<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 17, 1995
MORRISON KNUDSEN CORPORATION
Commission File Number 1-8889
A Delaware corporation
IRS Employer Identification No. 82-0393735
MORRISON KNUDSEN PLAZA, PLAZA, IDAHO 83729
208/386-5000
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MORRISON KNUDSEN CORPORATION
COMMISSION FILE NUMBER 1-8889
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
In July 1995, the registrant committed to dispose of its Transit segment
and on October 17, 1995, the registrant reached an agreement to transfer
substantially all of the assets and certain liabilities of its Transit segment
to American Passenger Rail Car Company, L.L.C. ("Amerail") a newly-formed
company wholly owned by persons not affiliated with the registrant. The
consideration for the disposition included the payment by Amerail of $42.1
million, borrowed by Amerail under new financing extended by banks, to pay off
the registrant's interim financing facilities for the Transit segment entered
into as of July 31, 1995 and the assumption of certain liabilities of the
Transit segment including its performance obligations for its major transit car
manufacturing and remanufacturing contracts. The guarantee by the registrant of
Amerail's reimbursement obligations does not allow this transfer to be treated
as a divestiture for accounting purposes according to SAB 5E, however this
transfer does represent an abandonment of the Transit segment by the registrant.
In accordance with SAB 93 the transfer will be accounted for as a discontinued
business. See the Asset Purchase Agreement which is filed as Exhibit 10.1 and is
incorporated herein by reference.
ITEM 5. OTHER MATERIAL IMPORTANT EVENTS.
(a) FINANCIAL RESTRUCTURING EVENTS.
In connection with the transfer of the Transit segment (described above),
the two interim financing facilities established as of July 31, 1995 to fund the
operations of the Transit segment pending its disposition were paid off and
terminated on October 17, 1995. In addition, on October 10, 1995, the registrant
entered into amendments to its existing credit facilities to reflect the
disposition of the Transit segment and to reduce the maximum secured borrowing
amount under the bridge loan from $129 million to $100 million. See the Amended
and Restated Override Agreement and the First Amendment to Amended and Restated
Credit Agreement which are filed as Exhibits 4.1 and 4.2, each of which is
incorporated herein by this reference.
As part of the disposition of the Transit segment, the registrant's primary
reimbursement obligations to certain banks with respect to the standby letter of
credit supporting the performance of the Transit segment's new transit car
manufacturing and remanufacturing contract with Metra was replaced with the
registrant's guaranty of Amerail's reimbursement obligations to the same bank
group under a replacement letter of credit and a new revolving credit facility
in the aggregate amount of $141 million provided by such banks to Amerail to
support its performance of the Metra contract. See the Guaranty which is filed
as Exhibit 4.4 and is incorporated herein by reference.
In connection with the disposition of the Transit segment, the registrant
entered into a Reimbursement Agreement with its bonding company pursuant to
which the reimbursement obligations of the registrant to its bonding company for
the bonding company's losses on its payment and performance bonds supporting
certain non-Metra transit contracts (certain Transit contracts other than the
Metra contract) and certain secured financing to be provided to Amerail to
finance completion of such contracts were capped at approximately $31 million.
See the Reimbursement Agreement which is filed as Exhibit 4.3 and is
incorporated herein by reference.
(b) SALE OF NORTH PACIFIC OPERATIONS.
On September 22, 1995, the registrant completed the sale of its North
Pacific Operations to Tutor-Saliba Corporation for $17.1 million in cash. See
the Stock Purchase Agreement which is filed as Exhibit 10.2 and is incorporated
herein by this reference.
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ITEM. 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS - NOT APPLICABLE.
(b) PRO FORMA FINANCIAL INFORMATION.
(1) Unaudited Pro Forma Condensed Financial Data at and for the six month
period ended June 30, 1995
(2) Unaudited Pro Forma Condensed Statement of Operations for the year
ended December 31, 1994
(c) EXHIBITS - THE EXHIBITS ARE LISTED IN THE EXHIBIT INDEX CONTAINED ELSEWHERE
IN THIS CURRENT REPORT.
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MORRISON KNUDSEN CORPORATION
UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma condensed statements of operations for
the year ended December 31, 1994 and for the six month period ended June 30,
1995, had been prepared as if the abandonment of the Corporation's Transit
segment had occurred on January 1, 1994. The following pro forma condensed
balance sheet at June 30, 1995 had been prepared as if the transaction had
occurred on June 30, 1995.
The unaudited pro forma condensed financial statements are not necessarily
indicative of how the Corporation's statements of operations and balance sheets
would have been presented had the transaction actually occurred on the assumed
dates, nor are they necessarily indicative of the presentation of the
Corporation's statements of operations and balance sheets for any future
periods.
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MORRISON KNUDSEN CORPORATION
UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA
AT AND FOR THE SIX MONTHS ENDED JUNE 30, 1995
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
LESS TRANSIT
TRANSIT SEGMENT
HISTORICAL SEGMENT (a) ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
CONDENSED STATEMENT OF OPERATIONS
Revenue $ 1,151,020 $ 216,539 $ 934,481
Cost of revenue (1,134,200) (220,169) (914,031)
- ----------------------------------------------------------------------------------------------------------------------
Operating income (loss) from
continuing operations 16,820 (3,630) 20,450
General and administrative expenses (25,784) -- (25,784)
Interest expense (14,439) -- (14,439)
Other income (expense), net (1,475) -- (1,475)
- ----------------------------------------------------------------------------------------------------------------------
Loss from continuing operations before
income taxes and minority interests (24,878) (3,630) (21,248)
Income tax expense (2,339) -- (2,339)
Minority interests in net (income)
loss of subsidiaries (5,055) -- (5,055)
- ----------------------------------------------------------------------------------------------------------------------
Loss from continuing operations $ (32,272) $ (3,630) $ (28,642)
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Loss per common share $(.98) $(.87)
Common shares used to compute loss per share 32,954,000 32,954,000
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
CONDENSED BALANCE SHEET
Cash and cash equivalents $ 72,877 $ 381 $ 72,496
Accounts receivable 181,201 36,940 144,261
Unbilled receivables 117,342 11,058 106,284
Assets of subsidiaries and investments held for sale 189,342 -- 189,342
Net assets of discontinued MK Rail operations 127,184 -- 127,184
Other current assets 178,385 90,854 87,531
Investments and other assets 96,642 -- 96,642
Property and equipment, net 99,628 32,473 67,155
- ----------------------------------------------------------------------------------------------------------------------
Total Assets $ 1,062,601 $171,706 $ 890,895
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
Short-term and current portion of long-term debt $ 307,617 $ 6,945 $300,672
Accounts payable 153,643 30,748 $ 6,500 (c) 129,395
Liabilities of subsidiaries held for sale 124,529 -- 124,529
Other current liabilities 362,249 132,613 (32,609)(b) 197,027
Non-current liabilities 110,655 1,400 109,255
Estimated liability-guarantee of certain Amerail
reimbursement obligations -- -- 32,609 (b) 60,609(d)
28,000 (c)
Stockholders' equity (deficit) 3,908 -- (34,500)(c) (30,592)
- ------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,062,601 $171,706 $ -- $890,895
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA
(a) Reflects the elimination of historical revenues, expenses, assets and
liabilities directly attributable to the Transit segment. The Corporation
will account for the abandonment of the Transit segment as a discontinued
operation.
(b) Reflects the classification of the accumulated losses of the Transit segment
in excess of the Corporation's investment therein, which accumulated losses
represent the Corporation's estimated liability for its guarantee of Amerail's
reimbursement obligations to certain banks and bonding company.
(c) Reflects the estimated loss on abandonment of the Transit segment, the
Corporation's estimated liability for its guarantee of Amerail's reimbursement
obligations to certain banks and bonding company and accrued transaction costs.
(d) Represents the Corporation's discounted guaranteed obligations for the
estimated net cash losses on transit car contracts. The Corporation has
estimated the expected aggregate discounted liability to be $60,609
using a discount rate of 11.75% the equivalent of the Corporation's
marginal borrowing rate.
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MORRISON KNUDSEN CORPORATION
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
LESS TRANSIT
HISTORICAL* SEGMENT (a) PRO FORMA
---------- ------------ ---------
<S> <C> <C> <C>
Revenue $ 2,135,762 $114,759 $ 2,021,003
Cost of revenue (2,459,552) (330,262) (2,129,290)
- -----------------------------------------------------------------------------------------------------
Operating income (loss) from continuing operations (323,790) (215,503) (108,287)
General and administrative expenses (33,087) -- (33,087)
Interest expense (9,631) -- (9,631)
Other income (expense), net (19,711) -- (19,711)
- -----------------------------------------------------------------------------------------------------
Loss from continuing operations before
income taxes and minority interests (386,219) (215,503) (170,716)
Income tax(expense) benefit 64,193 -- 64,193
Minority interests in net (income) loss of subsidiaries (657) -- (657)
- -----------------------------------------------------------------------------------------------------
Loss from continuing operations $ (322,683) $(215,503) $ (107,180)
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
Loss per common share $(9.92) $(3.29)
Common shares used to compute loss per share 32,528,000 32,528,000
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Certain amounts have been reclassified, principally as a result of the
adoption of a plan in March 1995 to sell the Corporation's ownership
interest in MK Rail Corporation and reflect such disposition as a
discontinued operation.
NOTE TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(a) Reflects the elimination of historical revenues and expenses directly
attributable to the Transit segment. The Corporation will account for the
abandonment of the Transit segment as a discontinued operation.
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
November 1, 1995 By:
---------------------------------
Stephen G. Hanks
Executive Vice President and
Chief Legal Officer
S-1
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EXHIBIT INDEX
THE FOLLOWING EXHIBITS ARE FILED HEREWITH:
EXHIBIT
NUMBER EXHIBITS
4.1 Amended and Restated Override Agreement dated as of October 10, 1995,
among the Registrant, Morrison Knudsen Corporation, an Ohio
corporation and a wholly owned subsidiary of Registrant, The Banks and
Other Financial Institutions named therein, Mellon Bank, N.A., as
Agent, and Bank of America National Trust and Savings Association, as
Metra Agent.
4.2 First Amendment to Amended and Restated Credit Agreement dated as of
October 10, 1995, among the Registrant, Morrison Knudsen Corporation,
an Ohio corporation and a wholly owned subsidiary of Registrant, the
banks and other financial institutions named on Schedule A therein
("Lenders"), Mellon Bank, N.A., as administrative agent for the
Lenders, and Mellon Bank, N.A. and Bank of America National Trust and
Savings Association as co-agents for the Lenders.
4.3 Reimbursement Agreement dated as of October 10, 1995, among the
Registrant, Morrison Knudsen Corporation, an Ohio Corporation and a
wholly owned subsidiary of Registrant, and each of the affiliates of
the Registrant listed on the signature pages thereof, to and for the
benefit of Fidelity and Deposit Company of Maryland.
4.4 Guaranty dated as of October 10, 1995 by Morrison Knudsen Corporation,
an Ohio corporation and a wholly owned subsidiary of Registrant, in
favor of Bank of America National Trust and Savings Association, as
Metra Agent, guarantying the obligations of American Passenger Rail
Car Company, L.L.C. under that certain Revolving Credit Agreement
dated as of October 10, 1995 among American Passenger Rail Car
Company, L.L.C., Bank of America National Trust and Savings
Association and the Lenders identified therein.
4.5 New Bonds Agreement dated as of October 10, 1995, by and among the
Registrant, Fidelity and Deposit Company of Maryland, Morrison Knudsen
Corporation, an Ohio corporation and a wholly owned subsidiary of
Registrant, and the entities listed on Annex A thereto.
10.1 Asset Purchase Agreement dated as of October 10, 1995 by and among the
Registrant, American Passenger Rail Car Company, L.L.C., Morrison
Knudsen Corporation, an Ohio corporation and a wholly owned subsidiary
of Registrant, and the entities listed on Schedule 1 thereto.
10.2 Stock Purchase Agreement dated as of September 21, 1995, by and
between the Registrant, Morrison Knudsen Corporation, an Ohio
corporation and a wholly owned subsidiary of Registrant, and Tutor-
Saliba Corporation, a California corporation.
E-1
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EXHIBIT 4.1
AMENDED AND RESTATED OVERRIDE AGREEMENT
dated as of
October 10, 1995
among
Morrison Knudsen Corporation,
a Delaware corporation,
Morrison Knudsen Corporation
an Ohio corporation,
The Banks and Other
Financial Institutions
Named Herein,
Mellon Bank, N.A., as Agent
and
Bank of America National Trust and Savings Association,
as Metra 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
1.4. Certain Contingent Obligations. . . . . . . . . . . . . . . . . 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) The Agent's Fee . . . . . . . . . . . . . . . . . . . . . . 25
(b) The Collateral Agent's Fee. . . . . . . . . . . . . . . . . 25
(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 . . . . . . . . . . . . . . . 27
2.12. Recalculation . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.13. Delivery of Reallocation Certificates.. . . . . . . . . . . . . 31
2.14. Computation of Interest and Fees. . . . . . . . . . . . . . . . 31
2.15. Cash Management System. . . . . . . . . . . . . . . . . . . . . 31
2.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE III ADDITIONAL AMENDMENTS TO THE EXISTING AGREEMENTS AND EFFECT ON
EXISTING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 33
3.1. Waiver of Covenants.. . . . . . . . . . . . . . . . . . . . . . 33
3.2. Non-Exercise of Certain Remedies. . . . . . . . . . . . . . . . 34
3.3. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.4. Effect on Existing Agreements . . . . . . . . . . . . . . . . . 34
ARTICLE IV SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.1. The Borrowers' Obligations. . . . . . . . . . . . . . . . . . . 35
4.2. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE V CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . 35
5.1. Conditions Precedent to Effectiveness of Agreement. . . . . . . 35
(a) Restructuring Documents . . . . . . . . . . . . . . . . . . 35
(b) Consents. . . . . . . . . . . . . . . . . . . . . . . . . . 36
(c) Pending and Threatened Litigation . . . . . . . . . . . . . 36
(d) The T-Co Restructuring. . . . . . . . . . . . . . . . . . . 36
(e) Other Matters . . . . . . . . . . . . . . . . . . . . . . . 36
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(f) Representations and Warranties. . . . . . . . . . . . . . . 36
(g) No Default or Event of Default. . . . . . . . . . . . . . . 36
(h) Defaults Under Indebtedness . . . . . . . . . . . . . . . . 36
ARTICLE VI REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . 37
6.1. Organization and Qualification. . . . . . . . . . . . . . . . . 37
6.2. Corporate Power and Authorization; Binding Effect . . . . . . . 37
6.3. No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.4. No Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . 38
6.6. No Default under the Restructuring Documents. . . . . . . . . . 38
6.7. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.8. Material Contracts. . . . . . . . . . . . . . . . . . . . . . . 38
6.9. Correctness of Collateral Schedules . . . . . . . . . . . . . . 39
6.10. Correctness of Financial Information. . . . . . . . . . . . . . 39
6.11. Security Documents. . . . . . . . . . . . . . . . . . . . . . . 39
6.12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.13. No Burdensome Restrictions. . . . . . . . . . . . . . . . . . . 40
6.14. Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.15. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 40
6.16. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 40
6.17. Governmental Authorizations; Permits, Licenses and
Accreditations; Other Rights. . . . . . . . . . . . . . . . . . 41
6.18. Environmental Matters . . . . . . . . . . . . . . . . . . . . . 41
6.19. No Material Adverse Effect. . . . . . . . . . . . . . . . . . . 42
6.20. Consolidated Subsidiaries; Subsidiaries . . . . . . . . . . . . 42
6.21. Margin Securities . . . . . . . . . . . . . . . . . . . . . . . 42
6.22. Investment Company Act. . . . . . . . . . . . . . . . . . . . . 42
6.23. Business Locations and Trade Names. . . . . . . . . . . . . . . 42
6.24. Title to Real Property and Other Assets . . . . . . . . . . . . 43
6.25. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.26. Employment and Investment Agreements. . . . . . . . . . . . . . 43
6.27. No Misstatements. . . . . . . . . . . . . . . . . . . . . . . . 43
6.28. T-Co Restructuring. . . . . . . . . . . . . . . . . . . . . . . 44
6.29. MK Rail Lock Box. . . . . . . . . . . . . . . . . . . . . . . . 44
6.30. Cash Management System. . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 44
7.1. Financial Statements; Additional Reporting Requirements . . . . 44
7.2. Provision of Notices. . . . . . . . . . . . . . . . . . . . . . 46
7.3. Filing of Returns; Payment of Taxes . . . . . . . . . . . . . . 48
7.4. Maintenance of Existence. . . . . . . . . . . . . . . . . . . . 48
7.5. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 48
7.6. Maintenance of Properties . . . . . . . . . . . . . . . . . . . 48
7.7. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.8. Books and Records . . . . . . . . . . . . . . . . . . . . . . . 49
7.9. Compliance With Terms of All Real Property Related Agreements . 49
7.10. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . 49
7.11. Intellectual Property Assignments . . . . . . . . . . . . . . . 50
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7.12. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 50
7.13. Inspection of Property, Books and Records . . . . . . . . . . . 50
7.14. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 50
7.15. Compliance with Asset Disposition Program . . . . . . . . . . . 50
7.16. Cash Management System. . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 51
8.1. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.2. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . 52
8.3. Prohibition of Fundamental Changes. . . . . . . . . . . . . . . 53
8.4. Prohibition on Sale of Assets . . . . . . . . . . . . . . . . . 53
8.5. Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.6. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 54
8.7. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 54
8.8. Transactions With Affiliates. . . . . . . . . . . . . . . . . . 54
8.9. Sale/Lease-Backs. . . . . . . . . . . . . . . . . . . . . . . . 55
8.10. Operating Leases. . . . . . . . . . . . . . . . . . . . . . . . 55
8.11. Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . 55
8.12. Amendment of Charter or Bylaws. . . . . . . . . . . . . . . . . 55
8.13. No Consent to Subordination . . . . . . . . . . . . . . . . . . 55
8.14. Intercompany Obligations. . . . . . . . . . . . . . . . . . . . 55
ARTICLE IX DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . 56
9.2. The Existing Lenders' Remedies. . . . . . . . . . . . . . . . . 59
9.3. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . 59
9.4. Waivers by the Borrowers. . . . . . . . . . . . . . . . . . . . 60
ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.1. Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.2. The Agent and Affiliates. . . . . . . . . . . . . . . . . . . . 61
10.3. Retention of Documents and Information to the Existing
Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.4. Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . 61
10.5. Limitation of Liability . . . . . . . . . . . . . . . . . . . . 61
10.6. Reliance by the Agent. . . . . . . . . . . . . . . . . . . . . 62
10.7. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 63
10.8. Non-Reliance on the Agent and the Other Existing Lenders. . . . 63
10.9. Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 64
10.11. The Agent in its Individual Capacity. . . . . . . . . . . . . . 64
10.12. The Successor Agent . . . . . . . . . . . . . . . . . . . . . . 64
10.13. Applicability of Section to The Borrowers . . . . . . . . . . . 65
10.14. Delivery to the Agent of Existing Agreements. . . . . . . . . . 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
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11.5. Waivers by The Borrowers. . . . . . . . . . . . . . . . . . . . 67
11.6. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . 69
11.7. Stay of Acceleration. . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.2. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . 70
12.3. No Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.4. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . 70
12.5. Set-Off; Sharing Upon Set-Off Reductions in Liability and
Conversion Events . . . . . . . . . . . . . . . . . . . . . . . 71
12.6. Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . 74
12.7. Effect of Waivers; Modification of Documents. . . . . . . . . . 74
12.8. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . 75
12.9. Headings and Captions . . . . . . . . . . . . . . . . . . . . . 76
12.10. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . 76
12.11. Inconsistencies With Other Documents. . . . . . . . . . . . . . 76
12.12. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.13. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . 77
12.14. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . 77
12.15. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . 77
12.16. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 77
12.17. Survival of Representations and Warranties. . . . . . . . . . . 77
12.18. Relationship of the Parties . . . . . . . . . . . . . . . . . . 78
12.19. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 78
12.20. Voting by the Metra Lenders . . . . . . . . . . . . . . . . . . 78
12.21. Payments to the Metra Lenders . . . . . . . . . . . . . . . . . 79
12.22. Affirmation of Payments of Obligations. . . . . . . . . . . . . 79
12.23. Amendment of Metra Credit Agreement . . . . . . . . . . . . . . 79
12.24. Acknowledgement and Acceptance of the Intercreditor Agreement . 79
12.25 Approval of First Amendment to Collateral Agent Agreement . . . .79
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EXHIBITS AND SCHEDULES
EXHIBIT A BUDGET
EXHIBIT B FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT C-1 FORM OF WARRANT FOR EXISTING LENDERS OTHER THAN WITH RESPECT
TO METRA OBLIGATIONS
EXHIBIT C-2 FORM OF WARRANT WITH RESPECT TO METRA OBLIGATIONS
EXHIBIT D FIRST AMENDMENT TO COLLATERAL AGENT AGREEMENT AND MORTGAGE
TRUST
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 2.9 BRAZILIAN LOAN AGREEMENT
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 PBGC ACTION
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
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AMENDED AND RESTATED OVERRIDE AGREEMENT
This Amended and Restated Override Agreement (the "Agreement") dated
as of October 10, 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"), Mellon Bank, N.A.
as the agent for the Existing Lenders (in such capacity, the "Agent"), and Bank
of America National Trust and Savings Association, in its capacity as the Metra
Agent (as hereinafter defined).
The parties hereto agree as follows:
RECITALS
A. The Borrowers are currently indebted to certain lenders (the "Bridge
Loan Lenders") pursuant to that certain Amended and Restated Credit Agreement
dated as of July 31, 1995 (the "Bridge Loan Agreement") in the maximum principal
amount of $100,000,000 (the "Bridge Loan").
B. MKO and MKD have obligations (funded, contingent or otherwise) 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 and
together with the Metra Guaranty (as hereinafter defined), 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, the Existing Lenders, the Bridge Loan Lenders, Fidelity
and Deposit Company of Maryland and Colonial American Casualty and Surety
Company agreed to a restructuring of certain of the Existing Agreements, the
Bridge Loan and the establishment of certain interim credit facilities in
preparation for the formation of American Passenger Rail Car Company, L.L.C., a
limited liability company ("T-Co"), and the subsequent transfer of the assets of
MKO's transit division (the "Transit Division") to T-Co. Such restructuring
shall collectively be referred to as the "July 31, 1995 Restructuring."
E. In connection with the July 31, 1995 Restructuring, certain of the
Existing Agreements were modified pursuant to the terms of that certain Override
Agreement dated as of July 31,
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1995 (the "Original Override Agreement") among the Borrowers, the Existing
Lenders and the Agent.
F. In connection with the formation of T-Co and the transfer of the
Transit Division assets to T-Co, the Borrowers have requested, and the Bridge
Loan Lenders, the Existing Lenders, Fidelity and Deposit Company of Maryland and
Colonial American Casualty and Surety Company have agreed, to repay and
terminate the interim facilities previously established, amend and restate the
Original Override Agreement, establish certain new credit facilities with T-Co
as the borrower and enter into certain other related transactions (such
transactions, together with the formation of T-Co and the transfer of the
Transit Division assets, shall collectively be referred to as the "T-Co
Restructuring").
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.
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.
"Agent's Fee" has the meaning assigned to it in SECTION 2.7(a).
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"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; and Morrison Knudsen Investments, Inc. 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 the same may be amended, modified, supplemented and restated from
time to time.
"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.
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"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 Ratings
Group 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 October 10, 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 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.
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"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, as supplemented and amended by that certain First
Amendment to Collateral Agent Agreement and Mortgage Trust dated
October 10, 1995, as the same may be further amended, supplemented or restated
from time to time.
"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 of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property,
5
<PAGE>
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 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 or the occurrence of an
Event of Default specified in SECTION 9.1(f) OR 9.1(g), 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, 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 Credit Fees in connection with the NYCTA/PB Letters
of Credit,
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<PAGE>
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.
"Distribution Agreement" means that certain Distribution Agreement,
dated as of October 10, 1995, by and between Fidelity and Deposit Company of
Maryland, Mellon Bank, N.A., as agent and collateral agent for itself and the
other Existing Lenders, the Borrowers, and each of the Subsidiaries who are
signatories thereto.
"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 (4D2 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.
"Equilibrium" means any point at which the Non-Metra Exposure
Percentage equals the Metra Exposure Percentage determined in accordance with
the most recent Recalculation.
"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
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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" means the Indebtedness under the Existing
Agreements 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 Indebtedness
described in Clause (b) of the definition of "Exposure" and all Liquidated
Contingent Liabilities of such Existing Lender to the extent outstanding from
time to time.
"Exposure" means, with respect to each Existing Lender at any time,
the following: (a) such Existing Lender's share of the maximum aggregate
principal amount 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; (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 both) to such Existing
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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; and (e) all interest, fees, and other charges then
accrued and unpaid with respect to any of the foregoing.
"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.
"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,
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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 the obligations under the
Bridge Loan Agreement.
"Initial Exposure" means, with respect to each Existing Lender, such
Existing Lender's Exposure as of July 1,
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1995, exclusive of that portion of such Existing Lenders Exposure described in
Clause (e) of the definition of "Exposure."
"Intercreditor Agreement" means that certain Intercreditor and
Subordination Agreement dated as of October 10, 1995, by and among Fidelity and
Deposit Company of Maryland, Mellon Bank, N.A., as administrative 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,
and T-Co.
"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.
"July 31, 1995 Restructuring" has the meaning assigned to it in
RECITAL D.
"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 Non-Metra 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 Agreement, the Distribution Agreement and any
documents (i) listed on the Schedule of Documents and therein specified to be
executed and delivered, or caused to be executed and delivered,
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by the Borrowers or the Guarantors to the Agent, the Existing Lenders or the
Collateral Agent in connection with this Agreement or (ii) listed on the
Schedule of Documents for the July 31, 1995 Restructuring and executed or
delivered in connection with the Original Override Agreement; PROVIDED, that the
Bridge Loan Agreement and related loan documents, the T-Co Credit Agreement and
related loan documents, the Metra Credit Agreement and related loan documents,
and the T-Co Asset Purchase 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 Credit Agreement.
"Metra Collateral" means collateral granted to the Metra Agent for the
benefit of Metra Lenders by T-Co in connection with and solely for the benefit
of the Metra 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, as assigned to and assumed by
T-Co.
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"Metra Credit Agreement" means that certain Revolving Credit Agreement
dated as of October 10, 1995 among T-Co, Bank of America National Trust and
Savings Association as agent and the Metra Lenders.
"Metra Exposure Percentage" means, as of the date of determination, a
percentage derived by dividing (a) the aggregate amount of the Metra Obligations
as of such date less the amount of the Metra Holdback 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
stating: (a) that the Metra Agent has released, disposed of or collected upon
all Metra Collateral; (b) the amount of the Metra Exposure Percentage as of such
date; (c) the amount of the Metra Obligations as of such date; (d) that all of
the Metra Obligations have become due and payable; (e) that but for the terms of
SECTION 2.3 and ARTICLE III of this Agreement or the occurrence of an Event of
Default specified in SECTION 9.1(f) OR 9.1(g), the Metra Agent, for the benefit
of the Metra Lenders, would be entitled to seek immediate payment from a
Borrower pursuant to the Metra Guaranty.
"Metra Guaranty" means that certain Guaranty dated as of October 10,
1995 made by MKO and MKD in favor of the Metra Agent for the benefit of the
Metra Lenders guarantying the obligations of T-Co to the Metra Lenders under the
Metra Credit Agreement.
"Metra Holdback" has the meaning assigned to it in SECTION 2.11(e).
"Metra Lenders" means those Existing Lenders that are banks under the
Metra Credit Agreement in their capacity as banks under the Metra Credit
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 T-Co in connection with the Metra
Contract.
"Metra Obligations" means, as of the date of determination, the
maximum principal amount advanced (and not repaid) or which the Metra Lenders
may thereafter be obligated to advance, which principal amounts are guaranteed
under the Metra Guaranty together with interest, fees and other charges then
accrued and unpaid, which amounts are guaranteed under the Metra Guaranty;
PROVIDED, that the principal amount of the Metra Obligations measured as of
July 1, 1995 shall be deemed to be $141,704,301.94 and each Existing Lender's
Initial Exposure with respect to the Metra Obligations shall be based upon such
amount.
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"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, as the same may be amended,
modified, supplemented and restated from time to time.
"MKO" means Morrison Knudsen Corporation, an Ohio corporation, and its
successors.
"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, as the same may be amended,
modified, supplemented and restated from time to time.
"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 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.
"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
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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.
"New Bonds Agreement" means that certain agreement dated as of October
10, 1995 among Fidelity and Deposit Company of Maryland, the Borrowers and the
other parties listed on the signature pages thereto.
"Non-Metra Exposure Percentage" means, as of the date of
determination, a percentage derived by dividing (a) the aggregate principal,
interest, fees and other charges owing as of such date with respect to those
Existing Loans which were outstanding as of July 1, 1995, by (b) the aggregate
principal amount of Existing Loans outstanding as of July 1, 1995.
"Non-Metra Lenders" means those Existing Lenders acting in any
capacity other than Banks under the Metra Credit Agreement.
"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 Letters of Credit" means the Existing Letters of Credit
issued by Morgan Guaranty Trust Company of New York or Citibank, N.A. for the
account of either Borrower for the benefit of the New York City Transit
Authority or Pitney Bowes Corporation.
"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 or the Loan Documents and the
Existing Agreements 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
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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.
"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.
"Original Closing Date" means August 10, 1995.
"Original Override Agreement" has the meaning assigned to it in
RECITAL E.
"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, limited liability company,
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
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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
(not including distributions from the Contingent Indebtedness Account to
Existing Lenders on account of Conversion Events) 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; PROVIDED FURTHER,
that in calculating Pro Rata Shares for purposes of distributions under this
Agreement during any period when Equilibrium has not been reached, (i) if
pursuant to SECTION 2.11, any portion of a distribution is to be distributed
solely to the Metra Lenders, only the Metra Obligations shall be included in the
calculation of each Existing Lender's Exposure and the Aggregate Exposure and
(ii) if pursuant to SECTION 2.11, any portion of a distribution is to be
distributed solely to the Non-Metra Lenders, only Existing Loans and Existing
Contingent Indebtedness shall be included in the calculation of each Existing
Lender's Exposure and the Aggregate Exposure.
"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
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such Existing Lender's Exposure, 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 which each
Reduction in Liability described therein 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; (d) the amount of Letter of Credit Fees and Facility Fees accrued and
unpaid under such Existing Lender's Existing Agreements; and (e) as to any
Reallocation Certificate provided with respect to Metra Obligations, all
interest, fees and other charges then accrued and unpaid under the Metra
Guaranty.
"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.
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"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 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
Agreement, the Distribution Agreement, the Metra Guaranty and any other of those
documents (i) 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 T-Co Restructuring or (ii) listed on
the Schedule of Documents for the July 31, 1995 Restructuring and executed or
delivered in connection with the July 31, 1995 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.
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"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, 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", as supplemented and amended by that certain First Supplement
and Amendment to Second Preferred Mortgage dated as of October 10, 1995, and as
the same may be further supplemented or amended from time to time.
"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
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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 Asset Purchase Agreement" means that certain Asset Purchase
Agreement dated as of October 10, 1995 between the Borrowers, the Subsidiary
signatories thereto and T-Co.
"T-Co Asset Purchase Documents" means the T-Co Asset Purchase
Agreement and the documents executed by any Borrower in connection therewith,
including the New Bonds Agreement.
"T-Co Restructuring" has the meaning assigned to it in RECITAL F.
"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.
"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.
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"Warrants" means those certain Warrants in substantially the form of
EXHIBITS C-1 AND C-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.
1.4. CERTAIN CONTINGENT OBLIGATIONS. Any reference to principal payable
with respect to an Existing Agreement which is a guaranty shall mean and refer
to the principal payable with respect to the primary obligation.
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 and all other Obligations with respect to which a Conversion Event shall
have then occurred 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 Original Closing Date. Any obligation of either Borrower or any Guarantor
to prefund or cash collateralize Existing Contingent Indebtedness or the Metra
Guaranty is hereby suspended until the Termination Date, other
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than as required by SECTION 2.11. On the Termination Date, the Agent on behalf
of Existing Lenders holding outstanding Existing Contingent Indebtedness or the
Metra Obligations, may require that such Existing Contingent Indebtedness or the
Metra Guaranty be prepaid or cash collateralized as required pursuant to the
terms of the applicable Existing Agreements as in effect immediately prior to
the Original Closing Date or, with respect to the Metra Guaranty, the Closing
Date, by delivering such prepayment or cash collateral to the Collateral Agent.
On the Termination Date, the Agent may demand payment in full of all Existing
Loans and take any other action as provided in ARTICLE IX. Nothing in this
Agreement or any of the other Restructuring Documents, shall restrict or impair
any Existing Lender's right to seek recovery of Existing Contingent Indebtedness
or Obligations under the Metra Credit 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, 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 amount of
their Existing Indebtedness, an amount equal to $100,000,000 plus interest and
fees accrued on Existing Loans as of such date, plus interest, fees and other
charges then accrued and unpaid under the Metra Guaranty to the extent necessary
to achieve and maintain Equilibrium. 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. The Borrowers agree that to the extent the Agent is required to
distribute payments into the Metra Holdback, as provided in SECTION 2.11(a), to
achieve and maintain Equilibrium, the Borrowers shall pay additional amounts to
the Agent to insure full payment of the amounts required to be paid to the Non-
Metra Lenders under SECTION 2.11(a) and this SECTION 2.5(a). Deferred Interest
shall be paid as set forth in
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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 on Existing Loans, 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 Letters of Credit shall be paid directly to
the respective issuers thereof. Interest, fees and other charges accruing under
the Metra Guaranty shall be payable hereunder only to the extent necessary to
achieve and maintain Equilibrium at the time of any payment to the Non-Metra
Lenders.
(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 (including sums necessary to achieve
Equilibrium as more particularly described in the second sentence of SECTION
2.5(a)) 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 all 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.
(c) For the purposes of calculating interest owing under an Existing
Agreement which constitutes a Contingent Obligation, such interest shall at all
times be deemed to accrue on unpaid principal at the rate at which interest is
then accruing with respect to Existing Loans. In no event shall interest be
deemed to have accrued with respect to the unfunded principal portion of any
Obligation.
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
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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 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 such payment is due.
2.8. OPTIONAL PREPAYMENTS.
(a) Subject to the terms and conditions of the Intercreditor
Agreement and the Distribution Agreement, the Borrowers may, upon at least one
Business Day's notice to the Agent, prepay all or any portion of the
Obligations, 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. Each such
optional prepayment shall be paid to the Agent for the benefit of the Existing
Lenders, shall be payable to the Existing Lenders 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 share of such prepayment and such notice shall not
thereafter be revocable by the Borrowers.
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2.9. MANDATORY PREPAYMENT. Subject to the terms and conditions of the
Intercreditor Agreement, 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 the Existing Lenders 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 (other than Emkay Development Company, Inc.) or the Agent of (i) Net
Cash Proceeds of 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) Net Cash
Proceeds of any issuance of capital stock by the Borrowers or (iii) insurance
proceeds, the Borrowers shall pay or cause to be paid such Net Cash Proceeds or
insurance 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 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 and that certain Loan Agreement
between MKD and Morrison Knudsen Engenharia S.A. dated __________, 1995 in
substantially the form attached hereto as Schedule 2.9.
(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. Each Non-Metra Lender shall apply each
payment received by it on account of 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) as follows (regardless of how
each Existing Lender may treat such payments for purposes of its own
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accounting): FIRST to interest on Deferred Interest (to the extent then due);
SECOND 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; THIRD to Deferred Interest (to the extent
then due); and FOURTH to the unpaid principal amount of the Obligations.
Subject to the requirements of SECTION 2.11(b), sums payable to any of the Metra
Lenders hereunder shall be paid to the Metra Agent for the account of the Metra
Lenders and for distribution and application in accordance with the terms of the
Metra Credit Agreement.
2.11. GENERAL PROVISIONS AS TO PAYMENTS.
(a) The Borrowers shall make each payment 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 and Letter of Credit
Fees with respect to the NYCTA/PB Letters of Credit), 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 this
SECTION 2.11, the Agent will promptly distribute each payment received by it on
account of the Obligations, FIRST, to the Agent on account of then due and
outstanding fees and expenses or other charges of the Agent or the Collateral
Agent under this Agreement or any of the other Loan Documents to the extent
payable by the Borrowers; SECOND, ratably in accordance with their Pro Rata
Shares, either to the Non-Metra Lenders or the Metra Lenders to the extent
required to achieve Equilibrium; THIRD, ratably to all Existing Lenders in
accordance with their Pro Rata Shares; and, FOURTH, to all other Obligations.
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 and the Agent may
direct the Collateral Agent to disburse the share of such returned payment
deposited in the Contingent Indebtedness Account to the Agent. Upon receipt by
the Agent of any such payment from the Borrowers, or from the Existing Lenders
and the Contingent Indebtedness Account 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
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shall be reinstated to the extent the Agent makes such payment. The Agent's
determination of each Existing Lender's share of a returned payment received or
deposited in the Contingent Indebtedness Account shall be conclusive absent
manifest error. 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) The Agent shall make the distributions on account of the Existing
Contingent Indebtedness and, prior to the Metra Final Accounting Date, the Metra
Guaranty into an account established pursuant to SECTION 6.1 of the Collateral
Agent Agreement (the "Contingent Indebtedness Account"). From and after the
Metra Final Accounting Date, sums payable to any Metra Lender hereunder shall be
paid to the Metra Agent for distribution under the Metra Credit Agreement.
Funds distributed to the Non-Metra Lenders pursuant to SECTION 2.11(a) shall be
distributed, FIRST, ratably to each Non-Metra Lender in accordance with its
share of interest on the Deferred Interest; SECOND, to the extent of any
remaining balance, ratably to each Non-Metra Lender in accordance with its share
of the 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 Non-Metra Lenders; THIRD, to the extent of any remaining
balance, ratably to each Non-Metra Lender in accordance with its share of the
Deferred Interest (to the extent then due); and FOURTH, to the extent of any
remaining balance, ratably to each Non-Metra Lender in accordance with its Pro
Rata Share for application to the unpaid principal amount of the Obligations.
(c) In the event that Conversion Events have occurred with respect to
Existing Contingent Indebtedness since the date of the last Recalculation, the
Agent shall request the Collateral Agent to disburse funds from the Contingent
Indebtedness Account to the Agent for distribution 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 shall receive cash bearing the
same proportion to the amount of Existing Contingent Indebtedness 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 July 1, 1995 bears to the outstanding principal
amount of such Existing Loans as of July 1, 1995. In the event a Conversion
Event occurs with respect to the Metra Obligations, and the Metra Exposure
Percentage (calculated, for the purposes of this SECTION 2.11(c), as if the
Metra Holdback is zero) then exceeds the Non-Metra Exposure Percentage, then the
Agent will instruct the Collateral Agent to disburse funds from the Contingent
Indebtedness Account to the Agent for distribution to the Metra Agent for the
benefit
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of the Metra Lenders in such amount sufficient to achieve Equilibrium
(calculated, for the purposes of this SECTION 2.11(c), as if the Metra Holdback
is zero). In the event that either (i) funds remain in the Metra Holdback after
the disbursement described in the preceding sentence or (ii) following a
Conversion Event with respect to the Metra Obligations, the Non-Metra Exposure
Percentage then equals or exceeds the Metra Exposure Percentage (calculated, for
the purposes of this SECTION 2.11(c), as if the Metra Holdback is zero), then
the Agent shall request that the Collateral Agent deliver the balance then held
in the Metra Holdback 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, to
the extent then so required, to the Metra Lenders on account of the Metra
Obligations.
(d) If any Reductions in Liability shall occur at any time with
respect to any Existing Contingent Indebtedness, 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 paid
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
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, to the extent
then required, to the Metra Lenders on account of the Metra Obligations. Upon
the occurrence of each Reduction in Liability with respect to the Metra
Obligations the Agent shall request the Collateral Agent to disburse from the
Metra Holdback the lesser of (i) the entire balance of the Metra Holdback and
(ii) an amount necessary to achieve Equilibrium (by the resulting increase in
the Metra Exposure Percentage). The Agent shall promptly distribute funds so
disbursed 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, to
the extent then required, to the Metra Lenders on account of the Metra
Obligations.
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(e) Except as set forth in SECTION 2.11(c) and SECTION 2.11(f), 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
Final Accounting Date.
(f) If eight years after the Termination Date, no Event of Default
under SECTION 9.1(f) or 9.1(g) has occurred and funds remain in the Contingent
Indebtedness Account, the Agent shall distribute to each Existing Lender its Pro
Rata Share of the Contingent Indebtedness Account; PROVIDED, that for the
purposes of determining each Existing Lender's Pro Rata Share under this
SECTION 2.11(f), only Existing Loans or other Obligations with respect to which
a Conversion Event has occurred shall be included in the calculation of each
Existing Lender's Exposure and the Aggregate Exposure, unless all Existing Loans
and all other Obligations with respect to which a Conversion Event has occurred
have been paid in full, in which case, the Agent shall distribute to each
Existing Lender holding Existing Contingent Indebtedness and Metra Obligations
(if the Metra Final Accounting Date has not occurred) its Pro Rata Share of the
Contingent Indebtedness Account. Any distribution to Existing Lenders on
account of the Metra Obligations or Existing Contingent Indebtedness shall be
held by such Existing Lender as cash collateral and applied to such Obligations
upon maturity.
2.12. RECALCULATION. On the Original Closing Date and on the first day
of each calendar quarter, commencing with the calendar quarter beginning
October 1, 1995, at such other times as may be requested by the Majority Lenders
or the Metra Agent, and at such other time or times as Agent may deem
appropriate for the purposes of determining distributions, voting, or any other
act under this Agreement to which each Existing Lender's Pro Rata Share may be
relevant, the Agent shall recalculate (a "Recalculation") each Existing Lender's
Existing Contingent Indebtedness, Existing Loans and Metra Obligations on the
basis of Reallocation Certificates most recently 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 Original Closing
Date until the next Recalculation, 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 (calculated
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other than for purposes of accruing interest and fees, as if such Reduction in
Liability had occurred before July 1, 1995) 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. 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 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. Each of the Existing
Lenders and the Metra Agent may, in its discretion and from time to time,
deliver to the Agent a current Reallocation Certification. 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. If
such Existing Lender or the Metra Agent has not complied ninety (90) days after
written request from the Agent (including the Agent's initial request) and
forty-five (45) days after a second written request from the Agent, such
Existing Lender's Exposure, or, in the case of the Metra Agent, the Metra
Obligations, shall be deemed to be zero (0).
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 has established, on or
prior to the Original Closing Date, and each Borrower will maintain until the
Obligations have been paid in full, the Cash Management System described in
SCHEDULE E.
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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.
(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
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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 Original Closing Date through the Termination Date,
other than (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, 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 reimbursement agreements applicable to which the NYCTA/PB Letters of Credit
were issued, (b) waives all defaults and events of default existing on the
Original Closing Date or which may arise on or after the Original 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
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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
Original 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. Other than as provided in ARTICLE
IX, each Existing Lender and the Metra Agent agree 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.
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 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, this Agreement shall not (i) 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 the Agent, the
respective definitions for all capitalized terms used therein and the notes
issued thereunder,
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it being understood that this Agreement constitutes an amendment and restatement
of all other provisions of such Credit Agreement and (ii) appoint Mellon Bank,
N.A., as the Metra Agent under the Metra Guaranty.
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 agreements under this Agreement, the other Loan
Documents and the Existing Agreements, as modified by this Agreement, shall be
secured to the extent provided in the Security Documents and the Intercreditor
Agreement.
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 not
previously delivered in connection with the July 31, 1995 Restructuring and all
the other
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certificates, schedules, the T-Co Asset Purchase Documents 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 and the T-Co Asset
Purchase Documents to 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 T-CO RESTRUCTURING. The T-Co 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 6.20 (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,
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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.
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, each of the other Restructuring Documents and the T-Co Asset Purchase
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 and the T-Co Asset Purchase 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 and T-Co Asset Purchase 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, and the T-Co Asset Purchase Documents, 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
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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, the other Restructuring Documents
or the T-Co Asset Purchase 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 Original Closing
Date which
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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 T-Co Restructuring 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 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 and the T-Co Asset Purchase 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. 4.00 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 delivered in connection
with the July 31, 1995 Restructuring, 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 delivered to the 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.
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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, 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
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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 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
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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 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.
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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
Original 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.
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6.28. T-CO RESTRUCTURING. The T-Co 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 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 such officer's 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;
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(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;
(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;
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(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 and
Western Aircraft, Inc.), certified by the chief financial officer as complete
and correct;
(m) On a daily basis, each Borrower's daily cash balances and
outstanding loan balances;
(n) On a weekly basis, a report of any reductions of letter of credit
obligations under the Existing Agreements;
(o) On a weekly basis, the management operation reports prepared for
each of the Borrowers' divisions; 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 Existing
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 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
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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, including any breach or default under the New Bonds
Agreement.
(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.
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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 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
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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 their 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
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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.
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.
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(b) Provide a brief description of any bona fide offer in excess of
$3,500,000 for any proposed disposition of assets.
7.16. 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;
Indebtedness existing, or relating to commitments existing, on
the Original Closing Date and the Metra Obligations, 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 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
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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 and the T-Co Asset Purchase
Documents including Liens of the Bonding Company thereunder; provided that (i)
no cash collateral may be provided to the Bonding Company (except for cash
collateral permitted to be disbursed to or for the benefit of the Bonding
Company under the Distribution Agreement) or to T-Co except as permitted by
SECTION 8.4, and (ii) no security interest in office equipment or furnishings,
including computers, shall be provided to either the Bonding Company or T-Co;
(b) Liens existing on the Original Closing Date securing Indebtedness
outstanding on the Original Closing Date 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; and PROVIDED, FURTHER, that such
Lien is confined solely to the asset so acquired;
(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;
(g) Liens which are bonded in a manner reasonably satisfactory to the
Majority Lenders; and
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(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, except Emkay
Development Company, Inc., 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 Intercreditor Agreement and secures
new bonds issued by the Bonding Company (the "Subject Equipment"), the Borrowers
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 any stock, bonds, notes, debentures or
other securities of, or make any other investment in any Person (all such
transactions
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being called "Investments"), or permit any Guarantor to do any of the foregoing,
except:
(a) Investments in Cash Equivalents;
(b) Investments existing on the Original 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 Agreement or are in
the ordinary course of such Borrower's or Guarantor's business and are made in
accordance with the Budget.
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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 Original 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.
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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 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,
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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 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 (3) 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
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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;
(r) The occurrence of any breach or default under the Distribution
Agreement or the Intercreditor Agreement;
(s Breach of any representation, warranty, covenant, obligation or
undertaking set forth in the Cash Management System or any agreement related
thereto;
(t) There shall be any amendment or other modification of the Metra
Guaranty, the Metra Credit Agreement or any related documents that increases the
maximum amount payable under the Metra Guaranty or the Metra Credit Agreement
without
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the consent of All Existing Lenders, including amendments or modifications
relating to the maximum principal amount, the rate of interest, or fees and
other charges payable under the Metra Guaranty, the Metra Credit Agreement or
any related documents; or
(u) Any claim is made by T-Co or any other Person asserting that the
Borrowers have breached a representation, warranty, or covenant contained in the
T-Co Asset Purchase Documents or any payments are made by the Borrowers on
account of any such claim or breach, in each case in an aggregate amount in
excess of $500,000; PROVIDED, HOWEVER, that no Event of Default shall exist
under this SECTION 9.1(u) if the Borrowers are contesting, in good faith, the
claim that they have breached a representation, warranty or covenant contained
in the T-Co Asset Purchase Documents.
(v) There shall be any amendment or other modification to the T-Co
Asset Purchase Documents, including the New Bonds Agreement and the
Reimbursement Agreement, without the consent of the Majority Lenders.
9.2. THE EXISTING LENDERS' REMEDIES. Subject to the Intercreditor
Agreement and the Distribution Agreement, 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 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.
9.3. OTHER REMEDIES. Subject to the Intercreditor Agreement and the
Distribution Agreement, 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
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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 Documents and the transactions evidenced by this Agreement and the
other Restructuring Documents, generally.
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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.
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
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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 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
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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 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
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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 upon such Existing Lenders 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.
10.12. THE SUCCESSOR AGENT. The Agent may resign as such upon ten days'
prior written notice to the Existing Lenders. The
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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 THE 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.
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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
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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
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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
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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
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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
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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
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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. Any such set-off rights will be subject to the
Intercreditor Agreement.
(b) Each Existing Lender (other than Citibank, N.A. and Morgan
Guaranty Trust Company of New York with respect to Letter of Credit Fees under
the reimbursement agreements under which the NYCTA/PB 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 this
Agreement (in the case of a Reduction in Liability, calculated, other than for
purposes of accruing interest and fees, as if such Reduction in Liability had
occurred before July 1, 1995), 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 Guaranty as
provided in SECTION 2.11(b), and until so delivered or disbursed pursuant to
SECTION 2.11(f), 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 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
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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 (calculated, other
than for purposes of accruing interest and fees, as if such Reduction in
Liability had occurred before July 1, 1995).
(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 Guaranty 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. The Agent shall deposit such property with the
Collateral Agent and upon the liquidation of such property, such property shall
be distributed to the Existing Lenders as provided in SECTION 2.11 and applied
to the Obligations as provided in SECTION 2.10.
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(e) Each Existing Lender agrees to the provisions of this SECTION
12.5 on behalf of any assignee under its Existing 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," "Equilibrium," "Exposure," "Liquidated Contingent Liability," "Majority
Lenders," "Metra Exposure Percentage," "Metra Final Accounting Date," "Metra
Lenders," "Non-Metra Exposure Percentage," "Non-Metra Lenders," "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 12.21, (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 Agreement or the Distribution
Agreement, 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 Agreement.
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
Documents, shall not suspend, waive or affect any other Default
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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 Agreement, 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) Any Existing Lender may at any time grant a participating
interest in its Existing Indebtedness to any Person (a "Participant"). 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) 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 B. Upon execution
and delivery of such instrument and payment by such Assignee to such transferor
Existing Lender of an amount
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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 any Metra Lenders under the
Metra Guaranty shall also be subject to any conditions or limitations set forth
in the Metra Credit 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 Guaranty
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.
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 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
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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, 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.
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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 BY THE METRA LENDERS. Any vote (a) at any time at which
the Non-Metra Exposure Percentage exceeds the Metra Exposure Percentage, 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 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 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 Metra Exposure Percentage
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does not exceed the Non-Metra Exposure Percentage. This SECTION 12.20 shall not
apply in a bankruptcy proceeding.
12.21. PAYMENTS TO THE METRA LENDERS. The Metra Agent and each Metra
Lender hereby agree, for the benefit of each Existing Lender with any
Obligations other than Metra Guaranty, that notwithstanding any provision of any
writing to the contrary, neither the Metra Agent nor any Metra Lender shall be
entitled to receive any payment or distribution at any time in respect of the
Metra Guaranty from the Borrowers, any Guarantor or proceeds of Collateral in
connection with this Agreement or the other Loan Documents prior to the first
time on or after the Metra Final Accounting Date that the Metra Exposure
Percentage equals or exceeds the Non-Metra Exposure Percentage calculated, for
the purpose of this SECTION 12.21 as if the Metra Holdback is zero (0). If any
such payments are received they shall be paid to the Agent pursuant to SECTION
12.5.
12.22. 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.
12.23. AMENDMENT OF METRA CREDIT AGREEMENT. The Metra Agent and the
Metra Lenders hereby agree that they shall not enter into any amendment or
modification of the Metra Credit Agreement that increases the maximum amount
payable under the Metra Credit Agreement without the consent of All Existing
Lenders.
12.24. ACKNOWLEDGEMENT AND ACCEPTANCE OF THE INTERCREDITOR AGREEMENT.
Each of the Existing Lenders and the Metra Agent agree to and acknowledge the
terms of the Intercreditor Agreement and agree to be bound by the terms thereof
as it applies to the Existing Lenders and the Agent.
12.25. APPROVAL OF FIRST AMENDMENT TO COLLATERAL AGENT AGREEMENT. The
Agent and the Existing Lenders hereby agree to the terms of the First Amendment
to Collateral Agent Agreement and Mortagage Trust in the form of EXHIBIT D,
agree to be bound by such amendment as if they had executed it, and appoint
Mellon Bank, N.A. as Collateral Agent and Mortgage Trustee thereunder, as set
forth therein.
79
<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
(a Delaware corporation), as a Borrower
/s/ D. L. Brigham
By
----------------------------------
Name: D. L. Brigham
Title: VP & Treasurer
MORRISON KNUDSEN CORPORATION
(an Ohio corporation), as a Borrower
/s/ D. L. Brigham
By
----------------------------------
Name: D. L. Brigham
Title: VP & Treasurer
MELLON BANK, N.A., as Agent and an Existing Lender
/s/ Alan J. Kopolow
By
----------------------------------
Name: Alan J. Kopolow
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Metra Agent and an Existing Lender
/s/ Henry Y. Yu
By
----------------------------------
Name: Henry Y. Yu
Title: Senior Vice President
[ADDITIONAL SIGNATURES FOR EXISTING LENDERS CONTINUED ON NEXT PAGE]
80
<PAGE>
EXISTING LENDERS:
Bank of Montreal
/s/ R. Domachevsky
By:
-------------------------
Name: R. Domachevsky
Title: Vice President
The Bank of Nova Scotia
/s/ D. N. Gillespie
By:
-------------------------
Name: D. N. Gillespie
Title: Assistant General Manager
The Bank of Tokyo, Ltd.,
Seattle Branch
/s/ Stanley A. Lance
By:
-------------------------
Name: Stanley A. Lance
Title: Vice President
Banque Nationale de Paris
/s/Katherine Wolfe
By:
-------------------------
Name: Katherine Wolfe
Title: Vice President
/s/ Jeffrey S. Kajisa
By:
-------------------------
Name: Jeffrey S. Kajisa
Title: Assistant Vice President
Banque Paribas
/s/John Cate
By:
-------------------------
Name: John Cate
Title: Group Vice President
/s/ Alan E. McLintock
By:
-------------------------
Name: Alan E. McLintock
Title: Regional General Manager
CIBC Inc.
/s/ Robert N. Greer
By:
-------------------------
Name: Robert N. Greer
Title: Vice President
Citibank, N.A.
/s/ Bradley I. Dietz
By:
-------------------------
Name: Bradley I. Deitz
Title: Vice President
Credit Lyonnais, Canada
/s/ Jacques Clermont
By:
-------------------------
Name: Jacques Clermont
Title: VP & Asst Mngr Eastern Region
/s/ Rita Farley
By:
-------------------------
Name: Rita Farley
Title: Manager, Corporate Banking
Credit Lyonnais, New York Branch
/s/ Alan Sidrane
By:
-------------------------
Name: Alan Sidrane
Title: Vice President
Deutsche Bank AG,
Los Angeles Branch and/or Cayman Islands Branch
/s/ Patricia E. Apelian
By:
-------------------------
Name: Patricia E. Apelian
Title: Director
/s/ J. Scott Jessup
By:
-------------------------
Name: J. Scott Jessup
Title: Vice President
The Hongkong and Shanghai
Banking Corporation Limited
/s/ George W. Masek
By:
-------------------------
Name: George W. Masek
Title: Vice President
[ADDITIONAL SIGNATURES FOR EXISTING LENDERS CONTINUED ON NEXT PAGE]
<PAGE>
The Industrial Bank of Japan, Limited, Los Angeles Agency
/s/ Illegible
By:
-------------------------
Name: Illegible
Title: SVP
Key Bank of Idaho
/s/ Terry Pitkin
By:
-------------------------
Name: Terry Pitkin
Title: VP
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency
/s/ Curt M. Biren
By:
-------------------------
Name: Curt M. Biren
Title: Vice President, Manager
Morgan Guaranty Trust Company
/s/ D. Linda Scheuplein
By:
-------------------------
Name: D. Linda Scheuplein
Title: Vice President
National Westminster Bank PLC
/s/Theodore P. Nikolis
By:
-------------------------
Name: Theodore P. Nikolis
Title: Vice President & Counsel
Royal Bank of Canada
/s/ Brian W. Dixon
By:
-------------------------
Name: Brian W. Dixon
Title: Senior Manager
San Paolo Bank SpA
/s/ Donald W. Brown
By:
-------------------------
Name: Donald W. Brown
Title: Branch Manager
/s/ Glen Binder
By:
-------------------------
Name: Glen Binder
Title: VP
Society National Bank
/s/ Amy J. Piesen
By:
-------------------------
Name: Amy J. Piesen
Title: Vice President
Union Bank of Switzerland
/s/ Scott Sommers
By:
-------------------------
Name: L. Scott Sommers
Title: Vice President
/s/ Peter S. Humber
By:
-------------------------
Name: Peter S. Humber
Title: Vice President
Westdeutsche Landesbank
Girozentrale, New York and
Cayman Islands Branches
/s/ Salvatore Battinelli
By:
-------------------------
Name: Salvatore Battinelli
Title: Vice President
Credit Department
/s/ Catherine Ruhland
By:
-------------------------
Name: Catherine Ruhland
Title: Associate
<PAGE>
SCHEDULES AND EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE SCHEDULES AND EXHIBITS HERETO.
<PAGE>
EXHIBIT 4.2
FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
"Amendment") dated as of October 10, 1995 is entered into among MORRISON KNUDSEN
CORPORATION, a Delaware corporation ("MKD"), and MORRISON KNUDSEN CORPORATION,
an Ohio corporation ("MKO") (MKD and MKO each a "Borrower," and collectively,
the "Borrowers"), the banks and other financial institutions named on Schedule A
to the Credit Agreement (as defined below) 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"), with reference to
the following facts:
RECITALS
A. Pursuant to the Amended and Restated Credit Agreement dated as of July
31, 1995 by and among the Borrowers, the Lenders, the Administrative Agent and
the Co-Agents (the "Credit Agreement"), the Lenders agreed to make certain
financial accommodations to or for the benefit of the Borrowers upon the terms
and conditions contained therein. Unless otherwise defined in this Amendment,
(i) capitalized terms used herein shall have the meanings attributed to them in
the Credit Agreement as amended hereby, and (ii) references to sections and
subsections shall refer to sections or subsections of the Credit Agreement.
B. In connection with the second phase of the restructuring of the
Borrowers' Indebtedness, (i) American Passenger Rail Car Company L.L.C.
("T-Co"), a limited liability company, has been formed, (ii) MKO will transfer
certain assets of its Transit Division (the "Transit Division Assets") to T-Co
pursuant to that certain Asset Purchase Agreement dated as of October 10, 1995
among T-Co, MKO, MKD and the entities named on Schedule 1 thereto (the "T-Co
Asset Purchase Agreement"), (iii) T-Co and Credit Suisse will enter into a
credit agreement to repay the amounts owing under the T-Co Interim Credit
Agreement and to finance certain of the ongoing operations of T-Co, (iv) T-Co
and the Metra Lenders will enter into a credit agreement (the "Metra Credit
Agreement") to repay the amounts owing under the Metra Interim Credit Agreement
and to finance certain of the ongoing operations of the Metra Contract after its
acquisition by T-Co, and (v) the Existing Lenders, the agent for the Existing
Lenders, and the Borrowers will amend and restate the Override Agreement (such
transactions shall collectively be referred to as the "T-Co Restructuring").
<PAGE>
C. In connection with the T-Co Restructuring, the Borrowers have
requested that the Credit Agreement be amended.
D. The Lenders are willing to amend the Credit Agreement upon the terms
and conditions set forth in this Amendment, but only upon the condition, among
others, that the Borrowers, the Administrative Agent, the Co-Agents and the
Lenders shall have executed and delivered this Amendment to the Administrative
Agent.
NOW, THEREFORE, in consideration of the continued performance by the
Borrowers of their promises and obligations under the Credit Agreement and the
other Loan Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
A G R E E M E N T
1. AMENDMENT TO CREDIT AGREEMENT.
1.1 Section 1.1 of the Credit Agreement is hereby amended as follows:
(a) The definition of Cash Equivalent is hereby amended by
deleting the phrase "Standard & Poor's Corporation" and substituting the phrase
"Standard & Poor's Ratings Group" therefor.
(b) A new definition of "Distribution Agreement" is hereby added
in appropriate alphabetical order to read as follows:
"'Distribution Agreement' means that certain Distribution Agreement
dated as of October 10, 1995 by and among Fidelity and Deposit Company of
Maryland, Mellon Bank, N.A. as agent and collateral agent for itself and
the Existing Lenders, the Borrowers, and each of the Subsidiaries that are
signatories thereto."
(c) The definition of Equipment Asset Pool Intercreditor
Agreement is deleted in its entirety.
(d) A new definition of "First Amendment" is hereby added in
appropriate alphabetical order to read as follows:
"'First Amendment' means the First Amendment to Amended and Restated
Credit Agreement dated as of October 10, 1995 among the Borrowers, the
Administrative Agent, the Co-Agents and the Lenders."
<PAGE>
(e) The definition of Five Party Agreement is deleted in its
entirety.
(f) A new definition of "Intercreditor Agreement" is hereby
added in appropriate alphabetical order to read as follows:
"'Intercreditor Agreement' means that certain Intercreditor and
Subordination Agreement dated as of October 10, 1995 among Fidelity and
Deposit Company of Maryland, Mellon Bank, N.A. as administrative agent and
collateral agent for itself and the Lenders, Mellon Bank, N.A. as agent and
collateral agent for itself and the Existing Lenders, and T-Co."
(g) The definition of Intercreditor Agreements is deleted in its
entirety and the following is substituted therefor:
"'Intercreditor Agreements' means the Intercreditor Agreement and the
Distribution Agreement."
(h) A new definition of "Metra Agent" is hereby added in
appropriate alphabetical order to read as follows:
"'Metra Agent' means the agent under the Metra Credit Agreement."
(i) The definition of Metra Contract is hereby amended by adding
the phrase ", as assigned to and assumed by T-Co" before the period at the end
thereof.
(j) A new definition of "Metra Credit Agreement" is hereby added
in appropriate alphabetical order to read as follows:
"'Metra Credit Agreement' has the meaning assigned to it in RECITAL B
of the First Amendment."
(k) A new definition of "Metra Guaranty" is hereby added in
appropriate alphabetical order to read as follows:
"'Metra Guaranty' means that certain Guaranty dated as of October 10,
1995 made by MKO in favor of the Metra Agent for the benefit of the Metra
Lenders guarantying the obligations of T-Co to the Metra Lenders under the
Metra Credit Agreement."
(l) A new definition of "Metra Lenders" is hereby added in
appropriate alphabetical order to read as follows:
<PAGE>
"'Metra Lenders' means those Existing Lenders that are banks under the
Metra Credit Agreement in their capacity as banks under the Metra Credit
Agreement, and their respective successors and assigns."
(m) The definition of MKD Security Agreement is hereby amended
by adding the phrase ", as the same may be amended, modified, supplemented and
restated from time to time" before the period at the end thereof.
(n) The definition of MKO/MKD Asset Pool Intercreditor Agreement
is deleted in its entirety.
(o) The definition of MKO Security Agreement is hereby amended
by adding the phrase ", as the same may be amended, modified, supplemented and
restated from time to time" before the period at the end thereof.
(p) The definition of Multiparty Agreement is deleted in its
entirety.
(q) A new definition of "New Bonds Agreement" is hereby added in
appropriate alphabetical order to read as follows:
"'New Bonds Agreement' means that certain New Bonds Agreement dated as
of October 10, 1995 among Fidelity and Deposit Company of Maryland, the
Borrowers and the other parties listed on the signature pages thereto."
(r) The definition of Override Agreement is deleted in its
entirety and the following is substituted therefor:
"'Override Agreement' means that certain Amended and Restated Override
Agreement dated as of October 10, 1995 among the Borrowers, Mellon Bank,
N.A. as agent, the Existing Lenders and the Metra Agent, as the same may be
amended, modified, supplemented and restated from time to time."
(s) The definition of Person is hereby amended by adding the
phrase "limited liability company," after the word "corporation."
(t) The definition of Restructuring Documents is deleted in its
entirety and the following is substituted therefor:
"'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,
<PAGE>
the Metra Guaranty, and any other of those documents (i) listed on the
Schedule of Documents and executed or delivered in connection with the
Credit Agreement or (ii) listed on the Schedule of Documents for the
Override Agreement and therein specified to be executed and delivered, or
caused to be executed and delivered, in connection with the Override
Agreement."
(u) The definition of T-Co is deleted in its entirety and the
following is substituted therefor:
"'T-Co has the meaning assigned to it in RECITAL B to the First
Amendment."
(v) A new definition of "T-Co Asset Purchase Agreement" is
hereby added in appropriate alphabetical order to read as follows:
"'T-Co Asset Purchase Agreement' has the meaning assigned to it in
Recital B to the First Amendment."
(w) A new definition of "T-Co Asset Purchase Documents" is
hereby added in appropriate alphabetical order to read as follows:
"'T-Co Asset Purchase Documents' means the T-Co Asset Purchase
Agreement and the documents executed by any Borrower in connection
therewith, including the New Bonds Agreement."
(x) A new definition of "T-Co Restructuring" is hereby added in
appropriate alphabetical order to read as follows:
"'T-Co Restructuring' has the meaning assigned to it in RECITAL B to
the First Amendment."
(y) The definition of Transit Division Intercreditor Agreement
is deleted in its entirety.
(z) A new definition of "Unused Commitment Fee" is hereby added
in appropriate alphabetical order to read as follows:
"'Unused Commitment Fee' has the meaning assigned to it in SECTION
2.7(f).
1.2 Section 2.1 is hereby amended by deleting the reference to
"129,000,000" and substituting "100,000,000" therefor.
1.3 Section 2.2 is hereby amended by deleting the word "Period" after
the word "Borrowing."
<PAGE>
1.4 Section 2.7 is hereby amended by adding a new subsection (f) to
read as follows:
"(f) From and after the date of the closing of the T-Co
Restructuring and until the Termination Date, the Borrowers shall
pay to the Administrative Agent, for the account of the Lenders
in accordance with their respective Pro Rata Shares, a fee (the
"Unused Commitment Fee") equal to one-half of one percent (1/2%)
per annum of the amount by which the Commitments exceed the Loans
on any day. The Unused Commitment Fee shall be calculated based
on the actual number of days elapsed and a year of 360 days. The
accrued portion of the Unused Commitment Fee shall be payable (i)
monthly, in arrears, on the first day of the immediately
succeeding calendar month and (ii) on the Termination Date."
1.5 Section 2.9(a) is hereby amended by
(a) adding the phrase "Net Cash Proceeds of any" immediately
after the number "(ii)" and before the phrase "issuance of
capital stock;"
(b) adding the phrase "or insurance proceeds" after the phrase
in subsection (iii) that reads "the Borrowers shall pay or cause
to be paid such Net Cash Proceeds;" and
(c) adding the phrase "and that certain Loan Agreement between
MKD and Morrison Knudsen Engenharia S.A. dated ________, 1995 in
substantially the form attached hereto as Schedule 2.9" after the
phrase "that certain Loan Agreement between MKD and Morrison
Knudsen Engenharia S.A. dated July 7, 1995."
1.6 Section 7.1(m) is deleted in its entirety.
1.7 Section 7.2(g) is hereby amended by adding the phrase ",
including any breach or default under the New Bonds Agreement" before the period
at the end thereof.
1.8 Section 7.14 is hereby amended by deleting the phrase "non
Transit Division."
1.9 Section 7.16 is deleted in its entirety.
1.10 Section 8.2(a) is hereby amended by adding the following after
the word "thereunder;"
<PAGE>
"provided that (i) no cash collateral may be provided to the Bonding
Company (except for cash collateral permitted to be disbursed to or
for the benefit of the Bonding Company under the Distribution
Agreement) or to T-Co except as permitted by Section 8.4, and (ii) no
security interest in office equipment or furnishings, including
computers, shall be provided to either the Bonding Company or T-Co;"
1.11 Section 8.2(c) is hereby amended by adding the phrase "and
provided, further, that such Lien is confined solely to the asset so acquired;"
after the phrase "within 90 days after the acquisition thereof."
1.12 Section 8.4 is hereby amended by
(a) deleting the phrase "Equipment Asset Pool;" and
(b) adding the phrase "except Emkay Development Company, Inc."
after the phrase "or permit any Consolidated Subsidiary."
1.13 Section 8.15 is deleted in its entirety.
1.14 Section 9.1(i) is hereby amended by deleting the phrase
"occurrence of any of the events specified in subsections (a) through (g) of
Section 6.1 of the Multiparty Agreement or the."
1.15 Section 9.1(r) is hereby amended by deleting the phrase "the
Multiparty Agreement or the Intercreditor Agreements" and substituting the
phrase "the Distribution Agreement or the Intercreditor Agreement" therefor.
1.16 Section 9.1(s) is deleted in its entirety and the following is
substituted therefor:
"(s) Any claim is made by T-Co or any other Person asserting that the
Borrowers have breached a representation, warranty or covenant contained in
the T-Co Asset Purchase Documents, or any payments are made by the
Borrowers on account of any such claim or breach, in each case in an
aggregate amount in excess of $500,000; PROVIDED, HOWEVER, that no Event of
Default shall exist under this SECTION 9.1(s) if the Borrowers are
contesting, in good faith, the claim that they have breached a
representation, warranty or covenant contained in the T-Co Asset Purchase
Documents;"
1.17 Section 9.1(u) is deleted in its entirety and the following is
substituted therefor:
<PAGE>
"(u) There shall be any amendment or other modification of the Metra
Guaranty, the Metra Credit Agreement or any related documents that
increases the maximum amount payable under the Metra Guaranty or the Metra
Credit Agreement without the consent of All Lenders, including amendments
or modifications relating to the maximum principal amount, the rate of
interest, or fees and other charges payable under the Metra Guaranty, the
Metra Credit Agreement or any related documents;"
1.18 Section 9.1(v) is deleted in its entirety and the following is
substituted therefor:
"(v) There shall be any amendment or other modification of the
Override Agreement or any related documents, without the consent of the
Majority Lenders."
1.19 A new Section 9.1(w) is added in appropriate alphabetical order
to read as follows:
"(w) There shall be any amendment or other modification to the T-Co
Asset Purchase Documents, including the New Bonds Agreement and the
Reimbursement Agreement, without the consent of the Majority Lenders."
1.20 Section 13.11 is hereby amended by deleting the phrase "MKO/MKD
Asset Pool."
1.21 Schedule A -- Schedule of Lenders is hereby deleted in its
entirety and the Schedule of Lenders attached hereto as Schedule A is
substituted therefor.
1.22 Schedule B -- Schedule of the Existing Lenders and Existing
Agreements is hereby deleted in its entirety and the Schedule of the Existing
Lenders and Existing Agreements attached hereto as Schedule B is substituted
therefor.
1.23 Schedule E -- Schedule of Guarantors is hereby deleted in its
entirety and the Schedule of Guarantors attached hereto as Schedule E is
substituted therefor.
1.24 Schedule F -- Cash Management System is hereby deleted in its
entirety and the Cash Management System attached hereto as Schedule F is
substituted therefor.
1.25 Schedule G -- Schedule of Real Property Collateral is hereby
deleted in its entirety and the Schedule of Real Property Collateral attached
hereto as Schedule G is substituted therefor.
1.26 Schedule 5.1(h) -- Schedule of Title Policies is hereby deleted
in its entirety and the Schedule of Title Policies attached hereto as Schedule
5.1(h) is substituted therefor.
<PAGE>
1.27 Schedule 5.1(n) -- Schedule of Pending and Threatened Litigation
is hereby deleted in its entirety and the Schedule of Pending and Threatened
Litigation attached hereto as Schedule 5.1(n) is substituted therefor.
1.28 Schedule 6.7A -- Schedule of Indebtedness is hereby deleted in
its entirety and the Schedule of Indebtedness attached hereto as Schedule 6.7A
is substituted therefor.
1.29 Schedule 6.7B -- Schedule of Contingent Obligations is hereby
deleted in its entirety and the Schedule of Contingent Obligations attached
hereto as Schedule 6.7B is substituted therefor.
1.30 Schedule 6.8 -- Schedule of Material Contracts is hereby
deleted in its entirety and the Schedule of Material Contracts attached hereto
as Schedule 6.8 is substituted therefor.
1.31 Schedule 6.8A -- Material Defaults is hereby deleted in its
entirety and Material Defaults attached hereto as Schedule 6.8A is substituted
therefor.
1.32 Schedule 6.19 -- Schedule of Material Adverse Effects is
hereby deleted in its entirety and the Schedule of Material Adverse Effects
attached hereto as Schedule 6.19 is substituted therefor.
1.33 Schedule 6.20 -- Schedule of Subsidiaries is hereby deleted in
its entirety and the Schedule of Subsidiaries attached hereto as Schedule 6.20
is substituted therefor.
1.34 Schedule 6.23A -- Schedule of Business Locations is hereby
deleted in its entirety and the Schedule of Business Locations attached hereto
as Schedule 6.23A is substituted therefor.
1.35 Schedule 6.23B -- Schedule of Trade Names is hereby deleted in
its entirety and the Schedule of Trade Names attached hereto as Schedule 6.23B
is substituted therefor.
1.36 Schedule 7.1(k) -- Backlog Certificate is hereby deleted in
its entirety and the Backlog Certificate attached hereto as Schedule 7.1(k) is
substituted therefor.
1.37 Schedule 7.2(c)(A) -- Schedule of Reportable Events is hereby
deleted in its entirety and the Schedule of Reportable Events attached hereto as
Schedule 7.2(c)(A) is substituted therefor.
1.38 Schedule 7.2(c)(B) -- Schedule of Plan Terminations is hereby
deleted in its entirety and the Schedule
<PAGE>
of Plan Terminations attached hereto as Schedule 7.2(c)(B) is substituted
therefor.
1.39 Schedule 8.1 -- Schedule of Existing Indebtedness is hereby
deleted in its entirety and the Schedule of Existing Indebtedness attached
hereto as Schedule 8.1 is substituted therefor.
1.40 Schedule 8.2 -- Schedule of Permitted Liens is hereby deleted in
its entirety and the Schedule of Permitted Liens attached hereto as Schedule 8.2
is substituted therefor.
1.41 Schedule 8.5 -- Schedule of Permitted Investments is hereby
deleted in its entirety and the Schedule of Permitted Investments attached
hereto as Schedule 8.5 is substituted therefor.
1.42 Schedule 8.10 -- Schedule of Operating Leases is hereby deleted
in its entirety and the Schedule of Operating Leases attached hereto as Schedule
8.10 is substituted therefor.
2. CONSENT TO AMENDED AND RESTATED OVERRIDE AGREEMENT.
The Lenders hereby consent to that certain Amended and Restated Override
Agreement dated as of October 10 among the Borrowers, Mellon Bank, N.A. as
agent, the Existing Lenders and the Metra Agent.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
only upon satisfaction of each of the following conditions:
(a) FIRST AMENDMENT. The Administrative Agent shall have
received copies of this Amendment that, when taken together, bear the signatures
of the Borrowers, the Administrative Agent, the Co-Agents and each of the
Lenders.
(b) GUARANTOR CONSENTS. The Administrative Agent shall have
received a copy of the accompanying Guarantor Consents executed by each of the
Guarantors.
(c) CONSUMMATION OF T-CO RESTRUCTURING. The T-Co Restructuring
shall have been consummated with all conditions to effectiveness having been
satisfied, subject only to the execution of this Amendment.
(d) LANDLORD WAIVERS AND CONSENTS. The Administrative Agent
shall have received the Landlord Waivers and Consents in favor of the Collateral
Agent, together with memoranda of leases for the premises leased or used by the
Borrowers and Guarantors as set forth on SCHEDULE 2 hereto, in form and
substance satisfactory to the Co-Agents.
<PAGE>
(e) LEASEHOLD DEEDS OF TRUST, MODIFICATIONS, AND TITLE
INSURANCE. The Administrative Agent shall have received an original, executed
and notarized Leasehold Deed of Trust, Leasehold Mortgage, and/or Modification
to Leasehold Deed of Trust or Mortgage for each of the properties listed on
Schedule 3 hereto; PROVIDED, HOWEVER, that all necessary written consents from
landlords to such Leasehold Deeds of Trust and Leasehold Mortgages have been
acquired.
(f) COLLATERAL DEEDS OF TRUST. The Administrative Agent shall
have received an Assignment of Mortgage pertaining to that certain Purchase
Money Mortgage executed by Englewood Plaza South Limited Partnership in favor of
Morrison Knudsen Corporation, identified on Appendix I to the Schedule of
Documents.
(g) CERTIFICATES OF TITLE. The Administrative Agent shall have
received all original certificates of title of the certificated vehicles listed
in Schedule 4.23 to the Schedule of Documents.
(h) PHASE I SITE ASSESSMENTS. Administrative Agent shall have
received a Phase I Site Assessment for the real property located at 4925 State
Road, Cleveland, Ohio.
(i) SCHEDULE OF ACCOUNT DEBTORS. Administrative Agent shall
have received a Schedule of Account Debtors, listing all account debtors of each
Borrower and Guarantor (other than lessees listed on the Schedule of Real
Property Leases and obligors of notes receivable listed on the Schedule of Notes
Receivable), as of June 30, 1995, including (i) the name and address of each
account debtor, (ii) the nature of the account, and (iii) the outstanding
balance owing on such account, and, at the Closing Date, a certificate signed by
an officer of each Borrower and Guarantor certifying that the Schedule is
complete and correct, as of the Closing Date.
(j) FOREIGN COUNSEL LEGAL OPINIONS. Administrative Agent shall
have received (i) Dutch counsel's legal opinion stating that MKO has a perfected
security interest in MK-River Constructie Maatschappij, B.V. ("MK-River") and
Morrison Knudsen B.V. ("MK-BV"), or evidence that its Dutch subsidiaries have
been liquidated, and (ii) Polish counsel's legal opinion stating that Collateral
Agent has a perfected interest in MKO's uncertificated shares of the American
Bank in Poland.
(k) OTHER DOCUMENTS. Administrative Agent shall have received
all documents listed on the Schedule of Documents attached as Exhibit B to the
Override Agreement.
<PAGE>
4. REFERENCE TO AND EFFECT ON CREDIT AGREEMENT AND RELATED
DOCUMENTS.
(a) Upon the effectiveness of this Amendment, on and after the
date hereof each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby and each reference in the
Loan Documents to the Credit Agreement shall also mean and be a reference to the
Credit Agreement as amended hereby.
(b) Except as expressly modified under Section 1 of this
Amendment, all of the terms and conditions set forth in the Credit Agreement and
the other Loan Documents are incorporated herein by this reference, and the
Obligations of the Borrowers under the Credit Agreement and the other Loan
Documents are hereby acknowledged, confirmed and ratified by the Borrowers.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Agents or the Lenders under the Credit Agreement
or any of the Loan Documents or Restructuring Documents, nor constitute a waiver
of any provision of the Credit Agreement or any of the Loan Documents or
Restructuring Documents.
5. ENTIRE AGREEMENT. This Amendment, together with the Credit Agreement
and the other Loan Documents, is the entire agreement between the parties hereto
with respect to the subject matter hereof. This Amendment supersedes all prior
and contemporaneous oral and written agreements and discussions with respect to
the subject matter hereof. Except as otherwise expressly modified herein, the
Loan Documents shall remain in full force and effect.
6. REPRESENTATIONS AND WARRANTIES. Each Borrower hereby represents and
warrants that the representations and warranties contained in the Credit
Agreement were true and correct in all material respects when made and, except
to the extent (a) that a particular representation or warranty by its terms
expressly applies only to an earlier date, or (b) such Borrower has previously
advised the Administrative Agent in writing as contemplated under the Credit
Agreement, are true and correct in all material respects as of the date hereof.
The recitals set forth at the beginning of this Amendment are true and correct,
and such recitals are incorporated into and are a part of this Amendment.
7. MISCELLANEOUS.
7.1 COUNTERPARTS. This Amendment may be executed in identical
counterpart copies, each of which shall be an original,
<PAGE>
but all of which shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Amendment by facsimile
transmission shall be effective as delivery of a manually executed counterpart
of this Amendment. Any Person delivering this Amendment by facsimile shall send
the original manually executed counterpart of this Amendment to the
Administrative Agent promptly after such facsimile transmission.
7.2 AUTHORITY. Each Person executing this Amendment represents and
warrants that he or she is lawfully authorized and empowered to execute this
Amendment on behalf of the entity on whose behalf such Person is signing, and
that upon execution, this Amendment will be binding upon such entity, without
any further approval, ratification or other action.
7.3 HEADINGS. Section headings used herein are for convenience of
reference only, are not part of this Amendment, and are not to be taken into
consideration in interpreting this Amendment.
7.4 GOVERNING LAW. This Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Pennsylvania applicable to contracts made and performed in such state, without
regard to the principles thereof regarding conflict of laws.
7.5 CONFLICT OF TERMS. In the event of any inconsistency between the
provisions of this Amendment and any provision of the Credit Agreement, the
terms and provisions of this Amendment shall govern and control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective duly authorized representative as of the
day and year first above written.
BORROWERS: MORRISON KNUDSEN CORPORATION
(a Delaware corporation)
/s/ Douglas L. Brigham
By:
-------------------------------
Name: Douglas L. Brigham
Title: Vice President and Treasurer
MORRISON KNUDSEN CORPORATION
(an Ohio corporation)
/s/ Douglas L. Brigham
By:
-------------------------------
Name: Douglas L. Brigham
Title: Vice President and Treasurer
AGENTS AND LENDERS:
MELLON BANK, N.A., as Administrative Agent, a Co-Agent
and a Lender
/s/ Alan J. Kopolow
By
---------------------------------
Name: Alan J. Kopolow
Title: Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as a Co-Agent and a Lender
/s/ Henry Y. Yu
By
---------------------------------
Name: Henry Y. Yu
Title: Senior Vice President
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
<PAGE>
LENDERS:
Bank of America Illinois
/s/ Henry Y.Yu
By:
-------------------------
Name: Henry Y. Yu
Title:
----------------------
Bank of Montreal
/s/ R. Domachevsky
By:
-------------------------
Name: R. Domachevsky
Title: Vice President
The Bank of Nova Scotia
/s/D. N. Gillespie
By:
-------------------------
Name: D. N. Gillespie
Title: Assistant General Mgr
The Bank of Tokyo, Ltd.,
Seattle Branch
/s/ Stanley A. Lance
By:
-------------------------
Name: Stanley A. Lance
Title:
----------------------
Banque Nationale de Paris
/s/ Katherine Wolfe
By:
-------------------------
Name: Katherine Wolfe
Title: Vice President
By: /s/ Jeffrey S. Kalisa
-------------------------
Name: Jeffrey S. Kalisa
Title: Assistant Vice President
Banque Paribas
/s/ John Cate
By:
-------------------------
Name: John Cate
Title: Group Vice President
By: /s/ Alan E. McLintock
---------------------------
Name: Alan E. McLintock
Title: Regional General Manager
CIBC Inc.
/s/ Robert N. Greer
By:
-------------------------
Name: Robert N. Greer
Title: Vice President
Citibank, N.A.
/s/ Bradley I. Dietz
By:
-------------------------
Name: Bradley I. Dietz
Title: Vice President
Credit Lyonnais, New York Branch
/s/ Alan Sidrane
By:
-------------------------
Name: Alan Sidrane
Title: Vice President
Deutsche Bank AG,
Los Angeles Branch and/or Cayman Islands Branch
/s/ Patricia E. Apelian
By:
-------------------------
Name: Patricia E. Apelian
Title: Director
/s/ J. Scott Jessup
By:
-------------------------
Name: J. Scott Jessup
Title: Vice President
The Hongkong and Shanghai
Banking Corporation Limited
/s/ George W. Macek
By:
-------------------------
Name: George W. Macek
Title: Vice President
[ADDITIONAL SIGNATURES FOR LENDERS CONTINUED ON NEXT PAGE]
<PAGE>
The Industrial Bank of Japan, Limited, Los Angeles Agency
/s/ Kiyato
By:
-------------------------
Name: Kiyato
Title: SVP
Key Bank of Idaho
/s/ Terry L. Pitkin
By:
-------------------------
Name: Terry L. Pitkin
Title: VP
The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency
/s/ Curt M. Biren
By:
-------------------------
Name: Curt M. Biren
Title: Vice President, Manager
Morgan Guaranty Trust Company
/s/ D. Linda Scheuplein
By:
-------------------------
Name: D. Linda Scheuplein
Title: Vice President
National Westminster Bank PLC
/s/ Theodore P. Nikolis
By:
-------------------------
Name: Theodore P. Nikolis
Title: Vice President & Counsel
PNC Bank, N.A.
/s/Thomas J. McCool
By:
-------------------------
Name: Thomas J. McCool
Title: Sr. Vice President
Royal Bank of Canada
/s/Brian W. Dixon
By:
-------------------------
Name: Brian W. Dixon
Title: Senior Manager
San Paolo Bank SpA
/s/ Donald W. Brown
By:
-------------------------
Name: Donald W. Brown
Title: Branch Manager
/s/ Glen Binder
By:
-------------------------
Name: Glen Binder
Title: VP
Society National Bank
/s/ Amy J. Piesen
By:
-------------------------
Name: Amy J. Piesen
Title: Vice President
Union Bank of Switzerland
/s/ Scott Sommers
By:
-------------------------
Name: L. Scott Sommers
Title: Vice President
/s/ Peter S. Humber
By:
-------------------------
Name: Peter S. Humber
Title: Vice President
Westdeutsche Landesbank
Girozentrale, New York and
Cayman Islands Branches
/s/ Salvatore Battinelli
By:
-------------------------
Name: Salvatore Battinelli
Title: Vice President
Credit Department
/s/ Catherine Ruhland
By:
-------------------------
Name: Catherine Ruhland
Title: Associate
<PAGE>
GUARANTOR CONSENTS
Each of the undersigned, a Guarantor under a Guaranty, hereby (i)
ratifies and reaffirms, as of the date hereof, all of the provisions of its
Guaranty and its Guaranty Security Agreement, (ii) acknowledges receipt of a
copy of the First Amendment to Amended and Restated Credit Agreement dated as of
OCTOBER 10, 1995 (the "Amendment") and (iii) consents to all of the provisions
of the Amendment.
National Projects, Inc.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Morrison-Knudsen Services, Inc.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Morrison-Knudsen Financial Company, Inc., a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Atascosa Mining Co.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Centennial Engineering, Inc.,
a Colorado corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Assistant Treasurer
CF Systems Corporation,
a Massachusetts corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Chemical Demilitarization of Anniston Company, a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Vice President and
Treasurer
Joy MK Projects Company,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Vice President and
Assistant Treasurer
MK Capital Company,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
MK-Ferguson Engineering Company,
a Michigan corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Assistant Treasurer
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
MK-Ferguson of Idaho Company,
a Idaho corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
MK-Ferguson of Oak Ridge Company,
a Tennessee corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
MK Infrastructure Corporation,
a Delaware corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Assistant Treasurer
MK-Train Control, Inc.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Navasota Mining Company, Inc.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Yampa Mining Co.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Treasurer
Morrison-Knudsen Company, Inc.,
a Delaware corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Vice President and
Treasurer
Morrison-Knudsen Engineers, Inc.,
a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Vice President and
Treasurer
Morrison-Knudsen International Company, Inc., a Nevada corporation
/s/ Douglas L. Brigham
By:
--------------------------
Name: Douglas L. Brigham
Title: Vice President and
Treasurer
<PAGE>
SCHEDULES AND EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE SCHEDULES AND EXHIBITS HERETO.
20
<PAGE>
EXHIBIT 4.3
REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT ("Agreement") dated as of October 10,
1995, by each of Morrison Knudsen Corporation, a Delaware corporation ("MKD"),
Morrison Knudsen Corporation, an Ohio Corporation ("MKO"), and each of the
affiliates of MKD listed on the signature pages hereof (collectively, the
"Obligors," and each, an "Obligor"), to and for the benefit of Fidelity and
Deposit Company of Maryland (the "Bonding Company").
RECITALS
A. Reference is made to (1) the Guaranty Agreement dated as of
October 10, 1995 by the Bonding Company in favor of Credit Suisse (the "Guaranty
Agreement") and (2) the Override Agreement dated as of July 31, 1995 among MKD,
MKO, the Banks and Other Financial Institutions Named Therein and Mellon Bank,
N.A., as Agent (as amended from time to time, the "Override Agreement").
Capitalized terms used but not defined herein have the meanings assigned to such
terms in the Guaranty Agreement.
B. In order to induce the Bonding Company to participate in a global
restructuring (the "Global Restructuring") of certain obligations of MKO and
MKD, the Bonding Company has required that the Obligors execute and deliver to
the Bonding Company this Agreement.
<PAGE>
C. MKO has operated a public transportation manufacturing business
(the "Business") providing engineering services and manufacturing and
refurbishing light rail cars for various municipalities and other governmental
entities (collectively, the "Transit Division Customers").
D. The Transit Division Customers, the Obligors, the Bonding
Company, and other parties have agreed to a global restructuring of certain
obligations of the Obligors (the "Global Restructuring"), the principal terms
and conditions of which include, among other things, that MKO would transfer and
assign to American Passenger Rail Car Company, L.L.C. (the "Borrower") assets
used to conduct the Business in accordance with the terms of an Asset Purchase
Agreement dated as of October 10, 1995 (the "Asset Purchase Agreement"). In
connection with the Guaranty Agreement, the Bonding Company and the Borrower
have entered into an Indemnification and Reimbursement Agreement dated as of
October 10, 1995 (the "Indemnification and Reimbursement Agreement").
E. The Sureties are concurrently entering into a Release of even
date in reliance upon each of the following, and would not execute such Release
in the absence of any of the following: (i) the validity and enforceability of
this Agreement, the Distribution Agreement (as defined in the Override Agreement
as in effect on the date hereof) and the documents securing the obligations of
the Obligors under this Agreement, (ii) the validity and enforceability of each
of the transactions contemplated by
-2-
<PAGE>
the Asset Purchase Agreement, (iii) neither the Borrower nor the Sureties will
be required to make any post closing payments as a consequence of any bankruptcy
proceeding or otherwise, in order to retain the benefits of the assets
transferred in the Asset Purchase Agreement, including the contracts with the
Transit Division Customers.
F. Accordingly, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the Obligors hereby agree as
follows:
SECTION 1. Each of the Obligors absolutely and unconditionally
agrees, jointly and severally, to indemnify and pay the Bonding Company (a) for
any losses incurred by the Bonding Company under, pursuant to or in connection
with the Guaranty Agreement or the Indemnification and Reimbursement Agreement
and (b) for any losses incurred by the Bonding Company in connection with (i)
any loan it makes to the Borrower, (ii) any extensions of credit made pursuant
to Section 2.4 of the Intercreditor and Subordination Agreement dated as of
October 10, 1995 among the Bonding Company, Bank of America National Trust and
Savings Association, as agent for itself and certain other banks and financial
institutions, or (iii) matters referred to in Section 2 of the Agreement of
Indemnity dated as of October 10, 1995 between the Borrower and the Bonding
Company (in calculating the losses of the Bonding Company under this paragraph,
any amounts paid by the Bonding Company to any third party shall bear interest
at the interest rate then being charged under the Override Agreement (which may
-3-
<PAGE>
be the Prime Rate or the Default Rate, each as defined in the Override
Agreement) (the "Obligations"); PROVIDED, HOWEVER, that the maximum amount of
the Obligations hereunder shall not, except for interest referred to in the
following sentence, exceed $31,249,377.00. After the amount of the
"Obligations" hereunder has become fixed at an amount not to exceed
$31,249,377.00, such amount shall thereafter bear interest until paid at the
interest rate then being charged under the Override Agreement (which may be the
Prime Rate or the Default Rate, each as defined in the Override Agreement). The
losses referred to in this Section 1 refer only to losses incurred in connection
with the Borrower's performance of the Transit Division Contracts (as defined in
the Asset Purchase Agreement) and not in connection with the Borrower's
performance of other contracts or projects undertaken by the Borrower. In
calculating the amount of such losses, any recovery received by the Bonding
Company from any disposition of the Borrower shall not reduce such loss. The
losses referred to above will be fixed on the day (the "Loss Determination
Date") that is ninety (90) days after the date the last railcar manufactured
pursuant to the Transit Division Contracts (as defined in the Asset Purchase
Agreement) is accepted by a Transit Division Customer. The Obligors shall make
payments with respect to the Obligations in accordance with the Distribution
Agreement (as defined in the Override Agreement as in effect on the date
hereof).
SECTION 2. Each of the Obligors waives presentment to, demand of
payment from and protest to any other corporation, partnership, company, person,
firm or other entity (any of which a "Person") obligated with respect to any of
the Obligations,
-4-
<PAGE>
and also waives notice of acceptance and notice of protest for nonpayment. The
obligations of each Obligor hereunder shall not be affected by: (a) the failure
of the Bonding Company to assert any claim or demand or to enforce any right or
remedy against any Obligor; or (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of, any
guarantee or any other agreement, including with respect to any other Obligor
under this Agreement.
SECTION 3. Each of the Obligors waives any right to require that any
resort be had by the Bonding Company to any other Person responsible for the
Obligations or any security held for payment of the Obligations.
SECTION 4. The obligations of each Obligor hereunder shall be
absolute and unconditional and shall not be subject to any reduction,
limitation, impairment or termination for any reason, including, without
limitation, any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any setoff, counterclaim, deduction, diminution,
abatement, suspension, reduction, recoupment, termination or defense (other than
full and strict indefeasible satisfaction of the Obligations) whatsoever.
Without limiting the generality of the foregoing, the obligations of each
Obligor hereunder shall not be released, discharged, impaired or otherwise
affected by any circumstance or condition whatsoever (whether or not the Obligor
has knowledge thereof) which may or might in any manner or to any extent vary
the risk of any Obligor or otherwise operate as a discharge of any Obligor as a
matter of law or equity (other than the indefeasible
-5-
<PAGE>
payment in full of all of the Obligations), including, without limitation:
(a) any amendment, modification, addition, deletion or
supplement to or other change to any of the terms of the Guaranty Agreement, the
Credit Agreement or any other instrument or agreement applicable to any of the
parties hereto or thereto, or any assignment or transfer of any thereof, or any
furnishing, acceptance, surrender, substitution, modification or release of any
security for any of the Obligations, or the failure of any security or the
failure of any person to perfect any interest in any collateral;
(b) any failure, forbearance, omission or delay on the part of
any Obligor or the Bonding Company to conform or comply with any term of any
instrument or agreement, or any failure to give notice to any Person of the
occurrence of an Event of Default under the Guaranty Agreement or the Credit
Agreement;
(c) any waiver of the payment, performance or observance of any
of the obligations, conditions, covenants or agreements contained in the
Guaranty Agreement or the Credit Agreement, or any other waiver, consent,
extension, renewal, indulgence, compromise, release, settlement, refunding or
other action or inaction under or in respect of the Obligations, or under or in
respect of any obligation or liability of the Borrower or any Obligor or the
Bonding Company or any exercise or non-exercise of any right, remedy, power or
privilege under or in respect of any of the foregoing;
-6-
<PAGE>
(d) any extension of the time for payment of the principal of or
interest, or of the time for performance, of any obligations, covenants or
agreements under or arising out of the Guaranty Agreement or the Credit
Agreement, or the extension or the renewal thereof;
(e) any failure, omission or delay on the part of the Bonding
Company to enforce, assert or exercise any right, power or remedy conferred on
it in any agreement relating to the Obligations, or any other failure, omission,
delay, action or inaction on the part of the Bonding Company;
(f) to the extent permitted by applicable law, any voluntary or
involuntary bankruptcy, insolvency, reorganization, moratorium, arrangement,
adjustment, readjustment, composition, assignment for the benefit of creditors,
receivership, conservatorship, custodianship, liquidation, marshaling of assets
and liabilities or similar proceedings with respect to any Obligor or any other
Person or any of their respective properties or creditors, or any action taken
by any trustee or receiver or by any court in any such proceeding (including,
without limitation, any automatic stay incident to any such proceeding); or
(g) any other occurrence, circumstance, happening or event
whatsoever, whether similar or dissimilar to the foregoing, whether foreseen or
unforeseen, and any other circumstance which might otherwise constitute a legal
or
-7-
<PAGE>
equitable defense, release or discharge (including the release or discharge of
the liabilities of a obligor or surety or which might otherwise limit recourse
against any Obligor, whether or not the Obligor shall have notice or knowledge
of the foregoing).
SECTION 5. Each of the Obligors agrees that its obligations hereunder
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded, invalidated,
declared to be fraudulent or preferential, or must otherwise be returned,
refunded, repaid or restored by the Bonding Company upon the bankruptcy or
reorganization of any Obligor or otherwise.
SECTION 6. None of the Obligors shall have any right by way of
subrogation, contribution or otherwise as a result of the payment of any sums
hereunder. Each of the Obligors agrees that it will never have, and hereby
waives and disclaims, any claim or right against the Borrower or any other
Person by way of subrogation, contribution or otherwise in respect of any
payment that such Obligor may be required to make hereunder.
SECTION 7. Each Obligor represents, warrants and covenants that this
Agreement has been duly authorized by each Obligor and constitutes the legal,
valid and binding obligation of each Obligor, enforceable against each Obligor
in accordance with its terms.
-8-
<PAGE>
SECTION 8. This Agreement shall be binding upon each Obligor and its
successors, and shall inure to the benefit of the Bonding Company and its
successors and assigns. None of the Obligors may assign or transfer any of its
rights or obligations under this Agreement, without the prior written consent of
the Bonding Company.
SECTION 9. No failure on the part of the Bonding Company to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Bonding Company preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All remedies
hereunder are cumulative and are not exclusive of any other remedies provided by
law. The Bonding Company shall not be deemed to have waived any rights
hereunder or under any other agreement or instrument unless such waiver shall be
in writing and signed by the Bonding Company.
SECTION 10. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without regard to its conflict of
laws doctrine.
SECTION 11. All notices, requests and other communications to any
party hereunder shall be in writing (including 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
-9-
<PAGE>
hereafter specify as provided through a notice complying with this section.
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. Addresses for the
parties as of the date of this Agreement are as follows:
If to any Obligor:
c/o Morrison Knudsen Corporation
720 Park Boulevard
Boise, ID 83729
Attention: Stephen G. Hanks
Telephone: (208) 386-6176
Telecopy: (208) 386-5298
with copies to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, IL 60601-1692
Attention: Jeffrey W. Linstrom
Telephone: (312) 269-4361
Telecopy: (312) 782-8585
If to the Bonding Company:
Fidelity and Deposit Company of Maryland
300 Saint Paul Place
Baltimore, Maryland 21202
-10-
<PAGE>
Attention: Robert L. Lawrence
Telephone: (410) 588-4674
Telecopy: (410) 528-4964
with copies to:
Steptoe & Johnson
1330 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Filiberto Agusti, Esq.
Telephone: (202) 429-6428
Telecopy: (202) 429-3902
SECTION 12. If any provision contained in this Agreement should be
held invalid, illegal or unenforceable in any respect with respect to any
Obligor, the validity, legality and enforceability of the remaining provisions
contained herein, and of such provision with respect to any other Obligor, shall
not in any way be affected or impaired. The parties shall endeavor in good-
faith negotiations to replace any invalid, illegal or unenforceable provisions
with valid provisions, the economic effect of which comes as close as possible
to that of the invalid, illegal or unenforceable provisions.
SECTION 13. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument; provided that this
Agreement shall be construed as a separate agreement with respect to each
Obligor and may be amended, modified, supplemented, waived or released with
respect to any Obligor without the approval of any other Obligor and without
affecting the obligations of any other Obligor hereunder.
-11-
<PAGE>
SECTION 14. Except as set forth in Section 13, this Agreement may not
be amended except pursuant to a written agreement executed by each of the
parties hereto.
SECTION 15. Each of the Obligors agrees, jointly with the other
Obligors and severally, to pay on demand any and all costs and expenses incurred
by the Bonding Company in connection with enforcement of any rights under this
Agreement (including the reasonable fees and expenses of counsel employed by the
Bonding Company).
SECTION 16. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO ITS CONFLICT OF LAWS DOCTRINE. EACH OF THE OBLIGORS HEREBY IRREVOCABLY
CONSENTS TO THE PERSONAL JURISDICTION OF ANY COURT LOCATED IN THE DISTRICT OF
COLUMBIA IN ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, NEW BONDS AND ANY INDEMNIFICATION AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. EACH OF THE OBLIGORS HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF A SUMMONS AND COMPLAINT AND OTHER PROCESS IN ANY ACTION, CLAIM OR
PROCEEDING BROUGHT BY THE BONDING COMPANY IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND
-12-
<PAGE>
OBLIGATIONS, ON BEHALF OF THEMSELVES AND THEIR PROPERTY, IN THE MANNER SPECIFIED
IN SECTION 11 (PROVIDED, TELECOPY NOTICES MAY NOT BE USED FOR THIS PURPOSE).
NOTHING IN THIS SECTION 16 SHALL AFFECT THE RIGHT OF THE BONDING COMPANY TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE BONDING COMPANY TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OF THE
OBLIGORS OR THEIR PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTIONS.
SECTION 17. THE BONDING COMPANY AND EACH OF THE OBLIGORS 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 THEREUNDER, OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
MORRISON KNUDSEN CORPORATION,
an Ohio corporation
By: /S/ STEPHEN G. HANKS
----------------------------------
Name: Stephen G. Hanks
Title: Executive Vice President
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Executive Vice President
NATIONAL PROJECTS, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Senior Vice President
and Secretary
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<PAGE>
MORRISON KNUDSEN SERVICES, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Secretary
MORRISON KNUDSEN FINANCIAL COMPANY,
INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Chairman, President
and Secretary
ATASCOSA MINING CO.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Secretary
CENTENNIAL ENGINEERING, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Executive Vice President
CF SYSTEMS CORPORATION
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Secretary
CHEMICAL DEMILITARIZATION OF ANNISTON
COMPANY
/s/ Stephen G. Hanks
By:
------------------------
Name: Stephen G. Hanks
Title: Secretary
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<PAGE>
JOY MK PROJECTS COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
MK CAPITAL COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
MK-FERGUSON ENGINEERING COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Assistant Secretary
MK-FERGUSON OF IDAHO COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Assistant Secretary
MK-FERGUSON OF OAK RIDGE COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Assistant Secretary
MK INFRASTRUCTURE CORPORATION
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Secretary
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<PAGE>
MK TRAIN CONTROL, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
NAVASOTA MINING COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Secretary
YAMPA MINING CO.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Secretary
MORRISON-KNUDSEN COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Chairman and President
MORRISON-KNUDSEN ENGINEERS, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
MORRISON-KNUDSEN INTERNATIONAL
COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
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<PAGE>
SCHEDULES AND EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE SCHEDULES AND EXHIBITS HERETO.
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<PAGE>
EXHIBIT 4.4
GUARANTY
This GUARANTY is entered into as of October 10, 1995, among MORRISON
KNUDSEN CORPORATION, a Delaware corporation ("MKD") and MORRISON KNUDSEN
CORPORATION, an Ohio corporation ("MKO" and with MKD, collectively, the
"GUARANTORS"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
agent (in such capacity, the "AGENT") for itself and the banks (collectively,
the "BANKS" and individually a "BANK") party to the Revolving Credit Agreement
referred to below.
RECITALS
A. Prior to the date hereof MKO, 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").
B. 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 "ORIGINAL LETTER OF CREDIT") for
the benefit of Metra (as defined in the Revolving Credit Agreement referred to
below) and for the account of MKO, which Letter of Credit is in the form of
Exhibit 2.01 to the Reimbursement Agreement.
C. Pursuant to that certain Guaranty dated as of August 4, 1992,
MKD, guaranteed all obligations of MKO under the Reimbursement Agreement.
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<PAGE>
D. MKO, the Agent and certain of the Banks have entered into that
certain Revolving Credit Agreement dated as of July 31, 1995, as amended to date
(as so amended, the "ORIGINAL CREDIT AGREEMENT").
E. Pursuant to the Original Credit Agreement, the Banks agreed to
provide financing to MKO to be used by MKO exclusively to fund MKO's performance
of the Contract (as defined in the Revolving Credit Agreement referred to
below).
F. Pursuant to that certain Guaranty dated as of July 31, 1995, MKD
guaranteed all obligations of MKO under the Original Credit Agreement.
G. Pursuant to a restructuring being entered into concurrently
herewith, (i) the Company has requested that the Issuing Bank (as defined in the
Revolving Credit Agreement referred to below) issue, for the account of American
Passenger Rail Car Company, L.L.C., a Delaware limited liability company (the
"Borrower"), a letter of credit to Metra as beneficiary in substitution for the
Original Letter of Credit, (ii) MKO has agreed to transfer all of its rights,
duties and obligations under the Contract to the Borrower, and the Borrower has
agreed to assume and become liable therefor and (iii) the Borrower has requested
that the Banks provide revolving credit to the Borrower on the terms and
conditions herein set forth in that certain Revolving Credit Agreement dated as
of October 10, 1995 (the "Revolving Credit Agreement").
H. In connection with the restructuring, the Issuing Bank has issued
or is issuing concurrently herewith a letter of credit for the benefit of Metra
and for the account of the Borrower, which letter of credit is in the form of
EXHIBIT 2.01 to the Revolving Credit Agreement (as amended, modified or
supplemented from time to time, the "LETTER OF CREDIT"). The Banks have agreed
to participate in such letter of credit on the terms set forth in the Revolving
Credit Agreement, and the Borrower has agreed to reimburse the Banks for any
drawing under the Letter of Credit pursuant to the provisions of the Revolving
Credit Agreement.
I. Further, in connection with the restructuring, the Banks have
agreed to make certain amounts available to the Borrower pursuant to the
provisions of the Revolving Credit Agreement and the Borrower has agreed to
repay the Banks for amounts so made
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<PAGE>
available pursuant to the terms of the Revolving Credit Agreement. Upon
occurrence of the Closing Date, as defined in the Revolving Credit Agreement,
among other things, (i) the Reimbursement Agreement and the Original Credit
Agreement shall terminate, except for certain warranties and indemnities
provided therein, (ii) the Original Letter of Credit shall be returned to the
Issuing Bank, (iii) the Revolving Credit Agreement shall become effective and
(iv) the Letter of Credit shall be issued and delivered to Metra.
J. Further, in connection with the restructuring and as a material
part of it, MKD and MKO have agreed, at the request of the Banks, to guarantee
all obligations of the Borrower existing from time to time under the terms of
the Revolving Credit Agreement and any other documents entered into by the
Borrower in connection herewith.
K. In order to induce the Banks to commit to extend credit to the
Borrower as provided in the Revolving Credit Agreement, and for other valuable
consideration, the Guarantors issue this Guaranty of the Borrower's indebtedness
and obligations under the Revolving 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 Revolving
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" means Title 11, United States Code, as amended from
time to time, and any successor statute thereto.
"CONTROLLED GROUP" means the MKD and all Persons (whether or not
incorporated) under common control or treated as a single employer with MKD
pursuant to Section 414(b), (c), (m) or (o) of the Code.
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<PAGE>
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under "common control" with MKD within the meaning of Section
414(b), 414(c) or 414(m) of the Code.
"EVENT OF DEFAULT" means (a) the failure of MKO or MKD to perform or
observe any term, covenant or agreement contained in this Guaranty, (b) the
occurrence of an "Event of Default," as defined in the Revolving Credit
Agreement, (c) the occurrence of an "Event of Default," as defined in the
Amended and Restated Override Agreement, or (d) the occurrence of any event
described in clause (g) or (h) of Section 8.01 of the Revolving Credit Agreement
with respect to MKO or MKD.
"GUARANTY" means 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" means (a) the Obligations and (b) all
indebtedness, liabilities, and obligations of Guarantors to Agent or the Banks,
whether now existing or hereafter arising, under this Guaranty or any other
Related Document.
"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 MKD or MDO, as applicable;
(b) the ability of MKD or MKO to perform under any Related Document, to which it
is a party; or (c) the legality, validity, binding effect or enforceability of
any Related Document.
"PERMITTED LIENS" means (a) Liens described in the Amended and
Restated Override Agreement; (b) Liens existing on the date hereof; (c) 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;
PROVIDED, that such Indebtedness is not increased and is not secured by any
additional assets; (d) 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 asset and MKD or MKO,
as applicable, shall maintain in accordance with GAAP appropriate reserves
therefor; and (e) materialmen's,
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<PAGE>
mechanic's, worker's, repairman'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 asset.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which MKD or any member of the Controlled Group sponsors or maintains or
to which MKD or any member of the Controlled Group makes or is obligated to make
contributions and includes any Multiemployer Plan or Qualified Plan.
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. 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 Guarantors hereby acknowledge and
for the benefit of Agent and each Bank, and their successors, endorsees,
transferees, and assigns, Guarantors hereby jointly and severally (i)
unconditionally guarantee to Agent, the prompt payment (whether at stated
maturity, by acceleration or otherwise) and performance of the Obligations and
(ii) agree to pay all indebtedness, liabilities and obligations of the
Guarantors 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 Guarantors, 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 Guarantors or the Collateral be exonerated, discharged,
or released by, any of the following events:
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<PAGE>
(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 Revolving 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 for all or any part of Borrower's or Guarantors' assets or of the
assets of any other guarantor of the Obligations, liquidation, winding-up, or
dissolution of Borrower or Guarantors 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
Revolving 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 Guarantors 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
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<PAGE>
under the Revolving 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, Guarantors, 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 any bankruptcy or reorganization case related
to the Collateral, the Obligations, or the Guaranty Liabilities;
(i) Obligations arising under the Revolving Credit Agreement as a
result of the Bonding Company's borrowing Revolving Loans pursuant to its rights
to do so, for the account of the Borrower, under Section 2.22 of the Revolving
Credit Agreement;
(j) 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
(k) 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 Guarantors 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
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<PAGE>
payable, then Guarantors shall, upon demand in writing therefor by Agent to
Guarantors, or either one of them, 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 6. 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,
Guarantors, jointly and severally, waive and agree as follows:
(a) each 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 Liabilities, or to pursue any other right or remedy in
Agent's or any Bank's power that such Guarantor may or may not be able to pursue
itself and that may lighten such Guarantor's burden, before proceeding against
the Collateral. Each 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. Each 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.
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<PAGE>
(b) Each Guarantor has entered into this Guaranty based solely upon
its independent knowledge of Borrower's financial condition and such Guarantor
assumes full responsibility for obtaining any further information with respect
to Borrower or the conduct of its business. Each Guarantor represents that it
is now, and during the terms of this Guaranty will be, responsible for
ascertaining the financial condition of Borrower. Each Guarantor hereby waives
any duty on the part of Agent or any Bank to disclose to such 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.
Each 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 Guarantors or in payment of any or all of the
Obligations or Guaranty Liabilities.
(d) Each Guarantor hereby waives: (i) presentment, demand, protest,
notice of acceleration, dishonor, non-payment, protest, or any delay related
thereto, with 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 Revolving 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
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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, each 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 such 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 8. The amount of the successful bid at any such sale,
whether Agent or any other party (including Guarantors) 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 8 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 deficiency claim to which Agent might otherwise be
entitled but for such bidding at any such sale.
(e) Each 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 Guarantors, for business and commercial purposes only. Each
Guarantor agrees that any claim of Agent or any Bank against such Guarantor
arising out of this Guaranty arises out of the conduct by that Guarantor of its
trade, business, or profession. Each Guarantor undertakes all the risks
encompassed in the Revolving 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 Guarantors, may release, add, subordinate or
substitute security for the Obligations or the Guaranty Liabilities.
(f) Each Guarantor waives and agrees that it shall not at any time
insist upon, plead, or in any manner
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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 such 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, either or both Guarantors 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, each 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 such Guarantor's liability to pay and perform the Guaranty
Liabilities.
2.5 WAIVERS UNDER STATUTES. Each Guarantor expressly acknowledges that:
(a) If Borrower defaults in the payment or performance of the
Obligations and Guarantors pay to Agent all or part of the Obligations,
Guarantors would have a right to proceed against Borrower to the extent of the
Obligations so paid by Guarantors and to have the benefit of 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 Guarantors. 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, Guarantors' 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, Guarantors might have a defense
against payment under this Guaranty.
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(d) If Borrower so defaults and Agent sells any real property
security by means of judicial action, Guarantors' right to proceed against
Borrower might be limited by the operation of CCP Section 580a or similar laws,
in which case Guarantors might have a complete or partial defense against
payment under this Guaranty.
Nevertheless, each Guarantor expressly, knowingly and intentionally
waives and relinquishes any and all rights, defenses or benefits such Guarantor
might have under CCP Sections 580a or 580d or similar laws. In addition, each
Guarantor also expressly, knowingly and intentionally waives and relinquishes
any and all rights, defenses or benefits such Guarantor may have based upon an
election of remedies by Agent which in any manner impairs, affects, reduces,
releases, destroys and/or extinguishes that Guarantor's subrogation rights
and/or that 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, each
Guarantor agrees that this Guaranty will remain fully effective and such
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 such Guarantor from taking any action against Borrower to recover any
amounts paid by such Guarantor to Agent under this Guaranty or otherwise limits
or destroys such Guarantor's right of subrogation.
Each Guarantor also agrees that this Guaranty will remain fully
effective and such Guarantor will be liable to Agent for any Guaranty
Liabilities even if Agent sells real property by judicial foreclosure action and
such Guarantor's rights against Borrower are limited by the operation of CCP
Sections 580a or 580d or similar laws.
2.6 WAIVERS OF DEFENSES. Each 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
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purposes represented to, or intended or understood by, Agent, Banks or
Guarantors; (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. This
Guaranty shall remain in full force and effect notwithstanding any release of
the Borrower by the Banks from liability given in connection with or pursuant to
(i) the Manager Option Agreement, (ii) that certain Agreement to Provide Notice
of Non-Liability, dated as of September 15, 1995, among the Bonding Company, the
Agent and the Managers, or (iii) the Collateral Intercreditor Agreement.
Without limiting the generality of the foregoing, each 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 Guarantors, and Guarantors may not assign, transfer, or endorse
this Guaranty. In the event all or 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. Each 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 Revolving Credit
Agreement, regardless of whether the Obligations may, in successive
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transactions, be paid, repaid, advanced, or renewed from time to time.
2.9 SUBORDINATION.
(a) Each Guarantor hereby agrees that all obligations and all
indebtedness of Borrower to such 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 such 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, each 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 such 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) Neither Guarantor shall 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. Neither Guarantor shall demand payment of,
accelerate the maturity of, or declare a default or event of default under the
Subordinated Indebtedness unless and until the Obligations are paid in full.
Neither Guarantor shall cause or permit Borrower to make or give, and such
Guarantor shall not receive or accept, payment in any form (direct or indirect,
including by transfer to an affiliate or subsidiary of Borrower or such
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,
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transfer, or collateral security so made or given by Borrower and received or
accepted by such Guarantor, without the express prior written consent of the
Majority Banks, shall be held in trust by that Guarantor for Agent, for the
account of Agent and Banks, and that 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.
Neither Guarantor will 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 either 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
Revolving Credit Agreement. If (i) either 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 such Guarantor's request, execute and deliver to that
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to that Guarantor of
an interest in the Obligations resulting from such payment by that Guarantor.
2.11 LIMIT OF LIABILITY. The obligations of Guarantors under this
Guaranty shall be limited to an aggregate amount equal to the largest amount
that would not render their joint and several obligations under this Guaranty
subject to avoidance under Section 548 of the Bankruptcy Code or any comparable
provisions of any applicable state law.
2.12 NO OFFSET, DEFENSE, OR COUNTERCLAIM. Each 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 such Guarantor specifically waives its right to assert
any such defense or right of offset. Each Guarantor further agrees that the
Guaranty Liabilities shall not be subject to any counterclaims,
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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,
such Guarantor, or other guarantor of the Obligations may have or assert.
2.13 CONSULTATION WITH LEGAL COUNSEL. Each 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 Revolving Credit Agreement and that Banks are
relying upon the foregoing waivers in its future dealings with Borrower. Each
Guarantor acknowledges and certifies that it has reviewed the foregoing waivers
with its legal counsel and that, after such review with its legal counsel, such
Guarantor has agreed to the foregoing waivers.
2.14. ADDITIONAL SECURITY. All Obligations guaranteed by the Guarantors
shall be secured by the liens and security interests granted pursuant to the
"Security Documents" (as defined in the Amended and Restated Override
Agreement), including the "Ship Mortgage" (as defined in the Amended and
Restated Override Agreement).
2.15. AMENDED AND RESTATED OVERRIDE AGREEMENT. The obligations,
liabilities and responsibilities of the Guarantors pursuant to this Guaranty are
subject in all respects to the terms and conditions of the Amended and Restated
Override Agreement.
3. PAYMENTS FREE AND CLEAR OF TAXES
All payments required to be made by Guarantors 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
Revolving Credit Agreement to Agent in accordance with the terms of the Related
Documents. Upon request by Agent, Guarantors shall furnish to Agent a receipt
for any Taxes or Other Taxes paid by Guarantors pursuant to this Section 3 or,
if no Taxes or Other Taxes are payable with respect to any payments required to
be made by Guarantors 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
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of any Bank, as a result of payments under this Guaranty, Guarantors 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 applicable to overdue amounts under the Revolving Credit
Agreement.
4. REPRESENTATIONS.
Each Guarantor makes the representations and warranties contained in
Article VI of the Amended and Restated Override Agreement as if each such
representation and warranty were set forth in its entirety herein.
5. COVENANTS
Each Guarantor makes the covenants and agreements contained in Articles
VIII and IX of the Amended and Restated Override Agreement as if each such
covenant and agreement were set forth in its entirety herein.
6. 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 Revolving 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 Revolving 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 Revolving 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.
7. REMEDIES UPON EVENT OF DEFAULT
Upon the occurrence of an Event of Default and the continuation of such
Event of Default or should any of the representations and warranties contained
herein prove to be incorrect in any material respect, the Agent may declare
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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 Revolving Credit Agreement and any other Related Document, and
under applicable law, and may, in addition
(a) make demand upon either or both Guarantors for the payment of the
Guaranty Liabilities;
(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; and
(c) with respect to all contingent, unmatured or unliquidated
Obligations and Guaranty Liabilities, including amounts which could be drawn
under the Letter of Credit or amounts that could be borrowed by the Bonding
Company under Section 2.22 of the Revolving Credit Agreement, declare and
require that cash in an amount equal to the aggregate amount of such contingent,
unmatured or unliquidated Obligations and Guaranty Liabilities be paid over to
the Agent to be held as additional cash collateral.
PROVIDED, that upon the occurrence of (i) an event described in clause (g) or
(h) or (n) of Section 8.01 of the Revolving Credit Agreement, or (ii) an event
described in clause (g) or (h) of Section 8.01 of the Revolving Credit Agreement
with respect to MKO or MKD, the Guaranty Liabilities shall become immediately
due and payable without declaration, notice or demand by the Agent or any Bank.
8. APPLICATION OF PAYMENTS
Any payment made by Guarantor under this Guaranty shall be applied by Agent
first, to the satisfaction of each Guarantor's indemnification liabilities
pursuant to Section 9; 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.
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9. INDEMNIFICATION
Such 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 each Guarantor under this Section 9 shall survive the
termination of this Guaranty.
10. MISCELLANEOUS
10.1 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.
10.2 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.
10.3 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.
10.4 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
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Documents other than this Guaranty, provisions contained in the Revolving Credit
Agreement shall govern and control.
10.5 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:
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 Guarantors:
Morrison Knudsen Corporation
One Morrison Knudsen Plaza
Boise, Idaho 83712
Attention: Douglas L. Brigham
Telecopy No.: (208) 386-5922
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with copies to:
David S. Kurtz, Esq.
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
Telecopy No.: (312) 782-8585
10.6 NON-WAIVER. None of the liabilities of Guarantors, 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.
10.7 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.
10.8 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.
10.9 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
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THEIR PROPERTY, IN THE MANNER SPECIFIED IN SECTION 8.5 (PROVIDED, TELECOPY
NOTICES MAY NOT BE USED FOR THIS PURPOSE). NOTHING IN THIS SECTION 10.9 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 EITHER GUARANTOR OR ITS PROPERTIES IN THE COURTS OF ANY OTHER
JURISDICTIONS.
10.10 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 REVOLVING CREDIT AGREEMENT OR THE OTHER RELATED DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
10.11 CUMULATIVE REMEDIES. All rights and remedies provided in and
contemplated by this Guaranty, the Revolving 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.
10.12 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.
10.13 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 Guarantors, any such
notice being waived by the Guarantors 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 Guarantors against any
and all obligations of the Guarantors 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 Guarantors 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
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under this Section 10.13 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.
10.14 PARTICIPATIONS; NOVATIONS. Any Bank may from time to time, without
notice to the Guarantors and without affecting the Guarantors' obligations
hereunder, transfer its interest in the Obligations to Participants and
Assignees (each defined in the Revolving Credit Agreement) as provided in the
revolving Credit Agreement. Each Guarantor agrees that each such transfer will
give rise to a direct obligation of such 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
Revolving Credit Agreement and this Guaranty. Each 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 such Guarantor, this Guaranty and any
security for this Guaranty.
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty
as of the date first above written.
"Guarantors":
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
/s/ Stephen G. Hanks
By:
-----------------------------
Name: Stephen G. Hanks
Title: Executive Vice President
MORRISON KNUDSEN CORPORATION,
an Ohio corporation
/s/ Stephen G. Hanks
By:
-----------------------------
Name: Stephen G. Hanks
Title: Executive Vice President
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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/ Christine Cordi
-----------------------------
Name: Christine Cordi
------------------------
Title: Vice President
-----------------------
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EXHIBIT 4.5
NEW BONDS AGREEMENT
THIS NEW BONDS AGREEMENT dated as of October 10, 1995, is by and among
Fidelity & Deposit Company of Maryland (the "Surety") and Morrison Knudsen
Corporation, a Delaware Corporation ("MKD"), Morrison Knudsen Corporation, an
Ohio corporation ("MKO"), and each of the entities listed on ANNEX A hereto
(together with their successors and assigns, collectively, the "Company").
W I T N E S S E T H:
WHEREAS, the principal business of the Company is to be a design and
construction company on environmental, construction, and other projects for
project owners (the "Business");
WHEREAS, the continued operation and viability of the Company's
Business requires that a bonding surety commit to issue bonds to guarantee the
future performance of the Company to said project owners;
WHEREAS, because of the Company's current financial and operating
condition, the Company has been and is unable to cause any bonding surety to
issue any such new bonds;
WHEREAS, in consideration for and conditioned upon the Company
transferring and assigning those assets to American Passenger Rail Car Company,
L.L.C. (the "Buyer") which are specified in the Asset Purchase Agreement between
the Buyer and the Company of even date herewith, the Sureties, in addition to
supplying other consideration, are willing to issue such new bonds on the terms
and conditions set forth in this New Bonds Agreement;
WHEREAS, the Company desires to sell all said assets to the Buyer,
upon the terms and subject to the conditions of the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
I. DEFINITIONS
A. DEFINITIONS. For the purposes of this Agreement:
"AFFILIATE" shall mean any Person directly or indirectly controlling, controlled
by, or under
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common control with the Company, and any Person who is a director, officer,
shareholder or partner of the Company. For purposes of this definition,
"control", when used with respect to any Person, includes, without limitation,
the direct or indirect beneficial ownership of ten percent (10%) or more of the
outstanding voting securities or voting equity of such Person or the power to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.
"AGGREGATE CONTRACT VALUE" shall mean, as of any particular time, the aggregate
amount of all Contract Values with respect to Bonds issued under this Agreement
then not discharged or released; PROVIDED HOWEVER, that the Value of any
Contract which is an open joint venture shall be excluded from Aggregate
Contract Value if the Bond is issued based solely on the basis of the credit of
an open joint venture partner in said joint venture. "AGREEMENT" shall mean
this Agreement.
"AGREEMENT DATE" shall mean the date as of which this Agreement is dated.
"APPLICABLE LAW" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations, and orders of governmental bodies
or regulatory agencies applicable to such Person, and all orders and decrees of
all courts and arbitrators in proceedings or actions to which the Person in
question is a party or by which it is bound.
"ASSET PURCHASE AGREEMENT" shall mean that certain Asset Purchase Agreement by
and among the Buyer and the Company dated as of October 10, 1995.
"AUTHORIZED SIGNATORY" shall mean, with respect to matters other than financial
matters, the Chief Executive Officer, the President, or the highest-ranking
officer, of the Company, the Executive Vice President and Chief Legal Officer
and with respect to financial matters, the Chief Financial Officer, the
Treasurer, or the highest-ranking financial officer of the Company.
"AVAILABLE COMMITMENT" shall mean, as of any particular time, (a) the amount of
the Commitment, minus (b) the Aggregate Contract Value of Bonds.
"BASE RATE" shall mean, at any time, a fluctuating and floating rate per annum
equal to the highest rate of interest announced publicly by Citibank, N.A., or
its successor, in New York City, New York, from time to time, as its base rate,
but in no event higher than the maximum rate permitted by Applicable Law.
"BOND DOCUMENTS" shall mean this Agreement, the Asset Purchase Agreement, the
Bonds, all Requests for Bonding, all Security Documents, and all other
documents, instruments, certificates, and agreements executed or delivered in
connection with or contemplated by this Agreement.
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"BOND" shall mean any of the surety bonds, undertakings, or instruments of
guarantee issued under this Agreement by the Surety to support the Company's
performance of a Contract, whether in its own name solely or as co-adventurer or
joint venturer with others, not to exceed the amount of the Commitment.
"BONDING BASE" shall mean, at any particular time, the sum of:
(a)(i) product of five and (ii) the Value of Eligible Equipment in which
the Surety has perfected a security interest of first priority; PLUS
(b)(i) product of five and (ii) 100% of the value of immediately
available funds in which the Surety has perfected a security interest of
first priority; PLUS
(c)(i) product of five and (ii) 80% of the publicly announced value of
securities traded on a nationally recognized stock exchange in which the
Surety has perfected a security interest of first priority; PROVIDED,
HOWEVER, that no such security may be one issued by the Company or one of
its Subsidiaries other than MK Rail.
"BONDING BASE CERTIFICATE" shall mean (i) if none of the Eligible Equipment
which is Collateral has been damaged or experienced an event or occurrence
which otherwise reduced its value (other than the passage of time) in an
amount exceeding $100,000 in the aggregate since the delivery of the
immediately preceding Bond Delivery, a certificate of an Authorized
Signatory of the Company affirming that the Eligible Equipment which is
Collateral has not been damaged or experienced an event or occurrence which
otherwise reduced its value (other than the passage of time) in an amount
exceeding $100,000 in the aggregate and affirming other elements of
Collateral, if any; (ii) with respect to the Initial Bond and in every case
other than under clause (i) above, a certificate of an Independent
Appraiser substantially in the form of EXHIBIT C attached hereto.
"BONDING BASE DEFICIENCY" shall mean any condition wherein the Aggregate
Contract Values exceed the Bonding Base.
"BUSINESS DAY" shall mean a day on which banks are not authorized or required to
be closed and foreign exchange markets are open for the transaction of business
required for this Agreement in New York, New York and Baltimore, Maryland as
relevant to the determination to be made or the action to be taken.
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"CAPITAL EXPENDITURES" shall mean, for any period, on a consolidated basis for
the Company the aggregate of all expenditures made by the Company during such
period that, in conformity with GAAP, are required to be included in or
reflected on its consolidated balance sheet as a capital asset of the Company
(including expenditures for equipment purchased simultaneously with the trade-in
or sale of existing equipment owned by the Company minus any proceeds derived
from any such trade-in or sale of existing equipment owned by the Company, but
excluding expenditures made in connection with the replacement or restoration of
assets, to the extent reimbursed or financed from insurance proceeds or
condemnation awards).
"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) shall have acquired beneficial ownership (within the meaning of Rule
13d promulgated by the Securities and Exchange Commission under said Act) of 10%
or more of the equity interest of MKD or MKO or (ii) during any period of twelve
consecutive calendar months commencing after the date of this Agreement,
individuals who were directors of MKD or MKO on the first day of such period
shall cease to constitute a majority of the directors of the Company; PROVIDED,
HOWEVER, that for purposes of this definition, any director appointed to fill a
vacancy or an additional director position by the then remaining directors shall
be deemed to have been a director during the period of time the predecessor
director whose vacancy is so filled served as such;FURTHER PROVIDED, that the
exercise of the warrants for common stock of MKD issued to certain banks and
financial institutions on August 23, 1995 shall not be deemed a Change in
Control, but any subsequent transfer or transfers of such common stock to any
person or group of persons shall be deemed a Change in Control if, by reason of
any such transfer, the event described in clause (i) above shall have occurred.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"COLLATERAL" shall mean the Eligible Equipment, cash, or securities in which the
Surety has a perfected security interest of first priority and which is
specified in Schedule 1.1 attached hereto, as such Schedule may be amended from
time to time in a writing complying with Section 5.13 hereof.
"COMMITMENT" shall mean the obligation of the Surety to issue Bonds assuring the
payment or the performance of the Company on Contracts of maximum Aggregate
Contract Value (subject to the provisions of Section 2.5(b)) in a dollar amount
less than
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or equal to the difference of (x) the lesser of (i) the Bonding Base and (ii)
$300,000,000 MINUS (y) (i) $15,000,000 PLUS (ii) five times the maximum amount
of the secured obligations under the Pledge and Security Agreement (Equipment
Assets) (Bulk Sales Law Indemnity) among American Passenger Rail Car Company,
L.L.C., and the Company, as such maximum amount may from time to time be reduced
in accordance with such Pledge and Security Agreement.
"COMPANY" shall mean Morrison Knudsen Corporation, a Delaware corporation,
Morrison Knudsen Corporation, an Ohio corporation, and each of the entities
listed on ANNEX A hereto (together with its successors and assigns).
"COMPLIANCE CERTIFICATE" shall mean a certificate of a Authorized Signatory
substantially in the form of EXHIBIT 1.1(B).
"CONTRACT" shall mean any prime contract, subcontract, teaming agreement or
arrangement, joint venture, basic ordering agreement, letter contract, purchase
order, delivery order, Bid, change order, arrangement or other commitment of any
kind between the Company and any Owner for which a Bond is issued or has been
issued.
"CONTRACTUAL OBLIGATION" 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.
"CONTRACT VALUE" shall mean, with respect to any Contract, the price to be paid
to the Company under the terms of the Contract, as adjusted from time to time by
change orders; PROVIDED, HOWEVER, that, on the tenth Business Day after the
receipt by the Surety of a monthly report on contract performance, satisfactory
in form and substance to the Surety, the Contract Value of each Contract shall
be reduced by the percentage of work completed calculated on a basis consistent
with GAAP using the percentage of completion method wherein recognized
percentage of completion is determined by the ratio that incurred cost to date
bears to total estimated cost; further provided that Contract Value with respect
to any Contract shall not be reduced below five (5) percent of Contract Value
until the Date of Discharge of such Contract; PROVIDED FURTHER, that the
Contract Value of a Contract to be performed by a joint venture shall be reduced
by a percentage amount equal to the joint venture partner's percentage share in
the joint venture if, but only if, (i) the Surety's liability on the face of the
Bond for the Contract or by a separate co-surety agreement is limited to the
Company's percentage share in the joint venture, PROVIDED that, such co-surety
is (a) listed in United States Treasury Department Circular 570, "Companies
Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as
Acceptable Reinsurance Companies" and (b) is rated
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"A- Class VIII" or better by A.M. Best Company, Inc.; and (ii) said joint
venture partner has (a) a Net Worth of $50 million and is rated "5A2" or better
by Dun & Bradstreet, Inc.
"CONTROLLED GROUP" shall mean the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company.
"CORPORATE OVERHEAD" shall have the meaning assigned to corporate overhead under
GAAP.
"DATE OF DISCHARGE" shall mean, with respect to any Contract, the date on which
the Company shall serve evidence satisfactory to the Surety of its discharge or
release from the Bonds with respect to such Contract and all liability by reason
thereof.
"DEFAULT" shall mean any Event of Default, and any of the events specified in
Section 7.1 hereof regardless of whether there shall have occurred any passage
of time or giving of notice (or both) that would be necessary in order to
constitute such event an Event of Default.
"DEFAULT RATE" shall mean a simple per annum interest rate equal to the Base
Rate plus five percent (5%).
"EBIT" shall mean, for any period, the Net Income for such period, plus, without
duplication and to the extent reflected as charges in the statement of Net
Income for such period, the sum of (a) income taxes, (b) Interest Expense, (c)
capitalized financing costs relating to the closing of the original Credit
Agreement and (d) the gain (loss) on the sale of business assets and
discontinued operations, that have been deducted in determining such Net Income.
"ELIGIBLE EQUIPMENT" shall mean, as of any particular time, all machinery
and equipment (other than office furniture and office equipment) which
contribute to the performance of the Company's business in the ordinary course
of its business which fulfills each and every one of the following requirements:
1. is owned solely by the Company;
2. is situated in one of the 50 States of the United States of America
(except for the Derrick Barge "Betty L", so long as such Derrick Barge is not
removed from the United States and Canada);
3. is not obsolete or unmerchantable, and is readily salable in its
current form;
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4. is located either (i) on real property owned by the Company, (ii)
on leased premises in regard to which the landlord thereof shall have executed
and delivered to the Surety an agreement, which shall be in form and substance
acceptable to the Surety, waiving any lien rights such landlord may hold in
regard to the Company's property in favor of the Surety, (iii) on real property
owned by or leased by the Owner of a Contract, or (iv) with respect to mobile
equipment, not to include fixtures, on any construction site on which work is
required to be performed under the Contract;
5. is not goods in transit;
6. does not constitute packaging materials, labels, nameplates or
similar supplies;
7. does not constitute any goods that were returned to the Company due
to defect or damage;
8. is not located at any vendor/trade show;
9. has not been removed from regular stock for quality rework or other
engineering matters;
10. is personal property: (i) in which the Company has granted a
valid and continuing first Lien in favor of the Surety pursuant to the Security
Documents, and as to which all action necessary to perfect such security
interest shall have been taken, and (ii) in which the Company has good and
marketable title, free and clear of any Liens (other than Permitted Liens);
11. shall have been appraised by the Independent Appraiser; and
12. is not service parts.
"ENVIRONMENTAL CLAIM" shall mean any claim, however, asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous
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Material at, in or from property, whether or not owned by the Company or (b) any
other circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law.
"ENVIRONMENTAL LAWS" shall mean all Applicable Laws relating to the control of
any pollutant or the protection of human health, safety or the environment
including, without limitation, (i) all requirements pertaining to reporting,
licensing, permitting, controlling or threatened releases of Hazardous
Materials, chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, chemical substances, pollutants, contaminants or toxic
substances, materials or wastes, whether solid, liquid or gaseous in nature; and
(ii) all requirements pertaining to the protection of the health and safety of
employees or the public. Without limiting the generality of the foregoing,
"Environmental Laws" include: (a) the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. Sections 6901 ET SEQ.; (b) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 26 U.S.C. Sections 4611 and 42
U.S.C. Sections 9601 ET SEQ.; (c) the Superfund Amendment and Reauthorization
Act of 1984; (d) the Clean Air Act, 42. U.S.C. Sections 7401 ET SEQ.; (e) the
Clean Water Act, 33 U.S.C. Sections 1251 ET SEQ.; (f) the Safe Drinking Water
Act, 42 U.S.C. Sections 300f ET SEQ.; (g) the Toxic Substances Control Act, 15
U.S.C. Sections 2601 ET SEQ.; (h) the Federal Water Pollution Control Act, as
amended, 33 U.S.C. Sections 1251 ET SEQ.; (i) the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sections 1801 ET SEQ.; (j) the Atomic
Energy Act, as amended, 42 U.S.C. Sections 2011 ET SEQ.,; (k) the Federal
Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. Sections 301 ET
SEQ.; (l) the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
Sections 301 ET SEQ.; and (m) the Occupational Safety and Health Act of 1970, 29
U.S.C.A. Section 651, and all rules and regulations promulgated thereunder
("OSHA").
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and any
regulation promulgated thereunder.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) under "common control" with the Company within the meaning of
Section 414(b), 414(c) or 414(m) of the Code.
"ERISA EVENT" shall mean (a) a Reportable Event with respect to a Qualified
Plan; (b) a withdrawal by any member of the Controlled Group from a Qualified
Plan subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete
or partial withdrawal by any member of the Controlled Group from a Multiemployer
Plan; (d) the filing of a notice of intent to terminate, the treatment of a plan
amendment as a termination under Section
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4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure to make required contributions to a Qualified Plan or
Multiemployer Plan; (f) an event or condition which might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Qualified Plan or Multiemployer
Plan; (g) the imposition of any liability under Title IV of ERISA, other than
PBGC premiums due but not delinquent under Section 4007 of ERISA upon any member
of the Controlled Group; (h) an application for a funding waiver or an extension
of any amortization period pursuant to Section 412 of the Code with respect to
any Qualified Plan; (i) any member of the Controlled Group engages in or
otherwise becomes liable for a non-exempt prohibited transaction; or (j) a
violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rules under Section 401(a) of the Code by any fiduciary with
respect to any Qualified Plan for which any member of the Controlled Group may
be directly or indirectly liable.
"EVENT OF DEFAULT" shall mean any of the events specified in Section 7.1 hereof,
provided that any requirement for notice or lapse of time, or both, has been
satisfied or has occurred.
"GAAP" shall mean, as in effect from time to time, generally accepted accounting
principles consistently applied.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state or other
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining government.
"HAZARDOUS MATERIALS" shall mean any chemical substance, object, condition,
material or waste that is or may be hazardous to human health, safety or the
environment, including, without limitation, any chemicals, substances, materials
and wastes: (i) the presence of which requires investigation or remediation
under the Applicable Law; or (ii) which is defined as "hazardous wastes,"
"hazardous substances," "hazardous materials," "toxic substances," "air
pollutants," "extremely hazardous waste" or "restricted hazardous waste" under
any Applicable Law; or (iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, dangerous or mutagenic or otherwise
hazardous and is regulated by any Governmental Authority having or asserting
jurisdiction over the Company, any Affiliate or any Property; or (iv) the
presence of which causes nuisance to adjacent properties or poses a hazard to
the health or safety of Persons; or (v) the presence of which on adjacent
properties constitutes a trespass by the Company or any Affiliate; or
(vi) without limitation, which contains radioactive materials, pesticides,
pollutants, contaminants, chemicals, lead, formaldehyde, flammable explosives,
radon, gasoline, diesel fuel or other petroleum hydrocarbons, polychlorinated
biphenols (PCBs)
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or asbestos.
"INDEBTEDNESS" shall mean (a) all items, except items of shareholders, and
partners' equity or capital stock or surplus or general contingency or deferred
tax reserves, which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a consolidated balance sheet
of the Company, (b) all direct or indirect obligations secured by any Lien to
which any property or asset owned by the Company is subject, whether or not the
obligation secured thereby shall have been assumed, (c) to the extent not
otherwise included, all Capital Lease Obligations of the Company, (d) all
reimbursement obligations with respect to outstanding letters of credit, and (e)
to the extent not otherwise included, all obligations of other persons or
entities which the Company has guaranteed.
"INDEMNITY" shall mean any payment due under Section 8.2 hereof.
"INDEPENDENT APPRAISER" shall mean Higdon, Inc., with respect to appraisals of
the Derrick Barge "Betty L" only, ABS Marine Services, Inc., or such other
appraiser, independent of the Company, the Surety or any of the Surety's
creditors, as to which the Company and the Surety may agree.
"INDEPENDENT APPRAISER'S INITIAL REPORT" shall mean that certain report of
Higdon, Inc., dated as of August 24, 1995.
"INSOLVENCY PROCEEDING" shall mean (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, marshaling of assets for creditors or other similar arrangement; in
each case (a) and (b), whether under U.S. Federal, State or foreign law.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor and Subordination
Agreement, dated as of October 10, 1995 (the "Intercreditor Agreement"), among
the Bonding Company, Mellon Bank, N.A., as agent and collateral agent for itself
and the other Bridge Loan Lenders (as defined therein), Mellon Bank, N.A., as
agent and collateral agent for itself and the other Existing Lenders (as defined
therein), and American Passenger Rail Car Company, L.L.C., pursuant to which the
parties thereto have confirmed their agreements with respect to, among other
things, the priority of their respective security interests in the Collateral.
"INTEREST EXPENSE" shall mean, for any period, "interest expense" of the Company
and the Company's Subsidiaries determined on a consolidated basis in accordance
with GAAP.
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"LIEN" shall mean, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, hypothecation, restriction,
encumbrance, adverse right or charge of any kind in respect of such asset.
"MATERIALLY ADVERSE EFFECT" shall mean any materially adverse effect (a) upon
the business, assets, liabilities, financial condition, results of operations,
or business prospects of the Company, or (b) upon the ability of the Company to
ensure performance under this Agreement or any other Bond Document by the
Company, or (c) upon the rights, benefits or interests of the Surety in or to
this Agreement or any other Bond Document, in each case, resulting from any act,
omission, situation, status, event, or undertaking, (other than by the gross
negligence or willful misconduct of the Surety).
"MORTGAGE TRUSTEE" shall mean PNC Bank, Delaware, a corporation with an office
located at 222 Delaware Avenue, Wilmington, Delaware 19801, mortgagee under the
Ship Mortgage, as trustee on behalf of and for the benefit of the Surety, or any
successor thereto.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making, or is obligated to make contributions or has made, or been
obligated to make, contributions at any time during the immediately preceding
period covering at least five (5) calendar years.
"NECESSARY AUTHORIZATIONS" shall mean all material authorizations, consents,
permits, approvals, licenses, and exemptions from, and all filings and
registrations with, and all reports to, any Governmental Authority whether
federal, state, local, and all agencies thereof, which are required for
performance of any Contract or for the conduct of the businesses and the
ownership (or lease) of the properties and assets of the Company.
"NET INCOME" shall mean, for any period, "net income" of the Company and the
Company's Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"NET WORTH" shall mean, for any period, "net worth" of the Company and the
Company's Subsidiaries determined on a consolidated basis in accordance with
GAAP.
"OBLIGATIONS" shall mean (a) all payment and performance obligations of the
Company to the Surety under this Agreement and the other Bond Documents, as they
may be amended from time to time, or as a result of the issuance of the Bonds,
and (b) the obligation to pay an amount equal to the amount of any and all
damages which the Surety may suffer by reason of a breach by the Company of any
obligation, covenant, or undertaking with respect to this Agreement, any
Contract, or any other Bond
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Document including, without limitation, the payment of any Premium, Indemnity,
or interest.
"ORDINARY COURSE OF BUSINESS" shall mean, in respect of any transaction
involving the Company, the ordinary course of the Company's business,
substantially as conducted by the Company immediately prior to July 1, 1994.
"OWNER" shall mean any obligee under a Bond or a Contract.
"PERMITTED LIENS" shall mean, (a) Liens permitted under the Intercreditor
Agreement or under the Ship Mortgage; (b) 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 asset and the Company shall maintain in accordance with GAAP appropriate
reserves therefor; and (c) 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 asset.
"PERSON" shall mean an individual, corporation, partnership, trust, joint stock
company, limited liability company, unincorporated organization, or a government
or any agency or political subdivision thereof.
"PLAN" shall mean an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Company, or any member of the Controlled Group, sponsors or maintains
or to which the Company, or a member of the Controlled Group makes or is
obligated to make contributions, and includes any Multiemployer Plan or
Qualified Plan.
"PROPERTY" shall mean any real property or personal property, plant, building,
facility, structure, underground storage tank or unit, equipment, inventory or
other asset owned, leased or operated by the Company (including, without
limitation, any surface water thereon or adjacent thereto, and soil and
groundwater thereunder).
"PROPORTIONAL SHARE" shall mean, with respect to any Contract, a fraction, the
numerator of which shall be the Contract Value of said Contract and the
denominator of which shall be the aggregate contract value of all Contracts to
which the Company is a party, including without limitation, contracts for which
the Surety has not issued a Bond, Contracts entered into prior to the date of
this Agreement, and all other Contracts which are excluded from the definition
of Aggregate Contract Value.
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"QUALIFIED PLAN" shall mean a pension plan (as defined in Section 3(2) of ERISA)
intended to be tax-qualified under Section 401(a) of the Code and which any
member of the Controlled Group sponsors, maintains, or to which it makes or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding period covering at least five (5) plan years, but
excluding any Multiemployer Plan.
"REPORTABLE EVENT" shall mean any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder (other than an event for which notice to the
PBGC is waived or penalties have been waived under PBGC Technical Update 95-3),
a withdrawal from a Plan described in Section 4063 of ERISA, or a cessation of
operations described in Section 4062(e) of ERISA.
"REQUEST FOR BONDING" shall mean any certificate signed by an Authorized
Signatory requesting a Bond hereunder which will increase the aggregate amount
of the Aggregate Contract Value, which certificate shall be denominated a
"Request for Bonding," and shall be in substantially the form of EXHIBIT 1.1(C)
attached hereto. Each Request for Bonding shall, among other things, specify
the date that the Bond would be required to be issued, which shall be a Business
Day, the penal amount of the Bond, the Contract Value of the contract which the
Bond is to assure, the proposed Owner, the proposed principal, and a description
of the Contract or risk to be bonded.
"RESTRUCTURING" shall mean the consummation of the transactions contemplated by
the Asset Purchase Agreement and certain related transactions restructuring the
obligations of the Company to the Bonding Company, certain banks and financial
institutions and certain customers of the Transit Division of the Company.
"SECURITY DOCUMENTS" shall mean, collectively, the Pledge and Security Agreement
dated as of October 10, 1995 among the Surety and the Company and any other
document, instrument or agreement granting Collateral for the Obligations, as
the same may be amended or modified from time to time.
"SHIP MORTGAGE" shall mean the Third Preferred Mortgage on the Vessel executed
by MKO, and delivered to PNC Bank, Delaware, mortgagee, as trustee on behalf of
and for the benefit of the Surety, dated as of October 10, 1995 and being filed
for recordation with the United States Coast Guard at the National Vessel
Documentation Center in West Virginia as supplemented, amended, modified or
restated from time to time.
"SUBSIDIARY" shall mean, as applied to any Person, 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,
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or one or more of the Subsidiaries of the Person, or a combination thereof;
provided, however, that for purposes of this definition, MK Rail shall not be
deemed a Subsidiary.
"TERMINATION DATE" shall mean the earlier of (i) October 10, 1997 or (ii) the
date on which the Surety declares a Termination of this Agreement pursuant to
Section 7.2 hereof.
"UNDERWRITING REQUIREMENTS" shall mean with respect to any Contract for which a
Bond is applied, the following:
II.. the Contract must provide that all progress payments must
be made monthly and made in cash, subject only to the Owner's
right to retain an amount not to exceed 15% of the Contract Value
as retention for payment upon completion of the Contract and that
no payments will be made in advance of actual performance;
III.. all payments under the Contract shall be (i) due from an
Owner whose debt is rated "investment grade" or better by Moody's
Investors Service, Inc. or Standard & Poor's Corporation; (ii)
due from the federal government of the United States of America
or the state government of one of the 50 States of the United
States of America, or a governmental agency which is backed by
the full faith and credit of said federal or state governments;
or (iii) committed to be financed by a United States national or
state bank having deposits totaling more than $250,000,000, and
whose short-term debt is rated "P-11" or better by Moody's
Investors Service, Inc. or "A-l+" or better by Standard & Poor's
Corporation;
IV.. the proposed warranty or maintenance period under the
Contract shall not exceed two years from the date of completion;
V.. any Contract guarantee relating to the efficiency of the
finished product shall (i) not exceed one year from the date of
completion; (ii) be consistent with historical efficiency for
that type of technology or project in the appropriate industry;
(iii) be consistent with prudent engineering practice; (iv)
include a limit on aggregate exposure to the Company and the
Surety which is less than or equal to five percent of the
Contract Value;
VI.. any liquidated damages payable under the Contract must
either (i) be less than $10,000 per day; or (ii) include a limit
on aggregate exposure to the Company and the Surety less than or
equal to ten percent of the Contract Value;
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VII.. the Bond for the Contract must be on (i) the Surety's own
standard surety bond contract forms; (ii) a standard federal or
state government bond form which has been previously utilized by
the Surety; or (iii) a private bond form which is generally
accepted for use by the Surety;
VIII.. the Bond shall be only a Bid, Payment, Performance, or
Maintenance Bond or a License/Permit Bond directly required in
connection with the performance of a Contract for which a Bond
has been issued under this Agreement (provided that the aggregate
exposure under such License/Permit Bond per Contract does not
exceed $100,000) or a Stop Notice Bond directly required in
connection with the performance of a Contract for which a Bond
has been issued under this Agreement (provided that the aggregate
exposure under such Stop Notice Bond per Contract does not exceed
$250,000), and shall not be any other type of Bond, such as,
without limitation, a Judicial Bond, a Court Bond or any License
& Permit Bond other than that specified above;
IX.. the Contract must require the Company to perform or
supervise only work which is both: (i) in the fields of (A)
industrial/process plant construction, (B) power plant or hydro
electric facility construction, (C) highway construction, rail
lines construction (excluding rail car manufacturing), marine
construction (excluding vessel maintenance and construction), and
airport construction, (D) operations and maintenance of
facilities, (E) housing and other related construction, (F)
telecommunications lines and facility construction; (G) water and
waste water treatment facility construction; (H) mining
construction and operations; (I) institutional construction AND
(ii) in those aspects of the foregoing fields in which the
Company has experience and expertise;
X.. the Contract must not in any way involve the handling of,
remediation of, design of or construction on a site containing,
operation of a facility containing or generating, or exposure of
any sort to Hazardous Materials;
XI.. the Contract's completion date must be less than 36 months
from the date of execution of the Contract;
XII.. the Contract Value of Contract shall not exceed the
lesser of (i) $50 million or (ii) the sum of (A) the Surety's
statutory underwriting capacity as determined from time to time
by the Fiscal Service of the
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United States Treasury Department in Department Circular 570,
"Companies Holding Certificates of Authority as Acceptable
Sureties on Federal Bonds and as Acceptable Reinsurance
Companies" and (B) the Surety's additional continued available
capacity under the Surety's reinsurance treaty as it may be
amended from time to time;
XIII.. at the time that the Bond for the Contract is to be
issued, the Surety shall be licensed to issue Bonds in the
jurisdictions where it is necessary or appropriate in order to
issue a Bond on the Contract; and
XIV.. with respect to the terms of the Contract other than as
addressed in the prior twelve specifications, which
specifications must each be complied with in full, the Contract
must contain only terms which are customary and reasonable, it
being expressly agreed that the guiding standard to determine
what is customary and reasonable shall be the standard forms
published by (i) the American Institute of Architects; (ii) the
Associated General Contractors of America; or (iii) the federal
government of the United States of America.
The Surety may, in its sole and unencumbered discretion, waive any of
the foregoing Underwriting Requirements with respect to any given Contract and
any such waiver shall be governed by Section 8.4 hereof. In the event of such
waiver, such Contract shall be included in the determination of Aggregate
Contract Value.
"UNFUNDED PENSION LIABILITIES" of a Plan shall mean the excess of the
present value of the Qualified Plan's accrued benefits, as defined in Section
3(23) of ERISA, over the current value of that Qualified Plan's assets, as
defined in Section 3(26) of ERISA.
"VALUE OF ELIGIBLE EQUIPMENT" shall mean, at any particular date, the value of
the Eligible Equipment which is Collateral, net of all costs of sale, assuming a
sale of all such Eligible Equipment in July 1997 on an as-is, cash-and-carry,
rapid liquidation basis; PROVIDED, HOWEVER, that the value of the Derrick Barge
"Betty L" shall for purposes of this Agreement be $6 million from the date
hereof until November 30, 1995, and thereafter, until the Surety has received an
appraisal from an Independent Appraiser satisfactory to it in form and substance
establishing its value, its value shall be nothing.
"VESSEL" shall mean that certain derrick barge known as the "Betty L" bearing
Official No. 652 734, built in 1982 with an approximate gross tonnage of 6,103
tons, having been duly documented in the name of MKO, under the laws of the
United States of America and having her home port at the port of Portland,
Oregon.
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"WITHDRAWAL LIABILITIES" shall mean, as of any determination date, the aggregate
amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the
Controlled Group made a complete withdrawal from all Multiemployer Plans and any
increase in contributions pursuant to Section 4243 of ERISA.
A. OTHER MATTERS OF CONSTRUCTION. Each definition of an agreement in
this Article 1 shall include such instrument or agreement as modified, amended,
or supplemented from time to time, and except where the context otherwise
requires, definitions imparting the singular shall include the plural and vice
versa. Except where otherwise specifically restricted, reference to a party to
a Bond Document includes that party and its successors and assigns. All
accounting terms used herein without definition shall be used as defined under
GAAP.
XV. THE BONDS
A. THE BONDS. Subject to the Company's performance of the terms and
conditions of the Asset Purchase Agreement and the terms and conditions of, and
in reliance upon the representations and warranties made in, this Agreement and
the other Bond Documents, the Surety agrees to issue to the Company, prior to
the Termination Date, Bonds on Contracts of a Contract Value which in the
aggregate at any one time outstanding do not exceed the then applicable
Commitment.
B. MANNER OF APPLICATION FOR AND ISSUANCE OF BONDS .
1. REQUESTS FOR BONDING.
a. INITIAL AND SUBSEQUENT BONDS. The Company shall give
the Surety at least fifteen (15) Business Days' prior notice by telecopy of a
written Request for Bonding; PROVIDED HOWEVER, that with respect to Requests for
Bonding of Contracts to be performed by a joint venture, the Company shall give
the Surety at least thirty (30) Business Days' prior notice by telecopy of a
written Request for Bonding .
b. MAXIMUM AMOUNT. Notwithstanding any term or provision
of this Agreement which may be construed to the contrary, no Bond may be issued
with respect to a Contract with a Contract Value which exceeds $50 million.
2. ISSUANCE OF BONDS. Upon satisfying itself that the Company has
satisfied the conditions of Sections 3.1 or 3.2, as applicable, and that the
Company is not in default of its performance of the terms and conditions of the
Asset Purchase Agreement or of the terms and conditions of, and the
representations and warranties made in, this Agreement and the other Bond
Documents, the Surety shall issue a Bond in response
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to a Request for Bonding.
C. PREMIUMS. The Company shall pay Premiums on Bonds to the Surety
at the rate per Contract Value which is equal to the premium rate announced
publicly by the Surety from time to time, as its Revised Merit Rate, but in no
event higher than the maximum rate permitted by Applicable Law.
D. REDUCTION OF COMMITMENT
1. REDUCTIONS BY THE COMPANY. The Commitment may be reduced by
the Company at any time, upon at least three (3) Business Days' prior written
notice to the Surety; PROVIDED, THAT (i) the Commitment may not be reduced by an
amount exceeding the Available Commitment, (ii) each notice of reduction of the
Commitment shall be irrevocable, and (iii) each such reduction shall permanently
reduce the Commitment by the amount of such reduction.
2. REDUCTION BY TERMINATION. No Bonds shall be issued under
this New Bonds Agreement on or subsequent to the Termination Date.
E. MANNER OF PAYMENT.
1. WHEN PAYMENTS DUE.
a. Each payment by the Company on account of Premium for a
Bond under this Agreement shall be made not later than 12:00 noon (Baltimore
time) on or before the thirtieth calendar day after the last day of the month in
which the Bond is issued. Said payment shall be to the Surety at such Surety's
office as is designated in writing from time to time, for the account of the
Surety, in lawful money of the United States of America in immediately available
funds. Any payment received by the Surety after 12:00 noon (Baltimore time)
shall be deemed received on the next Business Day.
b. Each payment by the Company on account of Indemnity,
interest, and any other amount owed to the Surety under this Agreement shall be
made not later than 12:00 noon (Baltimore time) on the date specified for
payment under this Agreement or other Bond Document to the Surety at such
Surety's office as is designated in writing from time to time, for the account
of the Surety, in lawful money of the United States of America in immediately
available funds. Any payment received by the Surety after 12:00 noon (Baltimore
time) shall be deemed received on the next Business Day.
c. If any payment under this Agreement or the Bond shall
be
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specified to be made upon a day which is not a Business Day, it shall be made on
the next preceding day which is a Business Day.
2. NO DEDUCTION.
a. The Company agrees to pay Premium, Indemnity, interest,
and all other amounts due hereunder without set-off or counterclaim or any
deduction whatsoever. If the Company shall hereafter be required by law to
deduct any taxes from or in respect of any sum payable hereunder or under any
Bond to the Surety, (A) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.7(b)), such Surety receives an
amount equal to the sum it would have received had no such deductions been made,
(B) the Company shall make such deductions and (C) the Company shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
3.
INADEQUATE PAYMENTS. If on the date on which any amount shall be due and
payable by the Company, the amount received by the Surety from the Company shall
not be adequate to pay the amount which shall be so due and payable, interest
shall accrue on such due and unpaid amount at the Default Rate.
F. REIMBURSEMENT. Except as set forth in Section 8.2(b) hereof
with respect to the payment of Indemnity, whenever the Surety shall sustain or
incur any losses or out-of-pocket expenses in connection with a Default, the
Company agrees to pay to such Surety, upon the Surety's demand, an amount
sufficient to compensate the Surety for all such losses and out-of-pocket
expenses. The Surety's good faith determination of the amount of such losses
and out-of-pocket expenses, absent manifest error, shall be binding and
conclusive. Losses subject to reimbursement hereunder shall include, without
limiting the generality of the foregoing, expenses incurred by any Surety or any
co-surety or reinsurer of the Surety.
G. APPLICATION OF PAYMENTS. If some but less than all amounts due
from the Company are received by the Surety, the Surety shall distribute such
amounts in the following order of priority: FIRST, to the payment of any
Indemnity then due and payable to the Surety hereunder or under any Bond,
including, without limitation, (i) to damages, losses, and expenses incurred by
the Surety by reason of execution of any Bond, any breach hereof or of any other
Bond Document; and (ii) attorneys, fees and expenses incurred by the Surety in
the collection of amounts under this Agreement or of any Bond; SECOND, to the
payment of interest then due and payable on the Bonds; THIRD, to the payment of
Premium then due and payable on the Bonds; FOURTH, to the payment of
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all other Obligations not otherwise referred to in this Section 2.7(a) then due
and payable.
H. MAXIMUM RATE OF INTEREST. In no contingency or event whatsoever
shall the aggregate of all amounts deemed interest on the accrued but unpaid
Premiums and Indemnity and charged or collected pursuant to the terms of this
Agreement or pursuant to the Bond exceed the highest rate permissible under any
law which a court of competent jurisdiction shall, in a final determination,
deem applicable thereto. In the event that such a court determines that the
Surety charged or received interest hereunder in excess of the highest
applicable rate, the rate in effect hereunder shall automatically be reduced to
the maximum rate permitted by Applicable Law and the Surety shall promptly
refund to the Company any interest received by it in excess of the maximum
lawful rate or, if so requested by the Company, shall apply such excess to the
principal balance of the Obligations. It is the intent hereof that the Company
not pay or contract to pay, and that the Surety not receive or contract to
receive, directly or indirectly in any manner whatsoever, interest in excess of
that which may be paid by the Company under Applicable Law.
XVI. CONDITIONS PRECEDENT
A. CONDITIONS PRECEDENT TO INITIAL BOND. The obligation of the
Surety to undertake the Commitment and to issue the initial Bond is subject to
the prior fulfillment of each of the following conditions:
1. The Surety shall have received each of the following, in
form and substance satisfactory to the Surety:
a. This duly executed Agreement;
b. The Asset Purchase Agreement duly executed by the
Company;
c. The opinion of Jones Day Reavis & Pogue addressed to
the Surety, and reasonably satisfactory to it, dated the Agreement Date with
respect to the enforceability of this Agreement and the Asset Purchase
Agreement;
d. The duly executed Request for Bonding for the initial
Bond of the Bonds;
e. A certificate signed by an Authorized Signatory of the
Company in substantially the form of EXHIBIT 3.1(a)(vii) attached hereto,
including a certificate of incumbency with respect to each Authorized Signatory
of the Company, together with
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appropriate attachments which shall include, without limitation, a true,
complete and correct copy of the resolutions of the Company authorizing the
Request for Bonding and the execution, delivery and performance by the Company
of this Agreement, the Asset Purchase Agreement, and any other Bond Document;
f. the Contract for which such initial Bond is to be issued
shall satisfy all Underwriting Requirements, in the reasonable judgment of the
Surety;
g. A Bonding Base Certificate, signed by the Independent
Appraiser, which shall demonstrate that, after giving effect to the issuance of
the Bond, no Bonding Base Deficiency will exist.
h. Payment of all fees and expenses payable to the Surety
in connection with the execution and delivery of this Agreement up to $2.5
million in the reasonable fees and expenses of counsel and consultants to the
Surety ($500,000 of which shall be paid by funds disbursed from the Metra Banks
facility);
i. Duly executed Ship Mortgage with respect to the Vessel
and Pledge and Security Agreement between the Company and the Surety and the
related Financing Statements with respect to all other Collateral, in each case
granting the Surety a perfected security interest of first priority and
agreements subordinating all other security interests in the Collateral, in form
and substance satisfactory to the Surety;
j. Opinions of outside counsel reasonably satisfactory to
the Surety, addressed to the Surety, and reasonably satisfactory to it, dated
the date of the issuance of the Bond to the effect that the Surety or, in the
case of the Vessel, the Mortgage Trustee, has a perfected security interest in
all appropriate jurisdictions in all of the Equipment which is Collateral and
evidence reasonably satisfactory to the Surety that such security interest is of
the first priority;
k. All such other documents as the Surety may reasonably
request, certified by an appropriate governmental official or an Authorized
Signatory if so requested.
2. The Surety shall have perfected a security interest of first
priority in all Collateral other than the Vessel, and the Mortgage Trustee shall
have perfected the Ship Mortgage as a preferred mortgage of first priority in
the Vessel.
3. All of the representations and warranties of the Company
under this Agreement shall be true and correct, both before and after giving
effect to the issuance of the initial Bond, and the Surety shall have received a
certificate of an Authorized
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Signatory so stating.
B. CONDITIONS PRECEDENT TO EACH BOND. The obligation of the Surety
to issue each Bond after the initial Bond is subject to the fulfillment of each
of the following conditions immediately prior to or contemporaneously with such
Bond:
1. There shall not exist on the date of such Bond, a Default;
and
2. The Surety shall have received a Request for Bonding duly
executed by the Company.
3. The Surety or, in the case of the Vessel, the Mortgage Trustee
shall have perfected a security interest of first priority in all Collateral.
4. The Surety shall have received a Bonding Base Certificate,
signed by the appropriate party under the definition of Bonding Base
Certificate, which shall demonstrate that, after giving effect to the issuance
of the Bond, no Bonding Base Deficiency will exist.
5. the Contract for which such Bond is to be issued shall satisfy
all Underwriting Requirements, in the reasonable judgment of the Surety;
6. All of the representations and warranties of the Company under
this Agreement shall be true and correct, both before and after giving effect to
the issuance the Bond, and the Surety shall have received a certificate of an
Authorized Signatory so stating.
7. Opinions of outside counsel reasonably satisfactory to the
Surety, addressed to the Surety, and reasonably satisfactory to it, dated the
date of the issuance of the Bond to the effect that the Surety or, in the case
of the Vessel, the Mortgage Trustee has a perfected security interest in all
appropriate jurisdictions in all of the Equipment which is Collateral and
evidence reasonably satisfactory to the Surety that such security interests are
of the first priority.
8. All such other documents as the Surety may reasonably
request, certified by an appropriate governmental official or an Authorized
Signatory if so requested.
The Company hereby agrees that the delivery of any Request for
Bonding hereunder shall be deemed to be the certification of the Authorized
Signatory thereof that there does not exist, on the date of the making of the
Bond, before or after giving effect thereto, a Default.
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XVII. REPRESENTATIONS AND WARRANTIES
A. GENERAL REPRESENTATIONS AND WARRANTIES. In order to induce
the Surety to enter into this Agreement and to issue Bonds to the Company, the
Company hereby agrees, represents and warrants that:
1. CORPORATE EXISTENCE AND POWER. The Company:
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 Applicable Law.
2. AUTHORIZATION; NO CONTRAVENTION. The execution,
delivery and performance by the Company of this Agreement and each Bond have
been duly authorized by all necessary action and do not and will not:
a. contravene the terms of the Company's certificate of
incorporation or by-laws;
b. conflict with or result in any breach or
contravention of, or the creation of any Lien (other than a Permitted Lien)
under, any indenture, agreement, lease, instrument, Contract, Contractual
Obligation, injunction, order, decree or undertaking to which the Company is a
party; or
c. violate any Applicable Law.
3. 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 Company of this
Agreement, any Contract, any Bond, or any other instrument or agreement
required hereunder to be made by the Company.
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4. BINDING EFFECT. This Agreement constitutes the legal,
valid and binding obligations of the Company, enforceable against the Company
in accordance with its terms.
5. LITIGATION. Except as set forth in SCHEDULE 4.1(e) hereto,
there are no actions, suits, proceedings, claims or disputes pending, or to the
best knowledge of the Company, threatened or contemplated at law, in equity, in
arbitration or before any Governmental Authority, against the Company or its
properties which:
a. purport to affect or pertain to this Agreement, any
Contract, any Bond or any of the transactions contemplated hereby or thereby or
which might give rise to a claim under any Bond; or
b. if determined adversely to the Company, could
reasonably be expected to have a Materially Adverse Effect.
c. 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, any Contract, any Bond, or any other document relating to this
Agreement, or directing that the transactions provided for herein or therein not
be consummated as herein or therein provided.
6. ERISA COMPLIANCE.
a. Schedule 4.1(f)(i) lists all Plans maintained or
sponsored by the Company or to which it is obligated to contribute, and
separately identifies Plans intended to be Qualified Plans and Multiemployer
Plans. All written descriptions thereof provided by the Company are true and
complete in all material respects. There are no Withdrawal Liabilities.
b. Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal or state
law, including all requirements under the Code or ERISA for filing reports
(which are true and correct in all material respects as of the date filed), and
benefits have been paid in accordance with the provisions of the Plan.
c. Each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the Code, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of section 501 of the
Code, and to the best knowledge of the Company nothing has occurred which would
cause the loss of such qualification or tax-exempt status.
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d. Except as set forth in Schedule 4.1(f)(iv), neither
the Company, nor any ERISA Affiliate, has any outstanding liability under Title
IV of ERISA with respect to any Plan maintained or sponsored by the Company or
any ERISA Affiliate, nor with respect to any Plan to which the Company or any
ERISA Affiliate contributes or is obligated to contribute.
e. Except as set forth on Schedule 4.1(f)(v), none of
the Qualified Plans subject to Title IV of ERISA has any Unfunded Pension
Liability as to which the Company is or may be liable.
f. Except as set forth in Schedule 4.1(f)(vi), no Plan
maintained or sponsored by the Company provides medical or other welfare
benefits or extends coverage relating to such benefits beyond the date of a
participant's termination of employment with the Company, except to the extent
required by Section 4980B of the Code and at the sole expense of the participant
or the beneficiary of the participant to the fullest extent permissible under
such Section of the Code. The Company has complied in all material respects
with the notice and continuation coverage requirements of Section 4980B of the
Code.
g. No ERISA Event has occurred or is reasonably expected
to occur with respect to any Plan maintained or sponsored by the Company or to
which the Company is obligated to contribute.
h. There are no pending or, to the best knowledge of the
Company, threatened claims, actions or lawsuits, other than routine claims for
benefits in the usual and ordinary course, asserted or instituted against (i)
any Plan maintained or sponsored by the Company or their respective assets, (ii)
any member of the Controlled Group with respect to any Qualified Plan of the
Company or (iii) any fiduciary with respect to any Plan for which the Company
may be directly or indirectly liable, through indemnification obligations or
otherwise.
i. The Company has not incurred nor reasonably expects
to incur (i) any liability (and no event has occurred which, with the giving of
notice under Section 4219 Of ERISA, would result in such liability) under
Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan or (ii) any
liability under Title IV of ERISA (other than premiums due and not delinquent
under Section 4007 of ERISA) with respect to a Plan.
j. The Company, has not transferred any Unfunded Pension
Liability outside of the Controlled Group or otherwise engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
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k. The Company has not, directly or indirectly, in a
non-exempt prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan which has a reasonable
likelihood of having a Materially Adverse Effect.
7. TITLE TO PROPERTIES. The Company 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 Materially Adverse Effect. The Property of the Company
is free and clear of all Liens or rights of others, except Permitted Liens.
8. SECURITY INTEREST TO THE SURETY. The Company has granted
to the Surety a valid and binding perfected security interest of first priority
in all Collateral.
9. TAXES. The Company 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 Company, which would, if the assessment were
made, have a Materially Adverse Effect.
10. ENVIRONMENTAL MATTERS
a. The operations of the Company comply in all respects
with all Environmental Laws except such non-compliance as is associated with
the Company's Transit Division and is disclosed in the Asset Purchase Agreement.
b. The Company has obtained all licenses, permits,
authorizations and registrations required under any Environmental Law
("ENVIRONMENTAL PERMITS") necessary for its operations, and all such
Environmental Permits are in good standing, and the Company, is in compliance
with all terms and conditions of such Environmental Permits.
c. Except as specifically identified in Schedule
4.1(i)(iii), none of the Company or any of the Property or operations of the
Company is subject to any outstanding written order from or agreement with
any Governmental Authority or other Person, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
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d. Except as is associated with the Company's Transit
Division and is disclosed in the Asset Purchase Agreement, there are no
conditions or circumstances which may give rise to any Environmental Claim
arising from the operations of the Company, including Environmental Claims
associated with any operations of the Company. Without limiting the generality
of the foregoing, (i) the Company does not have any underground storage tanks
(x) that are not properly registered or permitted under applicable Environmental
Laws or (y) that are leaking or disposing of Hazardous Materials and (ii) the
Company has notified all of their employees of the existence, if any, of any
health hazard arising from the conditions of their employment and have met all
notification requirements under Title III of CERCLA or any other Environmental
Law.
11. LABOR RELATIONS. There are no strikes, lockouts or other
labor disputes against the Company, or, to the best knowledge of the Company,
threatened against or affecting the Company which would have a Materially
Adverse Effect on the Company, and no significant unfair labor practice
complaint is pending against the Company, or, to the best knowledge of the
Company, threatened against it before any Governmental Authority, which would
have a Materially Adverse Effect on the Company.
12. COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, PATENTS,
ETC. The Company owns or is licensed or otherwise has the right to use all of
the patents, trademarks, service marks, trade names, copyrights, franchises,
authorizations and other rights that are reasonably necessary for the operation
of its businesses, without conflict with the rights of any other Person. To the
best knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed by the Company, infringes upon any rights owned by
any other Person; except as set forth on Schedule 4.1(l), no claim or litigation
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Company, proposed,
which, in either case, would be likely to result in a Materially Adverse Effect
on the Company.
13. INSURANCE. The properties of the Company are insured
with financially sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as is customarily carried on by company
engaged in similar businesses and owning similar properties in localities where
the Company operates.
14. SUBSIDIARIES. Except as set forth on Schedule 4.1 (n),
the Company has no Subsidiaries.
15. COLLECTIVE BARGAINING. Except as set forth on Schedule
4.1(o) attached hereto, none of the employees of the Company is a party to any
collective
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bargaining agreement with the Company and, to the best knowledge of the Company
and its officers, there are no material grievances, disputes, or controversies
with any union or any other organization of the employees of the Company or
threats of strikes, work stoppages, or any asserted pending demands for
collective bargaining by any union or other organization.
16. OSHA. All of the Company's operations are conducted in
material compliance with all applicable rules and regulations promulgated by
the Occupational Safety and Health Administration of the United States
Department of Labor.
17. FULL DISCLOSURE. None of the representations or
warranties made by the Company in this Agreement or any Bond Document, and none
of the statements contained in each exhibit, report, statement or certificate
furnished by or on behalf of the Company in this Agreement or any document
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 made therein, in light of the circumstances under which they are
made, not misleading.
18. With respect to Bonding Requests after the Initial Bond,
the Company is to provide updates to the foregoing Schedules.
B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties made under this Agreement shall be deemed to be
made, and shall be true and correct, at and as of the Agreement Date and the
date of issuance of each Bond hereunder, except to the extent previously
fulfilled in accordance with the terms hereof and to the extent subsequently
inapplicable. All representations and warranties made under this Agreement
shall survive, and not be waived by, the execution hereof by the Surety, any
investigation or inquiry by the Surety, or the issuance of any Bond under this
Agreement.
XVIII. GENERAL COVENANTS
At all times prior to the Date of Discharge of any of the Bonds issued under
this Agreement or to the time that the Company no longer has the right to
request Bonds hereunder (whether or not the conditions to the issuance of such
Bonds have been or can be fulfilled), and unless the Surety shall otherwise
consent in writing:
A. FINANCIAL STATEMENTS. The Company shall deliver to the Surety in
form and detail satisfactory to the Surety:
1. as soon as available, but not later than 105 days after the
end of
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each fiscal year of the Company, a copy of the audited consolidated balance
sheet of the Company as at the end of such year and the related consolidated
statements of income, owners' equity and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the previous
year, and accompanied by the opinion of an independent certified public
accountant who shall be satisfactory to the Surety, together with a report which
shall state that such consolidated financial statements present fairly the
financial position of the Company for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years;
2. as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters of each year a copy of the unaudited
consolidated balance sheet of the Company as of the end of such quarter and the
related consolidated statements of income, stockholders' equity and cash flow
for the period commencing on the first day and ending on the last day of such
quarter, and certified by an appropriate responsible officer of the Company as
being complete and correct and fairly presenting, in accordance with GAAP, the
financial position and the results of operations of the Company;
3. as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters and 90 days after the end of each
fiscal year, a Compliance Certificate of the Company for such quarter or year
end, certified by an appropriate Authorized Signatory as being complete and
correct.
B. CERTIFICATES; OTHER INFORMATION. The Company shall furnish to the
Surety:
1. concurrently with the delivery of the financial statements
referred to in subsection 5.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements stating that
in making the examination necessary therefor no knowledge was obtained of any
Default, or Event of Default, except as specified in such certificate;
2. concurrently with the time the same are sent, copies of all
financial statements and reports which the Company sends to any of its
creditors, directors, or shareholders; and
3. such additional financial and other information as the Surety
may from time to time reasonably request.
C. NOTICES. The Company shall notify the Surety:
1. immediately of the occurrence of any Default or Event of
Default and of
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the occurrence or existence of any event or circumstance that foreseeable will
become a Default or Event of Default;
2. immediately of any dispute, litigation, investigation,
proceeding, or suspension which may constitute or result in a claim under any
Bond;
3. immediately of any (i) breach or non-performance of, or any
default under any Contractual Obligation of the Company; or (ii) dispute,
litigation, investigation, proceeding or suspension which may exist at any time
between the Company and any Governmental Authority;
4. immediately of any event or occurrence which reduces the value
of any Eligible Equipment which is Collateral by five percent of the value of
Eligible Equipment which is Collateral;
5. promptly, but in no event later than two (2) Business Days,
after becoming aware of the commencement of any material development in any
litigation or proceeding affecting the Company (i) in which the amount of
damages claimed is $250,000 (or its equivalent in another currency or
currencies) or more, (ii) in which injunctive or similar relief is sought or,
(iii) in which the relief sought is an injunction or other stay of the
performance of this Agreement or any document relating to this Agreement or
the operations of the Company;
6. upon, but in no event later than ten (10) days after, any event
or occurrence which reduces the value, by an amount in excess of $100,000 in the
aggregate since the last Bonding Base Certificate, of any Eligible Equipment
which is not Collateral but as to which the Independent Appraiser's Initial
Report attributed value;
7. upon, but in no event later than ten (10) days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against the Company or
any of its properties pursuant to any applicable Environmental Laws, (ii) all
other Environmental Claims, and (iii) any environmental or similar condition on
any real property adjoining or in the vicinity of the property of the Company
that could reasonably be anticipated to cause such property or any part thereof
to be subject to any restrictions on the ownership, occupancy, transferability
or use of such property under any Environmental Laws, if the aggregate cost or
value of such actions, Environmental Claims, or other conditions is reasonably
anticipated to be in excess of $250,000 in the aggregate;
8. upon, but in no event later than ten (10) days after, becoming
aware of any ERISA Event affecting the Company or any member of its Controlled
Group (but
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in no event more than thirty (30) days after such ERISA Event) together with (i)
a copy of any notice with respect to such ERISA Event that may be required to be
filed with the PBGC and (ii) any notice delivered by the PBGC to the Company or
its Controlled Group with respect to such ERISA Event;
9. upon, but in no event later than ten (10) Business Days after,
any Collateral is moved from one jurisdiction to another jurisdiction;
10. upon, but in no event later than ten (10) days after, becoming
aware of any Materially Adverse Effect subsequent to the date of the most recent
audited financial statements of the Company delivered to the Surety pursuant to
subsection 5.1(a), notice thereof;
11. upon, but in no event later than ten (10) days after, becoming
aware of any change in accounting policies or financial reporting practices of
the Company, notice thereof; and
12. upon, but in no event later than ten (10) days after, becoming
aware of, notice of any labor controversy resulting in or threatening to result
in any strike, work stoppage, boycott, shutdown or other labor disruption
against or involving the Company.
13. Each notice pursuant to this Section shall be accompanied by a
written statement by an Authorized Signatory of the Company, setting forth
details of the occurrence referred to therein and stating what action the
Company proposes to take with respect thereto.
D. PRESERVATION OF EXISTENCE, ETC. The Company shall:
1. preserve and maintain in full force and effect its existence
and good standing under the laws of the jurisdiction of its formation or
incorporation;
2. 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 except where the lapse of which
would not be material; and
3. 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.
E. MAINTENANCE OF PROPERTY. The Company shall maintain and preserve all
its property which is used or useful in its business or to the performance of
any Contract in
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good working order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof. The Company
shall use the standard of care typical in the industry in the operation of its
facilities.
F. INSURANCE. The Company shall maintain with financially sound and
reputable insurers, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons,
including workers' compensation insurance, public liability and property and
casualty insurance which amount shall not be reduced by the Company. Upon
request of the Surety, the Company shall furnish or cause to be furnished to the
Surety, at reasonable intervals a certificate of an Authorized Signatory of the
Company (and, if requested by the Surety, any insurance broker of the Company)
setting forth the nature and extent of all insurance maintained by the Company
in accordance with this Section 5.6 (and which, in the case of a certificate of
a broker, were placed through such broker).
G. PAYMENT OF OBLIGATIONS. The Company shall pay and discharge as the
same shall become due and payable, all their respective obligations and
liabilities, including:
1. all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets used in any way in connection with
the performance of any Contract, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company;
2. all lawful claims which, if unpaid, might by law become a Lien
upon its property used in any way in connection with the performance of any
Contract; and
3. all Indebtedness as and when due and payable but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
H. COMPLIANCE WITH LAWS. The Company 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.
I. INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company 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
Company. The Company will permit
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representatives of the Surety to visit and inspect any of their respective
properties, to examine their respective corporate, financial and operating
records and 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 Company and at such reasonable times during normal business hours and as
often as may be reasonably desired, without advance notice. The Company hereby
authorizes any bank depository, materialman, supply house, or other Person when
requested by the Surety to furnish the Surety any information requested
including, but not limited to, the status of the work under contracts being
performed by the Company, the condition of the performance of such contracts and
payments of accounts.
J. ENVIRONMENTAL LAWS. The Company shall conduct its operations and keep
and maintain its property in compliance with all Environmental Laws.
K. ACCURATE DISCLOSURE. The Company shall ensure that all written
information, exhibits and reports furnished to the Surety 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 Surety and correct any defect or error that may be
discovered therein or in any related document or agreement or in the execution,
acknowledgment or recordation thereof.
L. APPLICATION OF PROCEEDS.
1. PROPER APPLICATIONS. The proceeds of any advances or any other
payments from any Owner under any Contract shall be applied solely to the
payment of (i) subcontractors, laborers, and materialmen, or other persons
furnishing or supplying labor, materials, supplies, machinery, tools or other
equipment used only for the performance of such Contract and (ii) the Contract's
Proportional Share of actual disbursements the Company's corporate overhead and
shall not be applied to any other cost, expense or liability of any nature
whatsoever. No less frequently than weekly, commencing on October 20, 1995
through April 30, 1996 and on the first day of each month thereafter, the
Company shall provide to the Surety a certificate from the chief financial
officer of the Company, stating the following: "The undersigned hereby
certifies that, to the best of my knowledge after due inquiry in my capacity as
chief financial officer of [the applicable Company], no advances or any other
payments from any Owner under any Contract have been applied to any cost or
expense that is not permitted under the New Bonds Agreement dated as of October
10, 1995."
2. TRUST FUND. The Company covenants and agrees that all payments
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received for or on account of any Contract shall be held as a trust fund in
which the Surety has an interest, for the payment of obligations incurred in the
performance of the Contract and for labor, materials and services furnished in
the prosecution of the work provided in said Contract or any authorized
extension or modification thereof. The Company expressly understands and
declares that all monies due and to become due under any Contract covered by the
Bonds are trust funds, whether in the possession of the Company or otherwise,
for the benefit of and for payment of all such obligations in connection with
any such Contract for which the Surety would be liable under any of said Bonds,
which said trust also inures to the benefit of the Surety for any liability or
loss it may have or sustain under any said Bonds, and this Agreement and
declaration shall also constitute notice of such trust.
M. PRESERVATION OF COLLATERAL.
1. PRESERVATION OF SECURITY INTEREST. The Company, at its expense,
shall take all steps necessary or appropriate to preserve and protect the
Surety's perfected security interest of first priority in all Collateral
(including without limitation the filing of continuation statements under the
Uniform Commercial Code and keeping Collateral in jurisdictions where filings
have been made to perfect said security interest).
2. MOVING THE COLLATERAL. Prior to moving any part of the Collateral
from one jurisdiction to another, the Company shall furnish to the Surety an
opinion of outside counsel reasonably satisfactory to the Surety, addressed to
the Surety, and reasonably satisfactory to it, dated a date prior to said moving
of Collateral, to the effect that the Surety has a perfected security interest
in such Collateral in all jurisdictions into which such Collateral will be
moved, and all actions required to maintain such perfection beyond four months
after such Collateral is moved into any such jurisdiction have been taken, and
evidence reasonably satisfactory to the Surety that such security interest is of
the first priority.
3. PREVENTION OF BONDING BASE DEFICIENCY. The Company, at its
expense, shall take all steps necessary or appropriate to assure that no Bonding
Base Deficiency shall occur.
4. REMOVAL OF COLLATERAL. The Company may propose an amendment to
Schedule 1.1 which would remove a portion of the Collateral only under the
following circumstances:
a. The value attributed to the portion of Eligible Equipment
proposed to be removed from the Collateral in the Independent Appraiser's
Initial Report is such that, after giving effect to the removal of said portion
of Eligible Equipment, no Bonding
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Base Deficiency will exist, after giving effect to any replacement Eligible
Equipment added to Collateral in accordance with Section 5.13(e) below.
b. If no specific dollar value is attributed to the portion of
Eligible Equipment proposed to be removed from the Collateral in the Independent
Appraiser's Initial Report, the Company may propose an Amendment to Schedule 1.1
only if it delivers a Bonding Base Certificate, signed by the Independent
Appraiser, which shall demonstrate that, after giving effect to the removal of
the portion of Eligible Equipment proposed to be removed, no Bonding Base
Deficiency will exist, after giving effect to any replacement Eligible Equipment
added to Collateral in accordance with Section 5.13(e) below.
c. The Company may propose an Amendment to Schedule 1.1 which
would remove a portion of cash or securities from Collateral if and only if,
after giving effect to the removal of said portion of cash or securities, no
Bonding Base Deficiency will exist.
d. Immediately upon execution of an amendment to Schedule which
would remove a portion of the Collateral, the Bonding Base shall be
appropriately reduced;
e. No amendment to Schedule 1.1 removing any portion of the
Collateral may be proposed or effected during any time that a Default has
occurred and is continuing or after the Termination Date.
The Surety will execute such proposed amendment to Schedule 1.1;
PROVIDED that all of the conditions (i) through (v) of this Section 5.13(d) are
fulfilled.
5. ADDITION OF COLLATERAL. The Company may propose an amendment to
Schedule 1.1 increasing the amount of Eligible Equipment only if it delivers a
Bonding Base Certificate, signed by the Independent Appraiser, which shall state
the Value of Eligible Equipment proposed to be added to Collateral.
The Surety will execute such proposed amendment to Schedule 1.1;
provided that each item of equipment proposed to be added to Collateral
constitutes Eligible Equipment.
6. MAINTENANCE OF COLLATERAL. The Company, at its expense, shall
take all steps necessary or appropriate to maintain the Eligible Equipment which
is Collateral in a manner consistent with prudent industry practice and as
necessary to maintain the value attributed to such Eligible Equipment in the
Independent Appraiser's Initial Report.
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In the event that any Collateral is damaged (whether by accidental occurrence or
any other event or occurrence) or is not properly maintained, or for any other
reason ceases to meet the requirements of Eligible Equipment or fails to
maintain the value attributed to such Collateral in the Independent Appraiser's
Initial Report, the entire value of said Collateral shall be subtracted from the
Bonding Base immediately; provided, however, that the decreased value of said
Collateral may be subsequently added to Collateral if the Company delivers a
Bonding Base Certificate, signed by the Independent Appraiser, which shall state
the revised Value of said Eligible Equipment.
N. FURTHER ASSURANCES. The Company shall promptly cure, or cause to be
cured, defects in the creation and issuance of the Bond and the execution and
delivery of Bond Documents (including this Agreement), resulting from any act or
failure to act by the Company or any of the Company's Subsidiaries or any
employee or officer thereof. The Company, at its expense, will promptly execute
and deliver to the Surety, or cause to be executed and delivered to the Surety,
all such other and further documents, agreements, and instruments in compliance
with or accomplishment of the covenants and agreements of the Company in the
Bond Documents, including this Agreement, or to correct any omissions in the
Bond Documents, or more fully to state the obligations set out herein or in any
of the Bond Documents, or to obtain any consents, all as may be necessary or
appropriate in connection therewith as may be reasonably requested.
XIX. NEGATIVE COVENANTS
At all times prior to the Date of Discharge of all of the Bonds issued under
this Agreement or to the time that the Company no longer has the right to
request Bonds hereunder (whether or not the conditions to the issuance of such
Bonds have been or can be fulfilled), and unless the Surety shall otherwise
consent in writing:
A. MERGERS, CONSOLIDATIONS, PURCHASES AND SALES. The Company shall not:
1. be a party to any merger or consolidation;
2. transfer, convey, lease, grant or otherwise dispose of all or any
of its assets, except for sales to customers of the Company in the Ordinary
Course of Business and (ii) the use of cash in the Ordinary Course of Business
and otherwise in compliance with the terms hereof.
B. TRANSACTIONS WITH AFFILIATES. The Company shall not enter into any
transaction with any Affiliate of the Company, except in the ordinary course of
business and pursuant to the reasonable requirements of the business of the
Company and upon fair and reasonable terms no less favorable to the Company than
the Company would obtain in
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a comparable arm's-length transaction with a Person not an Affiliate of the
Company.
C. COMPLIANCE WITH ERISA. The Company shall not directly or indirectly
and shall not permit or suffer any ERISA Affiliate directly or indirectly (i) to
terminate any Plan subject to Title IV of ERISA so as to result in any liability
to the Company or any ERISA Affiliate, (ii) to permit to exist any ERISA Event
or any other event or condition, which presents the risk of liability to the
Company or any ERISA Affiliate, or (iii) to make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan so as to result in any liability to the Company or any ERISA Affiliate,
(iv) to enter into any new Plan or modify any existing Plan so as to increase
its obligations thereunder or (v) permit the present value of all nonforfeitable
accrued benefits under each Plan (using the actuarial assumptions utilized by
the PBGC upon termination of a Plan) (in the opinion of the Surety) exceed the
fair market value of Plan assets allocable to such benefits, all determined as
of the most recent valuation date for each such Plan.
D. CHANGE IN BUSINESS. Except for cessation of the business formerly
conducted by MKO's transit division, the Company shall not engage in any line of
business different from immediately prior to the date of this Agreement.
E. CHANGE IN STRUCTURE. The Company shall not make any changes in its
capital structure or amend its Articles of Incorporation as in effect on the
date hereof.
F. ACCOUNTING CHANGES. The Company shall not make any significant change
in accounting treatment and reporting practices, except as required by GAAP, or
change the fiscal year of the Company.
G. INDEBTEDNESS. The Company shall not create, incur, assume or suffer to
exist, any Indebtedness, EXCEPT:
1. Indebtedness of the Company in connection with this Agreement;
2. Indebtedness existing, or relating to commitments existing, on
the Closing Date, all as set forth on SCHEDULE 6.9(k) and any extensions,
refundings or renewals thereof on terms; PROVIDED, HOWEVER, that the principal
amount thereof or the interest rate thereon shall not be increased, nor shall
the amortization schedule thereof be shortened;
3. Indebtedness with respect to financed insurance premiums which is
not past due;
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4. Indebtedness with respect to trade payables incurred in the
Ordinary Course of Business which is not past due; and
5. Indebtedness for an asset which is a Capital Expenditure secured
by purchase money security interests, provided that the Indebtedness is limited
to that incurred by the Company in order to purchase such asset.
H. LIENS. The Company will not create, assume, incur or permit to exist
or to be created, assumed, or permitted to exist, directly or indirectly, any
Lien on any of the Collateral, now owned or hereafter acquired except for
Permitted Liens.
I. MINIMUM EBIT. The Company shall maintain on a consolidated basis
beginning with September 30, 1995 and for each calendar quarter end thereafter,
an EBIT for the immediately preceding period which is no less than the amount
set forth below for such period:
<TABLE>
<CAPTION>
Period EBIT
------ -----
<S> <C>
Cumulative year to end ending on:
September 30, 1995 $(19.29) million
December 31, 1995 $(17.899) million
March 31, 1996 $3.825 million
June 30, 1996 $8.0 million
September 30, 1996 $15.2 million
December 31, 1996 $25.8 million
March 31, 1997 $6.2 million
June 30, 1997 $16.8 million
</TABLE>
PROVIDED, HOWEVER, that if the Company records a charge in its quarter ending
September 30, 1995 or December 31, 1995 to reflect the Restructuring and such
charge results in a net loss under GAAP with respect to all of the transactions
constituting the Restructuring (any such loss, the "Restructuring Net Loss") in
its quarter ending September 30 or December 31, 1995, then the amount stated
above opposite the periods ending September 30 and December 31, 1995 shall be
reduced by the difference between the Restructuring Net Loss and $12.4 million
(or increased, if the difference is a negative number).
J. MINIMUM NET INCOME. The Company shall maintain on a consolidated basis
beginning with September 30, 1995 and for each calendar quarter end thereafter,
Net Income for the immediately preceding period which is no less than the amount
set forth below for such period:
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<TABLE>
<CAPTION>
Period Net Income
------ ----------
<S> <C>
Cumulative year to end ending on:
September 30, 1995 $(100.359) million
December 31, 1995 $(105.865) million
March 31, 1996 $340,000
June 30, 1996 $875,000
September 30, 1996 $4.9 million
December 31, 1996 $11.2 million
March 31, 1997 $3.6 million
June 30, 1997 $9.6 million
</TABLE>
PROVIDED, HOWEVER, that if the Company sells its interests in any of MK Pacific,
Inc., McConnell Dowell Corporation, Limited, MK Rail Corporation, or AmerBank, a
financial institution licensed under the laws of Poland (collectively, the "Non
Core Assets") for a net value of less than the Book Value for such interest as
reflected in its financial statements for the period ended June 30, 1995, the
difference between such aggregate net proceeds and such Book Value (the "Non-
Core Deficit") shall be subtracted from the amounts set forth above for each
period to arrive at the required Net Income for each such period; PROVIDED
FURTHER, that for purposes of determining required Net Income, the aggregate
Non-Core Deficit may not exceed $20 million; PROVIDED FURTHER, that if the
Company records a charge in its quarter ending September 30, 1995 or December
31, 1995 to reflect the Restructuring and such charge results in a net loss
under GAAP with respect to all of the transactions constituting the
Restructuring (any such loss, the "Restructuring Net Loss") in its quarter
ending September 30 or December 31, 1995, then the amount stated above opposite
the periods ending September 30 and December 31, 1995 shall be reduced by the
difference between the Restructuring Net Loss and $12.4 million (or increased,
if the difference is a negative number).
K. MINIMUM NET WORTH. The Company shall not at any time permit its Net
Worth to be less than any of the amounts set forth below as of the corresponding
dates set forth below:
<TABLE>
<CAPTION>
Date Net Worth
---- ---------
<S> <C>
September 30, 1995 $(26) million
December 31, 1995 $(1) million
March 31, 1996 $0.1 million
June 30, 1996 $112 million
September 30, 1996 $122 million
December 31, 1996 $128 million
March 31, 1997 $135 million
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June 30, 1997 $141 million
</TABLE>
PROVIDED, HOWEVER, that if the Company sells its interests in any of MK Pacific,
Inc., McConnell Dowell Corporation, Limited, MK Rail Corporation, or AmerBank, a
financial institution licensed under the laws of Poland (collectively, the "Non
Core Assets") for a net value of less than the Book Value for such interest as
reflected in its financial statements for the period ended June 30, 1995, the
difference between such aggregate net proceeds and such Book Value (the "Non-
Core Deficit") shall be subtracted from the amounts set forth above for each
period to arrive at the required Net Worth for each such period; PROVIDED
FURTHER, that for purposes of determining required Net Worth, the aggregate Non-
Core Deficit may not exceed $20 million; PROVIDED FURTHER, that if the Company
records a charge in its quarter ending September 30, 1995 or December 31, 1995
to reflect the Restructuring and such charge results in a Restructuring Net Loss
under GAAP in its quarter ending September 30, 1995 or December 31, 1995, then
the amounts stated above opposite each of the dates above shall be reduced by
the difference between the Restructuring Net Loss and $12.4 million (or
increased, if the difference is a negative number).
XX. DEFAULT
A. EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default, whatever the reason for such event and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment or
order of any court or any order, rule, or regulation of any governmental or non-
governmental body:
1. NON-PAYMENT. The Company shall default in the payment of any
amount due hereunder or in connection with any Contract for which Bonds have
been issued; or
2. REPRESENTATION OR WARRANTY. Any representation or warranty by
the Company herein, in any related document, which is contained in any
certificate, document, or financial or other statement furnished at any time
under this Agreement, in any Bond Document or in any related document or
agreement, shall prove to have been materially incorrect on or as of the date
made or deemed made; or
3. BONDING BASE DEFICIENCY. Any event or condition shall occur
which results in a Bonding Base Deficiency; PROVIDED, HOWEVER, that in the event
that a Bonding Base Deficiency results from sudden damage to Eligible Equipment,
an Event of Default shall occur if such Deficiency is not cured within 10
Business Days or
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4. OTHER DEFAULTS. The Company fails to perform or observe any
other term or covenant contained in Article 6 (Negative Covenants) of this
Agreement, any Bond, the Asset Purchase Agreement, any other Bond Document or
any other document relating to this Agreement and such breach is not cured
within 10 calendar days; or
5. NON-PAYMENT OF OTHER INDEBTEDNESS. The Company shall default in
the payment when due, whether by acceleration or otherwise, of any Indebtedness
of or Indebtedness guaranteed by the Company which other Indebtedness shall in
the aggregate exceed $250,000 (after giving effect to applicable grace periods);
or
6. DEFAULT OF CONTRACTS, BONDS, OR OTHER INDEBTEDNESS. Any event or
condition shall occur which results in a default under any Contract or any
Indebtedness of or Indebtedness guaranteed by the Company, or results in a claim
under any Bond or any of the other surety bonds, undertakings, or instruments of
guarantee issued by any surety to support the Company's performance of any prime
contract, subcontract, teaming agreement or arrangement, joint venture, basic
ordering agreement, letter contract, purchase order, delivery order, Bid, change
order, arrangement or other commitment of any kind or enables an Owner with
respect to such Contract, Bond, prime contract, subcontract, teaming agreement
or arrangement, joint venture, basic ordering agreement, letter contract,
purchase order, delivery order, Bid, change order, arrangement, or other
commitment to declare a default or assert a claim or enables a holder or holders
of such other Indebtedness or any trustee or agent for such Owners or holders to
declare a default or assert a claim in connection with such Contract, Bond, or
other Indebtedness (after giving effect to applicable grace periods); or
7. OTHER OBLIGATIONS. The Company 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 Company to or with the Surety, or (ii) any material obligation or agreement
of the Company to or with any other Person except only to the extent that the
existence of any such default is being contested by the Company in good faith
and by appropriate proceedings and the Company shall have set aside on its books
such reserves or other appropriate provisions therefor as may be required by
GAAP; or
8. BANKRUPTCY OR INSOLVENCY. The Company (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 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,
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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
9. INVOLUNTARY PROCEEDINGS. Any involuntary Insolvency Proceeding
is commenced or filed against the Company or any member thereof or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's assets and any such
Insolvency Proceeding remains undismissed for a period of 20 days; or
10. ERISA. (i) The Company, or an ERISA Affiliate, shall fail to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under a Multiemployer Plan;
(ii) the Company or an ERISA Affiliate shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (iii) in the case of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer shall
have Unfunded Pension Liabilities; (iv) in the case of an ERISA Event involving
the complete or partial withdrawal from a Multiemployer Plan, the withdrawing
employer shall have incurred a withdrawal liability; (v) in the case of an ERISA
Event not described in clause (iii) or (iv), the relevant Plan or Plans shall
have Unfunded Pension Liabilities; (vi) a Plan that is intended to be qualified
under Section 401(a) of the Code shall lose its qualification, and the loss can
reasonably be expected to impose on the Company or an ERISA Affiliate liability
to Plan participants; (vii) the commencement or increase of contributions to,
the adoption of, or the amendment of a Plan by, the Company or an ERISA
Affiliate shall result in a net increase in unfunded liabilities to the Company
or an ERISA Affiliate; or (viii) the occurrence of any combination of events
listed in clauses (iii) through (vii) that involves a net increase in aggregate
Unfunded Pension Liabilities and unfunded liabilities; or
11. MONETARY JUDGMENTS. One or more final judgments, orders or
decrees shall be entered against the Company involving in the aggregate a
liability of $500,000 or more, excluding those judgments or decrees (i) for and
to the extent to which the Company is insured and with respect to which the
insurer has assumed responsibility in writing or for and to the extent to which
the Company is otherwise indemnified if the terms of such indemnification and
the Person providing such indemnification are satisfactory to the Surety, or
(ii) that have been stayed pending appeal, provided that no execution or
enforcement is then possible; or
12. NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against the Company which does or could be expected to
have
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a Materially 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 time 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
13. LOSS OF LICENSES. Any Governmental Authority shall revoke or
fail to renew any license, permit or franchise of the Company or the Company
shall for any reason lose any license, permit or franchise or the Company 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
Materially Adverse Effect on the Company; or
14. CHANGE IN CONTROL. Any Change in Control shall occur;
15. TAKEOVER EVENT. Any breach or default shall be asserted by an
Owner in any Bond, or the Company shall have abandoned the work on or forfeited
any Contact covered by any said Bonds, or shall have failed to pay obligations
incurred in connection therewith.
B. REMEDIES. If an Event of Default shall have occurred and shall be
continuing, in addition to the rights and remedies set forth elsewhere in this
Agreement and the Bond Documents:
1. Upon the occurrence and continuance of an Event of Default other
than an Event of Default specified in Section 7.1(d), the Surety may immediately
terminate the Commitment and terminate any and all of its obligations to issue
Bonds under this Agreement.
2. Upon the occurrence and continuance of an Event of Default
specified in Section 7.1(d), the Surety may suspend the Commitment and suspend
any and all of its obligations to issue Bonds under this Agreement until such
time as such Event of Default is cured.
3. Upon the occurrence and continuance of an Event of Default other
than an Event of Default specified in Section 7.1(d), the Surety may declare all
amounts under this Agreement and all other Obligations to be forthwith due and
payable without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived, anything in this Agreement or in any Bond
Document to the contrary notwithstanding.
4. Upon the occurrence and continuance of an Event of Default
specified
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in Sections 7.1(g) or (h), the Commitment shall forthwith terminate, all without
any action by the Surety and without presentment, demand, protest, or other
notice of any kind, all of which are expressly waived, anything in this
Agreement or in the Bond to the contrary notwithstanding.
5. Upon the occurrence of an Event of Default specified in Sections
7.1(g) or 7.1(h) or 7.1(o), the Surety shall have the right or option conferred
upon it by law or in the terms of this Agreement, to take possession of any part
or all of the work under any contract or contracts covered by any said Bonds,
and at the expense of the Company to complete or arrange for the completion of
the same, and the Company shall promptly upon demand pay to the Surety all
losses, and expenses so incurred.
6. Upon the occurrence of an Event of Default specified in Sections
7.1(g) or 7.1(h) or 7.1(o), the Surety may guarantee loans, bond or lend to the
Company any money, which the Surety may see fit, for the purpose of any
Contracts referred to in, or guaranteed by the Bonds; and all money expended in
the completion of any such contracts by the Surety, or lent or advanced from
time to time to the Company, or guaranteed by the Surety for the purposes of any
such contracts, and all costs, and expenses incurred by the Surety in relation
thereto, unless repaid with interest at the Default Rate by the Company to the
Surety when due, shall be presumed to be a loss by the Surety for which the
Company shall be responsible, notwithstanding that said money or any part
thereof should not be used by the Company.
7. The Surety may exercise all of the post-default rights granted to
it under the Bond Documents or under Applicable Law.
8. The rights and remedies of the Surety hereunder shall be
cumulative, and not exclusive.
XXI. MISCELLANEOUS
A. NOTICES.
1. All notices and other communications under this Agreement shall
be in writing and shall be deemed to have been given five (5) days after deposit
in the mail, designated as certified mail, return receipt requested, post-
prepaid, or one (1) day after being entrusted to a reputable commercial
overnight delivery service, or when sent out by telecopy addressed to the party
to which such notice is directed at its address determined as provided in this
Section 8.1. All notices and other communications under this Agreement shall be
given to the parties hereto at the following addresses:
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(i) If to the Company, to it at:
Morrison Knudsen Plaza
P.O. Box 73
Boise, Idaho 82729
Attention: Stephen G. Hanks
Telefacsimile No. 208-386-5298
with a copy to:
David S. Kurtz
Jones, Day, Reavis, & Pogue
77 West Wacker Drive
Chicago, Illinois 60601-1692
(ii) (A) With respect to Requests for Bonding and any document to be delivered
pursuant to Section 3.2 hereof, if to the Surety, to it at:
Robert A. Sutton
Fidelity & Deposit Company of Maryland
Baltimore, Maryland
Telefacsimile No. 410-659-3779
with copy to: Kenneth I. Jonson
Steptoe & Johnson
1330 Connecticut Avenue, NW
Washington, D.C. 20036
Telefacsimile No. 202-429-3902
(B) With respect to all other notices, if to the Surety, to it at:
Robert Lawrence
Fidelity & Deposit Company of Maryland
Baltimore, Maryland
Telefacsimile No. 410-528-7335
with copy to: Kenneth I. Jonson
Steptoe & Johnson, L.L.P.
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<PAGE>
1330 Connecticut Avenue, NW
Washington, D.C. 20036
Telefacsimile No. 202-429-3902
2. Any party hereto may change the address to which notices shall be
directed under this Section 8.1 by giving ten (10) days' written notice of such
change to the other parties.
B. INDEMNIFICATION OF SURETY.
1. INDEMNIFICATION. The Company shall exonerate, indemnify, and keep
indemnified the Surety from and against any and all liability for losses and/or
expenses of whatsoever kind or nature (including, but not limited to, interest,
court costs and counsel fees) and from and against any and all such losses
and/or expenses which the Surety may sustain and incur:
(1) By reason of having issued, executed, or procured the
issuance or execution of any of the Bonds,
(2) By reason of the failure of the Company to perform or
comply with the covenants and conditions of this Agreement; or
(3) In enforcing the covenants and conditions of this
Agreement.
2. PAYMENT OF INDEMNITY. Notwithstanding anything to the contrary
herein, payment by reason of the causes specified in Section 8.2(a) shall be
made in immediately available funds to the Surety by the Company as soon as
liability exists or is asserted against the Surety, whether or not the Surety
shall have made any payment therefor. Such payment shall be equal to the amount
of the reserve set by the Surety. In the event of any payment by the Surety,
the Company further agrees that in any accounting between the Surety and the
Company, the Surety shall be entitled to charge for any and all disbursements
made by it in good faith in and about the matters herein contemplated by this
Agreement under the belief that it is or was liable for the sums and amounts to
disbursed, or that it was necessary or expedient to make such disbursements,
whether or not such liability, necessity or expediency existed; and that the
vouchers or other evidence of any such payments made by the Surety shall be
PRIMA FACIE evidence of the fact and amount of the liability to the Surety.
C. EXPENSES. The Company agrees to promptly pay:
1. All reasonable out-of-pocket expenses of the Surety in connection
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<PAGE>
with the preparation, negotiation, execution, and delivery of this Agreement and
the other Bond Documents, the transactions contemplated hereunder and
thereunder, and the making of the initial Bond hereunder, including, but not
limited to, the fees and disbursements of counsel and consultants for the Surety
up to $2.5 million;
2. All reasonable out-of-pocket costs and expenses of the Surety in
connection with any restructuring, refinancing, or, "work-out" of the
transactions contemplated by this Agreement, and of obtaining performance under
this Agreement or the other Bond Documents, and all out-of-pocket costs and
expenses of collection if default is made in the payment of the Bond, which in
each case shall include fees and out-of-pocket expenses of counsel for the
Surety, and the fees and out-of-pocket expenses of any experts, agents, or
consultants of the Surety; and
(d) All taxes, assessments, general or special, and other charges levied on, or
assessed, placed or made against any of the Collateral, the Bond Documents, or
the Obligations.
D. WAIVERS. The rights and remedies of the Surety under this Agreement
and the other Bond Documents shall be cumulative and not exclusive of any rights
or remedies which they would otherwise have. No failure or delay by the Surety,
in exercising any right shall operate as a waiver of such right. The Surety
expressly reserves the right to require strict compliance with the terms of this
Agreement in connection with any funding of a request for a Bond. In the event
the Surety decides to fund a request for a Bond at a time when the Company is
not in strict compliance with the terms of this Agreement, such decision by the
Surety shall not be deemed to constitute an undertaking by the Surety to fund
any further requests for Bonds or preclude the Surety from exercising any rights
available to the Surety under the Bond Documents or at law or in equity. Any
waiver or indulgence granted by the Surety shall not constitute a modification
of this Agreement, except to the extent expressly provided in such waiver or
indulgence, or constitute a course of dealing by the Surety at variance with
the terms of the Agreement such as to require further notice by the Surety of
the Surety's intent to require strict adherence to the terms of the Agreement in
the future. Any such actions shall not in any way affect the ability of the
Surety, in its discretion, to exercise any rights available to it under this
Agreement or under any other agreement, whether or not the Surety is a party,
relating to the Company.
E. SET-OFF. In addition to any rights now or hereafter granted under
Applicable Law and not by way of limitation of any such rights, upon the
occurrence of a Default or an Event of Default and during the continuation
thereof, the Surety and any subsequent holder or holders of the Bond is hereby
authorized by the Company at any time or from time to time, without notice to
the Company or to any other Person, any such notice
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<PAGE>
being hereby expressly waived, to set-off and to appropriate and apply any and
all deposits (general or special, time or demand, including, but not limited to,
Indebtedness evidenced by certificates of deposit, in each case whether matured
or unmatured) and any other Indebtedness at any time held or owing by the Surety
or such holder to or for the credit or the account of the Company, against and
on account of the Obligations, irrespective of whether or not (a) the Surety or
the holder of the Bond shall have made any demand hereunder or (b) the Surety
shall have declared the principal of and interest on the Bonds and the Bond and
other amounts due hereunder to be due and payable as permitted by Section 7.2
and although said obligations and liabilities, or any of them, shall be
contingent or unmatured.
F. ASSIGNMENT.
1. The Company may not assign or transfer any of its rights or
obligations hereunder, under the Bond or under any other Bond Document without
the prior written consent of the Surety.
2. The Surety may at any time assign all of its rights hereunder,
under the Bond and under any other Bond Document. The Surety may at any time
enter into participations with one or more other co-sureties or other Persons
pursuant to which the Surety may participate its interest under this Agreement
and the other Bond Documents, including, its interest in any particular Bond or
portion thereof. In the event the Surety procures the execution of the Bonds by
the other sureties, or executes the Bonds, with co-sureties, or reinsures any
portion of said Bonds with reinsuring sureties, then all the terms and
conditions of this Agreement shall inure to the benefit of such other sureties,
co-sureties and reinsuring sureties, as their interest may appear.
G. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
H. GOVERNING LAW. This Agreement and the Bond Documents shall be
construed in accordance with and governed by the laws of the State of New York
without regard to its conflict of laws doctrine.
I. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
J. HEADINGS. Headings used in this Agreement are for convenience only and
shall
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<PAGE>
not be used in connection with the interpretation of any provision hereof.
K. ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement and the other documents described or contemplated herein embody the
entire Agreement and understanding among the parties hereto and thereto and
supersede all prior agreements, understandings, and conversations relating to
the subject matter hereof and thereof. The parties explicitly acknowledge that
any indemnification agreement existing as of the date hereof between the Surety
and the Company or any of its Affiliates shall not apply to any Bonds issued
pursuant to this Agreement. The Company represents and warrants to the Surety
that it has read the provisions of this Section 8.11 and discussed the
provisions of this Section 8.11 and the rest of the Bond Agreement with counsel
for the Company, and the Company acknowledges and agrees that the Surety is
expressly relying upon such representations and warranties of the Company (as
well as the other representations and warranties of the Company set forth in
Article 4 hereof) in entering into this Agreement.
L. HOMESTEAD. The Company hereby waives, so far as their respective
obligations under this Agreement are concerned, all rights to claim any of their
property, including their respective homesteads, as exempt from levy, execution,
sale or other legal process under the laws of any State, Territory, or
Possession.
M. SETTLEMENTS. The Surety shall have the right to adjust, settle or
compromise any claim, demand, suit or judgment upon the Bonds, unless the
Company shall request the Surety to litigate such claim or demand, or to defend
such suit, or to appeal from such judgment, and shall deposit with the Surety,
at the time of such request, cash or collateral satisfactory to the Surety in
kind and amount, to be used in paying any judgment or judgments rendered or that
may be rendered, with interest, costs, expenses and attorneys' fees, including
those of the Surety.
N. AMENDMENT; WAIVER.
Neither this Agreement nor any term hereof may be amended orally, nor may any
provision hereof be waived orally but only by an instrument in writing signed by
the Surety and the Company.
O. OTHER RELATIONSHIPS. No relationship created hereunder or under any
other Bond Document shall in any way affect the ability of the Surety to enter
into or maintain business relationships with the Company, or any of its
Affiliates, beyond the relationships specifically contemplated by this Agreement
and the other Bond Documents.
P. PRONOUNS. The pronouns used herein shall include, when appropriate,
either
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<PAGE>
gender and both singular and plural, and the grammatical construction of
sentences shall conform thereto.
XXII. JURISDICTION, VENUE AND WAIVER OF JURY TRIAL
A. JURISDICTION AND SERVICE OF PROCESS. For purposes of any legal action
or proceeding brought by the Surety with respect to this Agreement or any other
Bond Document, the Company hereby irrevocably submits to the personal
jurisdiction of the federal and state courts sitting in the District of
Columbia. The consent to jurisdiction herein shall be exclusive. The Company
further irrevocably consents to service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail to
the Company at the address set forth above, such service to become effective
five (5) Business Days after such mailing. In the event that, for any reason,
service of legal process cannot be made in the manner described above, such
service may be made in such manner as permitted by law.
B. CONSENT TO VENUE. The Company hereby irrevocably waives any objection
it would make now or hereafter for the laying of venue of any suit, action, or
proceeding arising out of or relating to this Agreement or any other Bond
Document brought in the federal courts of the United States of America sitting
in Washington, D.C. and hereby irrevocably waives any claim that any such suit,
action, or proceeding has been brought in an inconvenient forum.
C. WAIVER OF JURY TRIAL. THE COMPANY AND THE SURETY WAIVE, AND OTHERWISE
AGREE NOT TO REQUEST, A TRIAL BY JURY IN ANY COURT AND IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM OF ANY TYPE IN WHICH THE COMPANY, THE SURETY, OR ANY OF THEIR
RESPECTIVE SUCCESSORS IS A PARTY, AS TO ALL MATTERS AND THINGS ARISING DIRECTLY
OR INDIRECTLY OUT OF THIS AGREEMENT, THE BOND OR THE OTHER BOND DOCUMENTS AND
THE RELATIONS BETWEEN THE SURETY AND THE COMPANY.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers, all as of the day and year first above
written.
MORRISON KNUDSEN CORPORATION,
a Delaware corporation
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Executive Vice President
MORRISON KNUDSEN CORPORATION,
an Ohio corporation
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Executive Vice President
NATIONAL PROJECTS, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Senior Vice President
and Secretary
MORRISON KNUDSEN SERVICES, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
MORRISON KNUDSEN FINANCIAL COMPANY,
INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Chairman, President and Secretary
ATASCOSA MINING CO.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
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CENTENNIAL ENGINEERING, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Executive Vice President
CF SYSTEMS CORPORATION
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
CHEMICAL DEMILITARIZATION OF ANNISTON
COMPANY
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
JOY MK PROJECTS COMPANY
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
MK CAPITAL COMPANY
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
MK-FERGUSON ENGINEERING COMPANY
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Assistant Secretary
MK-FERGUSON OF IDAHO COMPANY
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Assistant Secretary
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MK-FERGUSON OF OAK RIDGE COMPANY
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Assistant Secretary
MK INFRASTRUCTURE CORPORATION
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
MK TRAIN CONTROL, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
NAVASOTA MINING COMPANY, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
YAMPA MINING CO.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Secretary
MORRISON-KNUDSEN COMPANY, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Chairman and President
MORRISON-KNUDSEN ENGINEERS, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Vice President and Secretary
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MORRISON-KNUDSEN INTERNATIONAL
COMPANY, INC.
/s/ Stephen G. Hanks
By:
-----------------------
Name: Stephen G. Hanks
Title: Vice President
and Secretary
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Fidelity and Deposit Company
of Maryland
/s/Joanne S. Brooks
By:
--------------------
Name: Joanne S. Brooks
Title: Claims Counsel
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ANNEX A
Company Name Federal Taxpayer ID #
- ------------ ---------------------
MORRISON KNUDSEN CORPORATION 34-0217470
(an Ohio corporation)
MORRISON KNUDSEN CORPORATION 82-0393735
(a Delaware corporation)
National Projects, Inc. 82-0400724
Morrison-Knudsen Services, Inc. 82-0377046
Morrison-Knudsen Financial 82-0402517
Company, Inc.
Atascosa Mining Co. 82-0347192
Centennial Engineering, Inc. 84-0393735
CF Systems Corporation 04-2693933
Chemical Demilitarization of [None]
Anniston Company
Joy MK Projects Company 82-0441351
MK Capital Company 82-0447939
MK-Ferguson Engineering Company 34-0660541
MK-Ferguson of Idaho Company 82-0413800
MK-Ferguson of Oak Ridge Company 82-0438780
MK Infrastructure Corporation [None]
MK Train Control, Inc. 82-0458915
Navasota Mining Company, Inc. 82-0360441
Yampa Mining Co. 82-0342614
Morrison-Knudsen Company, Inc. 82-0146120
Morrison-Knudsen Engineers, Inc.
Morrison-Knudsen International 82-0402517
Company, Inc.
<PAGE>
SCHEDULES AND EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE SCHEDULES AND EXHIBITS HERETO.
<PAGE>
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
DATED AS OF
OCTOBER 10, 1995
BY AND AMONG
AMERICAN PASSENGER RAIL CAR COMPANY,
L.L.C.,
MORRISON KNUDSEN CORPORATION,
MORRISON KNUDSEN CORPORATION,
AND
THE ENTITIES LISTED ON SCHEDULE 1 HERETO
1
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of October 10, 1995, is by and
among American Passenger Rail Car Company, L.L.C., a Delaware limited liability
company (the "Buyer"), Morrison Knudsen Corporation, an Ohio corporation
(together with its successors and assigns, "MK" or the "Seller"), Morrison
Knudsen Corporation, a Delaware corporation ("MK Delaware"), and each of the
entities listed on Schedule 1 hereto (collectively, MK Delaware and the entities
listed on Schedule 1 hereto, the "MK Affiliates").
W I T N E S S E T H:
WHEREAS, MK Delaware is the sole owner, of record and beneficially, of
all of the issued and outstanding capital stock of the Seller and has Affiliates
(as hereinafter defined) including the entities listed in Schedule 1 hereto;
WHEREAS, the Seller, among other things, conducts a public
transportation manufacturing business, which provides engineering services and
manufactures and refurbishes commuter passenger and transit railcars for various
municipalities and other governmental entities pursuant to the Transit Division
Contracts (as hereinafter defined) (the "Business");
WHEREAS, the Seller and its advisors have attempted to find a
purchaser for the Business and anticipated having to pay potential transferees
of the Purchased Assets (as defined below) to accept them, but, due to potential
liabilities and other concerns, have been unsuccessful in concluding any such
transaction;
WHEREAS, at the request of the Seller, Fidelity and Deposit Company of
Maryland, on its own behalf and on behalf of its co-sureties and reinsurers
(collectively, the "Sureties"), executed and delivered that certain guarantee
(the "$25,000,000 Guarantee") dated as of July 31, 1995, guaranteeing certain
obligations of the Seller, up to a maximum principal amount of Twenty-five
Million Dollars ($25,000,000.00), under that certain credit agreement (the
"Previous Credit Agreement") described in Schedule R1, conditioned on certain
principal terms and conditions set forth in the T-Co Term Sheet (as hereinafter
defined), executed contemporaneously with the $25,000,000 Guarantee, which
principal terms and conditions provided, among other things, that the Seller
would transfer and assign to the Buyer the assets used to conduct the Business
in accordance with the terms of this Agreement;
2
<PAGE>
WHEREAS, certain financial institutions that are lenders to the Seller
(the "Banks") extended to the Seller financing (the "New Financing"), subject to
and conditioned on certain principal terms and conditions set forth in the T-Co
Term Sheet, executed contemporaneously with the extending of such financing,
which principal terms and conditions provided, among other things, that the
Seller would transfer and assign to the Buyer the assets used to conduct the
Business in accordance with the terms of this Agreement.
WHEREAS, if the transactions contemplated by this Agreement did not
occur, such failure to consummate the transactions contemplated by this
Agreement would constitute an event of default with respect to the New Financing
and all original financing provided by the Banks to or for the benefit of the
Seller, entitling the Banks to accelerate such financing and to enforce certain
rights and remedies against the Seller, including the right to enforce the
Banks' security interests in certain assets and property of the Seller;
WHEREAS, the Sureties have agreed, at the request of the Seller and
the Buyer, to enter into an agreement (the "New Bonds Agreement"), at Closing,
to issue the bond or bonds described in the New Bonds Agreement (the "New
Bonds"), on the terms and conditions set forth in the New Bonds Agreement,
subject to, and conditioned upon, the Buyer agreeing to assume the Buyer
Obligations, certain banks and financial institutions extending new credit and
the Seller transferring and assigning the Purchased Assets to the Buyer
contemporaneously with the entering into of the New Bonds Agreement, on the
terms and conditions herein set forth;
WHEREAS, pursuant to Section 2.05 of this Agreement, the Buyer will
pay the amount set forth on Exhibit 2.05(a) to the Seller as partial
consideration for the Purchased Assets;
WHEREAS, a financial advisor has provided an opinion as to the
fairness of the transaction contemplated by this Agreement;
WHEREAS, since the Seller believes that the New Financing and the New
Bonds are necessary for the continued operation and viability of the Seller's
remaining business and that the value of such New Financing and New Bonds,
together with the cash payment to be made by the Buyer pursuant to Section 2.05
is at least equivalent to the value of the Purchased Assets, and, further, to
avoid the acceleration of the Seller's existing financing and the exercise of
the Banks' rights and remedies against the Seller and its assets and properties
as aforesaid, the Seller desires to sell the Purchased Assets to the Buyer, upon
the terms and subject to the conditions of this Agreement; and
WHEREAS, the Buyer desires to purchase the Purchased Assets and has
3
<PAGE>
agreed to assume the Buyer Obligations, upon the terms and subject to the
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01. DEFINITIONS. (a) Unless the context shall otherwise require,
the following terms used in this Agreement shall have the respective meanings
assigned to such terms in this Section 1.01 for all purposes of this Agreement.
All agreements or instruments defined in this Section 1.01 or elsewhere in this
Agreement shall mean such agreements or instruments as the same may from time to
time be supplemented or amended or the terms thereof waived or modified to the
extent permitted by, and in accordance with, the terms hereof and thereof.
"Affiliate" has the meaning ascribed to such term in Rule 405 of the
Securities Act of 1933, as amended.
"Amtrak" means National Railroad Passenger Corporation.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, code, ordinance, rule,
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any Governmental Authority (including
any Environmental Law) applicable to such Person or any of its Affiliates or any
of their respective properties, assets, officers, directors or employees (in
connection with such officer's, director's or employee's activities on behalf of
such Person or any of its Affiliates).
"Assignment Agreement" means the Assignment Agreement to be dated as
of the Closing Date between the Seller and the Buyer in the form of Exhibit
1.01(a) attached hereto.
"Attributable to the Business" means (i) with respect to assets
physically located in any of the Seller's locations in Chicago, Illinois,
Pittsburg, California or Hornell,
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New York, and, with respect to contracts, subcontracts, agreements,
arrangements, options, leases, licenses, commitments and other instruments of
any kind, used or held in connection with the conduct of the Business as the
Business is being conducted on the date hereof, and (ii) with respect to assets
physically located in any of the Seller's locations other than Chicago,
Illinois, Pittsburg, California and Hornell, New York, either (A) necessary to
conduct the Business as the Business is being conducted on the date hereof,
excluding assets that are used or held only in connection with an Excluded
Obligation, or (B) used or held in connection with the conduct of the Business,
but not primarily used or held in connection with the conduct of any business of
the Seller other than the Business.
"Banks" has the meaning set forth in the recitals of this Agreement.
"BART" means San Francisco Bay Area Rapid Transit District.
"Bid" means any quotation, bid or proposal made by the Seller or its
Affiliates that, if accepted or awarded, would become a contract, subcontract,
agreement, arrangement, joint venture, order, option, lease, license, commitment
or other instrument of any kind with any Governmental Authority or any other
Person for the design, manufacture, engineering, rehabilitation, lease and/or
sale of, or any other action with respect to, any products or the provision of
any services by the Business.
"Bond Documents" means that certain Indemnification and Reimbursement
Agreement dated as of the date hereof by and between the Buyer and the Bonding
Company and that certain Agreement of Indemnity dated as of the date hereof by
and between the Buyer and the Bonding Company.
"Bonding Company" means Fidelity & Deposit Company of Maryland.
"Business" has the meaning set forth in the recitals of this
Agreement.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in Chicago, Illinois, New York, New York or Los
Angeles, California are authorized or required by law to close.
"Buyer Obligations" has the meaning set forth in Section 2.03 hereof.
"Caltrans" means State of California Department of Transportation.
"Closing Net Assets To Be Sold" means the net assets of the Business
to be sold by the Seller to the Buyer, as shown on the Closing Statement of Net
Assets To Be Sold.
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"Closing Statement of Net Assets To Be Sold" means the statement of
the Closing Net Assets To Be Sold as at the close of business on the Closing
Date, together with the notes thereto and accompanied by a report thereon from
Deloitte & Touche.
"Contracts" means any and all written contracts, subcontracts,
agreements, arrangements, options, leases, licenses, commitments and other
instruments of any kind to which the Seller is a party on the Closing Date,
which are Attributable to the Business or which relate to any of the Purchased
Assets.
"Conveyance Documents" means the bill of sale, the assignments of
intellectual property rights, the TDC Assignments, the Lease Assignments, the
Assignment Agreement, the Instrument of Assumption, the Pledge and Security
Agreement (Equipment Assets) and the Bulk Sales Pledge and Security Agreement
(Equipment Assets).
"Customer Concessions" means the concessions described in Exhibit
1.01(b).
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages (excluding consequential damages, other then
consequential damages included in any judgment, award or settlement paid to a
third party), costs, expenses, liabilities (excluding contingent liabilities),
judgments, awards, fines, sanctions, penalties, charges and amounts paid in
settlement, including (x) interest on cash disbursements in respect of any of
the foregoing at the Reference Rate in effect from time to time, compounded
quarterly, from the date each such cash disbursement is made until the Person
incurring the same shall have been indemnified in respect thereof and (y)
reasonable costs, fees and expenses of attorneys, experts, accountants,
appraisers, consultants, witnesses, investigators and any other agents of such
Person.
"Delaware LLC Act" means the Delaware Limited Liability Company Act, 6
Del. C. Ch. 18.
"Disclosure Schedule" means that certain schedule identified as such
and delivered or to be delivered by the Seller to the Buyer pursuant hereto.
"Environmental Laws" means all Applicable Laws relating to the control
of any pollutant or the protection of human health, safety or the environment
including (i) all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of Hazardous Substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances, chemical substances, pollutants,
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contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees or the public. Without limiting the generality
of the foregoing, "Environmental Laws" include: (a) the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. Sections 6901 ET SEQ.; (b) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 26
U.S.C. Sections 4611 and 42 U.S.C. Sections 9601 ET SEQ.; (c) the Superfund
Amendment and Reauthorization Act of 1984; (d) the Clean Air Act, 42 U.S.C.
Sections 7401 ET SEQ.; (e) the Clean Water Act, 33 U.S.C. Sections 1251 ET SEQ.;
(f) the Safe Drinking Water Act, 42 U.S.C. Sections 300f ET SEQ.; (g) the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 ET SEQ.; (h) the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 ET SEQ.; (i) the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. Sections 1801 ET
SEQ., (j) the Atomic Energy Act, as amended, 42 U.S.C. Sections 2011 ET SEQ.;
(k) the Federal Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C.
Sections 136 ET SEQ.; (l) the Federal Food, Drug and Cosmetic Act, as amended,
21 U.S.C. Sections 301 ET SEQ.; and (m) OSHA.
"Environmental Liabilities" means all Liabilities of a Person (whether
such Liabilities are owed by such Person to Governmental Authorities, third
parties or otherwise) whether presently in existence or arising hereafter which
arise under or relate to any Environmental Law.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Excluded Assets" means (i) any and all Bids which have not been
accepted or awarded as of the date of this Agreement, the Teaming Agreement
between the Seller and Fiat Ferroviara and the Teaming Agreement between the
Seller and AEG (ii) subject to Section 2.04(d) hereof, the Restricted Contracts,
where the consent of the Person that is required for the Buyer to assume such
Restricted Contract is not obtained (but only until so obtained, if ever), and
(iii) the assets set forth in Section 1A of the Disclosure Schedule.
"Excluded Obligations" means Liabilities of the Seller specifically
not being assumed by the Buyer hereunder, including (i) Liabilities related to
"401(k) and SERP expenses", "Legal 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 Indemnification and
Reimbursement Agreement, (ii) any existing bank debt, (iii) Environmental
Liabilities associated with any conditions existing prior to Closing, (iv)
employee severance Liabilities, (v) Liabilities associated with any existing
employee benefit plans, (vi) Liabilities associated with any existing health
care plans, (vii) retiree benefits of any kind, (viii) product liability arising
in tort relating to defects in work performed by the Seller or any of the MK
Affiliates prior to Closing, (ix) Tax Liabilities, including any state sales
taxes arising in connection with the transaction consummated
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pursuant to this Agreement, (x) subject to Section 2.04(d), Liabilities
associated with any Excluded Asset, and (xi) Liabilities associated with any
litigation pending on the Closing Date or any claims, charges or complaints
pending on the Closing Date with any Governmental Authority arising out of
employment related disputes.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, parastatal, instrumentality, court, government or self-regulatory
organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision,
department or branch of any of the foregoing.
"Government Contract" means any Contract with (i) any Governmental
Authority, (ii) any prime contractor of any Governmental Authority, or (iii) any
subcontractor of any Governmental Authority or any prime contractor of any
Governmental Authority.
"Guaranty Agreement" means that certain Guaranty Agreement, dated as
of the date of this Agreement, from the Bonding Company in favor of Credit
Suisse.
"Hazardous Substance" means any chemical substance, object, condition,
material or waste that is or may be hazardous to human health, safety or the
environment, including any chemicals, substances, materials and wastes: (i) the
presence of which requires investigation or remediation under any Applicable
Law; (ii) which is defined as "hazardous wastes," "hazardous substances,"
"hazardous materials," "toxic substances," "air pollutants," toxic pollutants,"
"extremely hazardous waste" or "restricted hazardous waste" under any Applicable
Law; (iii) which is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, dangerous or mutagenic or otherwise hazardous and is
regulated by any Governmental Authority having or asserting jurisdiction over
the Business, the Purchased Assets or the Seller; (iv) the presence of which
causes a nuisance to adjacent properties or poses a hazard to the health or
safety of Persons; (v) the presence of which on adjacent properties constitutes
a trespass by the Seller; or (vi) which contains radioactive materials,
pesticides, pollutants, contaminants, chemicals, lead, ureaformaldehyde,
flammable explosives, radon, gasoline, diesel fuel or other petroleum
hydrocarbons, polychlorinated biphenols (PCBs) or asbestos.
"I.A.M." means the International Association of Machinists and
Aerospace Workers.
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"Indemnification and Reimbursement Agreement" means that certain
Indemnification and Reimbursement Agreement dated as of July 31, 1995 among the
Seller, MK Delaware, the Bonding Company and Colonial American Casualty and
Surety Company.
"Initial Net Assets To Be Sold" means the net assets of the Business
that would have been sold by the Seller to the Buyer if the Closing Date had
been August 27, 1995, as shown on the Initial Statement of Net Assets To Be
Sold.
"Initial Statement of Net Assets To Be Sold" means the statement of
the Initial net assets to be sold, as at the close of business on August 27,
1995, a copy of which is attached as Exhibit 1.01(c) hereto.
"Instrument of Assumption" means the instrument of assumption to be
dated as of the Closing Date between the Seller and the Buyer in the form of
Exhibit 1.01(d) attached hereto.
"Knowledge" or "knowledge" means, with respect to the Seller, the
collective actual knowledge (after due inquiry) of the officers, directors and
Management Employees of the Seller and MK Delaware, and Joe Janovec, James F.
O'Kelly III and Jim Benoit, and with respect to the Buyer, the collective actual
knowledge (after due inquiry) of the officers, managers and Management Employees
of the Buyer.
"Lease Assignments" means the assignment agreements with respect to
the Real Property Leases in substantially the form of Exhibit 1.01(e).
"Liability" means, with respect to any Person, any liability or
obligation of such Person of any kind, character or description, whether
disclosed or undisclosed, known or unknown, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, secured or unsecured, joint or several,
due or to become due, vested or unvested, executory, determined, determinable or
otherwise and whether or not the same is required to be accrued on the financial
statements of such Person.
"Lien" means, with respect to any asset, any mortgage, title defect or
objection, lien, pledge, charge, security interest, hypothecation, restriction
applicable to such asset's use in the Business, encumbrance, adverse right or
charge of any kind in respect of such asset.
"Management Employee" means, with respect to any Person, any employee
of such Person who has an annual base salary in 1995 of One Hundred Thousand
Dollars ($100,000) or more.
"Material Adverse Effect" means a change or effect that is reasonably
likely
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to be materially adverse to the Purchased Assets taken as a whole or the
operations, properties, prospects, condition, results of operations, assets or
Liabilities of the Business taken as a whole.
"Metra" means Commuter Rail Division of the Regional Transit Authority
D/B/A Metra/Metropolitan Rail.
"Metra Contract" means that certain Proposal/Contract (Rev. 1/24/92),
between Metra and the Seller, and all exhibits, schedules, amendments and
supplements thereto, awarded March 9, 1992.
"Net Asset Statements" means the Initial Statement of Net Assets To Be
Sold and the Closing Statement of Net Assets To Be Sold.
"New Metra Banks Revolving Credit Agreement" means that certain
Revolving Credit Agreement dated as of the date hereof among the Buyer, the
several financial institutions parties thereto and the Bank of America National
Trust and Savings Association, as agent for such financial institutions.
"OSHA" means the Occupational Safety and Health Act of 1970, 29
U.S.C.A. Section 651, and all rules and regulations promulgated thereunder.
"Owners" means Amtrak, BART, Caltrans, Metra, Metro North Commuter
Railroad, New York City Transit Authority, Massachusetts Bay Transportation
Authority, San Francisco Municipal Railway, Chicago Transit Authority,
Turbomecca Engine Corporation and VIA Rail.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (i) Liens for Taxes or governmental
assessments, charges or claims the payment of which is not yet due or, with
respect to California, is due but not past due; (ii) purchase money Liens on
equipment set forth in Section 1B(ii) of the Disclosure Schedule; PROVIDED, such
Liens do not apply to any other Purchased Assets, and, PROVIDED, FURTHER, that
such Liens do not, individually or in the aggregate, interfere with or impair
the present use of the equipment they affect; (iii) Encumbrances and Liens on
the Real Property Leases which are disclosed in any of the Title Commitments (as
defined in Section 5.07), other than the Liens granted by the Seller in favor of
Mellon Bank, or in Section lB(iii) of the Disclosure Schedule; (iv) the lien
granted under that certain Security Agreement and Waiver No. 4 with Morgan
Guaranty Trust Company of New York dated as of July 31, 1995 and described in
Section 1B(iv) of the Disclosure Schedule; (v) inchoate mechanic's Liens and
materialman's Liens that will attach if the Buyer fails to satisfy the
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Buyer Obligations giving rise to such Liens; (vi) other Liens set forth in
Section lB(iv) of the Disclosure Schedule.
"Person" means an individual, corporation, partnership, association,
trust, estate, Governmental Authority or other entity or organization.
"Previous Metra Banks Revolving Credit Agreement" means that certain
Revolving Credit Agreement dated as of July 31, 1995, as amended, among the
Seller, the several financial institutions parties thereto and the Bank of
America National Trust and Savings Association, as agent for such financial
institutions.
"Purchased Assets" has the meaning set forth in Section 2.01.
"Reference Rate" means the "prime rate" of interest per annum
published from time to time in the "Money Rates" column of The Wall Street
Journal. Any change in the Reference Rate shall take effect at the opening of
business on the day on which such change is published.
"Required Consents" has the meaning set forth in Section 3.15.
"Restricted Contracts" means all those Contracts for which consent of
a third party is required to the assignment or transfer of such Contract to the
Buyer or the assignment of the rents, claims and benefits thereunder to the
Buyer.
"Subsidiary" means (i) any corporation that conducts any part of the
Business or that owns any Purchased Assets or owes or is otherwise liable for
any of the Buyer Obligations, as to which more than 50% of the outstanding stock
having ordinary voting rights or power (and excluding stock having voting rights
only upon the occurrence of a contingency unless and until such contingency
occurs and such rights may be exercised) is owned or controlled, directly or
indirectly, by the Seller and (ii) any partnership, joint venture or other
similar relationship between the Seller and any other Person (whether pursuant
to a written agreement or otherwise) which relates to the Business, or pursuant
to which any part of the Business is conducted.
"Sureties" has the meaning set forth in the Recitals of this
Agreement.
"T-Co Term Sheet" means that certain T-Co Transaction Revised Term
Sheet, executed on behalf of the Seller, the Banks and the Sureties, a copy of
which is attached as Exhibit 1.01(f).
"TDC Assignments" means the assignment agreements with respect to the
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Transit Division Contracts.
"Transit Division Contracts" means the Contracts with the Owners
described in Schedule R3.
"Union Benefit Plans" means, (i) the I.A.M. National Pension Fund, the
Group Health and Dental Plan and the Group Life Insurance covering union
employees in Hornell New York; (ii) the Group Health Plan, the Group Dental
Plan, the Group Life Insurance and the Short-term Sickness and Accident
Insurance covering union employees in Chicago, Illinois; and (iii) the Group
Health and Dental Plan and the Short-term Sickness and Accident Insurance
covering union employees in Pittsburg, California.
Certain terms used principally in other sections of this Agreement are
defined in such sections.
ARTICLE II
PURCHASE AND SALE
2.01. PURCHASE AND SALE. Upon the terms and subject to the
conditions of this Agreement and in reliance upon the representations,
warranties and agreements herein set forth, the Buyer agrees to purchase from
the Seller and the Seller agrees to sell, transfer, assign and deliver, or cause
to be sold, transferred, assigned and delivered, to the Buyer at the Closing,
free and clear of all Liens, other than Permitted Liens, all the assets,
properties, rights, licenses (other than licenses granted by a Governmental
Authority that are not transferable), transferable permits, causes of action and
claims (excluding counterclaims and cross-claims for all litigation that is not
assumed by the Buyer), operations and businesses of such Seller of every kind
and description that are Attributable to the Business (other than the Excluded
Assets), wherever located, whether tangible or intangible, real, personal or
mixed, which are owned by, leased by or in the possession of such Seller,
whether or not reflected on the books and records of such Seller, including all
assets shown on the Initial Statement of Net Assets To Be Sold and not disposed
of in the ordinary course of business or as permitted by this Agreement prior to
the Closing Date (the collective assets, properties, rights, licenses, permits,
causes of action, claims, operations and businesses to be transferred to the
Buyer by the Seller pursuant hereto are referred to collectively herein as the
"Purchased Assets") and including, except as otherwise specified herein, all
right, title and interest of the Seller in, to and under:
(i) all the Real Property Leases (as defined in Section 3.09(d))
and
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other leases, whether capitalized or operating, of, and other interests in, real
property that are Attributable to the Business, including the items listed in
Section 3.09(d) of the Disclosure Schedule, in each case together with all
buildings, fixtures and improvements erected thereon and appurtenances thereto;
(ii) all machinery, equipment, furniture, office equipment,
communications equipment, vehicles, storage tanks, spare and replacement parts,
fuel and other tangible property (and interests in any of the foregoing) of the
Seller that are Attributable to the Business, including the items listed in
Section 2.01(ii) of the Disclosure Schedule ("Equipment");
(iii) all items of inventory notwithstanding how classified in
the financial records of the Seller that are Attributable to the Business,
including all raw materials, work-in-process, finished goods, supplies, spare
parts, samples and stores that are Attributable to the Business ("Inventory");
(iv) the Contracts, which included those contracts listed on
Schedule 2.03(a) as of the date of such Schedule 2.03(a), including the
Restricted Contracts, upon receipt of the consent of all Persons that are
required to consent to the assignment of such Restricted Contracts;
(v) all accounts, accounts receivable and notes receivable of the
Seller, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto, arising out of the Business, and any security
or collateral therefor, including recoverable advances and deposits, that are
Attributable to the Business;
(vi) all amounts held or retained by any of the Owners on account
of amounts payable under any of the Contracts;
(vii) all prepaid charges and expenses of the Seller that are
Attributable to the Business, including any such charges and expenses with
respect to ad valorem taxes, leases, rentals and utilities;
(viii) all cash and petty cash of the Seller located at operating
facilities that are Attributable to the Business ("Petty Cash") and all cash
accounts, including the Stuben Trust Account in Hornell, New York, the Mellon
Bank Loan Proceeds Account (Account Number 0016715), the Bank of America Loan
Proceeds Account (Account Number 1233320736), the Key Bank Concentration Account
(Account Number 124012027874), the Bank of America California Payroll Account
(Account Number 1233920795), and the Key Bank Disbursement Account (Account
Number 1920084077);
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(ix) all of the Seller's rights, claims, credits, causes of
action or rights of set-off against third parties relating to the Business or
the Purchased Assets, whether liquidated or unliquidated, fixed or contingent
(including claims under Government Contracts, but excluding counterclaims and
cross-claims for all litigation that is not assumed by the Buyer), and all
rights of the Seller under or pursuant to all warranties, representations and
guarantees made by suppliers, manufacturers, contractors and other third parties
in connection with products or services purchased by or furnished to the Seller
that are Attributable to the Business or affect any of the Purchased Assets;
(x) all of the Seller's patents, copyrights, trademarks, trade
names, service marks, service names, mask work, designs, technology, know-how,
processes, trade secrets, inventions, proprietary data, formulae, chip designs,
research and development data and results, computer software and documentation
(including computer modeling programs, design and operational software and
computer source and object codes), manufacturing, engineering quality control,
testing, operational, logistical, maintenance and other technical information,
and other intangible property (excluding the name "Morrison Knudsen," "MK" and
any derivatives thereof) and any registrations and applications for the same and
any rights of the Seller as licensee or otherwise with respect to any of the
foregoing, that are Attributable to the Business, including the items listed in
Sections 3.19(a) and (b) of the Disclosure Schedule;
(xi) all transferable franchises, licenses, permits or other
authorizations issued or granted by any Governmental Authority that are owned
by, granted to or held or used by the Seller and Attributable to the Business,
including the items listed in Section 3.15(a) of the Disclosure Schedule;
(xii) all books, records, files and papers of the Seller, whether
in hard copy or computer format, including bank account records, books of
account, invoices, engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former customers, personnel and employment
records of present and former employees, and documentation developed or used for
accounting, marketing, engineering, manufacturing or any other purpose that are
Attributable to the Business;
(xiii) all goodwill associated with the Business or the Purchased
Assets; and
(xiv) the Beechcraft King Air A100.
2.02. EXCLUDED ASSETS. The parties expressly acknowledge and agree
that the Purchased Assets shall exclude the Excluded Assets.
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2.03. BUYER OBLIGATIONS.
Upon the terms and subject to the conditions of this Agreement
and in reliance upon the representations, warranties and agreements herein set
forth, the Buyer agrees, from and effective as of the time of Closing, to (i)
assume the Liabilities of the Seller with respect to the Transit Division
Contracts pursuant to the terms and conditions of the TDC Assignments; (ii)
assume the Liabilities of the Seller with respect to the Real Property Leases
set forth in Section 3.09(d) of the Disclosure Schedule pursuant to the terms
and conditions of the Lease Assignments; (iii) assume the Liabilities of the
Seller with respect to the Contracts (other than Transit Division Contracts and
the Real Property Leases), including the letters of credit/reimbursement
agreements listed in item 4 of Schedule 2.03(a) and the Loan Agreement with the
City of Pittsburg, California listed in item 5 of Schedule 2.03(a), pursuant to
the Instrument of Assumption; (iv) assume the Liabilities of the Seller included
on the Initial Statement of Net Assets To Be Sold that were necessarily incurred
in performance of the Transit Division Contracts; (v) assume the Liabilities of
the Seller that were necessarily incurred in performance of the Transit Division
Contracts, in the ordinary course of the Seller's business, between August 27,
1995 and the Closing Date with respect to any of the foregoing; (vi) assume the
Liabilities of the Seller with respect to item 7 of Schedule 2.03(a); and (vii)
assume the Union Benefit Plans; PROVIDED, HOWEVER, that, notwithstanding
anything herein to the contrary, the Buyer shall not assume (x) the Liabilities
of the Seller with respect to any Restricted Contract unless and until all third
party consents required for the assignment or transfer of such Restricted
Contract have been obtained, (y) Liabilities arising out of any breach by the
Seller of, or the failure of the Seller to perform, any provision of any
Contract (other than the Transit Division Contracts), and (z) any Excluded
Obligation, whether or not listed on Schedule 2.03(a). The obligations referred
to in clauses (i) through (vii) above, as limited by the proviso above, other
than the Excluded Obligations are hereafter referred to as the "Buyer
Obligations." Anything in this Agreement to the contrary notwithstanding, the
Buyer is not assuming and shall not assume any Liabilities of the Seller, or any
of its Affiliates, whether presently in existence or arising hereafter, except
the Buyer Obligations. The parties agree that the Buyer is not assuming any
Benefit Plan other than the Union Benefit Plans, and that all Benefit Plans
other than the Union Benefit Plans shall remain a Liability of the Seller.
2.04. ASSIGNMENT OF CONTRACTS.
(a) Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign any Restricted Contracts
or any claim or right or any benefit arising thereunder or resulting therefrom
if an attempted assignment thereof, without the consent of a third party
thereto, would constitute a breach or other contravention thereof, be
ineffective with respect to any party thereto or in any way
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adversely affect the rights of the Buyer or the Seller thereunder.
(b) With respect to each Transit Division Contract indicated with an
asterisk on Schedule R3, prior to Closing the Seller shall have obtained the
execution of a TDC Assignment between the Buyer and the Seller, consented to by
the applicable Owner.
(c) With respect to each Real Property Lease indicated with an
asterisk on Section 3.09(d) of the Disclosure Schedule, prior to Closing the
Seller shall have obtained the execution by the applicable other parties thereto
of a Lease Assignment among the Buyer, the Seller and such other parties.
(d) If the Seller is unable to obtain the execution of a consent to
assignment from each of the other parties to any Restricted Contract prior to
Closing, the Seller and the Buyer will cooperate in an arrangement reasonably
satisfactory to the Buyer and the Seller under which the Buyer would obtain, to
the extent practicable, the claims, rights and benefits, and perform the
corresponding obligations thereunder, in accordance with this Agreement,
including subcontracting, sub-licensing or subleasing to the Buyer, or under
which the Seller would enforce for the benefit of the Buyer, with the Buyer
performing the Seller's corresponding obligations thereunder, any and all
claims, rights and benefits of the Seller against each other party thereto. The
Seller will promptly pay to the Buyer when received all monies received by the
Seller under or with respect to any Restricted Contract or any claim, right or
benefit arising thereunder not transferred pursuant to this Section 2.04(d). To
the extent that the Buyer receives rights and benefits from any Restricted
Contract not transferred pursuant to this Section 2.04(d), the Buyer shall pay
to the other contracting party to such contract all amounts owing to such other
contracting party under such Restricted Contract. The parties agree that, with
respect to the agreement between the Seller and Sumitomo/Nippon Sharyo, the
arrangement described in that certain Resale Agreement dated as of October 10,
1995 between the Seller and the Buyer, secured by that certain Security
Agreement dated as of October 10, 1995 by the Seller in favor of the Buyer, is a
satisfactory arrangement for purposes of this Section 2.04(d). The Seller shall
continue to use its best efforts after Closing to obtain the execution of a
consent to assignment from each of the other parties to any Restricted Contract
for which such consent was not obtained prior to Closing. Upon receipt of the
consent of all Persons that are required to consent to the assignment of a
Restricted Contract, the Seller shall transfer, assign and deliver such
Restricted Contract to the Buyer, free and clear of all Liens, other than
Permitted Liens.
SECTION 2.05. CONSIDERATION.
(a) The consideration for the Purchased Assets (the "Consideration")
(subject to adjustment pursuant to Section 2.08) is described below:
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(i) the payment by the Buyer to the Seller the amount set
forth on Exhibit 2.05(a);
(ii) the Seller acknowledges and agrees that the following
constitutes value and consideration for the Purchased Assets: (w) pending the
negotiation, execution and delivery of this Agreement, and contemporaneous with
the T-Co Term Sheet, the Seller received value for the transactions contemplated
in this Agreement in the form of the issuance by the Sureties, at the Seller's
request, of the $25,000,000 Guarantee; (x) pending the negotiation, execution
and delivery of this Agreement, and contemporaneous with the T-Co Term Sheet,
the Banks extended the New Financing to the Seller; (y) at the request of the
Buyer and the Seller, the Sureties have agreed to issue the New Bonds for the
benefit of the Seller, based on, among other things, the consummation of the
transactions herein contemplated, and the assurance that the aggregate value of
the New Financing and the New Bonds Agreement is at least equivalent to the
value of the Purchased Assets; and (z) had this Agreement not been entered into,
an event of default with respect to the New Financing and all original financing
provided by the Banks to or for the benefit of the Seller would have occurred,
thus entitling the Banks (I) discontinue the New Financing, (II) accelerate
certain existing financing or credit facilities to the Seller, or (III) enforce
their rights as a secured party with respect to security interests in certain of
the Seller's assets; and
(iii) the Buyer's assumption of the Buyer Obligations from and
effective as of the Closing pursuant to this Agreement.
(b) The Buyer and the Seller shall prepare or obtain a reasonable
valuation of the Purchased Assets. The Buyer and the Seller agree to allocate
the Consideration among the Purchased Assets in accordance with the rules of
Section 1060 of the Internal Revenue Code and the regulations thereunder and in
a manner entirely consistent with such valuation. The Buyer and the Seller
further agree to act in accordance with such allocation in the filing of all tax
returns (including filing Form 8594 with its Federal income tax return for the
taxable year that includes the date of the Closing) and in the course of any tax
audit, tax review or tax litigation relating thereto.
(c) Not later than ten (10) Business Days prior to the filing of their
respective Form 8594 relating to this transaction, each party hereto shall
deliver to the other party a copy of its Form 8594.
2.06. CLOSING. The closing (the "Closing") of the purchase and sale
of the Purchased Assets hereunder shall take place at the offices of Steptoe &
Johnson in Washington, D.C. on the date hereof or such other date as the Buyer
and the Seller shall mutually agree (the "Closing Date"). At the Closing:
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(i) The Seller shall deliver to the Buyer such bills of sale,
certificates of title, endorsements, consents, assignments and other good and
sufficient instruments of conveyance and assignment, which in the case of
Intellectual Property Rights, shall be documents immediately recordable in the
respective countries of origin of such rights, as the Buyer shall deem
reasonably necessary or appropriate to vest in the Buyer all of the Seller's
right, title and interest in, to and under the Purchased Assets. Such
instruments shall include:
(A) a bill of sale in the form of Exhibit 2.06(a)(i)(A)
with respect to all of the Purchased Assets;
(B) assignments in the form of Exhibit 2.06(a)(i)(B) of all
Intellectual Property Rights;
(C) an opinion of counsel, dated as of the Closing Date;
(D) the fairness opinion of a financial advisor;
(E) a bill of sale for the Beechcraft King Air A100 (which
shall be executed at the Closing and delivered by the Seller to
the Buyer in New York), accompanied by all other documentation
necessary to record the sale of such airplane; and
(F) all other previously undelivered documents that this
Agreement or the Closing List prepared in connection with the
consummation of this Agreement requires the Seller to deliver to
the Buyer at Closing.
(ii) The Buyer shall deliver on behalf of the Seller the amount set
forth on Exhibit 2.06(ii) by wire transfer in immediately available funds to
such account(s) as the Agent under the Previous Credit Agreement shall specify
in writing.
(iii) The Buyer shall deliver on behalf of the Seller the amount set
forth on Exhibit 2.06(iii) to Bank of America National Trust and Savings
Association, as agent under the Previous Metra Banks Revolving Credit Agreement.
(iv) The Seller and the Buyer shall enter into the Pledge and Security
Agreement (Equipment Assets), in the form attached as Exhibit 2.06(iv), and the
Bulk Sales Pledge and Security Agreement (Equipment Assets).
(v) The Seller and the Buyer shall enter into the TDC Assignments, the
Lease
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Assignments and the Assignment Agreement.
(vi) The Seller shall deliver to the Buyer (x) evidence
satisfactory to the Buyer of the release of each Lien (other than Permitted
Liens) relating to any of the Purchased Assets, and (y) evidence satisfactory to
the Buyer that all borrowings and obligations under each of the Previous Credit
Agreement and the Previous Metra Banks Revolving Credit Agreement have been paid
and satisfied in full.
(vii) The Buyer shall deliver to the Seller the Instrument of
Assumption and the Assignment Agreement.
(viii)The Buyer shall deliver to the Seller an opinion of counsel,
dated as of the Closing Date.
(ix) The Buyer shall deliver to the Seller all other previously
undelivered documents that this Agreement or the Closing List prepared in
connection with the consummation of this Agreement requires the Buyer to deliver
to the Seller at Closing.
2.07. CLOSING STATEMENT OF NET ASSETS TO BE SOLD.
(a) As promptly as practicable after the Closing Date, the Seller
shall cause the preparation of the Closing Statement of Net Assets To Be Sold
and shall engage Deloitte & Touche to audit it in accordance with generally
accepted auditing standards, for the purpose of rendering an opinion thereon
(the "Closing Deloitte & Touche Report"). The Closing Statement of Net Assets
To Be Sold shall be prepared in accordance with GAAP; however, the following
shall be excluded from such statement: reserves for losses on completion of
transit car contracts, inventory valuation allowances, reserves for future
warranty costs and liabilities for purchase contract penalties (GAAP, together
with such exclusions is hereinafter referred to as the "Basis of Accounting").
The Closing Deloitte & Touche Report shall express Deloitte & Touche's opinion
that the Closing Statement of Net Assets To Be Sold presents fairly, in all
material respects, the Closing Net Assets To Be Sold in conformity with the
Basis of Accounting at the Closing Date.
In addition to rendering the Deloitte & Touche Closing Report,
Deloitte & Touche will also examine disbursements during the period from July 1,
1995 to the Closing Date and Liabilities at the Closing Date, using certain
agreed upon procedures as set forth in Exhibit 2.07 (the "Agreed Upon
Procedures") for the purpose of rendering a report (the "Agreed Upon Procedures
Report"). The Agreed Upon Procedures Report shall state the procedures
performed and the results of performing such procedures.
As promptly as practicable, but in any case not later than sixty (60)
days (or
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such longer period as the Buyer and the Seller shall agree in writing) after the
Closing Date (the "Report Delivery Date"), the Seller shall cause the proposed
form of Closing Statement of Net Assets To Be Sold and a draft of the Closing
Deloitte & Touche Report and the Agreed Upon Procedures Report to be delivered
to the Buyer. For a period of fifteen (l5) Business Days after the Report
Delivery Date, the Buyer and the Seller shall be entitled to review the proposed
Closing Statement of Net Assets To Be Sold and the draft of the Closing Deloitte
& Touche Report and the Agreed Upon Procedures Report (and any employees of the
Seller and officers of the Buyer of the level of controller or above shall be
entitled to access to Deloitte & Touche's work papers prepared in connection
with its draft reports) and to submit in writing any suggestions for changes
thereto to Deloitte & Touche. Any suggestions submitted to Deloitte & Touche
shall concurrently be submitted to the Buyer or the Seller, as applicable. For
a period of fifteen (15) Business Days after the expiration of such fifteen (l5)
Business Day period, the Buyer and the Seller shall consult with each other and
with Deloitte & Touche to determine if any such suggested changes may be
resolved to the mutual satisfaction in writing of the Buyer and the Seller.
Within fifteen (15) Business Days after the Report Delivery Date, the
Buyer shall deliver to the Seller a statement identifying (i) any disbursements
made from July 1, 1995 to the Closing Date by or on behalf of the transit
division of the Seller that the Buyer contends were not Necessary for the
Business (each, a "Buyer Reimbursable Disbursement") and (ii) any overhead
allocated by the Seller to its transit division from July 1, 1995 to the Closing
Date that the Buyer contends constitutes Excluded Overhead that have not been
previously reimbursed to the Buyer or the transit division of the Seller and
either applied as described in Section 3.24 of this Agreement or acquired by the
Buyer at the Closing (a "Buyer Reimbursable Overhead Payment"). The Seller has
determined that there were checks aggregating $4,232,069.94 that had been
written prior to July 1, 1995 but did not clear until on or after July 1, 1995.
Based on such determination, for purposes of this Section 2.07, the parties
agree that $3,239,967.63 of that amount is to be considered a post-July 1, 1995
disbursement and that $992,102.31 of that amount is to be considered a pre-July
1, 1995 disbursement.
Within fifteen (15) Business Days after the Report Delivery Date, the
Seller shall deliver to the Buyer a statement identifying (i) any disbursements
made from July 1, 1995 to the Closing Date by or on behalf of the Seller
(excluding its transit division) or any MK Affiliate that the Seller contends
were Necessary for the Business and that have not been previously reimbursed to
the Seller (excluding its transit division) or any MK Affiliate (a "Seller
Reimbursable Disbursement") and (ii) any overhead items on the 1995 Proposed
Overhead Budget allocable to the Seller's transit division from July 1, 1995 to
the Closing Date that does not constitute Excluded Overhead that has not been
previously reimbursed to the Seller (excluding its transit division) or any MK
Affiliate (a "Seller Reimbursable Overhead Payment"). The Buyer and Seller
shall have fifteen (15) Business Days from the
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date of delivery of the foregoing statements to reach agreement as to the amount
required to be paid by either party to the other party in accordance with the
foregoing statements. To the extent the Buyer and the Seller agree on the
amounts required to be paid by either to the other, the party owing such amount
shall pay such amount to the other within five (5) Business Days after reaching
such agreement.
If the Buyer and Seller are unable to reach agreement with respect to
any suggested changes to the Closing Statement of Net Assets To Be Sold (the
"Unresolved Changes") and/or amounts required to be paid by either party to the
other by the end of the applicable periods specified above, then the matter(s)
shall be submitted to arbitration in accordance with section 9.04 and 10.04
hereof. At the completion of the arbitration process, the resolution of the
Unresolved Changes shall be reflected in the Closing Statement of Net Assets To
Be Sold, which statement, and the executed Closing Deloitte & Touche Report and
the executed Agreed Upon Procedures Report, shall be final and binding upon the
parties hereto. In addition, the decision of the arbitrator as to the amount of
any Buyer Reimbursable Disbursement, Buyer Reimbursable Overhead Payment, Seller
Reimbursable Disbursement or Seller Reimbursable Overhead Payment shall be final
and binding upon the parties hereto.
All fees, costs, and expenses (including attorneys' fees and expenses)
incurred by the party that prevails in any such arbitration may be assessed
against the party that does not prevail in such arbitration. This provision for
arbitration shall be specifically enforceable by the parties. No statement made
in the footnotes to either Net Assets Statement shall expand or reduce the
Liabilities that come within the definition of Buyer Obligations as set forth in
this Agreement.
Notwithstanding any other provision of this Section 2.07, neither the
Buyer nor the Seller shall be obligated to pay any amount to the other pursuant
to Section 2.07 or Section 2.08 based on the audit of the Closing Statement of
Net Assets To Be Sold or the Agreed Upon Procedures Report, except for Buyer
Reimbursable Disbursements, Buyer Reimbursable Overhead Payments, Seller
Reimbursable Disbursements, and Seller Reimbursable Overhead Payments.
For purposes of this Section 2.07, (i) "Necessary for the Business"
means necessarily incurred in performance of the Transit Division Contracts in
the ordinary course of the Business, and (ii) "Excluded Overhead" means "401(k)
and SERP Expenses", "Legal 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 Indemnification and
Reimbursement Agreement.
(b) The Buyer shall provide all reasonable assistance and cooperation
of its
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employees and representatives to assist in the preparation of the Closing
Statement of Net Assets To Be Sold, and the Seller shall require Deloitte &
Touche to allow the Buyer and its auditors to examine all of the auditors' work
papers (including observation of inventories, review of open contracts and all
memoranda prepared in connection with the completion of the Closing Statement of
Net Assets To Be Sold and the preparation of the Closing Deloitte & Touche
Report and the Agreed Upon Procedures Report), schedules and other documents
prepared in connection with the preparation of the Closing Statement of Net
Assets To Be Sold. The right to examine work papers, schedules and documents
shall continue after completion of the examination.
2.08. REIMBURSEMENTS.
(a) To the extent that the arbitrator determines that there is any
Buyer Reimbursable Disbursement, Buyer Reimbursable Overhead Payment, Seller
Reimbursable Disbursement, or Seller Reimbursable Overhead Payment, the Seller
shall pay the amount of any Buyer Reimbursable Disbursement and Buyer
Reimbursable Overhead Payment to the Buyer, and the Buyer shall pay the amount
of any Seller Reimbursable Disbursement and Seller Reimbursable Overhead Payment
to the Seller, within fifteen (15) days of the completion of the arbitration.
(b) Any payments pursuant to this Section 2.08 shall be made in
immediately available funds by wire transfer to an account designated by the
recipient at least two (2) Business Days prior to the payment date. The amount
of any payment to be made pursuant to this Section 2.08 shall bear interest from
and including the Closing Date (but excluding the date of payment) through the
date of payment in full, at a rate per annum equal to the Reference Rate. Such
interest shall be payable at the same time as the payment to which it relates
and shall be calculated daily on the basis of a year of 365 days.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Seller hereby represents and warrants to the Buyer as follows:
3.01. CORPORATE EXISTENCE AND POWER. The Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of the
state of its incorporation, and has all corporate power and all governmental
licenses, authorizations, consents and approvals required to carry on the
Business as now conducted. The Seller is
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duly qualified to do business as a foreign corporation in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary to carry on the Business as now
conducted. Section 3.01 to the Disclosure Schedule sets forth those
jurisdictions in which the Seller is qualified to do business. Section 3.01 of
the Disclosure Schedule includes true and complete copies of the certificates of
incorporation, bylaws and other charter documents of the Seller as currently in
effect.
3.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by the Seller of this Agreement and the consummation by the Seller
of the transactions contemplated hereby are within the Seller's corporate powers
and have been duly authorized by all necessary corporate action on the part of
the Seller, the Seller's Affiliates and the Seller's shareholders. This
Agreement constitutes the legal, valid and binding agreement of the Seller
enforceable against the Seller in accordance with its terms (i) except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, and (ii) subject to the limitations imposed by
general equitable principles (regardless whether such enforceability is
considered in a proceeding at law or in equity).
3.03. SUBSIDIARIES. The Seller has no Subsidiaries.
3.04. GOVERNMENTAL AUTHORIZATION.
The execution, delivery and performance by the Seller of this
Agreement require no action by, consent or approval of, or filing with, any
Governmental Authority (other than the Owners) other than:
(i) compliance with any applicable requirements of the Exchange Act;
(ii) any actions, consents, approvals or filings otherwise expressly
referred to in this Agreement or described in Section 3.15(b) of the Disclosure
Schedule; and
(iii) any actions, consents, approvals or filings which if not
obtained would not have a Material Adverse Effect.
3.05. NON-CONTRAVENTION. The execution, delivery and performance by
the Seller of this Agreement do not and will not: (a) (i) contravene or conflict
with the certificate of incorporation, bylaws or other charter documents of the
Seller; (ii) assuming compliance with the matters referred to in Section 3.04
and receipt of the Required Consents, contravene or conflict with or constitute
a violation of any provision of any Applicable Law binding upon or applicable to
the Business or any of the Purchased Assets; and (iii) assuming compliance with
the matters referred to in Section 3.04 and receipt of the Required Consents,
constitute a default under or give rise to any right of termination,
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cancellation or acceleration of, or to a loss of any benefit to which the Seller
is entitled under any Contract or any license, franchise, permit or similar
authorization relating to the Business or included in any of the Purchased
Assets or by which the Business or the Purchased Assets may be bound, except,
for any of the foregoing described in clause (iii) hereof, as would not have a
Material Adverse Effect or are described in Section 3.05 of the Disclosure
Schedule, or (b) result in the creation or imposition of any Lien on any
Purchased Asset, other than Permitted Liens.
3.06. FINANCIAL STATEMENTS AND REPORTS. (a) The Seller has delivered
to the Buyer the financial statements described in Section 3.06(a) of the
Disclosure Schedule. Except as set forth in Section 3.06(a) of the Disclosure
Schedule, such financial statements have been prepared based on the books and
records of the Seller and have been prepared in accordance with GAAP, consistent
with past practice. All management letters and all other letters, reports and
other documents delivered to the Seller or any of its Affiliates by Deloitte &
Touche (or any previous auditors of the Seller, its Affiliates, or any of them)
relating to the results of operations, financial statements or internal controls
of the Seller insofar as the same may pertain to the Business or any of the
Purchased Assets or the Buyer Obligations during any period from and after
January l, 1993 are included as part of Section 3.06(a) of the Disclosure
Schedule.
(b) No report filed since January l, 1992 by the Seller or any
predecessor thereof (and not withdrawn) with the Securities and Exchange
Commission under the Exchange Act contained on the date of filing any untrue
statement of a material fact required to be stated therein, or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except for untrue statements or omissions which were
corrected in or superseded by a subsequent filing under the Exchange Act,
without regard to any such filings by MK Rail Corporation or MK Gold Company.
(c) Since January l, 1992 there has been no material disagreement
(within the meaning of Item 304(a)(1)(iv) of Regulation S-K under the Securities
Act of 1933, as amended) between the Seller and its independent auditing firm(s)
concerning any aspect of the manner in which the Seller maintained or maintains
its books and records insofar as the same relate to the Business or any of the
Purchased Assets or Buyer Obligations, or the manner in which any of the
foregoing has reported upon the financial condition and results of operations of
the Business or any of the Purchased Assets or Buyer Obligations since such
date, that has not been resolved to the satisfaction of the relevant independent
auditing firm.
3.07. INITIAL STATEMENT OF NET ASSETS TO BE SOLD. The Initial
Statement of Net Assets To Be Sold and the Financial Statements of the MK
Transit Group as of August 27, 1995 (upon which the Initial Statement of Net
Assets To Be Sold was based) each was prepared based on the books and records of
the Seller, is true and complete, and accurately
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and fairly presents the net assets of the Business to be transferred pursuant to
this Agreement in conformity with the basis of presentation as described
therein, except for any reduction in the value of the assets listed therein
resulting from the Customer Concessions. The assets and liabilities included on
the face of the Initial Statement of Net Assets To Be Sold have been prepared in
accordance with GAAP in effect on August 27, 1995 and include all of the assets
and Liabilities of the Business as of August 27, 1995, except for those
specifically excluded from the Statement by the provisions of this Agreement.
3.08. ABSENCE OF CERTAIN CHANGES. Except as set forth in Section
3.08 of the Disclosure Schedule, since July 1, 1995, the Business has been
conducted in the ordinary course, and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts or change in the Purchased Assets or the Business (including any damage,
destruction or other casualty loss, but excluding any event, occurrence,
development or state of circumstances or facts or change resulting from changes
in general economic conditions) affecting the Business or any Purchased Asset
which has had or which may be reasonably expected to have, either alone or
together with all such events, occurrences, developments, states of
circumstances or facts or changes, a Material Adverse Effect;
(b) (i) any incurrence, assumption or guarantee of any indebtedness
for borrowed money by the Seller in connection with the Business or any of the
Purchased Assets, (ii) any incurrence of any Liability relating to a documentary
or standby letter of credit by the Seller in connection with the Business or any
of the Purchased Assets, (iii) any incurrence of any other Liability by the
Seller in connection with the Business or any of the Purchased Assets, other
than in each such case referred to in this clause (iii) in the ordinary course
of business, or (iv) any change in any Buyer Obligations other than in the
ordinary course of business;
(c) any creation, assumption or sufferance of the existence of any
Lien on any Purchased Asset (other than Permitted Liens);
(d) any transaction or commitment made, or any Contract entered into,
by the Seller relating to the Business or any Purchased Assets (including the
acquisition or disposition of any Purchased Assets), or any waiver, amendment,
termination or cancellation of any Contract by the Seller, or any relinquishment
of any rights thereunder by the Seller or of any other right or debt owed to the
Seller relating to the Business or the Purchased Assets, other than in each such
case actions (i) taken in the ordinary course of business or (ii) otherwise
permitted or contemplated by this Agreement;
(e) other than severance pay, retention bonuses and similar
compensation that
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arise under agreements, plans or arrangements in existence as of July 1, 1995
and that are solely the responsibility of Seller or its Affiliates, any (i)
grant of any severance, continuation or termination pay to any officer or
employee of the Seller who is employed in connection with the Business, (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any officer or
employee of the Seller who is employed in connection with the Business, (iii)
increase in benefits payable or potentially payable under any severance,
continuation or termination pay policies or employment agreements with any
officer or employee of the Seller who is employed in connection with the
Business (other than increases resulting from termination of employment), (iv)
increase in compensation, bonus or other benefits payable or potentially payable
to officers or employees of the Seller who is employed in connection with the
Business other than in the ordinary course of business, (v) change in the terms
of any bonus, pension, insurance, health or other employee benefit plan or
arrangement of the Seller with respect to any officer or employee of the Seller
who is employed in connection with the Business, or (vi) prior to the Closing
Date, any transfer of an employee of the Seller or any Affiliate thereof to the
Business;
(f) any loan to or guarantee or assumption of any loan or obligation
by the Seller on behalf of any director, officer or employee of the Seller
involved in the Business, except travel advances occurring in the ordinary
course of business;
(g) any change by the Seller related to the Business or any of the
Purchased Assets in the Seller's accounting principles, methods or practices or
in the manner it keeps its books and records;
(h) any labor dispute or any activity or proceeding by a labor union
or representative thereof to organize any employees of the Seller involved in
the Business, who were not subject to a collective bargaining agreement on July
1, 1995, or any lockouts, strikes, slowdowns, work stoppages or threats thereof
by or with respect to any such employees;
(i) with respect to the Business or any of the Purchased Assets, any
writing down the value of the Inventories for any reason, or writing off as
uncollectible any notes or accounts receivable except writedowns and writeoffs,
in the ordinary course of business and consistent with past practices, that,
individually and in the aggregate, are immaterial in amount; or
(j) with respect to the Business or any of the Purchased Assets, any
canceling of debts payable of substantial value to the Seller or waiving of
claims or rights of substantial value.
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3.09. PROPERTIES; LEASES; TANGIBLE ASSETS.
(a) Except as disclosed in Section 3.09(a) of the Disclosure Schedule,
the Seller owns and has good, valid and marketable title to or, in the case of
leased properties, a good, valid and marketable leasehold interest in, all of
the Purchased Assets, including all such assets (real, personal or mixed,
tangible or intangible (including the Intellectual Property Rights, as defined
in Section 3.19)) reflected in the Initial Statement of Net Assets To Be Sold,
except those assets disposed of in the ordinary course of business after August
27, 1995. The Seller holds title to each such property and asset free and clear
of all Liens, except Permitted Liens, and, to the knowledge of the Seller, free
and clear of all adverse claims, easements, rights of way, servitudes, zoning or
building restrictions, or any other rights of others or other adverse interests
of any kind, including leases, chattel mortgages, conditional sales contracts,
collateral security arrangements and other title or interest retention
arrangements (collectively, "Encumbrances"), except Permitted Liens. Except as
disclosed in Section 3.09(a) of the Disclosure Schedule, to the Seller's
knowledge, there are no governmental assessments, charges or claims (other than
Taxes) the payment of which is not yet due, which would create a Lien on any of
the Purchased Assets, except Permitted Liens.
(b) Except as disclosed in Section 3.09(b) of the Disclosure Schedule,
to the knowledge of the Seller, all material tangible properties and assets
included in the Purchased Assets (other than inventory) and the Real Property
are adequate for the uses to which they are currently put in the conduct of the
Business, and are in all material respects structurally sound and are in good
operating condition and repair and no properties or assets Attributable to the
Business are in need of replacement, maintenance or repair except for routine
replacement, maintenance and repair which are not material in nature or cost.
(c) the Seller does not own any real property that is Attributable to
the Business.
(d) Section 3.09(d) of the Disclosure Schedule sets forth all personal
property leases requiring annual lease payments in excess of $25,000 to which
the Seller is a party or by which it is bound and that are Attributable to the
Business and all real property leases (such section of the Disclosure Schedule
describing separately those leases relating to real property the "Real Property
Leases" and those leases relating to personal property and indicating where
appropriate those leases which have been recorded for tax, protection of title
of interest, or other purposes) entered into in connection with the Business
(the "Leases"). With respect to the Real Property Leases and the Leases, there
exist no defaults or violations by the Seller or, to the Seller's knowledge, any
default or violation or threatened default or violation by any third party
thereunder that has affected or could reasonably be expected to affect the
rights and privileges thereunder of the Seller. The
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Buyer expressly agrees and acknowledges that it shall not be a breach of the
representations set forth in this Section 3.09(d) if the Seller fails to include
in the list of Leases set forth in Section 3.09(d) of the Disclosure Schedule
any Lease that requires an annual payment of less than $25,000; provided, that
the aggregate annual payments due under all such omitted Leases does not exceed
$250,000.
(e) Except as disclosed in Section 3.09(e) of the Disclosure Schedule,
with respect to any property subject to any of the Real Property Leases (the
"Real Property"), to the knowledge of the Seller, there exists no applicable
restrictive covenant, zoning ordinance, building code, use or occupancy
restriction, or any violation of any such ordinance, code or restriction, or any
condemnation action or proceeding with respect thereto, that will interfere with
the assignment thereof to the Buyer pursuant hereto or will materially interfere
with the enjoyment thereof by the Buyer following the Closing in the conduct of
the Business.
(f) Except as disclosed in Section 3.09(f) of the Disclosure Schedule,
to the knowledge of the Seller, none of the buildings and structures located on
any Real Property nor any appurtenances thereto or equipment thereon, nor the
operation or maintenance thereof, violates any restrictive covenants or
encroaches on any property owned by others, except for such violations or
encroachments, if any, that do not have a Material Adverse Effect. To the
knowledge of the Seller, no condemnation proceeding is pending or threatened
which would preclude or impair the use of any Real Property for the uses
permitted under the Real Property Leases. No expropriation proceeding is
pending, or to the Seller's knowledge threatened, with respect to the Business
or any of the Purchased Assets.
3.10. SUFFICIENCY OF PURCHASED ASSETS. The Purchased Assets
(together with sufficient working capital and except for nontransferable Permits
listed in Section 3.15(b) of the Disclosure Schedule, appropriate arrangements
with employees, qualifications to do business and any Restricted Contracts with
respect to which a consent to assignment has not been obtained) include all
rights, properties, and other assets necessary to permit the Seller to conduct
the Business in all material respects in the same manner as the Business has
been conducted prior to the Closing Date. Upon consummation of the assignment,
transfer and conveyance by the Seller to the Buyer of all of the Purchased
Assets, the Buyer will own or otherwise be vested with all rights, interests,
assets and properties necessary (together with sufficient working capital and
appropriate arrangements with employees) to permit the Buyer to conduct the
Business immediately after the Closing in all materials respects in the same
manner as the Business has been conducted prior to the Closing Date, excluding
Restricted Contracts with respect to which a consent to assignment has not been
obtained, nontransferable Permits listed in Section 3.15(b) of the Disclosure
Schedule and qualifications to do business. The Purchased Assets include all of
the material assets that
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are currently being used in the conduct of the Business by the Seller, except as
set forth in Section 3.10 of the Disclosure Schedule.
3.11. AFFILIATES. Section 3.11 of the Disclosure Schedule sets forth
a correct and complete list of all Affiliates of the Seller other than natural
Persons.
3.12. LOCATION OF PURCHASED ASSETS. Except for Purchased Assets in
transit and on the premises of vendors in Pennsylvania, Alabama, Minnesota,
South Carolina and Japan, none of the Purchased Assets physically reside in any
state other than California, Illinois, New York or Ohio.
3.13. LITIGATION.
(a) Except as disclosed in Section 3.13(a) of the Disclosure Schedule:
(i) there are no actions, suits, hearings, inquiries, arbitrations, proceedings
(public or private) or governmental investigations that have been brought by or
against any Governmental Authority or any other Person (collectively,
"Proceedings") pending or threatened, against or affecting the Business or any
of the Purchased Assets; and (ii) there are no existing orders, judgments or
decrees of any Governmental Authority affecting any of the Purchased Assets or
the Business. Without limiting the generality of the foregoing, Section 3.13(a)
of the Disclosure Schedule sets forth a correct and complete listing of the
Seller's product liability claims experience, Bureau of Labor Statistics Log and
Summary of Occupational Injuries and Illnesses (which accurately and completely
describes all recordable injuries and illnesses) and workers' compensation
experience losses and claims, including potential liabilities for violation of
federal and state safety rules (including OSHA), relating to the Business during
the five years immediately preceding the date hereof.
(b) Except as set forth in Section 3.13(b) of the Disclosure Schedule,
there are no Proceedings pending or threatened, against the Seller, the Business
or the Purchased Assets which seek to enjoin or rescind the transactions
contemplated by this Agreement or otherwise prevent the Seller from complying
with the terms and provisions of this Agreement.
3.14. CONTRACTS AND BIDS.
(a) Section 3.14(a) of the Disclosure Schedule sets forth an accurate
and complete list of all Contracts in effect as of the date of this Agreement.
Without limiting the generality of the foregoing and without regard to whether
any of the following are necessary for the conduct of the Business, Section
3.14(a) of the Disclosure Schedule identifies by date and the parties thereto
the following):
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(i) each Contract between the Seller Attributable to the Business or
relating to any of the Purchased Assets and (y) any supplier of the Business, or
(z) any customer (including Governmental Authorities) of the Business;
(ii) each agreement or arrangement of the Seller Attributable to the
Business that requires the payment or incurrence of Liabilities by the Seller
subsequent to August 27, 1995;
(iii) all contracts relating to, and evidences of, indebtedness for
borrowed money or the deferred purchase price of property (whether incurred,
assumed, guaranteed or secured by any asset), Attributable to the Business or
relating to any Purchased Asset or otherwise constituting a Buyer Obligation;
(iv) all license, sale, distribution, commission, marketing, agent,
franchise, technical assistance or similar agreements relating to or providing
for the marketing and/or sale of the products or services of the Business other
than any such agreement terminable without penalty to the Seller or the Buyer
upon thirty (30) days' or less notice to the other party thereto;
(v) all teaming or similar agreements or arrangements to which the
Seller is a party that are Attributable to the Business or relate to any of the
Purchased Assets;
(vi) all Government Contracts under which the Seller is the prime
contractor ("Prime Government Contracts") and all other Government Contracts to
which the Seller is a party that, in either case, are Attributable to the
Business or relate to any Purchased Asset;
(vii) all Restricted Contracts to which the Seller is a party that are
Attributable to the Business or relate to any Purchased Asset; and
(viii) all partnership, joint venture or other similar contracts,
arrangements or agreements that are Attributable to the Business as a result of
which the Seller owns, directly or indirectly, an equity interest (whether as a
limited or general partner, as a shareholder or otherwise) and each agreement,
obligation or commitment to which the Seller is subject to make any investment
in or loan or advance to any joint venture, partnership, corporation or other
business enterprise described in this clause (viii) of this Section 3.14(a).
The Buyer expressly agrees and acknowledges that it shall not be a
breach of the representations set forth in this Section 3.14(a) if the Seller
fails to include in the list of Contracts set forth in Section 3.14(a) of the
Disclosure Schedule any Contract that requires an annual payment of less than
$25,000; provided, that the aggregate annual payments due under all such omitted
Contracts does not exceed $250,000.
(b) Except as disclosed in Section 3.l4(b) of the Disclosure Schedule
and other than with respect to accounts receivable, each Contract is a legal,
valid and binding obligation of the Seller and each other party thereto,
enforceable against the Seller and each such other party in accordance with its
terms (except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
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relating to or affecting creditors' rights generally, and subject to the
limitations imposed by general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity), and neither
Seller nor any other party thereto is in material default or has failed to
perform any material obligation thereunder.
(c) Except as disclosed in Section 3.14(c) of the Disclosure Schedule,
the Seller has not submitted any Bid that is Attributable to the Business which
is currently outstanding.
3.15. PERMITS; REQUIRED CONSENTS.
(a) Section 3.15(a) of the Disclosure Schedule sets forth all
approvals, authorizations, certificates, consents, licenses, orders and permits
or other similar authorizations of all Governmental Authorities and other
Persons (other than qualifications to do business) that are necessary for the
operation of the Purchased Assets in substantially the same manner as currently
operated by the Seller or are Attributable to the Business (the "Permits"),
including all such permits and approvals relating to the discharge of by-
products and waste material into a public waste discharge system.
(b) Section 3.15(b) of the Disclosure Schedule lists (i) except for
qualifications to do business, each governmental or other registration, filing,
application, notice, transfer, consent, approval, order, qualification and
waiver (each, a "Required Governmental Approval") that is required under
Applicable Law to be obtained by the Seller by virtue of the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby to avoid the loss of any Permit and (ii) each Contract with respect to
which, pursuant to the terms thereof, the consent of the other party or parties
thereto must be obtained by the Seller by virtue of the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
to avoid a breach or default thereunder (each, a "Required Contractual Consent"
and collectively with the Required Governmental Approvals, the "Required
Consents"). Except as set forth in Section 3.15(b) of the Disclosure Schedule,
each Permit is valid and in full force and effect and, assuming the related
Required Consents have been obtained prior to the Closing Date, are, or will be,
transferable by the Seller and none of the Permits will, assuming the related
Required Consents have been obtained prior to the Closing Date, be terminated or
become terminable or impaired as a result of the transactions contemplated
hereby.
3.16. COMPLIANCE WITH LAWS. Except as set forth in Section 3.16 of
the Disclosure Schedule, (a) the operation of the Business and condition of the
Purchased Assets do not violate or infringe any Applicable Law, or any order,
writ, injunction or decree of any Governmental Authority, and (b) the Seller has
not received any notification of any asserted present or past infringement or
violation of any Applicable Law that is continuing.
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3.17. EMPLOYMENT MATTERS.
(a) Section 3.17(a) of the Disclosure Schedule contains a complete
and accurate list of each collective bargaining agreement or other labor or
consulting agreement (including, in each case, all supplements, amendments,
modifications and side agreements relating thereto, whether in writing or oral)
that is Attributable to the Business and (i) to which the Seller or any of its
Affiliates is a party or by which it or they are bound, (ii) which covers
employees of the Business and (iii) which may affect in any way the Purchased
Assets or Buyer Obligations.
(b) Except as set forth in Section 3.17(b) of the Disclosure
Schedule, and with respect to the Business:
(i) the Seller and its Affiliates are in compliance with all Applicable
Laws of all Governmental Authorities having jurisdiction over the Seller or any
of its Affiliates respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and are not engaged in any unfair
labor practice;
(ii) there is no unfair labor practice complaint pending or threatened
against the Seller or any of its Affiliates before the National Labor Relations
Board;
(iii) there is no labor strike, or slowdown or stoppage pending or
threatened against or affecting the Seller or any of its Affiliates, and neither
the Seller nor any of its Affiliates has experienced any such event since
January 1, 1992;
(iv) since January 1, 1992, no representation petition under Section 9 of
the National Labor Relations Act has been filed at the National Labor Relations
Board;
(v) no grievance or arbitration proceeding arising out of or under
collective bargaining agreements of the Seller or any of its Affiliates is
pending or threatened;
(vi) there is no unfair labor practice charge or complaint pending or
threatened with respect to a Seller or any of its Affiliates arising out of this
transaction;
(vii) there are no pending or threatened charges, claims or complaints
relating to the Business before the Office of Federal Contract Compliance
Programs, the Equal Employment Opportunity Commission, any similar state or
local agency, or any court of competent jurisdiction under E.O. 11246 (as
amended), the Civil Rights Act, the Age Discrimination in Employment Act, the
Equal Pay Act, the Americans with Disabilities Act, the Family and Medical Leave
Act, or any similar federal, state or local statute prohibiting discrimination
in employment; and
(viii) neither the Seller nor any of its Affiliates is liable, on account
of this transaction, for any severance pay or other payments arising from the
termination of employment of any employee or former employee of the Seller or
any of its Affiliates that will become an employee of the Buyer.
(c) Section 3.17(c) of the Disclosure Schedule sets forth the name of
each highly compensated employee (as defined in Section 414(p) of the Code)
employed in the Business as of December 31, 1994, and his or her total wages,
commissions and bonuses as
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reported on Form W-2 for the year ending on such date. None of such persons,
except as set forth in Section 3.17(c) of the Disclosure Schedule, has announced
an intention to his or her immediate supervisor or to any other Person to cancel
or otherwise terminate such person's relationship with the Seller or any of its
Affiliates.
(d) The Seller and its Affiliates, consistent with past practices,
will have paid to all employees of the Business all wages, salaries, commissions
and bonuses for services rendered prior to the Closing Date, except (i) as
accrued on the Initial Statement of Net Assets To Be Sold, (ii) as set forth on
Section 3.17(d) of the Disclosure Schedule or (iii) relating to vacation pay for
non-union employees of the Business. This representation is not intended to
require the Seller and its Affiliates to disclose severance pay, retention
bonuses and similar compensation which the Seller or its Affiliates are solely
responsible to pay arising from the Seller's or its Affiliates termination of
employment of any employee or former employee of the Seller or any of the
Seller's Affiliates on account of this transaction.
(e) Except as set forth on Section 3.17(e) of the Disclosure
Schedule, since January 1, 1995, neither the Seller nor any of its Affiliates
has incurred any Liability under the Worker Adjustment and Retraining
Notification Act ("WARN"), as amended from time to time, or any similar state or
federal law with respect to employees of the Business.
(f) Section 3.17(f) of the Disclosure Schedule sets forth a true and
complete list of the wage rates for non-salaried and salaried employees of the
Business by classification.
3.18. COMPLIANCE WITH ERISA.
(a) Neither the Seller nor any of its Affiliates within the meaning
of Section 414(b) or (c) of the Code (as defined in Section 7.01) (and, for
purposes of Section 412(n) of the Code, Sections 414(n) and (o) of the Code)
(hereinafter "ERISA Affiliates"), maintains or contributes to any employee
pension benefit plan, any multiemployer plan or any employee welfare benefit
plan (as those terms are defined in Section 3 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) that covers employees of the
Business, other than those listed on Section 3.18(a) of the Disclosure Schedule
("Benefit Plans"). Neither the Seller nor any of its ERISA Affiliates maintains
any stock option, stock bonus, restricted stock, phantom stock or similar plan
that covers employees of the Business other than those listed on Section 3.18(a)
of the Disclosure Schedule, and all employees covered by such plans are listed
on Section 3.18(a) of the Disclosure Schedule.
(b) There are no Liens pending against the Seller or any ERISA
Affiliates under Code Section 412(n) and there is no basis for such a Lien. All
premium payments due to the PBGC under Section 4007 of ERISA have been or will
be timely made before
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the Closing Date. As of the Closing Date, neither the Seller nor any of its
ERISA Affiliates has adopted an amendment which would be subject to the security
requirements of Code Section 401(a)(29).
(c) None of the pension plans subject to Title IV of ERISA maintained
by the Seller or any ERISA Affiliate has been completely or partially
terminated, other than in a "standard termination," within the meaning of
Section 4041(b) of ERISA, with respect to which there is any further outstanding
liability to the plan or the PBGC, nor has been the subject of a "reportable
event" (as that term is defined in Section 4043 of ERISA and regulations
thereunder) as to which either (i) notices would be required to be filed with
the PBGC; or (ii) penalties have not been waived under PBGC Technical Update 95-
3. The PBGC has not instituted proceedings to terminate any such plan pursuant
to Subtitle 1 of Title IV of ERISA, and there is no pending or threatened
action, proceeding or investigation under Title IV of ERISA against or involving
any such plan. There are no liens pending against the Seller or any ERISA
Affiliate under Section 4068 of ERISA and there is no basis for such a lien.
The PBGC has not instituted or threatened to institute any action against the
Seller or its ERISA Affiliates under sections 4063, 4064 or 4062(e) of ERISA.
(d) The Seller has not represented to the employees (or any former
employees) of the Business that the Buyer will provide any form of retiree
medical benefits.
(e) Except for multiemployer Union Benefit Plans not maintained or
sponsored by the Seller but to which the Seller contributes or is obligated to
contribute, each Union Benefit Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other Federal or state
law, including all requirements under the Code or ERISA for filing reports
(which are true and correct in all material respects as of the date filed), and
benefits have been paid in accordance with the provisions of the Union Benefit
Plans.
3.19. INTELLECTUAL PROPERTY.
(a) Section 3.19(a) of the Disclosure Schedule sets forth a complete
and correct list of each patent, patent application and docketed invention of
the Seller, by date and germane case or docket number and country of origin, and
each license or licensing agreement of the Seller, by date, term and the parties
thereto, for each patent and patent application, and a summary description of
each invention or customized (by modification of source code) computer program,
Attributable to the Business (each of the foregoing being hereinafter referred
to as the "Patents and Licenses").
(b) Section 3.19(b) of the Disclosure Schedule sets forth a complete
and correct list of each trademark, trade name, trademark or tradename
registration or
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application, and copyright registration or application for copyright
registration of the Seller, by date and germane case or docket number and
country of origin, and each license or licensing agreement, by date and the
parties thereto, for each trademark or copyright license or application,
relating to any Purchased Asset or Attributable to the Business (each of the
foregoing being hereafter referred to as the "Trademarks and Copyrights" and
collectively with the Patents and Licenses, the "Intellectual Property Rights").
(c) Except as disclosed in Section 3.19(c) of the Disclosure Schedule,
neither the Seller nor any of its Affiliates has during the three years
preceding the date of this Agreement been a party to any Proceeding as to which
there is a reasonable possibility of a determination adverse to the Seller that
involved or may involve a claim of infringement by any Person (including a
Governmental Authority) of any Intellectual Property Right, nor does the Seller
have any reason to believe that it or any of its Affiliates may become a party
to any Proceeding as to which there is a reasonable possibility of a
determination adverse to the Seller that involved or may involve a claim of
infringement by any Person (including a Governmental Authority) of any
Intellectual Property Right that would be expected to have a Material Adverse
Effect. Except as disclosed in Section 3.19(c) of the Disclosure Schedule, no
Intellectual Property Right (other than the name "Morrison Knudsen", "MK" or any
derivative thereof) is subject to any outstanding order, judgment, decree,
stipulation or agreement restricting the use thereof by the Seller or any of its
Affiliates or restricting the licensing thereof by the Seller to any Person, and
there is no valid basis for a claim to restrict the use thereof by the Seller.
The use of the Intellectual Property Rights does not conflict with, infringe
upon or violate any patent, patent license, patent application, trademark,
tradename, trademark or tradename registration, copyright, copyright
registration, service mark, brand mark or brand name or any pending application
relating thereto, or any trade secret, know-how, programs or processes, or any
similar rights, of any Person.
(d) Except as set forth in Section 3.19(d) of the Disclosure Schedule,
the Seller either owns the entire right, title and interest in, to and under, or
has acquired in connection with the acquisition of Equipment or Inventory all
necessary licenses to use, any and all inventions, processes, computer programs,
know-how, formulae, trade secrets, patents, chip designs, mask works,
trademarks, tradenames, brand names and copyrights Attributable to the Business.
No other inventions, processes, computer programs, know-how, formulae, trade
secrets, patents, chip designs, mask works, trademarks, tradenames, brand names,
copyrights, licenses or applications for any of the foregoing are necessary to
conduct the Business in all material respects in the same manner as the Business
has been conducted prior to the Closing Date.
3.20. ADVISORY AND LEGAL FEES. Except for the legal counsel retained
by the Seller in connection with this Agreement, the financial advisors
providing the fairness
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opinion, and Bear, Stearns (if any fees or expenses are owed), whose fees and
expenses will be paid by the Seller, there is no other investment banker,
broker, finder, counsel or other intermediary or advisor which has been retained
by or is authorized to act on behalf of the Seller or any of its Affiliates who
might be entitled to any fee, commission or reimbursement of expenses from the
Buyer or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.
3.21. ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth in Section 3.21(a) of the Disclosure Schedule,
the Seller has obtained all approvals, authorizations, certificates, consents,
licenses, orders and permits or other similar authorizations of all Governmental
Authorities, or from any other Person, which are required under any
Environmental Law and that are Attributable to the Business or relate to the
Purchased Assets. Section 3.21(a) of the Disclosure Schedule sets forth (i) all
permits, licenses and other authorizations issued under any Environmental Law to
the Seller that are Attributable to the Business or relate to the Purchased
Assets, and (ii) a description and good faith estimate by the Seller of the
costs of all capital expenditures through September 22, 1997 that, to the
knowledge of the Seller, are reasonably expected to be necessary to maintain or
continue to be qualified for each such permit, license or other authorization.
(b) Except as set forth in Section 3.21(b) of the Disclosure Schedule,
the Seller is in full compliance with all terms and conditions of all approvals,
authorizations, certificates, consents, licenses, orders and permits or other
similar authorizations of all Governmental Authorities (and all other Persons)
required under all Environmental Laws and that are Attributable to the Business
or that relate to the Purchased Assets or any, and is also in full compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables required or imposed under
all Environmental Laws.
(c) Except as set forth in Section 3.21(c) of the Disclosure Schedule,
there is no pending or, to the Seller's knowledge, threatened, Proceeding,
citation or notice of violation under any Environmental Law relating to the
Business or any of the Purchased Assets.
(d) Except as set forth in Sections 3.21(a) through (c) of the
Disclosure Schedule, with respect to the Business and the Purchased Assets,
there are no past or present events, conditions, circumstances, activities,
practices, incidents, actions, omissions or plans which may interfere with or
prevent continued compliance with any Environmental Law or with any approvals,
authorizations, certificates, consents, licenses, order, permits or other
similar authorizations, or which may give rise to any Environmental Liability,
or
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otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (1) under any Environmental Law, (2) based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release of any Hazardous Substance, or (3) resulting from exposure to
workplace hazards.
(e) Except as set forth in Section 3.21(e) of the Disclosure Schedule,
the Seller is not required to make any capital or other expenditures to comply
with any Environmental Law nor, to the Seller's knowledge, is there any
reasonable basis on which any Governmental Authority could take any action that
would require any such capital expenditures with respect to the Business or the
Purchased Assets.
3.22. GOVERNMENT-FURNISHED PROPERTY OR EQUIPMENT. Section 3.22 of the
Disclosure Schedule identifies by description or inventory number all personal
property, equipment and fixtures loaned, bailed or otherwise furnished to the
Seller by or on behalf of any Governmental Authority that (i) is Attributable to
the Business, and (ii) are or should be in the possession of the Seller
("Government-Furnished Items"). Section 3.22 of the Disclosure Schedule
identifies each Government Contract to which each such item of personal
property, equipment or fixture relates. The Seller has complied with all of its
obligations relating to the Government-Furnished Items, and upon the return
thereof to the applicable Governmental Authority in the condition thereof on the
date hereof, would have no Liability to that Governmental Authority with respect
thereto.
3.23. [INTENTIONALLY OMITTED]
3.24. APPLICATION OF RECEIPTS. The Seller has applied (i) the
proceeds of any borrowings under the Previous Credit Agreement in accordance
with the application of proceeds provision of the Indemnification and
Reimbursement Agreement and has not applied such proceeds to any other cost,
expense or liability of any nature whatsoever, and (ii) the proceeds of any
receivables from the assets constituting Collateral (as defined in the
Indemnification and Reimbursement Agreement) in accordance with the application
of proceeds provision of the Indemnification and Reimbursement Agreement. The
Seller has used the proceeds of each loan made under the Previous Metra Banks
Revolving Credit Agreement solely for the purpose set forth in the schedule
attached to any applicable Notice of Borrowing (as defined in the Metra Banks
Revolving Credit Agreement) and to fund the Seller's performance of its
obligations under the Metra Contract.
3.25. [INTENTIONALLY OMITTED]
3.26. INSURANCE. Section 3.26 of the Disclosure Schedule sets forth
a complete and correct list of all insurance policies of any kind or nature
whatsoever currently in force
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with the Seller that are Attributable to the Business (the "Insurance
Policies"), including all "occurrence based" liability policies regardless of
the periods to which they relate. For each Insurance Policy, Section 3.26 of
the Disclosure Schedule indicates the type of coverage, the name of the
insureds, the insurer, the premium, the expiration date, the period to which it
relates, the deductibles and loss retention amounts and the amounts of coverage.
Section 3.26 of the Disclosure Schedule sets forth a general description of the
Seller's self-insurance practices relating to the Business or the Purchased
Assets. The policies of insurance described as currently in effect in such
section of the Disclosure Schedule are in full force and effect and are valid,
outstanding and enforceable, and all premiums due thereon have been paid in
full. Except as set forth in Section 3.26 of the Disclosure Schedule, no
"claims made" insurance policies will in any way be affected by or terminate or
lapse by reason of the transactions contemplated by this Agreement. The Seller
has complied in all material respects with the provisions of all such policies.
3.27. REPORTS. Except as set forth in Section 3.27 of the Disclosure
Schedule, to the knowledge of the Seller, with respect to the Business, all
reports, documents and notices required to be filed, maintained or furnished
with or to any Governmental Authority by the Seller have been so filed,
maintained or furnished. All such reports, documents and notices were complete
and correct in all material respects on the date filed (or were corrected in or
superseded by a subsequent filing such that no Liability exists with respect to
the original filing, maintenance or furnishing thereof) and are kept in the
public inspection files of the Business, to the extent required by Applicable
Law to be kept in such files.
3.28. GOVERNMENT CONTRACTS.
There are no Government Contracts other than the Transit Division
Contracts. Except as set forth in Section 3.14(a), 3.14(b) and 3.14(c) of the
Disclosure Schedule, there is no Bid which, if accepted, would result in a
Government Contract.
3.29. PRODUCT WARRANTIES. Section 3.29 of the Disclosure Schedule
sets forth copies of the written product warranties and guaranties extended by
the Seller, and there are no other product warranties or guaranties extended by
the Seller, currently in effect that are Attributable to the Business or relate
to any of the Purchased Assets. Except as set forth in Section 3.29 of the
Disclosure Schedule, there have not been any deviations from such warranties and
guaranties, and salesmen, employees and agents of the Seller are not authorized
to undertake obligations to any customer or other third parties in excess of
such written warranties or guaranties.
3.30. MATERIAL DISCLOSURES. No statement, representation or warranty
made by the Seller in this Agreement, in any exhibit hereto, the Disclosure
Schedule or any other
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schedule of Seller hereto contains any untrue statement of a material fact, or
fails to state a material fact necessary to make the statements of the Seller
contained herein or therein, in light of the circumstances in which they are
made, not misleading. Notwithstanding any other provision to the contrary in
this Agreement, the Seller makes no representations or warranties as to any
financial projections, estimates to complete contracts, contract loss
projections, reserves on financial statements or similar predictive information
contained in any exhibit hereto, the Disclosure Schedule or other schedule of
the Seller hereto.
3.31. AGREEMENT REGARDING REPRESENTATIONS AND WARRANTIES. Other than
the representations and warranties of the Seller set forth in Sections 3.01,
3.02, 3.03, 3.05, 3.09 (except to the extent specifically provided therein),
3.10, 3.11, 3.12, 3.21 (except to the extent specifically provided therein),
3.22, 3.24, 3.26 and 3.27 (except to the extent specifically provided therein),
the Buyer and the Seller agree that each and every other representation and
warranty set forth in Article III hereof is limited to the knowledge of the
Seller, whether or not specifically provided in such representation and
warranty.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller that:
4.01. ORGANIZATION AND EXISTENCE. The Buyer has been duly formed and
is validly existing and in good standing as a limited liability company under
the Delaware LLC Act and, under the Delaware LLC Act and the Amended and
Restated Limited Liability Company Agreement of the Buyer dated October 10, 1995
by and between AmerailOne Corporation, a Delaware corporation, and AmerailTwo
Corporation, a Delaware corporation (the "LLC Agreement"), has all the requisite
limited liability company power and authority to carry on its business as
proposed to be conducted by it and to own and hold its properties, all as
described in the LLC Agreement. Exhibit 4.01 includes true and complete copies
of the Certificate of Formation and LLC Agreement as currently in effect.
4.02. CORPORATE AUTHORIZATION. The execution, delivery and
performance by the Buyer of this Agreement and the consummation by the Buyer of
the transactions contemplated hereby are within the power and authority
conferred on the Buyer under its Certificate of Formation and LLC Agreement and
Applicable Law. This Agreement constitutes a legal, valid and binding agreement
of the Buyer, enforceable in accordance with its terms (i) except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors'
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rights generally, and (ii) subject to the limitations imposed by general
equitable principles (regardless whether such enforceability is considered in a
proceeding at law or in equity).
4.03. GOVERNMENTAL AUTHORIZATION.
(a) To the knowledge of the Buyer, the execution, delivery and
performance by the Buyer of this Agreement require no action by, consent or
approval of, or filing with, any Governmental Authority other than: (i) any
actions, consents, approvals or filings otherwise expressly referred to in this
Agreement or described in Schedule 4.03; and (ii) any actions, consents,
approvals or filings which if not obtained would not have a material adverse
effect.
(b) Except as set forth in Section 4.03(b) of the Disclosure
Schedule, to the Buyer's knowledge, there are no facts relating to the identity
or circumstances of the Buyer or any of its Affiliates that would prevent or
materially delay obtaining any of the authorizations referred to in Sections
3.04(a)(i), (ii) and (iii) or 4.03(a).
4.04. NON-CONTRAVENTION. The execution, delivery and performance by
the Buyer of this Agreement do not and will not (i) contravene or conflict with
the certificate of formation or limited liability company agreement of the
Buyer, (ii) to the knowledge of the Buyer, assuming compliance with the matters
referred to in Section 4.03, contravene or conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable to
the Buyer, (iii) constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Buyer or to a loss of any benefit to which the Buyer is entitled under any
provision of any agreement, contract or other instrument binding upon the Buyer
or any license, franchise, permit or other similar authorization held by the
Buyer, except in the case of clauses (ii) and (iii) for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that would not interfere with the Buyer's ability to consummate the transactions
contemplated hereby.
4.05. ADVISORY AND LEGAL FEES. To the knowledge of the Buyer, except
for legal counsel retained by the Buyer in connection with this Agreement and
the financial advisor providing the fairness opinion, whose fees are being paid
by the Seller, there is no investment banker, broker, finder, counsel or other
intermediary or advisor not affiliated with the Buyer which has been retained by
or is authorized to act on behalf of the Buyer who might be entitled to any fee,
commission or reimbursement of expenses from the Buyer or any of its Affiliates
upon consummation of the transactions contemplated by this Agreement.
4.06. LITIGATION. To the knowledge of the Buyer, there is no action,
suit,
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investigation or proceeding pending against, or to the knowledge of the Buyer
threatened against or affecting, the Buyer before any court or arbitrator or any
governmental body, agency or official which in any matter challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated hereby.
4.07. OWNERSHIP OF THE BUYER. To the knowledge of the Buyer, (i)
AmerailOne Corporation, a Delaware corporation, and AmerailTwo Corporation, a
Delaware corporation, each own one-half of the Class A limited liability company
interests of the Buyer ("Class A Interests"); (ii) Amerail Holdings Company owns
each issued and outstanding share of AmerailOne Corporation and AmerailTwo
Corporation; (iii) one-third of the issued and outstanding shares of Amerail
Holdings Company are held by each of Broad Street Holdings, Inc., Broad Street
Contract Services, Inc. and Acacia Holding, Inc.; (iv) the only assets of
Amerail Holdings Company are the shares of AmerailOne Corporation and AmerailTwo
Corporation; (v) the only assets of AmerailOne Corporation are one-half of the
Class A Interests; (vi) the only assets of AmerailTwo Corporation are one-half
of the Class A Interests; (vii) William Ylvisaker, Dennis J. Kupchik and Arthur
J. Halleran, Jr., each own one third of the Class B Limited Liability Company
Interests of the Buyer (the "Class B Interests"); (viii) the Class A Interests
and the Class B Interests constitute all of the equity interests in the Buyer;
and (ix) the only assets of the Buyer are Thirty Thousand Dollars ($30,000).
4.08. MATERIAL DISCLOSURES. To the knowledge of the Buyer, no
statement, representation or warranty made by the Buyer in this Agreement or in
any exhibit or schedule of the Buyer hereto contains any untrue statement of
material fact, or fails to state a material fact necessary to make the
statements of the Buyer contained herein or therein, in light of the
circumstances in which they are made, not misleading.
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees that:
5.01. COMPLIANCE WITH TERMS OF REQUIRED GOVERNMENTAL APPROVALS AND
REQUIRED CONTRACTUAL CONSENTS. On and after the Closing Date, the Seller shall,
and shall cause its Affiliates to, comply at their respective expense with all
conditions and
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requirements set forth in: (i) all Required Governmental Approvals to the extent
necessary such that all such Required Governmental Approvals will remain in full
force and effect assuming continued compliance with the terms thereof by the
Buyer and its Affiliates; and (ii) all Required Contractual Consents to the
extent necessary such that all such Required Contractual Consents will remain
effective and enforceable against the Persons giving such Required Contractual
Consents assuming continued compliance with the terms thereof by the Buyer and
its Affiliates.
5.02. INSURANCE POLICIES. Seller shall include, to the extent
permitted by Applicable Laws, Buyer as an additional insured on the Insurance
Policies with respect to events occurring or claims relating to periods ending
prior to the Closing Date, and, with respect to any such "claims made" Insurance
Policies, will maintain such policies in effect for a period of three (3) years
from the Closing Date.
5.03. CHANGE OF LOCKBOX ACCOUNTS. Immediately after Closing, the
Seller shall take such steps as the Buyer may reasonably request to cause the
Buyer and/or its designees to be substituted as the sole party having control
over any lockbox or similar bank account to which customers of the Seller
directly make payments related to the Business.
5.04. DELIVERY OF DISCLOSURE SCHEDULE. On or before the execution of
this Agreement, the Seller shall deliver to the Buyer the Disclosure Schedule.
5.05. ACCESS TO BOOKS AND RECORDS. The Seller agrees that on and
after the Closing, during normal business hours or at such other times as the
Buyer may reasonably request, it will permit the Buyer and Buyer's Affiliates
and their auditors, through their authorized representative, to have reasonable
access to and examine and take copies of all books and records of the Seller and
its Affiliates relating to the Business or the Purchased Assets which are not
delivered to the Buyer hereunder (including correspondence, memoranda, books of
account and similar documents) where there is a legitimate purpose and relating
to events or transactions occurring prior to or after the date of this
Agreement.
5.06. TAX RETURNS. The Seller shall prepare and timely file all
material required Federal, state, local and foreign tax returns and amendments.
5.07. REAL PROPERTY LEASES. The Seller shall pay to the applicable
landlords all amounts accruing, arising or occurring under the Real Property
Leases prior to July 1, 1995.
ARTICLE VI
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OTHER COVENANTS
The parties hereto agree that:
6.01. FURTHER ASSURANCES. Subject to the terms and conditions of
this Agreement, each party shall take, or cause to be taken, all actions and to
do, or cause to be done, all things necessary or desirable under Applicable Law
to consummate the transactions contemplated by this Agreement. The Seller and
the Buyer agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be
reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
6.02. CERTAIN FILINGS. The Seller and the Buyer shall cooperate with
one another in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required or reasonably appropriate, or any
action, consent, approval or waiver from any party to any Contract is required
or reasonably appropriate, in connection with the consummation of the
transactions contemplated by this Agreement. Subject to the terms and
conditions of this Agreement, in taking such actions or making any such filings,
the Seller and the Buyer shall furnish information required in connection
therewith and seek timely to obtain any such actions, consents, approvals or
waivers.
6.03. ADMINISTRATION OF ACCOUNTS. All payments and reimbursements
made in the ordinary course by any third party in the name of or to the Seller
or any Affiliate thereof Attributable to the Business or in connection with or
arising out of the Purchased Assets after the Closing Date shall be held by the
Seller in trust for the benefit of the Buyer and, immediately upon receipt by
the Seller of any such payment or reimbursements, the Seller shall pay over to
the Buyer the amount of such payment or reimbursement without right of set off.
6.04. ACCESS TO BUYER'S BOOKS, RECORDS AND EMPLOYEES. The Buyer
agrees that on and after the Closing, during normal business hours or at such
other times as the Seller may reasonably request, it will permit the Seller and
Seller's Affiliates and their auditors and legal advisors, through their
authorized representatives, to have reasonable access to and examine and take
copies of all books, records and employees of the Buyer and its Affiliates
relating to the Business or the Purchased Assets (including correspondence,
memoranda, books of account and similar documents) where there is a legitimate
purpose (including litigation matters) and relating to events or transactions
occurring prior to or after the date of this Agreement. The Buyer further
agrees to provide the Seller with any and all reporting materials supplied to
Credit Suisse under the Credit Agreement between the Buyer and Credit Suisse
dated as of the date hereof or to the Bank of America National
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Trust and Savings Association as agent under the New Metra Banks Revolving
Credit Agreement, under such agreement, and to the Bonding Company under the
Bond Documents at or about the same time such reporting materials are provided
to such financial institutions and the Bonding Company.
6.05. GUARANTEE. Each of the MK Affiliates hereby agrees to cause
the Seller to perform its obligations and agreements hereunder. The MK
Affiliates each hereby unconditionally guaranties to the Buyer the full and
timely performance of all obligations and agreements of the Seller hereunder.
These guarantees shall include the guarantee of payment of all Damages as a
result of the nonperformance of any of the obligations or agreements so
guaranteed or as a result of the nonperformance of this guarantee. The Buyer,
at its option, may proceed against any of the MK Affiliates for the performance
of any such obligation or agreement, or for Damages for the default in the
performance thereof, without first proceeding against any other party or against
any of their respective properties. The MK Affiliates each agree that its
guarantee shall be an irrevocable guarantee and shall continue in effect
notwithstanding any extension or modification of any guaranteed obligation, any
assumption of any such guaranteed obligation by any other party, or any other
act or thing which might otherwise operate as a legal or equitable discharge of
a guarantor and the MK Affiliates each waives all special suretyship defenses
and notice requirements.
6.06. ELIMINATION OF LETTER OF CREDIT. From and after the date on
which the Seller obtains the consent of the New York City Transit Authority to
the assignment of the R46 Transit Division Contract and assigns such R46 Transit
Division Contract to the Buyer, the Buyer shall use its best efforts to cause
the New York City Transit Authority to issue as soon as possible any and all
reduction and termination certificates with respect to the letter of credit
issued by Citibank with respect to the R46 Transit Division Contract.
6.07. BULK SALES LAWS. The Buyer (subject to its rights to
indemnification under Section 9.01(e) hereof) and the Seller each waives
compliance with any applicable bulk sales or similar laws (including Tax laws
relating to sales in bulk). The Seller further agrees to execute and deliver at
the Closing the Bulk Sales Pledge and Security Agreement (Equipment Assets)
pursuant to which the Seller shall grant the Buyer a security interest in
certain of its assets for a period of six (6) months to secure its
indemnification obligation under Section 9.01(e). Nothing in this section shall
estop or prevent the Seller or the Buyer from asserting as a bar or defense to
any action or proceeding brought under any such applicable laws that it does not
apply to the transaction being consummated under this Agreement.
6.08. NOTICES TO VENDORS. The Buyer shall cooperate with the Seller
to prepare and deliver notices to creditors of the Seller with respect to the
Business notifying
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the creditors of the consummation of the transaction contemplated by this
Agreement, identifying the Buyer as the party to which the relevant Contract
and/or Buyer Obligation has been assigned, making arrangements for the Seller to
be released from liability to such creditor for such Buyer Obligations, advising
the creditor that all future transactions will be with the Buyer and that the
Seller shall have no liability therefor. Notwithstanding anything else to the
contrary set forth herein, the Seller shall have no liability to the Buyer for
any Damages arising from any creditor of the Seller refusing to extend credit to
the Buyer, any creditor demanding adequate assurance of future performance from
the Seller with respect to any Contract or otherwise any contracting party to a
Restricted Contract refusing to provide the benefit of the bargain of such
Restricted Contract to the Buyer.
6.09. COVENANT TO REIMBURSE. If, after the Closing, the Buyer makes
any disbursements with respect to any of the Seller's Liabilities, other than
(i) the Buyer Obligations or (ii) Seller Liabilities that the Buyer actually
knew at the time it made such disbursement were not Buyer Obligations, the
Seller shall promptly reimburse the Buyer for the aggregate amount of all such
disbursements.
ARTICLE VII
TAX MATTERS
7.01. TAX DEFINITIONS. The following terms, as used herein, have the
following meanings:
"Code" means the Internal Revenue Code of 1986, as amended.
"Tax" means all taxes imposed of any nature including federal, state,
local or foreign net income tax, alternative or add-on minimum tax, profits or
excess profits tax, franchise tax, gross income, adjusted gross income or gross
receipt tax, employment related tax (including employee withholding or employer
payroll tax, FICA or FUTA), real or personal property tax or ad valorem tax,
sales or use tax, excise tax, stamp tax or duty, any withholding or back up
withholding tax, value added tax, severance tax, prohibited transaction tax,
premiums tax, occupation tax, together with any interest or any penalty,
addition to tax or additional amount imposed with respect to any of the
foregoing by any governmental authority (domestic or foreign) responsible for
the imposition of any such tax.
"Tax Return" shall mean all returns, reports, forms or other
information required to be filed with respect to any Tax.
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"Seller Group" means, with respect to the Seller, the group of
affiliated entities that are required to file consolidated, combined, unitary,
or other group Tax Returns together with the Seller under the applicable
federal, state, local, foreign or other Tax laws.
7.02. TAX MATTERS. The Seller hereby represents and warrants to the
Buyer that (a) except for accrued and unpaid real and personal property and
employment related Taxes governed by Section 7.04, the Seller or its Affiliates
have timely filed or will timely file all Tax Returns required to be filed by
the Seller Group or any member thereof, and have timely paid or will timely pay
all Taxes owed by members of the Seller Group including all Taxes (i) with
respect to all taxable periods of the Seller Group ending on or before the
Closing Date or (ii) with respect to the assets, operations or business of the
Seller Group during all periods up to and including the Closing Date whether or
not such periods are taxable periods, (b) the reserves for taxes reflected in
the financial statements described in Section 3.06(a) of the Disclosure Schedule
are adequate, (c) there are no tax liens upon any of the Purchased Assets except
liens for current taxes not yet due or, with respect to California, due but not
past due, (d) the federal income tax returns of the Seller have been examined by
the Internal Revenue Service for all periods to and including those set forth in
Section 7.02 of the Disclosure Schedule and, except to the extent shown therein,
all deficiencies asserted as a result of such examinations have been paid or
finally settled and no issue has been raised by the Internal Revenue Service and
brought to the attention of the Seller in any such examination which, by
application of the same or similar principles, reasonably could be expected to
result in a proposed deficiency for any other period not so examined, (e) except
to the extent set forth in Section 7.02 of the Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal income tax return of the Seller for any period, and
(f) neither Seller nor any of its Affiliates has transferred, or will transfer,
on or before the Closing Date, to the Buyer or its Affiliates the stock of any
corporation in an amount which would create a qualified stock purchase within
the meaning of Section 338 of the Code, and if such a transfer takes place, or
has taken place, it shall be null and void and such stock and the consideration
paid therefor shall be returned.
7.03. TAX COOPERATION. The Buyer and the Seller agree to retain
until the expiration of any applicable Tax statute of limitations or extension
thereof, and furnish or cause to be furnished to each other, upon request, as
promptly as practicable, such working papers and information relating to the
Purchased Assets and the Business and to provide such assistance as is
reasonably necessary for the preparation and filing of all Tax Returns, the
making of any election related to Taxes, the preparation for any audit by any
taxing authority, and the prosecution or defense of any claim, suit or
proceeding relating to any Tax Return. The Seller and the Buyer shall cooperate
with each other in the conduct of any audit or other proceeding related to Taxes
involving the Business and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent
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of this Section 7.03.
7.04. ALLOCATION OF CERTAIN TAXES.
(a) The Closing Statement of Net Assets To Be Sold will reflect all
accrued but unpaid real and personal property Taxes on all Purchased Assets,
through and including the Closing Date, using a ratable daily accrual method.
The Seller has furnished the Buyer an analysis of this amount itemized by
property, tax and taxing jurisdiction, at least three (3) days prior to the date
hereof.
(b) The Buyer agrees to timely pay all real and personal property
Taxes on all Purchased Assets the payment date for which is after the Closing
Date.
(c) Any transfer, documentary, sales, use or other Taxes assessed upon
or with respect to the transfer of the Purchased Assets to the Buyer and any
recording or filing fees with respect thereto shall be borne by the Seller.
(d) The Closing Statement of Net Assets To Be Sold will reflect all
accrued but not yet due or paid employment-related Tax liabilities of the Seller
(including employee withholding and employer portions of such Taxes) through and
including the Closing Date.
(e) The Buyer and the Seller agree that, pursuant to the "Alternative
Procedure" provided in Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753,
(i) the Seller and the Buyer shall report on a predecessor/successor basis as
set forth therein, (ii) the Seller shall be relieved from filing a form W-2 with
respect to any employee of the Seller who accepts employment with the Buyer, and
(iii) the Buyer shall undertake to file a W-2 for each such employee for the
year that includes the Closing Date (including the portion of such year that
such employee was employed by the Seller). The Seller agrees to provide the
Buyer with all payroll and employment related information with respect to each
employee of the Seller who accepts employment with the Buyer.
(f) The Buyer agrees to prepare for the Seller and, where permitted,
to file on such Seller's behalf, any federal, state or local employment-related
tax reports or information reports (including Internal Revenue Service Forms W-
2, W-3, 940, 941, 1042, l042S, 1096 and 1099) that the Seller may be required to
file following the Closing Date (but that were not due to be filed on or prior
to the Closing Date) with respect to any employment period on or before the
Closing Date.
ARTICLE VIII
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[INTENTIONALLY OMITTED]
ARTICLE IX
INDEMNIFICATION OF BUYER INDEMNITEES
FOLLOWING THE CLOSING
9.01. AGREEMENT TO INDEMNIFY. If the Closing occurs, the Buyer and
its Affiliates (collectively, the "Buyer Indemnitees") shall be indemnified and
held harmless to the extent set forth in this Article IX by the Seller in
respect of any and all Damages incurred by any Buyer Indemnitee as a result of
each of the following:
(a) any breach of any representation or warranty made by the Seller or any
of its Affiliates in this Agreement or in any certificate, exhibit hereto, the
Disclosure Schedule or other schedule of the Seller hereto;
(b) the breach or failure to perform by the Seller after the Closing Date
of any of the covenants, agreements or obligations of the Seller contained in
this Agreement or the Conveyance Documents, or in any exhibit or schedule,
hereto;
(c) any Liabilities of the Seller, other than the Buyer Obligations;
(d) any Environmental Liability of the Buyer or the Seller that arose out
of or results from either (i) the Business or any of the Purchased Assets on or
prior to the Closing Date, or (ii) the failure of the Seller to have obtained an
approval, authorization, certificate, consent, license, order, permit or other
similar authorization of any Governmental Authority or other Person required by
any Environmental Law;
(e) any claim asserted by any Person (other than claims with respect to
Liabilities expressly assumed by the Buyer under Section 2.03 hereof) against
the Buyer or any of the Purchased Assets arising directly or indirectly out of
any failure or alleged failure of the Seller to pay any amounts due creditors of
the Seller as of the Closing Date under any bulk sales or similar laws
(including Tax laws relating to sales in bulk); and
(f) all actions, suits, proceedings, demands, assessments, judgments, costs
and expenses incident to any of the foregoing.
9.02. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties made by the Seller in this Agreement or in any
exhibit hereto, the Disclosure Schedule or other schedule hereto, shall survive
the Closing for a period of two years. Notwithstanding any investigation or
audit conducted before or after the Closing Date or the decision of any party to
complete the Closing, each party shall be entitled to rely upon the
representations and warranties set forth herein and therein. Any
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claim for indemnification pursuant to Section 9.02(a) made prior to the end of
the survival period shall continue to be subject to indemnification in
accordance with this Agreement. All covenants of the Seller contained in this
Agreement or in any exhibit or schedule hereto shall survive the Closing.
9.03. CLAIMS FOR INDEMNIFICATION. If any Buyer Indemnitee shall
believe that such Buyer Indemnitee is entitled to indemnification pursuant to
this Article IX in respect of any Damages, such Buyer Indemnitee shall give the
Seller prompt written notice thereof. Any such notice shall set forth in
reasonable detail and to the extent then known the basis for such claim for
indemnification. The failure of such Buyer Indemnitee to give notice of any
claim for indemnification promptly shall not adversely affect such Buyer
Indemnitee's right to indemnity hereunder except to the extent that such failure
adversely affects the right of the Seller to assert any reasonable defense to
such claim. The Seller shall have twenty (20) Business Days following its
receipt of such notice either (y) to acquiesce in such claim by giving such
Buyer Indemnitee written notice of such acquiescence or (z) to object to the
claim by giving such Buyer Indemnitee written notice of the objection. If the
Seller acquiesces in such claim or the Seller does object thereto within such
twenty (20) Business Day period, such Buyer Indemnitee shall be entitled to be
indemnified for all Damages incurred by such Buyer Indemnitee in respect of such
claim. If the Seller timely objects to such claim and such Buyer Indemnitee and
the Seller is unable to resolve their dispute within ten (10) Business Days
following such objection (or such additional period of time as may be mutually
agreed to by Buyer Indemnitee and the Seller), the claim shall be submitted
immediately to arbitration pursuant to Section 9.04.
9.04. ARBITRATION OF DISPUTES RELATING TO INDEMNIFICATION.
(a) Any dispute between any Buyer Indemnitee and the Seller under this
Article IX shall be resolved by one arbitrator in accordance with the procedures
set forth in this Section 9.04. Within ten (10) Business Days after expiration
of the ten (10) Business Day period referred to in Section 9.03, each of (y) the
Seller and (z) the relevant Buyer Indemnitee(s) shall designate a mutually
acceptable arbitrator who is, in any such case, not affiliated with any party in
interest to such arbitration and who has substantial professional experience
with regard to corporate legal matters. If the Seller and the relevant Buyer
Indemnitee(s) fail to agree upon such arbitrator within such ten (10) Business
Day period, the arbitrator shall be appointed by the American Arbitration
Association as soon as practicable, and shall be, in any such case, a person who
is not affiliated with any party in interest to such arbitration and who has
substantial professional experience with regard to corporate legal matters.
(b) The arbitrator shall consider the dispute at issue at Washington,
D.C. at a mutually agreed upon time and place within thirty (30) (or such longer
period as may be
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acceptable to such Buyer Indemnitee(s) and the Seller) days of the designation
of the arbitrator. The arbitration proceeding shall be held in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes in effect on the date of the initial request by the relevant
Buyer Indemnitee or the Seller, as the case may be, that gave rise to the
dispute to be arbitrated (as such rules are modified by the terms of this
Agreement or may be further modified by mutual agreement of the relevant Buyer
Indemnitee(s) and the Seller) and shall include an opportunity for the parties
to conduct discovery in advance of the proceeding. Notwithstanding the
foregoing, the relevant Buyer Indemnitee(s) and the Seller agree that they will
attempt, and they intend that they and the arbitrator should use their best
efforts in that attempt, to conclude the arbitration proceeding and have a final
decision from the arbitrator within ninety (90) days (or such longer period as
may be mutually acceptable to such Buyer Indemnitee(s) and the Seller) from the
date of selection of the arbitrator; provided, however, that the arbitrator
shall be entitled to extend such 90-day period one or more times to the extent
necessary for such arbitrator to place a dollar value on any claim that may be
unliquidated. The arbitrator shall immediately deliver his or her written
decision with respect to the dispute to each of the parties, who shall promptly
act in accordance therewith. Each Buyer Indemnitee and the Seller agree that
any decision of the arbitrator shall be final, conclusive and binding and that
they will not contest any action by any other party thereto in accordance with a
decision of the arbitrator. It is specifically understood and agreed that any
party may enforce any award rendered pursuant to the arbitration provisions of
this Section 9.04 by bringing suit in any court of competent jurisdiction.
(c) All fees, costs and expenses (including attorneys' fees and
expenses) incurred by the party that prevails in any such arbitration commenced
pursuant to this Section 9.04 or any judicial action or proceeding seeking to
enforce the agreement to arbitrate disputes as set forth in this Section 9.04 or
seeking to enforce any order or award of any arbitration commenced pursuant to
this Section 9.04 may be assessed against the party or parties that do not
prevail in such arbitration in such manner as the arbitrator or the court in
such judicial action, as the case may be, may determine to be appropriate under
the circumstances. All costs and expenses attributable to the arbitrator shall
be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
9.05. DEFENSE BY THE SELLER OF CLAIMS. In connection with any claim
which may give rise to indemnity under this Article IX resulting from or arising
out of any claim or Proceeding against a Buyer Indemnitee by a Person that is
not a party hereto, the Seller may (unless such Buyer Indemnitee elects not to
seek indemnity hereunder for such claim), upon written notice to the relevant
Buyer Indemnitee, assume the defense of any such claim or Proceeding if the
Seller acknowledges to the relevant Buyer Indemnitee its right to indemnity
pursuant hereto in respect of the entirety of such claim (as such claim may have
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been modified through written agreement of the parties or arbitration hereunder)
and provides assurances, reasonably satisfactory to such Buyer Indemnitee, that
the Seller will be financially able to satisfy such claim in full if such claim
or Proceeding is decided adversely. If the Seller assume the defense of any
such claim or Proceeding, the Seller shall select counsel reasonably acceptable
to such Buyer Indemnitee to conduct the defense of such claim or Proceeding,
shall take all steps necessary in the defense or settlement thereof and shall at
all times diligently and promptly pursue the resolution thereof. If the Seller
shall have assumed the defense of any claim or Proceeding in accordance with
this Section 9.05, the Seller shall be authorized to consent to a settlement of,
or the entry of any judgment arising from, any such claim or Proceeding, without
the prior written consent of such Buyer Indemnitee; provided, however, that the
Seller shall pay or cause to be paid all amounts arising out of such settlement
or judgment concurrently with the effectiveness thereof; provided, further, that
the Seller shall not be authorized to encumber any of the assets of any Buyer
Indemnitee or to agree to any restriction that would apply to any Buyer
Indemnitee or to its conduct of business; and provided, further, that a
condition to any such settlement shall be a complete release of such Buyer
Indemnitee with respect to such claim. Such Buyer Indemnitee shall be entitled
to participate in (but not control) the defense of any such action, with its own
counsel and at its own expense. Each Buyer Indemnitee shall, and shall cause
each of its Affiliates, officers, employees, consultants and agents to,
cooperate fully with the Seller in the defense of any claim or Proceeding being
defended by the Seller pursuant to this Section 9.05. If the Seller does assume
the defense of any claim or Proceeding resulting therefrom in accordance with
the terms of this Section 9.05, such Buyer Indemnitee may defend against such
claim or Proceeding in such manner as it may deem appropriate, including
settling such claim or Proceeding after giving notice of the same to the Seller,
on such terms as such Buyer Indemnitee may deem reasonably appropriate. If the
Seller seeks to question the manner in which such Buyer Indemnitee defended such
claim or Proceeding or the amount of or nature of any such settlement, the
Seller shall have the burden to prove by a preponderance of the evidence that
such Buyer Indemnitee did not defend such claim or Proceeding in a reasonably
prudent manner.
ARTICLE X
INDEMNIFICATION OF SELLER INDEMNITEES
FOLLOWING THE CLOSING
10.01. AGREEMENT TO INDEMNIFY. If the Closing shall occur, the
Seller and each of the MK Affiliates (collectively, the "Seller Indemnitees")
shall be indemnified and held harmless to the extent set forth in this Article X
by the Buyer in respect of any and all Damages incurred by any Seller Indemnitee
as a result of each of the following:
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(a) breach of any representation or warranty made by the Buyer in
this Agreement or in any exhibit or schedule of the Buyer hereto;
(b) the breach or failure to perform by the Buyer after the Closing
Date of any of the covenants, agreements or obligations of the Buyer contained
in this Agreement or the Conveyance Documents, or in any exhibit or schedule,
hereto;
(c) any Buyer Obligations;
(d) any Environmental Liability of the Buyer or the Seller that
arises out of or results from the Business or any of the Purchased Assets from
and after the Closing Date, other than any Environmental Liability that arises
out of or results from the failure of the Seller to have obtained an approval,
authorization, certificate, consent, license, order, permit or other similar
authorization of any Governmental Authority or other Person required by any
Environmental Law;
(e) any Liability that arises out of or results from the Business or
any of the Purchased Assets from and after the Closing Date; and
(f) all actions, suits, proceedings, demands, assessments, judgments,
costs and expenses incident to the foregoing.
10.02. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties made by the Buyer in this Agreement or in any
exhibit or schedule hereto shall survive the Closing for a period of two years.
Notwithstanding any investigation or audit conducted before or after the Closing
Date or the decision of any party to complete the Closing, each party shall be
entitled to rely upon the representations and warranties set forth herein and
therein. Any claim for indemnification pursuant to Section 10.01(a) made prior
to the end of the survival period shall continue to be subject to
indemnification in accordance with this Agreement. All covenants of the Buyer
contained in this Agreement or in any exhibit or schedule hereto shall survive
the Closing.
10.03. CLAIMS FOR INDEMNIFICATION. If any Seller Indemnitee shall
believe that such Seller Indemnitee is entitled to indemnification pursuant to
this Article X in respect of any Damages, such Seller Indemnitee shall give the
Buyer prompt written notice thereof. Any such notice shall set forth in
reasonable detail and to the extent then known the basis for such claim for
indemnification. The failure of such Seller Indemnitee to give notice of any
claim for indemnification promptly shall not adversely affect such Seller
Indemnitee's right to indemnity hereunder except to the extent that such failure
adversely affects the right of the Buyer to assert any reasonable defense to
such claim. The Buyer shall have twenty (20) Business Days following its
receipt of such notice either (y) to acquiesce in such claim by giving such
Seller Indemnitee written notice of such acquiescence or (z) to object to the
claim by giving such Seller Indemnitee written notice of the objection. If the
Buyer acquiesces in such claim or does not object thereto within such twenty
(20) Business Day period, such Seller Indemnitee shall be entitled to be
indemnified for all Damages incurred by such Seller Indemnitee in respect of
such claim. If the Buyer timely objects to such claim
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and such Seller Indemnitee and the Buyer are unable to resolve their dispute
within ten (10) Business Days following such objection (or such additional
period of time as may be mutually agreed to by such Seller Indemnitee and the
Buyer), the claim shall be submitted immediately to arbitration pursuant to
Section 10.04.
10.04. ARBITRATION OF DISPUTES RELATING TO INDEMNIFICATION.
(a) Any dispute between any Seller Indemnitee and the Buyer under this
Article X shall be resolved by one arbitrator in accordance with the procedures
set forth in this Section 10.04. Within ten (10) Business Days after expiration
of the ten (10) Business Day period referred to in Section l0.03, each of (y)
the relevant Seller Indemnitee(s) and (z) the Buyer shall designate a mutually
acceptable arbitrator who is, in any such case, not affiliated with any party in
interest to such arbitration and who has substantial professional experience
with regard to corporate legal matters. If the Buyer and the relevant Seller
Indemnitee(s) fail to agree upon such arbitrator within such ten (10) Business
Day period, the arbitrator shall be appointed by the American Arbitration
Association as soon as practicable and shall be, in any such case, a person who
is not affiliated with any party in interest to such arbitration and who has
substantial professional experience with regard to corporate legal matters.
(b) The arbitrator shall consider the dispute at issue at a mutually
agreed upon time and place within thirty (30) (or such longer period as may be
acceptable to such Seller Indemnitee(s) and the Buyer) days of the designation
of the arbitrator. The arbitration proceeding shall be held in accordance with
the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes in effect on the date of the initial request by the relevant
Seller Indemnitee(s) or the Buyer, as the case may be, that gave rise to the
dispute to be arbitrated (as such rules are modified by the terms of this
Agreement or may be further modified by mutual agreement of the relevant Seller
Indemnitee(s) and the Buyer) and shall include an opportunity for the parties to
conduct discovery in advance of the proceeding. Notwithstanding the foregoing,
the relevant Seller Indemnitee(s) and the Buyer agree that they will attempt,
and they intend that they and the arbitrator should use their best efforts in
that attempt, to conclude the arbitration proceeding and have a final decision
from the arbitrator within ninety (90) days (or such longer period as may be
mutually acceptable to such Seller Indemnitee(s) and the Buyer) from the date of
selection of the arbitrator; provided, however, that the arbitrator shall be
entitled to extend such 90-day period one or more times to the extent necessary
for such arbitrator to place a dollar value on any claim that may be
unliquidated. The arbitrator shall immediately deliver his or her written
decision with respect to the dispute to each of the parties, who shall promptly
act in accordance therewith. Each Seller Indemnitee and the Buyer agree that
any decision of the arbitrator shall be final, conclusive and binding and that
they will not contest any action by the other party in accordance with a
decision of the
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arbitrator. It is specifically understood and agreed that any party may enforce
any award rendered pursuant to the arbitration provisions of this Section 10.04
by bringing suit in any court of competent jurisdiction.
(c) All fees, costs and expenses (including attorneys' fees and
expenses) incurred by the party that prevails in any such arbitration commenced
pursuant to this Section 10.04 or any judicial action or proceeding seeking to
enforce the agreement to arbitrate disputes as set forth in this Section 10.04
or seeking to enforce any order or award of any arbitration commenced pursuant
to this Section 10.04 may be assessed against the party or parties that do not
prevail in such arbitration in such manner as the arbitrator or the court in
such judicial action, as the case may be, may determine to be appropriate under
the circumstances. All costs and expenses attributable to the arbitrator shall
be allocated among the parties to the arbitration in such manner as the
arbitrator shall determine to be appropriate under the circumstances.
10.05. DEFENSE BY THE BUYER OF CLAIMS. In connection with any claim
which may give rise to indemnity under this Article X resulting from or arising
out of any claim or Proceeding against a Seller Indemnitee by a Person that is
not a party hereto, the Buyer may (unless such Seller Indemnitee elects not to
seek indemnity hereunder for such claim), upon written notice to the relevant
Seller Indemnitee, assume the defense of any such claim or Proceeding if the
Buyer acknowledges to the relevant Seller Indemnitee the right of such Seller
Indemnitee to indemnity pursuant hereto in respect of the entirety of such claim
(as such claim may have been modified through written agreement of the parties
or arbitration hereunder) and provides assurances, reasonably satisfactory to
such Seller Indemnitee, that the Buyer will be financially able to satisfy such
claim in full if such claim or Proceeding is decided adversely. If the Buyer
assumes the defense of any such claim or Proceeding, the Buyer shall select
counsel reasonably acceptable to such Seller Indemnitee to conduct the defense
of such claim or Proceeding, shall take all steps necessary in the defense or
settlement thereof and shall at all times diligently and promptly pursue the
resolution thereof. If the Buyer shall have assumed the defense of any claim or
Proceeding in accordance with this Section 10.05, the Buyer shall be authorized
to consent to a settlement of, or the entry of any judgment arising from, any
such claim or Proceeding, without the prior written consent of such Seller
Indemnitee; PROVIDED, HOWEVER, that the Buyer shall pay or cause to be paid all
amounts arising out of such settlement or judgment concurrently with the
effectiveness thereof; PROVIDED, FURTHER that the Buyer shall not be authorized
to encumber any of the assets of any Seller Indemnitee or to agree to any
restriction that would apply to any Seller Indemnitee or to its conduct of
business; PROVIDED, FURTHER that a condition to any such settlement shall be a
complete release of such Seller Indemnitee with respect to such claim. Such
Seller Indemnitee shall be entitled to participate in (but not control) the
defense of any such action, with its own counsel and at its own expense. Each
Seller Indemnitee shall, and shall cause each of his, her or its Affiliates,
officers, employees,
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consultants and agents to, cooperate fully with the Buyer in the defense of any
claim or Proceeding being defended by the Buyer pursuant to this Section 10.05.
If the Buyer does not assume the defense of any such claim or Proceeding
resulting therefrom in accordance with the terms of this Section 10.05, such
Seller Indemnitee may defend against such claim or Proceeding in such manner as
such Seller Indemnitee may deem appropriate, including settling such claim or
Proceeding after giving notice of the same to the Buyer, on such terms as such
Seller Indemnitee may deem reasonably appropriate. If the Buyer seeks to
question the manner in which such Seller Indemnitee defended such claim or
Proceeding or the amount of or nature of any such settlement, the Buyer shall
have the burden to prove by a preponderance of the evidence that such Seller
Indemnitee did not defend such claim or Proceeding in a reasonably prudent
manner.
10.06. POST-CLOSING OBLIGATIONS. Notwithstanding anything in this
Agreement to the contrary, it is expressly agreed that none of the Sureties or
the Banks have any obligations or liabilities under this Agreement.
ARTICLE XI
LIMITATIONS ON INDEMNIFICATION AND REMEDIES
11.01 LIMITATIONS ON INDEMNIFICATION UNDER SECTION 9.01(A) AND
SECTION 10.01(A).
(a) Except as provided in Section 11.01(b) hereof, notwithstanding any
other provision hereof or of any Applicable Law, with respect to all claims
under Section 9.01(a) or 10.01(a), (i) no Buyer Indemnitee or Seller Indemnitee
(collectively, "Indemnitee") will be entitled to make a claim against an
indemnifying party ("Indemnifying Party") under Section 9.01(a) or 10.01(a)
unless and until the aggregate amount of indemnifiable losses under Section
9.01(a) or 10.01(a), as the case may be ("Indemnifiable Losses"), exceeds
$4,000,000 in which event, such Indemnitee may assert its right to
indemnification under such Section to the extent of its Indemnifiable Losses
thereunder in excess of such amount; and (ii) the maximum aggregate amount that
all Indemnifying Parties shall be responsible for, for all Indemnifiable Losses
arising under Section 9.01(a) or 10.01(a), shall not exceed $10,000,000.
(b) Notwithstanding anything to the contrary in Section 11.01(a) or
any other part of this Agreement, there shall be no minimum or maximum
limitation on, and Section 11.01(a) shall not apply to, (i) any Indemnitee's
right under Section 9.01(a) or 10.01(a), or otherwise, to bring actions for
Damages resulting from an inaccurate representation or
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warranty made with scienter or (ii) any Buyer Indemnitee's rights with respect
to claims under Section 9.01(a) or 10.01(a) arising out of breach of any
representation or warranty contained in the second sentence of Section 3.09(a)
or contained in Sections 3.10, 3.12, 3.21 or 3.24.
11.02. EXCLUSIVE REMEDY FOR CERTAIN BREACHES OF REPRESENTATIONS AND
WARRANTIES. Notwithstanding any provision to the contrary contained in this
Agreement or in any other document, the parties hereto (on behalf of themselves,
and each of their Affiliates, associates and third party beneficiaries) hereby
agree that the remedies provided for in Article IX and Article X hereof shall be
the sole and exclusive remedy for any breach of any representation or warranty
made in this Agreement or in any certificate, exhibit or schedule hereto, not
resulting from an inaccurate representation or warranty made with scienter.
ARTICLE XII
MISCELLANEOUS
12.01. NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) if
personally delivered, when so delivered, (ii) if mailed, ten Business Days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid and addressed to the intended recipient as set forth below,
(iii) if given by telex or telecopier, once such notice or other communication
is transmitted to the telex or telecopier number specified below and the
appropriate answer back or telephonic confirmation is received, provided that
such notice or other communication is promptly thereafter mailed in accordance
with the provisions of clause (ii) above or (iv) if sent through an overnight
delivery service in circumstances to which such service guarantees next day
delivery, the day following being so sent:
IF TO THE BUYER TO:
American Passenger Rail Car Company, L.L.C.
900 East 103rd Street
Chicago, IL 60628
Attention: James C. Gerber
Telecopier: (312) 264-5218
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IF TO THE SELLER TO:
Morrison Knudsen Corporation
720 Park Boulevard
Boise, ID 83729
Attention: Stephen G. Hanks
Telecopier: (208) 386-5298
Copy to:
Jones, Day, Reavis & Pogue
77 West Wacker Drive
Chicago, IL 60601-1692
Attention: David S. Kurtz
Telecopier: (312) 782-8585
Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
12.02. AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Buyer and the Seller, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent occurrence. Except as expressly provided herein, no
failure or delay by a party in exercising any right, power or privilege
hereunder 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.
12.03. EXPENSES. Except as otherwise provided herein, all costs and
expenses
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incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
12.04. SUCCESSORS AND ASSIGNS. No party hereto may assign either
this Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of each other party, which approval shall not be
unreasonably withheld.
12.05. GOVERNING LAW. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, without regard to its conflict of laws doctrine.
Except as expressly provided in Sections 2.07, 9.04 and 10.04, any legal action
or proceeding with respect to this Agreement may be brought in the courts of the
District of Columbia or of the United States for the District of Columbia, and
by execution and delivery of this Agreement, the parties hereto each consents,
for itself and in respect of its property, to the jurisdiction of those courts.
The parties hereto each 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. The parties hereto each waives personal service of any summons,
complaint or other process, which may be made by any other means permitted by
District of Columbia law.
12.06. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
12.07. ENTIRE AGREEMENT. This Agreement (including the Disclosure
Schedule and Exhibits referred to herein which are hereby incorporated by
reference) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes and extinguishes all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement including the T-Co Term Sheet.
12.08. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent permitted by this
Agreement, their respective successors a and assigns. For so long as any
obligations remain outstanding under the Guaranty Documents or the Bond
Documents, the Sureties shall be express, intended third party beneficiaries of
this Agreement. Except as provided in the immediately preceding sentence,
neither this Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
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12.09. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof. All references to an Article or Section include all subparts thereof.
12.10. SEVERABILITY. If any provision of this Agreement, or the
application thereof to any Person, place or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places and circumstances shall remain in full force and effect only if, after
excluding the portion deemed to be unenforceable, the remaining terms shall
provide for the consummation of the transactions contemplated hereby in
substantially the same manner as originally set forth at the later of the date
this Agreement was executed or last amended.
12.11. CONSTRUCTION.
(a) Whenever required by the context, any gender shall include any
other gender, the singular shall include the plural and the plural shall include
the singular. The words "herein," "hereof," "hereunder," and words of similar
import refer to the Agreement as a whole and not to a particular section.
Whenever the word "including" is used in this Agreement, it shall be deemed to
mean "including, without limitation," "including, but not limited to" or other
words of similar import such that the items following the word "including" shall
be deemed to be a list by way of illustration only and shall not be deemed to be
an exhaustive list of applicable items in the context thereof. All references
in this Agreement to Seller shall include the predecessor thereof.
(b) The parties hereto intend that each representation, warranty, and
covenant contained herein shall have independent significance. If any party has
breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the party has not breached shall not detract from or mitigate
the fact that the party is in breach of the first representation, warranty or
covenant.
12.12. CUMULATIVE REMEDIES. Except as expressly provided in Section
11.02 hereof, the rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers on October 10, 1995.
THE BUYER:
AMERICAN PASSENGER RAIL CAR
COMPANY, L.L.C.
/s/ James C. Gerber
By:
----------------------
Name James C. Gerber
Title
THE SELLER:
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
BY:
----------------------
Name Stephen G. Hanks
Title Executive Vice President
MK DELAWARE:
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
BY:
----------------------
Name Stephen G. Hanks
Title Executive Vice President
MK AFFILIATES
NATIONAL PROJECTS, INC.
/s/ Stephen G. Hanks
By:
----------------------
Name Stephen G. Hanks
Title Senior Vice President
and Secretary
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MORRISON-KNUDSEN SERVICES, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Secretary
MORRISON-KNUDSEN FINANCIAL
COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Chairman, President and Secretary
ATASCOSA MINING CO.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Secretary
CENTENNIAL ENGINEERING, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Executive Vice President
CF SYSTEMS CORPORATION
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Secretary
CHEMICAL DEMILITARIZATION OF
ANNISTON COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Secretary
JOY MK PROJECTS COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Vice President and Secretary
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MK CAPITAL COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Vice President and Secretary
MK-FERGUSON ENGINEERING COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Assistant Secretary
MK-FERGUSON OF IDAHO COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Assistant Secretary
MK-FERGUSON OF OAK RIDGE COMPANY
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Assistant Secretary
MK INFRASTRUCTURE CORPORATION
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Secretary
MK TRAIN CONTROL, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Vice President and Secretary
NAVASOTA MINING COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Vice President and Secretary
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YAMPA MINING CO.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Secretary
MORRISON-KNUDSEN COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Chairman and President
MORRISON-KNUDSEN ENGINEERS, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Vice President and Secretary
MORRISON-KNUDSEN INTERNATIONAL
COMPANY, INC.
By: /s/ Stephen G. Hanks
----------------------------------
Name Stephen G. Hanks
Title Vice President and Secretary
63
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SCHEDULE 1
MK AFFILIATES
National Projects, Inc.
Morrison-Knudsen Services, Inc.
Morrison-Knudsen Financial Company, Inc.
Atascosa Mining Co.
Centennial Engineering, Inc.
CF Systems Corporation
Chemical Demilitarization of Anniston Company
Joy MK Projects Company
MK Capital Company
MK-Ferguson Engineering Company
MK-Ferguson of Idaho Company
MK-Ferguson of Oak Ridge Company
MK Infrastructure Corporation
MK Train Control, Inc.
Navasota Mining Company, Inc.
Yampa Mining Co.
Morrison-Knudsen Company, Inc.
Morrison-Knudsen Engineers, Inc.
Morrison-Knudsen International Company, Inc.
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SCHEDULES AND EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE SCHEDULES AND EXHIBITS HERETO.
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EXHIBIT 10.2
EXECUTION COPY
STOCK PURCHASE AGREEMENT
by and between
TUTOR-SALIBA CORPORATION
Purchaser
and
MORRISON KNUDSEN CORPORATION
(a Delaware corporation)
and
MORRISON KNUDSEN CORPORATION
(an Ohio corporation)
Sellers
September 21, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE
1.1 Transfer of Shares. . . . . . . . . . . . . . . . . . . . . . 2
1.2 Consideration . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Contemplated Transfer of Retained Assets and Related
Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Elimination of Intercompany Accounts. . . . . . . . . . . . . 4
ARTICLE II
CLOSING
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 Organization and Existence. . . . . . . . . . . . . . . . . . 4
3.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Authority and Approval. . . . . . . . . . . . . . . . . . . . 5
3.4 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Laws and Regulations; Litigation. . . . . . . . . . . . . . . 6
3.6 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 Financial Statements. . . . . . . . . . . . . . . . . . . . . 7
3.8 No Adverse Changes. . . . . . . . . . . . . . . . . . . . . . 7
3.9 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . 9
3.13 Fixed Assets. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.14 Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Contracts and Agreements; Adverse Restrictions. . . . . . . . 10
3.16 Title and Liens . . . . . . . . . . . . . . . . . . . . . . . 11
3.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.18 Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.19 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 12
3.20 Copies Complete . . . . . . . . . . . . . . . . . . . . . . . 17
3.21 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . 17
3.22 Accurate and Complete Records . . . . . . . . . . . . . . . . 17
3.23 Brokerage Arrangements. . . . . . . . . . . . . . . . . . . . 18
<PAGE>
3.24 Environmental Matters . . . . . . . . . . . . . . . . . . . . 18
3.25 Financial Condition . . . . . . . . . . . . . . . . . . . . . 21
3.26 No Misleading Statements. . . . . . . . . . . . . . . . . . . 21
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
4.1 Organization and Existence. . . . . . . . . . . . . . . . . . 21
4.2 Authority and Approval. . . . . . . . . . . . . . . . . . . . 21
4.3 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.4 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 Funds Available . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Brokerage Arrangements. . . . . . . . . . . . . . . . . . . . 23
4.7 No Misleading Statements. . . . . . . . . . . . . . . . . . . 23
ARTICLE V
ADDITIONAL AGREEMENTS,
COVENANTS, RIGHTS AND OBLIGATIONS
5.1 Certain Changes . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Operations. . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4 Antitrust Notification; Other Reporting Requirements. . . . . 26
5.5 Best Business Efforts . . . . . . . . . . . . . . . . . . . . 26
5.6 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 26
5.7 Additional Disclosures and Information. . . . . . . . . . . . 27
5.8 Disclosure of Breach. . . . . . . . . . . . . . . . . . . . . 27
5.9 Notice of Failure of Condition. . . . . . . . . . . . . . . . 27
5.10 Interference with Relationships . . . . . . . . . . . . . . . 27
5.11 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12 Limited Use of Leased Space . . . . . . . . . . . . . . . . . 28
5.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 28
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligation of the Purchaser . . . . . . . . 28
6.2 Conditions to the Obligation of the Sellers . . . . . . . . . 34
6.3 Other Mutually Acceptable Arrangements. . . . . . . . . . . . 36
ARTICLE VII
TAX MATTERS
7.1 Liability for Taxes . . . . . . . . . . . . . . . . . . . . . 36
7.2 Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.3 Tax Proceedings . . . . . . . . . . . . . . . . . . . . . . . 40
7.4 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . 40
7.5 Cooperation and Exchange of Information . . . . . . . . . . . 40
7.6 Survival of Obligations . . . . . . . . . . . . . . . . . . . 41
7.7 Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.8 Tax Allocation Arrangements . . . . . . . . . . . . . . . . . 41
7.9 Loss Carryovers . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 Status of Employees . . . . . . . . . . . . . . . . . . . . . 42
8.2 Certain Benefits of Employees . . . . . . . . . . . . . . . . 42
ARTICLE IX
INVESTIGATION; LIMITATIONS
9.1 Scope of the Purchaser's Investigations and Waiver. . . . . . 44
9.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE X
TERMINATION
10.1 Events of Termination . . . . . . . . . . . . . . . . . . . . 45
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification of the Sellers. . . . . . . . . . . . . . . . 46
11.2 Indemnification of the Purchaser. . . . . . . . . . . . . . . 47
11.3 Demands . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.4 Right to Contest and Defend . . . . . . . . . . . . . . . . . 48
11.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.6 Right to Participate. . . . . . . . . . . . . . . . . . . . . 49
11.7 Payment of Damages. . . . . . . . . . . . . . . . . . . . . . 49
11.8 Limitations on Indemnification. . . . . . . . . . . . . . . . 49
ARTICLE XII
MISCELLANEOUS
12.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.3 No Negotiations . . . . . . . . . . . . . . . . . . . . . . 51
12.4 Governing Law and Jurisdiction. . . . . . . . . . . . . . . 51
12.5 Public Statements . . . . . . . . . . . . . . . . . . . . . 51
12.6 Form of Payment . . . . . . . . . . . . . . . . . . . . . . 52
12.7 Entire Agreement; Amendments and Waivers. . . . . . . . . . 52
12.8 Binding Effect and Assignment . . . . . . . . . . . . . . . 52
12.9 Severability. . . . . . . . . . . . . . . . . . . . . . . . 52
12.10 Definition of "Material". . . . . . . . . . . . . . . . . . 53
12.11 Headings and Schedules. . . . . . . . . . . . . . . . . . . 53
12.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . 54
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LIST OF SCHEDULES
Schedule 1.3A - Contemplated Transfer of Assets and Related Matters -
List of Assets other than Retained Assets
Schedule 1.3B - Contemplated Transfer of Assets and Related Matters -
List of Liabilities other than Retained Liabilities
Schedule 1.3C - [Intentionally Omitted]
Schedule 1.3D - List of Schedule 1.3D Items
Schedule 3.1 - Organization and Existence
Schedule 3.2 - Capitalization
Schedule 3.4 - No Conflicts
Schedule 3.5 - Laws and Regulations; Litigation
Schedule 3.6 - No Default
Schedule 3.7 - Financial Statements
Schedule 3.8 - No Adverse Change
Schedule 3.9 - Liabilities
Schedule 3.10 - Taxes
Schedule 3.11 - Receivables
Schedule 3.12 - Intellectual Property
Schedule 3.13 - Fixed Assets
Schedule 3.14 - Other Assets
Schedule 3.15 - Contracts and Agreements
Schedule 3.16 - Encumbrances
Schedule 3.17 - Insurance
Schedule 3.18 - Personnel
Schedule 3.19 - Benefit Plans
Schedule 3.21 - Bank Accounts
Schedule 3.23 - Brokerage Arrangements
Schedule 3.24 - Environmental Matters
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Schedule 6.1(q) - Schedules Deliverable After Execution of Agreement
Schedule 6.1(r) - Environmental Remediation and Indemnification Agreement
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered into as of
the 21st day of September, 1995, by and between Morrison Knudsen Corporation, a
Delaware corporation ("Morrison Knudsen"), and Morrison Knudsen Corporation, an
Ohio corporation ("MKC") (Morrison Knudsen and MKC being referred to
individually as a "Seller" and collectively as the "Sellers"), and Tutor-Saliba
Corporation, a California corporation (the "Purchaser").
W I T N E S E T H:
WHEREAS, Morrison Knudsen is the owner of all the issued and outstanding
shares of capital stock of MKC; MKC is the owner of all the issued and
outstanding capital stock of Morrison Knudsen Investments, Inc., a Nevada
corporation ("MKI"); MKI is the owner of all the issued and outstanding shares
of capital stock of MK Pacific, Inc., a Hawaii corporation ("MKP"); MKP is the
owner of all the issued and outstanding shares of capital stock of each of G.W.
Murphy Construction Company, Inc., a Hawaii corporation ("Murphy"), and E.E.
Black Limited, a Hawaii corporation ("E.E. Black"); and E.E. Black is the owner
of all the issued and outstanding shares of capital stock of each of Black
Construction Corporation, a Guam corporation ("Black Construction"), and Black
Micro Corporation, a Commonwealth of the Northern Mariana Islands corporation
("Black Micro") (MKI, MKP, Murphy, E.E. Black, Black Construction and Black
Micro being each individually referred to as a "Company" and collectively
referred to as the "Companies"); and
WHEREAS, the Purchaser desires to acquire the shares of issued and
outstanding capital stock of each of the Companies as contemplated herein by
acquiring all the issued and outstanding shares of capital stock of MKI (the
"MKI Shares"), and the Sellers have agreed to sell the MKI Shares to the
Purchaser on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto agree as follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE
1.1 TRANSFER OF SHARES. Pursuant to the terms of this Agreement, on the
Effective Date (as hereinafter defined), MKC will sell, transfer, convey and
assign the MKI Shares and deliver to the Purchaser certificates representing the
MKI Shares, together with stock powers duly endorsed by MKC so that the MKI
Shares may be duly registered in the Purchaser's name.
1.2 CONSIDERATION. On the terms and subject to the conditions of this
Agreement, on the Effective Date, the Purchaser will purchase the MKI Shares in
exchange for $17,100,000.00 in cash ("Purchase Price").
1.3 CONTEMPLATED TRANSFER OF RETAINED ASSETS AND RELATED MATTERS. (a)
Prior to the Closing (as defined below), the Sellers shall cause (i) each of
MKI, MKP and E.E. Black (collectively, the "Designated Companies") to transfer
to MKC, by dividend or otherwise, the assets of each of the Designated Companies
(the "Retained Assets"), except for the assets listed on Schedule 1.3A which
shall include all small tools, office furniture, fixtures and equipment and any
other items categorized as minor equipment in the books and records of the
Designated Companies (except for mutually acceptable exclusions), and (ii) MKC
to assume all the liabilities, commitments and other obligations of each of the
Designated Companies of every type and description whether recorded or not
("Retained Liabilities), except for the intercompany accounts payable by any
Company to any other Company, MKC or Morrison Knudsen and the liabilities listed
on Schedule 1.3B. In addition, prior to the Closing, MKC shall transfer to its
payroll all employees of the Designated Companies.
(b) Prior to the Closing, the Sellers shall secure and deliver to the
Purchaser the written agreement of the Fidelity and Deposit Company of Maryland
("F&D") to release the Purchaser and E.E. Black from all liabilities arising out
of, or in any way relating to any performance, payment or material bond issued
by F&D prior to the Effective Date with respect to any E.E. Black project
(individually an "E.E. Black Project Bond" and collectively the "E.E. Black
Project Bonds").
(c) As promptly as practicable after the date of this Agreement, the
Seller shall secure and deliver to the Purchaser (i) written evidence of the
release of each of the Designated Companies from the obligation to pay, perform
or discharge each of the Retained Liabilities from the owner, lessor, joint
venture partner, bonding company, surety, or other entity or person entitled to
the benefits thereof, as the case
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may be, and (ii) written evidence that each E.E. Black Project Bond has been
cancelled and substituted with a new performance, payment or material bond, as
the case may be, that does not guarantee the performance by E.E. Black of any
obligations covered thereby.
(d) The Sellers desire to retain the sole authority to direct the
defense of the matters described on Schedule 1.3D (the "Schedule 1.3D Items")
involving Murphy, Black Construction and Black Micro (an "Additional Designated
Company" or the "Additional Designated Companies"). Accordingly, for the
limited purpose of clause (e) of this Section 1.3 and for the limited purpose of
resolving the Schedule 1.3D Items, the Schedule 1.3D Items shall be deemed to be
Retained Liabilities. If requested by the Sellers after the Closing, the
Purchaser shall cause the officers and employees of the Additional Designated
Companies to cooperate with the Sellers in connection with the resolution of the
Schedule 1.3D Items, including, without limitation, providing reasonable access
to books and records of the Additional Designated Companies relating to the
Schedule 1.3D Items.
(e) The Sellers, jointly and severally, agree to protect, indemnify,
defend and hold harmless the Purchaser, E.E. Black and the Additional Designated
Companies from all damages (including, exemplary damages and penalties), losses,
deficiencies, costs, expenses, obligations, fines, expenditures, claims and
liabilities, including reasonable counsel fees and reasonable expenses of
investigating, defending and prosecuting litigation (collectively, the
"Damages"), suffered by E.E. Black, any Additional Designated Company or the
Purchaser as a result of, caused by, arising out of, or in any way relating to
any of the Retained Liabilities (including, without limitation, the E.E. Black
Project Bonds and the Schedule 1.3D Items). Notwithstanding any provision in
this Agreement to the contrary, the foregoing indemnity agreement shall neither
be subject to any time limit nor any limit on the amount of Damages recoverable
by E.E. Black, any Additional Designated Company or the Purchaser thereunder.
(f) For the purposes of this Agreement, the performance by the
Sellers of their obligations under this Section 1.3 shall not be considered a
material adverse change in the financial condition or results of operations of
E.E. Black, the Additional Designated Companies with respect to the Schedule
1.3D Items only, or the combined operations of the Companies, and none of the
representations, warranties or covenants of the Sellers set forth in this
Agreement shall relate to the Retained Assets and/or the Retained Liabilities.
Furthermore, neither the Retained Assets nor the Retained Liabilities need be
disclosed on any other schedule required to be delivered by the Sellers to the
Purchaser pursuant to this Agreement.
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1.4 ELIMINATION OF INTERCOMPANY ACCOUNTS. Immediately prior to the
Closing, the Sellers shall contribute all long-term debt payable by any Company
to the Sellers or any affiliate thereof and all other accounts payable by any
Company to the Sellers or any affiliate thereof to the capital of the
appropriate Company as additional paid in capital, and all other intercompany
accounts between the Sellers or any affiliate thereof on the one hand and any
Company on the other hand, shall be eliminated by contribution to capital or
dividend.
ARTICLE II
CLOSING
2.1 CLOSING. Subject to the satisfaction of the conditions to closing set
forth in Article VI, the closing (the "Closing") of the acquisition of the MKI
Shares shall be held at the offices of Morrison Knudsen at Morrison Knudsen
Plaza, Boise, Idaho, 83712 commencing at 9:00 a.m., Boise, Idaho time, on the
earlier of September 22, 1995 or the first business day following the
satisfaction of the conditions set forth in Article VI, provided that the
parties may select such other place, date and time as may be mutually agreed
upon by them. The "Effective Date," as referred to herein, shall mean the date
of the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, hereby represent and warrant to the
Purchaser that as of (a) the date hereof (except in the case of any
representation and warranty that is expressly made subject to a schedule listed
in Schedule 6.1(q) hereof in which event such representation and warranty shall
be deemed to be made only as of the time the Purchaser accepts such schedule
pursuant to Section 6.1(q) hereof) and (b) as of the Effective Date:
3.1 ORGANIZATION AND EXISTENCE. Each Company is duly incorporated,
validly existing and in good standing under the laws of the jurisdiction
indicated in Schedule 3.1. Each Company has full corporate power and authority
to own and hold the properties and assets it now owns and holds and to carry on
its businesses as and where such properties are now owned or held and such
business is now conducted. Each Company is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the character of the properties and assets now owned or held by it or
the nature of the business now conducted by it requires it
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to be so licensed or qualified and where the failure so to qualify would not
reasonably be expected to affect materially and adversely the business,
operations, affairs, properties, assets or condition (financial or otherwise) of
such Company. Schedule 3.1 contains a list of each jurisdiction in which each
Company is duly licensed or qualified to do business as a foreign corporation.
Except as disclosed in Schedule 3.1, no Company has any direct or indirect
investment or interest in or control over any other corporation, partnership,
joint venture or other business entity other than another Company.
3.2 CAPITALIZATION. (a) The entire authorized capital stock of each
Company consists of the class or classes of capital stock listed in Schedule
3.2. Schedule 3.2 also sets forth the number of shares of each class of
authorized capital stock of each Company that is issued and outstanding. All
issued and outstanding shares of capital stock of each Company are fully paid
and nonassessable. The outstanding shares of capital stock of each Company are
owned beneficially and of record by the party indicated in Schedule 3.2, free
and clear of all liens, security interests, claims, charges, encumbrances,
rights, options to purchase, voting trusts or other voting agreements and calls
and commitments of every kind (collectively, the "Stock Encumbrances").
(b) There are no outstanding subscriptions, options, convertible
securities, warrants, calls or rights of any kind (issued or granted by, or
binding upon, the Sellers or any Company) to purchase or otherwise acquire any
security of or equity interest in any Company. Except as set forth in Schedule
3.2, MKC has full legal right to sell, assign and transfer the MKI Shares to the
Purchaser and will, upon delivery of the MKI Shares to the Purchaser pursuant to
the terms hereof, transfer to the Purchaser good and valid title to the MKI
Shares, free and clear of all Stock Encumbrances.
3.3 AUTHORITY AND APPROVAL. Each Seller has the corporate power and
authority to execute and deliver this Agreement and the other agreements and
documents contemplated to be delivered by it pursuant to Article VI hereof
("Seller Related Documents"), to consummate the transactions contemplated hereby
and thereby and to perform all the terms and conditions hereof and thereof to be
performed by it. The execution and delivery by each Seller of this Agreement
and the Seller Related Documents, the performance by each Seller of all the
terms and conditions hereof and thereof to be performed by it and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized and approved by the Board of Directors of each Seller and no approval
of the stockholders of either Seller is required in connection with the
consummation of the transactions contemplated hereby and thereby. This
Agreement constitutes and, upon execution and delivery, the Seller Related
Documents will constitute the valid and binding obligation of each Seller
enforceable in
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accordance with their respective terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting enforcement of creditors' rights generally and by general
principles of equity (whether applied in a proceeding at law or in equity).
3.4 NO CONFLICT. Except as set forth in Schedule 3.4, this Agreement and
the Seller Related Documents and the execution and delivery hereof and thereof
by each Seller do not and will not, and the fulfillment and compliance with the
terms and conditions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not, (a) conflict with any of, or require
the consent of any person or entity under, the terms, conditions or provisions
of the charter documents or bylaws or equivalent governing instruments of either
Seller or any Company, (b) violate any provision of, or require any consent,
authorization or approval under, any law or administrative regulation or any
judicial, administrative or arbitration order, award, judgment, writ, injunction
or decree applicable to either Seller that has not already been obtained under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), (c) except
as set forth in Schedule 3.4, conflict with, result in a breach of, constitute a
default under (whether with notice or the lapse of time or both), or accelerate
or permit the acceleration of the performance required by, or require any
consent, authorization or approval under, any indenture, mortgage or lien, or
any agreement, contract, commitment or instrument to which either Seller or any
Company is a party or by which any of them is bound or to which any property of
either Seller or any Company is subject, or (d) result in the creation of any
Encumbrances (as defined below) on the assets of any Company under any such
indenture, mortgage, lien, lease, agreement or instrument.
3.5 LAWS AND REGULATIONS; LITIGATION. Except as set forth in Schedule 3.5
and except for those violations which would not reasonably be expected
materially and adversely to affect the businesses, operations, affairs,
properties, assets or condition (financial or otherwise) of a particular
Company, no Company is in violation of or in default under any law or
regulation, or under any order of any court or foreign, federal, state,
municipal, territorial or other governmental department, commission, board,
bureau, agency or instrumentality applicable to it; and, except to the extent
set forth in Schedule 3.9 and except for those claims, fines, actions, suits,
demands, investigations or proceedings which would not reasonably be expected
materially and adversely to affect the business, operations, affairs,
properties, assets or condition (financial or otherwise) of a particular
Company, there are no claims, fines, actions, suits, demands, investigations or
proceedings pending or, to the best knowledge of the Sellers, threatened against
or affecting any Company, at law or in equity, or before or by any foreign,
federal, state, municipal, territorial or other governmental department,
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commission, board, bureau, agency or instrumentality having jurisdiction over
any Company. Except as set forth in Schedule 3.9 or Schedule 3.12 and except
for such lack of compliance, violations or liabilities that would not reasonably
be expected materially and adversely to affect the businesses, operations,
affairs, properties, assets, or condition (financial or otherwise) of a
particular Company, each Company is in material compliance with all applicable
foreign, federal, state, territorial and local statutes, ordinances, permits,
permit applications, licenses, orders, approvals, variances, rules and
regulations expressly applicable to it.
3.6 NO DEFAULT. Except as set forth in Schedule 3.6, no Company is in
default under, and no condition exists that with notice or lapse of time or both
would constitute a default under, (a) any mortgage, loan agreement, indenture,
evidence of indebtedness or other instrument evidencing borrowed money to which
it or any of its properties is bound, (b) any judgment, order or injunction of
any court, arbitrator or governmental agency, or (c) any construction contract,
surety agreement or other agreement, except for such defaults and conditions
that, individually and in the aggregate, would not reasonably be expected
materially and adversely to affect the business, operations, affairs,
properties, assets or condition (financial or otherwise) of such Company.
3.7 FINANCIAL STATEMENTS. Attached as Schedule 3.7 is a copy of the
unaudited consolidating balance sheet of the Companies (the "Balance Sheet") as
at April 30, 1995 (the "Balance Sheet Date").
3.8 NO ADVERSE CHANGES. Except as disclosed in Schedule 3.8 and except on
account of matters that generally affect the economy or the industry in which
each Company is engaged, since the Balance Sheet Date there have been no
material adverse changes in (a) the financial condition of any Company from that
set forth in the Balance Sheet or (b) the business, operations, affairs,
properties, assets or condition (financial or otherwise) of any Company, in each
case other than changes in the ordinary course of business, consistent with past
practices. Except as disclosed in Schedule 3.8, since the Balance Sheet Date no
Company has declared, set aside or paid any dividends, or made any
distributions, in respect of its equity securities, or repurchased, redeemed or
otherwise acquired any such securities or transferred any cash to the Sellers
except in payment for services actually rendered to or in reimbursement for
expenses actually paid on behalf of such Company.
3.9 LIABILITIES. Except as set forth in Schedule 3.9 or as otherwise set
forth in the Balance Sheet, no Company has any obligation or liability material
to that Company (whether accrued, absolute, contingent, unliquidated or
otherwise, whether
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due or to become due), other than contractual liabilities incurred in the
ordinary course of business which are not required to be disclosed in the
Balance Sheet and other than liabilities which have arisen after the Balance
Sheet Date in the ordinary course of business, consistent with past practices.
3.10 TAXES. Except as otherwise expressly noted in this Section 3.10 or
set forth in Schedule 3.10: The operations of the Companies have been reflected
in the consolidated federal income tax returns of the affiliated group of
corporations having Morrison Knudsen as its common parent (the "Seller Group")
that have been filed or will be timely filed pursuant to the Internal Revenue
Code of 1986, as amended (the "Code"), for the taxable years ended on or before
December 31, 1994 during which Morrison Knudsen owned, directly or indirectly,
100% of the capital stock of any Company. Black Construction and Black Micro
are not included in the Seller Group but have filed separate tax returns in Guam
and the Commonwealth of the Northern Mariana Islands as the circumstances
require. Each Company and Morrison Knudsen have (or will have by the Closing)
caused to be duly filed in a timely manner (taking into account all extensions
of due dates) with the appropriate foreign, federal, state, local, territorial
and other governmental authorities all material returns, information returns or
statements, and reports with respect to Taxes (as defined in subsection (a) of
Section 7.1 hereof) which are required to be filed by or with respect to each
Company or with respect to any member of the Seller Group, to the extent any
Company could be liable for such Taxes, and have (or will have by the Closing)
caused to be paid or deposited or made adequate provision in accordance with
generally accepted accounting principles consistently applied for the payment of
all Taxes (including estimated Taxes) required with respect to the periods
covered by such returns, statements or reports or by any taxing authority.
Adequate provision has been made for all Taxes due with respect to each Company
and with respect to each member of the Seller Group, to the extent any Company
could be liable for such Taxes, for all periods through the Balance Sheet Date,
and adequate provision will be made for all such Taxes for the period between
the Balance Sheet Date and the Effective Date. Except as set forth in Schedule
3.10 and except for tax liens securing the payment of Taxes not yet due and
payable, (a) there are no tax liens upon any assets of any Company, (b) there
are no outstanding agreements or waivers by or with respect to any Company or
any member of the Seller Group extending the period for assessment or collection
of any Taxes for which any Company could be liable, (c) there is no pending
action, proceeding or investigation, and, to the best knowledge of the Sellers,
no action, proceeding or investigation has been threatened by any governmental
authority, for assessment or collection of Taxes with respect to any Company or
Taxes of any member of the Seller Group for which any Company could be held
liable, and (d) no claim for assessment or collection of Taxes has been asserted
and no actual or proposed assessment has been made against the
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Sellers or any Company with respect to the Taxes of any Company or Taxes of any
member of the Seller Group for which any Company could be held liable. No
consent or election under Section 341(f) of the Code has been filed by or for
any Company.
3.11 RECEIVABLES. Schedule 3.11 sets forth a list, as of the Balance Sheet
Date, of the accounts receivable (in the form of an aged account balance) and
notes receivable of each Company. Except to the extent of the reserve for bad
debts reflected on Schedule 3.11, such accounts and notes are collectible in the
amounts shown in Schedule 3.11. With respect to all accounts receivable and
notes receivable that have been created by each Company subsequent to the
Balance Sheet Date there is no pending contest to the amount or validity thereof
and, to the best knowledge of the Sellers, no reasonable basis exists for any
such contest.
3.12 INTELLECTUAL PROPERTY. All patents, trademarks, trade names, brand
names and copyrights (in each case, whether issued or pending), and all licenses
or rights in favor of each Company with respect to any of the foregoing, owned
or possessed by each Company (collectively, the "Intellectual Property
Interests") are in good standing and are free and clear of all Encumbrances.
Except with respect to Intellectual Property Interests listed on Schedule 3.12,
each of the Companies is entitled to own, possess and exploit all their
respective Intellectual Property Interests. To the best knowledge of the
Sellers, no Company infringes any patent, copyright or trademark rights of
others. To the best knowledge of the Sellers, all technical information
developed and belonging to each Company which has not been patented has been
kept confidential. Except as disclosed in Schedule 3.12, each Company has the
right to use, free and clear of claims or rights of others, all material trade
secrets, customer lists, processes, computer software, patents, copyrights and
trademarks required for, incident to or included in its products and activities
and its proposed products and activities, and, to the best of the Sellers'
knowledge, no present or past employee of any Company is using or has used any
confidential information, trade secrets or computer software required for its
products and activities in violation of the claims or rights of others.
3.13 FIXED ASSETS. Schedule 3.13 sets forth a list and summary description
of all fixed assets owned or leased by each Company as of the Balance Sheet
Date. All of the fixed assets of each Company are in good working order and
condition and fit for their intended purposes, subject to the need for normal
repair and maintenance. All leases of fixed assets are in full force and effect
and binding upon the parties thereto and none of the parties thereto is in
breach of any of the material provisions thereof. Schedule 3.13 also includes a
list of all leases under which each Company leases fixed assets, as of the
Balance Sheet Date. Except as indicated in Schedule 3.13, since the
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Balance Sheet Date, no Company has acquired or sold or otherwise disposed of any
such fixed assets.
3.14 OTHER ASSETS. Schedule 3.14 sets forth a list and summary description
of all properties and assets owned by each Company, as of the Balance Sheet
Date, other than those described in Schedules 3.11, 3.12 and 3.13. Schedule
3.14 also includes (a) a list of all title reports and title insurance policies
received or owned by each Company and (b) a list of each Company's leases,
including those covering vehicles. Except as indicated in Schedule 3.14 or in
the ordinary course of its business, since the Balance Sheet Date, no Company
has acquired or sold or otherwise disposed of any of such properties or assets.
Except as set forth in Schedule 3.14, since August 14, 1992, no Company has
conducted business operations that are materially different from those currently
conducted by it at the present time.
3.15 CONTRACTS AND AGREEMENTS; ADVERSE RESTRICTIONS. (a) Schedule 3.15
sets forth a list of all revenue producing contracts and agreements and all
other contracts and agreements under which any Company has an outstanding
liability or obligation to pay at least $50,000 (other than licenses and rights
included in Schedule 3.12, leases included in Schedule 3.13 or Schedule 3.14,
contracts and agreements included in Schedule 3.19, any individual customer
service agreement or purchase order which is subject to termination by a Company
without penalty upon 90 days' notice or less, and any agreement providing for
annual revenues to a Company of less than $1,000) to which any Company is a
party or by which it or any of its property is bound (including, but not limited
to, joint venture or partnership agreements, powers of attorney and other
similar instruments, tax allocation agreements or arrangements, bids for
contracts that have not been awarded, bonding and surety arrangements, contracts
with labor organizations, loan agreements, bonds and notes, mortgages, liens,
pledges or other security agreements). All such contracts and agreements
included in Schedule 3.15, as well as those included in Schedules 3.12, 3.13,
3.14 and 3.19, are in full force and effect and binding upon the parties
thereto, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar law affecting creditors' rights generally and
general principles of equity (whether applied in a proceeding in law or in
equity); and no Company that is a party to any such contract or agreement and,
to the best knowledge of the Sellers, no other party thereto is in breach of any
of the material provisions thereof and no event has occurred on the part of such
Company or, to the Sellers' best knowledge, on the part of any other party to
any such contract or agreement that with notice or lapse of time or both would
constitute such a breach.
(b) Except as specifically identified in Schedule 3.15, no Company is
a party to any contract, agreement or other commitment or instrument or subject
to any
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charter or other corporate restriction or subject to any restriction or
condition contained in any permit, license, judgment, order, writ, injunction,
decree or award which, singly or in the aggregate, materially and adversely
affects the business, operations, affairs, properties, assets or condition
(financial or otherwise) of such Company.
3.16 TITLE AND LIENS. (a) Each Company has good and marketable title to
all properties, contracts, assets and leasehold estates, real and personal,
owned and used in its respective businesses, including, without limitation,
those reflected in the schedules attached hereto, subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance or charge, (collectively,
"Encumbrances"), except for (i) Encumbrances listed in Schedule 3.16, (ii) liens
for current Taxes and assessments that are not yet due and payable, and (iii)
mechanics', warehousemen's, landlord's and other similar statutory liens
securing the payment of amounts that are not yet due and payable.
(b) Without limiting the foregoing, the condition of title to or
interest in each Company's real property (including real property which is
leased, during the pendency of such lease) described in Schedule 3.14
(collectively, the "Real Property") is as follows: (i) with respect to Real
Property owned by any Company, except as set forth in Schedule 3.16 or in the
title insurance policy listed in Schedule 3.14 relating to any of the Real
Property, there are no leases, tenancy agreements, easements, covenants,
restrictions or any other instruments, agreements or arrangements which create
in or confer on any party other than such Company the right to occupy or possess
all or any portion of the Real Property or create in or confer on any such party
any right, title or interest in or to the Real Property or any portion thereof
or any interest therein; no party other than such Company occupies or possesses
the Real Property or any portion thereof; there is legal and adequate ingress
and egress between each tract of Real Property and an adjacent (or, if none, the
closest) public roadway; the Real Property is properly zoned in order to allow
its current use in such Company's businesses; and there are no claims or demands
pending or, to the best knowledge of the Sellers, threatened by any party
against the Real Property which, if valid, would create in, or confer on, any
party other than such Company, any right, title or interest in or to the Real
Property or any portion thereof and (ii) with respect to Real Property leased by
any Company, such lease has been validly executed and delivered by the Company
and, to the best knowledge of the Sellers, by the other party or parties thereto
and is a binding agreement; the Company is not and, to the best knowledge of the
Sellers, no other party to the lease is in material breach or default and no
event has occurred on the part of the Company or, to the best knowledge of the
Sellers, on the part of any other party which with notice or lapse or time,
would constitute such a breach or default or permit termination, modification or
acceleration under such lease; the Company has not repudiated and, to the best
knowledge of the Sellers, no other
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party to such lease has repudiated any provision thereof; and to the best
knowledge of the Sellers, there are no disputes, oral agreements or delayed
payment programs in effect as to such lease. Notwithstanding the foregoing, no
representation is made as to the condition of any landlord's title to real
property on which a Company owns a leasehold interest, or as to the priority of
any leasehold interest owned by a Company.
3.17 INSURANCE. Morrison Knudsen maintains such policies of workmen's
compensation, casualty, liability and other insurance on behalf of each Company
as it considers appropriate under the circumstances. Schedule 3.17 accurately
identifies the types and coverage amounts of such insurance coverage as of the
Effective Date.
3.18 PERSONNEL. Schedule 3.18 sets forth a list of all officers,
directors, employees, and consultants and agents with whom each Company has
agreements not terminable at the will of such Company (by type or
classification) and their respective rates of compensation (including the
portions thereof attributable to bonuses), including any other salary, bonus or
other payment arrangement made with any of them.
3.19 BENEFIT PLANS.
(a) Schedule 3.19 sets forth a list (copies or descriptions of which
have been delivered to the Purchaser) of all of the following agreements or
plans sponsored by each Company which are presently in effect or which have been
in effect at any time since August 14, 1992 (other than the E.E. Black Limited
Savings & Retirement Plan):
(i) "employee welfare benefit plans" and "employee pension benefit plans,"
as defined in Sections 3(1) and 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"); and
(ii) except for the E.E. Black Limited Savings & Retirement Plan, any other
pension, profit sharing, retirement, deferred compensation, stock
purchase, stock option, incentive, bonus, vacation, severance,
disability, health, hospitalization, medical, life insurance, vision,
dental, prescription drug, supplemental unemployment, layoff,
automobile, apprenticeship and training, day care, scholarship, group
legal benefit, fringe benefit, or other employee or former employee
benefit plan, program, policy, or arrangement, whether written or
unwritten, formal or informal (the plans, programs, policies, or
arrangements described in subparts (i) or (ii) are herein collectively
referred to as the "Company Plans").
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Except as set forth in Schedule 3.19, the Sellers have delivered to the
Purchaser a copy of all governmental filings, financial statements, and
actuarial reports, including but not limited to, the most recent financial
statements of each "Qualified Plan," as defined below, the most recent actuarial
report, if any, for each employee pension benefit plan and Internal Revenue
Service Forms 5500 for each Company Plan for which a Form 5500 has been required
since August 14, 1992. All financial statements and actuarial reports have been
prepared in accordance with generally accepted accounting principles and
actuarial principles, applied on a uniform and consistent basis.
(b) Schedule 3.19 identifies each of the Company Plans which purports
to satisfy the requirements of Section 401(a) of the Code ("Qualified Plans").
A copy of each Qualified Plan and the most recent determination by the Internal
Revenue Service with respect to each of the Qualified Plans has been delivered
to the Purchaser. All of such determination letters remain in effect and have
not been revoked. Except as listed on Schedule 3.19, no Qualified Plan has been
amended since the issuance of the most recent determination letter. Except as
listed on Schedule 3.19, no issue concerning qualification of any Qualified Plan
is pending before or, to the best knowledge of the Sellers, threatened by the
Internal Revenue Service. In all materials respects each Qualified Plan has
been administered according to its terms, except for those terms which are
inconsistent with the changes required by the Code and any regulations and
rulings promulgated thereunder for which changes are not yet required to be
made, in which case each Qualified Plan has been administered in accordance with
the provisions of the Code and such regulations and rulings, and no Company or
any fiduciary of any Qualified Plan has done anything which would adversely
affect the qualified status of any Qualified Plan or any related trust.
(c) Except as listed in Schedule 3.19, each Company is in material
compliance with the requirements prescribed by any and all statutes, orders,
governmental rules, and regulations applicable to the Company Plans and all
material reports and disclosures relating to the Company Plans required to be
filed with or furnished to governmental agencies, participants or beneficiaries
prior to the Effective Date have been or will be filed or furnished in a timely
manner and in accordance with applicable law.
(d) No termination or partial termination of any existing Qualified
Plan has occurred, nor has a notice of intent to terminate any existing
Qualified Plan been issued by a Company. The Pension Benefit Guaranty
Corporation (the "PBGC") has not instituted, and, to the best knowledge of the
Sellers, is not expected to institute, any proceedings to terminate any Company
Plan.
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(e) No Qualified Plan has suffered any "accumulated funding
deficiency" within the meaning of ERISA Section 302 and Section 412 of the Code
(which remains outstanding on the Effective Date), whether or not waived, and if
any Qualified Plan were terminated on the Effective Date, no Company would have
any material liability to any participants or beneficiaries as a result of the
termination except to the extent of funds set aside for such purpose or
reflected as reserved for such purpose in the Balance Sheet. Except as listed
in Schedule 3.19, each Company has made full and timely payment of, or has
accrued pending full and timely payment, all amounts which are required under
the terms of each Qualified Plan and in accordance with applicable laws to be
paid as a contribution to each Qualified Plan. Schedule 3.19 sets forth the
unfunded accrued liabilities of each "defined benefit plan," as defined in
Section 3(35) of ERISA, as of the date indicated by the actuaries for such Plan.
(f) Except as listed in Schedule 3.19, since August 14, 1992, no
Company has any past, present or future obligation or liability to contribute to
any "multiemployer plan," as defined in ERISA Section 4001(a)(3) (a
"Multiemployer Plan").
(g) Since August 14, 1992, no member of the Controlled Group (as
defined in paragraph (x) below) has completely or partially withdrawn from any
Multiemployer Plan within the meaning of the Multiemployer Pension Plan
Amendments Act of 1980.
(h) No Company has any material liability to the PBGC. Except as
listed in Schedule 3.19, with respect to any Qualified Plan or any Company, no
termination liability to the PBGC or material withdrawal liability to any
Multiemployer Plan has been or is expected to be incurred or would be incurred
if any Qualified Plan were terminated on the Effective Date or if any Company
were to withdraw from any Multiemployer Plan on the Effective Date. Except as
listed in Schedule 3.19, since August 14, 1992, there has been no "reportable
event," as defined in Section 4043(b) or 4043(c) of ERISA, with respect to any
Qualified Plan that is subject to Title IV of ERISA, for which notice has not
been waived.
(i) No Company is liable or has been advised that it is liable for
any funding taxes under Code Sections 413(b)(6) or 4971 on account of an
accumulated funding deficiency of any Multiemployer Plan to which any Company
has contributed or is required to contribute.
(j) No Company has made or is obligated to make any nondeductible
contributions to any Qualified Plan.
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(k) Except as listed in Schedule 3.19, no Qualified Plan is subject
to Title IV of ERISA.
(l) Except as listed in Schedule 3.19, no Company shall increase the
rate of compensation payable or to become payable to any of its officers,
directors, employees, consultants or agents, or make any commitment or incur any
liability to any labor union (not currently set forth in the collective
bargaining agreement), or pay or agree to pay any bonuses or severance pay other
than in accordance with currently established policies or agreements.
(m) The transaction contemplated by this Agreement along with any
amounts paid or payable by any Company or any member of the Controlled Group (as
defined in paragraph (x) below) has not resulted in and will not result in
payments to "disqualified individuals" (as defined in Section 280G(c) of the
Code) of any Company which, individually or in the aggregate, will constitute
"excess parachute payments" (as defined in Section 280G(b) of the Code)
resulting in the imposition of the excise tax under Section 4999 of the Code or
the disallowance of deductions under Section 280G of the Code.
(n) Except as listed in Schedule 3.15, no Company (i) is a party to
any collective bargaining agreement; (ii) is obligated to bargain with any other
labor organization, (iii) knows of any charges or threatened charges of unfair
labor practices, or (iv) has failed to materially comply with all applicable,
foreign, federal, territorial, state and local regulations respecting employment
and employment practices.
(o) Except as set forth in Schedule 3.19, no Company is liable for
any material unpaid wages, bonuses or commissions, or taxes, penalties,
assessments or forfeitures arising from any employment matter.
(p) No Company has committed any material violations of the Civil
Rights Act of 1964, as amended, the federal wage and hour laws, federal or state
income, unemployment or social security withholding laws or any laws of a
similar or comparable nature in Guam, the Federated States of Micronesia, the
Commonwealth of the Northern Mariana Islands, Palau and the Philippines.
(q) Each Company has complied in all material respects with
applicable workers compensation statutes.
(r) No Company or any other "disqualified person" or "party in
interest," as defined in Section 4975 of the Code and ERISA Section 3(14),
respectively,
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has engaged in any "prohibited transaction," as defined in Section 4975 of the
Code or ERISA Section 406 with respect to the Company Plans for which an
exemption does not exist, and all "fiduciaries," as defined in Section 3(21) of
ERISA, with respect to the Company Plans have complied in all material respects
with the requirements of Section 404(a) or (b) of ERISA. Neither any Company
nor any party in interest or disqualified person with respect to the Company
Plans has taken or omitted to take any action with respect to the Company Plans
which could lead to the imposition of a material excise tax under the Code or a
material fine under ERISA.
(s) Other than routine claims for benefits, there are no actions,
audits, investigations, suits, or claims pending, or, to the best knowledge of
the Sellers, threatened (collectively, the "Actions") against any of the Company
Plans or any fiduciary of any of the Company Plans (but such representation is
limited to Actions with respect to any fiduciary while acting on behalf of the
Company Plans) or against the assets of any of the Company Plans.
(t) Except as listed in Schedule 3.19, as of the Effective Date, the
consummation of the transactions contemplated hereby will not accelerate or
increase any liability under any Company Plan because of an acceleration or
increase of any of the rights or benefits to which employees may be entitled
thereunder.
(u) Unless otherwise expressly permitted or required by the terms of
this Agreement, from the date hereof until the Effective Date, no Company shall
amend any Company Plans, except to the extent necessary to maintain compliance
with the Code or ERISA or to obtain a favorable determination letter from the
IRS for any Qualified Plan, increase any benefits or rights under any Company
Plan, or adopt any new plan, program, policy, or arrangement which, if it
existed as of the Effective Date, would constitute a Company Plan.
(v) Except as listed in Schedule 3.19, or as required by law, no
Company has any obligation to any retired or former employee, or any current
employee upon retirement, under any Company Plan. As of the Effective Date,
except for professional fees, any applicable IRS user or filing fees and any
obligations arising under applicable laws of the Territory of Guam and
surrounding islands, any Company Plan can be terminated without resulting in
additional penalties, premiums, fees, or similar charges to the sponsoring
Company or to the Purchaser. To the extent such obligations exist, such
obligations are fully funded or adequately reserved for by each Company or
represent Retained Liabilities to be retained by the Sellers.
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(w) To the extent applicable, each Company has complied in all
material respect with the continuation coverage requirements of Title X of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA").
(x) Except as listed in Schedule 3.19, no other entity, which
together with any Company constitutes a single employer within the meaning of
Section 414 of the Code ("Controlled Group"), sponsors or maintains any employee
benefit plan within the meaning of Section 3(3) of ERISA, which under Title IV
of ERISA or any section of the Code or ERISA, would subject the Purchaser, any
Company, any Company Plan, the fiduciaries thereof, or their respective plan
assets, to any material taxes, liens, encumbrances, penalties, or any other
material liabilities.
(y) Neither the Company nor any member of its Controlled Group is a
"contributing sponsor" within the meaning of Section 4001(a)(13) of ERISA to
which the requirements of Section 4043(b) of ERISA apply as of the Effective
Date with respect to the transactions contemplated by this Agreement.
3.20 COPIES COMPLETE. The certified copies of the charter documents,
bylaws and other governing documents, each as amended to date, of each Company
and the copies of all leases, instruments, agreements, bids, surety
arrangements, bonds, licenses, permits, certificates or other documents which
are recited herein as having been delivered to the Purchaser in connection with
the transactions contemplated hereby are true, correct and complete copies of
the originals thereof.
3.21 BANK ACCOUNTS. Schedule 3.21 contains a list of all bank accounts
maintained by each Company and the name of each person authorized to draw checks
on such accounts.
3.22 ACCURATE AND COMPLETE RECORDS. The books, ledgers, financial records
and other records of each Company for the period from August 14, 1992 to the
date hereof:
(a) are, or will be prior to the Effective Date, in the possession of
the appropriate Company;
(b) have been, in all material respects, maintained in accordance
with all applicable laws, rules and regulations and generally accepted standards
of practice; and
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(c) are accurate and complete and do not contain or reflect any
material discrepancies.
3.23 BROKERAGE ARRANGEMENTS. Except as set forth in Schedule 3.23, neither
any Company nor the Sellers have entered (directly or indirectly) into any
agreement with any person, firm or corporation that would obligate the Purchaser
or any Company to pay any commission, brokerage or "finder's fee" in connection
with the transactions contemplated herein.
3.24 ENVIRONMENTAL MATTERS. (a) Except as set forth in Schedule 3.24, (i)
each Company has obtained all Environmental Permits (as hereinafter defined)
that are required in connection with and are material to the business,
operations and properties of such Company, (ii) each Company has been, and each
Company is, in material compliance with all terms and conditions of all
applicable requirements of Environmental Law (as hereinafter defined) and
Environmental Permits, (iii) no Company has received written notice from a
governmental authority of any material violation, alleged material violation or
material liability arising under any requirements of Environmental Law or
Environmental Permits, (iv) no Environmental Claims (as hereinafter defined)
have ever been threatened or asserted or are presently pending against any
Company attributable to present or past operations on premises owned, leased or
operated by any Company, and (v) to the best knowledge of the Sellers, there is
no condition or set of facts or circumstances that could reasonably be expected
to give rise to an environmental lien or to an Environmental Claim against any
Company.
(b) Except as set forth in Schedule 3.24, no Company has disposed,
treated, or arranged for the disposal or treatment of any toxic or hazardous
waste, materials or substances at a site or location, or has leased, used,
operated or owned a site or location which (i) has been placed on the National
Priorities List or its state equivalent pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended ("CERCLA"),
or similar foreign, territorial or state law, (ii) the Environmental Protection
Agency or relevant foreign, territorial or state authority has proposed, or is
proposing, to place on the National Priorities List or foreign, territorial or
state equivalent, (iii) is subject to a lien, administrative order or other
demand either to take response or other action under CERCLA or other
Environmental Law, or to develop or implement a "Corrective Action Plan" or
"Compliance Plan," as each is defined in regulations promulgated pursuant to the
Resource Conservation and Recovery Act, as amended ("RCRA"), or to reimburse any
person who has taken response or other action in connection with that site, (iv)
is on any Comprehensive Environmental Response Compensation Liability
Information System List, (v) has been the site of any Release (as hereinafter
defined) from present or past operations of any
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Company (or any of its predecessors) which would be either reportable under any
requirements or Environmental Law or which has caused at such site or any third
party site any condition that has resulted in or could reasonably be expected to
result in a claim against any Company under Environmental Law, or (vi) to the
best knowledge of the Sellers, is located within one mile of a property
described in any of subclauses (i) through (iv) above.
(c) Except as set forth in Schedule 3.24 and to the best knowledge of the
Sellers after due inquiry, (i) no Company has ever owned or operated any
underground storage tanks (USTs) containing petroleum products or wastes or
other substances regulated by 40 CFR Part 280 or other applicable requirements
of Environmental Law, and has not owned or operated any real estate having any
USTs, (ii) there are no polychlorinated biphenyls or asbestos in or on premises
currently owned, leased or operated by any Company, and (iii) no entities or
sites owned or operated by third parties have been used by any Company in
connection with the treatment, storage, disposal or transportation of Hazardous
Substances (as hereinafter defined), except in compliance with applicable
Environmental Law and except for such violations that have been remedied.
(d) The plants, structures, equipment and other properties currently owned
or used by each Company are adequate and sufficient for the current operations
of such Company in conformance with all applicable requirements of Environmental
Law.
(e) "Environmental Claims," as referred to herein, shall mean any and all
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigations or other
adversarial proceedings relating to any Environmental Law or Environmental
Permit including, without limitation (i) any and all claims by governmental,
territorial or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other similar actions or damages pursuant to any
applicable Environmental Law and (ii) any and all claims by a third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Substances or arising from alleged
injury or threat of injury to the environment. An "Environmental Claim"
includes, but is not limited to, a common law action, as well as a proceeding to
issue, modify, terminate or enforce the provisions of an Environmental Permit or
requirement of Environmental Law, or to adopt or amend a regulation to the
extent that such a proceeding attempts to redress violations or alleged
violations of the applicable permit, license, or regulation.
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(f) "Environmental Law," as referred to herein, shall mean any federal,
state, territorial, local or foreign statute, law, rule, regulation, ordinance,
code, policy (compliance with which is required by law or if the failure to
comply therewith would be reasonably foreseeable to result in adverse
administrative action) or rule of common law in effect and in each case as
amended, and any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree or judgment, relating to
the environment or Hazardous Substances, including, without limitation to the
extent applicable under the circumstances, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. Section 9601 ET SEQ.; the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 ET
SEQ.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 ET
SEQ.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ.;
the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Section 136 ET SEQ.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f ET SEQ.; the Toxic Substance Control Act,
15 U.S.C. Section 2601 ET SEQ.; the Oil Pollution Act of 1990, 33 U.S.C. Section
2701 ET SEQ.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
Section 5101 ET SEQ.; the Atomic Energy Act, as amended, 42 U.S.C. Section 2011
ET SEQ.; any laws regulating the use of biological agents or substances
including medical or infectious wastes; and the corresponding foreign,
territorial or state laws, regulations and local ordinances, which may be
applicable, as any such acts may be amended.
(g) "Environmental Permits" as referred to herein, shall mean all permits,
approvals, identification numbers, licenses and other authorizations required
under any applicable Environmental Law.
(h) "Hazardous Substances" as referred to herein, shall mean (i) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "hazardous air
pollutants," "pollutants," "contaminants," "toxic chemicals," "toxics,"
"hazardous chemicals," "extremely hazardous substances," "regulated substances"
or "pesticides" as defined as such in any applicable Environmental Law, (ii) any
radioactive materials, asbestos-containing materials; urea formaldehyde foam
insulation, and radon in harmful quantities or concentration that are regulated
by any governmental authority having jurisdiction in the location of such
materials and (iii) any other chemical, material or substances, exposure to
which is prohibited, limited or regulated by any governmental authority having
jurisdiction in the location of such substances on the basis of potential
hazards.
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(i) "Release," as referred to herein, shall mean any release, spill,
emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of any Hazardous Substance into the environment or into or
out of any property, including the movement of any Hazardous Substance through
or in the air, soil, surface water, groundwater or property.
3.25 FINANCIAL CONDITION. The sale of the MKI Shares is for reasonably
equivalent value. Neither of the Sellers is insolvent (that is, its debts do
not exceed its assets), nor will either of the Sellers become insolvent as a
result of the transactions contemplated by this Agreement. The Sellers do not
and will not have, after giving effect to the transactions contemplated by this
Agreement, an unreasonably small amount of capital to conduct their respective
businesses.
3. NO MISLEADING STATEMENTS. The representations and warranties of the
Sellers contained in this Agreement, the schedules hereto and all other
documents and information furnished to the Purchaser and its representatives
pursuant hereto are accurate in all material respects and do not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers that as of the
date hereof and as of the Effective Date:
4.1 ORGANIZATION AND EXISTENCE. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California.
4.2 AUTHORITY AND APPROVAL. The Purchaser has the corporate power and
authority to execute and deliver this Agreement and the other agreements and
documents contemplated to be delivered by it pursuant to Article VI hereof
("Purchaser Related Document), and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
Purchaser Related Documents by the Purchaser and the consummation of the
transactions contemplated hereby and thereby have been duly authorized and
approved by its Board of Directors. No other act, approval or proceedings on
the part of the Purchaser or the holders of any class of its equity securities
is required to authorize the execution and delivery of
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this Agreement and the Purchaser Related Documents by the Purchaser or
consummation of the transactions contemplated hereby or thereby. The Purchaser
is purchasing the MKI Shares for its own account for investment purposes and not
with a view toward, or for sale in connection with, any distribution or public
offering of the MKI Shares within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and the Purchaser is an "accredited investor,"
as such term is defined in Rule 501(a) promulgated under the Securities Act.
This Agreement constitutes and, upon execution and delivery, the Purchaser
Related Documents will constitute the legal, valid and binding obligations of
the Purchaser enforceable in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity).
4.3 NO CONFLICT. This Agreement and the Purchaser Related Documents and
the execution and delivery hereof and thereof by the Purchaser do not and will
not, and the fulfillment and compliance with the terms and conditions hereof and
thereof and the consummation of the transactions contemplated hereby and thereby
will not, (a) conflict with any of, or require the consent of any person or
entity under, the terms, conditions or provisions of the charter documents or
bylaws or equivalent governing instruments of the Purchaser, (b) violate any
provision of, or require any consent, authorization or approval under, any law
or administrative regulation or any judicial, administrative or arbitration
order, award, judgment, writ, injunction or decree applicable to the Purchaser
that has not already been obtained under the HSR Act, or (c) conflict with,
result in a breach of, constitute a default under (whether with notice or the
lapse of time or both), or accelerate or permit the acceleration of the
performance required by, or require any consent, authorization or approval
under, any indenture, mortgage, lien, agreement, contract, commitment or
instrument to which the Purchaser is a party or by which it is bound.
4.4 LITIGATION. There are no actions, suits, proceedings or governmental
investigations or inquiries pending against the Purchaser or its properties,
assets, operations or business which might delay or prevent the consummation of
the transactions contemplated hereby.
4.5 FUNDS AVAILABLE. The Purchaser has sufficient cash, or firm
commitments from responsible lending institutions, available lines of credit or
other sources of available funds to enable it to make payment of any amounts to
be paid by it hereunder.
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4.6 BROKERAGE ARRANGEMENTS. The Purchaser has not entered (directly or
indirectly) into any agreement with any person, firm or corporation that would
obligate the Sellers to pay any commission, brokerage or "finder's fee" in
connection with the transactions contemplated herein.
4.7 NO MISLEADING STATEMENTS. The representations and warranties of the
Purchaser contained in this Agreement and all other documents and information
furnished to the Sellers and their representatives pursuant hereto are accurate
in all material respects and do not include any untrue statement of a material
fact or omit to state any material fact necessary to make the statements made
herein or therein not misleading.
ARTICLE V
ADDITIONAL AGREEMENTS,
COVENANTS, RIGHTS AND OBLIGATIONS
5.1 CERTAIN CHANGES. Without first obtaining the written consent of the
Purchaser, from the date hereof until the earlier of the Effective Date or the
termination of this Agreement, the Sellers, jointly and severally, covenant that
none of the Companies will:
(a) make any material change in the conduct of its businesses and
operations, or its financial reporting and accounting methods;
(b) other than in the ordinary course of business, enter into any material
contract or agreement or terminate or amend in any material respect,
or be in default in any material respect under any material contract
or agreement to which any Company is a party, including without
limitation any bid submitted by any Company, except for any defaults
which may occur during such time period which are cured by such
Company or the Sellers prior to the Effective Date;
(c) except as otherwise provided in Sections 1.4 and 3.8 hereof, declare,
set aside or pay any dividends, or make any distributions, in respect
of its equity securities, or repurchase, redeem or otherwise acquire
any such securities or transfer any cash to the Sellers;
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(d) merge into or with or consolidate with any other corporation or
acquire all or substantially all of the business or assets of any
corporation, person or other entity;
(e) make any change in its charter documents, bylaws or equivalent
governing instruments;
(f) other than in the ordinary course of business, purchase any securities
of any corporation, person or entity, except short term debt
securities of governmental entities and banks, or make any investment
in any corporation, partnership, joint venture or other business
enterprise;
(g) increase the indebtedness of, or incur any obligation or liability,
direct or indirect for any Company other than the incurrence of
liabilities pursuant to existing agreements in the ordinary course of
business consistent with past practices; provided, however, that in no
event will any Company incur any obligation or liability for funded
indebtedness;
(h) sell, lease or otherwise dispose of any of its assets other than the
sale of its assets in the ordinary course of business and as otherwise
contemplated by Section 1.3 hereof;
(i) purchase, lease or otherwise acquire any property of any kind
whatsoever other than in the ordinary course of business;
(j) allow or permit the expiration, termination or cancellation at any
time prior to the Closing of any of the insurance policies listed in
Schedule 3.17, unless it is replaced, with no loss of coverage, by a
comparable insurance policy;
(k) implement or adopt any change in its tax methods, principles or
elections; or
(l) commit to do any of the foregoing, except as contemplated by this
Agreement.
5.2 OPERATIONS. Unless the Purchaser shall otherwise first consent in
writing, from the date hereof until the earlier of the Effective Date or the
termination of this Agreement, the Sellers, jointly and severally, agree to
cause each Company to:
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(a) maintain its properties and facilities in as good working order and
condition as at present, ordinary wear and tear excepted;
(b) use its reasonable business efforts to maintain and preserve its
business organization intact, retain its present employees and
maintain its relationship with suppliers, customers and others having
business relations with it;
(c) advise the Purchaser promptly in writing of any material change in any
document, schedule or other information delivered pursuant to this
Agreement;
(d) file on a timely basis all notices, reports or other filings required
to be filed with or reported to any foreign, federal, state,
territorial, municipal or other governmental department, commission,
board, bureau, agency or any instrumentality of any of the foregoing
wherever located; and
(e) file on a timely basis all complete and correct applications or other
documents necessary to maintain, renew or extend any permit, license,
bond, surety, variance or any other approval required by any
governmental authority necessary or required for the continuing
operation of the businesses of each Company, whether or not such
approval would expire before or after the Effective Date.
5.3 ACCESS. Upon specific request made to either James S. Voorhees of MKC
or Jonathan M. Robertson of Morrison Knudsen, the Sellers will afford to the
Purchaser and its authorized representatives reasonable access to each Company's
financial, title, tax, corporate and legal materials and operating data and
information available as of the date hereof and which becomes available to the
Sellers at any time prior to the Effective Date, and will furnish to the
Purchaser such other information as it may reasonably request, unless any such
access and disclosure would violate the terms of any agreement to which either
Seller or any Company is bound or any applicable law or regulation. The Sellers
will use their reasonable business efforts to secure all requisite consents for
the examination by the Purchaser and its representatives of all information
covered by confidentiality agreements. The Sellers will cause each Company to
allow the Purchaser access to and consultation with the lawyers, accountants,
and other professionals employed by or used by such Company for the purposes of
negotiating, preparing, executing and performing this Agreement. Any such
consultation shall occur under circumstances appropriate to maintain intact the
attorney-client privilege as to privileged communications and attorney work
product. Additionally, the Sellers will afford to the
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Purchaser and its authorized representatives reasonable access to the books and
records of the Sellers insofar as they relate to property, accounting and tax
matters of any Company. Until the Effective Date, the confidentiality of any
data or information so acquired shall be maintained by the Purchaser and its
representatives, except in those cases where, on the advice of counsel,
disclosure is required in governmental filings or judicial, administrative or
arbitration proceedings. Further, the Sellers will afford to the Purchaser and
its authorized representatives reasonable access from the date hereof until the
Effective Date, during normal business hours, to each Company's assets and
properties; provided that such access shall be at the sole cost, expense and
risk of the Purchaser. The Sellers acknowledge that the Purchaser has had
access and will continue to have access to the senior management of each Company
and that each of such members of senior management is entitled to reveal to the
Purchaser and its representatives information concerning any Company that may be
deemed confidential and proprietary.
5.4 ANTITRUST NOTIFICATION; OTHER REPORTING REQUIREMENTS. The Sellers and
the Purchaser previously filed with the Federal Trade Commission and the
Department of Justice the notification and report form required under the HSR
Act for the transactions contemplated hereby and received notice from the
Federal Trade Commission on August 11, 1995 of the early termination of the
waiting period provided for thereunder. The Sellers shall cause each Company
duly and timely to file all notices and reports required to be filed with all
foreign, federal, state, territorial, local and other governmental authorities
in contemplation of the consummation of the transactions described herein.
5.5 BEST BUSINESS EFFORTS. The Sellers and the Purchaser shall use their
best business efforts to (a) obtain all approvals and consents required by or
necessary for the transactions contemplated by this Agreement, and (b) ensure
that all of the conditions to the obligations of the Purchaser and the Sellers
contained in Sections 6.1 and 6.2, respectively, are satisfied timely.
5.6 CONFIDENTIALITY. After the Effective Date, the Sellers shall not,
directly or indirectly, use or provide to, or shall not permit any affiliate,
directly or indirectly, to use or provide to, any other person any nonpublic
information (excluding information provided to third parties prior to the
Effective Date pursuant to confidentiality agreements in existence on the date
of this Agreement) concerning the business or operations (financial or other) of
any Company, except as on the advice of counsel is required in governmental
filings or judicial, administrative or arbitration proceedings.
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5.7 ADDITIONAL DISCLOSURES AND INFORMATION. The Sellers shall give the
Purchaser prompt notice if at any time on or prior to the Effective Date there
is a change in any state of facts, or there is the occurrence, nonoccurrence or
existence of any event subsequent to the date of this Agreement, which change or
event is known to any executive officer of either Seller and which would make
any representation and warranty (including the information set forth in the
schedules) made by the Sellers to the Purchaser not true or correct in any
material respect, it being the intention of the parties to this Agreement that
the Sellers shall engage in a continuous disclosure process from the date of
this Agreement through the Effective Date.
5.8 DISCLOSURE OF BREACH. The Purchaser covenants and agrees that if, in
the course of its investigation of the businesses of the Companies, anything
comes to its attention that indicates there has been or there is or there could
become a breach of the Sellers' representations and warranties, covenants and
agreements contained in this Agreement, Purchaser will promptly notify the
Sellers of such matter and will give the Sellers a reasonable opportunity to
cure or correct any such breach.
5.9 NOTICE OF FAILURE OF CONDITION. Each party hereto will as promptly as
reasonably practicable notify each other party in writing of the occurrence of
any event of which it obtains knowledge which will result in the failure to
satisfy the conditions specified in Section 6.1 hereof, in the case of events
relating to the Sellers, and Section 6.2 hereof, in the case of events relating
to the Purchaser.
5.10 INTERFERENCE WITH RELATIONSHIPS. From the date hereof until the
Effective Date, the Purchaser will not take any action or engage in any practice
calculated or designed to impair the relationships of the Companies with their
customers, suppliers or others having business dealings with any of them.
5.11 TRANSFER. The Sellers have taken and will take all actions necessary
to comply with applicable requirements of Environmental Law concerning the
transfer of the MKI Shares, including without limitation the filing with
appropriate permitting agencies of any notices required in reference to the
change in ownership for the purpose of effecting the transfer or issuance of the
permits required under Environmental Law for the operation and the conduct of
the business of any Company. The Sellers shall assist the Purchaser in
effectuating the issuance or transfer, as promptly as is reasonably possible, of
all Environmental Permits required as of the Effective Date. The Sellers shall
notify the Purchaser of any notices or reports required from the Purchaser in
connection with the transfer or issuance of the required Environmental Permits,
and the Purchaser shall cooperate in providing promptly such notices or reports.
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5.12 LIMITED USE OF LEASED SPACE. From and after the Effective Date and
until the first to occur of March 31, 1996 or the termination of MKC's right to
occupy the space, MKC shall permit the Purchaser (a) to store the office
furniture and equipment owned by E.E. Black on the Effective Date at MKC's
leased premises in Honolulu and (b) to store construction equipment as space
permits at MKC's Campbell Yard, in each case without a requirement for the
payment of rent by the Purchaser.
5.13 FURTHER ASSURANCES. Each of the Purchaser and the Sellers agrees that
it will execute and deliver, and cause to be executed and delivered, on and
after the Effective Date, all such instruments and will take all reasonable
actions as may be necessary to transfer the MKI shares to the Purchaser, on the
terms contained herein, and otherwise secure the benefits of this Agreement to
the Purchaser and the Sellers in accordance with the terms hereof. The Sellers
also agree, to the extent practicable under the circumstances, to cooperate with
the Purchaser after the Closing by permitting any resident management employee
or other designated person named in any contractor license of a Company in
Hawaii or elsewhere (an "RME") who is no longer an employee of such Company
after the Effective Date to continue to serve as the RME under such contractor's
license until the Purchaser can secure the substitution of another RME (which
the Purchaser undertakes to do promptly), all to the end that each Company can
continue to maintain its contractor licenses after the Closing without
interruption.
ARTICLE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO THE OBLIGATION OF THE PURCHASER. The obligation of the
Purchaser to proceed with the Closing contemplated hereby is subject to the
satisfaction on or prior to the Effective Date of all of the following
conditions, any one or more of which may be waived in writing, in whole or in
part, by the Purchaser:
(a) The Sellers shall have complied in all material respects with
each of their covenants and agreements contained herein and each of their
representations and warranties contained in this Agreement shall be deemed to
have been made again at and as of the Effective Date and shall then be true and
correct in all material respects.
(b) The Purchaser shall have received a certificate, dated as of the
Effective Date, of an executive officer of each Seller certifying as to (i) the
matters specified in Section 6.1(a) hereof and (ii) the accuracy and
completeness of the list attached thereto, which shall be reasonably acceptable
to the Purchaser, setting forth
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all outstanding liabilities of each Company as of the Effective Date that are
not reflected in the Audited Statements (as defined below).
(c) The Purchaser shall have received from Jonathan M. Robertson,
Esq., Associate General Counsel of Morrison Knudsen, counsel to the Sellers, an
opinion dated the Effective Date, with such qualifications (including reliance
upon the opinions of other counsel) as are reasonably acceptable to the
Purchaser, to the effect that:
(i) each Seller and each Company is a corporation duly
incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation with the
corporate power and authority to own its respective assets
and to transact its respective businesses as now being
conducted; and each Company is duly licensed or qualified to
do business as a foreign corporation and is in good standing
in all jurisdictions in which the character of the
properties and assets now owned or held by it or the nature
of business now conducted by it requires it to be so
licensed or qualified where the failure so to qualify would
affect materially and adversely the business, financial
condition or results of operations of such Company;
(ii) each Seller has the corporate power to execute and deliver
this Agreement and the Seller Related Documents and to
consummate the transactions contemplated hereby and thereby;
all corporate acts and other proceedings required to be
taken by or on the part of each Seller to execute and
deliver this Agreement and the Seller Related Documents and
to consummate the transactions contemplated hereby and
thereby have been taken; and each of this Agreement and the
Seller Related Documents has been duly executed and
delivered by each Seller, and constitutes the valid and
binding obligation of each Seller enforceable in accordance
with its terms (except as otherwise limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally,
and except that such counsel need not express an opinion as
to whether any covenant contained in this Agreement or any
Seller Related Document is specifically enforceable);
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(iii) the authorized capital stock of each Company consists of the
class or classes of capital stock listed in Schedule 3.2,
and the shares of each class so indicated in Schedule 3.2 as
being issued and outstanding are issued and outstanding,
fully paid and nonassessable;
(iv) each Company is the record and, to such counsel's knowledge,
the beneficial owner of all of the issued and outstanding
shares of capital stock of each other Company so identified
on Schedule 3.2 as being owned by it, free and clear of all
Stock Encumbrances, and such shares constitute all the
issued and outstanding capital stock of each Company;
(v) except for such as have been obtained or made as the case
may be, no authorization, approval or consent of or
declaration or filing with any governmental authority or
regulatory body is necessary or required of either Seller or
any Company in connection with the execution and delivery of
this Agreement and the Seller Related Documents or the
performance by each Seller of its obligations hereunder and
thereunder;
(vi) the execution and delivery of this Agreement and the Seller
Related Documents by each Seller and the performance by each
Seller of its obligations hereunder and thereunder will not
violate any provision of any existing law or regulation
applicable to either Seller or any Company, or of any order,
judgment, award or decree, known to such counsel after due
inquiry, of any court, arbitrator or governmental authority
applicable to either Seller or any Company, the charter or
bylaws of, or any securities issued by, either Seller or any
Company, or any mortgage, indenture, lease, contract or
other agreement, instrument or undertaking, known to such
counsel after due inquiry, to which each Seller or any
Company is a party or by which either Seller or any Company
or any of its assets is bound, and will not result in, or
require, the creation or imposition of any Encumbrances on
any of the Companies' properties, assets or revenues
pursuant to the provisions of any such mortgage, indenture,
lease, contract or other agreement, instrument or
undertaking;
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(vii) none of the Companies is in default under any material
order, judgment, award or decree, known to such counsel
after due inquiry, of any court, arbitrator or governmental
authority binding upon or affecting any of them or by which
any of their assets may be bound or affected, and no such
order, judgment, award or decree materially adversely
affects the ability of any Company to carry on its
businesses as now conducted or the ability of the Sellers to
perform their obligations under this Agreement and the
Seller Related Documents; and
(viii) to the best knowledge of such counsel, no litigation,
investigation or administrative proceeding of or before any
court, arbitrator or governmental authority is pending or
threatened against either Seller or any Company (x) with
respect to this Agreement or the Seller Related Documents or
the transactions contemplated hereby and thereby or (y)
that, if adversely determined, would have a material adverse
effect on the business or financial condition of either
Seller or any Company.
(d) All filings with and consents of any governmental authority or
agency required for the consummation of the transactions contemplated in this
Agreement shall have been made and obtained, all waiting periods with respect to
filings made with governmental authorities in contemplation of the consummation
of the transactions described herein shall have expired or been terminated.
(e) The Sellers shall have delivered resignations, effective as of
the Effective Date, of all officers or directors of each of the Designated
Companies, Murphy and Black Construction.
(f) The Sellers shall have, as of the Effective Date, caused each
Company to cancel the authority of each person who is listed in Schedule 3.21
hereto to draw checks on or withdraw funds from any of the bank accounts
maintained by any Company, except for any person designated by the Purchaser in
writing prior to the Closing, and shall provide to the Purchaser evidence of
said cancellation.
(g) No material adverse change in the business, operations, affairs,
properties, assets or condition (financial or otherwise) of any Company shall
have occurred, and no Company shall have suffered any material loss of or damage
to any of its properties or assets, whether or not covered by insurance, since
the Balance Sheet Date, which change, loss or damage materially and adversely
affects the business or
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financial condition of such Company, and the Purchaser shall have received a
certificate signed by the Sellers dated the Effective Date to such effect.
(h) All actions, proceedings, instruments and documents required to
carry out this Agreement or incidental hereto and all other related legal
matters shall have been approved by counsel to the Purchaser and such counsel
shall have been furnished with all such documents and instruments as it shall
have reasonably requested in connection with the transactions contemplated
herein.
(i) No suit, action or other proceeding brought by any third party
shall be pending in which there is sought any remedy to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions in
connection herewith.
(j) The Sellers shall have secured, from their workmen's
compensation, general liability and casualty insurance carriers that have issued
insurance contracts containing endorsements that require any of the insured
Companies to reimburse the carriers for losses paid within a deductible level in
excess of $10,000 ("Loss Deductibles"), agreements to eliminate the necessity
for the Purchaser or any Company to reimburse such carriers for Loss Deductibles
related to events arising on or before the Effective Date.
(k) The Purchaser shall have received from the Sellers the release
from F&D contemplated by subsection (b) of Section 1.3 hereof, in form and
substance reasonably acceptable to the Purchaser.
(l) Morrison Knudsen and the Purchaser shall have entered into a
mutually satisfactory agreement pursuant to which (i) Morrison Knudsen shall
release and agree to indemnify and hold harmless each Company from any
obligation to make payments in respect of any retroactive adjustment provision
of any insurance policy that relates to events occurring on or before the
Effective Date and (ii) each Company (x) shall waive any right to receive
reimbursement in respect of any retroactive adjustment provision of any
insurance policy that relates to events occurring on or before the Effective
Date and (y) shall authorize Morrison Knudsen to retain all such reimbursement
amounts to which such Company would otherwise be entitled for Morrison Knudsen's
own account.
(m) The Purchaser shall have received an audited consolidated
statement of certain net assets to be sold and supplemental consolidating
information of the Companies as at April 30, 1995, that fairly present the
consolidated and consolidating financial position of the Companies on a basis of
accounting mutually
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agreeable to the Purchaser and the Sellers and that are accompanied by the
report of Deloitte & Touche LLP, independent auditors for the Sellers ("Audited
Statements"). The Audited Statements shall reflect no adverse change in the
financial condition of the Companies from that reflected in the Balance Sheet,
except as disclosed in Schedule 3.8.
(n) The Sellers shall have provided the Purchaser with a FIRPTA
certificate certifying that neither Seller is a "foreign person" within the
meaning of Treasury Regulation 1.1445-2(b).
(o) The Sellers and the Purchaser shall have entered into a mutually
satisfactory non-competition agreement pursuant to which the Sellers and their
affiliates shall agree for a period of three years after the Effective Date not
to engage in any aspect of the residential, commercial or heavy construction
business in the State of Hawaii (other than pursuant to (i) the construction
contracts that represent Retained Assets and (ii) construction contracts in the
mechanical and environmental markets) and in Guam, Palau, Yap, Saipan, Pohnei,
Kosrae, Chuuk and the other islands that comprise the Northern Mariana Islands,
the Federated States of Micronesia or Palau.
(p) Murphy shall have purchased annuities for each of the vested
participants in the G.W. Murphy Construction Co., Inc. Pension Plan in a manner
that will permit the termination of such plan in due course without the
incurrence of any additional liability by Murphy, any other Company or the
Purchaser with respect to the vested participants in such plan.
(q) The Purchaser shall have given its written acknowledgement that
the schedules listed in Schedule 6.1(q) to be delivered by the Sellers to the
Purchaser after the execution of this Agreement and prior to the Effective Date
(i) have been received by the Purchaser and (ii) are in form and substance
acceptable to the Purchaser in its sole discretion.
(r) The Purchaser shall have received from Sellers an Environmental
Remediation and Indemnification Agreement in the form of Schedule 6.1(r).
(s) The Purchaser and Morrison Knudsen shall have entered into a
mutually satisfactory agreement pursuant to which Morrison Knudsen, on behalf of
itself and its affiliates, assigns to the Purchaser all its rights under the
Agreement to Vary Shareholders' Agreement and Plan of Restructuring and for the
Sale and Purchase of Shares in McConnell Dowell Investments Inc. dated 29 April
1992 between McConnell Dowell Holdings PTY Limited and Morrison Knudsen and
McConnell Dowell Corporation Limited to seek reimbursement or indemnification
for any Damages
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suffered or incurred by Morrison Knudsen or its successors as a result of any
breach of any warranty, covenant or undertaking by any other party to such
agreement, except to the extent such rights extend to the Designated Companies
and relate to Retained Assets or Retained Liabilities.
6.2 CONDITIONS TO THE OBLIGATION OF THE SELLERS. The obligation of the
Sellers to proceed with the Closing contemplated hereby is subject to the
satisfaction on or prior to the Effective Date of all of the following
conditions, any one or more of which may be waived in writing, in whole or in
part, by the Sellers:
(a) The Purchaser shall have complied in all material respects with
its covenants and agreements contained herein and each of its representations
and warranties contained in this Agreement shall be deemed to have been made
again at and as of the Effective Date and shall then be true and correct in all
material respects.
(b) The Sellers shall have received a certificate, dated the
Effective Date, of an executive officer of the Purchaser certifying as to the
matters specified in Section 6.2(a) hereof.
(c) The Sellers shall have received from Castle & Lax, counsel to the
Purchaser, an opinion dated the Effective Date, with such qualifications as are
reasonably acceptable to the Sellers, to the effect that:
(i) the Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
California;
(ii) the Purchaser has the corporate power to execute and deliver
this Agreement and the Purchaser Related Documents and to
consummate the transactions contemplated hereby and thereby;
all corporate acts and other proceedings required to be
taken by or on the part of the Purchaser to authorize it to
execute and deliver this Agreement and the Purchaser Related
Documents and to consummate the transactions contemplated
hereby and thereby have been taken; and each of this
Agreement and the Purchaser Related Documents has been duly
executed and delivered by, and constitutes the valid and
binding obligation of, the Purchaser enforceable in
accordance with its terms (except as otherwise limited by
bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting the enforcement of creditors' rights
generally, and except that such counsel need not express an
opinion as to
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whether any covenant contained in this Agreement or any
Purchaser Related Document is specifically enforceable);
(iii) except for such as have been obtained or made as the case
may be, no authorization, approval or consent of or
declaration or filing with any governmental authority or
regulatory body is necessary or required of the Purchaser in
connection with the execution and delivery of this Agreement
and the Purchaser Related Documents or the performance by
the Purchaser of its obligations hereunder and thereunder;
(iv) the execution and delivery of the Agreement and the
Purchaser Related Documents by the Purchaser and the
performance by the Purchaser of its obligations under this
Agreement and the Purchaser Related Documents will not
violate any provision of any existing law or regulation
applicable to the Purchaser, or of any order, judgment,
award or decree, known to such counsel after due inquiry, to
which the Purchaser is a party or by which either the
Purchaser or any of its assets is bound, and will not result
in, or require, the creation or imposition of any
Encumbrances on any of the Purchaser's properties, assets or
revenues pursuant to the provisions of any such mortgage,
indenture, lease, contract or other agreement, instrument or
undertaking; and
(v) the Purchaser is not in default under any material order,
judgment, award or decree, known to such counsel after due
inquiry, of any court, arbitrator or governmental authority
binding upon or affecting it or by which any of its assets
may be bound or affected, and no such order, judgment, award
or decree materially adversely affects the ability of the
Purchaser to carry on its businesses as now conducted or the
ability to perform its obligations under this Agreement and
the Purchaser Related Documents.
(d) All filings with and consents of any governmental authority or
agency required for the consummation of the transactions contemplated in this
Agreement shall have been made and obtained, all waiting periods with respect to
filings made with governmental authorities in contemplation of the consummation
of the transactions described herein shall have expired or been terminated.
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(e) All actions, proceedings, instruments and documents required to
carry out this Agreement or incidental hereto and all other related legal
matters shall have been approved by counsel to the Sellers and such counsel
shall have been furnished with all such documents and instruments as it shall
have reasonably requested in connection with the transactions contemplated
herein.
(f) No suit, action or other proceeding brought by any third party
shall be pending in which there is sought any remedy to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions in
connection herewith.
(g) Morrison Knudsen and the Purchaser shall have entered into a
mutually satisfactory agreement pursuant to which (i) Morrison Knudsen shall
release and agree to indemnify and hold harmless each Company from any
obligation to make payments in respect of any retroactive adjustment provision
of any insurance policy that relates to events occurring on or before the
Effective Date and (ii) each Company (x) shall waive any right to receive
reimbursement in respect of any retroactive adjustment provision of any
insurance policy that relates to events occurring on or before the Effective
Date and (y) shall authorize Morrison Knudsen to retain all such reimbursement
amounts to which such Company would otherwise be entitled for Morrison Knudsen's
own account.
(h) The requisite percentage of the lenders under Morrison Knudsen's
credit facility shall have approved the transactions contemplated by this
Agreement.
6.3 OTHER MUTUALLY ACCEPTABLE ARRANGEMENTS. If the Sellers are unable to
satisfy, or secure the Purchaser's waiver of compliance with, each of the
conditions set forth in subsections (a) through (s) of Section 6.1 hereof, the
Purchaser and the Sellers agree to explore all practical alternatives that are
reasonably available before initiating steps to terminate the Agreement pursuant
to Article X hereof.
ARTICLE VII
TAX MATTERS
7.1 LIABILITY FOR TAXES. (a) For purposes of this Agreement, "Taxes"
means (i) all federal, foreign, state, territorial or local net or gross income,
gross receipts, sales, use, real property gains or transfer, ad valorem,
property, value-added, franchise, production, severance, windfall profit,
withholding, payroll, employment, excise or similar taxes, assessments, duties,
fees, levies or other governmental charges, together with any interest thereon,
any penalties, additions to tax or additional amounts with respect
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thereto and any interest in respect of such penalties, additions or additional
amounts, and (ii) liability for the payment of any consolidated or combined tax
(including, without limitation, any liability imposed pursuant to Treasury
Regulations Section 1.1502-6 as a result of being a member of the Seller Group),
together with any interest thereon, any penalties, additions to tax or
additional amounts with respect thereto and any interest in respect of such
penalties, additions or additional amounts,
of the type described in clause (i) above. "Unitary Return" shall mean any
return with respect to any Taxes, other than federal income Taxes, filed on a
consolidated, combined, or unitary basis by any group of corporations of which
any Company is a member.
(b) The Sellers shall be liable for, and shall indemnify and hold the
Purchaser and its affiliates harmless from, (i) any Taxes caused by or resulting
from the sale of the MKI Shares, (ii) any Taxes of the Sellers and its
affiliates (other than the Companies) imposed on any Company solely on the basis
of joint and several liability for such Taxes (including, without limitation,
any liability imposed pursuant to Treasury Regulations Section 1.1502-6 for
federal income Taxes incurred by any member of the Seller Group), (iii) any
Taxes (other than Taxes described in clauses (i) or (ii) above or Section 3.10
hereof) imposed on or incurred by any Company for any taxable period ending on
or before the Effective Date (or the portion, determined as described in
subsection (d) of this Section 7.1, of any such Taxes imposed on or incurred by
any Company for any taxable period beginning on or before and ending after the
Effective Date which is allocable to the portion of such period occurring on or
before the Effective Date (the "Pre-Effective Date Period")), excluding (x) any
such Taxes arising from any event occurring on the Effective Date, but after the
Closing, which is outside the ordinary course of the business of such
corporation and (y) any such Taxes caused by or resulting from any actual or
deemed election pursuant to Section 338 of the Code with regard to the purchase
of the MKI Shares and (iv) any attorneys' fees or other litigation costs
incurred by the Purchaser, any Company or any affiliate thereof in connection
with any payment from either Seller under subsection (b) of this Section 7.1.
(c) The Purchaser shall be liable for, and shall indemnify and hold
the Sellers and their affiliates harmless from, (i) any Taxes caused by or
resulting from any actual or deemed election pursuant to Section 338 of the Code
with regard to the purchase of the MKI Shares, (ii) any Taxes imposed on or
incurred by any Company for which the Sellers are not liable under subsection
(b) of this Section 7.1, and (iii) any attorneys' fees or other litigation costs
incurred by the Sellers and their affiliates in connection with any payment from
the Purchaser under subsection (c) of this Section 7.1 hereof.
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(d) Whenever it is necessary for purposes of subsection (b) or (c) of
this Section 7.1 to determine the portion of any Taxes imposed on or incurred by
any Company for a taxable period beginning on or before and ending after the
Effective Date which is allocable to the Pre-Effective Date Period, the
determination shall be made, in the case of property or ad valorem Taxes or
franchise Taxes (which are not measured by, or based upon, net income), on a per
diem basis and, in the case of other Taxes, by assuming that the Pre-Effective
Date Period constitutes a separate taxable period of such Company (and any tax
partnerships in which it has an interest) and by taking into account the actual
taxable events occurring during such period (except that exemptions, allowances
and deductions for a taxable period beginning on or before and ending after the
Effective Date that are calculated on an annual or periodic basis, such as the
deduction for depreciation, shall be apportioned to the Pre-Effective Date
Period ratably on a per diem basis.
(e) The Purchaser agrees to pay to the Sellers any refund received
(whether by payment, credit, offset or otherwise) after the Effective Date by
the Purchaser or its affiliates, including any Company, in respect of any Taxes
for which the Sellers are liable under subsection (b) of this Section 7.1, but
only to the extent such refund has not been reflected as a receivable on the
balance sheet of any Company as of the Effective Date and does not result from
the carryback of losses or credits from a taxable period of any Company ending
after the Effective Date. The Sellers agree to pay to the Purchaser any refund
received (whether by payment, credit, offset or otherwise) by any Seller or its
affiliates in respect of any Taxes for which the Purchaser is liable under
subsection (c) of this Section 7.1. The parties shall cooperate in order to
take all necessary steps to claim any such refund. Any such refund received by
a party or its affiliate for the account of the other party shall be paid to
such other party within 90 days after such refund is received.
(f) Within 120 days after Closing, the Sellers will provide to the
Purchaser a schedule which sets forth the following information: (i) the
adjustments to the basis of the stock of each Company other than MKI, for
federal income tax purposes for the tax years ended December 31, 1992 through
the date of Closing, (ii) a schedule of the book/tax differences in the basis of
assets and liabilities of each Company for federal, foreign or territorial
income tax purposes, as the case may be as of the date of Closing, (iii) the
changes in the earnings and profits of each Company for the tax years ended
December 31, 1992 through the date of Closing, (iv) all material consents and
elections with respect to Taxes of or with respect to each Company that have
been filed with any taxing authority, and (v) the amounts of the net operating
loss, net capital loss, foreign tax credit and tax credit carryforwards
allocable to each Company as of December 31, 1994. The Sellers shall provide
and deliver to the
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Purchaser a schedule no later than August 31, 1996 showing for the short tax
year 1995 any and all adjustments for net operating loss, capital losses or
alternative minimum tax credit allocable to the Companies arising from the short
period for year 1995.
7.2 RETURNS. (a) All returns or reports which relate to any Taxes of any
Company (and any tax partnerships in which (i) any Company owns an interest and
(ii) the Sellers or an affiliate of the Sellers has responsibility for preparing
and filing partnership returns or reports) shall be prepared and filed by the
party which is legally responsible therefor. All income and deductions of each
Company that is at present a member of the Seller Group for the period beginning
on January 1, 1995 and extending through the Effective Date will be included in
the consolidated federal income tax return of the Seller Group for the year
ending December 31, 1995 and will be reported on a basis consistent with
previously filed returns. The Sellers shall file all returns required to be
filed for the period beginning on January 1, 1995 and ending on the Effective
Date for each Company that at present is not a member of the Seller Group on a
basis consistent with previously filed returns. The Purchaser and its
affiliates, including each Company, shall cooperate with the Sellers and shall
make available all necessary records and timely take all action necessary to
allow the Sellers or its affiliates to prepare and file the returns or reports
which they are responsible for preparing and filing under subsection (a) of this
Section 7.2.
(b) Prior to the Closing, the Sellers will provide to the Purchaser a
schedule setting forth the open tax years in each jurisdiction in which any
returns relating to income Taxes are filed by or with respect to any Company.
Tax information including copies of (i) pro forma separate federal income tax
returns for the Companies as members of the Seller Group and (ii) state, local,
territorial and foreign tax returns of the Companies or, with respect to Unitary
Returns (as defined in subsection (a) of Section 7.1 hereof) and in lieu of
providing copies thereof, a schedule showing the modifications to the Companies'
federal taxable income and other relevant information sufficient to compute the
Companies' state taxable income for each of the taxable years ended August 14,
1992 through December 31, 1994, and the short period for year 1995 shall be
provided by the Sellers and delivered to Purchaser as soon as practicable but no
later than 120 days after the Closing Date. Such information shall include
copies of the tax workpapers used by the Sellers to prepare the Companies' tax
returns for year 1994, and the short period for year 1995.
7.3 TAX PROCEEDINGS. In the event the Purchaser or any of its affiliates
receives notice (the "Proceeding Notice") of any examination, claim, adjustment,
or other proceeding with respect to the liability of any Company for Taxes for
any period for which the Sellers are or may be liable under subsection (b) of
Section 7.1 hereof, the
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Purchaser shall notify the Sellers in writing thereof (the "Purchaser Notice")
no later than the earlier of (i) 30 days after the receipt by the Purchaser or
any of its affiliates of the Proceeding Notice or (ii) ten days prior to the
deadline for responding to the Proceeding Notice. As to any such Taxes for
which the Sellers are solely liable under subsection (b) of Section 7.1 hereof,
the Sellers shall be entitled at their expense to control or settle the contest
of such examination, claim, adjustment, or other proceeding, provided (a) they
notify the Purchaser in writing that they desire to do so no later than the
earlier of (i) 30 days after receipt of the Purchaser Notice or (ii) five days
prior to the deadline for responding to the Proceeding Notice and (b) the
Sellers may not, without the consent of the Purchaser, agree to any settlement
which could result in an increase in the amount of Taxes for which the Purchaser
is liable under subsection (c) of Section 7.1 hereof. The parties shall
cooperate with each other and with their respective affiliates, and will consult
with each other, in the negotiation and settlement of any proceeding described
in this Section 7.3. The Purchaser will provide, or cause to be provided, to
the Sellers necessary authorizations, including powers of attorney, to control
any proceedings which the Sellers are entitled to control pursuant to this
Section 7.3.
7.4 PAYMENT OF TAXES. All Taxes with respect to any Company shall be paid
by the party that is legally responsible therefor. Except as otherwise provided
in this Article VII, any amount to which a party is entitled under this Article
VII shall be promptly paid to such party by the party obligated to make such
payment following written notice to the party so obligated stating that the
Taxes to which such amount relates have been paid or incurred and providing
details supporting the calculation of such amount.
7.5 COOPERATION AND EXCHANGE OF INFORMATION. The Purchaser on the one
hand, and the Sellers on the other hand, will provide, or cause to be provided,
to the other party copies of all correspondence received from any taxing
authority by such party or any of its affiliates in connection with the
liability of any for Taxes for any period for which such other party is or may
be liable under subsection (b) or (c) of Section 7.1 hereof. The Sellers shall
assist the Purchaser in obtaining the consent of the partners in any tax
partnership in which any Company owns an interest to make (i) any elections in a
return of the tax partnership which the Purchaser deems necessary and (ii) an
allocation of tax partnership items in the manner described in subsection (d) of
Section 7.1 hereof. The parties will provide each other with such cooperation
and information as they may reasonably request of each other in preparing or
filing any return, amended return, or claim for refund, in determining a
liability or a right of refund, or in conducting any audit or other proceeding,
in respect of Taxes imposed on the parties or their respective affiliates. The
Purchaser on the one hand, and the Sellers
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on the other hand, and their affiliates will preserve and retain all returns,
schedules, work papers and all material records or other documents relating to
any such returns, claims, audits, or other proceedings until the expiration of
the statutory period of limitations (including extensions) of the taxable
periods to which such documents relate and until the final determination of any
payments which may be required with respect to such periods under this Agreement
and shall make such documents available at the then current administrative
headquarters of such party to the other party or any affiliate thereof, and
their respective officers, employees and agents, upon reasonable notice and at
reasonable times, it being understood that such representatives shall be
entitled to make copies of any such books and records relating to any Company as
they shall deem necessary. The Purchaser on the one hand, and the Sellers on
the other hand, further agree to permit representatives of the other party or
any affiliate thereof to meet with employees of such party on a mutually
convenient basis in order to enable such representatives to obtain additional
information and explanations of any documents provided pursuant to this Section
7.5. The Purchaser on the one hand, and the Sellers on the other hand, shall
make available to the representatives of the other party or any affiliate
thereof sufficient work space and facilities to perform the activities described
in the two preceding sentences. Any information obtained pursuant to this
Section 7.5 shall be kept confidential, except as may be otherwise necessary in
connection with the filing of returns or claims for refund or in conducting any
audit or other proceeding. Each party shall provide the cooperation and
information required by this Section 7.5 at its own expense.
7.6 SURVIVAL OF OBLIGATIONS. The obligations of the parties set forth in
this Article VII shall be unconditional and absolute and shall remain in effect
without limitation as to time.
7.7 CONFLICT. In the event of a conflict between the provisions of this
Article VII and any other provisions of this Agreement, the provisions of this
Article VII shall control. The provisions of Article XI shall not apply to any
Taxes for which any party is liable under this Article VII.
7.8 TAX ALLOCATION ARRANGEMENTS. Effective as of the Effective Date, all
liabilities and obligations between any Company on one hand and the Sellers or
their affiliates on the other hand under any tax allocation agreement or
arrangement in effect prior to the Effective Date shall be extinguished in full
(without the necessity of any payment with respect thereto) and any liabilities
or rights existing under any such agreement or arrangement shall terminate and
shall no longer be enforceable. The Sellers and their affiliates shall execute
any documents necessary to effectuate the provisions of this Section 7.8.
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7.9 LOSS CARRYOVERS. To the extent that the Purchaser determines that it
is unable to utilize any net operating loss carryovers and otherwise would elect
to treat the loss carryover as expiring under Treasury Regulation Section
1.1502-32(b)(4), the Purchaser shall jointly enter into an election with the
Sellers pursuant to Treasury Regulation Section 1.1502-20(g)(1) to reattribute
losses of E.E. Black to Morrison Knudsen. The amount of losses to be
reattributed shall not exceed the taxable loss that would be disallowed by
Treasury Regulation Section 1.1501-20(a)(1) and 1.1502-20(c) as determined by
the Sellers. The determination of the amount of losses to be reattributed shall
be made by August 31, 1996.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.1 STATUS OF EMPLOYEES. Except for such employees covered by employment
agreements listed in Schedule 3.18 or subject to collective bargaining
agreements listed in Schedule 3.15 or 3.19 and except for any obligations or
covenants of the Purchaser set forth in Section 8.2 hereof, (a) neither the
Purchaser nor any Company shall have any obligation to continue the employment
of any employee of any Company after the Effective Date, and (b) after the
Effective Date any continued employment of the employees of any Company shall be
on such terms and conditions and include such benefits as the Purchaser shall
deem appropriate in its sole and unlimited discretion (except for those benefits
arising under the 401(k) Plan of Black Construction Corporation ("401(k) Plan"),
the G.W. Murphy Construction Company, Inc. Pension Plan ("Pension Plan") and the
plans referred to as items (a)(3) and (a)(4) on Schedule 3.19 (Guam Plans")).
8.2 CERTAIN BENEFITS OF EMPLOYEES. (a) Except for the 401(k) Plan, the
Pension Plan and the Guam Plans, which shall be continued after the Effective
Date, effective as of the Effective Date, participation by each Company under
all employee benefit plans, programs, practices or arrangements, whether written
or oral, sponsored by the Sellers ("Benefit Plans"), in which any of the
Companies has theretofore participated shall cease; and each participant who is
an employee of any Company immediately after the Effective Date and who was a
participant in any Benefit Plan immediately prior to the Effective Date shall be
entitled to the benefits due to such employee as a result of such termination as
provided in each Benefit Plan (but only if permitted by applicable law). Each
employee of any Company that participates in the employee benefit plans of the
Purchaser or any affiliate thereof shall be credited under such employee benefit
plans with the same amount of service for eligibility and vesting
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purposes credited to such employees as of the Effective Date under the employee
benefit plans in which they have theretofore participated, provided such
employee benefit plans are substantially similar to the employee benefit plans
of the Purchaser. To the extent required by law, the "group health plans"
providing medical coverage to the "covered employees" of the Companies prior to
the Effective Date will provide COBRA health care continuation coverage with
respect to individuals who are "qualified beneficiaries" and who have a
"qualifying event" on or prior to the Effective Date. The terms used in the
preceding sentence shall have those meanings set forth in Code Section 4980B.
Notwithstanding anything herein to the contrary, the Purchaser intends to
provide health care benefits and coverage to the employees of each Company
(other than the employees of Black Construction who are located in Guam) that
are substantially similar to the health care benefits and coverage that are
provided to the employees of the Purchaser immediately prior to the Effective
Date.
(b) Prior to the first anniversary of the Effective Date, the
Purchaser shall, at the sole cost and expense of the Sellers, cause Murphy to
use its best efforts to obtain a favorable determination letter from the
Internal Revenue Service to the effect that the termination of the G. W. Murphy
Construction Company, Inc. Pension Plan ("Pension Plan") does not affect the
qualification of the Pension Plan, and liquidate the trust and disburse Pension
Plan funds to the participants in accordance with the terms and provisions of
the Pension Plan. Nothing herein shall be construed to relieve the Sellers of
liability arising in connection with claims brought by participants in the
Pension Plan or its beneficiaries with respect to the operation or
administration of such plan prior to the Effective Date. The Purchaser shall
cooperate with the Sellers in all material respects regarding the filing of the
Pension Plan with the IRS and the PBGC. The Sellers shall have control over the
content of any such filings and shall select the advisors and other
professionals who will prepare and advise the Purchaser with respect to such
filings.
(c) The provisions of this Article VIII to the contrary
notwithstanding, the parties hereto may in the period between the date hereof
and the Effective Date mutually agree to handle the issues addressed therein in
some other manner and, in such event, any provisions agreed to by the parties
hereto in writing pursuant to subsection (c) of this Section 8.2 shall govern.
(d) Except with respect to liabilities under the 401(k) Plan, the
Pension Plan, the Guam Plans, the Employment Agreement dated as of November 8,
1992 between Murphy and Gordon L. Scruton, the Deferred Compensation Agreement
dated November 15, 1990 between Murphy and Angel C. Abcede and all obligations
under the collective bargaining agreements listed in Schedule 3.15 or 3.19,
neither the Purchaser
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nor any Company or their respective affiliates shall have any liability or
obligation with respect to employment matters, any of the Benefit Plans, the
E.E. Black Limited Savings and Retirement Plan or any other liability, whether
contingent or otherwise, relating to or arising out of the employment of
employees or the engagement of independent contractors by any Company or the
Sellers or any of their respective affiliates for periods prior to and including
the Effective Date.
(e) The Purchaser and its affiliates will cooperate fully with the
Sellers and allow the Sellers access (in the same manner as set forth in Section
5.3 hereof) with respect to any and all matters relating to the E.E. Black
Limited Savings & Retirement Plan until the latter of (i) the receipt of any
voluntary closing agreement, the application for which is filed with the IRS
within 12 months of the Effective Date, or (ii) three years from the Effective
Date.
ARTICLE IX
INVESTIGATION; LIMITATIONS
9.1 SCOPE OF THE PURCHASER'S INVESTIGATIONS AND WAIVER. In determining
the Purchase Price to be paid for the MKI Shares, the Purchaser relied upon the
substance of the unaudited April 30, 1995 consolidating balance sheet of the
Companies, a copy of which is included in Schedule 3.7 hereof and the accuracy
of which is being confirmed by the audit provided for in subsection (m) of
Section 6.1 hereof, the express representations, warranties and conditions set
forth in this Agreement and an inspection of the construction equipment and
certain real property owned by the Companies. ACCORDINGLY, THE PURCHASER IS
WILLING TO DISCLAIM AND NEGATE AND DOES HEREBY DISCLAIM AND NEGATE ANY OTHER
EXPRESSED OR IMPLIED REPRESENTATION OR WARRANTY THAT IS NOT SET FORTH IN THIS
AGREEMENT, THE SELLER RELATED DOCUMENTS OR ANY OTHER AGREEMENT DELIVERED IN
CONNECTION HEREWITH RELATING TO THE ASSETS AND OPERATIONS OF EACH COMPANY.
9.2 SURVIVAL. The liability of the Sellers for the breach of the
representations and warranties of the Sellers set forth in Article III hereof
shall be limited to claims for which the Purchaser delivers written notice to
the Sellers on or before (a) the first anniversary date of the Effective Date in
the case of claims relating to Black Construction and Black Micro, (b) the
second anniversary date of the Effective Date in the case of Murphy, MKI and MKP
and (c) the date upon which the assertion of a claim is barred by the statute of
limitations in the case of E.E. Black. The liability of the Purchaser for the
breach of the representations and warranties of the Purchaser set
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forth in Article IV hereof shall be limited to claims for which the Sellers
shall deliver written notice to the Purchaser on or before the second
anniversary date of the Effective Date.
ARTICLE X
TERMINATION
10.1 EVENTS OF TERMINATION. Subject to the terms of Section 6.3 hereof and
notwithstanding any other provision hereof, this Agreement shall terminate upon
the occurrence of any of the following events:
(a) The written consent of the Sellers and the Purchaser;
(b) By the Sellers in writing, without liability to the Sellers, if
Purchaser shall (i) fail to perform in any material respect its agreements
contained herein required to be performed by it on or prior to the Effective
Date, or (ii) materially breach any of its representations, warranties or
covenants contained herein, which failure or breach is not cured within ten days
after the Sellers shall have notified the Purchaser of their intent to terminate
this Agreement pursuant to subsection (b) of this Section 10.1;
(c) By the Purchaser in writing, without liability to the Purchaser, if
the Sellers shall (i) fail to perform in any material respect their agreements
contained herein required to be performed by them on or prior to the Effective
Date, or (ii) materially breach any of their representations, warranties or
covenants contained herein, which failure or breach is not cured within ten days
after the Purchaser has notified the Sellers of its intent to terminate this
Agreement pursuant to subsection (c) of this Section 10.1;
(d) By either the Sellers or the Purchaser in writing, without liability,
if there shall be any order, writ, injunction or decree of any court or
governmental or regulatory agency binding on the Purchaser or the Sellers, which
prohibits or restrains the Purchaser or the Sellers from consummating the
transactions contemplated hereby, provided that the Purchaser and the Sellers
shall have used their best efforts to have any such order, writ, injunction or
decree lifted and the same shall not have been lifted within 30 days after entry
by any such court or governmental or regulatory agency; or
(e) The written notice from the Purchaser to the Sellers or the Sellers to
the Purchaser if the Closing has not occurred, without fault on any party's
part, by October 31, 1995.
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10.2 EFFECT OF TERMINATION. The following provisions shall apply in the
event of a termination of this Agreement:
(a) If this Agreement is terminated by the Sellers or by the Purchaser as
permitted under Section 10.1 hereof and not as the result of the negligent or
willful failure of any party to perform its obligations hereunder, such
termination shall be without liability to any party to this Agreement or any
shareholder, director, officer, employee, agent or representative of such party.
(b) The Purchaser and the Sellers acknowledge that the MKI Shares are not
readily available in the open market and the assets of each Company are unique
and specifically identifiable. Accordingly, the Purchaser and the Sellers
further agree and stipulate that if the Closing does not occur because of the
willful failure of the Sellers, on the one hand, or the Purchaser, on the other
hand, to perform their respective obligations hereunder, (i) monetary damages
and any other remedy at law will not be adequate, (ii) the non-defaulting party
shall be entitled to specific performance as the remedy for such breach, (iii)
each party hereto agrees to waive any objection to the remedy of specific
performance, (iv) each party agrees that the granting of specific performance by
any court will not be deemed to be harsh or oppressive to the party who is
ordered specifically to perform its obligations under this Agreement, and (v) in
connection with any action for specific performance, the prevailing party shall
be entitled to reasonable attorneys' fees and other costs of prosecuting or
defending such action.
(c) The right to seek specific performance hereunder shall not preclude
any party to seek any other remedy at law or in equity.
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION OF THE SELLERS. The Purchaser, from and after the
Effective Date, shall protect, indemnify and hold the Sellers harmless from and
against any and all Damages suffered by the Sellers as a result of, caused by,
arising out of, or in any way relating to (a) any misrepresentation, breach of
warranty, or nonfulfillment of any agreement or covenant on the part of the
Purchaser under this Agreement, any Purchaser Related Document or any
misrepresentation in or omission from any list, schedule, certificate, or other
instrument furnished or to be furnished to the Sellers by the Purchaser pursuant
to the terms of this Agreement or (b) the performance (or lack of performance)
by any Company after the Effective Date of its obligations under any
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contract that was in existence prior to the Effective Date, other than any
contract representing part of the Retained Assets.
11.2 INDEMNIFICATION OF THE PURCHASER. Subject to the limitations set
forth in Section 9.2 hereof, the Sellers, jointly and severally, shall protect,
indemnify and hold the Purchaser and each Company harmless from and against any
and all Damages suffered by the Purchaser or any Company as a result of, caused
by, arising out of, or in any way relating to (a) any misrepresentation, breach
of warranty, or nonfulfillment of any agreement or covenant (including without
limitation Section 1.3 hereof) on the part of the Sellers under this Agreement,
any Seller Related Document or any misrepresentation in or omission from any
list, schedule, certificate, or other instrument furnished or to be furnished to
the Purchaser by the Sellers or any Company pursuant to the terms of this
Agreement or (b) the performance (or lack of performance) by any Company of any
contractual obligation that is performable by it on or prior to the Effective
Date, including without limitation any obligation arising from a contract
representing part of the Retained Assets.
11.3 DEMANDS. Each indemnified party hereunder agrees that promptly upon
its discovery of facts giving rise to a claim for indemnity under the provisions
of this Agreement, including receipt by it of notice of any demand, assertion,
claim, action or proceeding, judicial or otherwise, by any third party (such
discovery of facts or third-party action being collectively referred to herein
as a "Matter"), with respect to any Matter as to which it claims to be entitled
to indemnity under the provisions of this Agreement, it will give prompt notice
thereof in writing to the indemnifying party, together with a statement of such
information respecting any of the foregoing as it shall have. Such notice shall
include a formal demand for indemnification under this Agreement. The
indemnifying party shall not be obligated to indemnify the indemnified party
with respect to any Matter if the indemnified party knowingly failed to notify
the indemnifying party thereof in accordance with the provisions of this
Agreement in sufficient time to permit the indemnifying party or its counsel to
defend against such Matter and to make a timely response thereto including,
without limitation, any responsive motion or answer to a complaint, petition,
notice or other legal, equitable or administrative process relating to the
Matter, only insofar as such knowing failure to notify the indemnifying party
has actually resulted in prejudice or damage to the indemnifying party.
11.4 RIGHT TO CONTEST AND DEFEND. The indemnifying party shall be entitled
at its cost and expense to contest and defend by all appropriate legal
proceedings any Matter with respect to which it is called upon to indemnify the
indemnified party under the provisions of this Agreement; provided, that notice
of the intention so to contest
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shall be delivered by the indemnifying party to the indemnified party within 20
days from the date of receipt by the indemnifying party of notice by the
indemnified party of the assertion of the Matter. If the indemnifying party has
elected to assume the defense of any Matter, except as otherwise provided in
this Section 11.4, the indemnifying party will not be liable for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if the indemnifying party fails to
notify the indemnified party of its intent to assume the defense of the Matter
within such 20-day period, the indemnified party may assume its own defense, and
the indemnifying party will be liable for any reasonable expenses thereof. Any
such contest may be conducted in the name and on behalf of the indemnifying
party or the indemnified party as may be appropriate. Such contest shall be
conducted by reputable counsel employed by the indemnifying party, but the
indemnified party shall have the right but not the obligation to participate in
such proceedings and to be represented by counsel of its own choosing at its
sole cost and expense. The indemnifying party shall have full authority to
determine all action to be taken with respect thereto; provided, however, that
the indemnifying party will not have the authority to subject the indemnified
party to any obligation whatsoever, other than the performance of purely
ministerial tasks or obligations not involving material expense. If the
indemnifying party does not elect to contest any particular Matter, the
indemnifying party shall be bound by the result obtained with respect thereto by
the indemnified party. At any time after the commencement of the defense of any
Matter, the indemnifying party may request the indemnified party to agree in
writing to the abandonment of such contest or to the payment or compromise by
the indemnified party of the asserted Matter, whereupon such action shall be
taken unless the indemnified party reasonably determines that the contest should
be continued, and so notifies the indemnifying party in writing within 15 days
of such request from the indemnifying party. If the indemnifying party
ultimately determines that the contest should be continued, all legal fees and
disbursements and other expenses associated with continuing the contest shall be
borne by the indemnifying party. If the indemnified party determines that the
contest should be continued, the indemnifying party shall be liable hereunder
only to the extent of the amount that the other party to the contested Matter
had agreed unconditionally to accept in payment or compromise as of the time the
indemnifying party made its request therefor to the indemnified party. The
indemnified party shall not settle any Matter for which it is seeking
indemnification without the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld).
11.5 COOPERATION. If requested by the indemnifying party, the indemnified
party agrees to cooperate, including, without limitation, providing reasonable
access to its books and records relating to the Matter, with the indemnifying
party and its counsel in contesting any Matter that the indemnifying party
elects to contest or, if appropriate,
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in making any counterclaim against the person asserting the Matter, or any
cross-complaint against any person, and the indemnifying party will reimburse
the indemnified party for any expenses incurred by it in so cooperating. At no
cost or expense to the indemnified party, the indemnifying party shall cooperate
with the indemnified party and its counsel in contesting any Matter with respect
to all reasonable requests for such cooperation.
11.6 RIGHT TO PARTICIPATE. The indemnified party agrees to afford the
indemnifying party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons, including governmental
authorities, asserting any Matter against the indemnified party or conferences
with representatives of or counsel for such persons.
11.7 PAYMENT OF DAMAGES. The indemnifying party shall pay to the
indemnified party in immediately available funds any amounts to which the
indemnified party may become entitled by reason of the provisions of this
Agreement, such payment to be made within five days after any such amounts are
finally determined either by mutual agreement of the parties hereto or pursuant
to the final unappealable judgment of a court of competent jurisdiction. In
calculating any amount to be paid by an indemnifying party by reason of the
provisions of this Agreement, the amount shall be reduced by all tax benefits
and other reimbursements credited to or received by the other party related to
the Damages.
11.8 LIMITATIONS ON INDEMNIFICATION. The Sellers shall not be liable to
indemnify the Purchaser or any Company for Damages under Section 11.2 hereof
unless the aggregate amount of Damages for which the Sellers would, but for the
provisions of this Section 11.8, be liable exceeds, on an aggregate basis,
$25,000, and then only to the extent of any such excess and in no event shall
the total liability of the Sellers hereunder exceed $855,000 in the aggregate;
provided that notwithstanding the foregoing, the Sellers shall be fully liable
to indemnify the Purchaser and the Companies for Damages as a result of, caused
by, arising out of, or in any way relating to (a) any Taxes for which the
Sellers are liable under Article VII, (b) the breach by the Sellers of the
representations or covenants set forth in Sections 1.3(c), 1.3(d), 1.4, 3.10 and
3.23 hereof and (c) the agreement contemplated by subsection (l) of Section 6.1
hereof.
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ARTICLE XII
MISCELLANEOUS
12.1 EXPENSES. Regardless of whether the transactions contemplated hereby
are consummated, each party hereto shall pay its own expenses incident to this
Agreement and all action taken in preparation for carrying this Agreement into
effect. In addition to the foregoing, the Sellers agree to pay and bear (or to
reimburse any Company to the extent that any Company has paid) any expenses
arising out of the preparation and maintenance of any data rooms established in
connection with the offering for sale of the stock or assets of one or more of
the Companies, and all legal and accounting fees and expenses incurred in
connection with such offerings and in connection with the preparation,
negotiation and execution and consummation of this Agreement.
12.2 NOTICES. Any notice, request, instruction, correspondence or other
document to be given hereunder by either party to the other shall be in writing
and delivered personally or mailed by certified mail, postage prepaid and return
receipt requested, by telegram, telecopy, or by recognized courier service as
follows:
If to the Sellers, addressed to:
Morrison Knudsen Corporation
Morrison Knudsen Plaza
P. O. Box 73
Boise, Idaho 83729
Attn: Jonathan M. Robertson, Esq.
Telecopy: 208-386-6421
If to the Purchaser, addressed to:
Tutor-Saliba Corporation
15901 Olden Street
Sylmar, California 91342-1093
Attn: Ronald N. Tutor
Telecopy: 818-367-9574
Any address or name specified above may be changed by a notice given by the
addressee to the other party in accordance with this Section 12.2. Any notice,
demand or other communication shall be deemed given and effective (a) as of the
date of
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delivery, if delivered by hand, (b) as of the next day, if delivered
by overnight courier, or (c) three days after deposit in the United States mail,
postage prepaid. The inability to deliver because of changed address of which
no notice was given, or the rejection or other refusal to accept any notice,
demand or other communication, shall be deemed to be the receipt of the notice,
demand or other communication as of the date of such inability to deliver or the
rejection or refusal to accept.
12.3 NO NEGOTIATIONS. Until the first to occur of the Closing or
termination of this Agreement pursuant to the provisions of Article X hereof,
the Sellers shall not permit any Company to merge or consolidate with, or
acquire a substantial portion of the assets of, any other corporation, business
or person. The Sellers shall use reasonable efforts to retrieve promptly all
materials delivered to prospective bidders for the purchase of the stock or
assets of any Company. Until the first to occur of the Closing or termination
of this Agreement pursuant to the provisions of Article X hereof, the Sellers
shall not initiate or participate in discussions with, or otherwise solicit
from, any corporation, business or person any proposals or offers relating to
the disposition of stock, assets or business of any Company, or the acquisition
of the MKI Shares, or the merger or consolidation of any Company with any other
corporation.
12.4 GOVERNING LAW AND JURISDICTION. (a) This Agreement shall be governed
and construed in accordance with the substantive laws of the State of California
without reference to principles of conflicts of law.
(b) Each of the Sellers and the Purchaser, by acceptance hereof, (i)
agrees that any legal action with respect to this Agreement shall be brought
exclusively in the courts of the State of California, County of Los Angeles,
(ii) accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of those courts, and (iii) irrevocably waives
any objection, including, without limitation, 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 legal action in that jurisdiction;
PROVIDED, HOWEVER, that each of the Sellers and the Purchaser may assert in a
legal action in any other jurisdiction or venue each defense, third-party claim
or similar claim that, if not so asserted in such legal action, may thereafter
not be asserted by such party in an original legal action in the courts referred
to in clause (i) above.
12.5 PUBLIC STATEMENTS. The parties hereto shall consult with each other
and no party shall issue any public announcement or statement with respect to
the transactions contemplated hereby without the consent of the other parties,
unless the party desiring to make such announcement or statement, after seeking
such consent
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from the other parties, obtains advice from legal counsel that a public
announcement or statement is required by applicable law.
12.6 FORM OF PAYMENT. All payments hereunder shall be made in United
States dollars and, unless the parties making and receiving such payments shall
agree otherwise or the provisions hereof provide otherwise, shall be made by
wire or interbank transfer of immediately available funds by 12:00 Noon, Boise,
Idaho time, on the date such payment is due to such account as the party
receiving payment may designate at least three business days prior to the
proposed date of payment.
12.7 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with schedules attached hereto, and any documents delivered pursuant hereto,
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties,
including, without limitation, that certain Letter of Intent, dated July 21,
1995, as amended, by and between the Purchaser and Morrison Knudsen, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by each party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (regardless of
whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.
12.8 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective permitted
successors and assigns; but neither this Agreement nor any of the rights,
benefits or obligations hereunder shall be assigned, by operation of law or
otherwise, by any party hereto without the prior written consent of the other
parties; provided that the Purchaser may assign all of its rights, privileges
and obligations hereunder to any direct or indirect wholly-owned subsidiary of
the Purchaser organized under the laws of any of the United States. No such
assignment shall relieve the Purchaser of any of its obligations under this
Agreement. Nothing in this Agreement, express or implied, is intended to confer
upon any person or entity other than the parties hereto and their respective
permitted successors and assigns, any rights, benefits or obligations hereunder.
12.9 SEVERABILITY. If any one or more of the provisions contained in this
Agreement or in any other document delivered pursuant hereto shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or
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unenforceability shall not affect any other provision of this Agreement or any
other such document. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement, a provision as similar in its term to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
12.10 DEFINITION OF "MATERIAL". The misstatement or omission of an
item of data in or from a representation or warranty in a section of this
Agreement, or in or from any list, schedule, certificate or other instrument
furnished pursuant to the terms of this Agreement (or the failure to perform an
obligation set forth in a section of this Agreement), shall be considered
"material", "materially adverse" or other words and phrases of similar purport
if such misstatement or omission, when aggregated with all other misstatements
or omissions in or from the same section of this Agreement, or such list,
schedule, certificate or other instrument (or such failure, when aggregated with
all other failures under the same section), results in indemnifiable Damages
under Article XI hereof in excess of $25,000 without regard to the provisions of
Section 11.8 hereof.
12.11 HEADINGS AND SCHEDULES. The headings of the several Articles and
Sections herein are inserted for convenience of reference only and are not
intended to
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be a part of or to affect the meaning or interpretation of this Agreement. The
schedules referred to herein are attached hereto and incorporated herein by this
reference, and unless the context expressly requires otherwise, such schedules
are incorporated in the definition of "Agreement."
12.12 MULTIPLE 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 instrument.
EXECUTED as of the date first set forth above.
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"PURCHASER"
TUTOR-SALIBA CORPORATION
/s/ Ronald N. Tutor
By:
---------------------------
Ronald N. Tutor
President
"SELLERS"
MORRISON KNUDSEN
CORPORATION (a Delaware corporation)
/s/ Denis M. Slavich
By:
---------------------------
Authorized Officer
and
MORRISON KNUDSEN
CORPORATION (an Ohio corporation)
/s/ Denis M. Slavich
By:
---------------------------
Authorized Officer
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SCHEDULES AND EXHIBITS
THE REGISTRANT AGREES TO PROVIDE TO THE
SECURITIES AND EXCHANGE COMMISSION, UPON REQUEST,
WITH COPIES OF THE SCHEDULES AND EXHIBITS HERETO
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