Exhibit 10(a)
THIRD AMENDMENT TO
REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM
LOAN AGREEMENT AND SECURITY AGREEMENT
-------------------------------------
THIS THIRD AMENDMENT TO REVOLVING LINE OF CREDIT LOAN AGREEMENT, TERM
LOAN AGREEMENT AND SECURITY AGREEMENT (the "Third Amendment") is made as of
March 31, 2000, by and among United Industrial Corporation, a Delaware
corporation, having an address of 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, and the other Persons included within the definition of the Borrower
(hereinafter redefined), and First Union Commercial Corporation, a North
Carolina corporation, having an address of 0000 Xxxxx Xxxxxx Xxxx, XxXxxx,
Xxxxxxxx 00000 ("Lender").
RECITALS
A. United Industrial Corporation and certain of its subsidiaries and
the Lender are parties to a Revolving Line of Credit Loan Agreement, Term Loan
Agreement and Security Agreement, dated as of June 11, 1997 (the "Loan
Agreement"), as amended by First Amendment to Revolving Line of Credit Loan
Agreement, Term Loan Agreement and Security Agreement (the "First Amendment")
made as of October 1, 1998, and by Second Amendment to Revolving Line of Credit
Loan Agreement, Term Loan Agreement and Security Agreement (the "Second
Amendment") made as of December 31, 1998 (said agreement, as so amended, being
hereinafter called the "Loan Agreement").
B. The Borrower and the Lender desire further to amend the Loan
Agreement to extend the Ending Date (as defined in the Loan Agreement) to
January 11, 2001, to amend the Borrower's financial covenant regarding its Debt
Service Coverage Ratio, to provide that aggregate amount of Advances to be made
under the Revolving Loan shall henceforth be limited by a Borrowing Base
(hereinafter defined), to increase the sublimit on letters of credit, and for
certain other purposes hereinafter set forth.
C. The Borrower's obligation to repay Advances under the Revolving Loan
(as defined in the Loan Agreement) is evidenced by a Revolving Note, dated as of
June 11, 1997, in the stated principal amount of Seventeen Million, Five Hundred
Thousand Dollars ($17,500.000.00). The parties are simultaneously executing a
First Amendment To Revolving Note extending the maturity date of the Revolving
Note to January 11, 2001 and to change the signatures thereon to reflect the
revised definition of "Borrower" as hereinafter provided. The Revolving Note, as
so amended, is hereinafter called the "Revolving Note."
AGREEMENTS
NOW, THEREFORE, in consideration of the premises, the mutual agreements
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
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1. The recitals are incorporated herein by reference. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Loan
Agreement.
2. To induce the Lender to enter into this Third Amendment, the Borrower
warrants and represents to the Lender that:
a. The Borrower's books and record properly reflect the
Borrower's financial condition, and no material adverse change
in the Borrower's financial condition has occurred since the
last date that the Borrower provided financial reports to the
Lender; and
b. No litigation is pending or threatened against the Borrower of
which the Borrower has not informed the Lender in writing; and
c. The Borrower is in compliance with all provisions of the Loan
Agreement and with all applicable laws and regulations.
d. Borrower has the power and authority to enter into this Third
Amendment, to perform its obligations hereunder, to execute
all documents being executed and delivered in connection
herewith, and to incur the obligations provided for herein,
all of which have been duly authorized and approved in
accordance with the Borrower's organizational documents;
e. This Third Amendment, together with all documents executed in
connection herewith or pursuant hereto, constitute the valid
and legally binding obligations of the Borrower in accordance
with their respective terms;
f. The Borrower's obligations under the Loan Documents remain
valid and enforceable obligations, and the execution and
delivery of this Third Amendment and the other documents
executed in connection herewith shall not be construed as a
novation of the Loan Agreement or the other Loan Documents.
3. Section 1.1 of the Loan Agreement is amended by adding new definitions as
follows:
"Adjusted EBITDA" means EBITDA, adjusted by adding the absolute value
of the one-time expense reported on the Borrower's December 31, 1999
financial statements in the amount of Five Million Dollars
($5,000,000.00), said expense being described more specifically in
Schedule 1.1(A) attached hereto and made a part hereof.
"Allowed Amount of Advances" means the aggregate amount of all Advances
of principal under the Revolving Loan permitted to be outstanding at
any particular time under the Paragraph below titled "Allowed Amount of
Advances."
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"Borrowing Base" means the sum of: (i) ninety percent (90%) of the
Borrower's Eligible Government Accounts, plus (ii) eighty-five percent
(85%) of Borrower's Eligible Commercial Accounts.
"Borrowing Base Certificate" means a certificate substantially in the
form of Schedule 1.1(B) attached hereto and made a part hereof (or such
subsequent form as the Lender shall require).
"Commercial Accounts" means all Accounts due from Customers other than
the Government.
"Contra Account" means an Account due from an account debtor to which
the Borrower owes money.
"Customer" means any governmental entity (federal, state, county,
municipal or otherwise) or business entity (corporation, association,
partnership, limited liability company or partnership, sole
proprietorship or otherwise) or individual to which Borrower provides
goods or services for compensation; however, certain individual
agencies of the United States Government and certain branches of
certain major corporations, as determined by the Lender in its sole
discretion, shall be treated as Customers in their own right, separate
and distinct from other such agencies or branches and from the United
States Government or the corporation of which they are a part.
"Eligible," when used to describe an Account, means that the Account
conforms to the following criteria:
i. the Account has been Billed;
ii. in the case of a Commercial Account, less than
ninety-one (91) days have passed from the original
billing date, or, in the case of a Government
Account, less than one hundred and twenty-one (121)
days have passed from the original billing date;
iii. at Lender's option, in the case of a Government
Account, Borrower has made an Assignment of all
Payments due or to become due under the Government
Contract giving rise to the Account;
iv. the Account arose from a bona fide sale of goods or
services to a Customer; the goods or services have
been delivered or provided to the Customer; Borrower
possesses receipts from the Customer acknowledging
delivery of the goods or performance of the services;
and Customer has not returned or rejected the goods
or services;
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v. the Account is based upon an enforceable written
order or contract for goods or services;
vi. the Borrower's title to the Account is absolute and
is not subject to any prior assignment, claim, escrow
agreement, lien or security interest, and Borrower
otherwise has the full and unqualified right and
power to assign and grant a security interest in the
Account to the Lender;
vii. the amount shown on the books of Borrower and on any
invoice, certificate, schedule or statement delivered
to the Lender regarding the amount due on the Account
is due and owing to Borrower;
viii. the Account is not subject to any claim of reduction,
counterclaim, set-off, recoupment or other defense in
law or equity, or any claim for credits, allowances
or adjustments by the Customer because of returned,
inferior or damaged goods, unsatisfactory services or
for any other reason;
ix. the Customer has not notified Borrower of any dispute
concerning any of the goods or services giving rise
to the Account, nor made claim that the goods or
services fail to conform to the requirements of the
Customer's order or contract, nor notified Borrower
to cure any default under the Customer's order or
contract;
x. the Account does not arise out of a Customer's
contract or order that by its terms forbids or makes
void or unenforceable the Borrower's assignment of
the Account to the Lender;
xi. the Borrower has not received any note, trade
acceptance draft or other instrument tendered in
payment of the Account;
xii. Borrower has not received any notice of the death of
the Customer or any partner in a Customer that is a
partnership; nor has Borrower received any notice of
dissolution, termination of existence, insolvency,
business failure, appointment of a receiver for any
part of the property of, assignment for the benefit
of creditors by, or the filing of a petition in
bankruptcy or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against
the Customer;
xiii. the Customer is not incorporated in any jurisdiction
outside the United States and is not conducting its
business primarily outside the United States;
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xiv. Borrower is not indebted in any manner to the
Customer;
xv. no bond has been issued or is contemplated with
respect to the goods or services furnished by the
Borrower or with respect to the project or contract
for which those goods or services were furnished; and
xvi. the Account is not an Ineligible Account.
"Government Contracts" means all contracts with a Government, including
all renewals, extensions, modifications, change orders and amendments
thereof and thereto.
"Ineligible Accounts" shall include the following Accounts:
i. Accounts that do not conform with the criteria set
forth for Eligible Accounts;
ii. An Account owing by any account debtor for which the
Lender has deemed fifty percent (50%) or more of the
account debtor's other Accounts to be non-Eligible;
however, for purposes of this category of Ineligible
Accounts, each Government Contract shall be treated
as an individual Customer;
iii. Government Accounts arising under Government
Contracts which contain an express prohibition
against assignment of Borrower's rights to Payment;
iv. The last payment due on a Government Account, unless
such Government Account arises from a Government
Contract which is a "fixed price contract" (as
defined in the Federal Acquisition Regulations) which
does not include any provision for progress payments,
incentive arrangements or price redetermination;
v. Contra Accounts;
vi. Accounts receivable from ETI or PUI;
vii. Accounts receivable from Affiliates or subsidiaries
of the Borrower;
viii. Unbilled Accounts, including, but not limited to,
progress payments, retainages, milestones and final
payments; or
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ix. Any Account deemed by the Lender, in the exercise of
its sole and absolute discretion, to be an Ineligible
Account because of uncertainty as to the
creditworthiness of the Customer or because the
Lender otherwise considers the collateral value
thereof to the Lender to be impaired or its ability
to realize such value to be insecure.
However, Borrower may request that Lender regard as Eligible any
Account that would otherwise be classified an Ineligible Account.
Lender may grant or deny any such request in its sole discretion.
4. The definition of "Borrower" contained in Section 1.1 of the Loan Agreement
is modified to delete AAI Systems Management, Inc. and UIC-Del. Corporation, to
add AAI/ACL Technologies Europe Limited, and to change the name of NEO Products
Co. to UIC Products Co., such that the first sentence of the definition of
"Borrower" shall hereafter read as follows:
"Borrower" means United Industrial Corporation, AAI
Corporation, AAI Engineering Support, Inc., AAI/ACL Technologies, Inc.,
AAI/ACL Technologies Europe Limited, Detroit Xxxxxx Company, Midwest
Metallurgical Laboratory, Inc., UIC Products Co., Symtron Systems,
Inc., and AAI MICROFLITE Simulation International Corporation.
The remaining sentences of the definition of "Borrower" are unchanged, and shall
remain in full force and effect.
5. The definition of "Debt Service Coverage Ratio" contained in Section 1.1 of
the Loan Agreement is revised, effective as of December 31, 1999 and continuing
to and including September 30, 2000, to read as follows:
"Debt Service Coverage Ratio" means (i) Adjusted EBITDA, less Ten
Million Dollars ($10,000.00), divided by (ii) the sum of interest
expense, CMLT, CPCL and dividends paid on common or preferred shares of
stock in the Borrower;
provided, that on and after December 31, 2000, the words "Adjusted EBITDA" in
the definition of "Debt Service Coverage Ratio shall be replaced with the word
"EBITDA" and the words "Ten Million Dollars ($10,000,000.00)" shall be replaced
with the words "capital expenditures;" and provided, further, that the foregoing
amendment to the definition of Debt Service Coverage Ratio shall not apply to
any quarter prior to the quarter ending December 31, 1999, and the previous
definition of Debt Service Coverage Ratio shall apply prior to the quarter
ending December 31, 1999.
6. The definition of "Ending Date" contained in Section 1.1 of the Loan
Agreement is deleted in its entirety and replaced with the following:
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"Ending Date" means January 11, 2001.
7. The last sentence of the definition of "Tangible Net Worth" contained in
Section 1.1 of the Loan Agreement is deleted in its entirety and replaced with
the following:
Investments in or assets of AAI International, Inc., Seti, Inc., AAI
Medical, Inc., AAI California Carshell, Inc., UIC International
Corporation, AAI Aerospace Services Corp. or AAI Romania Technologies,
S.R.L. shall not be included in tangible net worth.
8. Paragraphs a and b of Section 2.1 of the Loan Agreement are deleted in their
entirety and replaced with the following:
a. Allowed Amount of Advances. The aggregate principal amount of
Advances outstanding under the Revolving Note at any time shall not
exceed the lesser of:
i. the difference between (i) the Maximum Revolving
Commitment Amount and (ii) the LOC Obligations; or
ii. the difference between (i) the Borrowing Base and
(ii) the LOC Obligations.
Borrower may decrease the Maximum Revolving Commitment Amount by
providing Lender ten (10) days prior written notice of the decrease,
but the Maximum Revolving Commitment Amount may not thereafter be
increased without the Lender's written consent.
b. Mandatory Prepayments. If the principal outstanding under the
Revolving Loan, at any time exceeds the Allowed Amount of Advances,
then Borrower shall make an immediate payment of principal under the
Revolving Loan in an amount sufficient that the principal outstanding
under the Revolving Loan will no longer exceed the Allowed Amount of
Advances. If the amount of the Borrower's Senior Debt at any time
exceeds the maximum amount that will enable Borrower to comply with any
of the affirmative covenants provided hereinafter (including, without
limiting the generality of the foregoing, any covenant limiting the
Borrower's ratio of Senior Debt to EBITDA), then Borrower shall make an
immediate payment of principal under the Revolving Loan in an amount
sufficient to enable Borrower to comply with all applicable financial
covenants provided hereinafter.
9. Clause (i) and (v) of Section 2.1, Paragraph (d) are deleted in their
entirety and replaced with the following:
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(i) the aggregate amount of LOC Obligations shall at
no time exceed Sixteen Million, Five Hundred
Thousand Dollars ($16,500,000.00);
(v) issuance of the Letter of Credit shall not cause the
principal amount outstanding under the Revolving
Note to exceed the Allowed Amount of Advances;
10. Section 5.20 is deleted in its entirety and replaced with the following:
5.20 Certain Subsidiaries of AAI Corporation. None of AAI
International, Inc., Seti, Inc., AAI Medical, Inc., AAI California
Carshell, Inc., AAI Aerospace Services Corp. or AAI Romania
Technologies, S.R.L.: (1) currently engages in any business activity,
(2) owns assets having an aggregate value in excess of Fifty Thousand
Dollars ($50,000.00); or (3) has any liability, except as a guarantor
of AAI Corporation's obligations to Lender under the 1994 Agreement.
11. Clause (i) of Section 6.3 of the Loan Agreement is deleted in its entirety
and replaced with the following: "(i) AAI Corporation may dissolve any or all of
AAI International, Inc., Seti, Inc., AAI California Carshell, Inc., AAI Medical,
Inc., AAI Aerospace Services Corp. or AAI Romania Technologies, S.R.L."
12. A new Paragraph g is added to Section 6.11 of the Loan Agreement providing
as follows:
g. Monthly Borrowing Base Certificates. As soon as available,
but not later than twenty (20) days after the end of each month,
Borrower shall provide Lender with an updated Borrowing Base
Certificate, providing information regarding the Borrowing Base current
as of the last day of the month just ended.
13. Paragraph a of Section 6.14 of the Loan Agreement is revised, effective
December 31, 1999, to read as follows:
a. Debt Service Coverage Ratio. A minimum Debt Service
Coverage Ratio of 1.75 to 1.0 at all times. Compliance with this
covenant shall be tested quarterly.
14. Section 7.11 of the Loan Agreement is deleted in its entirety and replaced
with the following:
7.11 Certain Inactive Subsidiaries of AAI Corporation. Make
any investment in, lend money to, advance funds to or guaranty
obligations of any of the following subsidiaries of AAI Corporation:
AAI International, Inc., Seti, Inc.,
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AAI California Carshell, Inc., AAI Medical, Inc., AAI Aerospace
Services Corp. or AAI Romania Technologies, S.R.L. Without the prior
written consent of the Lender, Borrower shall not suffer or permit AAI
International, Inc., Seti, Inc., AAI California Carshell, Inc., AAI
Medical, Inc., AAI Aerospace Services Corp. or AAI Romania
Technologies, S.R.L. to transact business of any kind.
15. A new Section 7.12 is added to Article 7 of the Loan Agreement, effective as
of January 1, 2000 but not prior to that date, to provide that the Borrower
shall not:
7.12 Limit on Annual Capital Expenditures. Make capital
expenditures in any calendar year that exceed in the aggregate the sum
of Ten Million Dollars ($10,000,000.00).
16. In consideration of Lender's agreement to this Third Amendment, Borrower
promises to pay to Lender, on demand, a loan fee of Twenty-Five Thousand Dollars
($25,000.00).
17. The Borrower promises to pay, on demand, all costs (including attorneys
fees) incurred by the Lender for: (i) the preparation of this Third Amendment,
the First Amendment to Revolving Note of even date and any other expenses
relating to this Third Amendment.
18. The Borrower authorizes the Lender to advance funds to itself or to third
parties to pay the fees and costs mentioned in the two immediately preceding
paragraphs, which shall be deemed to be Advances to the Borrower under the Loan
Agreement.
19. The Security Interest in the Collateral granted by the Loan Agreement shall
henceforth secure not only the Loans made pursuant to the Loan Agreement but
also any other credit that Lender may extend to the Borrower.
20. ARBITRATION. UPON DEMAND OF ANY PARTY HERETO, WHETHER MADE BEFORE OR AFTER
INSTITUTION OF ANY JUDICIAL PROCEEDING, ANY CONTROVERSY OR CLAIM ARISING OUT OF
OR RELATING TO THE LOAN DOCUMENTS BETWEEN PARTIES HERETO (A "DISPUTE") SHALL BE
RESOLVED BY BINDING ARBITRATION CONDUCTED UNDER AND GOVERNED BY THE COMMERCIAL
FINANCIAL DISPUTES ARBITRATION RULES (THE "ARBITRATION RULES") OF THE AMERICAN
ARBITRATION ASSOCIATION ("AAA") AND THE FEDERAL ARBITRATION ACT. DISPUTES MAY
INCLUDE, WITHOUT LIMITATION, TORT CLAIMS, COUNTERCLAIMS, A DISPUTE AS TO WHETHER
A MATTER IS SUBJECT TO ARBITRATION, CLAIMS BROUGHT AS CLASS ACTIONS, OR CLAIMS
ARISING FROM DOCUMENTS EXECUTED IN THE FUTURE. A JUDGMENT UPON THE AWARD MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. NOTWITHSTANDING THE FOREGOING, THIS
ARBITRATION PROVISION DOES NOT APPLY TO DISPUTES UNDER OR RELATED TO SWAP
AGREEMENTS. ALL ARBITRATION HEARINGS SHALL BE CONDUCTED IN THE CITY OR COUNTY
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WHERE THE LENDER'S OFFICE, AS FIRST STATED ABOVE, IS LOCATED, OR AT SUCH OTHER
PLACE AS THE PARTIES MAY IN WRITING AGREE. A HEARING SHALL BEGIN WITHIN 90 DAYS
OF DEMAND FOR ARBITRATION AND ALL HEARINGS SHALL CONCLUDE WITHIN 120 DAYS OF
DEMAND FOR ARBITRATION. THESE TIME LIMITS MAY NOT BE EXTENDED UNLESS A PARTY
SHOWS CAUSE FOR EXTENSION AND THEN FOR NO MORE THAN A TOTAL OF 60 DAYS. THE
EXPEDITED PROCEDURES SET FORTH IN RULE 51, ET SEQ., OF THE ARBITRATION RULES
SHALL APPLY TO DISPUTES IN WHICH THE CLAIM IS LESS THAN $1,000,000.00.
ARBITRATORS SHALL BE LICENSED ATTORNEYS SELECTED FROM THE COMMERCIAL FINANCIAL
DISPUTE ARBITRATION PANEL OF THE AAA. THE PARTIES DO NOT WAIVE APPLICABLE
FEDERAL OR STATE SUBSTANTIVE LAW EXCEPT AS PROVIDED HEREIN. NOTWITHSTANDING THE
PRECEDING BINDING ARBITRATION PROVISIONS, THE PARTIES AGREE TO PRESERVE WITHOUT
DIMINUTION, CERTAIN REMEDIES THAT ANY PARTY MAY EXERCISE BEFORE OR AFTER AN
ARBITRATION PROCEEDING IS BROUGHT. THE PARTIES SHALL HAVE THE RIGHT TO PROCEED
IN ANY COURT OF PROPER JURISDICTION OR BY SELF HELP TO EXERCISE OR PROSECUTE THE
FOLLOWING REMEDIES, AS APPLICABLE: (1) ALL RIGHTS TO FORECLOSE AGAINST ANY REAL
OR PERSONAL PROPERTY OR OTHER SECURITY BY EXERCISING A POWER OF SALE OR UNDER
APPLICABLE LAW BY JUDICIAL FORECLOSURE INCLUDING A PROCEEDING TO CONFIRM THE
SALE; (2) ALL RIGHTS OF SELF HELP, INCLUDING WITHOUT LIMITATION, PEACEFUL
OCCUPATION OF REAL PROPERTY AND COLLECTION OF RENTS, SETOFF, AND PEACEFUL
POSSESSION OF PERSONAL PROPERTY; (3) OBTAINING PROVISIONAL OR ANCILLARY REMEDIES
INCLUDING INJUNCTIVE RELIEF, SEQUESTRATION, GARNISHMENT, ATTACHMENT, APPOINTMENT
OF RECEIVER AND FILING AN INVOLUNTARY BANKRUPTCY PROCEEDING; AND (4) WHEN
APPLICABLE, A JUDGMENT BY CONFESSION OF JUDGMENT. ANY CLAIM OR CONTROVERSY WITH
REGARD TO ANY PARTY'S ENTITLEMENT TO SUCH REMEDIES IS A DISPUTE. THE PARTIES
AGREE THAT THEY SHALL NOT HAVE A REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES AGAINST
OTHER PARTIES IN ANY DISPUTE, AND THEY HEREBY WAIVE ANY RIGHT OR CLAIM TO
PUNITIVE OR EXEMPLARY DAMAGES THEY MAY NOW HAVE OR WHICH MAY ARISE IN THE FUTURE
IN CONNECTION WITH ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION OR
JUDICIALLY.
21. Except as modified by this Third Amendment, the Loan Agreement remains in
full force and effect and unmodified. Borrower warrants and represents that it
has no offsets or defenses to its obligations under the Loan Documents, as so
modified.
22. This Third Amendment may be signed in several counterparts which, when
executed, shall constitute a single agreement. A counterpart containing a
facsimile signature shall be effective to the same extent as if it were a
counterpart containing an original signature, but shall be confirmed promptly
with a counterpart containing an original signature.
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IN WITNESS WHEREOF, the undersigned have duly executed this Third
Amendment, or have caused this Third Amendment to be duly executed on their
behalf, as of the day and year first hereinabove written.
BORROWER: UNITED INDUSTRIAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxxx, President
AAI CORPORATION
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, Vice President,
Chief Financial Officer & Treasurer
AAI ENGINEERING SUPPORT, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, Vice President,
Chief Financial Officer & Treasurer
AAI/ACL TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, Vice President &
Chief Financial Officer
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AAI/ACL TECHNOLOGIES EUROPE LIMITED
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, Vice President & Chief
Financial Officer
DETROIT XXXXXX COMPANY
By: /s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
Vice President
MIDWEST METALLURGICAL LABORATORY, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
Vice President
UIC PRODUCTS CO.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
Vice President
SYMTRON SYSTEMS, INC.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxx, Vice President,
General Counsel, and Assistant
Secretary
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AAI MICROFLITE Simulation International
Corporation
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx
President
AGREED TO BY LENDER: FIRST UNION COMMERCIAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
Vice President
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SCHEDULE 1.1(B) - BORROWING BASE CERTIFICATE
Government Receivables Commercial Receivables
---------------------------------- -------------------------------
Billed receivables per last certificate
---------------------------------- -------------------------------
(+) New billed receivables
---------------------------------- -------------------------------
(-) Credit memos/Returns
---------------------------------- -------------------------------
(+) Miscellaneous debits
---------------------------------- -------------------------------
(-) Miscellaneous credits
---------------------------------- -------------------------------
(-) Receivables collected
---------------------------------- -------------------------------
(-) Discounts
---------------------------------- -------------------------------
(=) Total Net Receivables
---------------------------------- -------------------------------
Less ineligible receivables:
---------------------------------- -------------------------------
(-) Over 120 day gov't or over 90 commercial
---------------------------------- -------------------------------
(-) Escrow receivables
---------------------------------- -------------------------------
(-) Bonded receivables
---------------------------------- -------------------------------
(-) At-Risk, final close-outs
---------------------------------- -------------------------------
(-) Contra, ETI, PUI
---------------------------------- -------------------------------
(-) Other ineligible
---------------------------------- -------------------------------
(=) Eligible Billed Receivables
---------------------------------- -------------------------------
90% x Eligible Gov't; 85% x Eligible Commercial
---------------------------------- -------------------------------
----------------------------------
Borrowing Base (90% elig. gov't + 85% elig. commercial):
----------------------------------
Lesser of Borrowing Base or $17,500,000:
----------------------------------
(-) LOC Obligations
----------------------------------
(=) Allowed Amount of Advances
----------------------------------
----------------------------------
Loan Balance per last Certificate
----------------------------------
Payments
----------------------------------
Advance Request
----------------------------------
New Balance (after advance requested)
----------------------------------
Net availability (Allowed Amount of Advances - New Balance) Must be >=0
----------------------------------
CERTIFICATION
Re: Revolving Line of Credit Loan Agreement, Term Loan Agreement and Security
Agreement, dated June 11, 1997 among United Industrial Corporation and
subsidiaries and First Union Commercial Corporation, as amended from time to
time (the "Agreement"). Capitalized terms used in this Certificate and not
defined herein are defined in the Agreement.
I certify to the Lender that I am familiar with the terms of the Agreement. I
have conducted current review of the Borrower's books, records and activities to
determine the Borrower's compliance with the Agreement and the continuing
validity of the Borrower's representations and warranties under the Agreement.
My review has included, if necessary, interviews with officers and employees of
the Borrower whose duties require them to have personal knowledge of
certifications made herein. Based on my review, the information in the above
table is correct, and you are authorized to rely on it. All representations and
warranties in the Agreement and the other Loan Documents are true and correct
with the same force and effect as though such representations and warranties had
been made on the date of this Certification. The Borrower is in compliance with
all terms and provisions of the Agreement and other Loan Documents, and no
default or event of default exists under the Loan Documents, and no condition,
event or act that, with the passage of time or giving or notice or both, would
constitute an event of default under the Loan Documents exists. Borrower
requests an Advance in the amount stated above.
United Industrial Corporation
By: _______________ Effective date: ____________
Name: ______________ Date signed: ____________
Title: _____________
