FIRST AMENDMENT AND ADDITIONAL CREDIT AGREEMENT
THIS AGREEMENT is made as of the 18th day of October, 1995,
by and among AAI CORPORATION, a Maryland corporation ("Borrower"), AAI SYSTEMS
MANAGEMENT, INC., a Maryland corporation ("Systems"), AAI/ACL TECHNOLOGIES,
INC., a Maryland corporation ("Technologies"), AAI ENGINEERING SUPPORT INC., a
Maryland corporation ("Engineering"), AAI CALIFORNIA CARSHELL, INC., a Maryland
corporation ("Carshell"), AAI MEDICAL CORPORATION, a Maryland corporation
("Medical"), UIC - DEL. CORPORATION, a Delaware corporation ("UIC-DEL"), AAI
INTERNATIONAL, INC., a Delaware corporation ("International"), AAI MICROFLITE
SIMULATION INTERNATIONAL CORPORATION, a Maryland corporation ("Microflite"),
SETI, INC., a Pennsylvania corporation ("Seti"), SYMTRON SYSTEMS, INC., a New
Jersey corporation ("Symtron"), UNITED INDUSTRIAL CORPORATION, a Delaware
corporation ("UIC") (Systems, Technologies, Engineering, Carshell, Medical,
UIC-DEL, International, Microflite, Seti, Symtron and UIC being hereinafter
collectively referred to as "Guarantors"), and FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Lender (in such capacity, "Lender"), as Issuing Bank (in such
capacity, "Issuing Bank"), and as Agent (in such capacity, "Agent"), and as
under the Credit Agreement (as hereinafter defined).
RECITALS
R.1 Lender and Issuing Bank have previously extended credit to
Borrower pursuant to a certain Credit Agreement dated October 13, 1995 (the
"Credit Agreement"), among Borrower, Lender, Issuing Bank, Agent and another
financial institution which subsequently merged into Lender, resulting in Lender
holding one hundred percent (100%) of the Revolving Credit Commitments and the
Notes.
R.2 Borrower has requested that Lender, Issuing Bank and Agent
amend the Credit Agreement in certain respects and provide for possible future
additional credit to Borrower, and Lender, Issuing Bank and Agent have agreed to
do so upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of this Agreement, the
parties hereto agree as follows.
1. Defined Terms. All capitalized terms used in this Agreement
without definition shall have the meanings assigned to such terms in the Credit
Agreement, giving effect to the amendments of the Credit Agreement contained in
Section 2 of this Agreement.
2. Amendment of the Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) Amendment of Section 1. By amending Section 1 as follows:
(i) By inserting the following new definition,
immediately following the definition of "Applicable Margin,"
as follows:
"APPLICABLE SECURITIES CREDIT
PERCENTAGE": one hundred percent (100%) in
the case of Eligible Securities consisting
of certificates of deposit issued by First
Fidelity or savings accounts at First
Fidelity; ninety percent (90%) in the case
of Eligible Securities consisting of
certificates of deposit issued by financial
institutions other than First Fidelity or
savings accounts at financial institutions
other than First Fidelity, U.S. treasury
bills or bonds issued by agencies of the
United States of America; eighty-five
percent (85%) in the case of Eligible
Securities consisting of U.S. treasury notes
or U.S. treasury bonds; seventy percent
(70%) in the case of Eligible Securities
consisting of municipal bonds; fifty percent
(50%) in the case of Eligible Securities
consisting of corporate bonds, mutual funds,
stock traded on recognized exchanges in the
United States of America or any other
security which would constitute "margin
stock" (within the meaning of such term
under Regulation U of the Board of Governors
of the Federal Reserve System) if a
Revolving Credit Loan were for the purpose
of buying or carrying such security; and
such percentage as may be established by
Issuing Bank in the case of Eligible
Securities other than those securities
described above. Notwithstanding the
foregoing provisions of this definition, in
the case of any Eligible Securities, the
Issuing Bank may, in its discretion
exercised in good faith, establish a lesser
percentage as the "Applicable Securities
Credit Percentage." Such lesser percentages
may be based upon evaluations of risk by the
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Issuing Bank or any other factors deemed
relevant by the Issuing Bank, whether or not
such factors have theretofor been used,
contemplated or foreseen as a basis for
adjusting the Applicable Securities Credit
Percentage.
(ii) By amending the definition of "Borrowing Base"
to read, in its entirety, as follows:
"BORROWING BASE": at a particular
time, the sum of (a) the product of (i)
Eligible Accounts as at such time, and (ii)
the Accounts Credit Percentage, and (b) the
L/C Securities Base as at such time, but
only to the extent of the Standby L/C
Exposure as at such time.
(iii) By inserting the following new definition,
immediately following the definition of "Eligible Borrower
Subsidiary," as follows:
"ELIGIBLE SECURITIES": at a
particular time, marketable securities
consisting of certificates of deposit,
savings accounts, U.S. treasury bills, U.S.
treasury notes, U.S. treasury bonds, bonds
issued by agencies of the United States of
America, municipal bonds, corporate bonds,
stock traded on recognized exchanges in the
United States of America, mutual funds and
other securities which are owned by the
Borrower, which as of such time are
acceptable to the Agent and the Issuing
Bank, in their discretion exercised in good
faith, as a basis for issuance of standby
Letters of Credit under this Agreement and
in which the Agent as of such time has a
first priority perfected security interest
pursuant to the Borrower Security Agreement
as security for the Secured Obligations (as
defined in the Borrower Security Agreement).
The Agent and the Issuing Bank may determine
from time to time in their discretion
exercised in good faith and notwithstanding
any previous contrary determinations made by
them, to exclude from or include in Eligible
Securities specific securities or categories
or types of securities. Such determinations
may be based upon evaluations of risk by the
Agent and the Issuing Bank or any other
factors deemed relevant by the Agent and the
Issuing Bank, whether or not such factors
have theretofor
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been used, contemplated or foreseen as a
basis for limiting Eligible Securities.
(iv) By amending the definition of "L/C
Maximum Exposure" to read, in its entirety, as
follows:
"L/C MAXIMUM EXPOSURE": Twenty
Million Dollars ($20,000,000.00).
(v) By inserting the following new
definition, immediately following the definition of
"L/C Reimbursement Obligations," as follows:
"L/C SECURITIES BASE": at a
particular time, the product of (a) the
current market value of Eligible Securities
as at such time, as determined by the Agent
and the Issuing Bank in their discretion
exercised in good faith, and (b) the
Applicable Securities Credit Percentage.
(vi) By amending the definition of "Standby
L/C Commission Rate" by inserting, immediately
following the last occurrence in such definition of
the word "zero," the following:
; provided that, notwithstanding the
foregoing provisions of this definition, in
the case of any standby Letter of Credit in
connection with which, pursuant to
Subsection 3.1, the Borrower has granted to
the Agent a first priority perfected
security interest in Eligible Securities
having a current market value, as determined
by the Agent and the Issuing Bank in their
discretion exercised in good faith, which,
when multiplied by the Applicable Securities
Credit Percentage, is equal to or greater
than the face amount of such Letter of
Credit, the "Standby L/C Commission Rate"
shall mean one-half of one percent (.5%).
(vii) By amending the definition of "Standby
L/C Maximum Exposure" to read, in its entirety, as
follows:
"STANDBY L/C MAXIMUM EXPOSURE":
Twenty Million Dollars ($20,000,000.00).
(b) Amendment of Section 2. By amending Section 2 as follows:
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(i) By amending Subsection 2.4(a) by
deleting the language "one-half of one percent (.5%)"
and replacing such language with the language
"three-eighths of one percent (3/8%)."
(ii) By amending Subsection 2.7 to read, in
its entirety, as follows:
2.7 Mandatory Prepayments. In the
event that, at any time, the Aggregate
Borrowing Base Charge shall exceed the
Borrowing Base, the Borrower shall
immediately eliminate such excess by
prepaying Revolving Credit Loans or, to the
extent that the Standby L/C Exposure then
exceeds the L/C Securities Base, by
increasing the amount of Eligible Securities
comprising the L/C Securities Base.
(c) Amendment of Section 6. By amending Section 6 as follows:
(i) By amending Subsection 6.1(a) to read,
in its entirety, as follows:
(a) not later than Monday of each
week, a Borrowing Base Certificate as of the
close of business on the preceding Business
Day (except that, during any period that the
Borrowing Base exceeds the Aggregate
Borrowing Base Charge by Three Million
Dollars ($3,000,000.00) or more, the
Borrower shall furnish to the Agent, each
Lender and the Issuing Bank in writing, not
later than the fifth (5th) Business Day
after the end of each calendar month, a
Borrowing Base Certificate as at the end of
such calendar month);
(ii) By amending Subsection 6.10 by deleting
the language "Fifty Thousand Dollars ($50,000.00)"
and replacing such language with the language
"Thirty-Five Thousand Dollars ($35,000.00)."
(d) Amendment of Section 7. By amending Subsection 7.1(d) by
deleting the language "Three Million Dollars ($3,000,000.00)" and
replacing such language with the language "Three Million Five Hundred
Thousand Dollars ($3,500,000.00)."
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(e) Amendment of Section 8. By deleting Subsection 8.1(r) in
its entirety.
3. Equipment Financing. Borrower is authorized by Lender to
request loans from Lender from time to time in an aggregate amount not exceeding
Two Million Dollars ($2,000,000.00) to finance equipment of Borrower. Lender
may, IN ITS SOLE DISCRETION, BUT SHALL NOT BE OBLIGATED TO, make any such loans
requested by Borrower upon such terms and conditions as may be agreed between
Lender and Borrower, provided that the term of any such loan shall not exceed
forty-eight (48) months.
4. Representations and Warranties of Borrower. In order to
induce Lender, Issuing Bank and Agent to enter into this Agreement, Borrower
represents and warrants to Lender, Issuing Bank and Agent that:
(a) Each of Borrower and Guarantors has the power and
authority to execute, deliver and perform this Agreement and the other
Credit Documents executed or to be executed by it in connection with
this Agreement (the "Related Documents"). Each of Borrower and
Guarantors has taken all necessary action (including, without
limitation, obtaining any required approval of its Board of Directors
or stockholders) to authorize its execution, delivery and performance
of this Agreement and the Related Documents. No consent, approval or
authorization of, or filing with, any Governmental Authority, and no
consent of any other Person, is required in connection with the
execution, delivery and performance of this Agreement and the Related
Documents by each of Borrower and Guarantors, except for those already
duly obtained.
(b) This Agreement and the Related Documents have been duly
executed and delivered by each of Borrower and Guarantors, and
constitute the legal, valid and binding obligations of each of Borrower
and Guarantors, enforceable against Borrower and Guarantors in
accordance with their terms without defense, setoff or counterclaim.
The execution, delivery and performance of this Agreement and the
Related Documents by each of Borrower and Guarantors do not and will
not conflict with, or constitute a violation or breach of, or
constitute a default under, or result in the creation or imposition of
any Lien upon any property of Borrower, any Subsidiary of Borrower or
any Guarantor by reason of the terms of (a) any mortgage, lease,
agreement, instrument or Contractual Obligation to which Borrower, any
Subsidiary of Borrower or any Guarantor is a party or which is binding
upon it, or (b) any Requirement of Law.
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(c) Each of the representations and warranties of Borrower and
Guarantors contained in the Credit Agreement and the other Credit
Documents are correct and complete in all material respects as of the
date hereof.
(d) There has not occurred any material adverse change in the
business, operations, assets or financial or other condition of
Borrower or UIC from those indicated in the last financial statements
delivered to Agent pursuant to Subsection 6.1 of the Credit Agreement.
(e) There exists no Default or Event of Default as of the date
hereof.
5. Conditions to Effectiveness of Amendments. The amendments
of the Credit Agreement contained in Section 2 of this Agreement and the
provisions of Section 3 of this Agreement shall be conditioned upon, and shall
not be effective until, each of the following conditions precedent shall have
been satisfied as determined by Agent:
(a) There shall have been delivered to Agent, appropriately
completed and duly executed (when applicable), and in form and
substance satisfactory to Agent and its counsel, such documents,
agreements, instruments and certificates as Agent, Lender or Issuing
Bank may request in good faith in connection with the transactions
contemplated by this Agreement.
(b) Agent shall have received true and complete copies of all
documents and instruments, including all consents, authorizations and
filings, required under any Requirement of Law or by any Contractual
Obligation of Borrower or any Guarantor in connection with the
execution, delivery, performance, validity and enforceability of this
Agreement or in connection with any of the transactions contemplated by
or referred to in this Agreement, and all such consents, authorizations
and filings shall be satisfactory in form and substance to Agent and in
full force and effect.
(c) No suit, action, investigation, inquiry or other
proceeding (including, without limitation, the enactment or
promulgation of a statute or rule) by or before any arbitrator or any
Governmental Authority shall be pending and no preliminary or permanent
injunction or order by any Governmental Authority shall have been
entered (i) relating in any way to this Agreement or any of the
transactions contemplated by or referred to in this Agreement, or (ii)
which, in the reasonable judgment of Agent, would have a material
adverse effect upon any of the transactions contemplated by the Credit
Agreement or contemplated by or referred to in this Agreement or upon
the business, operations, properties, condition (financial or
otherwise) or prospects of Borrower or UIC.
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(d) As of the date hereof and after giving effect to the
amendments of the Credit Agreement contained in Section 2 of this
Agreement, all representations and warranties of Borrower and
Guarantors contained in the Credit Agreement, this Agreement, the
Related Documents and the other Credit Documents shall be correct and
complete in all material respects, and no Default or Event of Default
shall have occurred and be continuing.
6. No Defenses or Claims; Release. In order to induce Lender,
Issuing Bank and Agent to enter into this Agreement, each of Borrower and
Guarantors acknowledges and represents to Lender, Issuing Bank and Agent that it
has no defense, setoff, cause of action or claim of any kind against Lender,
Issuing Bank or Agent on account of actions heretofore taken or not taken by
Lender, Issuing Bank or Agent or otherwise, which can be asserted as a basis to
seek affirmative relief or damages from Lender, Issuing Bank or Agent or to
reduce or eliminate any obligations of Borrower or such Guarantor to Lender,
Issuing Bank or Agent. Each of Borrower and Guarantors, on behalf of itself and
its successors and assigns, hereby forever and irrevocably releases Lender,
Issuing Bank and Agent, and each of their employees, officers, agents,
attorneys, successors and assigns, from any and all claims, demands, damages,
liabilities, obligations, penalties, suits and causes of action of any kind
relating to, resulting from or arising out of any fact, matter or occurrence
known to Borrower or any of Guarantors existing as of, or occurring prior to,
the date of this Agreement directly or indirectly relating to, resulting from or
arising out of any Revolving Credit Loans or Letters of Credit, any of the
Credit Documents or any obligations of Borrower or such Guarantor to Lender,
Issuing Bank or Agent.
7. Consents of Guarantors. Each of Guarantors hereby consents
to the amendments of the Credit Agreement provided for in this Agreement.
8. No Novation or Waiver. Borrower, Guarantors, Lender,
Issuing Bank and Agent intend that the execution and delivery of this Agreement
shall not constitute or be construed to operate as a novation of the Credit
Agreement, the Notes, the Deed of Trust, the Guaranty, the Borrower Security
Agreement, the Borrower Pledge Agreement, the Intellectual Property Assignments,
the Guarantor Security Agreement, the UIC Pledge Agreement, the UIC
Subordination Agreement, the UIC-DEL Subordination Agreement, the L/C Agreements
or any other of the Credit Documents or any obligations of Borrower or
Guarantors evidenced by any of the Credit Documents or as a novation of any
security interests or other Liens directly or indirectly securing any of such
obligations. Nothing contained in this Agreement or in any prior oral or written
communications from or on behalf of Lender, Issuing Bank or Agent to Borrower or
any of Guarantors shall constitute or be construed to operate as a waiver by
Lender, Issuing Bank or Agent
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of any Defaults or Events of Default which have occurred. Nor shall anything
contained in this Agreement or in any prior oral or written communications from
or on behalf of Lender, Issuing Bank or Agent to Borrower or any of Guarantors
constitute or be construed to operate as a waiver by Lender, Issuing Bank or
Agent of any rights or remedies heretofore or hereafter accruing to Lender,
Issuing Bank or Agent on account of any such Default or Event of Default or any
other Default or Event of Default.
9. Expenses. Whether or not the transactions contemplated
hereby are consummated, Borrower shall pay to Agent on demand all out-of-pocket
costs and expenses that Agent has paid or incurred or subsequently pays or
incurs in connection with the negotiation, preparation, consummation and
administration of this Agreement and the Related Documents, all as further
provided in Subsection 10.6 of the Credit Agreement.
10. Ratification of Documents and Obligations. Borrower,
Guarantors, Lender, Issuing Bank and Agent hereby ratify and confirm the Credit
Agreement (as amended pursuant hereto), the Notes, the Deed of Trust, the
Borrower Security Agreement, the Borrower Pledge Agreement, the Guaranty, the
Intellectual Property Assignments, the Guarantor Security Agreement, the UIC
Pledge Agreement, the UIC Subordination Agreement, the UIC-DEL Subordination
Agreement, the L/C Agreements and the other Credit Documents, and agree that the
same, and all obligations of the parties thereunder, shall remain in full force
and effect.
11. Binding Nature, Merger, Counterparts and Choice of Law.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, and each reference in this
Agreement to any of the parties hereto shall be deemed to include the successors
and assigns of such party. This Agreement contains the entire agreement of the
parties with respect to the matters covered and the transactions contemplated
hereby and thereby, and no agreement, statement or promise made by any party, or
by any employee, officer, agent or attorney of any party, which is not contained
herein or therein, shall be valid or binding. This Agreement may be executed in
any number of counterparts and by different parties 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 agreement. This
Agreement, and the rights and obligations of the parties hereunder, shall be
governed by, and construed and interpreted in accordance with, the internal laws
of the State of Maryland, exclusive of principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have executed or caused
to be executed this Agreement under seal as of the date first above written.
ATTEST/WITNESS: AAI CORPORATION
AAI SYSTEMS MANAGEMENT, INC.
AAI/ACL TECHNOLOGIES, INC.
AAI ENGINEERING SUPPORT INC.
AAI CALIFORNIA CARSHELL, INC.
AAI MEDICAL CORPORATION
_______________________________ By:_______________________________(SEAL)
Paul J. Michaud
Vice President of each of the
foregoing corporations
UIC - DEL. CORPORATION
AAI INTERNATIONAL, INC.
AAI MICROFLITE SIMULATION
INTERNATIONAL CORPORATION
SETI, INC.
________________________________ By:_______________________________(SEAL)
Paul J. Michaud
President of each of the foregoing
corporations
SYMTRON SYSTEMS, INC.
________________________________ By:_______________________________(SEAL)
P. David Botsch
Chief Executive Officer
[SIGNATURES CONTINUED]
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[SIGNATURES CONTINUED]
UNITED INDUSTRIAL CORPORATION
_______________________________ By:_______________________________(SEAL)
P. David Botsch
President
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, as Lender, Issuing
Bank and Agent
_______________________________ By:_______________________________(SEAL)
Name: Michael Coiley
Title: Vice President
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STATE OF , , SS:
I HEREBY CERTIFY that on this ________ day of
__________________, 1995, before me, the undersigned, a Notary Public of said
State, personally appeared Paul J. Michaud, who acknowledged himself to be the
Vice President of each of AAI Corporation, AAI Systems Management, Inc., AAI/ACL
Technologies, Inc., AAI Engineering Support Inc., AAI California Carshell, Inc.,
and AAI Medical Corporation, and the President of each of UIC - DEL.
Corporation, AAI International, Inc., AAI Microflite Simulation International
Corporation and Seti, Inc., and that he, as such, being authorized so to do,
executed the foregoing instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
----------------------------
Notary Public
My Commission Expires: ______________
STATE OF , , SS:
I HEREBY CERTIFY that on this ________ day of
__________________, 1995, before me, the undersigned, a Notary Public of said
State, personally appeared P. David Botsch, who acknowledged himself to be the
Chief Executive Officer of Symtron Systems, Inc., and the President of United
Industrial Corporation, and that he, as such, being authorized so to do,
executed the foregoing instrument for the purposes therein contained.
WITNESS my hand and Notarial Seal.
----------------------------
Notary Public
My Commission Expires: ______________
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STATE OF , , SS:
I HEREBY CERTIFY that on this ________ day of
__________________, 1995, before me, the undersigned, a Notary Public of said
State, personally appeared ______________________________, who acknowledged
himself to be the _________________________ of First Fidelity Bank, National
Association, and that he, as such, being authorized so to do, executed the
foregoing instrument for the
purposes therein contained.
WITNESS my hand and Notarial Seal.
----------------------------
Notary Public
My Commission Expires: ______________
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