (A) written notice of such assignment, together with payment
instructions, addresses and related information with respect to the Assignee
shall have been given to the Company and the Agent by such Bank and the
Assignee; and (B) such Bank and its Assignee shall have delivered to the Company
and the Agent an Assignment and Acceptance in the form of EXHIBIT F (an
"ASSIGNMENT AND ACCEPTANCE") and (ii) until such time as the Reimbursement
Agreement shall have been terminated, no such assignment shall be effective
unless concurrently with the delivery of such assignment, such Bank shall have
assigned the same proportion of its Commitment and L\C Borrowings (each as
defined in the Reimbursement Agreement) and other rights and obligations under
the Reimbursement Agreement to such Assignee pursuant to the terms of the
Reimbursement Agreement.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received an executed Assignment and Acceptance, payment of the
processing fee and when applicable, the applicable assignment and acceptance to
be delivered under the Reimbursement Agreement, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Related Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance,
44
<PAGE>
relinquish its rights and be released from its obligations under the Related
Documents.
(c) Immediately upon each Assignee making its payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments arising therefrom. The
Commitment allocated to each Assignee shall reduce such Commitment of the
assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks
(a "PARTICIPANT") participating interests in the Commitment and Loans of that
Bank and the other interests of that Bank (the "ORIGINATING BANK") hereunder
and under the other Related Documents; PROVIDED, HOWEVER, that (i) the
Originating Bank's obligations under this Agreement shall remain unchanged, (ii)
the Originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Agent shall continue to deal solely and
directly with the Originating Bank in connection with the Originating Bank's
rights and obligations under this Agreement and the other Related Documents, and
(iv) no Bank shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Related Document, except to
the extent such amendment, consent or waiver would require unanimous consent as
described in the first PROVISO to Section 10.01. In the case of any such
participation, the Participant shall not have any rights under this Agreement,
or any of the other Related Documents, and all amounts payable by the Company
hereunder shall be determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing under
this Agreement to the same extent as if the amount of its participating interest
were owing directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all non-public information
provided to it by the Company or any Subsidiary of the Company, or by the Agent
on such Company's or Subsidiary's behalf, in connection with this Agreement or
any other Related Document, and neither it nor any of its Affiliates shall use
any such information for any purpose or in any manner other than pursuant to the
terms contemplated by this Agreement; except to the extent such information (i)
was or becomes generally available to the public other than as a result of a
disclosure by the Bank, or (ii) was or becomes available on a non-confidential
basis from a source other than the Company, provided that such source is not
bound by a confidentiality
45
<PAGE>
agreement with the Company known to the Bank; PROVIDED FURTHER, HOWEVER,
that any Bank may disclose such information, (a) at the request or pursuant to
any requirement of any Governmental Authority to which the Bank is subject or in
connection with an examination of such Bank by any such authority; (b) pursuant
to subpoena or other court process; (c) when required to do so in accordance
with the provisions of any applicable Requirement of Law; (d) to such Bank's
independent auditors and other professional advisors; and (e) to any other
financial institution who has advanced funds to or made other financial
accommodations on behalf of the Company. Notwithstanding the foregoing, the
Company authorizes each Bank to disclose to any Participant or Assignee (each, a
"TRANSFEREE") and to any prospective Transferee, such financial and other
information in such Bank's possession concerning the Guarantor or its
Subsidiaries which has been delivered to the Agent or the Banks pursuant to this
Agreement or which has been delivered to the Agent or the Banks by the Company
in connection with the Banks' credit evaluation of the Company; PROVIDED that,
unless otherwise agreed by the Company, such Transferee agrees in writing to
such Bank to keep such information confidential to the same extent required of
the Banks hereunder.
10.09 SET-OFF. (a) In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists, each Bank is authorized at any
time and from time to time, without prior notice to the Company, any such notice
being waived by the Company to the fullest extent permitted by law, to set-off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Company against any and all
obligations of the Company now or hereafter existing under this Agreement or any
other Related Document irrespective of whether or not the Agent or such Bank
shall have made demand under this Agreement or any Related Document and although
such obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agent after any such set-off and application made by
such Bank; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Bank
under this Section 10.09 are in addition to the other rights and remedies
(including without limitation, other rights of set-off) which the Bank may have.
Notwithstanding anything else to the contrary herein or in any Related Document,
the Agent expressly agrees that it will not exercise set-off rights in respect
of this Agreement or any Related Document other than in respect of the
Collateral.
(b) Notwithstanding the foregoing subsection (a), at any time that
the Loans or any other Obligation shall be secured by real property located in
California, no Bank shall exercise a right of setoff, banker's lien or
counterclaim or take any court or administrative action or institute any
proceeding to enforce any provision of this agreement or any Note that is not
taken by
46
<PAGE>
the Majority Banks or approved in writing by the Majority Banks if such setoff
or action or proceeding would or might (pursuant to Sections 580a, 580b, 580d
and 726 of the California Code of Civil Procedure or Section 2924 of the
California Civil Code, if applicable, or otherwise) affect or impair the
validity, priority, or enforceability of the liens granted to the Agent pursuant
to the Security Documents or the enforceability of the Notes and other
Obligations hereunder, and any attempted exercise by any Bank of any such right
without obtaining such consent of the Majority Banks shall be null and void.
This subsection (b) shall be solely for the benefit of each of the Banks
hereunder.
10.10 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of its Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
10.11 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Agent.
10.12 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality of, enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 TIME. Time is of the essence as to each term or provision of
this Agreement and each of the other Related Documents.
10.14 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH OF THE
COMPANY, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
47
<PAGE>
RELATED HERETO. THE COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.15 WAIVER OF JURY TRIAL. THE COMPANY, THE BANKS AND THE AGENT WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER RELATED DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE COMPANY, THE BANKS AND THE AGENT AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER RELATED DOCUMENTS
OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER RELATED DOCUMENTS
10.16 ENTIRE AGREEMENT. This Agreement, together with the other
Related Documents, embodies the entire Agreement and understanding among the
Company, the Banks and the Agent in respect of the subject matter hereof and
supersedes all prior or contemporaneous agreements and understandings of such
persons, verbal or written, relating to the subject matter hereof and thereof
except for any prior arrangements made with respect to the payment by the
Company of (or any indemnification for) any fees, costs or expenses payable to
or incurred (or to be incurred) by or on behalf of the Agent or the Banks.
10.17 INTERPRETATION. This Agreement is the result of negotiations
between and has been reviewed by counsel to the Agent, the Banks, the Company
and other parties, and is the product of all parties hereto. Accordingly, this
Agreement and the other Related Documents shall not be construed against the
Banks or the Agent merely because of the Agent's or Banks' involvement in the
preparation of such documents and agreements.
10.18 LIMITATION ON AGENT'S LIABILITY. The Company acknowledges and
agrees that the Agent has established the Metra Payment Account and the Loan
Proceeds Account, and has agreed to transfer funds to the Operating Account, at
the request of, and as an accommodation to, the Company, and the Company agrees
that the Agent shall not be liable to the Company for any expense, claim, loss,
damage or cost (collectively, "Damages") arising out of or relating to Agent's
actions or omissions in respect of such accounts or transfers other than such
actions or omissions constituting Agent's negligence. The Company agrees that
the Agent's liabilities in respect of any such account or transfer shall be
limited to direct money Damages actually incurred by the
48
<PAGE>
Company in an amount not exceeding the compensation for the service during the
month in which such acts or omissions occurred. In no event shall the Agent be
liable to the Company or to any other Person for any special, indirect,
exemplary or consequential damages, including but not limited to, lost profits.
49
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
MORRISON KNUDSEN CORPORATION
an Ohio corporation
By:_________________________
Title:______________________
By:_________________________
Title:______________________
S-1
<PAGE>
BANK OF AMERICA NATIONAL TRUST BANQUE NATIONALE DE PARIS
AND SAVINGS ASSOCIATION,
as Agent
By:________________________
By:_______________________
Title:_____________________
Title:____________________
By:________________________
BANK OF AMERICA NATIONAL TRUST Title:_____________________
AND SAVINGS ASSOCIATION, as a
Bank BANQUE PARIBAS
By:________________________
By:________________________
Title:_____________________
Title:_____________________
BANK OF MONTREAL By:________________________
By:________________________ Title:_____________________
Title:_____________________
CIBC, INC.
THE BANK OF NOVA SCOTIA
By:________________________
By:________________________ Title:_____________________
Title:_____________________
CREDIT LYONNAIS CAYMAN ISLANDS BRANCH
By:________________________
Title:_____________________ By:________________________
Title:_____________________
THE BANK OF TOKYO, LTD.
By:________________________
Title:_____________________
By:________________________
Title:_____________________
S-2
<PAGE>
HONG KONG AND SHANGHAI BANKING UNION BANK OF SWITZERLAND
CORPORATION LIMITED
By:________________________
By:________________________
Title:_____________________
Title:_____________________
By:________________________
THE LONG-TERM CREDIT BANK OF Title:_____________________
JAPAN, LTD., LOS ANGELES AGENCY
WESTDEUTSCHE LANDESBANK
By:________________________ GIROZENTRALE
Title:_____________________
By:________________________
SAN PAOLO BANK Title:_____________________
By:________________________
By:________________________
Title:_____________________
Title:_____________________
By:________________________
Title:_____________________
By:________________________
NATIONAL WESTMINSTER BANK PLC
By:________________________
Title:_____________________
ROYAL BANK OF CANADA
By:________________________
Title:_____________________
S-3
<PAGE>
Exhibit 4.14
GUARANTY
This GUARANTY is entered into as of July 31, 1995, between MORRISON
KNUDSEN CORPORATION, a Delaware corporation (the "GUARANTOR"), and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent (in such capacity, the
"AGENT") for itself and the banks (collectively "BANKS" and individually
"BANK") party to the Revolving Credit Agreement referred to below.
RECITALS
A. Prior to the date hereof, Morrison Knudsen Corporation, an
Ohio corporation (the "BORROWER"), certain of the Banks and the Agent entered
into a Standby Letter of Credit and Reimbursement Agreement dated as of August
4, 1992. The Reimbursement Agreement as amended, modified or supplemented to
the date hereof or hereafter amended, modified or supplemented is hereinafter
called the "REIMBURSEMENT AGREEMENT".
B. Pursuant to the Reimbursement Agreement, the issuing bank
issued a letter of credit on behalf of the Borrower.
C. Pursuant to a Guaranty dated as of August 4, 1992 (as amended,
modified or amended to the date hereof, the "REIMBURSEMENT AGREEMENT
GUARANTY") all of Borrower's indebtedness and obligations under the
Reimbursement Agreement were guaranteed by Guarantor.
D. The Borrower and the Guarantor are currently in default of
their obligations under the Reimbursement Agreement and the Reimbursement
Agreement Guaranty.
E. The Borrower, the Banks and the Agent entered into a Revolving
Credit Agreement dated as of July 31, 1995. The Revolving Credit Agreement as
now in effect or hereafter extended, renewed or amended is hereinafter called
the "CREDIT AGREEMENT".
<PAGE>
F. In order to induce the Banks to commit to extend credit to the
Borrower as provided in the Credit Agreement, and for other valuable
consideration, the Guarantor issues this Guaranty of the Borrower's indebtedness
and obligations under the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and to induce Banks to make the Loans pursuant to
the terms of the Credit Agreement, it is agreed as follows:
1. DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION
1.1 DEFINITIONS. Unless otherwise defined herein, (a) capitalized
terms used herein shall have the respective meanings ascribed to them in the
Credit Agreement, and (b) the following terms shall have, unless otherwise
provided elsewhere in this Guaranty, the meanings set forth below (such meanings
being equally applicable to both the singular and plural forms of the terms
defined):
"BANKRUPTCY CODE" shall mean Title 11, United States Code, as
amended from time to time, and any successor statute thereto.
"GUARANTY" shall mean this Guaranty, including any and all
amendments, modifications and supplements and any exhibits and schedules to any
of the foregoing, and shall refer to the Guaranty as the same may be in effect
at the time such reference becomes operative.
"GUARANTY LIABILITIES" shall mean (a) the Obligations and (b) all
indebtedness, liabilities, and obligations of Guarantor to Agent or the Banks,
whether now existing or hereafter arising, under this Guaranty or any other
Related Document.
1.2 CERTAIN MATTERS OF CONSTRUCTION. Unless otherwise specifically
provided, use of any term shall be equally applicable to any gender, "or" shall
not be exclusive, "including" shall not be limiting or exclusive, and any
reference to a "Section" shall refer to the relevant section of this Guaranty.
-2-
<PAGE>
2. THE GUARANTY
2.1 GUARANTY OF THE OBLIGATIONS. In consideration of the Loans and
all other financial accommodations to or for the benefit of the Borrower, and
for other valuable consideration, receipt of which Guarantor hereby acknowledges
and for the benefit of Agent and each Bank, and their successors, endorsees,
transferees, and assigns, Guarantor hereby (i) unconditionally guarantees to
Agent, the prompt payment (whether at stated maturity, by acceleration or
otherwise) and performance of the Obligations and (ii) agrees to pay all
indebtedness, liabilities and obligations of the Guarantor to Agent or the
Banks, whether now existing or hereafter arising, under the Guaranty or any
other Related Document.
2.2 ABSOLUTE GUARANTY. The Guaranty Liabilities are the immediate,
direct, primary, and absolute obligations of Guarantor, shall not be subject to
any condition precedent, and are independent of and not co-extensive with the
Obligations. The Guaranty Liabilities shall remain in full force and effect
without regard to, and shall not be impaired or affected by, or be deemed to be
satisfied by, nor shall Guarantor or the Collateral be exonerated, discharged,
or released by, any of the following events:
(a) Agent's or any Bank's exercise or enforcement of, or failure
or delay in exercising or enforcing, legal proceedings to collect the
Obligations or any power, right, or remedy with respect to any of the
Obligations, the Collateral, or the Guaranty Liabilities including: (i) any
action or inaction of Agent or any Bank to perfect, protect, or enforce any
security interest in any Collateral; (ii) any impairment or invalidity of the
Collateral or any suspension of Agent's or any Bank's right to enforce against
Borrower or any other guarantor of the Obligations, any Obligations, any
Guaranty Liabilities, any other obligations, or any security interest in or lien
upon the Collateral; or (iii) any change in the time, manner, or place of
payment of, or in any other term of, any or all of the Obligations or the
Guaranty Liabilities, or any other amendment to or waiver of the Credit
Agreement, any other Related Document, or any other agreement or instrument
governing or evidencing any of the Obligations or the Guaranty Liabilities;
(b) insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition, assignment for the benefit of creditors, appointment of
a receiver or trustee
-3-
<PAGE>
for all or any part of Borrower's or Guarantor's assets or of the assets of any
other guarantor of the Obligations, liquidation, winding-up, or dissolution of
Borrower or Guarantor or any other guarantor of the Obligations;
(c) any limitation, discharge, cessation, or partial satisfaction
of the Obligations, of any Guaranty Liabilities, or of the obligations of any
other guarantor of the Obligations, whether by operation of any statute,
regulation, or rule of law, or otherwise, regardless of the intervention or
omission of Agent or any Bank, or any invalidity, voidability, unenforceability,
or irregularity, or future change to or amendment of, in whole or in part, the
Credit Agreement, this Guaranty, any other Related Document, or any other
document evidencing any Obligations;
(d) any merger, acquisition, consolidation or change in structure
of Borrower or Guarantor or any guarantor of the Obligations; or any sale,
lease, transfer, or other disposition of any or all of the assets or shares of
Borrower or Guarantor or any other guarantor of the Obligations;
(e) any assignment or other transfer, in whole or in part, of
Agent's or any Bank's interest in and rights under the Credit Agreement or any
other Related Document, including this Guaranty, or of Agent's or any Bank's
interest in the Obligations, the Guaranty Liabilities, or the Collateral;
(f) any claim, defense, counterclaim, or set-off, other than (i)
any defense of prior performance or (ii) any defense based on any applicable
provision of the UCC requiring that the Collateral be disposed of in a
commercially reasonable manner, which Borrower, Guarantor, or any other
guarantor of the Obligations may have or assert, including any defense of
incapacity, disability, or lack of corporate or other authority to execute any
documents relating to the Obligations, the Guaranty Liabilities, the Collateral,
or any other guaranty of the Obligations;
(g) any cancellation, renunciation, or surrender of any pledge,
guaranty, or any debt instrument evidencing the Obligations or the Guaranty
Liabilities;
(h) Agent's or any Bank's vote, claim, distribution, election,
acceptance, action, or inaction in
-4-
<PAGE>
any bankruptcy or reorganization case related to the Collateral, the
Obligations, or the Guaranty Liabilities;
(i) any other action or circumstances that might otherwise
constitute a defense available to, or a legal or equitable discharge of, any
surety, guarantor or pledgor; or
(j) the fact that any of the Obligations or the Guaranty
Liabilities may become due or payable in connection with or by reason of any
agreement or transaction that may be illegal, invalid, or unenforceable in whole
or in part; it being agreed by Guarantor that the Guaranty Liabilities shall not
be discharged.
2.3 DEMAND BY AGENT. In addition to the terms of the guaranty set
forth in Sections 2.1 and 2.2, and in no manner imposing any limitation on such
terms, it is expressly understood and agreed that, if the Obligations are
declared to be or otherwise become immediately due and payable, then Guarantor
shall, upon demand in writing therefor by Agent to Guarantor, immediately pay
the Guaranty Liabilities to Agent, for its own account and for the benefit of
Banks, to be credited and applied upon the Obligations. Payment shall be in
immediately available funds to an account designated by Agent or at the address
set forth herein for the giving of notice to Agent or at any other address that
may be specified in writing from time to time by Agent. This Section shall in
no way affect Agent's and any Bank's right to resort to the Collateral without
demand, as provided in Section 5. Any payment received by Agent with respect to
the Obligations shall reduce the Guaranty Liabilities by the amount of such
payment.
2.4 GUARANTOR WAIVERS. In addition to any other waivers contained
herein, Guarantor waives and agrees as follows:
(a) Guarantor expressly waives any right it may now or in the
future have to require Agent or any Bank to, and neither Agent nor any Bank
shall have any liability to, first pursue or enforce its rights and remedies
against Borrower, any of Borrower's properties or assets, the Collateral, or any
other security, guaranty, or pledge that may now or hereafter be held by Agent
for its benefit or the benefit of Banks for the Obligations or for the Guaranty
Liabilities, or to apply such security, guaranty, or pledge to the Obligations
or to the Guaranty
-5-
<PAGE>
Liabilities, or to pursue any other right or remedy in Agent's or any Bank's
power that Guarantor may or may not be able to pursue itself and that may
lighten Guarantor's burden, before proceeding against the Collateral. Guarantor
agrees that any notice or directive given at any time to Agent that is
inconsistent with the waiver in the immediately preceding sentence shall be null
and void and may be ignored by Agent, and, in addition, may not be pleaded or
introduced as evidence in any litigation or other dispute resolution procedure
relating to this Guaranty for the reason that such pleading or introduction
would be at variance with the written terms of this Guaranty, unless Agent have
specifically agreed otherwise in writing. Guarantor shall remain liable for the
Guaranty Liabilities, notwithstanding any judgment Agent may obtain for the
benefit of Agent or Banks against Borrower, any other guarantor of the
Obligations, or any other Person, or any modification, extension, or renewal
with respect thereto.
(b) Guarantor has entered into this Guaranty based solely upon its
independent knowledge of Borrower's financial condition and Guarantor assumes
full responsibility for obtaining any further information with respect to
Borrower or the conduct of its business. Guarantor represents that it is now,
and during the terms of this Guaranty will be, responsible for ascertaining the
financial condition of Borrower. Guarantor hereby waives any duty on the part
of Agent or any Bank to disclose to Guarantor, and agrees that it is not relying
upon nor expecting Agent or any Bank to disclose to it, any fact known or
hereafter known by Agent or any Bank relating to the operation or condition of
Borrower or its business or relating to the existence, liability, or financial
condition of any other guarantor of the Obligations. Guarantor knowingly
accepts the full range of risk encompassed in a contract of guaranty, which risk
includes the possibility that the Borrower may incur Obligations after its
financial condition or its ability to pay its debts as they mature has
deteriorated.
(c) Neither Agent nor any Bank shall be under any liability to
marshal any assets in favor of Guarantor or in payment of any or all of the
Obligations or Guaranty Liabilities.
(d) Guarantor hereby waives: (i) presentment, demand, protest,
notice of acceleration, dishonor, non-payment, protest, or any delay related
thereto, with
-6-
<PAGE>
respect to any instruments or documents relating to the Obligations or the
Guaranty Liabilities, except as specifically provided in Section 2.3; (ii)
notice of any extension, modification, renewal, or amendment of any of the terms
of the Credit Agreement or any other Related Document relating to the
Obligations or the Guaranty Liabilities; (iii) notice of the occurrence of any
Default or Event of Default with respect to the Obligations, the Guaranty
Liabilities, or the Collateral; and (iv) notice of any exercise or non-exercise
by Agent or any Bank of any right, power, or remedy with respect to the
Obligations, the Collateral, or the Guaranty Liabilities.
If Agent may, under applicable law, proceed to realize its benefits
under any Related Document giving Agent a Lien for the ratable benefit of Agent
and each Bank upon any Collateral, whether owned by Borrower or by any other
Person, either by judicial foreclosure or by nonjudicial sale or enforcement,
Agent may, at its sole option, determine which of its remedies or rights it may
pursue without affecting any of its rights and remedies under this Guaranty.
If, in the exercise of any of its rights and remedies, Agent shall forfeit any
of its rights or remedies under any Related Document, including obtaining a
deficiency judgment against Borrower or any other Person, whether because of any
applicable laws pertaining to "election of remedies," anti-deficiency rules, or
the like, Guarantor hereby consents to such action by Agent and waives any claim
based upon such action. Any election of remedies that results in the denial or
impairment of the right of Agent to seek a deficiency judgment against Borrower
shall not impair Guarantor's obligations under this Guaranty. In the event
Agent shall bid at any foreclosure or trustee's sale or at any public or private
sale permitted by law or the Related Documents, Agent may bid all or less than
the amount of the Obligations or the Guaranty Liabilities and the amount of such
bid need not be paid by Agent but shall be credited and applied as set forth in
Section 6. The amount of the successful bid at any such sale, whether Agent or
any other party (including Guarantor) is the successful bidder, shall be deemed
to be PRIMA FACIE evidence of the fair market value of the Collateral and
the amount remaining after application of such bid amount in the manner set
forth in Section 6 shall be deemed to be PRIMA FACIE evidence of the amount
of the Obligations guaranteed under this Guaranty, notwithstanding that any
present or future law or court decision or ruling may have the effect of
reducing the amount of any
-7-
<PAGE>
deficiency claim to which Agent might otherwise be entitled but for such bidding
at any such sale.
(e) Guarantor agrees and represents that the Obligations are and
shall be incurred by Borrower, and that the Guaranty Liabilities are and shall
be incurred by Guarantor, for business and commercial purposes only. Guarantor
agrees that any claim of Agent or any Bank against Guarantor arising out of this
Guaranty arises out of the conduct by Guarantor of its trade, business, or
profession. Guarantor undertakes all the risks encompassed in the Credit
Agreement and the other Related Documents as they may be now or are hereafter
agreed upon by Agent, Banks and Borrower. Agent, in such manner and upon such
terms and at such time as it deems best, and with or without notice to
Guarantor, may release, add, subordinate or substitute security for the
Obligations or the Guaranty Liabilities.
(f) Guarantor waives and agrees that it shall not at any time
insist upon, plead, or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, or redemption laws, or
exemption, whether now or at any time hereafter in force, which may delay,
prevent, or otherwise affect the performance by Guarantor of the Guaranty
Liabilities or the enforcement by Agent of this Guaranty.
(g) A separate action or actions may be brought and prosecuted by
Agent against Guarantor whether or not an action is brought against Borrower, or
whether Borrower are joined in any such action or actions. Without limiting the
generality of the foregoing, Guarantor expressly waives the benefit of any
statute of limitation affecting the Obligations and expressly agrees that the
running of a period of limitation on, or Agent's delay or omission in, any
action by Agent against Borrower or for the foreclosure of any lien or the
enforcement of any security interest in the Collateral shall not exonerate or
affect Guarantor's liability to pay and perform the Guaranty Liabilities.
2.5 WAIVERS UNDER STATUTES. Guarantor expressly acknowledges that:
(a) If Borrower defaults in the payment or performance of the
Obligations and Guarantor pays to Agent all or part of the Obligations,
Guarantor would have a right to proceed against Borrower to the extent of the
Obligations so paid by Guarantor and to have the benefit of
-8-
<PAGE>
any security held by Agent, for the ratable benefit of Agent and Banks, for the
Obligations to the extent of the Obligations so paid by Guarantor. Such right
is commonly known as the "right of subrogation."
(b) If Borrower defaults in the payment or performance of the
Obligations, Agent, among other things, may foreclose upon any real property
security by means of judicial action or by non-judicial action commonly known as
a "non-judicial foreclosure," "trustee's sale" or "power of sale foreclosure."
(c) If Borrower so defaults and Agent sells any real property
security by means of a non-judicial foreclosure, trustee's sale or power of sale
foreclosure, Guarantor's right of subrogation to proceed against Borrower would
be extinguished by the operation of California Code of Civil Procedure ("CCP")
Section 580d or similar laws, and, in such case, Guarantor might have a defense
against payment under this Guaranty.
(d) If Borrower so defaults and Agent sells any real property
security by means of judicial action, Guarantor's right to proceed against
Borrower might be limited by the operation of CCP Section 580a or similar laws,
in which case Guarantor might have a complete or partial defense against payment
under this Guaranty.
Nevertheless, Guarantor expressly, knowingly and intentionally
waives and relinquishes any and all rights, defenses or benefits Guarantor might
have under CCP Sections 580a or 580d or similar laws. In addition, Guarantor
also expressly, knowingly and intentionally waives and relinquishes any and all
rights, defenses or benefits Guarantor may have based upon an election of
remedies by Agent which in any manner impairs, affects, reduces, releases,
destroys and/or extinguishes Guarantor's subrogation rights and/or Guarantor's
rights to proceed against Borrower and/or against any other person or any
security for the Guaranty Liabilities by way of subrogation, indemnity,
contribution, reimbursement or otherwise. In particular, Guarantor agrees that
this Guaranty will remain fully effective and Guarantor will be liable to Agent
for any Guaranty Liabilities even if Agent sells real property security for the
Obligations by non-judicial foreclosure, trustee's sale or power of sale
foreclosure and the effect of such sale is to prevent Guarantor from taking any
action against Borrower to recover any amounts paid by Guarantor to Agent under
this
-9-
<PAGE>
Guaranty or otherwise limits or destroys Guarantor's right of subrogation.
Guarantor also agrees that this Guaranty will remain fully effective
and Guarantor will be liable to Agent for any Guaranty Liabilities even if Agent
sells real property by judicial foreclosure action and Guarantor's rights
against Borrower are limited by the operation of CCP Sections 580a or 580d or
similar laws.
2.6 WAIVERS OF DEFENSES. Guarantor waives any defense based upon or
arising by reason of: (a) any disability or other defense of Borrower or any
other Person; (b) the cessation of liability or limitation from any cause
whatsoever of the Obligations or any portion thereof, other than payment in
full; (c) any lack of authority of any agent or other Person acting or
purporting to act on behalf of Borrower, or any defect in the formation of
Borrower; (d) the application by Borrower of the proceeds of the Obligations or
any other obligation of Borrower to Agent or Banks for purposes other than the
purposes represented to, or intended or understood by, Agent, Banks or
Guarantor; (e) any act or omission by Agent or any Bank that directly or
indirectly results in or aids the discharge of Borrower or any portion of the
Obligations or any other obligation of Borrower to Agent or Banks by operation
of law or otherwise; or (f) any modification of the Obligations or any other
obligation of Borrower to Agent or Banks in any form whatsoever, including the
renewal, extension, acceleration or other change in time for payment of the
Obligations, or other change in the terms of the Obligations or any part
thereof, including increase or decrease of the rate of interest thereon.
Without limiting the generality of the foregoing, Guarantor waives
any defenses or rights arising under California Civil Code sections 2795, 2808,
2809, 2810, 2815, 2819 through 2825 (inclusive), 2832, 2839, 2845 through 2850
(inclusive), and 2855 or any similar laws.
2.7 BENEFITS OF GUARANTY. The provisions of this Guaranty are for the
benefit of Agent and the Banks and their respective successors, transferees,
endorsees, and assigns, and nothing herein shall impair, as between Borrower,
Agent, and Banks, the Obligations. No such transfer, endorsement, or assignment
shall increase or diminish any of the Guaranty Liabilities hereunder. This
Guaranty binds Guarantor, and Guarantor may not assign, transfer, or endorse
this Guaranty. In the event all or
-10-
<PAGE>
any part of the Obligations are transferred, endorsed, or assigned by Agent or
any Bank to any Person, any reference to "Agent" or "Bank" herein shall be
deemed to refer equally to such Person.
2.8 CONTINUING GUARANTY. Guarantor agrees that (a) this is a
continuing guaranty, (b) this Guaranty shall remain in full force and effect
until the Obligations are paid in full and the Guaranty Liabilities shall have
been completely satisfied, and (c) the Guaranty Liabilities hereunder shall
extend to each and every extension or renewal, if any, of the Credit Agreement,
regardless of whether the Obligations may, in successive transactions, be paid,
repaid, advanced, or renewed from time to time.
2.9 SUBORDINATION.
(a) Guarantor hereby agrees that all obligations and all
indebtedness of Borrower to Guarantor, including any and all present and future
indebtedness regardless of its nature or manner of origination now or hereafter
to become due and owing by Borrower to Guarantor (collectively, the
"Subordinated Indebtedness"), are hereby unconditionally and forever
subordinated and postponed and shall be inferior, in all respects, to the
Obligations.
(b) In no circumstance shall any Subordinated Indebtedness be
entitled to any collateral security; PROVIDED, that in the event any such
collateral security exists, Guarantor agrees that any now existing or hereafter
arising Lien upon or security interest in any of the assets of Borrower, or any
of the assets of any other guarantor of the Obligations, in favor of Guarantor,
whether created by contract, assignment, subrogation, reimbursement, indemnity,
operation of law, principles of equity or otherwise, shall be junior and
inferior to, and is hereby subordinated in priority to any now existing or
hereafter arising Lien or security interest in favor of Agent, for the ratable
benefit of Agent and Banks, or in and against the Collateral, regardless of the
time, manner or order of creation, attachment or perfection of the respective
liens or security interests.
(c) Guarantor shall not assert, collect, accept payment on or
enforce any of the Subordinated Indebtedness or take collateral or other
security to secure payment of the Subordinated Indebtedness unless and until the
Obligations are paid in full. Guarantor shall not demand payment of, accelerate
the maturity of, or declare a
-11-
<PAGE>
default or event of default under the Subordinated Indebtedness unless and until
the Obligations are paid in full. Guarantor shall not cause or permit Borrower
to make or give, and Guarantor shall not receive or accept, payment in any form
(direct or indirect, including by transfer to an affiliate or subsidiary of
Borrower or Guarantor) on account of the Subordinated Indebtedness, make any
transfers in respect of the Subordinated Indebtedness without the express prior
written consent of the Majority Banks, or give any collateral security for the
Subordinated Indebtedness. Any payment, transfer, or collateral security so
made or given by Borrower and received or accepted by Guarantor, without the
express prior written consent of the Majority Banks, shall be held in trust by
Guarantor for Agent, for the account of Agent and Banks, and Guarantor shall
immediately turn over, in kind, any such payment to Agent for application in
reduction of, or (in the case of property other than cash) as security for, the
Guaranty Liabilities.
2.10 SUBROGATION.
Guarantor will not exercise any rights which it may acquire by way
of subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all the Obligations shall have been paid in full. If any amount shall be
paid to Guarantor on account of such subrogation rights at any time when all the
Obligations shall not have been paid in full, such amount shall be held in trust
for the benefit of Agent, for the ratable benefit of Agent and Banks, and shall
forthwith be paid to Agent to be credited and applied upon the Obligations,
whether matured or unmatured, in accordance with the terms of the Credit
Agreement. If (i) Guarantor shall make payment to Agent of all or any part of
the Obligations and (ii) all the Obligations shall be paid in full, Agent will,
at Guarantor's request, execute and deliver to Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to Guarantor of an interest in the Obligations
resulting from such payment by Guarantor.
2.11 LIMIT OF LIABILITY. The obligations of Guarantor under this
Guaranty shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations under this Guaranty subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
-12-
<PAGE>
2.12 NO OFFSET, DEFENSE, OR COUNTERCLAIM. Guarantor represents,
warrants and agrees that, as of the date of this Guaranty, the Guaranty
Liabilities are not subject to any offset or defense against Agent, any Bank, or
Borrower of any kind, and Guarantor specifically waives its right to assert any
such defense or right of offset. Guarantor further agrees that the Guaranty
Liabilities shall not be subject to any counterclaims, offsets, or defenses
against Agent, any Bank or Borrower that may arise in the future, except for (a)
any defense of prior performance or payment, or (b) any defense based on any
applicable provision of the UCC requiring that the Collateral be disposed of in
a commercially reasonable manner, which Borrower, Guarantor, or other guarantor
of the Obligations may have or assert.
2.13 CONSULTATION WITH LEGAL COUNSEL. Guarantor acknowledges that
the waivers in Section 2.4, 2.5 and 2.6 herein are a material inducement to
Banks to make the Loans under the Credit Agreement and that Banks are relying
upon the foregoing waivers in its future dealings with Borrower. Guarantor
acknowledges and certifies that it has reviewed the foregoing waivers with its
legal counsel and that, after such review with its legal counsel, Guarantor has
agreed to the foregoing waivers.
3. PAYMENTS FREE AND CLEAR OF TAXES
All payments required to be made by Guarantor hereunder shall be made to
Agent free and clear of, and without deduction for, any and all present or
future Taxes or Other Taxes that would otherwise have been payable by Agent for
the account of each Bank if Borrower had paid the Obligations under the Credit
Agreement to Agent in accordance with the terms of the Related Documents. Upon
request by Agent, Guarantor shall furnish to Agent a receipt for any Taxes or
Other Taxes paid by Guarantor pursuant to this Section 3 or, if no Taxes or
Other Taxes are payable with respect to any payments required to be made by
Guarantor hereunder, either a certificate from each appropriate taxing authority
or an opinion of counsel acceptable to Agent, in either case stating that such
payment is exempt from or not subject to Taxes or Other Taxes. If Taxes or
Other Taxes are paid by Agent on behalf of any Bank, as a result of payments
under this Guaranty, Guarantor will, upon demand of Agent, and whether or not
such Taxes or Other Taxes shall be correctly or legally asserted, indemnify
Agent and Banks for such payments, together with any interest, penalties, and
expenses in connection therewith plus interest thereon at the rate
-13-
<PAGE>
applicable to overdue amounts under the Credit Agreement. Guarantor will assume
all the rights and responsibilities of Borrower as set forth in Section 3.01 of
the Credit Agreement, and Agent and Banks will assume all of the rights and
responsibilities of Agent and Banks as set forth in Section 3.01(f) of the
Credit Agreement.
4. REINSTATEMENT
This Guaranty shall remain in full force and effect and continue to be
effective, as the case may be, if at any time payment and performance of the
Obligations under the Credit Agreement or the Guaranty Liabilities, or any part
thereof, is, pursuant to applicable law, avoided, rescinded or reduced in
amount, or must otherwise be restored or returned by Agent or any Bank or any
obligee of the Obligations under the Credit Agreement or the Guaranty
Liabilities, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is avoided, rescinded, reduced,
restored, or returned, the Obligations under the Credit Agreement or the
Guaranty Liabilities, as the case may be, shall be reinstated and deemed reduced
only by such amount paid and not so avoided, rescinded, reduced, restored, or
returned.
5. REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of an Event of Default and the continuation of such
Event of Default, Agent may, subject to Section 8.5, declare all of the Guaranty
Liabilities, immediately and without demand, notice or legal process of any
kind, to be, and such Guaranty Liabilities shall immediately become, due and
payable, and then, or at any subsequent time, Agent may exercise for the benefit
of each Bank any or all of its rights and remedies under this Guaranty, the
Credit Agreement and any other Related Document, and under applicable law, and
may, in addition
(a) make demand upon Guarantor for the payment of the Guaranty
Liabilities; and
(b) resort to the Collateral for payment of the Guaranty
Liabilities, without notice, declaration, or demand by Agent to the extent not
prohibited by applicable law;
-14-
<PAGE>
PROVIDED, that upon the occurrence of an Event of Default specified in clauses
(e) or (f) of Section 8.01 of the Credit Agreement, the Guaranty Liabilities
shall become immediately due and payable without declaration, notice or demand
by the Agent or any Bank.
6. APPLICATION OF PAYMENTS
Any payment made by Guarantor under this Guaranty shall be applied by
Agent first, to the satisfaction of Guarantor's indemnification liabilities
pursuant to Section 7; second, to the unreimbursed expenses of the Agent; third,
to then due interest on the Loans accrued and unpaid prior to the date such
payment is received by the Banks; and fourth, to reduce the principal balance of
the Loans.
7. INDEMNIFICATION
Guarantor agrees to indemnify and hold Agent and Banks harmless from and
against any Taxes, Other Taxes, liabilities, claims and damages, including
reasonable costs, attorneys' fees, and disbursements, and other expenses
incurred or arising by reason of the taking or the failure to take action by
Agent, in good faith, in respect of any transaction effected under this
Guaranty, including any action to enforce payment of the Guaranty Liabilities,
or in connection with the Lien upon the Collateral, including any Taxes or Other
Taxes payable in connection with the delivery of any of the Collateral as
provided herein and any action taken to protect, assert, or enforce the rights
or claims of the Agent or the Banks in any proceeding under the Bankruptcy Code.
The liabilities of Guarantor under this Section 7 shall survive the termination
of this Guaranty.
8. MISCELLANEOUS
8.1 ENTIRE AGREEMENT; AMENDMENTS. This Guaranty, together with the
other Related Documents (a) constitutes the entire agreement between the parties
with respect to the subject matter hereof, and (b) may not be amended or
supplemented except by a writing signed by Guarantor and Agent.
8.2 SECTION TITLES. The section titles contained in this Guaranty are
and shall be without substantive meaning or context of any kind whatsoever and
are not a part of the agreement between the parties hereto.
-15-
<PAGE>
8.3 SEVERABILITY. In the event that any one or more of the provisions
contained in this Guaranty shall be determined to be invalid, illegal, or
unenforceable in any respect for any reason, the validity, legality, and
enforceability of any such provision or provisions in every other respect, and
the remaining provisions of this Guaranty, shall not be in any way impaired.
8.4 CONFLICT OF TERMS. The Related Documents, other than this
Guaranty, are incorporated in this Guaranty by this reference. Except as
otherwise provided in this Guaranty and except as otherwise provided in the
Related Documents other than this Guaranty, by specific reference to the
applicable provision of this Guaranty, if any provision contained in this
Guaranty is in conflict with, or inconsistent with, any provision in the Related
Documents other than this Guaranty, provisions contained in the Credit Agreement
shall govern and control.
8.5 NOTICES. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party at its
address, facsimile number or telex number set forth below or such other address,
facsimile number or telex number as such party may hereafter specify for the
purpose by notice to the Agent and Guarantor. Each such notice, request or
other communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this section and the appropriate
answer back is received, (ii) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (iii) if given by mail, seventy-two (72) hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this section. The addresses for the parties as of the
date of this Guaranty are as follows:
If to Agent:
Bank of America NT & SA
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attention: Management Services Agency
Telecopy No. (415) 622-4894
with copies to:
-16-
<PAGE>
Bank of America NT & SA
Legal Department, #4362
555 S. Flower Street, 8th Fl.
Los Angeles, CA 90071
Attention: Eric T. Sieke, Senior Counsel
Telecopy No. (213) 228-3086
If to Guarantor:
Morrison Knudsen Corporation
One Morrison Knudsen Plaza
Boise, Idaho 83712
Attention: Douglas L. Brigham
Telecopy No.: (208) 386-5922
with copies to:
David S. Kurtz, Esq.
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Telecopy No.: (312) 782-8585
8.6 NON-WAIVER. None of the liabilities of Guarantor, and no right or
remedy of Agent under this Guaranty, shall be deemed to have been suspended or
waived by Agent, nor shall Agent be estopped from asserting any such right or
remedy, by Agent's conduct or oral statements, but any such suspension or waiver
of any such right or remedy by Agent must be in writing and signed by Agent.
Any suspension or waiver by Agent of any of their rights or remedies under this
Guaranty shall not suspend or waive any prior or subsequent right or remedy,
whether of the same or of a different type.
8.7 LIMITATION OF LIABILITY. None of Agent, any Bank, or any of their
officers, directors, employees, agents, or counsel shall be liable for any
action lawfully taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own respective gross negligence or
willful misconduct.
8.8 GOVERNING LAW. THIS GUARANTY, THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS, UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN, SHALL BE GOVERNED
BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES
THEREOF.
-17-
<PAGE>
8.9 CONSENT TO JURISDICTION. GUARANTOR HEREBY IRREVOCABLY CONSENTS TO
THE PERSONAL JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA IN ANY ACTION, CLAIM OR
OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY,
THE CREDIT AGREEMENT AND THE OTHER RELATED DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF A SUMMONS AND COMPLAINT
AND OTHER PROCESS IN ANY ACTION, CLAIM OR PROCEEDING BROUGHT BY AGENT OR ANY
LENDER IN CONNECTION WITH THIS GUARANTY, THE CREDIT AGREEMENT OR THE OTHER
RELATED DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS, ON BEHALF OF THEMSELVES AND THEIR
PROPERTY, IN THE MANNER SPECIFIED IN SECTION 8.5 (PROVIDED, TELECOPY NOTICES MAY
NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION 8.09 SHALL AFFECT THE
RIGHT OF AGENT OR ANY BANK TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR AFFECT THE RIGHT OF AGENT OR ANY BANK TO BRING ANY ACTION OR
PROCEEDING AGAINST GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY OTHER
JURISDICTIONS.
8.10 WAIVER OF JURY TRIAL. AGENT, EACH BANK AND GUARANTOR EACH HEREBY
IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM
OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY,
THE CREDIT AGREEMENT OR THE OTHER RELATED DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
8.11 CUMULATIVE REMEDIES. All rights and remedies provided in and
contemplated by this Guaranty, the Credit Agreement and the other Related
Documents are cumulative and not exclusive of any right or remedy otherwise
provided herein, therein, at law or in equity.
8.12 AGENT'S DUTIES. Agent may execute any of its duties hereunder by
or through agents or employees and shall be entitled to advice of counsel
concerning all matters pertaining to its duties hereunder.
8.13 RIGHT OF SETOFF. (a) In addition to any rights and remedies of
the Banks provided by law, if an Event of Default exists, each Bank is
authorized at any time and from time to time, without prior notice to the
Guarantor, any such notice being waived by the Guarantor to the
-18-
<PAGE>
fullest extent permitted by law, to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of the Guarantor against any and all obligations of the Guarantor now or
hereafter existing under this Guaranty or any other Related Document,
irrespective of whether or not the Agent or such Bank shall have made demand
under this Guaranty or any Related Document and although such obligations may be
contingent or unmatured. Each Bank agrees promptly to notify the Guarantor and
the Agent after any such set-off and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 8.13
are in addition to the other rights and remedies (including without limitation,
other rights of set-off) which such Bank may have. Notwithstanding anything
else to the contrary herein or in any other Related Document, the Agent
expressly agrees that it will not exercise set-off rights in respect of this
Guaranty or any other Related Document other than in respect of the Collateral.
(b) Notwithstanding the foregoing subsection (a), at any time that
the Loans or any other Obligation shall be secured by real property located in
California, no Bank shall exercise a right of setoff, banker's lien or
counterclaim or take any court or administrative action or institute any
proceeding to enforce any provision of this agreement or any Note that is not
taken by the Majority Banks or approved in writing by the Majority Banks if such
setoff or action or proceeding would or might (pursuant to Sections 580a, 580b,
580d and 726 of the California Code of Civil Procedure or Section 2924 of the
California Civil Code, if applicable, or otherwise) affect or impair the
validity, priority, or enforceability of the liens granted to the Agent pursuant
to the Security Documents or the enforceability of the Notes and other
Obligations hereunder, and any attempted exercise by any Bank of any such right
without obtaining such consent of the Majority Banks shall be null and void.
This subsection (b) shall be solely for the benefit of each of the Banks
hereunder.
8.14 PARTICIPATIONS; NOVATIONS. Any Bank may from time to time,
without notice to the Guarantor and without affecting the Guarantor's
obligations hereunder, transfer its interest in the Obligations to Participants
and Assignees (each defined in the Credit Agreement) as
-19-
<PAGE>
provided in the Credit Agreement. The Guarantor agrees that each such transfer
will give rise to a direct obligation of the Guarantor to each such Participant
and Assignee and that each such Participant and Assignee shall have the same
rights and benefits under this Guaranty as it would have if it were a Bank party
to the Credit Agreement and this Guaranty. The Guarantor authorizes the Agent
and each Bank to disclose to any prospective Participant and Assignee and any
Participant and Assignee any and all confidential information in the Agent's and
such Bank's possession concerning the Guarantor, this Guaranty and any security
for this Guaranty.
-20-
<PAGE>
IN WITNESS WHEREOF, Guarantor has executed and delivered this
Guaranty as of the date first above written.
"Guarantor":
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
By: /s/ D.L. Brigham
--------------------------------
Name: D.L. Brigham
------------------------------
Title: Vice President and Treasurer
-----------------------------
-21-
<PAGE>
ACCEPTED as of the date first above written
"Agent":
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for itself and
the Banks
By: /s/ Henry Y. Yu
-----------------------------
Name: Henry Y. Yu
---------------------------
Title: Senior Vice President
--------------------------
- 22 -
<PAGE>
EXHIBIT 4.1
MORRISON KNUDSEN CORPORATION
MORRISON KNUDSEN CORPORATION
P. O. BOX 73/BOISE, IDAHO U.S.A. 83729
PHONE: (208)386-6176/TELEX:368439
FAX: (208)386-5298
STEPHEN G. HANKS
EXECUTIVE VICE PRESIDENT AND
CHIEF LEGAL OFFICER
Via Federal Express
-------------------
August 8, 1995
Norwest Bank Minnesota, N.A.
161 North Concord Exchange
P. O. Box 738
South St. Paul, Minnesota 55075-0738
RE: AMENDMENT TO RIGHTS AGREEMENT
Ladies and Gentlemen:
Pursuant to Section 25 of the Rights Agreement, dated as of June 12, 1986, as
amended to date (as amended, "Rights Agreement"), by and between Morrison
Knudsen Corporation, a Delaware corporation ("Company") and Norwest Bank
Minnesota, N. A., as successor Rights Agent to Bank of America National Trust
and Savings Association ("Rights Agent"), the Company, by resolution adopted by
its Board of Directors, hereby amends the Rights Agreement as follows:
1. Section 1(d) to the Rights Agreement is hereby amended by inserting
the following after the words `after the date of such acquisition' and before
the period:
"; provided further, however, that a person shall not be
deemed the Beneficial Owner of, or to Own Beneficially,
Common Shares of the Company by virtue of such person being
an initial holder of those certain Warrants to Purchase
Common Stock of the Company to be issued in connection with
that certain Override Agreement and related Securities
Purchase Agreement among the Company, Morrison Knudsen
Corporation, an Ohio corporation, the lenders who are
signatories thereto and Mellon Bank, N.A., as agent to
certain of such lenders".
2. This Amendment to Rights Agreement shall be effective as of
August 1, 1995 (the "Effective Date"), and all references to the Rights
Agreement shall, as of and after the Effective Date, be deemed to be
references to the Rights Agreement, as amended by this Amendment.
<PAGE>
MORRISON KNUDSEN CORPORATION
Norwest Bank Minnesota, N.A.
August 8, 1995
Page Two
3. Except as set forth herein, the Rights Agreement shall remain
in full force and effect and shall be otherwise unaffected hereby.
4. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Very truly yours,
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
By ________________________________
Stephen G. Hanks
Executive Vice President
and Chief Legal Officer
Accepted and agreed to as
of the Effective Date:
NORWEST BANK MINNESOTA, N.A.
/s/ Suzanne M. Swits
By _________________________________
Name Suzanne M. Swits
Title Assistant Secretary
<PAGE>
Exhibit 10.2
MORRISON KNUDSEN CORPORATION
KEY EMPLOYEE RETENTION INCENTIVE PLAN
Adopted
July 7, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Award". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 "Base Salary". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Cause". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Change in Control of the Board" . . . . . . . . . . . . . . . . . 3
1.6 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 "Covered Employee" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 "Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 "Executive Officers" . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 "Fair Market Value". . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 "Involuntary Termination of Employment". . . . . . . . . . . . . . 4
1.13 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 "Reduced Retention Incentive Award". . . . . . . . . . . . . . . . 4
1.15 "Retention Incentive Award". . . . . . . . . . . . . . . . . . . . 4
1.16 "Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Term" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Covered Employees. . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III SHARES SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . 5
3.1 Maximum Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Adjustment of Shares and Price . . . . . . . . . . . . . . . . . . 5
ARTICLE IV RETENTION INCENTIVE AWARDS AND OTHER BENEFITS. . . . . . . . . . 6
4.1 Amount of Retention Incentive Award . . . . . . . . . . . . . . . 6
4.2 Form and Timing of Payment of Retention Incentive
Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Bankruptcy Filing. . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Vesting and Involuntary Termination. . . . . . . . . . . . . . . . 9
4.5 Awards Paid in Shares. . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Insufficient Shares. . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V TAX WITHHOLDING. . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . 12
6.1 The Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Committee Action . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Committee Authority. . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII AMENDMENT OR TERMINATION OF PLAN. . . . . . . . . . . . . . . . 14
8.1 Right to Amend or Terminate. . . . . . . . . . . . . . . . . . . . 14
8.2 Automatic Termination. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX METHOD OF FUNDING. . . . . . . . . . . . . . . . . . . . . . . . 14
9.1 Plan is Not Funded . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Limitation on Rights . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.5 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
INTRODUCTION
The Board of Directors (the "Board") of Morrison Knudsen
Corporation, a Delaware corporation (the "Company"), has considered the effect
that recent events have had on employees of the Company and its subsidiaries
(collectively, the "Employer"). The Board recognizes and understands the
concern such employees have for their careers and their personal financial
security. As a result, absent appropriate assurances, employees are likely to
seek more secure career opportunities, particularly if a reorganization or
restructuring transaction is proposed or threatened.
This Plan is designed to enable such employees to make career
decisions without the time pressure and financial uncertainty which may result
from a proposed or threatened transaction, to encourage such employees to remain
employees of the Employer notwithstanding the outcome of any such proposed
transaction.
As a result, the Board believes that this Plan will assist the
Company in attracting and retaining qualified employees. Accordingly, the
following Plan is hereby adopted.
ARTICLE I
DEFINITIONS
When used in this Plan and initially capitalized, the following
words and phrases shall have the following respective meanings unless the
context clearly requires otherwise:
<PAGE>
1.1 "AWARD" shall mean an award granted pursuant to Section 4 of the
Plan.
1.2 "BASE SALARY" as to any Covered Employee for any period, shall
mean (i) the base rate of salary paid to the Covered Employee by the Company at
the date of his or her inclusion in the Plan before reduction because of an
election between benefits or cash provided under a plan of the Company
maintained pursuant to Section 125 or 401(k) of the Internal Revenue Code of
1986, as amended, and before reduction for any other amounts contributed by the
Company on his or her behalf to any other employee-benefit plan or (ii) in the
event the Board acts to change the category in which the Covered Employee has
been placed, the base rate of salary paid to the Covered Employee by the
Employer (before any reductions provided in clause (i)) at the time the Board so
acts; PROVIDED, HOWEVER, that clause (ii) will not apply if its application
would adversely affect a Covered Employee's rights or benefits, contingent or
otherwise, under this Plan unless the Covered Employee consents to the
application of clause (ii).
1.3 "BOARD OF DIRECTORS" or "BOARD" shall mean the board of
directors of the Company.
1.4 "CAUSE" for termination by the Employer, shall mean termination
by the Employer for (i) the willful and continued failure by the Employee to
substantially perform the Employee's duties with the Employer (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness) or (ii) the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the
2
<PAGE>
Employer monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Employee's part shall be deemed
"willful" unless done, or omitted to be done, by the Employee not in good faith
and without reasonable belief that the Employee's act, or failure to act, was in
the best interest of the Employer.
1.5 "CHANGE IN CONTROL OF THE BOARD" shall mean the event occurring
when, during any period of two consecutive years, individuals who at the
beginning of such period constituted the directors of the Company cease for any
reason to constitute a majority thereof (unless the election, or the nomination
for election by the Company's shareholders, of each director of the Company
first elected during such period was approved by a vote of at least two-thirds
of the directors then still in office who were directors of the Company at the
beginning of any such period).
1.6 "COMPANY" shall mean Morrison Knudsen Corporation, a Delaware
corporation, or any entity that is a successor to Morrison Knudsen Corporation
in ownership of a majority of its assets.
1.7 "COVERED EMPLOYEE" shall mean an employee described in Article
II of the Plan.
1.8 "EFFECTIVE DATE" shall mean July 7, 1995.
1.9 "EMPLOYER" shall mean the Company or one of its subsidiaries.
1.10 "EXECUTIVE OFFICERS" shall mean those individuals listed on
Schedule B of this Plan.
3
<PAGE>
1.11 "FAIR MARKET VALUE" shall mean as applied to a specific date,
the mean between the highest and lowest quoted selling price of a Share on the
New York Stock Exchange on such date, or if there are no reported sales on such
date, on the last preceding date on which sales were reported. The Fair Market
Value determined by the Committee in good faith in such manner shall be final,
binding and conclusive on all parties.
1.12 "INVOLUNTARY TERMINATION OF EMPLOYMENT" shall mean a termination
of employment with the Employer at the Employer's option other than for Cause.
An Involuntary Termination of Employment shall also occur upon the sale of
substantially all of the assets of a business unit or division of the Company or
upon the sale of a majority of the stock of a subsidiary of the Company.
1.13 "PLAN" shall mean this Morrison Knudsen Corporation Key Employee
Retention Incentive Plan.
1.14 "REDUCED RETENTION INCENTIVE AWARD" shall mean the Retention
Incentive Award as adjusted pursuant to Section 4.3(a).
1.15 "RETENTION INCENTIVE AWARD" shall mean the award provided to a
Covered Employee and calculated by multiplying the Covered Employee's Base
Salary times the applicable multiplier as set forth in Section 4.1.
1.16 "SHARES" shall mean shares of the Company's authorized but
unissued or reacquired $1.66 par value common stock, or other securities as may
be applicable pursuant to the provisions of Section 3.2 hereof.
4
<PAGE>
1.17 "TERM" shall mean the period commencing on the Effective Date
and ending one year after that date.
ARTICLE II
PARTICIPATION
2.1 COVERED EMPLOYEES. The key employees of the Employer set
forth on Schedule A shall be Covered Employees and shall be eligible to receive
Awards under the Plan.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 MAXIMUM SHARES. Subject to adjustment by the operation of
Section 3.2 hereof, the maximum number of Shares distributable under the Plan is
3,000,000. Shares distributable under the Plan may be either authorized and
unissued shares heretofore or hereafter reacquired and held as treasury shares.
3.2 ADJUSTMENT OF SHARES AND PRICE. In the event that the Shares
are changed into or exchanged for a different kind or number of shares of Stock
or securities of the Company as the result of any stock dividend, stock split,
combination of shares, exchange of shares, merger, consolidation,
reorganization, recapitalization or other change in capital structure, then the
number of Shares subject to this Plan and distributable in partial payment of
Awards granted hereunder (and/or the purchase price for such Shares) shall be
equitably adjusted by the Committee to prevent the dilution or enlargement of
Awards, and any new stock or securities into which the Shares are changed or for
which they are exchanged shall be substituted for the Shares
5
<PAGE>
subject to this Plan; provided, however, that fractional Shares may be deleted
from any such adjustment or substitution.
ARTICLE IV
RETENTION INCENTIVE AWARDS AND OTHER BENEFITS
4.1 AMOUNT OF RETENTION INCENTIVE AWARD. The Company shall make
a Retention Incentive Award to each Covered Employee in an amount equal to the
Covered Employee's Annual Base Salary times the multiplier set forth opposite
the applicable category below:
<TABLE>
<CAPTION>
Category Multiplier
-------- ----------
<S> <C> <C>
One: Senior Managers (as listed in Part I .625
of Schedule A)
Two: Senior Managers/Executive Officers .3125
(as listed in Part II of Schedule A)
Three: Salaried Employees (as listed in .55
Part III of Schedule A)
Four: Salaried Employees/Executive .275
Officers (as listed in Part IV of
Schedule A)
Five: Senior Executive managers/Executive .233
Officers (as listed in Part V of
Schedule A)
</TABLE>
4.2 FORM AND TIMING OF PAYMENT OF RETENTION INCENTIVE AWARD.
Subject to the contingent application of Section 4.3 and the vesting rules set
forth in Section 4.4:
(a) The Company shall pay the Retention Incentive Award to
each Covered Employee other than Executive Officers, as
follows:
6
<PAGE>
(i) 1/6th of each such Covered Employee's Retention
Incentive Award shall be paid in cash on or about
December 15, 1995.
(ii) 1/6th of each such Covered Employee's Retention
Incentive Award shall be paid in cash on or about
July 1, 1996.
(iii) two-thirds of each such Covered Employee's
Retention Incentive Award shall be paid in Shares
on or about July 1, 1996.
(b) The Company shall pay the Retention Incentive Award to
each Executive Officer, as follows:
(i) 1/2 of each such Executive Officer's Retention
Incentive Award shall be paid in cash on or about
December 15, 1995.
(ii) 1/2 of each such Executive Officer's Retention
Incentive Award shall be paid in cash on or about
July 1, 1996.
4.3 BANKRUPTCY FILING. Subject to the vesting rules contained in
Section 4.4:
(a) In the event the Company files for bankruptcy prior to
making the payment described in 4.2(a)(i), the Company
shall make a Retention Incentive Award (the "Reduced
Retention Incentive Award") to each Covered Employee,
other than an Executive Officer, in an amount equal to
the Covered Employee's annual Base
7
<PAGE>
Salary times the multiplier set forth opposite the
applicable category below:
<TABLE>
<CAPTION>
Category Multiplier
-------- ----------
<S> <C> <C>
One: Senior Managers (as .41666
listed in Part II of
Schedule A)
Two: Management/Professional/ .36666
Technical (as listed in
Part III of Schedule A)
</TABLE>
The Reduced Retention Incentive Award shall be paid as
follows:
(i) One-half of such Covered Employee's Reduced
Retention Incentive Award shall be paid in cash
on or about December 15, 1995.
(ii) One-half of such Covered Employee's Reduced
Retention Incentive Award shall be paid in cash
on or about July 1, 1996.
The Company shall have no obligation to pay such Covered
Employees any other portion of the Retention Incentive
Award, either in Shares or otherwise.
(b) In the event the Company files for bankruptcy after
payment of the Award in 4.2(a)(i) but prior to the
payment of the Awards in 4.2(a)(ii) and 4.2(a)(iii), the
Company shall pay each Covered Employee, other than an
Executive Officer, in cash on or about July 1, 1996, an
amount equal to 1/2 of such Covered
8
<PAGE>
Employee's Reduced Retention Incentive Award. The
Company shall have no obligation to pay such Covered
Employees any other portion of the Retention Incentive
Award, either in Shares or otherwise.
(c) In the event the Company files for bankruptcy prior to
the payment of the Award in 4.2(b)(i), the Company shall
pay each Executive Officer:
(i) an amount equal to his Retention Incentive Award,
in cash on or about December 15, 1995, and
(ii) an additional amount equal to his Retention
Incentive Award, in cash on or about July 1,
1996.
(d) In the event the Company files for bankruptcy after
payment of the Award in 4.2(b)(i), but prior to the
payment of the Award in 4.2(b)(ii) the Company shall pay
each Executive Officer an amount equal to his Retention
Incentive Award, in cash on or about July 1, 1996.
A Covered Employee will in no event be entitled to receive any
Shares under this Section 4.3.
4.4 VESTING AND INVOLUNTARY TERMINATION. A Covered Employee's
right to receive the benefits provided under Sections 4.2(a)(i), 4.2(b)(i),
4.3(a)(i) and 4.3(c)(i), as applicable, shall vest on December 15, 1995 and a
Covered Employee's right to receive the benefits provided in Sections
4.2(a)(ii), 4.2(b)(ii), 4.3(a)(ii), 4.3(b), 4.3(c)(ii) and 4.3(d), as
applicable, shall
9
<PAGE>
vest on July 1, 1996 if such Covered Employee is employed by the Employer on
such date; PROVIDED, HOWEVER, that: (a) if a Covered Employee suffers an
Involuntary Termination of Employment before December 15, 1995, such
employee's rights to receive payments under Section 4.2(a)(i) or 4.2(b)(i),
4.3(a)(i) and 4.3(c)(i), as applicable, shall vest and such amounts shall
become immediately payable and (b) if a Covered Employee suffers an
Involuntary Termination of Employment after December 15, 1995 but before July
1, 1996, such employee's right to receive payments under 4.2(a)(ii) or
4.2(b)(ii), 4.3(a)(ii), 4.3(b), 4.3(c)(ii) and 4.3(d), as applicable, shall
vest and such amounts shall become immediately payable.
4.5 AWARDS PAID IN SHARES. The number of Shares payable to a
Covered Employee under this Article IV in satisfaction of the Share portion of
Covered Employee's Award shall be calculated by dividing the dollar amount of
the portion of the Award payable in Shares by the lesser of (i) the average Fair
Market Value of a Share between July 1, 1995 and July 1, 1996 and (ii) the
average Fair Market Value of a Share between June 1, 1996 and July 1, 1996.
4.6 INSUFFICIENT SHARES. In the event that the number of Shares
payable to Covered Employee under this Article IV exceeds the number of Shares
available for distribution pursuant to Section 3.1, the Covered Employee's
Retention Incentive Award shall be reduced and the Company shall distribute the
available Shares pro-rata in accordance with each Covered Employee's Retention
Incentive Award. The Covered Employee shall not be
10
<PAGE>
entitled to any additional payments in cash or Shares under this Article IV.
ARTICLE V
TAX WITHHOLDING
5.1 The Company shall have the right to withhold from amounts due
Participants or to collect from Participants directly, the amount which the
Company deems necessary to satisfy any taxes required by law to be withheld at
any time by reason of participation in the Plan and the obligations of the
Company under the Plan shall be conditional on payment of such taxes. The
Participant may, prior to the due date of any taxes, pay such amounts to the
Company in cash or, with the consent of the Committee, in Shares (which shall be
valued at their Fair Market Value on the date of payment). There is no
obligation under this Plan that any Participant be advised of the existence of
the tax or the amount required to be withheld. Without limiting the generality
of the foregoing, in any case where the Company determines that a tax is or will
be required to be withheld in connection with the issuance or transfer of Shares
under this Plan, the Company may, pursuant to such rules as the Committee may
establish, reduce the number of such Shares so issued or transferred by such
number of Shares as the Company may deem appropriate in its sole discretion to
accomplish such withholding or make such other arrangements as it deems
satisfactory. Notwithstanding any other provision of this Plan, the Committee
may impose such conditions on the payment of any withholding obligation as may
be required to satisfy applicable regulatory requirements.
11
<PAGE>
ARTICLE VI
ADMINISTRATION OF PLAN
6.1 THE COMMITTEE. The Plan shall be administered by the
Committee, which shall be comprised of three or more members of the Board of
Directors, each of whom shall be a "disinterested person" as defined in Rule
16b-3 (or successor provision) promulgated by the Securities and Exchange
Commission.
6.2 COMMITTEE ACTION. A majority of the members of the Committee
at the time in office shall constitute a quorum for the transaction of business,
and any determination or action may be taken at a meeting by a majority vote or
may be taken without a meeting by a written resolution signed by all members of
the Committee. All decisions and determinations of the Committee shall be
final, conclusive and binding upon all Participants and upon all other persons
claiming any rights under the Plan with respect to any Awards. Members of the
Board of Directors and members of the Committee acting under the Plan shall be
fully-protected in relying in good faith upon the advice of counsel and shall
incur no liability except for willful misconduct in the performance of their
duties.
6.3 COMMITTEE AUTHORITY. In amplification of the Committee's
powers and duties, but not by way of limitation, the Committee shall have full
authority and power to:
(a) Construe and interpret the provisions of the Plan and
make rules and regulations for the administration of
the Plan not inconsistent with the Plan;
12
<PAGE>
(b) Decide all questions of eligibility for Plan
participation and for the grant of Awards;
(c) Adopt forms of Agreements and other documents
consistent with the Plan;
(d) Engage agents to perform legal, accounting and other
such professional services as it may deem proper for
administering the Plan; and
(e) Take such other actions as may be reasonably required
or appropriate to administer the Plan or to carry out
the Committee activities contemplated by other sections
of this Plan.
6.4 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the Board of Directors and the members of the Committee shall be indemnified by
the Company against the reasonable expenses, including court costs and
reasonable attorneys' fees, actually incurred in connection with the defense of
any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Award granted
hereunder and against all amounts paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except where such indemnification is expressly prohibited by applicable law.
13
<PAGE>
ARTICLE VII
EFFECTIVE DATE
7.1 The Effective Date of this Plan shall be July 7, 1995 (the
date the Plan was approved by the Board of Directors).
ARTICLE VIII
AMENDMENT OR TERMINATION OF PLAN
8.1 RIGHT TO AMEND OR TERMINATE. The Company reserves the right
by a resolution adopted by a majority of the members of the Board to change,
modify, or amend, the Plan; provided that no such amendment, modification, or
change shall adversely affect any benefit under the Plan previously paid or
provided to a Covered Employee (or his successor in interest) (unless such
amendment is required by law); further provided, however, that no amendment,
change or modification may be made by the Board following a Change in Control of
the Board. An amendment of this Plan shall automatically effect a corresponding
amendment to the rights of all Covered Employees under this Plan.
8.2 AUTOMATIC TERMINATION. This Plan will terminate
automatically as of the final payment. Termination pursuant to this Section
8.2 shall occur without any action on the part of the Company and shall be
effective without prior notice to or approval of any employee or former
employee of the Employer.
ARTICLE IX
METHOD OF FUNDING
9.1 PLAN IS NOT FUNDED. The Company shall pay benefits under the
Plan from its general assets. No property of the Employer is or shall be, by
reason of this Plan, held in trust for
14
<PAGE>
any employee of the Employer, nor shall any person have any interest in or any
lien or prior claim upon any property of the Employer by reason of the Plan or
the Company's obligations to make payments hereunder.
ARTICLE X
MISCELLANEOUS
10.1 LIMITATION ON RIGHTS. Participation in the Plan shall not
give any employee the right to be retained in the service of the Employer or any
rights to any benefits whatsoever, except to the extent specifically set forth
herein.
10.2 HEADINGS. Headings of Articles and Sections in this
instrument are for convenience only, and do not constitute any part of the Plan.
10.3 GOVERNING LAW. The validity, interpretation, construction
and performance of this Plan shall be governed by the laws of the State of
Idaho, without giving effect to the principles of conflict of laws of such
State.
10.4 SEVERABILITY. If a provision of this Plan shall be held
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of this Plan and this Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
10.5 GENDER AND NUMBER. Unless the context clearly indicates
otherwise, the masculine gender when used in the Plan
15
<PAGE>
shall include the feminine, and the singular number shall include the plural and
the plural number the singular.
EXECUTED in Boise, Idaho on this 21st day of August, 1995.
------------- ----
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
-----------------------------------
By: Stephen G. Hanks
Executive Vice President &
Chief Legal Officer
16
<PAGE>
EXHIBIT 10.3
MORRISON KNUDSEN CORPORATION
RETENTION SEVERANCE PAY PLAN
Adopted
July 7, 1995
This Plan will terminate automatically
as of July 1, 1996, if there is no
"Effective Date" (as defined in Plan
Section 1.6) prior to that date.
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Base Salary". . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Cause". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Committee". . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 "Covered Employee" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.6 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 "Eligible Employee". . . . . . . . . . . . . . . . . . . . . . . . 4
1.8 "Involuntary Termination of Employment". . . . . . . . . . . . . . 4
1.9 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.10 "Severance Pay". . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.11 "Term" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.12 "Purchaser". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Covered Employees; Entitlement to Benefits . . . . . . . . . . . . 5
ARTICLE III SEVERANCE PAY AND OTHER BENEFITS. . . . . . . . . . . . . . . . 6
3.1 Amount of Severance Pay. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV CESSATION OF BENEFITS. . . . . . . . . . . . . . . . . . . . . . 6
4.1 Reemployment with the Company. . . . . . . . . . . . . . . . . . . 6
ARTICLE V DISTRIBUTION OF CASH PAYMENTS . . . . . . . . . . . . . . . . . . 7
5.1 Severance Pay. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 No Additional Benefits Under Certain Employee Plans. . . . . . . . 7
ARTICLE VI ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . 7
6.1 In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2 Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.3 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.4 Revocability of Committee Action . . . . . . . . . . . . . . . . . 9
ARTICLE VII AMENDMENT OR TERMINATION OF PLAN. . . . . . . . . . . . . . . . 10
7.1 Right to Amend or Terminate. . . . . . . . . . . . . . . . . . . . 10
7.2 Automatic Termination. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VIII METHOD OF FUNDING. . . . . . . . . . . . . . . . . . . . . . . 10
8.1 Plan is Not Funded . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IX CONFIDENTIALITY AND RELEASE. . . . . . . . . . . . . . . . . . . 11
9.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.1 Limitation on Rights. . . . . . . . . . . . . . . . . . . . . . . 12
10.2 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
<PAGE>
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.4 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10.5 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
INTRODUCTION
The Board of Directors (the "Board") of Morrison Knudsen Corporation,
a Delaware corporation (the "Company"), has considered the effect that recent
events have had on employees of the Company. The Board recognizes and
understands the concern such employees have for their careers and their personal
financial security. As a result, absent appropriate assurances, employees are
likely to seek more secure career opportunities, particularly if a
reorganization or restructuring transaction is proposed or threatened.
This Plan is designed to enable such employees to make career
decisions without the time pressure and financial uncertainty which may result
from a proposed or threatened transaction, to encourage such employees to remain
employees of the Company notwithstanding the outcome of any such proposed
transaction, and to assure fair treatment of such employees in the event of a
corporate reorganization or restructuring.
As a result, the Board believes that this Plan will assist the Company
in attracting and retaining qualified employees. Accordingly, the following
Plan is hereby adopted.
ARTICLE I
DEFINITIONS
When used in this Plan and initially capitalized, the following words
and phrases shall have the following respective meanings unless the context
clearly requires otherwise:
1.1 "BASE SALARY" as to any Eligible Employee for any period, shall
mean (i) the base rate of salary paid to the
<PAGE>
Eligible Employee by the Company on the applicable Effective Date before
reduction because of an election between benefits or cash provided under a plan
of the Company maintained pursuant to Section 125 or 401(k) of the Internal
Revenue Code of 1986, as amended, and before reduction for any other amounts
contributed by the Company on his or her behalf to any other employee benefit
plan or (ii) in the event that the Committee acts to change the category under
Section 3.1 in which an Eligible Employee has been placed, the base rate of
salary paid to the Eligible Employee by the Employer (before any reductions
listed in clause (i)) at the time the Committee so acts; PROVIDED, HOWEVER, that
clause (ii) will not apply if its application would adversely affect an Eligible
Employee's rights or benefits, contingent or otherwise, under this Plan.
1.2 "CAUSE" for termination by the Company, shall mean termination by
the Company for (i) the willful and continued failure by the Employee to
substantially perform the Employee's duties with the Company (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness) or (ii) the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the Company monetarily or otherwise.
For purposes of clauses (i) and (ii) of this definition, no act, or failure to
act, on the Employee's part shall be deemed "willful" unless done, or omitted to
be done, by the Employee not in good faith and without reasonable belief that
the Employee's act, or failure to act, was in the best interest of the Company.
2
<PAGE>
1.3 "COMMITTEE" shall mean three or more individuals as designated by
the Board.
1.4 "COMPANY" shall mean Morrison Knudsen Corporation, a Delaware
corporation, any entity that is a successor to Morrison Knudsen Corporation in
ownership of a majority of its assets, or any entity that is a successor to
Morrison Knudsen Corporation in ownership of a majority of the assets of any
division, business unit or subsidiary of Morrison Knudsen Corporation.
1.5 "COVERED EMPLOYEE" shall mean any Eligible Employee who suffers
an Involuntary Termination of Employment during the term of this Plan.
1.6 "EFFECTIVE DATE" shall mean the date prior to July 1, 1996, on
which any of the following is effective:
(a) The Company shall sell or transfer to one or more persons,
corporations or entities, in a single transaction or a series of related
transactions, more than one-half of the voting shares or assets of any
business unit, division or subsidiary of the Company, unless by an
affirmative vote of two-thirds of the members of the Board of Directors,
the transaction or transactions are exempted from the operation of this
provision based on a good faith finding that the transaction or
transactions are not within the intended scope of this definition for
purposes of this instrument; or
(b) The filing of a petition of bankruptcy under Title 11 of the
United States Code.
3
<PAGE>
(c) If during any period of two consecutive years, individuals
who at the beginning of such period constituted the directors of the Company
cease for any reason to constitute a majority thereof (unless the election, or
the nomination for election by the Company's shareholders, of each director of
the Company first elected during such period was approved by a vote of at least
two-thirds of the directors then still in office who were directors of the
Company at the beginning of any such period).
1.7 "ELIGIBLE EMPLOYEE" shall mean an employee of the Company as
provided in Section 2.1 hereof.
1.8 "INVOLUNTARY TERMINATION OF EMPLOYMENT" shall mean a termination
of employment with the Company after the Effective Date at the Company's option
other than for Cause; and in the event an Effective Date arises pursuant to
Section 1.6(a) and the (i)Purchaser does not offer Employee employment with
comparable responsibility, pay and benefits provided to Employee while engaged
in employment at the Company or (ii)Purchaser has terminated the employee for a
reason other than Cause and such termination occurs within one year following
the occurrence of the Effective Date under 1.6(a). Employee shall be deemed to
have received comparable pay if Purchaser offers Employee an annual base salary
no less than 95% of Employee's annual base salary in effect immediately prior to
the occurrence of the Effective Date arising pursuant to Section 1.6(a).
1.9 "PLAN" shall mean this Morrison Knudsen Corporation Retention
Severance Pay Plan.
4
<PAGE>
1.10 "SEVERANCE PAY" shall mean the sum payable as set forth in
Section 3.1 of the Plan.
1.11 "TERM" shall mean the period commencing on the Effective Date and
ending July 1, 1996 except as noted in Sections 7.2 and 1.8 of the Plan.
1.12 "PURCHASER" shall mean any person or entity who acquires a
business unit, division or subsidiary of the Company pursuant to Section 1.6(a)
of the Plan.
ARTICLE II
PARTICIPATION
2.1 ELIGIBLE EMPLOYEES. In the event the Effective Date arises
pursuant to Sections 1.6(b) or 1.6(c) an Eligible Employee shall mean an
employee listed on Schedule A of this Plan. In the event the Effective Date
arises pursuant to Section 1.6(a), an Eligible Employee shall mean an employee
(listed on Schedule A of this Plan) who is employed by the division, business
unit or subsidiary that is sold, and after the Effective Date, an employee
(listed on Schedule A of this Plan) of any other division, business unit or
subsidiary that is sold.
2.2 COVERED EMPLOYEES; ENTITLEMENT TO BENEFITS. Any Eligible
Employee who suffers an Involuntary Termination of Employment during the Term of
this Plan shall be a Covered Employee and eligible to receive the benefits
described in this Plan.
5
<PAGE>
ARTICLE III
SEVERANCE PAY AND OTHER BENEFITS
3.1 AMOUNT OF SEVERANCE PAY. The Company shall pay Severance Pay to
a Covered Employee in an amount equal to:
<TABLE>
<CAPTION>
Category Payment
-------- -------
<S> <C> <C>
One: Executives (as listed under 9 months' Base Salary
Part I of Schedule A)
Two: Senior Managers (as listed 6 months' Base Salary
under Part II of Schedule A)
Three: Salaried Employees (as 4 months' Base Salary
listed under Part III of
Schedule A)
</TABLE>
in each case reduced by (i) amounts paid or payable to the Covered Employee
under the Morrison Knudsen Corporation Severance Pay Plan other than the
payments made thereunder with respect to placement assistance and (ii) in the
event restrictions lapse on the restricted stock granted to Covered Employees,
pursuant to an action of the Compensation Committee of the Board on July 7, 1995
under Section 11(c) of the Morrison Knudsen Corporation Stock Compensation Plan,
the value of such stock on the date the restrictions lapse.
ARTICLE IV
CESSATION OF BENEFITS
4.1 REEMPLOYMENT WITH THE COMPANY. Except to the extent he or she
already has received benefits under the Plan, a Covered Employee who recommences
employment with the Company will cease immediately to be entitled to any
benefits under the Plan.
6
<PAGE>
ARTICLE V
DISTRIBUTION OF CASH PAYMENTS
5.1 SEVERANCE PAY. Subject to the conditions set forth in this Plan,
the Company shall pay a Covered Employee the amount to which he or she is
entitled under Section 3.1 of the Plan in one lump sum within a reasonable time,
but in no event later than 10 business days after his Involuntary Termination of
Employment.
5.2 NO ADDITIONAL BENEFITS UNDER CERTAIN EMPLOYEE PLANS. In the
event any payments are made pursuant to Section 5.1 to any Covered Employee
under this Plan, the Covered Employee shall not be entitled to receive any
additional payments pursuant to the Morrison Knudsen Corporation Key Employee
Retention Incentive Plan.
ARTICLE VI
ADMINISTRATION OF PLAN
6.1 IN GENERAL. The Plan shall be administered by the Company, which
hereby delegates to the Committee all administrative duties, including without
limitation duties with respect to the processing, review, investigation,
approval, and payment of benefits under the Plan. The Committee shall be the
named fiduciary under the Plan. The Committee shall have the sole and absolute
discretion to interpret where necessary all provisions of the Plan (including,
without limitation, by supplying omissions from, correcting deficiencies in, or
resolving inconsistencies or ambiguities in, the language of the Plan), to
determine the rights and status under the Plan of
7
<PAGE>
Eligible Employees, Covered Employees or other persons, to resolve questions or
disputes arising under the Plan and to make any determinations with respect to
the benefits payable hereunder and the persons entitled thereto as may be
necessary for the purposes of the Plan. Without limiting the generality of the
foregoing, the Committee is hereby granted the authority to determine whether a
particular employee is an Eligible Employee or Covered Employee.
6.2 REGULATIONS. The Committee shall promulgate any rules and
regulations that it deems necessary to carry out the purposes of the Plan, or to
interpret the terms and conditions of the Plan; provided that no rule,
regulation, or interpretation shall be contrary to the provisions of the Plan.
The rules, regulations, and interpretations made by the Committee shall, subject
only to the claims procedure outlined in Section 6.3 hereof, be final and
binding on any employee or former employee of the Company, or any successor in
interest of either.
6.3 CLAIMS PROCEDURE. The Committee shall determine the rights of
any employee or former employee of the Company to any benefits hereunder. Any
employee or former employee of the Company who believes that he or she is
entitled to receive any benefits other than as initially determined by the
Committee, may file a claim in writing with the Committee. The Committee shall
no later than 60 days after the receipt of a claim either allow or deny the
claim in writing.
A denial of a claim, wholly or partially, shall be written in a manner
calculated to be understood by the claimant and shall include:
8
<PAGE>
(a) the specific reason or reasons for the denial;
(b) a specific reference to pertinent Plan provisions on which
the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary; and
(d) an explanation of the claim-review procedure.
A claimant whose claim is denied (or his duly authorized
representative) may, within 60 days after receipt of denial of his or her claim:
(a) request a review upon written application to Human Resources;
(b) review pertinent documents; and
(c) submit issues and comments in writing.
The Committee shall notify the claimant of its decision on review
within 60 days after receipt of a request for review. Notice of the decision on
review shall be in writing.
6.4 REVOCABILITY OF COMMITTEE ACTION. Any action taken by the
Committee with respect to the rights under the Plan of any employee or former
employee shall be revocable by the Committee as to payments or distributions not
yet made to such person, and acceptance of any benefits under the Plan
constitutes acceptance of and agreement to any appropriate adjustments made by
the Committee in future payments or distributions to such
9
<PAGE>
person to offset any excess or underpayment previously made to him or her with
respect to any benefits.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
7.1 RIGHT TO AMEND OR TERMINATE. The Company, by resolution adopted
by a majority of the members of the Board, reserves the right at any time prior
to an Effective Date, and without prior or other approval of any employee or
former employee, to change, modify, amend, or terminate the Plan. All such
changes, modifications, or amendments may be retroactive to any date and shall
be retroactive to that date unless some other provision is specifically made.
Following the Effective Date, except as may be required by law, this Plan shall
not be amended without the consent of the Eligible Employees, unless such
amendment will not adversely affect the Eligible Employees. An amendment of
this Plan shall automatically effect a corresponding amendment to the rights of
all Covered Employees under this Plan.
7.2 AUTOMATIC TERMINATION. This Plan will terminate automatically as
of July 1, 1996, if there is no Effective Date prior to that date. Termination
pursuant to this Section 7.2 shall occur without any action on the part of the
Company and shall be effective without prior notice to or approval of any
employee or former employee of the Company.
ARTICLE VIII
METHOD OF FUNDING
8.1 PLAN IS NOT FUNDED. The Company shall pay benefits under the
Plan from its general assets. No property of
10
<PAGE>
the Company is or shall be, by reason of this Plan, held in trust for any
employee of the Company, nor shall any person have any interest in or any lien
or prior claim upon any property of the Company by reason of the Plan or the
Company's obligations to make payments hereunder.
ARTICLE IX
CONFIDENTIALITY AND RELEASE
9.1 CONFIDENTIALITY. Payment of the Severance Pay set forth in
Article III hereof to or for the benefit of a Covered Employee is conditioned
upon the Covered Employee agreeing in writing with the Company that all trade
secrets, customer lists, and other confidential business information are the
exclusive property of the Company and that the Covered Employee shall not at any
time reveal or cause to be revealed to any person or entity such trade secrets,
customer lists and other confidential business information obtained as a result
of such Covered Employee's employment or relationship with the Company.
9.2 RELEASE. Payment of the severance pay and provision of the
benefits set forth in Article III hereof to or for the benefit of a Covered
Employee is conditioned upon the Covered Employee executing and delivering a
release satisfactory to the Company releasing the Company from any and all
claims, demands, damages, actions and/or causes of action whatsoever, which he
or she may have had on account of the termination of his or her employment,
including, but not limited to claims of discrimination, including on the basis
of sex, race, age,
11
<PAGE>
national origin, religion, or handicapped status (with all applicable periods
during which the Covered Employee may revoke the release or any provision
thereof having expired), and any and all claims, demands and causes of action
for retirement (other than under any "pension benefit plan" or under any
"welfare benefit plan" of the Company (as those terms are defined in Sections
3(1) and 3(2) of the Employee Retirement Income Security Act of 1974, as
amended)), severance pay (other than under a "welfare benefit plan") or other
termination pay. Such release shall not, however, apply to the ongoing
obligations of the Company arising under this Plan, or rights of indemnification
the Covered Employee may have under the Company's By-laws or by contract or by
statute.
ARTICLE X
MISCELLANEOUS
10.1 LIMITATION ON RIGHTS. Participation in the Plan shall not
give any employee the right to be retained in the service of the Company or any
rights to any benefits whatsoever, except to the extent specifically set forth
herein.
10.2 HEADINGS. Headings of Articles and Sections in this
instrument are for convenience only, and do not constitute any part of the Plan.
10.3 GOVERNING LAW. The validity, interpretation, construction
and performance of this Plan shall be governed by the laws of the State of
Idaho, without giving effect to the principles of conflict of laws of such
State.
12
<PAGE>
10.4 SEVERABILITY. If a provision of this Plan shall be held
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of this Plan and this Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
10.5 GENDER AND NUMBER. Unless the context clearly indicates
otherwise, the masculine gender when used in the Plan
shall include the feminine, and the singular number shall include the plural and
the plural number the singular.
EXECUTED in Boise, Idaho on this day of August,1995.
----------------- ------
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
--------------------------------
By: Stephen G. Hanks
Executive Vice President and
Chief Legal Officer
13
<PAGE>
SCHEDULE TO EXHIBIT 10.4
MORRISON KNUDSEN CORPORATION
SCHEDULE OF INDEMNIFICATION AGREEMENTS
Name Date of Agreement
---- -----------------
Agee, William J. February 13, 1987
Arrillaga, John October 10, 1990
Brandon, Brent D. November 5, 1993
Brigham, Douglas L. August 6, 1993
Brzezinski, Zbigniew February 8, 1994
Carmichael, Gilbert E. March 28, 1994
Channer, David A. February 9, 1995
Clark, William P. May 13, 1994
Cleary, James F. (Jr.) August 6, 1993
Crockett, Gregg A. July 27, 1995
Fox, Lindsay E. February 28, 1992
Gorman, Edmund J. February 9, 1990
Grant, Stephen R. May 5, 1989
Hanks, Stephen G. February 9, 1990
Hemmeter, C. B. May 5, 1989
Henderson, Alvia L. July 27, 1995
Howland, Mark E. February 8, 1994
Kealey, Thomas F. October 6, 1994
Lynch, Peter S. May 5, 1989
McCabe, Robert A. February 13, 1987
Miller, Robert S. (Jr.) April 1, 1995
Peden, Irene C. August 3, 1990
Roche, Gerard R. August 3, 1990
Rogers, John W. February 5, 1993
Sarsten, Gunnar E. October 10, 1990
Slavich, Denis M. March 8, 1995
Tinstman, Robert A. February 9, 1995
Ueberroth, Peter V. August 3, 1989
Zarges, Thomas H. July 27, 1995
<PAGE>
EXHIBIT 10.1
FORBEARANCE AGREEMENT
This Forbearance Agreement (the "Agreement") is entered into this 30
day of June, 1995, among MELLON BANK, N.A., ("Mellon"), UNITED STATES NATIONAL
BANK OF OREGON ("USNB"), EMKAY DEVELOPMENT COMPANY, INC. ("Emkay") and MORRISON
KNUDSEN CORPORATION, a Delaware corporation ("Morrison").
RECITALS
A. Emkay is indebted to Mellon pursuant to a promissory note dated
December 15, 1994, in the original principal amount of $20,180,000 (the "Mellon
Note"). As of June 30, 1995, Emkay owed Mellon the principal amount of
$20,180,000 and accrued interest of $182,449.32 pursuant to the Mellon Note.
B. Emkay is indebted to USNB pursuant to a promissory note dated
December 8, 1994, (the "USNB Note") in the original principal amount of
$10,897,963.11. As of June 30, 1995, Emkay owed USNB the principal amount of
$10,897,963.11 and accrued interest (computed at USNB's prime rate of interest
since March 14, 1995) of $296,969.49 pursuant to the USNB Note.
C. The amounts due under the Mellon Note and the USNB Note are
collectively referred to as the "Loans." Those notes, Morrison's guaranties
with respect thereto, and any loan agreements or other documents related to the
Loans are referred to below collectively as the "Existing Loan Documents."
D. Payment of the obligations of Emkay to Mellon and USNB with
respect to the Loans is guaranteed unconditionally by Morrison.
E. Interest continues to accrue on the promissory notes described
above on and after July 1, 1995, and is due and owing by Emkay to Mellon and
USNB (the "Banks") in addition to the amounts specified above. In addition,
Emkay is obligated to reimburse the Banks for certain attorney fees and costs
incurred by the Banks.
F. Emkay is in default on the Loans as a result of Emkay's failure
to pay the Loans as agreed. The defaults described in the preceding sentence
and any other defaults on the Loans or under the Existing Loan Documents as of
the date of this Agreement, whether or not such defaults are known to the Banks,
are referred to below collectively as the "Existing Defaults."
G. Emkay and Morrison have requested the Banks to forbear from
exercising the Banks' rights and remedies against Emkay and Morrison as a result
of the Existing Defaults. The
- 1 -
<PAGE>
Banks are willing to do so, subject to the terms and conditions of this
Agreement.
TERMS AND CONDITIONS
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties to this Agreement
agree as follows:
SECTION I
PAYMENT OF THE OBLIGATIONS
1.1 CONDITIONAL AGREEMENT TO FORBEAR. The Banks hereby agree to
forbear from exercising their existing rights and remedies against Emkay and
Morrison with respect to the Loans (and Morrison's guaranties of the Loans) as a
result of the Existing Defaults until the earlier of (a) June 30, 1996; or
(b) the occurrence of an Event of Default (as defined in paragraph 7.1 of this
Agreement).
1.2 ACKNOWLEDGMENT OF AMOUNTS OWED WITH RESPECT TO THE EXISTING
NOTES. Emkay and Morrison hereby acknowledge and agree that the entire amounts
of principal and interest specified in the Recitals to this Agreement are due
and payable to the Banks and, except with respect to the counterclaims asserted
by Emkay and Morrison against USNB in the Litigation (as defined in paragraph
4.1 of this Agreement), are not subject to any offset, defense, counterclaim, or
claim of recoupment by Emkay or Morrison, or either of them. Furthermore, Emkay
and Morrison acknowledge the accuracy of the other recitals to this Agreement.
Emkay and Morrison acknowledge and agree that, contemporaneously with the
execution of this Agreement, which includes the release specified in
paragraph 4.3 below, the above-described counterclaims against USNB are released
and dismissed and the entire amount of principal and interest specified in
Recital B to this Agreement is due and owing to USNB without offset, defense,
counterclaim, or claim of recoupment.
1.3 REAFFIRMATION OF GUARANTIES. Morrison hereby reaffirms its
obligations to the Banks under its guaranties to unconditionally guarantee
prompt payment and performance of Emkay's obligations with respect to the Loans.
1.4 PAYMENT OF ACCRUED INTEREST, COSTS, AND ATTORNEY FEES. On the
date of execution of this Agreement, Emkay shall pay to Mellon and USNB all
accrued but unpaid interest as of the date of this Agreement pursuant to the
Mellon Note and the USNB Note, respectively. In addition, on the date of
execution of this Agreement, Emkay shall reimburse the Banks for all reasonable
costs and expenses, including reasonable attorney fees, incurred by either of
the Banks to the date of this Agreement
- 2 -
<PAGE>
in connection with the negotiation and documentation of this Agreement and the
transactions contemplated by this Agreement (but specifically excluding any
attorney fees incurred by USNB in connection with the Litigation). The Banks
shall provide Emkay with reasonably detailed evidence of such attorney fees.
1.5 APPLICABLE INTEREST RATES. Except as specified in the following
sentence, the rate of interest applicable to amounts owed by Emkay pursuant to
the Mellon Note and the USNB Note on and after the date of this Agreement shall
be Mellon's publicly announced prime rate (fully floating) and USNB's publicly
announced prime rate (fully floating), respectively. Nothing herein shall
affect, alter, or impair the Banks' rights to charge Emkay the default rates of
interest specified in the Mellon Note and the USNB Note (as applicable)
following an Event of Default.
1.6 PAYMENT OF THE NOTES. On July 5, 1995, and the same day of each
month thereafter through and including June 1996, Emkay shall pay Mellon and
USNB an amount equal to interest accrued through the last day of the preceding
month on the Mellon Note and the USNB Note, respectively. The entire unpaid
balance of principal and interest owed to Mellon on the Mellon Note and to USNB
on the USNB Note shall be due and payable by Emkay on June 30, 1996 (the
"Maturity Date"), subject to the right of Mellon and USNB (or either of them) to
accelerate the amounts owed pursuant to those notes prior to the Maturity Date
upon the occurrence of an Event of Default. The Notes may be prepaid at any
time without premium or penalty.
1.7 ONGOING EXPENSES OF THE BANKS. Emkay shall reimburse the Banks
for all necessary expenses reasonably incurred by the Banks on and after the
date of this Agreement, including, but not limited to, recording charges, escrow
charges, travel expenses, appraisal costs, environmental survey and
investigation costs, collateral examination and inspection costs, and the
reasonable fees and expenses of legal counsel for the Banks (including in-house
legal counsel), in connection with (a) the preparation, negotiation, closing,
administration, amendment, modification, and enforcement of this Agreement, or
the agreement evidenced hereby; (b) the valuation, evaluation, preservation, or
protection of the Collateral (as that term is defined in paragraph 2.1 of this
Agreement) (or the Banks' security interests therein); or (c) actions taken as
required by applicable law, rules, regulations, and policies. Except as
provided in Section 2.3 of this Agreement, the amounts owed by Emkay pursuant to
the preceding sentence of this Agreement shall be paid by Emkay to the bank in
question within ten days of the date Emkay receives a bill (which may be sent by
facsimile transmission and shall be deemed to have been received by Emkay upon
completion of such transmission) from Mellon or USNB for such amounts, with
adequate detail supporting the billing. If
- 3 -
<PAGE>
Emkay fails to pay all or any portion of the amounts referred to in the
preceding sentence, such unpaid amounts shall be due and owing to the Banks (or
such bank as is not paid), together with interest thereon at the default rate
specified in the applicable promissory note from the date Emkay received the
bill therefor, until paid.
1.8 ATTORNEY FEES. Without limiting the meaning of the term
"enforcement" as used in the preceding paragraph of this Agreement, if the Banks
(or either of them) incur any attorney fees (including those of in-house
counsel) in any action, suit, or bankruptcy case or proceeding in relation to or
involving this Agreement, the Security Agreements, or any other instrument or
agreement between or among the parties to this Agreement (or any of them) or any
appeal of any of the foregoing, in which the Banks (or either of them) are the
prevailing party, such bank or banks in addition to all other sums that the
other party may be called upon to pay, shall be entitled to recover the
prevailing party's reasonable attorney fees incurred therein.
1.9 INTERCREDITOR AGREEMENT. The Banks will enter into such
intercreditor agreement, collateral agency agreement, and other agreements that
the Banks believe are necessary to provide for a pro rata sharing of all income
and proceeds from the Collateral and perfection and protection of their security
interests and liens in the Collateral. Emkay and Morrison shall take any
actions reasonably requested by the Banks that will facilitate the Banks'
agreement to share the Collateral and the proceeds thereof on a pro rata basis.
The pro rata sharing between the Banks shall be computed in accordance with the
principal balances owed with respect to the Mellon Note and the USNB Note as of
the date of this Agreement, which means that Mellon's share of pro rata payments
and expenses is 64.9335 percent and USNB's share thereof is 35.0665 percent (the
"Pro Rata Shares").
1.10 CONTINUED VALIDITY OF AGREEMENTS. Emkay and Morrison hereby
expressly acknowledge and agree that the Mellon Note and any related documents,
the USNB Note and any related documents, Morrison's guaranties with respect to
those notes, and any other agreements between or among the parties to this
Agreement (or any of them), are valid, binding agreements and are enforceable
against Emkay and Morrison (as applicable) in accordance with the terms of those
agreements, except to the extent expressly modified or amended by this
Agreement. The Banks' forbearance hereunder is only with respect to the
Existing Defaults and does not apply or extend to an Event of Default hereunder,
or to any default under any other agreements between or among the parties to
this Agreement.
- 4 -
<PAGE>
SECTION II
COLLATERAL FOR THE OBLIGATIONS
2.1 GRANTING OF SECURITY INTERESTS. Contemporaneously with the
execution of this Agreement, Emkay shall execute and deliver to the Banks such
security agreements, trust deeds, or other documents (the "Security Agreements")
that the Banks reasonably believe are necessary or desirable to grant the Banks
security interests and liens in or with respect to all existing and after-
acquired assets of Emkay, including all income and rents from such assets and
all proceeds of the sale or other disposition of all such assets. The assets
that are the subject of the Banks' security interests and liens described in the
preceding sentence (including all proceeds thereof) are referred to in this
Agreement collectively as the "Collateral."
2.2 OTHER DOCUMENTS. Emkay hereby agrees that until the Mellon Note
and the USNB Note have been paid in full, Emkay promptly shall execute and
deliver to the Banks all documents reasonably deemed necessary or desirable by
the Banks to create, evidence, perfect, or continue their security interests or
liens in the Collateral.
2.3 APPRAISALS AND ENVIRONMENTAL REPORTS. Emkay promptly will take
any and all action reasonably requested by the Banks (or either of them) that
the Banks believe is necessary or desirable to enable the Banks to obtain
appraisals and environmental reports on all real property owned by Emkay, or
subject to any interest, claim, or right of Emkay. The determination of whether
it is necessary or desirable to obtain appraisals and environmental reports will
be made by the Banks (or either of them) in their good faith discretion, but
will consider, among other things, whether the real property or the assets of
Emkay related to the real property is subject to a pending disposition by Emkay.
Emkay hereby agrees that costs incurred by the Banks with respect to appraisals
and environmental studies shall be added to the obligations of Emkay to the
Banks with respect to the Loans and shall be paid by Emkay on or before the
maturity of the Loans.
2.4 CERTIFICATION REGARDING ASSETS. Prior to or contemporaneously
with the execution of this Agreement, Emkay shall deliver to the Banks a written
list of all assets of Emkay having a book or market value of $10,000, or more.
2.5 THE BANKS' RIGHT TO INSPECT THE COLLATERAL. Emkay hereby agrees
that the Banks (or either of them) may inspect all or any portion of the
Collateral at any reasonable time on reasonable advance notice to Emkay.
Notwithstanding the foregoing, after an Event of Default hereunder, the Banks
(or either of them) may take any action permitted by law at any time,
- 5 -
<PAGE>
with or without notice to, or the permission of, Emkay or Morrison.
SECTION III
THE LIQUIDATION PROCESS
3.1 THE SALES AGENT. On or before July 10, 1995, Emkay will retain a
sales agent (the "Sales Agent") reasonably acceptable to the Banks on terms
reasonably acceptable to the Banks. The Sales Agent will be authorized and
directed by Emkay to obtain offers to purchase, or otherwise arrange sales of,
in each case subject to approval by Emkay's Board of Directors, Emkay's
interests in the Collateral on or before June 30, 1996.
3.2 ASSET LIQUIDATION PROGRAM. On or before July 17, 1995, Emkay,
with the assistance of the Sales Agent, shall develop and deliver to the Banks a
plan for the liquidation of the Collateral (the "Liquidation Plan") by June 30,
1996, which plan must be reasonably acceptable to the Banks. At the same time,
Emkay and the Sales Agent shall deliver to the Banks a budget setting forth the
projected income and expenses relating to the proposed plan for the liquidation
of Emkay's assets (the "Liquidation Budget"), which budget must be reasonably
acceptable to the Banks. The Banks acknowledge that the Liquidation Plan may
reflect that proceeds resulting from the liquidation of the Collateral may be
insufficient to pay the Loans in full and agree that such fact, in and of
itself, shall not cause the Liquidation Plan to be unacceptable to the Banks.
3.3 THE EMKAY CASH COLLATERAL ACCOUNT. All proceeds of the
Collateral, including rents, profits, other revenue or payments, and proceeds
resulting from the sale or disposition of all or any portion of the Collateral,
shall be deposited into an account maintained by Emkay at USNB (the "Emkay Cash
Collateral Account"). Prior to or contemporaneously with the execution of this
Agreement, Emkay shall grant the Banks security interests and liens in the Emkay
Cash Collateral Account and all funds now or hereafter in that account.
3.4 USE OF FUNDS IN THE EMKAY CASH COLLATERAL ACCOUNT. Funds on
deposit in the Emkay Cash Collateral Account may be used by Emkay only for the
following purposes:
(a) To pay the reasonable expenses of Emkay incurred in
connection with the preservation, protection, and liquidation of the
Collateral; and
(b) To pay the obligations owing by Emkay to the Banks pursuant
to the Loans and this Agreement.
Proceeds of the Collateral, including funds in the Emkay Cash Collateral
Account, may not be paid, transferred, delivered, or
- 6 -
<PAGE>
otherwise given to or received by Morrison until Emkay has paid in full its
obligations to the Banks pursuant to the Loans and this Agreement. Accordingly,
Morrison shall not be reimbursed by Emkay (or with proceeds of the Collateral)
for support services, if any, provided by Morrison to Emkay until Emkay has paid
in full its obligations to the Banks pursuant to the Loans and this Agreement.
3.5 MANDATORY DISTRIBUTION OF AMOUNTS IN THE EMKAY CASH COLLATERAL
ACCOUNT. Unless the parties to this Agreement agree in writing to a different
schedule for disbursement, the entire balance of funds in the Emkay Cash
Collateral Account, except for such amount that must reasonably be retained to
fund payment of the items discussed in paragraph 3.4 above, shall be disbursed
to the Banks (according to their Pro Rata Shares) on the last day of each month
following the date of this Agreement. Notwithstanding the foregoing, all
amounts in the Cash Collateral Account shall be disbursed to the Banks according
to their Pro Rata Shares immediately after the occurrence of an Event of
Default.
3.6 LIMIT ON VARIANCE FROM THE LIQUIDATION BUDGET. Emkay's
expenditures with respect to the matters identified in paragraph 3.4(a) above
shall not exceed the expenses projected in the Liquidation Budget by more than
10 percent, measured on an aggregate basis from the date of this Agreement.
3.7 LIEN RELEASE MECHANISM. The Banks agree that they shall consent
to a sale by Emkay of all or any portion of the Collateral (and shall release
their liens and security interests in the asset or assets in question upon
Emkay's compliance with paragraph 3.3 of this Agreement) that would result in
payment in cash to Emkay on or before June 30, 1996, in an amount equal to or
greater than the price specified in the Liquidation Plan for the asset or assets
in question, provided that such sale is evidenced by a binding, written
agreement and is to a buyer that is determined by the Sales Agent to be ready,
willing, and able to close the transaction. If Emkay proposes to sell all or
any portion of the Collateral for an amount less than specified in the
Liquidation Plan (or the sale is proposed prior to delivery of the Liquidation
Plan to the Banks and approval by the Banks thereof), and the terms of such
proposed sale or sales constitute a Recommended Sale (as defined in the
following sentence), and the Banks do not consent to such sale and do not agree
to release their liens or security interests in the asset or assets in question
upon Emkay's compliance with paragraph 3.3 of this Agreement, then, in the event
that a subsequent sale of the asset or assets in question results in less
proceeds paid to Emkay than the proceeds that would have been received by Emkay
if the Recommended Sale had closed, Emkay shall receive a credit against the
amount owed with respect to the Loans (which shall be allocated between the
loans in accordance with the Banks' Pro Rata Shares) equal to the difference
between the proceeds actually received by Emkay from the sale of the asset or
assets
- 7 -
<PAGE>
in question and the proceeds Emkay would have received if the Recommended Sale
had closed. The term "Recommended Sale" as used in this Agreement means a sale
of all or any portion of the Collateral that has been recommended by the Sales
Agent and approved by Emkay's Board of Directors that would result in payment of
the agreed-upon purchase price in cash on or before June 30, 1996, pursuant to a
binding, written agreement by a buyer that is determined by the Sales Agent to
be ready, willing, and able to close the transaction.
SECTION IV
LAWSUIT AND RELEASES
4.1 DISMISSAL OF CLAIMS. As of the date of this Agreement, USNB,
Emkay, and Morrison are parties to a lawsuit pending as Case No. 95-479-JO in
the United States District Court for the District of Oregon (the "Litigation").
Contemporaneously with the execution of this Agreement, Emkay and Morrison will
dismiss the counterclaims asserted by either or both of them against USNB in the
Litigation with prejudice. Promptly after the perfection of the Banks' security
interests and liens in the Collateral, USNB will dismiss the claims asserted by
USNB in the Litigation against Emkay and Morrison without prejudice. Pending
such dismissal, USNB shall take all steps necessary to abate any proceedings in
the Litigation.
4.2 EMKAY'S AND MORRISON'S RELEASE OF MELLON. Emkay and Morrison
hereby release and forever discharge Mellon and Mellon's agents, principals,
successors, assigns, employees, officers, directors, and attorneys, and each of
them, of and from any and all claims, demands, damages, suits, rights, or causes
of action of every kind and nature relating to the Mellon Note that Emkay and
Morrison, or either of them, have or may have as of the date they execute this
Agreement, whether known or unknown, contingent or matured, foreseen or
unforeseen, asserted or unasserted, including, but not limited to, all claims
for compensatory, general, special, consequential, incidental, and punitive
damages, attorney fees, and equitable relief, other than Mellon's obligations
under this Agreement.
4.3 EMKAY'S AND MORRISON'S RELEASE OF USNB. Emkay and Morrison
hereby release and forever discharge USNB and USNB's agents, principals,
successors, assigns, employees, officers, directors, and attorneys, and each of
them, of and from any and all claims, demands, damages, suits, rights, or causes
of action of every kind and nature that Emkay and Morrison, or either of them,
have or may have as of the date they execute this Agreement, whether known or
unknown, contingent or matured, foreseen or unforeseen, asserted or unasserted,
including, but not limited to, the counterclaims alleged by Morrison and Emkay
in the Litigation and all claims for compensatory, general, special,
consequential, incidental, and punitive damages,
- 8 -
<PAGE>
attorney fees, and equitable relief, other than USNB's obligations under this
Agreement.
4.4 USNB'S LIMITED RELEASE OF EMKAY AND MORRISON. USNB hereby
releases Emkay, Morrison and their respective agents, principals, successors,
assigns, employees, officers, directors, and attorneys, and each of them, of and
from any and all claims, demands, damages, suits, rights, or causes of action of
every kind and nature that USNB has or may have as of the date of this
Agreement, whether known or unknown, contingent or matured, foreseen or
unforeseen, asserted or unasserted (including matters of the type described in
the preceding paragraph of this Agreement) other than (a) claims and causes of
action against Emkay and Morrison for enforcement of, or recovery of the amount
owed pursuant to, the USNB Note, the Existing Loan Documents (including the
Morrison guaranty), this Agreement, and any agreements executed pursuant to this
Agreement; and (b) claims and causes of action against such agents, principals,
successors, assigns, employees, officers, directors, and attorneys for matters
unrelated to the Loans, the USNB Note (and the loan evidenced thereby), the
Existing Loan Documents, this Agreement, and any agreements executed pursuant to
this Agreement.
SECTION V
REPORTING REQUIREMENTS
5.1 MONTHLY REPORTS. On or before July 25, 1995, and the 25th day of
each month thereafter until Emkay has paid the Mellon Note and the USNB Note in
full, Emkay shall furnish the Banks the following documents, reports, or
information:
(a) monthly financial statements with respect to Emkay, which
shall include a statement of operations and a balance sheet for the
preceding month;
(b) a report in a form reasonably satisfactory to the Banks
regarding sales or other dispositions of any of the Collateral during
the preceding month;
(c) a report in a form reasonably satisfactory to the Banks with
respect to the status of Emkay's performance of the Liquidation Plan
as of the end of the preceding month;
(d) a report in a form reasonably acceptable to the Banks with
respect to any expenditures made by Emkay during the preceding month;
(e) a report in a form reasonably satisfactory to the Banks with
respect to any payments or other revenue received by Emkay with
respect to or on account of all or
- 9 -
<PAGE>
any portion of the Collateral during the preceding month; and
(f) a certificate dated as of a date after the close of the
preceding month and signed by an authorized officer of Emkay to the
effect that, to the best of such officer's knowledge after due
diligence and reasonable inquiry:
(i) As of the date of the certificate no Event of Default
(as defined in paragraph 7.1 of this Agreement) has occurred and
is continuing, and no event has occurred and is continuing that,
with the giving of notice or passage of time, or both, could be
an Event of Default (an "Incipient Default") (or, if an Event of
Default or an Incipient Default has occurred, or exists, Emkay
has disclosed the existence thereof to the Banks);
(ii) No material adverse change has occurred in the
financial condition or results of operations of Emkay since the
date of this Agreement, except (x) changes resulting from
performance of the Liquidation Plan and (y) as is or has been
disclosed in such certificate, or otherwise, to the Banks in
writing;
(iii) Emkay has paid when due all withholding taxes; and
(iv) The financial information provided to the Banks
pursuant to paragraph 5.1(a) of this Agreement has been prepared
in accordance with generally accepted accounting principles,
consistently applied.
5.2 MORRISON'S QUARTERLY FINANCIAL STATEMENT. As soon as available,
Morrison shall provide the Banks with a copy of its financial statement as of
the end of the preceding calendar quarter.
5.3 ANNUAL REPORTS. As soon as available, Emkay shall provide the
Banks with a copy of Morrison's audited consolidated annual financial statement
with respect to the preceding year.
5.4 LIST OF ASSETS SOLD IN PRECEDING YEAR. On or before June 30,
1995, Emkay shall deliver to the Banks a report identifying the aggregate amount
(stated in terms of gross proceeds) of assets sold, transferred, or otherwise
disposed of by Emkay during the year preceding the date of this Agreement, which
shall include reasonable detail regarding the sale, transfer, or other
disposition of any asset that had a book or
- 10 -
<PAGE>
market value of $50,000, or more, at the time of such sale, transfer, or other
disposition.
5.5 PAYMENT HISTORY WITH RESPECT TO NOTES. On or before July 17,
1995, Emkay shall deliver to the Banks a report in a form reasonably acceptable
to the Banks identifying the balance owed as of June 1, 1995, on each of the
promissory notes payable to Emkay. That report shall include, among other
things, data regarding the date and amount of payments received by Emkay with
respect to each of those promissory notes. In addition, promptly after the date
of this Agreement, Emkay shall use reasonable efforts to obtain an estoppel
certificate, or comparable document, from each obligee of the promissory notes
payable to Emkay, whereby such obligees shall certify the accuracy of the
amounts Emkay claims are owed pursuant to the various promissory notes as of
June 1, 1995.
5.6 INSPECTION. At reasonable times during weekday working hours,
the Banks (or either of them) may inspect the records, books, premises, and
operations of Emkay. Notwithstanding the foregoing, after an Event of Default
hereunder, the Banks (or either of them) may take any action permitted by law,
with or without notice to, or the permission of, Emkay or Morrison.
5.7 OTHER INFORMATION. Emkay and Morrison promptly shall provide the
Banks with any other information reasonably requested by the Banks (or either of
them) including, but not limited to, information regarding the Collateral and
information regarding the financial condition of Emkay and Morrison.
Furthermore, they shall provide the Banks reasonable access to the Sales Agent.
SECTION VI
REPRESENTATIONS AND WARRANTIES
6.1 GENERAL REPRESENTATIONS, WARRANTIES, AND COVENANTS. To induce
the Banks to enter into this Agreement, Emkay and Morrison represent and warrant
to the Banks as follows:
(a) Emkay and Morrison are duly organized and existing under the
laws of the states of Nevada and Delaware, respectively. Emkay and
Morrison have the power to own their property and carry on their
businesses as now being conducted. Furthermore, Emkay and Morrison
are duly qualified and authorized to do business and are in good
standing in every state, county, or other jurisdiction in which the
nature of their properties and businesses make such qualification
necessary and where the failure to so qualify and remain in good
standing would have a material adverse effect on their ability to
- 11 -
<PAGE>
own their property or carry on their businesses as now being conducted;
(b) Emkay and Morrison are authorized to execute, deliver, and
perform this Agreement, and any other instrument, document, or
agreement required hereunder. The execution, delivery, and
performance by Emkay and Morrison (or either of them) of this
Agreement, the Security Agreements, and the other documents,
instruments, or agreements referred to herein does not contravene any
law, the terms of the charter, bylaws or other incorporation papers of
Emkay and Morrison, or any indenture, agreement, or undertaking to
which Emkay or Morrison is a party, or by which Emkay or Morrison is
bound;
(c) The officers of Emkay and Morrison who execute this
Agreement, the Security Agreements, or any other instrument, document,
or agreement required hereunder to be executed by Emkay or Morrison,
are duly and properly in office and fully authorized to execute the
same;
(d) Emkay has filed all tax returns required by law to be filed
and have paid and will pay in a timely fashion all taxes, assessments,
and other governmental charges, including, but not limited to,
employment taxes, withholding taxes, income taxes, and taxes levied
upon any of their property, assets, or income, other than those not
yet delinquent and those not substantial in aggregate amount and being
or about to be contested in good faith by appropriate means;
(e) Emkay shall maintain fire and public liability insurance
with respect to its properties and operations in such coverage
amounts, deductibles, and other terms, and with such insurers, as are
reasonably acceptable to the Banks;
(f) Emkay shall maintain insurance with an insurer and in amount
reasonably satisfactory to the Banks with respect to the Collateral
(which amount shall be at least equal to the greater of the aggregate
amount of the Loans, or the amount specified in any co-insurance
clause in any applicable insurance policy at which Emkay does not bear
any portion of the risk of loss (other than the deductible amount
specified in the policy) for either a partial or total destruction of
the insured property) until such time as Emkay has satisfied fully its
obligations with respect to the Loans; provided, however, that nothing
herein shall obligate Emkay to insure the Collateral for more than its
insurable value. Each policy of insurance shall bear a lender's loss
payable endorsement in a form satisfactory to the Banks naming
- 12 -
<PAGE>
the Banks as loss payee, or otherwise insuring and protecting the Banks'
interest in the property. Notwithstanding anything in this Agreement or
any of the Security Agreements to the contrary, Emkay shall have no
obligation to maintain fire insurance with respect to bare land. Prior to
or contemporaneously with the date of this Agreement, Emkay shall provide
the Banks evidence that they have obtained insurance as described herein;
and
(g) All information, reports, and other papers and data
furnished by Emkay or Morrison to the Banks are, to the best of
Emkay's and Morrison's knowledge, based upon reasonable investigation,
at the time such documents are provided to the Banks, complete and
correct in all material respects to the extent necessary to give the
Banks true and accurate information regarding the subject matter
thereof.
SECTION VII
DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. The occurrence of any of the following events
("Event(s) of Default") shall constitute a default by Emkay and Morrison under
this Agreement and the notes and guaranties referred to above:
(a) FAILURE TO PAY. Emkay fails to pay any amount owed to the
Banks pursuant to either the Mellon Note or the USNB Note, within ten
(10) days after written notice that such amount is due;
(b) FAILURE TO PAY ATTORNEY FEES AND COSTS. Emkay fails to pay
any of the Banks' attorney fees, costs, and expenses as required by
paragraph 1.7 of this Agreement;
(c) FAILURE TO DEPOSIT PROCEEDS. Emkay fails to deposit or
cause to be deposited any proceeds of the Collateral into the Emkay
Cash Collateral Account;
(d) FAILURE TO APPOINT SALES AGENT OR DELIVER LIQUIDATION PLAN.
Emkay fails to retain the Sales Agent, or to deliver the Liquidation
Plan and the Liquidation Budget to the Banks as required by
paragraphs 3.1 and 3.2, respectively, of this Agreement;
(e) FAILURE TO COMPLY WITH OTHER OBLIGATIONS. Emkay fails to
comply with any other covenant, agreement, term, or condition imposed
upon Emkay by this Agreement, the Security Agreements, or any other
agreement with the Banks pertaining to the Loans executed by Emkay on
or after the date of this Agreement, and does not remedy or
- 13 -
<PAGE>
cure such failure within thirty (30) days following written notice from the
Banks of such failure (notwithstanding the foregoing, the Existing Defaults
shall not constitute an Event of Default under this Agreement);
(f) INCORRECT OR MISLEADING STATEMENT. Any material statement,
representation, or warranty made by Emkay or Morrison in this
Agreement or in any written statement furnished to the Banks in
connection with this Agreement, whether contemporaneously with or
subsequent to the delivery of this Agreement, proves to have been
incorrect or misleading in any material respect when made; or
(g) RECEIVERSHIP/BANKRUPTCY. A receiver or trustee is appointed
for Emkay or Morrison, or for any substantial part of any of their
assets, or any bankruptcy case is instituted by or with respect to
Emkay or Morrison.
7.2 ACCELERATION. At the option of the Banks (or either of them),
upon the occurrence of any Event of Default, all of the obligations of Emkay and
Morrison to the Banks under this Agreement and the promissory notes and
guaranties described in this Agreement immediately shall become due and payable.
7.3 REMEDIES. Following the occurrence of an Event of Default, the
Banks (or either of them) immediately and without notice to Emkay or Morrison
may exercise any or all of their rights and remedies under this Agreement, the
promissory notes, the guaranties, the Security Agreements, any other agreements
between or among the parties, and applicable law, all of which rights and
remedies are cumulative.
SECTION VIII
GENERAL TERMS
8.1 NOTICE. For purposes of this Agreement, any notice required or
permitted shall be in writing and is effective when actually delivered (which
shall include facsimile transmission) as specified below:
To Emkay and Emkay Development Company, Inc.
Morrison: Morrison Knudsen Corporation
Attention: Mr. Richard D. Parry
Morrison Knudsen Plaza
Boise, Idaho 83729
Facsimile No. (208) 386-5220
- 14 -
<PAGE>
To Mellon: Mellon Bank, N.A.
Attention: Mr. Alan J. Kopolow
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Facsimile No. (412) 234-0286
To USNB: United States National Bank
of Oregon
Attention: Mr. Jeffrey C. Gardner
111 S.W. Fifth Avenue (T-8)
Portland, Oregon 97204
Facsimile No. (503) 275-5919
8.2 ASSIGNMENT. Each of the Banks shall have the right to transfer
or assign, without consent by Emkay or Morrison, any or all of the powers,
rights, title, and interests held by such bank under this Agreement, the
promissory notes, the guaranties, the Security Agreements, or any other
agreements between or among the parties to this Agreement, and Emkay and
Morrison hereby consent to such transfer or assignment and agree to take steps
reasonably deemed necessary by Mellon, or USNB, as the case may be, to
facilitate and effectuate such transfer or assignment. In the event of any
transfer or assignment of the type referred to in the preceding sentence, the
transferring or assigning bank shall inform the assignee or transferee in
writing, with a copy to Emkay, of the existence and terms of this Agreement.
The agreements referred to in the first sentence of this paragraph may not be
assigned by Emkay or Morrison by operation of law, or otherwise, without the
Banks' prior, written consent, and any such attempted assignment shall be void
and entirely without effect.
8.3 CAPTIONS. Any captions for the sections of this Agreement are
for convenience only and do not control or affect the meaning or construction of
any of the provisions of this Agreement.
8.4 SEVERABILITY. If any term, condition, or provision of this
Agreement, or any other document or instrument referred to in this Agreement, is
held invalid for any reason, such offending term, condition, or provision shall
be stricken therefrom, and the remainder thereof shall not be affected thereby.
8.5 AMENDMENTS. This Agreement may be amended or modified only by a
written agreement signed by an authorized representative of Emkay, Morrison, and
the Banks that by its terms expressly supersedes, modifies, amends, or alters
this Agreement.
8.6 NEGOTIATED AGREEMENT. This Agreement is a negotiated agreement.
In the event of any ambiguity in this Agreement, such ambiguity shall not be
subject to a rule of
- 15 -
<PAGE>
contract interpretation that would cause the ambiguity to be construed against
any of the parties to this Agreement.
8.7 VOLUNTARY AND ENTIRE AGREEMENT. The only consideration for the
execution of this Agreement is the consideration expressly recited herein. This
Agreement and the other agreements and instruments referred to in this Agreement
set forth and constitute the entire agreement among the parties hereto with
respect to the subject matter of this Agreement. No oral promise or agreement
of any kind or nature, other than those that have been reduced to writing and
set forth herein, has been made between or among the Banks and any of the other
parties to this Agreement. Emkay and Morrison acknowledge that they have been
represented by legal counsel in connection with the negotiation and execution of
this Agreement and the other agreements and instruments referred to in this
Agreement. Emkay and Morrison voluntarily executed this Agreement and the other
agreements and instruments referred to in this Agreement.
8.8 CONSTRUCTION AND CONFLICT WITH OTHER AGREEMENTS. In the event of
any conflict between the terms of this Agreement and the terms of any other
agreements or instruments referred to in this Agreement (including, but not
limited to, the Existing Loan Documents), the terms of this Agreement shall
control.
8.9 WAIVERS. No waiver of any provision of this Agreement, the
promissory notes, the Security Agreements, the guaranties, or any other
agreement between or among the parties hereto, nor consent to any failure by
Emkay or Morrison to comply with such provisions, shall be effective unless the
same shall be in writing and signed by the Banks, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
8.10 APPLICABLE LAW. This Agreement and any other instrument or
agreement required or contemplated hereunder shall be governed by, and construed
under, the laws of the state of Oregon without regard to principles of conflicts
of law.
8.11 WRITING REQUIREMENT. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES, AND COMMITMENTS MADE BY THE BANKS AFTER OCTOBER 3, 1989, CONCERNING
LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY, OR
HOUSEHOLD PURPOSES OR
- 16 -
<PAGE>
SECURED SOLELY BY THE BORROWER'S RESIDENCE, MUST BE IN WRITING, EXPRESS
CONSIDERATION, AND BE SIGNED BY THE BANKS TO BE ENFORCEABLE.
UNITED STATES NATIONAL MELLON BANK, N.A.
BANK OF OREGON
/s/ Jeffrey C. Gardner /s/ Alan J. Kopolow
By: By:
--------------------------- --------------------------
Jeffrey C. Gardner Alan J. Kopolow
Senior Vice President Vice President
EMKAY DEVELOPMENT COMPANY, INC. MORRISON KNUDSEN CORPORATION
/s/ Richard D. Parry /s/ Richard D. Parry
By: By:
--------------------------- --------------------------
Richard D. Parry Richard D. Parry
Vice President Vice President
- 17 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO OF
MORRISON KNUDSEN CORPORATION AT JUNE 30, 1995 AND FOR THE SIX MONTHS THEN ENDED,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH UNAUDITED FINANCIAL
STATEMENTS AND NOTES.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 72,877
<SECURITIES> 0
<RECEIVABLES> 181,201
<ALLOWANCES> 15,590
<INVENTORY> 90,750
<CURRENT-ASSETS> 866,331
<PP&E> 278,801
<DEPRECIATION> 179,173
<TOTAL-ASSETS> 1,062,601
<CURRENT-LIABILITIES> 948,038
<BONDS> 0
<COMMON> 55,818
0
0
<OTHER-SE> (59,726)
<TOTAL-LIABILITY-AND-EQUITY> 3,908
<SALES> 221,307
<TOTAL-REVENUES> 1,151,020
<CGS> 225,112
<TOTAL-COSTS> 1,134,200
<OTHER-EXPENSES> 25,784
<LOSS-PROVISION> 566
<INTEREST-EXPENSE> 14,439
<INCOME-PRETAX> (24,878)
<INCOME-TAX> (2,339)
<INCOME-CONTINUING> (32,272)
<DISCONTINUED> (31,435)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,707)
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 0
</TABLE>
