REVOLVING NOTE
$17,500,000.00 McLean, Virginia
June 11, 1997
FOR VALUE RECEIVED, United Industrial Corporation, AAI Corporation, AAI
Engineering Support, Inc., AAI Systems Management, Inc., AAI/ACL Technologies,
Inc., Detroit Stoker Company, Midwest Metallurgical Laboratory, Inc., Neo
Products Co., Symtron Systems, Inc., AAI MICROFLITE Simulation International
Corporation and UIC- Del. Corporation (collectively, the "Borrower"), having an
address at c/o United Industrial Corporation, 18 E. 48th Street, New York, N.Y.
10017, promises to pay to the order of First Union Commercial Corporation, a
North Carolina corporation (the "Lender"), the principal sum of Seventeen
Million, Five Hundred Thousand Dollars ($17,500,000.00) (the "Principal Sum"),
or so much thereof as has been or may be advanced or readvanced to or for the
account of the Borrower pursuant to the terms and conditions of the Credit
Agreement (as hereinafter defined), together with interest thereon at the rate
or rates hereinafter provided, in accordance with the following terms:
1. Interest. Commencing as of the date hereof and continuing until
repayment in full of all sums due hereunder, the unpaid Principal Sum shall bear
interest at a fluctuating rate, determined as follows:
(a) Prime Rate Option. The initial interest rate hereunder shall be
the Lender's "Prime Rate", being that rate announced by the Lender from
time to time as being its Prime Rate, in its sole discretion. Changes in
the Prime Rate will be effective, without prior notice, as of the date any
change is announced. The Prime Rate is a reference rate only; it is not
necessarily the most favorable rate of interest that the Lender charges to
any borrower or class of borrowers. However, if the ratio of the
Borrower's Senior Debt (hereinafter defined) to EBITDA (hereinafter
defined) equals or exceeds 1.25 to 1.00 as of any "Determination Date"
(hereafter defined), the interest rate under the Prime Rate Option shall,
from the day after that Determination Date through the next Determination
Date, be equal to the sum of (i) the Prime Rate in effect from time to
time; plus (ii) one quarter of one percent (0.25%).
(b) LIBOR Rate Option. The Borrower may elect to have interest
accrue at the LIBOR-Based Rate (hereinafter defined). The LIBOR-Based Rate
shall be the sum of: (i) the "LIBOR Rate" (hereinafter defined), plus (ii)
the applicable LIBOR Margin (hereinafter defined).
The LIBOR Rate is the annual percentage rate of interest equal to the
London Interbank Offered Rate for corresponding deposits of United States
dollars for "Interest Periods" of one (1), two (2), three (3) or six (6)
months. Absent manifest error, the Lender's certificate to the Borrower
stating the LIBOR Rate for each Interest Period shall be conclusive.
The LIBOR Margin shall be: (a) 1.50%, if the ratio of the Borrower's
Senior Debt to EBITDA does not exceed 0.75 to 1.00 as of most recent
Determination Date (hereinafter defined); (b) 1.65%, if the ratio of the
Borrower's Senior Debt to EBITDA equals or exceeds 0.75 to 1.00 but is
less than or equal to 1.25 to 1.00 as of the most recent Determination
Date; and (c) 2.00%, if the ratio of the Borrower's Senior Debt to EBITDA
exceeds 1.25 to 1.00 as of the most recent Determination Date. The LIBOR
Margin will adjust on the first day after each Determination Date.
The Borrower shall have the right to select the LIBOR Rate Option and the
Interest Period by written notice to the Lender three days prior to the
commencement of the proposed Interest Period; in the absence of an
election by the Borrower of the LIBOR Rate Option, the Prime Rate Option
shall apply. The LIBOR-Based Rate may be elected only for increments of
principal in integral multiples of $100,000.00. Subject to the conditions
and terms set forth herein, Borrower may elect to have the LIBOR-Based
Rate apply to a portion of the outstanding principal balance and the Prime
Rate apply to the remaining unpaid principal balance. The LIBOR-Based Rate
election need not be made on a Determination Date. The Borrower may have
no more than three LIBOR-Based Rate elections in effect at any time.
For purposes of determining any adjustment in the interest rate, the
"Determination Date" is the last day of each calendar quarter. Senior Debt and
EBITDA shall have the meanings ascribed to them in the Credit Agreement
(hereinafter defined).
All interest payable under the terms of this Note shall be calculated on the
basis of a per diem rate, calculated on a 360-day year, applied to the actual
number of days elapsed.
2. Payments and Maturity. The unpaid Principal Sum, together with interest
thereon at the rate or rates provided above, shall be payable as follows:
(a) With respect to interest accruing at the Prime Rate, interest only
shall be due and payable quarterly, commencing on the first day of the first
calendar quarter after the date of this Note, and on the first day of each
succeeding calendar quarter.
(b) With respect to interest accruing at the LIBOR Rate, interest only
shall be due and payable on the earlier of (i) the first day following the end
of each Interest Period, or (ii) the first day following the end of each
calendar quarter.
(c) Unless sooner paid, the unpaid Principal Sum, together with all
interest accrued and unpaid thereon, and all other amounts owing under this Note
shall be due and payable in full on June 11, 2000 (the "Maturity Date"). If the
Credit Agreement provides for the Borrower to make additional payments on
account of the Principal Sum
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from time to time, Borrower promises to make those payments at the time and in
the manner specified in the Credit Agreement.
This Note secures advances and readvances under the Credit Agreement. This Note
will continue in full force and effect and will evidence Borrower's obligation
to repay such advances and readvances notwithstanding that the principal amount
outstanding under the Credit Agreement and evidenced by this Note may be reduced
to zero from time to time.
3. Default Interest. Upon the occurrence of an Event of Default (as
hereinafter defined), the unpaid Principal Sum shall bear interest thereafter,
until the Event of Default is cured, at a rate of two percent (2.0%) per annum
in excess of the rate or rates of interest that would otherwise be in effect
under this Note.
4. Late Charges. If the Borrower fails to make any payment under the terms
of this Note within ten (10) days after the date such payment is due, the
Borrower shall pay to the Lender on demand a late charge equal to five percent
(5.0%) of such payment.
5. Application and Place of Payments. All payments, made on account of
this Note shall be applied first to the payment of accrued and unpaid interest
then due hereunder, second to the unpaid principal sum and the remainder, if
any, shall be applied to any other amounts which may remain owing hereunder. All
payments on account of this Note shall be paid in lawful money of the United
States of America in immediately available funds during regular business hours
of the Lender at its office at 1970 Chain Bridge Road, McLean, Virginia 22102,
or at such other times and places as the Lender may at any time and from time to
time designate in writing to the Borrower.
6. Credit Agreement. This Note is the "Revolving Note" described in a
Revolving Line of Credit Loan Agreement, Term Loan Agreement and Security
Agreement of even date herewith by and between the Borrower and the Lender (the
"Credit Agreement"). The indebtedness evidenced by this Note is included within
the meaning of the term "Debt" as defined in the Credit Agreement. The term
"Loan Documents" as used in this Note shall have the meaning
ascribed to that term in the Credit Agreement. Capitalized terms used in this
Note but not defined herein have the meanings ascribed to them in the Credit
Agreement.
7. Security. This Note is secured by the Collateral, the Real Estate
Collateral and certain other collateral described in the Credit Agreement.
8. Events of Default. The occurrence of any one or more of the following
events shall constitute an event of default (individually, an "Event of Default"
and collectively, the "Events of Default") under this Note:
(a) The failure of the Borrower to pay to the Lender when due any
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amount payable by the Borrower to the Lender under the terms of this Note; or
(b) The occurrence of an event of default under any of the other
Loan Documents.
9. Remedies. Upon the occurrence of an Event of Default, at the option of
the Lender, all principal, accrued interest and other sums payable by the
Borrower to the Lender under the terms of this Note shall become immediately due
and payable, and the Lender shall have all of the rights, powers, and remedies
available under the terms of this Note, any of the other Loan Documents and all
applicable laws. The Borrower and all endorsers hereby jointly and severally
waive presentment, protest and demand, notice of protest, notice of demand and
of dishonor and non-payment of this Note and expressly agree that this Note or
any payment hereunder may be extended from time to time without in any way
affecting the liability of the Borrower or any endorsers.
10. Expenses. The Borrower promises to pay to the Lender on demand by the
Lender all costs and expenses incurred by the Lender in connection with the
collection and enforcement of this Note, including, without limitation, all
attorneys' fees and expenses and all court costs.
11. Notices. Any notice, request, or demand to or upon the Borrower or the
Lender shall be deemed to have been properly given or made when delivered in
accordance with the Credit Agreement.
12. Miscellaneous. Each right, power, and remedy of the Lender as provided
for in this Note or any of the other Loan Documents, or now or hereafter
existing under any applicable law or otherwise shall be cumulative and
concurrent and shall be in addition to every other right, power, or remedy
provided for in this Note or any of the other Loan Documents or now or hereafter
existing under any applicable law, and the exercise or beginning of the exercise
by the Lender of any one or more of such rights, powers, or remedies shall not
preclude the simultaneous or later exercise by the Lender of any or all such
other rights, powers, or remedies. No failure or delay by the Lender to insist
upon the strict performance of any term, condition, covenant, or agreement of
this Note or any of the other Loan Documents, or to exercise any right, power,
or remedy consequent upon a breach thereof, shall constitute a waiver of any
such term, condition, covenant, or agreement or of any such breach, or preclude
the Lender from exercising any such right, power, or remedy at a later time or
times. By accepting payment after the due date of any amount payable under the
terms of this Note, the Lender shall not be deemed to waive the right either to
require prompt payment when due of all other amounts payable under the terms of
this Note or to declare an Event of Default for the failure to effect such
prompt payment of any such other amount. No course of dealing or conduct shall
be effective to amend, modify, waive, release, or change any provisions of this
Note.
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13. Partial Invalidity. If any term or provision of this Note or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Note and the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
term and provision of this Note shall be valid and be enforceable to the fullest
extent permitted by law.
14. Captions. The captions herein set forth are for convenience only and
shall not be deemed to define, limit, or describe the scope or intent of this
Note.
15. Governing Law. The provisions of this Note shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of
Virginia (excluding Virginia's choice of law rules).
16. Consent to Jurisdiction. Provisions of the Credit Agreement concerning
the Borrower's consent to the jurisdiction of state and federal courts sitting
in the Commonwealth of Virginia are incorporated into this Note by reference and
shall have the same force and effect as if fully set forth in this Note.
17. Waiver of Trial by Jury. Provisions of the Credit Agreement concerning
the Borrower's and Lender's mutual waiver of trial by jury in disputes between
the Borrower and the Lender are incorporated into this Note by reference and
shall have the same force and effect as if fully set forth in this Note.
18. Arbitration. Provisions of the Credit Agreement specifying that
certain disputes between the Borrower and the Lender shall be resolved by
binding arbitration are incorporated into this Note by reference and shall have
the same force and effect as if fully set forth in this Note.
19. Joint and Several Liability; Notices to Borrower. The liability under
this Note of the persons comprised by the term Borrower shall be joint and
several. References in this Note to the Borrower shall refer to each such person
or to all of them as the context may require. Any notice that the Lender
provides to United Industrial Corporation in accordance with the Credit
Agreement shall be deemed to have been given to all of the persons comprised by
the term Borrower.
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IN WITNESS WHEREOF, the Borrower has caused this instrument to be executed
by duly authorized officer or officers as of the date first written above.
UNITED INDUSTRIAL CORPORATION
By: /s/ James H. Perry
---------------------------------
James H. Perry
Treasurer and Chief
Financial Officer
AAI CORPORATION
By: /s/ Paul J. Michaud
---------------------------------
Paul J. Michaud
Vice President, Chief
Financial Officer and
Treasurer
AAI ENGINEERING SUPPORT, INC.
By: /s/ Paul J. Michaud
---------------------------------
Paul J. Michaud
Vice President, Chief
Financial Officer and
Treasurer
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AAI SYSTEMS MANAGEMENT, INC.
By: /s/ Paul J. Michaud
---------------------------------
Paul J. Michaud
Vice President, Chief
Financial Officer and
Treasurer
AAI/ACL TECHNOLOGIES, INC.
By: /s/ Paul J. Michaud
---------------------------------
Paul J. Michaud
Vice President, Chief
Financial Officer
DETROIT STOKER COMPANY
By: /s/ James H. Perry
---------------------------------
James H. Perry
Vice President
MIDWEST METALLURGICAL
LABORATORY, INC.
By: /s/ James H. Perry
---------------------------------
James H. Perry
Vice President
NEO PRODUCTS CO.
By: /s/ James H. Perry
---------------------------------
James H. Perry
Vice President
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SYMTRON SYSTEMS, INC.
By: /s/ James Perry
---------------------------------
James Perry
Chief Financial Officer
UIC-Del. CORPORATION
By: /s/ Paul J. Michaud
---------------------------------
Paul J. Michaud
President
AAI MICROFLITE SIMULATION
INTERNATIONAL CORPORATION
By: /s/ Paul J. Michaud
---------------------------
Paul J. Michaud
President
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