SECURITY AGREEMENT
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THIS SECURITY AGREEMENT ("Agreement") is made this 27th day
of May, 1994, by and among AAI CORPORATION, a Maryland corporation
("AAI"), AAI ENGINEERING SUPPORT, INC., a Maryland corporation
("Engineering"), AAI MANUFACTURING ASSEMBLY, INC., a Maryland
corporation ("Assembly"), AAI SYSTEMS MANAGEMENT, INC., a Maryland
corporation ("Systems"), AAI MEDICAL CORPORATION, a Maryland
corporation ("Medical"), SETI, INC., a Pennsylvania corporation
("Seti"), AAI/ACL TECHNOLOGIES, INC., a Maryland corporation
("AAI/ACL"), and AAI MICROFLITE SIMULATION INTERNATIONAL CORPORATION,
a Maryland corporation ("AAI MICROFLITE"), jointly and severally (AAI,
Engineering, Assembly, Systems, Medical, Seti, AAI/ACL and AAI
MICROFLITE jointly and severally, individually and collectively,
"Debtor"), and SIGNET BANK/MARYLAND ("Secured Party").
RECITALS
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Reference is made to that certain Amended and Restated Loan
Agreement dated August 11, 1992, as amended (the "Loan Agreement"), by
and among Debtor and Secured Party pursuant to which Secured Party
extended credit to Debtor in an original principal amount not to
exceed Thirty Million Dollars ($30,000,000.00). The "Termination
Date" as defined in the Loan Agreement has occurred without extension
by Secured Party, and all of the "Obligations" as therein defined have
become due and payable. Debtor has requested Secured Party to extend
the Termination Date until August 20, 1994, and as a condition to
consenting to such request Secured Party has, inter alia, required the
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execution hereof by Debtor.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, Debtor and Secured Party do hereby agree as follows:
1. CONSTRUCTION AND DEFINITION OF TERMS
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Capitalized terms used herein without definition which
are defined in the Loan Agreement shall have the meanings assigned to
them in the Loan Agreement. All terms used herein without definition
which are not defined in the Loan Agreement and which are defined by
the Maryland Uniform Commercial Code shall have the meanings assigned
to them by the Maryland Uniform Commercial Code unless and to the
extent varied by this Agreement. Whenever the phrase "satisfactory to
Secured Party" is used in this Agreement such phrase shall mean
"satisfactory to
NYFS11...:\95\78495\0001\7120\FRM80394.L40
Secured Party in its sole discretion." The use of any gender or the
neuter herein shall also refer to the other gender or the neuter and
the use of the plural shall also refer to the singular, and vice
versa. In addition to the terms defined elsewhere in this Agreement,
unless the context otherwise requires, when used herein, the following
terms shall have the following meanings:
"Collateral" shall mean all of Debtor's Receivables,
all property and funds of Debtor, both now owned and hereafter
acquired, now or hereafter in Secured Party's possession, all property
and assets of Debtor in or on which Secured Party has, or may in the
future acquire or be granted, a Lien, whether related or unrelated to
this Agreement, whether or not now contemplated, whether or not any
instrument or agreement relating thereto specifically refers to this
Agreement, and all proceeds (cash and non-cash, including insurance
proceeds), products, substitutions, renewals and replacements of all
of the foregoing in any form whatsoever and all books, records and
data processing materials in any form (including tapes, disks and the
like) documenting, describing or in any way relating to any or all of
the foregoing, whether in the possession of Debtor or any other
Person.
"Event of Default" shall mean any of the events
described in Section 6 hereof.
"Inter-Creditor Agreement" shall mean that certain
Inter-Creditor Agreement made as of August 11, 1992, by and among
Secured Party, Principal Mutual Life Insurance Company, The Travelers
Insurance Company, The Travelers Indemnity Company of Rhode Island,
AAI and UIC, as the same may hereafter be amended, supplemented or
otherwise modified from time to time.
"Permitted Liens" shall mean (a) Liens of Secured
Party, (b) Liens permitted pursuant to the Inter-Creditor Agreement,
and (c) Liens specifically consented to by Secured Party in writing.
"Receivables" shall mean all of Debtor's present and
future accounts, notes, instruments, documents, chattel paper, tax
refunds, contract rights, general intangibles, goodwill, judgments,
orders, awards and decrees in favor of Debtor, causes of action in
favor of Debtor, all goods returned, repossessed, or stopped in
transit the sale, lease or other disposition of which contributed to
the creation of any account, instrument or chattel paper, all present
and future rights of Debtor to the payment of money due or to become
due to Debtor for
any reason whatsoever, whether or not such right to payment has been
or is to be earned by any performance and howsoever such right to
payment may be evidenced, whether by open account, instrument, note,
draft, chattel paper, judgment, order, award, decree or otherwise, all
rights which Debtor may at any time have, by law or agreement, against
any account debtor, all rights which Debtor may at any time have, by
law or agreement, against any other obligor obligated to make such
payment and all rights and Liens which Debtor may at any time have, by
law or agreement, against any property of any account debtor or
against any property of any such other obligor; provided, however,
that notwithstanding the foregoing, Receivables shall not include (a)
any property now or hereafter abandoned or returned by the United
States government which AAI is contractually obligated to deliver to
Reflectone, Inc., or (b) any present or future rights of Debtor with
respect to any patents, copyrights, franchises, trade names,
trademarks, or computer software (collectively, "Excluded Intellectual
Property") except to the extent such rights relate to (x) proceeds of
such Excluded Intellectual Property which otherwise would fall within
the foregoing definition of Receivables, or (y) computer software
consisting of the books, records or data processing materials of
Debtor documenting or describing the Receivables and/or any account
debtor or other obligor of Debtor or in any way used or useful in the
collection or enforcement of the Receivables.
2. SECURITY
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2.01 Security Interest. As security for the payment
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and performance of all of the Obligations, whether or not any
instrument or agreement relating to any Obligation specifically refers
to this Agreement or the security interest created hereunder, Debtor
hereby assigns, pledges and grants to Secured Party a continuing
security interest in the Collateral. Secured Party's security
interest shall continually exist until (a) all Obligations have been
paid in full, and (b) there exists no commitment by Secured Party
which could give rise to any Obligations, whether or not all
Obligations shall at any time or from time to time be reduced to zero.
Debtor shall make notations, satisfactory to Secured Party, on its
books and records disclosing the existence of Secured Party's security
interest in the Collateral. Secured Party shall have no liability or
duty, either before or after the occurrence of an Event of Default
hereunder, on account of loss of or damage to, or to collect or
enforce any of its rights against, the Collateral, or to preserve any
rights against account debtors or other parties with prior interests
in the Collateral, the sole duty of Secured Party in this regard being
to exercise reasonable
care with respect to tangible Collateral in its actual possession.
2.02 Covenants and Representations Concerning
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Collateral. With respect to all of the Collateral, Debtor covenants,
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warrants and represents that:
(a) No financing statement covering any of the
Collateral is on file in any public office or land or financing
records except for financing statements in favor of Secured Party and
financing statements with respect to any Permitted Liens and Debtor is
the legal and beneficial owner of all of the Collateral, free and
clear of all Liens, except for Permitted Liens.
(b) The security interest granted Secured Party
here under shall constitute a first priority Lien upon the Collateral,
except for any Permitted Liens. Debtor will not, except in the
ordinary course of business, transfer, discount, sell, grant or assign
any interest in the Collateral nor, without Secured Party's prior
written consent, permit any other Lien to be created or remain thereon
except for Permitted Liens.
(c) Debtor will maintain the Collateral in good
order and condition, ordinary wear and tear excepted, and will use,
operate and maintain the Collateral in compliance with all laws,
regulations and ordinances and in compliance with all applicable
insurance requirements and regulations. Debtor will promptly notify
Secured Party in writing of any litigation involving or affecting the
Collateral which Debtor knows or has reason to believe is pending or
threatened. Debtor will promptly pay when due all taxes and all
transportation, storage, warehousing and other such charges and fees
affecting or arising out of or relating to the Collateral and shall
defend the Collateral, at Debtor's expense, against all claims and
demands of any Persons claiming any interest in the Collateral adverse
to Debtor or Secured Party.
(d) At all reasonable times Secured Party and its
agents and designees may enter any business premises of Debtor and any
other premises of Debtor and inspect the Collateral and all books and
records of Debtor (in whatever form).
(e) All books and records pertaining to the
Collateral are located at York Road and Industry Lane, Cockeysville,
Maryland 21030, at 11101 Gilroy Road, Cockeysville, Maryland 21030, at
2801 Professional Parkway, Ocoee, Florida
34761, at 1505 East Warner Avenue, Santa Ana, California 92705-5419 or
at 430 Stump Road, Montgomeryville, Pennsylvania 18936, and Debtor
will not change the location(s) of such books and records without the
prior written consent of Secured Party.
(f) Debtor shall do, make, execute and deliver
all such additional and further acts, things, deeds, assurances,
instruments and documents as Secured Party may request to vest in and
assure to Secured Party its rights hereunder or in any of the
Collateral, including, without limitation, the execution and delivery
of financing statements, financing statement amendments and/or
continuation statements, and Debtor agrees to pay all taxes, fees and
costs (including attorney's fees) paid or incurred by Secured Party in
connection with the preparation and filing or recordation thereof.
(g) A carbon, photographic or other reproduction
of this Agreement or any financing statement signed by Debtor in
connection with this Agreement shall be sufficient as a financing
statement.
(h) whenever required by Secured Party, Debtor
shall promptly deliver to Secured Party, with all endorsements and/or
assignments required by Secured Party, all instruments, chattel paper,
guaranties and the like received by Debtor constituting, evidencing or
relating to any of the Collateral or proceeds of any of the
Collateral.
(i) If any Receivable arises out of a contract
with the United States of America or any State, county, municipality
or any department, agency or instrumentality thereof, Debtor shall, if
required by Secured Party, execute and deliver any agreements, notices
and/or assignments and do such other things as may be satisfactory to
Secured Party in order that all sums due and to become due to Debtor
under such contract shall be duly assigned to Secured Party in
accordance with the Federal Assignment of Claims Act (31 United States
Code Section 1203; 41 United States Code Section 15) and/or any other
applicable federal, State and local laws and regulations relating to the
assignment of governmental obligations.
(j) Debtor agrees that until the Obligations
shall have been satisfied in full and this Agreement shall have been
terminated, Debtor will not, without Secured Party's prior written
consent, enter into any agreement (for example, a license agreement)
which is inconsistent with Debtor's obligations under this Agreement
and Debtor further agrees that it will not take any action, or permit
any action to be taken by others subject to
its control, including licensees, or fail to take any action, which
would materially adversely affect the validity or enforcement of the
rights transferred to Secured Party under this Agreement.
3. REPRESENTATIONS AND WARRANTIES
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To induce Secured Party to enter into this Agreement,
Debtor represents and warrants to Secured Party that:
3.01 Good Standing. Debtor and each Subsidiary is a
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corporation duly organized, legally existing and in good standing
under the laws of the State of its incorporation, has the power to own
its property and to carry on its business and is duly qualified to do
business and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary.
3.02 Authority. Debtor has full power and authority
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to enter into this Agreement, to execute and deliver all documents and
instruments required hereunder and to incur and perform the
obligations provided for herein, all of which have been duly
authorized by all necessary and proper corporate and other action, and
no consent or approval of any Person, including, without limitation,
stockholders of Debtor and any public authority or regulatory body,
which has not been obtained is required as a condition to the validity
or enforceability hereof or thereof.
3.03 Binding Agreements. This Agreement has been duly
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and properly executed by Debtor, constitutes the valid and legally
binding obligation of Debtor and is fully enforceable against Debtor
in accordance with its terms, subject only to laws affecting the
rights of creditors generally and application of general principles of
equity.
3.04 No Conflicting Agreements. The execution,
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delivery and performance by Debtor of this Agreement will not (a)
violate (i) any provision of law or any order, rule or regulation of
any court or agency of government, (ii) any award of any arbitrator,
(iii) the Charter or Bylaws of Debtor, or (iv) any indenture,
contract, agreement, mortgage, deed of trust or other instrument to
which Debtor is a party or by which Debtor or any of its property is
bound, or (b) be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under, any such
award, indenture, contract, agreement, mortgage, deed of trust or
other instrument, or result in the
creation or imposition of any Lien upon any of the property or assets
of Debtor except for Liens created in favor of Secured Party under or
pursuant to this Agreement.
3.05 Title to Properties. Debtor has good and
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marketable title to all of its properties and assets (including the
Collateral) and all of the properties and assets of Debtor are free
and clear of Liens, except for Permitted Liens.
3.06 Reaffirmation of Existing Representations and
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Warranties. Each of the representations and warranties contained in
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the Loan Agreement and the other Loan Documents is incorporated herein
and restated as of the date hereof.
4. AFFIRMATIVE COVENANTS
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Debtor covenants and agrees with Secured Party that,
until (a) all Obligations have been paid in full and (b) there exists
no commitment by Secured Party which could give rise to any
Obligations, Debtor will:
4.01 Taxes. Pay and discharge, and cause each
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Subsidiary to pay and discharge, all taxes, assessments and
governmental charges upon Debtor and each Subsidiary, its income and
properties, prior to the date on which penalties attach thereto unless
and to the extent only that the same are being diligently contested by
Debtor or a Subsidiary, as the case may be, in good faith by
appropriate proceedings, provided, however, that (a) Secured Party
shall have been given reasonable prior written notice of intention to
contest, (b)nonpayment of the same will not, in Secured Party's sole
discretion, materially impair any of the Collateral or Secured Party's
rights or remedies with respect thereto or the prospect for full and
punctual payment of all of the Obligations, (c) Debtor or such
Subsidiary at all times effectively stays or prevents any official or
judicial sale of or action or filing against any of the Collateral by
reason of nonpayment of the same and (d) Debtor or such Subsidiary
establishes reasonable reserves for any liabilities being contested
and for expenses arising out of such contest.
4.02 Extraordinary Loss. Promptly notify Secured
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Party in writing of any event causing extraordinary loss or
depreciation of the value of Debtor's or any Subsidiary's assets
(whether or not insured) and the facts with respect thereto.
4.03 Further Assurances and Corrective Instruments.
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Promptly execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, to Secured Party from
time to time such supplements hereto and such financing statements and
other instruments and documents as may be requested by Secured Party
to protect and preserve the Collateral, Secured Party's security
interest therein, perfection of Secured Party's security interest
and/or Secured Party's rights and remedies hereunder and under the
Loan Documents.
5. NEGATIVE COVENANTS
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Debtor covenants and agrees with Secured Party that,
until (a) all Obligations have been paid in full, and (b) there exists
no commitment by Secured Party which could give rise to any
Obligations, Debtor will not, directly or indirectly, without Secured
Party's prior written consent:
5.01 Dividends, Stock Redemptions. Directly or
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indirectly declare or pay any dividend on, or make any other
distribution with respect to (whether by reduction of capital or
otherwise), any shares of its capital stock, or purchase, redeem,
retire or otherwise acquire for value any shares of its capital stock,
except that a Subsidiary may pay dividends to Debtor.
5.02 Funded Debt. Redeem, call for redemption,
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purchase or otherwise acquire or retire, directly or indirectly, or
make any optional prepayment of principal on, any Funded Debt, or
amend, alter or otherwise modify the provisions relating to any Funded
Debt, if the effect of such amendment, alteration or other
modification would or might be to accelerate such Funded Debt. For
purposes of this Subsection, "Funded Debt" shall include any
obligation of Debtor to any Person other than Secured Party payable
more than one year from the date of its creation which, under
generally accepted accounting principles, is shown on the balance
sheet as a liability (excluding reserves for deferred income taxes and
other reserves to the extent that such reserves do not constitute an
obligation).
6. EVENTS OF DEFAULT
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The occurrence of any one or more of the following
events shall constitute an "Event of Default":
(a) Any representation or warranty made herein, in any
of the Loan Documents or in any statement, report, certificate,
opinion, financial statement or other document furnished or to be
furnished in connection with this Agreement or the Loan Documents
shall be false or misleading in any material respect.
(b) Failure of Debtor or any other Person to observe
or perform any warranty, covenant, condition or agreement to be
observed or performed by Debtor or such other Person under this
Agreement or any of the Loan Documents.
(c) The occurrence of a default under or an "Event of
Default" as defined in the Loan Agreement or any of the other Loan
Documents.
7. RIGHTS AND REMEDIES
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7.01 Rights and Remedies of Secured Party. Upon and
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after the occurrence of an Event of Default, Secured Party may,
without notice or demand, exercise in any jurisdiction in which
enforcement hereof is sought, the following rights and remedies, in
addition to the rights and remedies available to Secured Party under
the Loan Documents, the rights and remedies of a secured party under
the Uniform Commercial Code and all other rights and remedies
available to Secured Party under applicable law, all such rights and
remedies being cumulative and enforceable alternatively, successively
or concurrently:
(a) Declare all of the Obligations to be
immediately due and payable and the same shall thereupon become
immediately due and payable without presentment, demand for payment,
protest or notice of any kind, all of which are hereby expressly
waived.
(b) Institute any proceeding or proceedings to
enforce the Obligations and any Liens of Secured Party.
(c) Take possession of the Collateral, and for
that purpose, so far as Debtor may give authority therefor, enter upon
any premises on which the Collateral or any part thereof may be
situated and remove the same therefrom without any liability for suit,
action or other proceeding, DEBTOR HEREBY WAIVING ANY AND ALL RIGHTS
TO PRIOR NOTICE AND TO JUDICIAL HEARING WITH RESPECT TO REPOSSESSION
OF COLLATERAL, and require Debtor, at Debtor's expense, to assemble
and deliver the Collateral to such place or places as Secured Party
may designate.
(d) Operate, manage and control the Collateral
(including use of the Collateral and any other property or assets of
Debtor in order to continue or complete performance of Debtor's
obligations under any contracts of Debtor), or permit the Collateral
or any portion thereof to remain idle or store the same, and collect
all rents and revenues
therefrom and sell or otherwise dispose of any or all of the
Collateral upon such terms and under such conditions as Secured Party,
in its sole discretion, may determine, and purchase or acquire any of
the Collateral at any such sale or other disposition, all to the
extent permitted by applicable law.
(e) With respect to any accounts, notes,
instruments, chattel paper, tax refunds, contract rights, general
intangibles or other debts or liabilities payable to Debtor securing
the Obligations, notify any account debtors and other obligors thereon
to make payments thereon directly to Secured Party, take control of
the cash and non-cash proceeds thereof, demand, collect, sue for and
receive any money or property at any time due, payable or receivable
on account thereof, compromise and settle with any Person liable
thereon, and extend the time of payment or otherwise change the terms
thereof, without incurring liability or responsibility therefor to
Debtor or any guarantor of any of the Obligations.
(f) Cease making advances under any other
commitments or credit accommodations of Secured Party to Debtor and
stop and retract the making of any advance hereunder or thereunder
which may have been requested by Debtor.
7.02 Power of Attorney. Effective upon the occurrence
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of an Event of Default, Debtor hereby designates and appoints Secured
Party and its designees as attorney-in-fact of Debtor, irrevocably and
with power of substitution, with authority to receive, open and
dispose of all mail addressed to Debtor; to notify the postal
authorities to change the address for delivery of mail addressed to
Debtor to such other address as Secured Party designates; to endorse
Debtor's name on any notes, acceptances, checks, drafts, money orders,
instruments or other evidences of payment or proceeds of the
Collateral that may come into Secured Party's possession; to sign
Debtor's name on any invoices, documents, drafts against and notices
to account debtors or other obligors of Debtor and requests for
verification of accounts; to execute proofs of claim and loss; to
execute any endorsements, assignments or other instruments of
conveyance or transfer; to adjust and compromise any claims under
insurance policies; to execute releases; and to perform all other acts
necessary and advisable, in Secured Party's sole discretion, to carry
out and enforce this Agreement and the Loan Documents. All acts of
said attorney or designee are hereby ratified and approved by Debtor
and said attorney or designee shall not be liable for any acts of
commission or omission nor for any error of judgment or mistake of
fact or law. This power of attorney is coupled with an interest and
is irrevocable so long as any of the
Obligations remain unpaid or unperformed or there exists any
commitment by Secured Party which could give rise to any Obligations.
7.03 Notice of Disposition of Collateral. It is
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mutually agreed that commercial reasonableness and good faith require
Secured Party to give Debtor no more than 5 Business Days prior
written notice of the time and place of any public disposition of
Collateral or of the time after which any private disposition or any
other intended disposition is to be made.
7.04 Costs and Expenses. Debtor agrees to pay to
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Secured Party on demand the amount of all expenses, including
attorney's fees and court costs paid or incurred by Secured Party in
exercising or enforcing or consulting with counsel concerning any of
its rights hereunder, under the Loan Documents or under applicable
law, together with interest on all such expenses paid by Secured Party
at the highest rate and calculated in the manner provided in the Note;
provided, however, that if such Note shall have been satisfied in full
and no commitment by Secured Party to extend additional credit to
Debtor under the Loan Agreement or any of the other Loan Documents
shall exist, interest shall accrue at the highest rate and calculated
in the manner provided in the Loan Documents. The provisions of this
Subsection shall survive the termination of this Agreement and Secured
Party's security interest hereunder and the payment of all other
Obligations.
8. MISCELLANEOUS
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8.01 Performance for Debtor. Debtor agrees and hereby
----------------------
authorizes that Secured Party may, in Secured Party's sole discretion,
but Secured Party shall not be obligated to, whether or not an Event
of Default shall have occurred, advance funds on behalf of Debtor,
without prior notice to Debtor, in order to insure Debtor's compliance
with any covenant, warranty, representation or agreement of Debtor
made in or pursuant to this Agreement or any of the Loan Documents, to
continue or complete, or cause to be continued or completed,
performance of Debtor's obligations under any contracts of Debtor, to
cover overdrafts in any checking or other accounts of Debtor at
Secured Party or to preserve or protect any right or interest of
Secured Party in the Collateral or under or pursuant to this Agreement
or any of the Loan Documents, including, without limitation, the
payment of any insurance premiums or taxes and the satisfaction or
discharge of any judgment or any Lien upon the Collateral or other
property or assets of Debtor; provided, however, that the making of
any such advance by Secured Party shall not constitute a waiver by
Secured
Party of any Event of Default with respect to which such advance is
made nor relieve Debtor of any such Event of Default. Debtor shall
pay to Secured Party upon demand all advances made by Secured Party
under this Subsection 8.01 with interest thereon at the highest rate
and calculated in the manner provided in the Note; provided, however,
that if such Note shall have been satisfied in full and no commitment
by Secured Party to extend additional credit to Secured Party under
the Loan Agreement or any of the other Loan Documents shall exist,
interest shall accrue at the highest rate and calculated in the manner
provided in the Loan Documents. All such advances shall be deemed to
be included in the Obligations and secured by the security interest
granted Secured Party hereunder; provided, however, that the
provisions of this Subsection shall survive the termination of this
Agreement and Secured Party's security interest hereunder and the
payment of all other Obligations.
8.02 Expenses. Debtor agrees to pay to Secured Party
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on demand the amount of all expenses paid or incurred by Secured Party
(including the fees and expenses of its counsel) in connection with
the preparation of all written commitments of Secured Party antedating
this Agreement, this Agreement and the Loan Documents and all
documents and instruments referred to herein. Debtor further agrees
to pay all expenses in connection with the filing or recordation of
all financing statements and instruments as may be required by Secured
Party at the time of, or subsequent to, the execution of this
Agreement, including, without limitation, all documentary stamps,
recordation and transfer taxes and other costs and taxes incident to
recordation of any document or instrument in connection herewith and,
if any such expenses shall be paid or incurred by Secured Party, to
pay to Secured Party upon its demand the amount of such expenses.
Debtor agrees to save harmless and indemnify Secured Party from and
against any liability resulting from the failure to pay any required
documentary stamps, recordation and transfer taxes, recording costs,
or any other expenses in connection with this Agreement. The
provisions of this Subsection shall survive the termination of this
Agreement and Secured Party's security interest hereunder and the
payment of all other Obligations.
8.03 Applications of Collateral. Except as may be
--------------------------
otherwise specifically provided in this Agreement, all Collateral and
proceeds of Collateral coming into Secured Party's possession may be
applied by Secured Party to any of the Obligations, whether matured or
unmatured, as Secured Party shall determine in its sole discretion.
8.04 Waivers by Debtor. Debtor hereby waives, to the
-----------------
extent the same may be waived under applicable law: (a) notice of
acceptance of this Agreement; (b) all claims, causes of action and
rights of Debtor against Secured Party on account of actions taken or
not taken by Secured Party in the exercise of Secured Party's rights
or remedies hereunder, under the Loan Documents or under applicable
law; (c) all claims of Debtor for failure of Secured Party to comply
with any requirement of applicable law relating to enforcement of
Secured Party's rights or remedies hereunder, under the Loan Documents
or under applicable law; (d) all rights of redemption of Debtor with
respect to the Collateral; (e) in the event Secured Party seeks to
repossess any or all of the Collateral by judicial proceedings, any
bond(s) or demand(s) for possession which otherwise may be necessary
or required; (f) presentment, demand for payment, protest and notice
of non-payment and all exemptions; (g) any and all other notices or
demands which by applicable law must be given to or made upon Debtor
by Secured Party; (h) settlement, compromise or release of the
obligations of any Person primarily or secondarily liable upon any of
the Obligations; (i) trial by jury in any action or proceeding of any
kind or nature in connection with any of the Obligations, this
Agreement or any of the Loan Documents; and (j) substitution,
impairment, exchange or release of any collateral security for any of
the Obligations. Debtor agrees that Secured Party may exercise any or
all of its rights and/or remedies hereunder, under the Loan Documents
and under applicable law without resorting to and without regard to
any collateral security or sources of liability with respect to any of
the Obligations.
8.05 Waivers by Secured Party. Neither any failure
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nor any delay on the part of Secured Party in exercising any right,
power or remedy hereunder, under any of the Loan Documents or under
applicable law shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
8.06 Modifications. No modification or waiver of any
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provision of this Agreement or any of the Loan Documents, and no
consent by Secured Party to any departure by Debtor therefrom, shall
in any event be effective unless the same shall be in writing, and
then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand
upon Debtor in any case shall entitle Debtor to any other or further
notice or demand in the same, similar or other circumstances.
8.07 Notices. Any notice or other communication in
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connection with this Agreement shall be provided in the manner
specified in the Loan Agreement.
8.08 Confession of Judgment. Debtor hereby authorizes
----------------------
any clerk of court or any attorney-at-law to appear for Debtor before
any court, having jurisdiction, within the United States or elsewhere,
and, after one or more complaints filed, confess judgment against
Debtor as of any time after any of the Obligations are due (whether by
demand, stated maturity, acceleration or otherwise) for the unpaid
balance of the Obligations, including principal, interest, fees, late
charges, court costs and expenses, together with attorneys' fees equal
to fifteen percent (15%) of the amount of such Obligations, for
collection and release of all errors, and without stay of execution,
and inquisition and extension upon any levy on real estate is hereby
waived and condemnation agreed to, and the exemption of personal
property from levy and sale is also hereby expressly waived, and no
benefit of exemption shall be claimed under any exemption law now in
force or which may be hereafter adopted. The foregoing authorities
and powers to confess judgment shall not be exhausted by one or more
exercises of any of them or by any imperfect exercise of any of them,
shall not be extinguished by any judgment entered because of any of
them and may be exercised before, during or after sale, liquidation or
other disposition by Secured Party of any property directly or
indirectly securing any of the Obligations or exercise or enforcement
by Secured Party of any other right or remedy of Secured Party with
respect to the Obligations. Debtor agrees that any agreements of
Debtor contained in this Agreement or any of the Other Agreements to
pay any costs or expenses, including attorneys' fees and expenses,
paid or incurred by Secured Party shall not be merged into, or
otherwise impaired by, any such judgment by confession, but Secured
Party shall not be entitled to recover on account of such costs or
expenses any amount in excess of the greater of (a) such costs or
expenses included in any judgments by confession (without
duplication), or (b) such costs or expenses actually paid or incurred
by Secured Party.
8.09 Survival; Successors and Assigns. All covenants,
--------------------------------
agreements, representations and warranties made herein and in the Loan
Documents shall survive the execution and delivery hereof and thereof,
and shall continue in full force and effect until all Obligations have
been paid in full and there exists no commitment by Secured Party
which could give rise to any Obligations. Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All
covenants,
agreements, representations and warranties by or on behalf of Debtor
which are contained in this Agreement and the Loan Documents shall
inure to the benefit of Secured Party, its successors and assigns.
Debtor may not assign this Agreement or any of its rights hereunder
without the prior written consent of Secured Party. Secured Party may
at any time, in its discretion, assign, transfer or pledge to any
person, or grant to any person a security interest in, the
Obligations, this Agreement, any of the Other Agreements or any of its
rights hereunder or thereunder. In addition, Secured Party may sell,
in such amounts, upon such terms and to such persons as Secured Party
may determine, participations in its interests in the Obligations
and/or under this Agreement and/or any of the Other Agreements. In
the case of each such assignment, transfer, pledge, grant or sale,
Secured Party may from time to time provide to the assignee,
transferee, pledgee, secured party or participant, any information and
documents (or copies thereof) relating to this Agreement and the Other
Agreements and related transactions, and relating to the business,
assets, operations, business prospects or financial condition of
Debtor.
8.10 Merger and Integration. This Agreement and the
----------------------
attached Schedule(s) contain the entire agreement of the parties
hereto with respect to the matters covered and the transactions
contemplated hereby, and no other agreement, statement or promise made
by any party hereto, or by any employee, officer, agent or attorney of
any party hereto, which is not contained herein, shall be valid or
binding.
8.11 Counterparts. This Agreement may be executed in
------------
any number of counterparts and by different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be
an original, but all such counterparts shall together constitute one
and the same instrument.
8.12 Headings. The headings and sub-headings
--------
contained in the titling of this Agreement are intended to be used for
convenience only and shall not be used or deemed to limit or diminish
any of the provisions hereof.
8.13 Recitals. The Recitals hereto are hereby
--------
incorporated into and made a part of this Agreement.
8.14 Loan Document. This Agreement is one of the Loan
-------------
Documents.
IN WITNESS WHEREOF, the parties hereto have executed or
caused to be executed this Agreement under seal as of the date first
above written.
WITNESS/ATTEST: AAI CORPORATION
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI ENGINEERING SUPPORT, INC.
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI MANUFACTURING ASSEMBLY,
By: Robert W. Worthing (SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI SYSTEMS MANAGEMENT, INC.
By: Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI MEDICAL CORPORATION
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
SETI, INC.
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI/ACL TECHNOLOGIES, INC.
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
AAI MICROFLITE SIMULATION
INTERNATIONAL CORPORATION
By:Robert W. Worthing(SEAL)
-------------------- ------------------
Name:
---------------------
Title:
--------------------
DEBTOR
SIGNET BANK/MARYLAND
By:David A. Bauereis(SEAL)
------------------------- -----------------
David A. Bauereis
Vice President
SECURED PARTY
STATE OF MARYLAND, TO WIT:
I HEREBY CERTIFY that on this ____ day of _________, 1994,
before me, the subscriber, a Notary Public of said State, personally
appeared Paul J. Michaud, who acknowledged himself to be (1) the Vice
President, Chief Financial Officer and Treasurer of each of AAI
Corporation, AAI Engineering Support, Inc., AAI Manufacturing
Assembly, Inc., AAI Systems Management, Inc., Seti, Inc. and AAI/ACL
Technologies, Inc., (2) the Vice President and Secretary of AAI
Medical Corporation, and (3) the Vice President and Chief Financial
Officer of AAI Microflite Simulation International Corporation, and
that he, as such, being authorized so to do, executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official
seal.
-------------------------
Notary Public
My Commission expires:
----------------------