Guaranty Agreement From Litton Industries, Inc. To The First National Bank of Chicago, as Trustee Dated as of May 1, 1999
EXHIBIT 10.9
From
Xxxxxx Industries, Inc.
To
The First National Bank of Chicago,
as Trustee
as Trustee
Dated as of May 1, 1999
(This Table of Contents is not a part of
this Guaranty Agreement and is only for
convenience of reference)
this Guaranty Agreement and is only for
convenience of reference)
Table of Contents
| Section | Heading | Page | ||||
Section 1. |
Guaranteed Obligations | 1 | ||||
Section 2. |
Continuing Obligations | 1 | ||||
Section 3. |
Guaranty of Payment | 2 | ||||
Section 4. |
Obligations Unconditional | 2 | ||||
Section 5. |
Waivers | 2 | ||||
Section 6. |
No Set-Off | 2 | ||||
Section 7. |
Books and Records; Financial Statements | 3 | ||||
Section 8. |
Venue | 3 | ||||
Section 9. |
Covenants and Representations | 4 | ||||
Section 10. |
Guarantor to Maintain Its Corporate Existence; Conditions under Which Exceptions Permitted | 4 | ||||
Section 11. |
Restrictive Covenants | 5 | ||||
Section 12. |
Events of Default | 5 | ||||
Section 13. |
Successors and Assigns; Enforcement of Remedies | 7 | ||||
Section 14. |
Subrogation | 7 | ||||
Section 15. |
Notices | 7 | ||||
Section 16. |
Miscellaneous | 7 | ||||
This Guaranty Agreement (the “Guaranty”), made as of May 1, 1999, by and
between Xxxxxx Industries, Inc., a Delaware corporation (the “Guarantor”), and The First
National Bank of Chicago, as Trustee (in such capacity, together with any successor or
successors in such capacity, herein called the “Trustee”):
W i t n e s s e t h
The Mississippi Business Finance Corporation (the “Issuer”) intends to issue its
Economic Development Revenue Bonds (Xxxxxxx Shipbuilding, Inc. Project) Taxable Series 1999A, in
the aggregate principal amount of $83,700,000 (the “Bonds”) under and pursuant to an Indenture of
Trust dated as of May 1, 1999 (the “Indenture”) between the Issuer and the Trustee. The proceeds
derived from the issuance and sale of the Bonds are to be used to finance the acquisition,
construction and installation of certain port facilities (the “Project”) at the shipbuilding
complex of Xxxxxxx Shipbuilding, Inc., a Delaware corporation (the “Company”), in Xxxxxxx County,
Mississippi. The proceeds of the Bonds will be loaned by the Issuer to the Company pursuant to the
terms of a Loan Agreement dated as of May 1, 1999 (the “Loan Agreement”) between the Issuer and
the Company.
Now, Therefore, in consideration of the foregoing and as an inducement to the Issuer to issue
the Bonds and in further consideration of the anticipated benefits to the Guarantor, as the owner
of all of the outstanding capital stock of the Company, the Guarantor agrees as follows:
Section 1. Guaranteed Obligations. The Guarantor hereby unconditionally guarantees to the
Trustee for the benefit of any Bondholder (as defined in the Indenture) of any of the Bonds, the
full and prompt payment of (a) the principal of and redemption premium, if any, on the Bonds when
and as the same shall become due (whether at maturity, by acceleration, call for redemption or
otherwise); (b) the interest on the Bonds when and as the same shall become due; and (c) all
amounts due or to become due from the Company under Section 4.2(a) of the Loan Agreement. In
addition, the Guarantor hereby unconditionally guarantees to the Trustee (a) for the benefit of the
Trustee, the full and prompt payment of all amounts due or to become due from the Company under
Section 4.2(b) of the Loan Agreement and (b) for the benefit of the Issuer, the full and prompt
payment of all amounts due or to become due from the Company under Sections 4.2(c), 5.2 and 6.3 of
the Loan Agreement. Such guaranteed amounts are hereinafter collectively referred to as the
“Guaranteed Obligations.”
Section 2. Continuing Obligations. This Guaranty shall be a continuing, absolute and
unconditional Guaranty and shall remain in full force and effect until the entire principal of,
redemption premium, if any, and interest on the Bonds shall have been paid or provided for
according to the terms of the Indenture, at which time this Guaranty shall terminate and be of no
further force and effect. The Guarantor acknowledges and agrees, however, that its obligations
hereunder shall apply to and continue with respect to any amount paid to the Trustee with respect
to the Guaranteed Obligations which is subsequently recovered from the Trustee for any reason
whatsoever (including, without limitation, as a result of a bankruptcy, insolvency or fraudulent
conveyance proceeding but excluding any amounts so recovered due to any willful misconduct
or bad faith on the part of the Trustee) notwithstanding the fact that the Bonds may have been
previously paid or performed in full or this Guaranty returned, or both.
Section 3. Guaranty of Payment. This is a guaranty of payment and not of collection, and the
Guarantor expressly waives any right to require that any action be brought against the Issuer, the
Company or any other person or to require that resort be had to any security. If there shall occur
a default by the Company under the Loan Agreement with respect to the payment of the Guaranteed
Obligations when and as the same become due, the Guarantor, upon written demand by the Trustee as
provided herein, without notice other than such demand and without the necessity of further action
by the Trustee, its successors or assigns, shall promptly and fully pay such defaulted payment. In
case of any Event of Default hereunder, the Guarantor shall pay all reasonable costs and expenses,
including reasonable attorneys’ fees and expenses, paid or incurred by the Trustee in connection
with the enforcement of the Guaranteed Obligations or the obligations of the Guarantor under this
Guaranty. All payments by the Guarantor shall be paid in lawful money of the United States of
America in immediately available funds. Each default in payment of the principal of, redemption
premium, if any, or interest on the Bonds or with respect to payments due to the Trustee or the
Issuer under Sections 4.2(b), 4.2(c), 5.2 and 6.3 of the Loan Agreement shall give rise to a
separate cause of action hereunder and separate suits may be brought hereunder as each cause of
action arises.
Section 4. Obligations Unconditional. The obligations of the Guarantor hereunder shall be
absolute and unconditional and shall not be impaired, modified, released or limited by any
occurrence or condition whatsoever (other than upon the discharge of the lien of the Indenture in
accordance with Article VII thereof), including without limitation (a) any compromise, settlement,
release, waiver, renewal, extension, indulgence, change in, amendment to or modification of any of
the obligations and liabilities contained in the Bonds, the Indenture or the Loan Agreement, (b)
any impairment, modification, release or limitation of the liability of the Issuer or the Company,
or any other security for or guaranty of the Bonds, or any remedy for the enforcement thereof,
resulting from the operation of any present or future provision of the federal bankruptcy laws or
other statutes or from the decision of any court relating thereto, (c) the assertion or exercise
by the Issuer, its successors or assigns, or the Trustee of any rights or remedies under the
Indenture, the Loan Agreement or this Guaranty or their delay in asserting or exercising, or
failure to assert or exercise, any such rights or remedies, (d) the assignment or mortgaging or
the purported assignment or mortgaging of all or any part of the interest of the Company in the
Project, and (e) the purchase or sale of any capital stock of the Company.
Section 5. Waivers. The Guarantor unconditionally waives notice of any of the matters referred
to in Section 4 and, prior to making payment to the Trustee hereunder, any proof of nonpayment by
the Company under the Loan Agreement with respect to any Guaranteed Obligation other than a
certificate of the Trustee (or, with respect to payments due the Issuer under Sections 4.2(c), 5.2
and 6.3 of the Loan Agreement, the Issuer) stating such nonpayment.
Section 6. No Set-Off. No act of commission or omission of any kind or at any time upon the
part of the Trustee, with respect to any matter whatsoever shall in any way affect or impair the
rights of the Trustee to enforce any right, power or benefit of the Trustee under this Guaranty,
and no set-off, claim, reduction or diminution of any obligation or any defense of any
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kind or nature which the Guarantor has or may have against the Issuer, the Company or the Trustee
or their assignees or successors shall be available to the Guarantor or against any such assignee
or successor in any suit or action brought by the Trustee or its successors or assigns to enforce
any right, power or benefit under this Guaranty. Nothing in this Guaranty shall be construed as a
waiver by the Guarantor of any rights or claims it may have against the Company or the Trustee or
the Issuer under this Guaranty or otherwise, but any recovery upon such rights and claims shall be
had from the Company or the Trustee or the Issuer separately, it being the intent of this Guaranty
that the Guarantor shall be unconditionally and absolutely obligated to perform fully all of its
obligations, agreements and covenants hereunder for the benefit of the Trustee and the Bondholders
and, with respect to the payments due the Issuer under Sections 4.2(c), 5.2 and 6.3 of the Loan
Agreement, the Issuer. It is the intention of the parties that the Issuer, its commissioners,
elected and appointed officers, officials, agents and employees shall not incur pecuniary liability
by reason of the terms of this Guaranty, the Loan Agreement or the Indenture, or by reason of the
undertakings required of the Issuer, its commissioners, elected and appointed officers, officials,
agents and employees in connection with the issuance of the Bonds, this Guaranty, the Loan
Agreement or the Indenture, the performance of any act required or requested of the Issuer, its
commissioners, elected and appointed officers, officials, agents and employees in connection with
the issuance of the Bonds, this Guaranty, the Loan Agreement or the Indenture, or in any way
arising from the transaction which this Guaranty is a part or arising in any manner in connection
with the Project, and the Guarantor hereby waives any rights or claims it may have against the
Issuer in connection therewith. Notwithstanding the above, no limitation on the Issuer’s liability,
actions, covenants, obligations, agreements or otherwise described above in this Section 6 shall
apply with respect to the Issuer’s obligation to loan the proceeds of the Bonds to the Company on
the date of their issuance pursuant to, and in accordance with the terms of, the Loan Agreement.
Section 7. Books and Records; Financial Statements. The Guarantor shall maintain proper books
of record and account, in which entries shall be made in accordance with generally accepted
accounting principles (except where noted), consistently applied, of all its business and affairs.
Within one hundred twenty (120) days after the end of each of its fiscal years, if so requested,
the Guarantor shall furnish the Issuer and the Trustee, copies of its annual audited consolidated
financial statements, accompanied by the report of independent certified public accountants. The
Guarantor agrees to provide the Issuer and the Trustee with such other financial information and
reports as the Issuer and the Trustee may reasonably request from time to time. The information
contained in any such statements or reports shall be kept confidential by the Issuer and the
Trustee, except such disclosures as may be required by law.
Section 8. Venue. The Guarantor agrees that any suit, action or proceeding arising out of or
relating to this Guaranty may be instituted in the State of California, at the option of the person
or entity bringing such suit, action or proceeding; and the Guarantor hereby waives any objection
to the venue of any such suit, action or proceeding, and irrevocably submits to the jurisdiction of
any such court in any such suit, action or proceeding. Nothing herein shall affect the right of the
Trustee to serve process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Guarantor in any other jurisdiction.
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Section 9. Covenants and Representations. The Guarantor makes the following covenants
and representations as the basis for its undertakings hereunder:
(a) It is a corporation duly organized, and validly existing in good standing under the
laws of the State of Delaware, has the corporate power to enter into this Guaranty and to
perform its obligations hereunder, and by proper corporate action has duly authorized the
execution and delivery of this Guaranty and performance of its obligations hereunder.
(b) The execution and delivery of this Guaranty and all documents, instruments and
certificates relating thereto and the performance of its obligations hereunder do not and
will not conflict with, or constitute a breach or result in a violation of, its articles or
incorporation or bylaws, or any material agreement or other material instrument to which it
is a party or by which it is bound or any constitutional or statutory provision or order,
rule, regulation, decree or ordinance of any court, government or governmental authority
having jurisdiction over it or its property, the violation of any of which would have a
material adverse effect upon the Guarantor’s ability to perform its obligations hereunder.
(c) Except for the matters disclosed in the Private Offering Memorandum with respect to
the Bonds dated May 12, 1999 or in the Guarantor’s Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q or Periodic Reports on Form 8-K filed with the U.S. Securities and
Exchange Commission, there are no pending or, to the best of its knowledge, threatened
actions, suits, proceedings or investigations of a legal, equitable, regulatory,
administrative or legislative nature, which could reasonably be expected to adversely affect
in a material way its business or financial condition or its ability to perform its
obligations under this Guaranty.
(d) The Guarantor hereby covenants to notify the Trustee and the Issuer immediately of
the occurrence of any Event of Default hereunder or upon becoming aware (i) that any
representation made in this Guaranty was false, misleading or incorrect when made or (ii) of
a breach or violation of any material agreement or other material instrument to which it is
a party or by which it is bound or any constitutional or statutory provision or order, rule,
regulation, decree or ordinance of any court, government or governmental authority having
jurisdiction over it or its property, in any such case to the extent such breach or
violation would, in the Guarantor’s judgment, materially adversely affect the Guarantor’s
ability to perform its obligations under Section 1 hereof.
Section 10. Guarantor to Maintain Its Corporate Existence; Conditions under Which Exceptions
Permitted. The Guarantor agrees that during the term of this Guaranty, it will maintain its
corporate existence, will not dissolve or otherwise dispose of all or substantially all of its
assets and will not consolidate with or merge into another corporation unless the acquirer of its
assets or the corporation with which it shall consolidate or into which it shall merge shall
assume in writing all of the obligations of the Guarantor under this Guaranty.
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Any transfer of all or substantially all of the Guarantor’s assets to any of its wholly owned
direct or indirect subsidiaries, including the Company, shall not be deemed to constitute a
disposition “of all or substantially all of the Guarantor’s assets,” within the meaning of the
preceding paragraph.
Any transfer of the Guarantor’s assets under this Section 10 shall not relieve the Guarantor
of any of its obligations under this Guaranty.
Section 11. Restrictive Covenants. The Guarantor will not, and will not permit any Subsidiary
to, create, assume or suffer to exist any lien on any Restricted Property to secure any debt of
the Guarantor, any Subsidiary or any other person, without securing the Guarantor’s obligations
under this Guaranty equally and ratably with such debt for so long as such debt shall be so
secured, subject to certain exceptions. Exceptions consist of: (a) existing liens or liens on
facilities of corporations at the time they become Subsidiaries; (b) liens existing on facilities
when acquired, or incurred to finance the purchase price, construction or improvement thereof; (c)
liens required by contracts with, and in favor of, governmental entities; and (d) liens otherwise
prohibited by such covenant, securing indebtedness which, together with the aggregate amount of
outstanding indebtedness secured by liens otherwise prohibited by such covenant and the value of
sale and leaseback transactions, does not exceed 15% of the Guarantor’s consolidated net tangible
assets (defined as total assets less current liabilities and intangible assets).
In addition, the Guarantor will not, and will not permit any Subsidiary to, enter into any
sale and leaseback transaction covering any Restricted Property unless (a) the Guarantor would be
entitled under the provisions described above to incur debt equal to the value of such sale and
leaseback transaction, secured by liens on the facilities to be leased, without equally and
ratably securing the Guarantor’s obligations under this Guaranty, or (b) the Guarantor, during the
six months following the effective date of such sale and leaseback transaction, applies an amount
equal to the value of such sale and leaseback transaction to the voluntary retirement of long-term
indebtedness or to the acquisition of Restricted Property.
“Restricted Property” is defined as (a) any manufacturing facility (or portion thereof) owned
or leased by the Guarantor or any Subsidiary and located within the continental United States
which, in the opinion of the Board of Directors of the Guarantor, is of material importance to the
business of the Guarantor and its Subsidiaries taken as a whole, but no such manufacturing
facility (or portion thereof) shall be deemed of material importance if its gross book value
(before deducting accumulated depreciation) is less than 2% of the Guarantor’s consolidated net
tangible assets, or (b) any shares of capital stock or indebtedness of any Subsidiary owning any
such manufacturing facility.
“Subsidiary” means any corporation or other entity as to which the Guarantor, or any
Subsidiary of the Guarantor, has the voting power under ordinary circumstances to elect a majority
of the board of directors or other governing body of such corporation or other entity.
Section 12. Events of Default. Each of the following events shall be an Event of Default
hereunder:
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(a) Failure of the Guarantor to pay any Guaranteed Obligations upon receipt of demand
by the Trustee or the Issuer to the Guarantor given in accordance with Section 15.
(b) Failure of the Guarantor to observe or perform any of the other covenants,
conditions or agreements hereunder for a period of sixty (60) days after notice (unless the
Guarantor and the Trustee and, with respect to payments due the Issuer under Sections
4.2(c), 5.2 and 6.3 of the Loan Agreement, the Issuer shall agree in writing to an extension
of such time prior to its expiration), specifying such failure and requesting that it be
remedied, given by the Trustee or the Issuer to the Guarantor; provided, that if said
default is such that it can be corrected but cannot be corrected within the applicable
period, it shall not constitute an Event of Default if corrective action is instituted by
the Guarantor within the applicable period and is diligently pursued until the default is
corrected.
(c) The dissolution or liquidation of the Guarantor or the filing by the Guarantor of a
voluntary petition in bankruptcy, or failure by the Guarantor promptly to cause to be lifted
any execution, garnishment or attachment of such consequence as will impair the Guarantor’s
ability to carry on its obligations hereunder, or the commission by the Guarantor of any act
of bankruptcy, or adjudication of the Guarantor as a bankrupt, or if a petition or answer
proposing the adjudication of the Guarantor as a bankrupt or its reorganization, arrangement
or debt readjustment under any present or future federal bankruptcy act or any similar
federal or state law shall be filed in any court and such petition or answer shall not be
discharged or denied within ninety days after the filing thereof, or if the Guarantor shall
admit in writing its inability to pay its debts generally as they become due, or a receiver,
trustee or liquidator of the Guarantor shall be appointed in any proceeding brought against
the Guarantor and shall not be discharged within ninety days after such appointment or if
the Guarantor shall consent to or acquiesce in such appointment, or assignment by the
Guarantor for the benefit of its creditors, or the entry by the Guarantor into an agreement
of composition with its creditors, or a bankruptcy, insolvency or similar proceeding shall
be otherwise initiated by or against the Guarantor under any applicable bankruptcy,
reorganization or analogous law as now or hereafter in effect and if initiated against the
Guarantor shall remain undismissed (subject to no further appeal) for a period of ninety
days; provided, the term “dissolution or liquidation of the Guarantor,” as used in this
subsection, shall not be construed to include the cessation of the existence of the
Guarantor resulting either from a merger or consolidation of the Guarantor into or with
another entity or a dissolution or liquidation of the Guarantor following a transfer of all
or substantially all of its assets as an entirety or under the conditions permitting such
actions contained in Section 10 hereof.
(d) If any representation contained in this Guaranty or any financial statement or
other information furnished to the Trustee or the Issuer in connection with this Guaranty
was false or misleading in any material respect at the time it was made or delivered.
Whenever an Event of Default hereunder shall have happened and be continuing, (a) the Trustee
in the manner provided in the Indenture may declare the entire unpaid principal of,
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redemption premium, if any, and interest on the Bonds to be immediately due and payable, and (b)
the Trustee may take whatever action at law or in equity as may appear necessary or desirable to
collect payments then due or thereafter to become due hereunder or to enforce observance or
performance of any covenant, condition or agreement of the Guarantor under this Guaranty.
Section 13. Successors and Assigns; Enforcement of Remedies. This Guaranty shall be binding
upon the Guarantor, its successors and assigns, and all rights against the Guarantor arising under
this Guaranty shall be for the sole benefit of the Trustee and the Bondholders and, with respect
to payments due the Issuer under Sections 4.2(c), 5.2 and 6.3 of the Loan Agreement, the Issuer.
The Trustee shall be entitled to bring any suit, action or proceeding against the Guarantor for
the enforcement of any provision of this Guaranty without exhausting any other remedies which it
may have pursuant to the terms of the Bonds, the Indenture or the Loan Agreement and without
resort to any other security held by or available to the Issuer or the Trustee.
Section 14. Subrogation. Prior to payment in full of all Guaranteed Obligations, the
Guarantor shall have no right and shall assert no right to be subrogated to any right of the
Trustee or the Issuer. No subrogation of the Guarantor shall require the Trustee to proceed
against any person or entity or to resort to any security or to take any other action of any kind
as a result of subrogation.
Section 15. Notices. Demand for payment by the Guarantor of the amounts guaranteed hereunder
shall be made by notice in writing as provided in the next sentence. All demands, notices,
approvals, consents, requests and other communication hereunder shall be in writing addressed to
the addresses as set forth in Section 12.4 of the Indenture and shall be deemed to have been
given: (i) three days after the same are deposited in the United States mail and sent by
registered or certified mail, return receipt requested, or (ii) when the same are delivered by
hand, or (iii) when the same are sent by confirmed facsimile transmission, or (iv) on the next
Business Day when the same are sent by overnight delivery service (with the signature of the
receiving party required). The Guarantor, the Company, the Issuer and the Trustee may, by notice
given hereunder, designate any further or different addresses to which subsequent demands,
notices, approvals, consents, requests or other communications shall be sent or persons to whose
attention the same shall be directed. Any notice sent by the Issuer or the Trustee to the
Guarantor, or vice versa, shall also be sent to the Company.
Section 16.
Miscellaneous. (a) If any provision of this Guaranty shall be held invalid by any
court of competent jurisdiction, such holding shall not invalidate any other provision hereof.
(b) This Guaranty shall be governed by and construed in accordance with the laws of the State
of New York.
(c) This Guaranty, together with the Indenture and the Loan Agreement, expresses the entire
understanding and all agreements between the parties and may not be modified or amended except in
writing signed by the parties as described in (h) below.
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(d) All capitalized terms not otherwise defined herein shall have the same meaning as set
forth in Article I of the Indenture.
(e) The Guarantor consents to all the terms, covenants and conditions of the Indenture
and the Loan Agreement.
(f) This Guaranty is necessary to promote and further the business of the Guarantor. The
assumption by the Guarantor of the obligations hereunder will result in direct financial benefits
to the Guarantor, as the owner of all of the outstanding capital stock of the Company.
(g) This Guaranty may be executed in one or more counterparts, each of which shall constitute
an original and all of which together shall constitute but one and the same instrument.
(h) Subject to the provisions of Article XI of the Indenture, this Guaranty may be amended,
changed, modified, altered or terminated only by written instrument executed by the Guarantor and
the Trustee and, in certain instances described in Section 11.5 of the Indenture, only with the
prior written consent of the Issuer and/or the Bondholders.
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In Witness Whereof, the parties have caused this Guaranty to be executed by
their duly authorized representatives as of the date first above written.
| Xxxxxx Industries, Inc. | ||||||
| By |  |
|||||
| Title: Vice President and Treasurer | ||||||
| Accepted: | ||||
| The First National Bank of Chicago, as Trustee | ||||
By
|
 |
|||
|
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| Title: Assistant Vice President | ||||
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