Fifth Amendment to the Credit Agreement EXHIBIT 10.2
FIFTH AMENDMENT AGREEMENT
THIS FIFTH AMENDMENT AGREEMENT (this "Agreement") is made and entered
into as of the 30th day of September, 2003, by and among FLEET CAPITAL
CORPORATION ("Lender"), a Rhode Island corporation with an office at 200
Glastonbury Boulevard, Glastonbury, Connecticut 06033; and UNITED INDUSTRIAL
CORPORATION, a Delaware corporation, and the following of its subsidiaries: AAI
CORPORATION ("AAI"), a Maryland corporation, DETROIT STOKER COMPANY, a Michigan
corporation; AAI ENGINEERING SUPPORT INC., a Maryland corporation, and AAI/ACL
TECHNOLOGIES, INC., a Maryland corporation (each a "Borrower" and collectively
the "Borrowers"). Capitalized terms used, but not defined, herein shall have the
meanings given to such terms in the Credit Agreement (defined below).
WHEREAS, the Borrowers and the Lender are parties to the Loan and
Security Agreement, dated as of June 28, 2001, as amended by the Waiver,
Amendment and Consent Agreement dated as of March 6, 2002, the Second Amendment
and Consent Agreement dated as of June 28, 2002, the Third Amendment and Waiver
Agreement dated as of March 21, 2003 and the Fourth Amendment to Loan Agreement
dated as of March 31, 2003 (as amended, the "Credit Agreement"); and
WHEREAS, the Borrowers have requested and the Lender has agreed to
amend the Credit Agreement, all on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises, and in reliance
thereon, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1.
AMENDMENTS. Subject to the satisfaction in full, on or prior to the
Agreement Effective Date, of the conditions precedent set forth in Section 3
below, the Credit Agreement is hereby amended as follows:
(i) The second sentence of Section 1.2 of the Credit Agreement is
amended and restated in its entirety to read as follows:
No Letter of Credit or LC Guarantee (i) may have an expiration
date that is more than one year after the last day of the Original
Term (or, if a Renewal Term is then in effect, such Renewal Term), or
(ii) will be issued if the issuance thereof would cause the sum of the
LC Amount and outstanding Loans to exceed the lesser of (a) the
Maximum Credit Facility and (b) the Borrowing Base. It is understood
that if the Lender on one or more occasions issues or causes to be
issued a Letter of Credit or LC Guaranty having an expiration date
after the last day of the Original Term (or, if a Renewal Term is then
in effect, such Renewal Term), then, without limiting the generality
of Section 4.2.4, the Lender will retain all Liens in the Collateral
until no such Letters of Credit or LC Guaranties are outstanding and
all of the Obligations in respect thereof are paid in full or the
Borrowers shall have otherwise complied with the provisions of Section
4.2.5.
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(ii) Section 4.2.5 of the Credit Agreement is amended and restated in its
entirety to read as follows:
4.2.5 Effect of Termination on Letters of Credit. Upon the
termination of the Lender's commitment to make Letters of Credit and
LC Guaranties available to the Borrowers, or the acceleration of the
Obligations with respect to all Letters of Credit and/or LC
Guaranties, the Borrowers will either (i) pay to the Lender an amount
equal to 110% of LC Amount as cash collateral for all Letters of
Credit and LC Guaranties or (ii) deliver to the Lender a Qualifying
Letter of Credit.
(iii) Section 5.1. of the Credit Agreement is amended by adding the following to
the end of such Section to read as follows:
Lender acknowledges and represents that it, in good faith, has
not relied upon margin stock (as defined in Regulation U) of UIC or
any of its Subsidiaries as collateral in its decision to make any
Revolving Loans and/or issue or cause to be issued any Letters of
Credit and/or LC Guaranties.
(iv) Section 7.1.27 of the Credit Agreement is amended by adding the following
to the end of such Section to read as follows:
Margin stock does not constitute more than 25% of the value of
the assets of UIC and its Subsidiaries on a consolidated basis and
neither UIC nor any of its Subsidiaries has any intention that margin
stock will constitute more than 25% of the value of such assets. No
portion of any Revolving Loan is to be used, and no portion of any
Letter of Credit or LC Guaranty is to be obtained, for the purpose of
purchasing or carrying any margin stock. As used in this Section and
elsewhere in this Agreement, the term "margin stock" shall have the
meaning assigned to such term in Regulation U.
(v) Clause (iii) of Section 8.2.7 of the Credit Agreement is amended and
restated in its entirety to read as follows:
(iii) stock repurchases in an aggregate amount not to exceed
$10,000,000 during the term of this Agreement.
(vi) Section 8.3.1 of the Credit Agreement is amended and restated in its
entirety to read as follows:
8.3.1 Minimum Fixed Charge Coverage Ratio: not permit the
Consolidated Fixed Charge Coverage Ratio of UIC and its Subsidiaries
to be less than (a) 1.00 to 1.00 for the fiscal quarter ending March
31, 2003; (b) 1.00 to 1.00 for the period of two fiscal quarters
ending June 30, 2003; (c) 1.30 to 1.00 for the period of three fiscal
quarters ending September 30, 2003; (d) if the Supplier Bond Claim
Proceeds have been recognized or received by one or more of the
Borrowers on or before December 31, 2003, 1.50 to 1.00 for the period
of four fiscal quarters ending on December 31, 2003; (e) if the
Supplier Bond Claim Proceeds have not been recognized or received by
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one or more of the Borrowers on or before December 31, 2003, 1.30 to
1.00 for the period of four fiscal quarters ending on December 31,
2003; (f) if the Supplier Bond Claim Proceeds have been recognized or
received by one or more of the Borrowers on or before March 31, 2004,
1.50 to 1.00 for the period of four fiscal quarters ending on March
31, 2004; (g) if the Supplier Bond Claim Proceeds have not been
recognized or received by one or more of the Borrowers on or before
March 31, 2004, 1.30 to 1.00 for the period of four fiscal quarters
ending on March 31, 2004; (h) if the Supplier Bond Claim Proceeds have
been recognized or received by one or more of the Borrowers on or
before the end of any fiscal quarter ending after March 31, 2004, 1.30
to 1.00 for the period of four fiscal quarters ending at the end of
such fiscal quarter; or (i) if the Supplier Bond Claim Proceeds have
not been recognized or received by one or more of the Borrowers on or
before the end of any fiscal quarter ending after March 31, 2004, 1.20
to 1.00 for the period of four fiscal quarters ending at the end of
such fiscal quarter.
(vii) Section 8.3.2 of the Credit Agreement is amended and restated in its
entirety to read as follows:
8.3.2 Maximum Balance Sheet Leverage Ratio: not permit the ratio
of UIC and its Subsidiaries' (a) total liabilities, as determined on a
consolidated basis in accordance with GAAP (but, without duplication,
including all LC Amounts as liabilities), to (b) Tangible Total Net
Worth, to exceed (w) 3.50 to 1.00 as at March 31, 2003, June 30, 2003
or September 30, 2003, (x) if the Supplier Bond Claim Proceeds have
been recognized or received by one or more of the Borrowers on or
before December 31, 2003, 3.50 to 1.00 as at December 31, 2003, (y) if
the Supplier Bond Claim Proceeds have not been recognized or received
by one or more of the Borrowers on or before December 31, 2003, 4.00
to 1.00 as at December 31, 2003 and (z) 4.00 to 1.00 as at March 31,
2004 or as at the end of any fiscal quarter thereafter.
(viii) Section 8.3.3 of the Credit Agreement is amended and restated in its
entirety to read as follows:
8.3.3 Losses From Discontinued Transportation Division: not
permit the pre-tax losses incurred by UIC and its Subsidiaries as a
result of the cessation of business of their transportation division
to be more than (a) if the Supplier Bond Claim Proceeds have been
recognized or received by one or more of the Borrowers on or before
December 31, 2003, $10,000,000 in the aggregate for the fiscal year
ending December 31, 2003, (b) if the Supplier Bond Claim Proceeds have
not been recognized or received by one or more of the Borrowers on or
before December 31, 2003, $20,000,000 in the aggregate for the fiscal
year ending December 31, 2003, (c) $7,000,000 in the aggregate for the
fiscal year ending December 31, 2004 and (d) $1.00 in the aggregate
for any fiscal year ending on or after December 31, 2005.
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(ix)The following definitions in Appendix A of the Credit Agreement are amended
and restated in their entirety as follows:
Consolidated Fixed Charge Coverage Ratio - means for the period
in question, for UIC and its Subsidiaries, the ratio of (i) the sum of
(a) earnings before interest, taxes, depreciation and amortization,
plus (b) the Transportation Division Addback Amount, minus Supplier
Bond Proceeds to the extent that said proceeds result in a profit from
such discontinued operations, minus (d) Unfunded Capital Expenditures,
divided by (ii) the sum of (a) taxes paid in Cash during such period
(excluding any taxes paid in Cash during such period, if any, in
respect of the Supplier Bond Proceeds), (b) dividends, (c) scheduled
principal payments of the Loans and any other Indebtedness, including
Capitalized Lease Obligations, (d) all interest in respect of
Indebtedness accrued or paid during such period (whether or not
actually paid during such period), and all fees and expenses payable
under this Agreement, (e) amounts paid in Cash or Cash Equivalents
with respect to asbestos litigation or claims, (f) amounts paid in
Cash or Cash Equivalents with respect to pension plans or other ERISA
plans, and (g) net amounts paid in Cash or Cash Equivalents to
Electric Transit, Inc. with respect to warranty claims (net of
Supplier Bond Proceeds, if any), each of the foregoing as determined
on a consolidated basis without duplication in accordance with GAAP.
Investment Property - all of the Borrowers' investment property
(excluding any and all shares of UIC Treasury Stock), as such term is
defined in the Code, whether now or hereafter acquired.
Qualifying Letter of Credit - means an irrevocable letter of
credit in form and substance satisfactory to the Lender in an amount
equal to 110% of the LC Amount which is issued by a bank acceptable to
the Lender and which provides that such letter of credit may be drawn
upon by the Lender by delivery of a sight draft in the amount by which
any outstanding Letter of Credit and/or LC Guaranty has been drawn.
Transportation Division Addback Amount - with respect to any
fiscal period, the amount of losses incurred by UIC and its
Subsidiaries during such period as a result of the cessation of
business of their transportation division, provided that the
Transportation Division Addback Amount shall not exceed (i) $1,500,000
with respect to the fiscal quarter ending March 31, 2003; (ii)
$3,000,000 in the aggregate with respect to the two fiscal quarters
ending June 30, 2003; (iii) if the Supplier Bond Claim Proceeds have
been recognized or received by one or more of the Borrowers on or
before September 30, 2003, $4,500,000 in the aggregate with respect to
the three fiscal quarters ending September 30, 2003; (iv) if the
Supplier Bond Claim Proceeds have not been recognized or received by
one or more of the Borrowers on or before September 30, 2003,
$14,500,000 in the aggregate with respect to the three fiscal quarters
ending September 30, 2003; (v) if the Supplier Bond Claim Proceeds
have been recognized or received by one or more of the Borrowers on or
before December 31, 2003, $5,500,000 in the aggregate with respect to
the fiscal year ending December 31, 2003; (vi) if the Supplier Bond
Claim Proceeds have not been recognized or received by one or more of
the Borrowers on or before December 31, 2003, $15,500,000 in the
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aggregate with respect to the fiscal year ending December 31, 2003;
(vii) if the Supplier Bond Claim Proceeds have not been recognized or
received by one or more of the Borrowers on or before December 31,
2004, $2,000,000 in the aggregate with respect to any fiscal quarter
ending during the 2004 fiscal year and $2,000,000 in the aggregate
with respect to the fiscal year ending December 31, 2004 (e.g. if all
$2,000,000 of the Transportation Division Addback Amount is used for
the fiscal quarter ending March 31, 2004, then no additional
Transportation Division Addback Amount is permitted for any subsequent
fiscal quarter); and (viii) if the Supplier Bond Claim Proceeds have
been recognized or received by one or more of the Borrowers on or
before December 31, 2004, $0.00.
(x)The following new definitions are added to Appendix A of the Credit Agreement
in alphabetical order to read as follows:
Supplier Bond Claim Proceeds - means the proceeds in respect of
that certain National Union Fire Insurance Company of Pittsburgh,
Pennsylvania Payment Surety Bond on behalf of Electric Transit Inc. in
favor of the City and County of San Francisco, California.
UIC Treasury Stock - means shares of capital stock of UIC held in
Treasury.
Section 2.
CONDITIONS TO EFFECTIVENESS OF AGREEMENT. This Agreement shall become effective
as of the date hereof only when the following conditions shall have been
satisfied (the date of satisfaction of such conditions being referred to herein
as the "Agreement Effective Date"):
(i)The Lender shall have executed this Agreement and shall have received a
copy of this Agreement duly executed by the Borrowers.
(ii)The Borrowers shall have paid a fee of $5,000 to Lender in
consideration of the waiver set forth herein.
(iii)The Borrowers shall have paid to counsel for the Lender the amount of
reasonable fees and disbursements owed to such counsel in connection with this
Agreement and matters related hereto.
(iv)The Lender shall have received such other information, approvals,
opinions, documents or instruments as it may reasonably request.
Section 3.
REPRESENTATIONS AND WARRANTIES. In order to induce the Lender to enter into this
Agreement, the Borrowers jointly and severally represent and warrant to the
Lender that, as of the Agreement Effective Date, after giving effect to the
effectiveness of this Agreement, the following statements are true and correct
in all material respects:
(i) Authorization of Agreements. The execution and delivery of this
Agreement by each Borrower and its performance under the Credit Agreement as
amended by this Agreement (the "Amended Agreement") are within each such
Borrower's corporate powers and have been duly authorized by all necessary
corporate action on the part of each such Borrower.
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(ii) No Conflict. The execution and delivery by each Borrower of this
Agreement and the performance by each Borrower of the Amended Agreement do not
contravene any such Borrower's certificate of incorporation or by laws or any
other contractual restriction where such a contravention has a reasonable
possibility of having a Material Adverse Effect or contravening any law or
governmental regulation or court decree or order binding on or affecting any
such Borrower.
(iii) Binding Obligation. This Agreement has been duly executed and
delivered by each Borrower and this Agreement and the Amended Agreement
constitute the legal, valid and binding obligations of each Borrower,
enforceable against each Borrower in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally and by
general principles of equity.
(iv) Governmental Approval, Regulation, etc. No authorization or approval
or other action by, and no notice to or filing with, any governmental authority
or regulatory body or any other Person is required for the due execution,
delivery or performance of this Agreement by any Borrower.
(v) Incorporation of Representations and Warranties from Credit Agreement.
Other than as amended hereby each of the representations and warranties set
forth in Section 7 of the Credit Agreement is true and correct.
Section 4.
ACKNOWLEDGEMENT. Each Borrower acknowledges and agrees that each of the Security
Documents to which it is a party or otherwise bound shall continue in full force
and effect. Each Borrower hereby agrees and confirms that each Security Document
to which it is a party or otherwise bound and all Collateral encumbered thereby
will continue to guaranty or secure, as the case may be, the payment and
performance of all obligations guaranteed or secured thereby, as the case may
be, and that none of the Borrowers has any defense, offset, counterclaim or
right of recoupment with respect to the Obligations of the Borrowers under the
Amended Agreement.
Section 5.
MISCELLANEOUS.
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(i) Effect on the Credit Agreement and the Other Loan Documents. Except as
specifically set forth herein, the terms, provisions and conditions of the
Credit Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed and the Borrowers remain bound to
pay and perform their obligations thereunder.
(ii) Applicable Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO SUCH LAWS RELATING TO CONFLICTS OF LAWS.
(iii) Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
(iv) Counterparts and Incorporation. This Agreement may be executed by the
parties hereto in several counterparts and by the different parties on separate
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same instrument. Following execution
and delivery of this Agreement, any reference to the Credit Agreement shall be
deemed a reference to such document as hereby amended.
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(v) Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provisions in any other
jurisdiction.
IN WITNESS WHEREOF, this Fifth Amendment Agreement has been duly
executed and delivered as of the day and year first above written.
FLEET CAPITAL CORPORATION
By: /s/ Matthew A. Bourgeois
----------------------------------------
Name: Matthew A. Bourgeois
Title: Vice President
UNITED INDUSTRIAL CORPORATION
By: /s/ James H. Perry
-----------------------------------------
Name: James H. Perry
Title: Vice President
AAI CORPORATION
By: /s/ James H. Perry
----------------------------------------
Name: James H. Perry
Title: Vice President
DETROIT STOKER COMPANY
By: /s/ James H. Perry
----------------------------------------
Name: James H. Perry
Title: Vice President
AAI ENGINEERING SUPPORT INC.
By: /s/ James H. Perry
----------------------------------------
Name: James H. Perry
Title: Vice President
AAI/ACL TECHNOLOGIES, INC.
By:/S/ James H. Perry
----------------------------------------
Name: James H. Perry
Title: Vice President
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