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EXHIBIT 4.3
EXECUTION COPY
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
AAR CORP.,
VARIOUS LENDING INSTITUTIONS
AND
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, AS AGENT
DATED AS OF MAY 27, 1998
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TABLE OF CONTENTS
PAGE
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TABLE OF CONTENTS..............................................................2
ARTICLE I......................................................................7
DEFINITIONS....................................................................7
ARTICLE II....................................................................20
THE CREDITS...................................................................20
2.1. THE ADVANCES. Subject to the terms of this Agreement, the Borrower
may borrow, repay and reborrow Advances at any time prior to or on the
Revolving Credit Termination Date. The Advances may be U.S. Dollar Advances
made pursuant to SECTION 2.1(a) or Alternate Currency Advances made pursuant
to SECTION 2.1(b). No Advances may be requested or made subsequent to the
Revolving Credit Termination Date. Principal payments made after the
Revolving Credit Termination Date may not be reborrowed....................20
2.2. EXTENSION OF REVOLVING CREDIT TERMINATION DATE. The initial Revolving
Credit Termination Date shall be May 27, 2001. The Borrower may, not earlier
than 180 days and not later than 60 days prior to each anniversary of the
Restatement Effective Date execute and deliver to the Agent (who shall
promptly forward a copy of the same to each of the Lenders) an Extension
Letter in substantially the form of EXHIBIT "B" hereto, with appropriate
insertions, requesting that the Revolving Credit Termination Date be extended
for one year. Such request for an extension of the Revolving Credit
Termination Date shall become effective if, and only if, each Lender shall,
in its sole and absolute discretion, execute such Extension Letter and return
copies thereof to the Agent and the Borrower prior to each such applicable
anniversary of the Restatement Effective Date..............................21
2.3. MANDATORY PAYMENTS. The Borrower shall make the following mandatory
payments on the Advances:..................................................21
2.4. FEES. The Borrower further agrees to pay to the Agent, for the
ratable benefit of the Lenders, the Facility Fee for the period from the date
hereof to and including the Revolving Credit Termination Date. The Facility
Fee shall be payable quarterly in advance on the Restatement Effective Date
and on each Payment Date thereafter. The obligations of the Borrower under
this Section 2.4 shall survive the payment of the Advances and the
termination of this Agreement..............................................21
2.5. OPTIONAL REDUCTIONS IN AGGREGATE COMMITMENT. The Borrower may
permanently reduce the Aggregate Commitment in whole or in part ratably among
the Lenders in integral multiples of $1,000,000, upon at least 10 days'
written notice to the Agent, which notice shall specify the amount of any
such reduction, provided, however, that the amount of the Aggregate
Commitment may not be reduced below the aggregate principal Dollar Amount of
the outstanding Advances. All accrued interest and fees shall be payable on
the effective date of any termination of the obligations of the Lenders to
make Loans hereunder.......................................................21
2.6. RATABLE LOANS. Each Advance hereunder shall consist of Loans made
from the several Lenders ratably according to their respective
Percentages................................................................22
2.7. TYPES OF ADVANCES. The U.S. Dollar Advances may be Floating Rate
Advances, Eurodollar Advances or Quoted Rate Advances, or a combination
thereof, selected by the
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Borrower in accordance with SECTIONS 2.10 and 2.13. All Alternate Currency
Advances shall be Transaction Rate Advances selected by the Borrower in
accordance with SECTION 2.11...............................................22
2.8. MINIMUM AMOUNT OF EACH ADVANCE. Each Fixed Rate Advance shall be in
the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof), and each Floating Rate Advance shall be in the minimum amount of
$500,000 (and in multiples of $100,000 if in excess thereof), provided,
however, that any Floating Rate Advance may be in the amount of the Aggregate
Commitment.................................................................22
2.9. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to time pay,
without penalty or premium, all outstanding Floating Rate Advances, or, in a
minimum aggregate amount of $1,000,000 or any integral multiple of $100,000
in excess thereof, any portion of the outstanding Floating Rate Advances upon
5 days' prior notice to the Agent. Fixed Rate Advances may be paid prior to
the last day of the applicable Interest Period, subject to compliance with
SECTION 3.4; PROVIDED, however, that Quoted Rate Advances may not be repaid
prior to the last day of their respective Interest Periods. Principal
payments made after the Revolving Credit Termination Date shall be applied to
the principal installments payable under SECTION 2.3(d) in the inverse order
of maturity................................................................22
2.10. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW U.S. DOLLAR
ADVANCES. The Borrower shall select the Type and, in the case of each
Eurodollar Advance or Quoted Rate Advance, the Interest Period applicable to
each new Advance from time to time. The Borrower shall give the Agent
irrevocable notice in substantially the form of EXHIBIT "C" hereto with
appropriate insertions (a "BORROWING NOTICE") not later than (a) 1:00 p.m.
(Chicago time) at least (i) one Business Day before the Borrowing Date of
each Floating Rate Advance and (ii) two Business Days before the Borrowing
Date for each Eurodollar Advance and (b) 11:30 a.m. (Chicago time) on the
Borrowing Date for each Quoted Rate Advance, in each case specifying:......22
2.11. METHOD OF REQUESTING ALTERNATE CURRENCY ADVANCES. The Borrower may from
time to time in accordance with this Section 2.11 request the Lenders to make
one or more Alternate Currency Advances. The Lenders shall have no obligation
to make any such Alternate Currency Advance so requested by the Borrower. If,
and only if, each of the Lenders in its sole and absolute discretion agrees,
in the manner provided for in this Section 2.11, to make its respective Loan
comprising any such Alternate Currency Advance, will such Alternate Currency
Advance be made............................................................23
2.12. MAKING THE LOANS. Subject to SECTION 2.10, on each Borrowing Date,
each Lender shall make available its Loan or Loans comprising the Advance or
Advances to be made on such Borrowing Date (i) in the case of a Loan
denominated in U.S. Dollars, not later than noon (Chicago time), in
immediately available funds to the Agent at its address specified pursuant to
Article XIII and (ii) in the case of a Loan denominated in an Alternate
Currency, not later than noon (local time), in the city of the Agent's
Lending Installation for such Alternate Currency, in such funds as may then
be customary for the settlement of international transactions in such
currency in the city of and at the address of the Agent's Lending
Installation for such currency. The Agent will make the funds so received
from the Lenders available to the Borrower at the Agent's aforesaid
address....................................................................24
2.13. CONVERSION AND CONTINUATION OF OUTSTANDING U.S. DOLLAR ADVANCES.
Outstanding U.S. Dollar Advances may be continued as or converted into U.S.
Dollar Advances of the same or
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another Type as provided below in this Section 2.13; PROVIDED, that
notwithstanding anything else in this Section 2.13 to the contrary, (a)
outstanding U.S. Dollar Advances may not be converted into Alternate Currency
Advances pursuant to this Section 2.13 and (b) outstanding Alternate Currency
Advances may not be continued or converted pursuant to this Section 2.13, but
must be repaid on or prior to the last day of their respective Interest
Periods pursuant to SECTION 2.3(a) and may only be reborrowed pursuant to
SECTIONS 2.1(b) and 2.11...................................................24
2.14. RESTRICTIONS ON INTEREST PERIODS. No Interest Period may extend
beyond a Payment Date on which principal of the Advances shall be payable
unless outstanding principal of Floating Rate Advances and Fixed Rate
Advances with Interest Periods ending prior to said Payment Date shall be at
least equal to the amount so payable. No Interest Period shall extend beyond
the Facility Termination Date. No more than 10 Interest Periods may be in
effect at any one time. No more than three Quoted Rate Interest Periods may
be in effect at any one time...............................................26
2.15. CHANGES IN INTEREST RATE, ETC. Changes in the rate of interest on
that portion of any Advance maintained as a Floating Rate Advance will take
effect simultaneously with each change in the Alternate Base Rate and each
change in the Applicable Margin applicable thereto. Each Fixed Rate Advance
shall bear interest from and including the first day of the Interest 26
Period applicable thereto to but excluding the last day of such Interest
Period at the interest rate determined as applicable to such Fixed Rate
Advance, provided that the rate of interest on each Eurodollar Advance will
change simultaneously with each change, during the applicable Eurodollar
Interest Period, of the Applicable Margin..................................26
2.16. RATES APPLICABLE AFTER DEFAULT. During the continuance of a Default
the Required Lenders may, at their option, by notice to the Borrower (which
notice may be revoked at the option of the Required Lenders notwithstanding
any provision of SECTION 8.2 requiring unanimous consent of the Lenders to
changes in interest rates), declare that (i) each Fixed Rate Advance shall
bear interest for the remainder of the applicable Interest Period at the rate
otherwise applicable to such Interest Period plus 2% per annum and (ii) each
Floating Rate Advance shall bear interest at a rate per annum equal to the
Floating Rate otherwise applicable to the Floating Rate Advance plus 2% per
annum......................................................................26
2.17. METHOD OF PAYMENT. (a) All payments of principal, interest and fees
to be made by the Borrower hereunder or under the Notes in U.S. Dollars shall
be made, without setoff, deduction, or counterclaim, in immediately available
funds to the Agent at the Agent's address specified pursuant to ARTICLE XIII,
or at any other Lending Installation of the Agent specified in writing by the
Agent to the Borrower, by noon (local time) on the date when due and shall be
applied ratably by the Agent among the Lenders. Each payment delivered to the
Agent for the account of any Lender shall be delivered promptly by the Agent
to such Lender in the same type of funds which the Agent received at such
Lender's address specified pursuant to ARTICLE XIII or at any Lending
Installation specified in a notice received by the Agent from such Lender..26
2.18. FOREIGN TAXES. (a) All payments made by the Borrower in respect of
principal of and interest on the Advances and of all other amounts payable by
it under this Agreement are payable without deduction for or on account of
any present or future taxes, duties, withholdings or other charges levied or
imposed by the government of any jurisdiction outside
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the United States of America or by any political subdivision or taxing
authority thereof or therein (herein called "FOREIGN TAXES"). If the Borrower
shall be required by law to deduct or withhold any Foreign Taxes from any
such amount payable by it hereunder or under any of the Notes to or for the
account of any Lender, (i) such amount shall be increased as may be necessary
so that, after making such deductions or withholdings (including any
deductions or withholdings applicable to additional amounts payable pursuant
to this Section), such Lender receives an amount equal to the amount it would
have received had no such deductions or withholdings been made and (ii) the
Borrower shall make such deductions and withholdings and pay the amount
thereof to the relevant government, political subdivision or taxing authority
at or prior to the time required to be paid under applicable law (and shall
promptly furnish to the Agent, for the benefit of the Lenders, official
receipts evidencing such payment). In addition, the Borrower will pay any
present or future stamp or documentary taxes or similar taxes or levies
imposed by any government, political subdivision or taxing authority referred
to in the first sentence of this subsection arising from any payment by it
hereunder or under any of the Notes or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
Notes (herein called "OTHER TAXES"). The Borrower will indemnify each Lender
and the Agent for, and hold each Lender and the Agent harmless against, the
full amount of Foreign Taxes or Other Taxes (including, without limitation,
any Foreign Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section) paid or payable by such Lender or the Agent and
any liability of such Lender or the Agent relating thereto (including,
without limitation, penalties, interest and expenses)......................27
2.19. JUDGMENT CURRENCY. If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due from the Borrower hereunder or
under any of the Notes in the currency expressed to be payable herein or
under the Notes (the "SPECIFIED CURRENCY") into another currency, the parties
hereto agree, to the fullest extent that they may effectively do so, that the
rate of exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase the specified currency with such
other currency at the Agent's main Chicago office on the Business Day
preceding that on which final, nonappealable judgment is given. The
obligations of the Borrower in respect of any sum due to any Lender or the
Agent hereunder or under any Note shall, notwithstanding any judgment in a
currency other than the specified currency, be discharged only to the extent
that on the Business Day following receipt by such Lender or the Agent (as
the case may be) of any sum adjudged to be so due in such other currency such
Lender or the Agent (as the case may be) may in accordance with normal,
reasonable banking procedures purchase the specified currency with such other
currency. If the amount of the specified currency so purchased is less than
the sum originally due to such Lender or the Agent (as the case may be), in
the specified currency, the Borrower agrees, to the fullest extent that it
may effectively do so, as a separate obligation and notwithstanding any such
judgment, to indemnify such Lender or the Agent (as the case may be) against
such loss, and if the amount of the specified currency so purchased exceeds
(a) the sum originally due to such Lender or the Agent (as the case may be)
in the specified currency and (b) any amounts shared with other Lenders as a
result of allocations of such excess as a disproportionate payment to such
Lender under SECTION 11.2, such Lender or the Agent (as the case may be)
agrees to remit such excess to the Borrower................................28
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2.20. NOTES; TELEPHONIC NOTICES. Each Lender shall, and is hereby
authorized to, record the principal amount of each of its Loans and each
repayment on the schedule attached to its Note (or to otherwise record the
same in its usual practice) provided, however, that the failure to so record
shall not affect the Borrower's obligations in respect of such Loans. The
Borrower hereby authorizes the Lenders and the Agent to extend, convert or
continue U.S. Dollar Advances (it being understood and agreed that Alternate
Currency Borrowing Requests must be in writing or by facsimile) and to
transfer funds based on telephonic notices made by any person or persons the
Agent or any Lender in good faith believes to be acting on behalf of the
Borrower. The Borrower agrees to deliver promptly to the Agent a written
confirmation, if such confirmation is requested by the Agent or any Lender,
of each telephonic notice signed by an Authorized Officer. If the written
confirmation differs in any material respect from the action taken by the
Agent and the Lenders, the records of the Agent and the Lenders shall govern
absent manifest error......................................................29
2.21. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the
outstanding principal amount of any Floating Rate Advance converted into a
Eurodollar Advance or Quoted Rate Advance on a day other than a Payment Date
shall be payable on the date of conversion. Interest accrued on each Fixed
Rate Advance shall be payable on the last day of its applicable Interest
Period, on any date on which the Fixed Rate Advance is prepaid, whether by
acceleration or otherwise, and at maturity. Interest accrued on each Fixed
Rate Advance having an Interest Period longer than three months shall also be
payable on the last day of each three-month interval during such Interest
Period. Interest and fees shall be calculated for actual days elapsed on the
basis of a 360-day year. Interest shall be payable for the day an Advance is
made but not for the day of any payment on the amount paid if payment is
received prior to noon (local time) at the place of payment. If any payment
of principal of or interest on an Advance shall become due on a day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment....29
2.22. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND COMMITMENT
REDUCTIONS. Promptly after receipt thereof, the Agent will notify each Lender
of the contents of each Aggregate Commitment reduction notice, Borrowing
Notice, Alternate Currency Borrowing Request, Continuation/Conversion Notice
and repayment notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance promptly
upon determination of such interest rate and will give each Lender prompt
notice of each change in the Alternate Reference Rate......................30
2.23. LENDING INSTALLATIONS. Each Lender may book its Loans at any one or
more Lending Installations selected by such Lender and may change its Lending
Installation(s) from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each
Lender for the benefit of such Lending Installation(s). Each Lender may from
time to time, by written or facsimile notice to the Agent and the Borrower,
designate a new Lending Installation through which Loans (or Loans in a
particular currency)
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will be made by it and for whose account Loan payments (or Loan payments in a
particular currency) are to be made. The Agent may from time to time, by
written or facsimile notice to the Borrower and each Lender, designate a new
Lending Installation at which Advances (or Advances in a particular currency)
will be made available to the Borrower and at which payments on the Advances
(or payments on Advances in a particular currency) are to be made by the
Borrower...................................................................30
2.24. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that
it does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to, make the
amount of such payment available to the intended recipient in reliance upon
such assumption. If such Lender or the Borrower, as the case may be, has not
in fact made such payment to the Agent, the recipient of such payment shall,
on demand by the Agent, repay to the Agent the amount so made available
together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the Agent until
the date the Agent recovers such amount at a rate per annum equal to (i) in
the case of payment by a Lender, the Federal Funds Effective Rate for such
day or (ii) in the case of payment by the Borrower, the interest rate
applicable to the relevant Loan............................................30
2.25. WITHHOLDING TAX EXEMPTION. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that
such Lender is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes
to deliver to each of the Borrower and the Agent two additional copies of
such form (or a successor form) on or before the date that such form expires
(currently, three successive calendar years for Form 1001 and one calendar
year for Form 4224) or becomes obsolete or after the occurrence of any event
requiring a change in the most recent forms so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such
Lender is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which
would prevent such Lender from duly completing and delivering any such form
with respect to it and such Lender advises the Borrower and the Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax...........................................31
ARTICLE III...................................................................31
CHANGE IN CIRCUMSTANCES.......................................................31
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3.1. YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether
or not having the force of law), or any interpretation thereof, or the
compliance of any Lender therewith.........................................31
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such
Lender is increased as a result of a Change (as defined below), then, within
15 days of demand by such Lender, the Borrower shall pay such Lender the
amount necessary to compensate for any shortfall in the rate of return on the
portion ...................................................................32
of such increased capital which such Lender determines is attributable to
this Agreement, its Loans or its obligation to make Loans hereunder (after
taking into account such Lender's policies as to capital adequacy). "CHANGE"
means (i) any change after the date of this Agreement in the Risk-Based
Capital Guidelines (as defined below) or (ii) any adoption of or change in
any other law, governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the force of
law) after the date of this Agreement which affects the amount of capital
required or expected to be maintained by any Lender or any Lending
Installation or any corporation controlling any Lender. "RISK-BASED CAPITAL
GUIDELINES" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules, and
(ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United States implementing the July 1988 report of
the Basle Committee on Banking Regulation and Supervisory Practices Entitled
"International Convergence of Capital Measurements and Capital Standards,"
including transition rules, and any amendments to such regulations adopted
prior to the date of this Agreement........................................32
3.3. AVAILABILITY OF EURODOLLAR ADVANCES. If (i) any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or
not having the force of law, (ii) the Required Lenders determine that
deposits of a type and maturity appropriate to match fund Eurodollar Advances
are not available or (iii) the Required Lenders determine that the interest
rate applicable to a Eurodollar Advance does not accurately reflect the cost
of making or maintaining such Eurodollar Advance, then the Agent shall
suspend the availability of any new Eurodollar Advances (whether pursuant to
SECTION 2.10 or 2.13)......................................................32
3.4. FUNDING INDEMNIFICATION. If any payment of a Fixed Rate Advance
occurs on a date prior to the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Fixed Rate
Advance is not made on the date specified by the Borrower in its Borrowing
Notice, Alternate Currency Borrowing Request or Continuation/Conversion
Notice, as the case may be, as a consequence of any condition precedent to
such Advance under SECTION 2.1 or ARTICLE IV not being satisfied or as a
consequence of any failure by the Borrower to borrow such Advance when the
same has been made available to it pursuant to SECTION 2.12, the Borrower
will indemnify each Lender for any loss or cost in liquidating or employing
deposits acquired to fund or maintain the Fixed Rate Advance and, provided
that such Lender has taken such reasonable action, if any, not
disadvantageous to it, to mitigate the same, any other loss or cost incurred
by such Lender resulting therefrom.........................................32
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3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Fixed Rate Loans to reduce any liability of the Borrower to
such Lender under SECTIONS 2.18, 3.1 and 3.2 or to avoid the unavailability
of Eurodollar Advances under SECTION 3.3, so long as such designation is not
disadvantageous to such Lender. Each Lender shall deliver a written statement
of such Lender as to the amount due, if any, under SECTION 2.18, 3.1, 3.2 or
3.4. Such written statement shall set forth in reasonable detail (and in
accordance with Agreement Accounting Principles, where applicable) the
calculations upon which such Lender determined such amount and shall be
final, conclusive and binding on the Borrower in the absence of manifest
error. Determination of amounts payable under such Sections in connection
with a Eurodollar Loan shall be calculated as though each Lender funded its
Eurodollar Loan through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Eurodollar Loan, whether in fact that is
the case or not. Unless otherwise provided herein, the amount specified in
the written statement shall be payable on demand after receipt by the
Borrower of the written statement. The obligations of the Borrower under
SECTIONS 2.18, 3.1, 3.2 and 3.4 shall survive payment of the obligations and
termination of this Agreement..............................................33
3.6. REFUND TO BORROWER. If, and to the extent that, any Lender shall
actually receive a credit against its United States federal income tax
liability or otherwise receive any rebate or refund from any government or
governmental agency in respect of any amount paid by the Borrower pursuant to
SECTION 3.1 or 3.2, such Lender agrees to promptly notify the Borrower
thereof and make reimbursement of credit, rebate or refund to the Borrower,
provided that if such Lender reasonably believes that such credit, rebate or
refund may be subject to challenge, then such Lender shall thereupon enter
into negotiations in good faith with the Borrower to determine when
reimbursement of such credit, rebate or refund can be made to the
Borrower...................................................................33
ARTICLE IV....................................................................33
CONDITIONS PRECEDENT..........................................................33
4.1. CONDITIONS PRECEDENT TO THE RESTATEMENT EFFECTIVE DATE. This
Agreement shall become effective on the date (the "Restatement Effective
Date") on which the Borrower shall have furnished to the Agent, with
sufficient copies for the Lenders:.........................................33
4.2. EACH ADVANCE. The Lenders shall not be required to make any Advance,
unless on the applicable Borrowing Date:...................................34
ARTICLE V.....................................................................34
REPRESENTATIONS AND WARRANTIES................................................34
5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted......................................................35
5.2. AUTHORIZATION AND VALIDITY. The Borrower has the corporate power and
authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the
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Borrower enforceable against the Borrower in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors, rights generally..............35
5.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by the Borrower of the Loan Documents, nor the consummation of the
transactions therein contemplated, nor compliance with the provisions thereof
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrower or any of its Subsidiaries or the
Borrower's or any Subsidiary's articles of incorporation or by-laws or the
provisions of any indenture, instrument or agreement to which the Borrower or
any of its Subsidiaries is a party or is subject, or by which it, or its
property, is bound, or conflict with or constitute a default thereunder, or
result in the creation or imposition of any Lien in, of or on the property of
the Borrower or a Subsidiary pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, approval, license, authorization,
or validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of, any of the Loan Documents...............................35
5.4. FINANCIAL STATEMENTS. The May 31, 1997 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower
and its Subsidiaries at such date and the consolidated results of their
operations for the period then ended.......................................35
5.5. MATERIAL ADVERSE CHANGE. Since May 31, 1997, there has been no change
in the business, properties, prospects, condition (financial or otherwise) or
results of operations of the Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect...................35
5.6. TAXES. The Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed
and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except for
the filing of such returns and the payment of such taxes, if any, as (a) are
being contested in good faith and as to which adequate reserves have been
provided or (b) do not in the aggregate exceed $4,000,000 and the failure to
file or pay for which could not reasonably be expected to have a Material
Adverse Effect. As of the date hereof, the United States income tax returns
of the Borrower and its Subsidiaries have been audited by the Internal
Revenue Service through the fiscal year ended 1992. No tax liens have been
filed other than those permitted pursuant to SECTION 6.16(a). The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of any taxes or other governmental charges are adequate............36
5.7. LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth in the
Borrower's Form 10-K filed with the Securities and Exchange Commission for
its fiscal year ended May 31, 1997, there is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the
knowledge of any of their officers, threatened against or affecting the
Borrower or any of its Subsidiaries which could reasonably be expected to
have a Material Adverse Effect.
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Other than any liability incident to such litigation, arbitration or
proceedings, the Borrower has no material contingent obligations not provided
for or disclosed in the Borrower's Form 10-K filed with the Securities and
Exchange Commission for its fiscal year ended May 31, 1997.................36
5.8. SUBSIDIARIES. As of the date hereof, Borrower's Form 10-K filed with
the Securities and Exchange Commission for its fiscal year ended May 31, 1997
contains an accurate description of all of the Borrower's presently existing
Significant Subsidiaries (as defined in Regulation S-X of the Securities and
Exchange Commission). All of the issued and outstanding shares of capital
stock of all of the Borrower's Subsidiaries have been duly authorized and
issued and are fully paid and non-assessable...............................36
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $10,000,000. Neither the Borrower nor any other
member of the Controlled Group has incurred, or is reasonably expected to
incur any withdrawal liability to Multiemployer Plans in an aggregate amount
which, when added to the aggregate Unfunded Liabilities of all Single
Employer Plans, would exceed of $10,000,000. Each Plan complies in all
material respects with all applicable requirements of law and regulations and
no Reportable Event has occurred with respect to any Plan. Neither the
Borrower nor any other member of the Controlled Group has withdrawn from any
Plan or initiated steps to do so, and no steps have been taken to reorganize
or terminate any Plan......................................................36
5.10. ACCURACY OF INFORMATION. No information, exhibit or report furnished
by the Borrower or any of its Subsidiaries to the Agent or any Lender in
connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or omitted to state a material
fact or any fact necessary to make the statements contained therein not
misleading.................................................................36
5.11. REGULATION U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of the Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder..36
5.12. COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries have complied
in all respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, except where
failure to comply would not reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary has received any notice to
the effect that its operations are not in material compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations or the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to
a release of any toxic or hazardous waste or substance into the environment,
which non-compliance or remedial action could reasonably be expected to have
a Material Adverse Effect..................................................37
5.13. INVESTMENT COMPANY ACT. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended...........................................................37
5.14. YEAR 2000 COMPLIANCE. The Borrower has conducted a comprehensive
review and assessment of its computer applications and is in the process of
making inquiry of its material suppliers, vendors and customers with respect
to the Year 2000 Issue (as such term is defined
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below). Based on the foregoing review, the Borrower reasonably believes that
the Year 2000 Issue, as it relates to the Borrower's computer applications,
will not result in a Material Adverse Effect. "Year 2000 Issue" means, with
respect to any Person, the ability or inability of all computer applications
material to such Person's business and operations properly to perform
date-sensitive functions for all dates before and after January 1, 2000. The
Borrower is unable to determine the ultimate impact, if any, on the
Borrower's operations resulting from the Year 2000 Issue relating to material
suppliers, vendors and customers...........................................37
ARTICLE VI....................................................................37
COVENANTS.....................................................................37
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles and furnish to the Lenders:..37
6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances for the general corporate needs of the
Borrower and its Subsidiaries and to repay outstanding Advances. The Borrower
will not, nor will it permit any Subsidiary to, use any of the proceeds of
the Advances to (i) purchase or carry any "margin stock" (as defined in
Regulation U), (ii) acquire any security in any transaction which is subject
to Sections 13 and 14 of the Securities Exchange Act of 1934 or (iii) make
any unfriendly Acquisition.................................................39
6.3. NOTICE OF DEFAULT. The Borrower will, and will cause each Subsidiary
to, give prompt notice in writing to the Lenders of (i) the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise, which would have a Material Adverse Effect, or (ii) any threatened
or pending litigation or governmental proceeding or labor controversy against
the Borrower or any Subsidiary which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect...................39
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic or foreign corporation, as the
case may be, in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business
is conducted; PROVIDED, that nothing contained in this Section 6.4 shall
prohibit (a) any Subsidiary from entering into a merger or consolidation
otherwise permitted by SECTION 6.11 or (b) the liquidation of any Subsidiary
substantially all of whose assets have been transferred to the Borrower or
another Subsidiary in compliance with SECTION 6.12.........................39
6.5. TAXES. The Borrower will, and will cause each Subsidiary to, pay when
due all taxes, assessments and governmental charges and levies upon it or its
income, profits or property, except those which (a) are being contested in
good faith and as to which adequate reserves have been provided or (b) do not
in the aggregate exceed $4,000,000 and the failure to pay which could not
reasonably be expected to have a Material Adverse Effect...................39
6.6. INSURANCE. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance
on all their property in such amounts and covering such risks as is
consistent with sound business practice, and the Borrower will furnish to any
Lender upon request full information as to the insurance carried...........40
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6.7. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject....................................................40
6.8. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and
keep its properties in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times..40
6.9. INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Lenders, by their respective representatives and agents, to
inspect any of the properties, corporate books and financial records of the
Borrower and each Subsidiary, to examine and make copies of the books of
accounts and other financial records of the Borrower and each Subsidiary, and
to discuss the affairs, finances and accounts of the Borrower and each
Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Lenders may
designate..................................................................40
6.10. RESTRICTED PAYMENTS. The Borrower will not, nor will it permit any
Subsidiary to, declare or make any Restricted Payments, which together with
all Restricted Payments made on or after May 31, 1995 would exceed an amount
equal to the sum of (i) $20,000,000 plus (ii) 50% of Consolidated Net Income
for the period commencing June 1, 1994 and extending to and including the
last day of the fiscal year of the Borrower immediately preceding the date on
which such Restricted Payment was made, said period to be taken as one
accounting period, except that:............................................40
6.11. MERGER. The Borrower will not, nor will it permit any Subsidiary to,
merge or consolidate with or into any other Person, except that:...........41
6.12. SALE OF ASSETS. The Borrower will not, nor will it permit any
Subsidiary to, sell, lease, transfer, assign or otherwise dispose of
(including, for the avoidance of doubt, in connection with a sale leaseback
transaction), any of its assets (including, for the avoidance of doubt, the
capital stock of Subsidiaries, but excluding (i) inventory sold in the
ordinary course of the Borrower's or any Subsidiary's business, (ii) property
formerly used in the Borrower's or any Subsidiary's business which is worn
out or obsolete, (iii) assets of any Domestic Subsidiary transferred to the
Borrower or to another Domestic Subsidiary which is a Wholly-Owned
Subsidiary, (iv) assets of any Foreign Subsidiary transferred to the Borrower
or to another Subsidiary which is a Wholly-Owned Subsidiary, (v) assets
permitted to be sold or otherwise transferred pursuant to SECTION 6.13 and
(vi) promissory notes ("PAYMENT NOTES") received as partial or full payment
for assets sold) if, after giving effect thereto, the sum of all such assets
transferred, assigned or otherwise disposed of during the twelve-month period
ending with (and including) the month of such disposition either (a)
represents more than 10% of Consolidated Assets determined as of the date of
(and after giving effect to) such disposition or (b) were responsible for
more than 10% of the consolidated net sales or of the consolidated net income
of the Borrower and its Subsidiaries during such twelve-month period.......41
6.13. SALE OF ACCOUNTS. Anything in SECTION 6.12 to the contrary
notwithstanding, the Borrower will not, nor will it permit any Subsidiary to,
sell, with or without recourse, transfer, assign, encumber or otherwise
dispose of any of its notes or accounts receivable, leases or
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chattel paper (collectively referred to in this Section as "ACCOUNTS") to any
Person, except that:.......................................................41
6.14. INVESTMENTS AND ACQUISITIONS. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to
become or remain a partner in any partnership or joint venture, or to make
any Acquisition of any Person, except:.....................................42
6.15. LIENS. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the property of the
Borrower or any of its Subsidiaries, except:...............................43
6.16. RENTALS. The Borrower will not, nor will it permit any Subsidiary to,
create, incur or suffer to exist any obligation for Rentals if, as a
consequence thereof, obligations for Rentals created, incurred or suffered to
exist in any one fiscal year shall be in an aggregate consolidated amount for
the Borrower and its Subsidiaries in excess of 5% of Consolidated Revenues
(as defined below) as at the end of the Borrower's fiscal year immediately
preceding the date on which such obligation is entered into, on a
non-cumulative basis from year to year. It is expressly agreed and understood
that, for the purposes of this Section, any contract between the Borrower or
any Domestic Subsidiary and the vendor of aircraft fuel shall not be
considered a lease and any payments made under any such contract by the
Borrower or any Domestic Subsidiary to such vendor shall not be considered a
lease payment. "CONSOLIDATED REVENUES" shall mean the amount of "net
revenues" as shown on the Borrower's consolidated income statement.........46
6.17. RETIREMENT AND MODIFICATION OF SUBORDINATED INDEBTEDNESS. The
Borrower will not, nor will it permit any Subsidiary to, purchase, acquire,
redeem or retire, or make any payment on account of principal of, any
Subordinated Debt except at the stated maturity thereof or as required by
mandatory prepayment provisions or sinking fund provisions relating thereto.
The Borrower will not, nor will it permit any Subsidiary to, alter, amend,
modify, rescind, terminate or waive, or permit any breach or event of default
to exist under, any note or notes evidencing such Subordinated Debt........46
6.18. AFFILIATES. The Borrower will not, and will not permit any Subsidiary
to, enter into any transaction (including, without limitation, the purchase
or sale of any property or service) with, or make any payment or transfer to,
any Affiliate except in the ordinary course of business and pursuant to the
reasonable requirements of the Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to the Borrower or such
Subsidiary than the Borrower or such Subsidiary would obtain in a comparable
arms-length transaction. The transactions entered into in connection with the
Receivables Securitization shall be deemed to be arms-length transactions..46
6.19. WORKING CAPITAL. The Borrower will maintain at all times a ratio of
Consolidated Current Assets to Consolidated Current Liabilities of at least
1.50 to 1.00...............................................................46
6.20. CONSOLIDATED NET WORTH. The Borrower will maintain at all times
Consolidated Net Worth in an amount not less than the sum of (a) $260,000,000
PLUS (b) the net cash proceeds received by the Borrower from the sale of any
of its capital stock on or after May 31, 1998 PLUS (c) an amount equal to the
aggregate of one-third of Consolidated Net Income earned
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during each of its fiscal years beginning with its fiscal year commencing
June 1, 1998, said fiscal years to be taken as one accounting period MINUS
(d) amounts (not to exceed $10,000,000 in the aggregate for the purposes of
this covenant) either used for the purchase or retirement of the Borrower's
capital stock or representing the after-tax write-down of assets and
associated costs on or after May 31, 1998..................................46
6.21. CONSOLIDATED SECURED LIABILITIES. The Borrower will maintain at all
times Consolidated Secured Liabilities in an amount not in excess of
$20,000,000. For purposes of calculating Consolidated Secured Liabilities
hereunder the obligations of the Borrower not in excess of $10,000,000,
secured by the real estate located in Wood Dale, Illinois, known as the
Corporate Headquarters of the Borrower, shall not be included..............46
6.22. LIMITATION ON CONSOLIDATED FUNDED DEBT. The Borrower will not permit
the sum of (i) Consolidated Funded Debt plus (ii) the aggregate amount of
Contingent Obligations of the Borrower and its Subsidiaries to exceed 60% of
Consolidated Total Capitalization..........................................47
6.23. FIXED CHARGE COVERAGE RATIO. The Borrower will maintain a Fixed
Charge Coverage Ratio of not less than 1.20:1:00 as of the last day of each
fiscal quarter of the Borrower commencing on the date immediately preceding
the Revolving Credit Termination Date and thereafter. The Fixed Charge
Coverage Ratio shall be determined based on four of the previous five fiscal
quarters of the Borrower that occurred immediately prior to the calculation
date, at the Borrower's option.............................................47
ARTICLE VII...................................................................47
DEFAULTS......................................................................47
ARTICLE VIII..................................................................51
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES................................51
8.1. ACCELERATION. If any Default described in SECTION 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the
Agent or any Lender. If any other Default occurs, the Required Lenders may
terminate or suspend the obligations of the Lenders to make Loans hereunder,
or by written notice to the Borrower declare the Obligations to be due and
payable, or both, whereupon the Obligations shall become immediately due and
payable, without presentment, demand, protest or further notice of any kind,
all of which the Borrower hereby expressly waives. The Required Lenders agree
to give the Borrower prompt subsequent notice of any termination or
suspension of the obligations of the Lenders to make Loans hereunder;
PROVIDED, that the giving of such notice shall not be a condition to the
effectiveness of any such termination or suspension........................51
8.2. AMENDMENTS. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for
the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of each Lender affected thereby:......51
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right
or be construed to be a waiver of any Default or an acquiescence therein, and
the making of a Loan notwithstanding the
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existence of a Default or the inability of the Borrower to satisfy the
conditions precedent to such Loan shall not constitute any waiver or
acquiescence. Any single or partial exercise of any such right shall not
preclude other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the terms, conditions
or provisions of the Loan Documents whatsoever shall be valid unless in
writing signed by the Lenders required pursuant to SECTION 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained
in the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid
in full....................................................................52
ARTICLE IX....................................................................52
GENERAL PROVISIONS............................................................52
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Notes
and the making of the Loans herein contemplated............................52
9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation...........................................52
9.3. TAXES. Any taxes (excluding federal income taxes on the overall net
income of any Lender) or other similar assessments or charges payable or
ruled payable by any governmental authority in respect of the Loan Documents
shall be paid by the Borrower, together with interest and penalties, if
any........................................................................52
9.4. HEADINGS. Section headings in the Loan Documents are for convenience
of reference only, and shall not govern the interpretation of any of the
provisions of the Loan Documents...........................................52
9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Agent and the Lenders and supersede all
prior agreements and understandings among the Borrower, the Agent and the
Lenders relating to the subject matter thereof.............................52
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders here under are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any
of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns......................53
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the Agent for
any and all reasonable costs and out-of-pocket expenses (including attorneys'
fees and time charges of attorneys for the Agent, which attorneys may be
employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment,
modification, and administration of the Loan Documents. The Borrower also
agrees to reimburse the Agent and the Lenders for any and all reasonable
costs and out-of-pocket expenses (including attorneys' fees and time charges
of attorneys for the Agent and the Lenders, which attorneys may be employees
of the Agent or the Lenders) paid or incurred by the Agent or any Lender in
connection with the collection and enforcement of the
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Loan Documents. The Borrower also agrees to reimburse the Agent and the
Lenders for any and all reasonable costs and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the Agent and
the Lenders, which attorneys may be employees of the Agent or the Lenders)
paid or incurred by the Agent or any Lender in connection with the collection
and enforcement of the Loan Documents. The Borrower further agrees to
indemnify the Agent and each Lender, its directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent or any Lender is a party
thereto) which any of them may pay or incur arising out of any term or
condition contained in this Agreement or the other Loan Documents, or the
direct or indirect application or proposed application of the proceeds of any
Loan hereunder, except to the extent any of the foregoing arises solely from
the gross negligence or wilful misconduct of the party requesting
indemnification. The obligations of the Borrower under this Section shall
survive the termination of this Agreement..................................53
9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders......53
9.9. ACCOUNTING. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting
Principles.................................................................53
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are
declared to be severable...................................................53
9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender.
Neither the Agent nor any Lender shall have any fiduciary responsibilities to
the Borrower. Neither the Agent nor any Lender undertakes any responsibility
to the Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower's business or operations....................54
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL
BANKS......................................................................54
9.13. CONSENT TO JURISDICTION. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER,
THE AGENT AND EACH LENDER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR
THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE
RIGHT OF THE BORROWER TO BRING PROCEEDINGS AGAINST THE AGENT OR ANY LENDER,
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OR THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER, IN THE COURTS OF ANY OTHER JURISDICTION..........................54
9.14. CONFIDENTIALITY. Each Lender agrees to use any confidential
information which it may receive from the Borrower pursuant to this Agreement
solely for the purposes of administering and monitoring this Agreement and to
hold such confidential information in confidence, except for disclosure (i)
to other Lenders and Affiliates of any Lender, (ii) to legal counsel,
accountants, and other professional advisors to that Lender who are advised
of and agree to be bound by this Section 9.14, (iii) to regulatory officials,
(iv) as requested pursuant to or as required by law, regulation, or legal
process, (v) in connection with any legal proceeding to which that Lender is
a party, and (vi) permitted by SECTION 12.4; PROVIDED that in the case of
each of the preceding CLAUSES (iv) and (v), such Lender agrees, to the extent
reasonably possible and to the extent that it is legally permitted to do so,
to give the Borrower prior notice of such disclosure and not resist any
efforts by the Borrower to obtain confidential treatment
therefor...................................................................54
9.15. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN
ANY WAY ARISING OUT OF, RELATED TO,........................................54
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.................................................................54
ARTICLE X.....................................................................55
THE AGENT.....................................................................55
10.1. APPOINTMENT. Bank of America NT & SA is hereby appointed Agent
hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the agent of such Lender. The
Agent agrees to act as such upon the express conditions contained in this
Article X. The Agent shall not have a fiduciary relationship in respect of
any Lender by reason of this Agreement.....................................55
10.2. POWERS. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of
each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to
the Lenders to take any action thereunder except any action specifically
provided by the Loan Documents to be taken by the Agent................... 55
10.3. GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except for its or their own gross negligence or willful
misconduct.................................................................55
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor any
of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement,
warranty or representation made in connection with any Loan Document or any
borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document; (iii) the
satisfaction of any condition specified in ARTICLE IV, except receipt of
items required to be delivered to the Agent;
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or (iv) the validity, effectiveness or genuineness of any Loan Document or
any other instrument or writing furnished in connection therewith..........55
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under
any other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it
shall first be indemnified to its satisfaction by the Lenders pro rata
against any and all liability, cost and expense that it may incur by reason
of taking or continuing to take any such action............................55
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby created and
its duties hereunder and under any other Loan Document.....................55
10.7. RELIANCE ON DOCUMENTS: COUNSEL. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent......................................56
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify the Agent ratably according to their respective
Percentages (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other expenses incurred by the Agent on behalf of the Lenders,
in connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any other document delivered in connection
therewith or the transactions contemplated thereby, or the enforcement of any
of the terms thereof or of any such other documents, provided that no Lender
shall be liable for any of the foregoing to the extent they arise from the
gross negligence or willful misconduct of the Agent........................56
10.9. RIGHTS AS A LENDER. With respect to its Commitment, Loans made by it
and the Note issued to it, the Agent shall have the same rights and powers
hereunder and under any other Loan Document as any Lender and may exercise
the same as though it were not the Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent may accept deposits from, lend money to, and
generally engage in any kind of trust, debt, equity or other transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with the Borrower or any of its Subsidiaries in which the Borrower or such
Subsidiary is not restricted hereby from engaging with any other Person....56
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10.10. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.....................................56
10.11. SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, and the Agent may be removed
at any time with or without cause by written notice received by the Agent
from the Required Lenders. Upon any such resignation or removal, the Required
Lenders shall have the right to appoint, on behalf of the Borrower and the
Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days after the retiring Agent's giving notice of resignation, then
the retiring Agent may appoint, on behalf of the Borrower and the Lenders, a
successor Agent. Such successor Agent shall be a commercial bank having
capital and retained earnings of at least $100,000,000. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations hereunder and under the
other Loan Documents. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as the Agent hereunder and under the other Loan Documents.......56
ARTICLE XI....................................................................57
SETOFF; RATABLE PAYMENTS......................................................57
11.1. SETOFF. In addition to, and without limitation of, any rights of the
Lenders under applicable law, so long as any Default has occurred and is
continuing, any indebtedness from any Lender to the Borrower (including all
account balances, whether provisional or final and whether or not collected
or available) may be offset and applied toward the payment of the Obligations
then due and owing to such Lender..........................................57
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
SECTIONS 2.18, 3.1, 3.2 or 3.4) in a greater proportion than that received by
any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase
each Lender will hold its Percentage of Loans. If any Lender, whether in
connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or
such amounts which may be subject to setoff, such Lender agrees, promptly
upon demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably according to their respective
Percentages. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made...................57
ARTICLE XII...................................................................57
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BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.............................57
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and
the Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under
the Loan Documents and (ii) any assignment by any Lender must be made in
compliance with SECTION 12.3. Notwithstanding CLAUSE (ii) of this Section,
any Lender may at any time, without the consent of the Borrower or the Agent,
assign all or any portion of its rights under this Agreement and its Notes to
a Federal Reserve Bank; provided, however, that no such assignment shall
release the transferor Lender from its obligations hereunder. The Agent may
treat the payee of any Note as the owner thereof for all purposes hereof
unless and until such payee complies with SECTION 12.3 in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and provisions of
the Loan Documents. Any request, authority or consent of any Person, who at
the time of making such request or giving such authority or consent is the
holder of any Note, shall be conclusive and binding on any subsequent holder,
transferee or assignee of such Note or of any Note or Notes issued in
exchange therefor..........................................................57
12.2. PARTICIPATIONS.....................................................58
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("PARTICIPANTS") participating
interests in any Loan owing to such Lender, any Note held by such Lender,
any Commitment of such Lender or any other interest of such Lender under
the Loan Documents. Any Lender selling such participating interests to a
Participant agrees to promptly notify the Borrower of such sale and the
identity of such Participant. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations under
the Loan Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, such Lender shall remain the holder of any such Note for all
purposes under the Loan Documents, all amounts payable by the Borrower
under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under the Loan Documents 12.2.2. VOTING
RIGHTS. Each Lender shall retain the sole right to approve, without the
consent of any Participant, any amendment, modification or waiver of any
provision of the Loan Documents other than any amendment, modification or
waiver with respect to any Loan or Commitment in which such Participant has
an interest which forgives principal, interest or fees or reduces the
interest rate or fees payable with respect to any such Loan or Commitment,
postpones any date fixed for any regularly-scheduled payment of principal
of, or interest or fees on, any such Loan or Commitment, releases any
guarantor of any such Loan or releases any substantial portion of
collateral, if any, securing any such Loan...............................58
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each Participant shall
be deemed to have the right of setoff provided in SECTION 11.1 in respect
of its participating interest in amounts owing under the Loan Documents to
the same extent as if the amount of its
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participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff
provided in SECTION 11.1 with respect to the amount of participating
interests sold to each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of setoff
provided in SECTION 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with SECTION 11.2 as if each Participant were a
Lender...................................................................58
12.3. ASSIGNMENTS..........................................................59
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to
one or more banks or other entities ("PURCHASERS") all or any part of its
rights and obligations under the Loan Documents. Such assignment shall be
substantially in the form of EXHIBIT "H" hereto. Unless a Default has
occurred and is continuing, the written consent of the Borrower and the
Agent shall be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate thereof. Such
consent shall be in form and substance satisfactory to the Agent and shall
not be unreasonably withheld.............................................59
12.3.2. EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a notice
of assignment, substantially in the form attached as EXHIBIT "I" to EXHIBIT
"H" hereto (a "NOTICE OF ASSIGNMENT"), together with any consents required
by SECTION 12.3.1, and (ii) payment of a $2,500 fee to the Agent for
processing such assignment, such assignment shall become effective on the
effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by
the Lenders and shall have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or
the Agent shall be required to release the transferor Lender with respect
to the percentage of the Aggregate Commitment and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 12.3.2, the transferor Lender, the Agent and the Borrower
shall make appropriate arrangements so that replacement Notes are issued to
such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting
their respective Commitments, as adjusted pursuant to such assignment....59
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and
any prospective Transferee any and all information in such Lender's
possession concerning the creditworthiness of the Borrower and its
Subsidiaries; PROVIDED that each Transferee and prospective Transferee agrees
in writing for the benefit of the Borrower to be bound by SECTION 9.14.....59
12.5. TAX TREATMENT. If any interest in any Loan Document is transferred to
any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall
cause such Transferee, concurrently with the effectiveness of such transfer,
to comply with the provisions of SECTION 2.25..............................60
ARTICLE XIII..................................................................60
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NOTICES.......................................................................60
13.1. GIVING NOTICE. Except as otherwise permitted by SECTION 2.20 with
respect to Borrowing Notices and Continuation/Conversion Notices, all notices
and other communications provided to any party hereto under this Agreement or
any other Loan Document shall be in writing or by facsimile and addressed or
delivered to such party at its address set forth below its signature hereto
or at such other address as may be designated by such party in a notice to
the other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted..........................60
13.2. CHANGE OF ADDRESS. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to
the other parties hereto...................................................60
ARTICLE XIV...................................................................60
AND EFFECTIVENESS.............................................................60
OF ASSIGNMENT.................................................................84
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SCHEDULES AND EXHIBITS
Schedule "1" - Other Investments
Schedule "2" - Liens
Exhibit "A" - Note
Exhibit "B" - Extension Letter
Exhibit "C" - Borrowing Notice
Exhibit "D" - Alternate Currency Borrowing Request
Exhibit "E" - Opinion
Exhibit "F" - Transfer Instructions
Exhibit "G" - Compliance Certificate
Exhibit "H" - Assignment Agreement
Exhibit "I" - Notice of Assignment
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of May 27,
1998, is among AAR CORP., a Delaware corporation, the Lenders listed from time
to time on the signature pages hereof, and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION (successor by merger to Bank of America Illinois, formerly
known as Continental Bank N.A.), as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and the Lenders are parties to an Amended
and Restated Credit Agreement, dated as of September 9, 1996 (the "Original
Credit Agreement"), which amended and restated a Credit Agreement, dated as of
June 1, 1993, as amended by a First Amendment thereto, dated as of May 16, 1994
and a Second Amendment thereto, dated as of May 16, 1995; and
WHEREAS, the parties hereto agree that the Original Credit Agreement shall
be and hereby is amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"ACCOUNTS" has the meaning provided in SECTION 6.13.
"ACQUISITION" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any
of its Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or division thereof, whether through
purchase of assets, merger or otherwise or (ii) directly or indirectly acquires
(in one transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the securities of a
corporation which have ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) or a majority (by percentage or voting power) of the outstanding
partnership interests of a partnership.
"ADVANCE" means a borrowing hereunder consisting of the aggregate amount of
the several Loans made by the Lenders to the Borrower which are (a) denominated
in the same currency, (b) of the same Type and (c) in the case of Fixed Rate
Advances, for the same Interest Period.
"AFFILIATE" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control
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another Person if the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person or possesses,
directly or indirectly, the power to direct or cause the direction of the
management or policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
"AGENT" means Bank of America National Trust and Savings Association in its
capacity as agent for the Lenders pursuant to ARTICLE X, and not in its
individual capacity as a Lender, and any successor Agent appointed pursuant to
ARTICLE X.
"AGGREGATE COMMITMENT" means the aggregate of the Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.
"AGREEMENT" means this second amended and restated credit agreement, as it
may be amended or modified and in effect from time to time.
"AGREEMENT ACCOUNTING PRINCIPLES" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in SECTION 5.4.
"ALTERNATE CURRENCY" means, with respect to an Alternate Currency Advance,
such currency (which shall be freely transferable and convertible into U.S.
Dollars) as the Borrower shall have requested in its Alternate Currency
Borrowing Request for such Advance, and in which each of the Banks, in its sole
discretion, shall have agreed to make its Loan comprising such Advance.
"ALTERNATE CURRENCY ADVANCE" means an Advance bearing interest at a
Transaction Rate and denominated in an Alternate Currency made pursuant to
SECTION 2.1(b).
"ALTERNATE CURRENCY BORROWING REQUEST" is defined in SECTION 2.11.
"ALTERNATE CURRENCY LOAN" means, with respect to a Lender, such Lender's
portion of any Alternate Currency Advance.
"ALTERNATE REFERENCE RATE" means, for any day, a rate of interest per annum
equal to the higher of (i) the Reference Rate for such day and (ii) the sum of
Federal Funds Effective Rate for such day plus 1/2% per annum.
"APPLICABLE MARGIN" means,
(i) with respect to any Eurodollar Advance, (A) at all times prior to
the Revolving Credit Termination Date, 0.225% when the Borrower has
an Investment Grade Rating and 0.50% when the Borrower does not
have an Investment Grade Rating and (B) at all times after the
Revolving Credit Termination Date, 0.75% when the Borrower has an
Investment Grade Rating, and 1.50% when the Borrower does not have
an Investment Grade Rating, or
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(ii) with respect to any Floating Rate Advance, zero % at all times when
the Borrower has an Investment Grade Rating and 0.50% at all times
when the Borrower does not have an Investment Grade Rating;
PROVIDED, that, if after Bank of America NT & SA has made a good faith effort to
market its non-credit-related products to the Borrower, Bank of America NT & SA
is not, in its sole judgment, satisfied with the amount of business the Borrower
is doing with Bank of America NT & SA, the Applicable Margin shall increase to
the margins set forth below effective January 1, 1999:
(X) with respect to any Eurodollar Advance, (A) at all times prior to
the Revolving Credit Termination Date, 0.45% when the Borrower has
an Investment Grade Rating and 1.075% when the Borrower does not
have an Investment Grade Rating and (B) at all times after the
Revolving Credit Termination Date, 1.00% when the Borrower has an
Investment Grade Rating and 1.825% when the Borrower does not have
an Investment Grade Rating, or
(Y) with respect to any Floating Rate Advance, (A) at all times prior
to the Revolving Credit Termination Date, zero % at all times when
the Borrower has an Investment Grade Rating and 0.50% at all times
when the Borrower does not have an Investment Grade Rating and (B)
at all times after the Revolving Credit Termination Date, 0.50% at
all times when the Borrower has an Investment Grade Rating and 1.0%
at all times when the Borrower does not have an Investment Grade
Rating.
"AUTHORIZED OFFICER" means any of the Chairman of the Board, Chief
Executive Officer, President, Chief Operations Officer, Vice President-Finance
or Treasurer of the Borrower.
"BANK OF AMERICA NT & SA" means Bank of America National Trust and Savings
Association, its successors and assigns.
"BORROWER" means AAR Corp., a Delaware corporation, and its successors and
assigns.
"BORROWING DATE" means a date on which an Advance is made hereunder.
"BORROWING NOTICE" is defined in SECTION 2.10.
"BUSINESS DAY" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks are open for business in Chicago and on which dealings in U.S.
Dollars may be carried on by the Agent in the interbank Eurodollar market, (ii)
with respect to any borrowing or payment of Alternate Currency Advances, a day
(other than Saturday or Sunday) on which banks are open for business in Chicago
and New York and are open for domestic and international business (including
dealings in such Alternate Currency) in both London and the place where funds
are to be paid or made available, and (iii) for all other purposes, a day (other
than a Saturday or Sunday) on which banks are open for business in Chicago.
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"CAPITALIZED LEASE" of a Person means any lease of property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.
"CAPITALIZED LEASE OBLIGATIONS" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.
"CHANGE IN CONTROL" means (i) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of voting stock of the
Borrower or (ii) a majority of the Directors on the Borrower's Board of
Directors shall cease to be Directors of the Borrower during any twelve-month
period.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COMMITMENT" means, for each Lender, the obligation of such Lender to make
Loans in an aggregate amount not exceeding the amount set forth opposite its
signature below, as such amount may be modified from time to time pursuant to
the terms hereof.
"CONSOLIDATED ASSETS" means the total consolidated assets of the Borrower
and its Subsidiaries determined in accordance with Agreement Accounting
Principles.
"CONSOLIDATED CURRENT ASSETS" means the total consolidated current assets
of the Borrower and its Subsidiaries determined in accordance with Agreement
Accounting Principles.
"CONSOLIDATED CURRENT LIABILITIES" means the total consolidated current
liabilities of the Borrower and its Subsidiaries determined in accordance with
Agreement Accounting Principles.
"CONSOLIDATED FUNDED DEBT" means all Indebtedness having a final maturity
of more than one year. Consolidated Funded Debt shall not include payments due
within one year from the date as of which a calculation of Consolidated Funded
Debt is made.
"CONSOLIDATED LIABILITIES" means the total consolidated liabilities of the
Borrower and its Subsidiaries determined in accordance with Agreement Accounting
Principles.
"CONSOLIDATED NET INCOME" shall mean, for any period, the net income (or
loss) of the Borrower and its Subsidiaries on a consolidated basis for such
period taken as a single accounting period determined in accordance with
Agreement Accounting Principles; PROVIDED, that there shall be excluded (i) the
income (or loss) of any Affiliate of the Borrower or other Person (other than a
Subsidiary of the Borrower) in which any Person (other than the Borrower or any
of its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to the Borrower, or any of its
Subsidiaries by such Affiliate or other Person during such period, (ii) the
income (or loss) of any Person accrued prior to the date
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it becomes a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower or any of its Subsidiaries or that Person's assets are acquired by
the Borrower or any of its Subsidiaries, and (iii) the income of any Subsidiary
of the Borrower to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary.
"CONSOLIDATED NET WORTH" means, as of any date of determination, the
consolidated stockholders' equity of the Borrower and its Subsidiaries
determined in accordance with Agreement Accounting Principles.
"CONSOLIDATED SECURED LIABILITIES" means the aggregate amount of
Consolidated Liabilities which are secured by any Lien (other than Liens
permitted pursuant to any of CLAUSES (a), (d), (e), (f), (h) and (k) of SECTION
6.15) on any property of the Borrower or any of its Subsidiaries.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of determination,
the sum of (a) Consolidated Net Worth, less consolidated Intangible Assets of
the Borrower and its Subsidiaries, plus (b) Subordinated Debt. For purposes of
this definition "INTANGIBLE ASSETS" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to May 31, 1998 in the book value of
any asset owned by the Borrower or a Consolidated Subsidiary, and (ii) all
unamortized debt discount and expense, unamortized deferred charges, goodwill,
patents, trademarks, service marks, trade names, copyrights, organization or
developmental expenses and other intangible items, for purposes of this clause
(ii), in each case, to the extent such items are disclosed as separate line
items on the Borrower's financial statements required under SECTION 6.1.
"CONSOLIDATED TOTAL CAPITALIZATION" means the sum of (i) the remainder of
(a) Consolidated Tangible Net Worth minus (b) Subordinated Debt plus
(ii) Consolidated Funded Debt.
"CONTINGENT OBLIGATION" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide
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funds for the payment of, or otherwise becomes or is contingently liable upon,
the obligation or liability of any other Person, or agrees to maintain the net
worth or working capital or other financial condition of any other Person, or
otherwise assures any creditor of such other Person against loss, including,
without limitation, any comfort letter, operating agreement, take-or-pay
contract or application for a letter of credit; PROVIDED, HOWEVER, that
Contingent Obligations shall not include (i) Contingent Obligations resulting
from endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Borrower's and each Subsidiary's
business, (ii) Contingent Obligations by the Borrower of any Subsidiary's
Indebtedness (including, for the avoidance of doubt, obligations arising out of
overdraft and similar cash management facilities) permitted to exist pursuant to
this Agreement and any Subsidiary's obligations for Rentals permitted by SECTION
6.16, and (iii) any obligations in connection with the Receivables
Securitization.
"CONTINUATION/CONVERSION NOTICE" is defined in SECTION 2.13.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Borrower or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"DEFAULT" means an event described in ARTICLE VII.
"DOLLAR AMOUNT" means, as of any date of determination, (i) with respect to
an Advance denominated in U.S. Dollars, the principal amount of such Advance and
(ii) with respect to an Advance denominated in an Alternate Currency, the Dollar
Equivalent of the principal amount of such Advance.
"DOLLAR EQUIVALENT" means, with respect to an amount in an Alternate
Currency on a given date, the amount of U.S. Dollars which Bank of America NT &
SA could purchase with such amount at the Exchange Rate.
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Borrower organized under
the laws of any State of the United States of America or the District of
Columbia, all or substantially all of whose assets are located, and whose
business is conducted, in one or more of any such States or District.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EURODOLLAR ADVANCE" means an Advance which bears interest at a Eurodollar
Rate.
"EURODOLLAR BASE RATE" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate of interest per annum notified to
the Agent by Bank of
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America NT & SA as the rate of interest at which U.S. Dollar deposits in the
approximate amount of the Advance to be made or continued as, or converted into,
a Eurodollar Advance and having a maturity comparable to such Eurodollar
Interest Period would be offered by Bank of America NT & SA to major banks in
the interbank market at approximately 10:00 a.m. (Chicago time) two Business
Days prior to the commencement of such Eurodollar Interest Period.
"EURODOLLAR INTEREST PERIOD" means, with respect to a Eurodollar Advance, a
period of 14 days, or one, two, three, six or 12 months commencing on a Business
Day selected by the Borrower pursuant to this Agreement. Such Eurodollar
Interest Period shall end on (but exclude) the day which corresponds numerically
to such date 14 days, or one, two, three, six or 12 months thereafter, provided,
however, that if there is no such numerically corresponding day in such next,
second, third, sixth or twelfth succeeding month, such Eurodollar Interest
Period shall end on the last Business Day of such next, second, third, sixth or
twelfth succeeding month. If a Eurodollar Interest Period would otherwise end on
a day which is not a Business Day, such Eurodollar Interest Period shall end on
the next succeeding Business Day, provided, however, that if said next
succeeding Business Day falls in a new calendar month, such Eurodollar Interest
Period shall end on the immediately preceding Business Day. No Eurodollar
Interest Period may end after the Revolving Credit Termination Date.
"EURODOLLAR LOAN" means, with respect to a Lender, such Lender's portion of
any Eurodollar Advance.
"EURODOLLAR RATE" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus (ii) the Applicable Margin. The Eurodollar
Rate shall be rounded to the next higher multiple of 1/16 of 1% if the rate is
not such a multiple.
"EXCHANGE RATE" means, in relation to the purchase of one currency (the
"first currency") with another currency (the "second currency") on a given date,
Bank of America NT & SA's spot rate of exchange at or about 11:00 a.m. London
time on such date for the purchase of the first currency with the second
currency, including any premium or costs payable in connection with such
purchase.
"FACILITY FEE" means a facility fee on the Aggregate Commitment in an
amount equal to (a) 0.175% per annum when the Borrower has an Investment Grade
Rating or (b) 0.25% per annum when the Borrower does not have an Investment
Grade Rating; PROVIDED, that, if the Applicable Margin shall increase effective
January 1, 1999 as provided in the definition of "Applicable Margin," the
Facility Fee shall automatically increase effective January 1, 1999 to (x) 0.30%
per annum when the Borrower has an Investment Grade Rating or (y) 0.425% per
annum when the Borrower does not have an Investment Grade Rating.
"FACILITY TERMINATION DATE" means the twentieth (20th) Payment Date
following the Revolving Credit Termination Date.
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"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10 a.m. (Chicago
time) on such day on such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by the Agent in its sole
discretion.
"FINANCE CORP." means a special purpose vehicle created in connection with
the Receivables Securitization, and a Subsidiary of the Borrower.
"FIRST CHICAGO AGREEMENT" means the Second Amended and Restated Credit
Agreement dated as of February 10, 1998 among the Borrower, certain lenders and
the First National Bank of Chicago, as agent, as the same may from time to time
be amended, supplemented or otherwise modified, and including any replacement
credit facility among the Borrower and the lenders party thereto.
"FIXED RATE ADVANCE" means (a) an Alternate Currency Advance, (b) a
Eurodollar Advance or (c) a Quoted Rate Advance.
"FIXED RATE LOAN" means, with respect to a Lender, such Lender's portion of
any Fixed Rate Advance.
"FLOATING RATE" means, for any day, a rate per annum equal to (a) the
Alternate Reference Rate for such day plus (b) the Applicable Margin, changing
when and as the Alternate Reference Rate changes.
"FLOATING RATE ADVANCE" means an Advance which bears interest at the
Floating Rate.
"FLOATING RATE LOAN" means, with respect to a Lender, such Lender's portion
of any Floating Rate Advance.
"FOREIGN ACCOUNTS" means Accounts with respect to which the obligor is a
Person which is (i) organized under the laws of a jurisdiction other than the
United States of America, any State of the United States of America or the
District of Columbia, in the case of a Person which is not a natural person, or
(ii) a citizen of a country other than the United States of America, in the case
of a natural person.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower which is not a
Domestic Subsidiary.
"INDEBTEDNESS" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by Liens (other than Liens permitted
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pursuant to any of CLAUSES (a), (d), (e), (f), (h) and (k) of SECTION 6.15) or
payable out of the proceeds or production from property now or hereafter owned
or acquired by such Person, (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) Capitalized Lease Obligations, and (vi)
net liabilities under currency or interest rate swap, exchange or cap
agreements.
"INTEREST PERIOD" means a Eurodollar Interest Period, a Transaction Rate
Interest Period and/or a Quoted Rate Interest Period, as the case may be.
"INVESTMENT" of a Person means any loan, advance (other than commission,
travel and similar advances to its officers, employees, agents and
representatives made in the ordinary course of business), extension of credit
(other than accounts receivable arising in the ordinary course of business on
terms customary in the trade), deposit account or contribution of capital by
such Person to any other Person or any investment in, or purchase or other
acquisition of, the stock, partnership interests, notes, debentures or other
securities of any other Person made by such Person.
"INVESTMENT GRADE RATING" means, in the context of the Borrower having an
Investment Grade Rating, that the Borrower's senior unsecured long term debt is
rated both (a) BBB- or better by Standard & Poor's Corporation and (b) Baa3 or
better by Moody's Investor Service, Inc.
"LENDERS" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.
"LENDING INSTALLATION" means (i) with respect to a Lender, any office,
branch, subsidiary or affiliate of such Lender and (ii) with respect to the
Agent, any office, branch, subsidiary, affiliate or correspondent bank of the
Agent.
"LETTER OF CREDIT" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).
"LOAN" means, with respect to a Lender, such Lender's portion of any
Advance.
"LOAN DOCUMENTS" means this Agreement and the Notes.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, properties, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the
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Loan Documents, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Agent or the Lenders thereunder.
"MULTIEMPLOYER PLAN" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.
"NOTE" means a promissory note, in substantially the form of EXHIBIT "A"
hereto, duly executed by the Borrower and payable to the order of a Lender in
the amount of its Commitment, including any amendment, modification, renewal or
replacement of such promissory note.
"NOTICE OF ASSIGNMENT" is defined in SECTION 12.3.2.
"OBLIGATIONS" means all unpaid principal of and accrued and unpaid interest
on the Notes, all accrued and unpaid fees and all expenses, reimbursements,
indemnities and other obligations of the Borrower to the Lenders or to any
Lender, the Agent or any indemnified party hereunder arising under the Loan
Documents.
"ORIGINAL CREDIT AGREEMENT" has the meaning provided in the first WHEREAS
clause of this Agreement.
"PARTICIPANTS" is defined in SECTION 12.2.1.
"PAYMENT DATE" means the last day of each March, June, September and
December.
"PAYMENT NOTES" has the meaning provided in SECTION 6.12.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"PERCENTAGE" means, relative to any Lender, the percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%), determined by dividing the
Aggregate Commitment by such Lender's Commitment, as such percentage may be
adjusted from time to time pursuant to Assignment Agreement(s) executed by such
Lender and its Purchaser(s) and delivered pursuant to SECTION 12.3.1.
"PERSON" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"PLAN" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.
"PURCHASERS" is defined in SECTION 12.3.1.
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"QUOTED RATE" means the rate of interest quoted by the Agent to the
Borrower pursuant to SECTION 2.10 applicable to a Quoted Rate Advance.
"QUOTED RATE ADVANCE" means any Advance bearing interest at the Quoted
Rate.
"QUOTED RATE INTEREST PERIOD" means the period which shall begin on (and
include) the date on which such Quoted Rate Advance is made and, unless the
final maturity of such Quoted Rate Advance is accelerated, shall end on (but
exclude) the subsequent day or any other day up to 90 days thereafter, as the
Borrower may select in its relevant Borrowing Notice pursuant to SECTION 2.10;
PROVIDED, HOWEVER, that:
(a) absent such selection, the Borrower shall be deemed to have
selected Floating Rate Advances in accordance with SECTION 2.10;
(b) any such Quoted Rate Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next following
Business Day; and
(c) no Quoted Rate Interest Period may end after the Revolving
Credit Termination Date.
"RECEIVABLES SECURITIZATION" has the meaning provided in SECTION 6.13(f).
"REFERENCE RATE" means, at any time, the rate of interest then most
recently announced by the Lender at San Francisco, California as its reference
rate.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.
"RENTALS" of a Person means the aggregate fixed amounts payable by such
Person under any lease of real or personal property having an original term
(including any required renewals or any renewals at the option of the lessor or
lessee) of one year or more, but does not include any amounts payable under
Capitalized Leases of such Person.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC by regulation waived the
requirement of Section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
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shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"REQUIRED LENDERS" means Lenders in the aggregate having at least 66-K% of
the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66-K% of the aggregate unpaid
principal amount of the outstanding Advances.
"RESERVE REQUIREMENT" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.
"RESTATEMENT EFFECTIVE DATE" has the meaning provided in SECTION 4.1.
"RESTRICTED PAYMENTS" means collectively, all dividends (cash, stock, asset
or otherwise) and all payments on any class of securities (specifically
including all Subordinated Debt, but excluding any other debt securities) issued
by the Borrower or any Subsidiary, whether such securities are now, or may
hereafter be, authorized or outstanding and any payment by the Borrower or any
Subsidiary on account of the purchase, redemption or retirement of any class of
securities (specifically including all Subordinated Debt, but excluding all
other debt securities) issued by it, and any distribution in respect to any of
the foregoing, whether directly or indirectly.
"REVOLVING CREDIT TERMINATION BALANCE" means the aggregate principal amount
of Advances outstanding at the close of business on the Revolving Credit
Termination Date after giving effect to any Advances made or repaid on such
date.
"REVOLVING CREDIT TERMINATION DATE" means May 27, 2001 or such later date
to which the Revolving Credit Termination Date may be extended pursuant to
SECTION 2.2.
"SECTION" means a numbered section of this Agreement, unless another
document is specifically referenced.
"SINGLE EMPLOYER PLAN" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.
"SUBORDINATED DEBT" means indebtedness of the Borrower or any Subsidiary
evidenced by instruments containing provisions by which the payment of such
indebtedness is postponed and subordinated to the payment of the Notes, which
subordination provisions and the provisions for payment shall be in form and
substance satisfactory to the Required Lenders as evidenced by their prior
written consent thereto.
"SUBSIDIARY" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar
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business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled. Unless
otherwise expressly provided, all references herein to a "Subsidiary" shall mean
a Subsidiary of the Borrower.
"TERMINATION BALANCE" means the aggregate principal amount of Advances
outstanding on the Revolving Credit Termination Date after giving effect to any
Advances made or paid on such date.
"TRANSACTION RATE" means, with respect to an Alternate Currency Advance,
such fixed rate per annum as the Borrower shall have requested in its Alternate
Currency Borrowing Request for such Advance, and which each of the Banks, in its
sole discretion, shall have agreed to for its respective Loan comprising such
Advance.
"TRANSACTION RATE INTEREST PERIOD" means, with respect to an Alternate
Currency Advance, such number of days (not to exceed 180) as the Borrower shall
have requested in its Alternate Currency Borrowing Request for such Advance, and
which each of the Banks, in its sole discretion, shall have agreed to for its
respective Loan comprising such Advance. No Transaction Rate Interest Period may
end after the Revolving Credit Termination Date.
"TRANSFEREE" is defined in SECTION 12.4.
"TYPE" means (a) with respect to any U.S. Dollar Advance, its nature as a
Floating Rate Advance, a Eurodollar Advance or a Quoted Rate Advance or (b) with
respect to any Alternate Currency Advance, its nature as a Transaction Rate
Advance.
"UNFUNDED LIABILITIES" means the aggregate unfunded value of accumulated
benefits under all Single Employer Plans, all determined in accordance with
Agreement Accounting Principles as of the then most recent valuation date for
such Plans.
"UNMATURED DEFAULT" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.
"U.S. DOLLAR ADVANCE" means an Advance denominated in U.S. Dollars.
"WHOLLY-OWNED SUBSIDIARY" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, association, joint venture or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.
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ARTICLE II
THE CREDITS
2.1. THE ADVANCES. Subject to the terms of this Agreement, the Borrower
may borrow, repay and reborrow Advances at any time prior to or on the Revolving
Credit Termination Date. The Advances may be U.S. Dollar Advances made pursuant
to SECTION 2.1(a) or Alternate Currency Advances made pursuant to SECTION
2.1(b). No Advances may be requested or made subsequent to the Revolving Credit
Termination Date. Principal payments made after the Revolving Credit Termination
Date may not be reborrowed.
(a) COMMITMENTS TO MAKE U.S. DOLLAR ADVANCES. From and including
the date of this Agreement and to and including the Revolving Credit
Termination Date, the Lenders severally agree, on the terms and conditions
set forth in this Agreement, to make U.S. Dollar Advances to the Borrower
from time to time in amounts such that, upon giving effect to each such
U.S. Dollar Advance, the aggregate principal Dollar Amount of all Advances
then outstanding shall not exceed the Aggregate Commitment then in effect;
PROVIDED, that no Quoted Rate Advance shall be made (i) on or after the
Revolving Credit Termination Date and (ii) unless each of the Lenders in
its sole and absolute discretion has agreed (as provided in SECTION 2.10)
to make its respective Loan comprising such requested Advance. The
foregoing commitment to make U.S. Dollar Advances shall expire at the close
of business on the Revolving Credit Termination Date.
(b) DISCRETIONARY ALTERNATE CURRENCY ADVANCES. From and
including the date of this Agreement and to but excluding the Revolving
Credit Termination Date, the Lenders may, on the terms and conditions set
forth in this Agreement, make Alternate Currency Advances to the Borrower
from time to time; PROVIDED, that (i) any Alternate Currency Advance
requested by the Borrower pursuant to SECTION 2.11 shall be made if, and
only if, each of the Lenders in its sole and absolute discretion, has
agreed in writing (as provided in SECTION 2.11) to make its respective Loan
comprising such requested Advance and (ii) upon giving effect to each such
Alternate Currency Advance, the aggregate principal Dollar Amount of all
Advances then outstanding shall not exceed the Aggregate Commitment then in
effect.
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2.2. EXTENSION OF REVOLVING CREDIT TERMINATION DATE. The initial
Revolving Credit Termination Date shall be May 27, 2001. The Borrower may, not
earlier than 180 days and not later than 60 days prior to each anniversary of
the Restatement Effective Date execute and deliver to the Agent (who shall
promptly forward a copy of the same to each of the Lenders) an Extension Letter
in substantially the form of EXHIBIT "B" hereto, with appropriate insertions,
requesting that the Revolving Credit Termination Date be extended for one year.
Such request for an extension of the Revolving Credit Termination Date shall
become effective if, and only if, each Lender shall, in its sole and absolute
discretion, execute such Extension Letter and return copies thereof to the Agent
and the Borrower prior to each such applicable anniversary of the Restatement
Effective Date.
2.3. MANDATORY PAYMENTS. The Borrower shall make the following mandatory
payments on the Advances:
(a) Each Alternate Currency Advance shall be repaid in full on
the last day of its respective Transaction Rate Interest Period.
(b) Each Advance outstanding on the Revolving Credit Termination
Date shall be repaid in full on the Revolving Credit Termination Date (it
being understood and agreed that, subject to the terms and conditions of
this Agreement, the Borrower shall be entitled to make a final borrowing of
one or more U.S. Dollar Advances pursuant to SECTION 2.1(a) on the
Revolving Credit Termination Date).
(c) If on the last day of any calendar month, it is determined
by the Agent that the aggregate Dollar Amount of all outstanding Advances
exceeds the Aggregate Commitment then in effect, the Borrower shall within
three Business Days of demand by the Agent make a repayment (in U.S.
Dollars) of the outstanding Advances in an amount which is at least
sufficient to eliminate such excess.
(d) The Revolving Credit Termination Balance shall be payable in
twenty (20) equal, consecutive quarterly installments, commencing on the
first Payment Date following the Revolving Credit Termination Date.
(e) Any outstanding Advances and all other unpaid Obligations
shall be paid in full by the Borrower on the Facility Termination Date.
2.4. FEES. The Borrower further agrees to pay to the Agent, for the
ratable benefit of the Lenders, the Facility Fee for the period from the date
hereof to and including the Revolving Credit Termination Date. The Facility Fee
shall be payable quarterly in advance on the Restatement Effective Date and on
each Payment Date thereafter. The obligations of the Borrower under this Section
2.4 shall survive the payment of the Advances and the termination of this
Agreement.
2.5. OPTIONAL REDUCTIONS IN AGGREGATE COMMITMENT. The Borrower may
permanently reduce the Aggregate Commitment in whole or in part ratably among
the Lenders in integral multiples of $1,000,000, upon at least 10 days' written
notice to the Agent, which notice shall
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specify the amount of any such reduction, provided, however, that the amount of
the Aggregate Commitment may not be reduced below the aggregate principal Dollar
Amount of the outstanding Advances. All accrued interest and fees shall be
payable on the effective date of any termination of the obligations of the
Lenders to make Loans hereunder.
2.6. RATABLE LOANS. Each Advance hereunder shall consist of Loans made
from the several Lenders ratably according to their respective Percentages.
2.7. TYPES OF ADVANCES. The U.S. Dollar Advances may be Floating Rate
Advances, Eurodollar Advances or Quoted Rate Advances, or a combination thereof,
selected by the Borrower in accordance with SECTIONS 2.10 and 2.13. All
Alternate Currency Advances shall be Transaction Rate Advances selected by the
Borrower in accordance with SECTION 2.11.
2.8. MINIMUM AMOUNT OF EACH ADVANCE. Each Fixed Rate Advance shall be in
the minimum amount of $1,000,000 (and in multiples of $100,000 if in excess
thereof), and each Floating Rate Advance shall be in the minimum amount of
$500,000 (and in multiples of $100,000 if in excess thereof), provided, however,
that any Floating Rate Advance may be in the amount of the Aggregate Commitment.
2.9. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to time
pay, without penalty or premium, all outstanding Floating Rate Advances, or, in
a minimum aggregate amount of $1,000,000 or any integral multiple of $100,000 in
excess thereof, any portion of the outstanding Floating Rate Advances upon 5
days' prior notice to the Agent. Fixed Rate Advances may be paid prior to the
last day of the applicable Interest Period, subject to compliance with SECTION
3.4; PROVIDED, however, that Quoted Rate Advances may not be repaid prior to the
last day of their respective Interest Periods. Principal payments made after the
Revolving Credit Termination Date shall be applied to the principal installments
payable under SECTION 2.3(d) in the inverse order of maturity.
2.10. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW U.S. DOLLAR
ADVANCES. The Borrower shall select the Type and, in the case of each Eurodollar
Advance or Quoted Rate Advance, the Interest Period applicable to each new
Advance from time to time. The Borrower shall give the Agent irrevocable notice
in substantially the form of EXHIBIT "C" hereto with appropriate insertions (a
"BORROWING NOTICE") not later than (a) 1:00 p.m. (Chicago time) at least (i) one
Business Day before the Borrowing Date of each Floating Rate Advance and (ii)
two Business Days before the Borrowing Date for each Eurodollar Advance and (b)
11:30 a.m. (Chicago time) on the Borrowing Date for each Quoted Rate Advance, in
each case specifying:
(i) the Borrowing Date of such Advance, which shall be a
Business Day, prior to or, in the case of a Eurodollar
Advance or Floating Rate Advance, on the Revolving Credit
Termination Date,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
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(iv) in the case of each Eurodollar Advance or Quoted Rate
Advance, the Interest Period applicable thereto.
In the case of any Quoted Rate Advance, the Agent shall promptly inform each
Lender of its receipt of such Borrowing Notice for a Quoted Rate Advance and of
the interest rate it proposes to quote the Borrower therefor. If any Lender
refuses to make the requested Quoted Rate Advance, such Quoted Rate Advance
shall not be made. The Agent shall telephonically notify the Borrower of the
Lenders' acceptance or refusal of such Borrowing Notice for a Quoted Rate
Advance and, if such Borrowing Notice has been accepted, the pricing of such
Quoted Rate Advance. The Borrower shall either accept or reject the Quoted Rate
Advance upon receipt of such notice.
2.11. METHOD OF REQUESTING ALTERNATE CURRENCY ADVANCES. The Borrower may
from time to time in accordance with this Section 2.11 request the Lenders to
make one or more Alternate Currency Advances. The Lenders shall have no
obligation to make any such Alternate Currency Advance so requested by the
Borrower. If, and only if, each of the Lenders in its sole and absolute
discretion agrees, in the manner provided for in this Section 2.11, to make its
respective Loan comprising any such Alternate Currency Advance, will such
Alternate Currency Advance be made.
In order to request an Alternate Currency Advance, the Borrower shall give
the Agent a request in substantially the form of EXHIBIT "D" hereto with
appropriate insertions (an "Alternate Currency Borrowing Request"), which
request shall be irrevocable, not later than 10:00 a.m. (Chicago time) at least
five Business Days before the requested Borrowing Date for such Alternate
Currency Advance, specifying:
(i) the Borrowing Date, which shall be a Business Day prior to
the Revolving Credit Termination Date, of such Advance,
(ii) the aggregate amount of such Advance,
(iii) the Alternate Currency in which such Advance is to be
denominated,
(iv) the Transaction Rate for such Advance, and
(v) the Transaction Rate Interest Period for such Advance.
Upon receipt of any such Alternate Currency Borrowing Request, the Agent
shall promptly forward copies thereof to each of the Lenders. The requested
Alternate Currency Advance will be made as requested if, and only if, each
Lender shall, in its sole and absolute discretion, execute and return a copy of
such Alternate Currency Borrowing Request to the Agent not later than 10:00 a.m.
(Chicago time) at least three Business Days before the requested Borrowing Date
for such Alternate Currency Advance. Upon such receipt of an executed copy of
such Alternate Currency Borrowing Request from each of the Lenders (which copy
may be a facsimile transmittal), the Agent shall promptly notify the Borrower
and each of the Lenders of such acceptance, and thereupon the Lenders shall be
jointly and severally committed to make the
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requested Alternate Currency Advance, subject to the terms and conditions of
this Agreement. The making by the Lenders of any one or more Alternate Currency
Advances shall not constitute a consent by the Lenders to make any subsequent
Alternate Currency Advances, whether in the same or a different Alternate
Currency.
2.12. MAKING THE LOANS. Subject to SECTION 2.10, on each Borrowing Date,
each Lender shall make available its Loan or Loans comprising the Advance or
Advances to be made on such Borrowing Date (i) in the case of a Loan denominated
in U.S. Dollars, not later than noon (Chicago time), in immediately available
funds to the Agent at its address specified pursuant to Article XIII and (ii) in
the case of a Loan denominated in an Alternate Currency, not later than noon
(local time), in the city of the Agent's Lending Installation for such Alternate
Currency, in such funds as may then be customary for the settlement of
international transactions in such currency in the city of and at the address of
the Agent's Lending Installation for such currency. The Agent will make the
funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.
2.13. CONVERSION AND CONTINUATION OF OUTSTANDING U.S. DOLLAR ADVANCES.
Outstanding U.S. Dollar Advances may be continued as or converted into U.S.
Dollar Advances of the same or another Type as provided below in this Section
2.13; PROVIDED, that notwithstanding anything else in this Section 2.13 to the
contrary, (a) outstanding U.S. Dollar Advances may not be converted into
Alternate Currency Advances pursuant to this Section 2.13 and (b) outstanding
Alternate Currency Advances may not be continued or converted pursuant to this
Section 2.13, but must be repaid on or prior to the last day of their respective
Interest Periods pursuant to SECTION 2.3(a) and may only be reborrowed pursuant
to SECTIONS 2.1(b) and 2.11.
Each Floating Rate Advance shall continue as Floating Rate Advance unless
and until such Floating Rate Advance is repaid pursuant to SECTION 2.9 or
converted into a Eurodollar Advance or Quoted Rate Advance pursuant to this
Section 2.13. Each Eurodollar Advance shall continue as a Eurodollar Advance
until the end of its respective Eurodollar Interest Period, at which time such
Eurodollar Advance shall automatically be converted into a Floating Rate Advance
unless the Borrower shall have given the Agent a Continuation/Conversion Notice
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Advance be continued as a Eurodollar Advance for a new Eurodollar Interest
Period or converted into a Quoted Rate Advance. Each Quoted Rate Advance shall
continue as a Quoted Rate Advance until the end of its respective Quoted Rate
Interest Period, at which time such Quoted Rate Advance shall automatically be
converted into a Floating Rate Advance unless the Borrower shall have given the
Agent a Continuation/Conversion Notice requesting that, at the end of such
Quoted Rate Interest Period, such Quoted Rate Advance be continued as a Quoted
Rate Advance for a new Quoted Rate Interest Period or converted into a
Eurodollar Advance. Subject to the terms of SECTION 2.8, the Borrower may from
time to time elect to convert all or any part of any Floating Rate Advance into
a Eurodollar Advance or Quoted Rate Advance, to continue all or any part of any
Eurodollar Advance as a Eurodollar Advance for a new Eurodollar Interest Period,
to convert all or any part of any Eurodollar Advance into a Quoted Rate Advance,
to continue all or any part of any Quoted Rate Advance as a Quoted Rate Advance
for a new Quoted Rate Interest Period or to convert all or any part of any
Quoted Rate Advance into a
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Eurodollar Advance; PROVIDED, that any such continuation or conversion of an
existing Eurodollar Advance or Quoted Rate Advance shall be made on, and only
on, the last day of its respective Interest Period. The Borrower shall give the
Agent irrevocable notice (a "CONTINUATION/CONVERSION NOTICE") of each
continuation or conversion of an outstanding U.S. Dollar Advance as or into (a)
a Eurodollar Advance not later than 1:00 p.m. (Chicago time) at least two
Business Days prior to the date of or (b) not later than 11:30 a.m. (Chicago
time) on the date of the requested continuation or conversion, specifying:
(i) the requested date of such continuation or conversion, which
date shall be a Business Day;
(ii) the aggregate amount and Type of the U.S. Dollar Advance
which is to be continued or converted; and
(iii) the amount and Interest Period applicable to each Eurodollar
Advance or Quoted Rate Advance which such U.S. Dollar
Advance is to be continued as or converted into.
Notwithstanding anything to the contrary contained in this Section 2.13, (a) no
U.S. Dollar Advance may be converted into or continued as a Eurodollar Advance
at any time within 30 days of the Facility Termination Date, (b) no U.S. Dollar
Advance may be continued as or converted into a Quoted Rate Advance (I) at any
time on or after the Revolving Credit Termination Date and (II) unless the
Borrower and each Lender have agreed upon a Quoted Rate for the applicable
Quoted Rate Interest Period in accordance with the procedures set forth in
SECTION 2.10 applicable to new Quoted Rate Advances and (c) except with the
consent of the Required Lenders, no U.S. Dollar Advance may be continued as or
converted into a Eurodollar Advance or Quoted Rate Advance at any time when any
Default or Unmatured Default has occurred and is continuing.
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2.14. RESTRICTIONS ON INTEREST PERIODS. No Interest Period may extend
beyond a Payment Date on which principal of the Advances shall be payable unless
outstanding principal of Floating Rate Advances and Fixed Rate Advances with
Interest Periods ending prior to said Payment Date shall be at least equal to
the amount so payable. No Interest Period shall extend beyond the Facility
Termination Date. No more than 10 Interest Periods may be in effect at any one
time. No more than three Quoted Rate Interest Periods may be in effect at any
one time.
2.15. CHANGES IN INTEREST RATE, ETC. Changes in the rate of interest on
that portion of any Advance maintained as a Floating Rate Advance will take
effect simultaneously with each change in the Alternate Base Rate and each
change in the Applicable Margin applicable thereto. Each Fixed Rate Advance
shall bear interest from and including the first day of the Interest Period
applicable thereto to but excluding the last day of such Interest Period at the
interest rate determined as applicable to such Fixed Rate Advance, provided that
the rate of interest on each Eurodollar Advance will change simultaneously with
each change, during the applicable Eurodollar Interest Period, of the Applicable
Margin.
2.16. RATES APPLICABLE AFTER DEFAULT. During the continuance of a Default
the Required Lenders may, at their option, by notice to the Borrower (which
notice may be revoked at the option of the Required Lenders notwithstanding any
provision of SECTION 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that (i) each Fixed Rate Advance shall bear interest
for the remainder of the applicable Interest Period at the rate otherwise
applicable to such Interest Period plus 2% per annum and (ii) each Floating Rate
Advance shall bear interest at a rate per annum equal to the Floating Rate
otherwise applicable to the Floating Rate Advance plus 2% per annum.
2.17. METHOD OF PAYMENT. (a) All payments of principal, interest and fees
to be made by the Borrower hereunder or under the Notes in U.S. Dollars shall be
made, without setoff, deduction, or counterclaim, in immediately available funds
to the Agent at the Agent's address specified pursuant to ARTICLE XIII, or at
any other Lending Installation of the Agent specified in writing by the Agent to
the Borrower, by noon (local time) on the date when due and shall be applied
ratably by the Agent among the Lenders. Each payment delivered to the Agent for
the account of any Lender shall be delivered promptly by the Agent to such
Lender in the same type of funds which the Agent received at such Lender's
address specified pursuant to ARTICLE XIII or at any Lending Installation
specified in a notice received by the Agent from such Lender.
(b) Each Advance shall be repaid or prepaid in the currency in which it
was made in the amount borrowed and interest payable thereon shall be paid in
such currency. All payments to be made by the Borrower hereunder or under the
Notes in any Alternate Currency shall be made in such Alternate Currency on the
date due in such funds as may then be customary for the settlement of
international transactions in such Alternate Currency for the account of the
Agent, at its Lending Installation for such Alternate Currency. The Agent will
promptly cause such payments to be distributed to each Lender in like funds and
currency at such Lender's address specified pursuant to ARTICLE XIII or at any
Lending Installation specified in a notice received by the Agent from such
Lender. Notwithstanding the foregoing provisions of this Section, if, after the
making of any Advance in any Alternate Currency, currency control or exchange
regulations
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are imposed in the country which issues such Alternate Currency with the result
that different types of such Alternate Currency (the "New Currency") are
introduced and the type of Alternate Currency in which the Advance was made (the
"Original Currency") no longer exists or the Borrower is not able to make
payment to the Agent for the account of the Lenders in such Original Currency,
then all payments to be made by the Borrower hereunder or under the Notes in
such Alternate Currency shall be made in such amount and such type of the New
Currency as shall be equivalent to the amount of such payment otherwise due
hereunder or under the Notes in the Original Currency, it being the intention of
the Borrower and the Lenders that the Borrower take all risks of the imposition
of any such currency control or exchange regulations.
(c) On or before the time a principal payment is made on any of the
Advances, the Borrower shall inform the Agent as to the proportionate
application of such payment among the Floating Rate Advances, the Eurodollar
Advances, the Quoted Rate Advances and the Alternate Currency Advances. In the
absence of such instructions, the Agent shall apply such payment first to the
outstanding Floating Rate Advances and then apply any remainder to the
outstanding Eurodollar Advances, Quoted Rate Advances and Alternate Currency
Advances in whatever proportion it shall determine in its sole discretion;
PROVIDED, that as between Eurodollar Advances, as between Quoted Rate Advances
and as between Alternate Currency Advances of the same Alternate Currency, the
Agent shall endeavor to make such application (not otherwise disadvantageous to
the Agent or the Lenders) as will mitigate the Borrower's liability to the
Lenders under SECTION 3.4 as a consequence of such application.
2.18. FOREIGN TAXES. (a) All payments made by the Borrower in respect of
principal of and interest on the Advances and of all other amounts payable by it
under this Agreement are payable without deduction for or on account of any
present or future taxes, duties, withholdings or other charges levied or imposed
by the government of any jurisdiction outside the United States of America or by
any political subdivision or taxing authority thereof or therein (herein called
"FOREIGN TAXES"). If the Borrower shall be required by law to deduct or withhold
any Foreign Taxes from any such amount payable by it hereunder or under any of
the Notes to or for the account of any Lender, (i) such amount shall be
increased as may be necessary so that, after making such deductions or
withholdings (including any deductions or withholdings applicable to additional
amounts payable pursuant to this Section), such Lender receives an amount equal
to the amount it would have received had no such deductions or withholdings been
made and (ii) the Borrower shall make such deductions and withholdings and pay
the amount thereof to the relevant government, political subdivision or taxing
authority at or prior to the time required to be paid under applicable law (and
shall promptly furnish to the Agent, for the benefit of the Lenders, official
receipts evidencing such payment). In addition, the Borrower will pay any
present or future stamp or documentary taxes or similar taxes or levies imposed
by any government, political subdivision or taxing authority referred to in the
first sentence of this subsection arising from any payment by it hereunder or
under any of the Notes or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any of the Notes (herein called
"OTHER TAXES"). The Borrower will indemnify each Lender and the Agent for, and
hold each Lender and the Agent harmless against, the full amount of Foreign
Taxes or Other Taxes (including, without limitation, any Foreign Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid or
payable by such Lender or the Agent
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and any liability of such Lender or the Agent relating thereto (including,
without limitation, penalties, interest and expenses).
(b) If the cost to any Lender of making or maintaining any Loan to the
Borrower is increased, or the amount of any sum received or receivable by any
Lender (or its applicable Lending Installation) is reduced, by an amount deemed
by such Lender to be material, which increase or reduction (i) is due to any law
or any governmental or quasi-governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of any Lender therewith, and (ii) would not have
occurred but for the fact that the Borrower (or one or more of its Subsidiaries)
conducts business in a jurisdiction outside the United States of America, the
Borrower shall indemnify such Lender for such increased cost or reduction within
15 days after demand by such Lender (with a copy to the Agent).
(c) If, and to the extent that, any Lender shall actually receive a
credit against its United States federal income tax liability for any Foreign
Taxes or Other Taxes indemnified or paid by the Borrower pursuant to this
Section, such Lender agrees to promptly notify the Borrower thereof and make
reimbursement of such credit to the Borrower, provided that if such Lender
reasonably believes that such credit may be subject to challenge, then such
Lender shall thereupon enter into negotiations in good faith with the Borrower
to determine when reimbursement of such credit can be made to the Borrower.
(d) All tax receipts required to be delivered under this Section shall
be originals, duplicate originals or duly certified or authenticated copies
within the meaning of Treasury Regulation Section 1.905-2(a)(2).
2.19. JUDGMENT CURRENCY. If for the purposes of obtaining judgment in any
court it is necessary to convert a sum due from the Borrower hereunder or under
any of the Notes in the currency expressed to be payable herein or under the
Notes (the "SPECIFIED CURRENCY") into another currency, the parties hereto
agree, to the fullest extent that they may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Agent could purchase the specified currency with such other
currency at the Agent's main Chicago office on the Business Day preceding that
on which final, nonappealable judgment is given. The obligations of the Borrower
in respect of any sum due to any Lender or the Agent hereunder or under any Note
shall, notwithstanding any judgment in a currency other than the specified
currency, be discharged only to the extent that on the Business Day following
receipt by such Lender or the Agent (as the case may be) of any sum adjudged to
be so due in such other currency such Lender or the Agent (as the case may be)
may in accordance with normal, reasonable banking procedures purchase the
specified currency with such other currency. If the amount of the specified
currency so purchased is less than the sum originally due to such Lender or the
Agent (as the case may be), in the specified currency, the Borrower agrees, to
the fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent (as the
case may be) against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to such Lender or the Agent (as the
case may be) in the specified currency and (b)
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any amounts shared with other Lenders as a result of allocations of such excess
as a disproportionate payment to such Lender under SECTION 11.2, such Lender or
the Agent (as the case may be) agrees to remit such excess to the Borrower.
2.20. NOTES; TELEPHONIC NOTICES. Each Lender shall, and is hereby
authorized to, record the principal amount of each of its Loans and each
repayment on the schedule attached to its Note (or to otherwise record the same
in its usual practice) provided, however, that the failure to so record shall
not affect the Borrower's obligations in respect of such Loans. The Borrower
hereby authorizes the Lenders and the Agent to extend, convert or continue U.S.
Dollar Advances (it being understood and agreed that Alternate Currency
Borrowing Requests must be in writing or by facsimile) and to transfer funds
based on telephonic notices made by any person or persons the Agent or any
Lender in good faith believes to be acting on behalf of the Borrower. The
Borrower agrees to deliver promptly to the Agent a written confirmation, if such
confirmation is requested by the Agent or any Lender, of each telephonic notice
signed by an Authorized Officer. If the written confirmation differs in any
material respect from the action taken by the Agent and the Lenders, the records
of the Agent and the Lenders shall govern absent manifest error.
Upon receipt of its Note, each Lender will: (i) record the aggregate unpaid
principal amount of the note dated September 9, 1996 (the "Original Note")
issued under the Original Agreement in its records or, at its option, on the
schedule attached to the Note as the aggregate unpaid principal amount of the
Note; (ii) mark the Original Note as replaced by the Note; and (iii) promptly
return the Original Note to the Borrower. Thereafter, all references in this
Agreement and any and all instruments or documents provided for herein or
delivered or to be delivered hereunder or in connection herewith to the Original
Note shall be deemed references to the Note. The replacement of the Original
Note with the Note shall not be construed to deem paid or forgiven the unpaid
principal amount of, or unpaid accrued interest on, the Original Note
outstanding at the time of replacement.
2.21. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS. Interest accrued on
each Floating Rate Advance shall be payable on each Payment Date, commencing
with the first such date to occur after the date hereof, on any date on which
the Floating Rate Advance is prepaid, whether due to acceleration or otherwise,
and at maturity. Interest accrued on that portion of the outstanding principal
amount of any Floating Rate Advance converted into a Eurodollar Advance or
Quoted Rate Advance on a day other than a Payment Date shall be payable on the
date of conversion. Interest accrued on each Fixed Rate Advance shall be payable
on the last day of its applicable Interest Period, on any date on which the
Fixed Rate Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Fixed Rate Advance having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest and fees shall be
calculated for actual days elapsed on the basis of a 360-day year. Interest
shall be payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local time) at
the place of payment. If any payment of principal of or interest on an Advance
shall become due on a day which is not a Business Day, such payment shall be
made on the next
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succeeding Business Day and, in the case of a principal payment, such extension
of time shall be included in computing interest in connection with such payment.
2.22. NOTIFICATION OF ADVANCES, INTEREST RATES, PREPAYMENTS AND
COMMITMENT REDUCTIONS. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Alternate Currency Borrowing Request, Continuation/Conversion
Notice and repayment notice received by it hereunder. The Agent will notify each
Lender of the interest rate applicable to each Eurodollar Advance promptly upon
determination of such interest rate and will give each Lender prompt notice of
each change in the Alternate Reference Rate.
2.23. LENDING INSTALLATIONS. Each Lender may book its Loans at any one or
more Lending Installations selected by such Lender and may change its Lending
Installation(s) from time to time. All terms of this Agreement shall apply to
any such Lending Installation and the Notes shall be deemed held by each Lender
for the benefit of such Lending Installation(s). Each Lender may from time to
time, by written or facsimile notice to the Agent and the Borrower, designate a
new Lending Installation through which Loans (or Loans in a particular currency)
will be made by it and for whose account Loan payments (or Loan payments in a
particular currency) are to be made. The Agent may from time to time, by written
or facsimile notice to the Borrower and each Lender, designate a new Lending
Installation at which Advances (or Advances in a particular currency) will be
made available to the Borrower and at which payments on the Advances (or
payments on Advances in a particular currency) are to be made by the Borrower.
2.24. NON-RECEIPT OF FUNDS BY THE AGENT. Unless the Borrower or a Lender,
as the case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent of (i) in the case of a Lender, the
proceeds of a Loan or (ii) in the case of the Borrower, a payment of principal,
interest or fees to the Agent for the account of the Lenders, that it does not
intend to make such payment, the Agent may assume that such payment has been
made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day or (ii) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.
2.25. WITHHOLDING TAX EXEMPTION. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224, certifying in either case that such Lender is
entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Lender
which so delivers a Form
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1001 or 4224 further undertakes to deliver to each of the Borrower and the Agent
two additional copies of such form (or a successor form) on or before the date
that such form expires (currently, three successive calendar years for Form 1001
and one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case certifying that such Lender
is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax.
ARTICLE III
CHANGE IN CIRCUMSTANCES
3.1. YIELD PROTECTION. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law), or any interpretation thereof, or the compliance
of any Lender therewith,
(i) subjects any Lender or any applicable Lending Installation
to any tax, duty, charge or withholding on or from payments due from the
Borrower (excluding federal taxation of the overall net income of any
Lender or applicable Lending Installation), or changes the basis of
taxation of payments to any Lender in respect of its Loans or other amounts
due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation (other than reserves
and assessments taken into account in determining the interest rate
applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining loans or reduce any amount receivable by any
Lender or any applicable Lending Installation in connection with loans, or
requires any Lender or any applicable Lending Installation to make any
payment calculated by reference to the amount of loans held or interest
received by it, by an amount deemed material by such Lender,
then, within 15 days of demand by such Lender, the Borrower shall pay such
Lender that portion of such increased expense incurred or reduction in an amount
received which such Lender determines is attributable to making, funding and
maintaining its Loans and its Commitment.
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3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change (as defined below), then, within 15 days of
demand by such Lender, the Borrower shall pay such Lender the amount necessary
to compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its obligation to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "CHANGE" means (i)
any change after the date of this Agreement in the Risk-Based Capital Guidelines
(as defined below) or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "RISK-BASED CAPITAL GUIDELINES" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.
3.3. AVAILABILITY OF EURODOLLAR ADVANCES. If (i) any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, (ii) the Required Lenders determine that deposits of a
type and maturity appropriate to match fund Eurodollar Advances are not
available or (iii) the Required Lenders determine that the interest rate
applicable to a Eurodollar Advance does not accurately reflect the cost of
making or maintaining such Eurodollar Advance, then the Agent shall suspend the
availability of any new Eurodollar Advances (whether pursuant to SECTION 2.10 or
2.13).
3.4. FUNDING INDEMNIFICATION. If any payment of a Fixed Rate Advance
occurs on a date prior to the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Fixed Rate
Advance is not made on the date specified by the Borrower in its Borrowing
Notice, Alternate Currency Borrowing Request or Continuation/Conversion Notice,
as the case may be, as a consequence of any condition precedent to such Advance
under SECTION 2.1 or ARTICLE IV not being satisfied or as a consequence of any
failure by the Borrower to borrow such Advance when the same has been made
available to it pursuant to SECTION 2.12, the Borrower will indemnify each
Lender for any loss or cost in liquidating or employing deposits acquired to
fund or maintain the Fixed Rate Advance and, provided that such Lender has taken
such reasonable action, if any, not disadvantageous to it, to mitigate the same,
any other loss or cost incurred by such Lender resulting therefrom.
3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Fixed Rate Loans to reduce any liability of the Borrower to such
Lender under SECTIONS 2.18, 3.1 and 3.2 or to
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avoid the unavailability of Eurodollar Advances under SECTION 3.3, so long as
such designation is not disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender as to the amount due, if any, under
SECTION 2.18, 3.1, 3.2 or 3.4. Such written statement shall set forth in
reasonable detail (and in accordance with Agreement Accounting Principles, where
applicable) the calculations upon which such Lender determined such amount and
shall be final, conclusive and binding on the Borrower in the absence of
manifest error. Determination of amounts payable under such Sections in
connection with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Eurodollar Loan, whether in fact that is the
case or not. Unless otherwise provided herein, the amount specified in the
written statement shall be payable on demand after receipt by the Borrower of
the written statement. The obligations of the Borrower under SECTIONS 2.18, 3.1,
3.2 and 3.4 shall survive payment of the obligations and termination of this
Agreement.
3.6. REFUND TO BORROWER. If, and to the extent that, any Lender shall
actually receive a credit against its United States federal income tax liability
or otherwise receive any rebate or refund from any government or governmental
agency in respect of any amount paid by the Borrower pursuant to SECTION 3.1 or
3.2, such Lender agrees to promptly notify the Borrower thereof and make
reimbursement of credit, rebate or refund to the Borrower, provided that if such
Lender reasonably believes that such credit, rebate or refund may be subject to
challenge, then such Lender shall thereupon enter into negotiations in good
faith with the Borrower to determine when reimbursement of such credit, rebate
or refund can be made to the Borrower.
ARTICLE IV
CONDITIONS PRECEDENT
4.1. CONDITIONS PRECEDENT TO THE RESTATEMENT EFFECTIVE DATE. This
Agreement shall become effective on the date (the "Restatement Effective Date")
on which the Borrower shall have furnished to the Agent, with sufficient copies
for the Lenders:
(i) Copies, certified by the Secretary or Assistant Secretary of the
Borrower, of its Board of Directors' resolutions (and resolutions
of other bodies, if any are deemed necessary by counsel for any
Lender) authorizing the execution of the Loan Documents.
(ii) An incumbency certificate, executed by the Secretary or Assistant
Secretary of the Borrower, which shall identify by name and title
and bear the signature of the officers of the Borrower authorized
to sign the Loan Documents and to make borrowings hereunder, upon
which certificate the Lenders shall be entitled to rely until
informed of any change in writing by the Borrower.
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(iii) A certificate, signed by the chief financial officer of the
Borrower stating that on the Restatement Effective Date no Default
or Unmatured Default has occurred and is continuing.
(iv) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of EXHIBIT "E" hereto.
(v) Note payable to the order of each of the Lenders.
(vi) Such other documents as any Lender or its counsel may have
reasonably requested.
4.2. EACH ADVANCE. The Lenders shall not be required to make any
Advance, unless on the applicable Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in ARTICLE V are true
and correct as of such Borrowing Date except for changes in the
Schedules hereto reflecting transactions permitted by this
Agreement.
(iii) If such Advance is a U.S. Dollar Advance, the Agent shall have
received a duly completed Borrowing Notice from the Borrower
pursuant to SECTION 2.10 and, in the case of any Quoted Rate
Advance, such Borrowing Notice shall have been accepted by the
Lenders pursuant to SECTION 2.10.
(iv) If such Advance is an Alternate Currency Advance, the Agent shall
have received a duly completed Alternate Currency Borrowing Request
from the Borrower pursuant to SECTION 2.11, and such Alternate
Currency Borrowing Request shall have been agreed to in writing by
each of the Lenders pursuant to SECTION 2.11.
(v) All legal matters incident to the making of such Advance shall be
in accordance with this Agreement in the reasonable judgment of the
Lenders and their counsel.
Each Borrowing Notice or Alternate Currency Borrowing Request with respect
to each such Advance shall constitute a representation and warranty by the
Borrower that the conditions contained in paragraphs (i) and (ii) above and have
been satisfied. Any Lender may require a duly completed compliance certificate
in substantially the form of EXHIBIT "G" hereto as a condition to making an
Advance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
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5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and its
Subsidiaries is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted.
5.2. AUTHORIZATION AND VALIDITY. The Borrower has the corporate power
and authority and legal right to execute and deliver the Loan Documents and to
perform its obligations thereunder. The execution and delivery by the Borrower
of the Loan Documents and the performance of its obligations thereunder have
been duly authorized by proper corporate proceedings, and the Loan Documents
constitute legal, valid and binding obligations of the Borrower enforceable
against the Borrower in accordance with their terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors, rights generally.
5.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and delivery
by the Borrower of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Borrower or any of its Subsidiaries or the Borrower's or any
Subsidiary's articles of incorporation or by-laws or the provisions of any
indenture, instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its property, is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien in, of or on the property of the Borrower or
a Subsidiary pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, approval, license, authorization, or validation
of, or filing, recording or registration with, or exemption by, any governmental
or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
5.4. FINANCIAL STATEMENTS. The May 31, 1997 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.
5.5. MATERIAL ADVERSE CHANGE. Since May 31, 1997, there has been no
change in the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Borrower and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
5.6. TAXES. The Borrower and its Subsidiaries have filed all United
States federal tax returns and all other tax returns which are required to be
filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except for the
filing of such returns and the payment of such taxes, if any, as (a) are
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being contested in good faith and as to which adequate reserves have been
provided or (b) do not in the aggregate exceed $4,000,000 and the failure to
file or pay for which could not reasonably be expected to have a Material
Adverse Effect. As of the date hereof, the United States income tax returns of
the Borrower and its Subsidiaries have been audited by the Internal Revenue
Service through the fiscal year ended 1992. No tax liens have been filed other
than those permitted pursuant to SECTION 6.16(a). The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.
5.7. LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth in the
Borrower's Form 10-K filed with the Securities and Exchange Commission for its
fiscal year ended May 31, 1997, there is no litigation, arbitration,
governmental investigation, proceeding or inquiry pending or, to the knowledge
of any of their officers, threatened against or affecting the Borrower or any of
its Subsidiaries which could reasonably be expected to have a Material Adverse
Effect. Other than any liability incident to such litigation, arbitration or
proceedings, the Borrower has no material contingent obligations not provided
for or disclosed in the Borrower's Form 10-K filed with the Securities and
Exchange Commission for its fiscal year ended May 31, 1997.
5.8. SUBSIDIARIES. As of the date hereof, Borrower's Form 10-K filed
with the Securities and Exchange Commission for its fiscal year ended May 31,
1997 contains an accurate description of all of the Borrower's presently
existing Significant Subsidiaries (as defined in Regulation S-X of the
Securities and Exchange Commission). All of the issued and outstanding shares of
capital stock of all of the Borrower's Subsidiaries have been duly authorized
and issued and are fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not
in the aggregate exceed $10,000,000. Neither the Borrower nor any other member
of the Controlled Group has incurred, or is reasonably expected to incur any
withdrawal liability to Multiemployer Plans in an aggregate amount which, when
added to the aggregate Unfunded Liabilities of all Single Employer Plans, would
exceed of $10,000,000. Each Plan complies in all material respects with all
applicable requirements of law and regulations and no Reportable Event has
occurred with respect to any Plan. Neither the Borrower nor any other member of
the Controlled Group has withdrawn from any Plan or initiated steps to do so,
and no steps have been taken to reorganize or terminate any Plan.
5.10. ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or any Lender
in connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not misleading.
5.11. REGULATION U. Margin stock (as defined in Regulation U) constitutes
less than 25% of those assets of the Borrower and its Subsidiaries which are
subject to any limitation on sale, pledge, or other restriction hereunder.
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5.12. COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries have
complied in all respects with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof, having jurisdiction over the conduct of their
respective businesses or the ownership of their respective properties, except
where failure to comply would not reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary has received any notice
to the effect that its operations are not in material compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations or the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to a
release of any toxic or hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have a
Material Adverse Effect.
5.13. INVESTMENT COMPANY ACT. Neither the Borrower nor any Subsidiary
thereof is an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
5.14. YEAR 2000 COMPLIANCE. The Borrower has conducted a comprehensive
review and assessment of its computer applications and is in the process of
making inquiry of its material suppliers, vendors and customers with respect to
the Year 2000 Issue (as such term is defined below). Based on the foregoing
review, the Borrower reasonably believes that the Year 2000 Issue, as it relates
to the Borrower's computer applications, will not result in a Material Adverse
Effect. "Year 2000 Issue" means, with respect to any Person, the ability or
inability of all computer applications material to such Person's business and
operations properly to perform date-sensitive functions for all dates before and
after January 1, 2000. The Borrower is unable to determine the ultimate impact,
if any, on the Borrower's operations resulting from the Year 2000 Issue relating
to material suppliers, vendors and customers.
ARTICLE VI
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself and
each Subsidiary, a system of accounting established and administered in
accordance with generally accepted accounting principles and furnish to the
Lenders:
(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants, acceptable to the Lenders, prepared in accordance with
generally accepted accounting principles on a consolidated basis
for itself and the Subsidiaries, including balance sheets as of the
end of such period, related profit and loss and reconciliation of
surplus statements, and a statement of cash flows, accompanied by
(a) any management letter prepared by said accountants, at the
request of the Lenders, and (b) a
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certificate of said accountants that, in the course of their
examination necessary for their certification of the foregoing,
they have obtained no knowledge of any Default or Unmatured
Default, or if, in the opinion of such accountants, any Default or
Unmatured Default shall exist, stating the nature and status
thereof.
(ii) At the request of the Lenders, within 90 days after the close of
each fiscal year of the Borrower, for each active Subsidiary, an
unaudited balance sheet as at the close of such fiscal year and an
unaudited profit and loss statement for such fiscal year, all
certified by the Borrower's chief financial officer or Treasurer.
(iii) Within 60 days after the close of the first three quarterly periods
of each of its fiscal years, for itself and the Subsidiaries,
consolidated unaudited balance sheets as at the close of each such
period and consolidated profit and loss and reconciliation of
surplus statements and a statement of cash flows for the period
from the beginning of such fiscal year to the end of such quarter,
all certified by the Borrower's chief financial officer or
Treasurer.
(iv) At the request of the Lenders, within 60 days after the close of
the first three quarterly periods of each of its fiscal years, for
each active Subsidiary, an unaudited balance sheet as at the close
of each such period and an unaudited profit and loss statement for
the period from the beginning of such fiscal year to the end of
such quarter, all certified by the Borrower's chief financial
officer or Treasurer.
(v) Together with the financial statements required hereunder, a
compliance certificate in substantially the form of EXHIBIT "G"
hereto signed by the Borrower's chief financial officer or
Treasurer showing the calculations necessary to determine
compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
(vi) Within 270 days after the close of each fiscal year, a statement of
the Unfunded Liabilities of each Single Employer Plan, certified as
correct by an actuary enrolled under ERISA, except that the
Borrower shall not be required to deliver such statement for any
such fiscal year to the extent that such information is
specifically set forth in the audit report for such fiscal year
delivered to the Agent pursuant to CLAUSE (i) of this Section 6.1.
(vii) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect
to any Plan, a statement, signed by the chief financial officer or
Treasurer of the Borrower, describing said Reportable Event and the
action which the Borrower proposes to take with respect thereto.
(viii) As soon as possible and in any event within 10 days after receipt
by the Borrower, a copy of (a) any notice or claim to the effect
that the Borrower or any of its
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Subsidiaries is or may be liable to any Person as a result of the
release by the Borrower, any of its Subsidiaries, or any other
Person of any toxic or hazardous waste or substance into the
environment, and (b) any notice alleging any violation of any
federal, state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries which, in the
case of either clause (a) or clause (b), could reasonably be
expected to have a Material Adverse Effect.
(ix) Promptly upon the furnishing thereof to the shareholders of the
Borrower, copies of all financial statements, reports and proxy
statements so furnished.
(x) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports
which the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission.
(xi) Such other information (including non-financial information) as the
Agent or any Lender may from time to time reasonably request.
6.2. USE OF PROCEEDS. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances for the general corporate needs of the
Borrower and its Subsidiaries and to repay outstanding Advances. The Borrower
will not, nor will it permit any Subsidiary to, use any of the proceeds of the
Advances to (i) purchase or carry any "margin stock" (as defined in Regulation
U), (ii) acquire any security in any transaction which is subject to Sections 13
and 14 of the Securities Exchange Act of 1934 or (iii) make any unfriendly
Acquisition.
6.3. NOTICE OF DEFAULT. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lenders of (i) the
occurrence of any Default or Unmatured Default and of any other development,
financial or otherwise, which would have a Material Adverse Effect, or (ii) any
threatened or pending litigation or governmental proceeding or labor controversy
against the Borrower or any Subsidiary which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the same
manner and in substantially the same fields of enterprise as it is presently
conducted and to do all things necessary to remain duly incorporated, validly
existing and in good standing as a domestic or foreign corporation, as the case
may be, in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted; PROVIDED, that nothing contained in this Section 6.4 shall prohibit
(a) any Subsidiary from entering into a merger or consolidation otherwise
permitted by SECTION 6.11 or (b) the liquidation of any Subsidiary substantially
all of whose assets have been transferred to the Borrower or another Subsidiary
in compliance with SECTION 6.12.
6.5. TAXES. The Borrower will, and will cause each Subsidiary to, pay
when due all taxes, assessments and governmental charges and levies upon it or
its income, profits or property, except those which (a) are being contested in
good faith and as to which adequate
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reserves have been provided or (b) do not in the aggregate exceed $4,000,000 and
the failure to pay which could not reasonably be expected to have a Material
Adverse Effect.
6.6. INSURANCE. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.
6.7. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Subsidiary to, comply in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject.
6.8. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its properties in good repair, working order and condition, and make all
necessary and proper repairs, renewals and replacements so that its business
carried on in connection therewith may be properly conducted at all times.
6.9. INSPECTION. The Borrower will, and will cause each Subsidiary to,
permit the Lenders, by their respective representatives and agents, to inspect
any of the properties, corporate books and financial records of the Borrower and
each Subsidiary, to examine and make copies of the books of accounts and other
financial records of the Borrower and each Subsidiary, and to discuss the
affairs, finances and accounts of the Borrower and each Subsidiary with, and to
be advised as to the same by, their respective officers at such reasonable times
and intervals as the Lenders may designate.
6.10. RESTRICTED PAYMENTS. The Borrower will not, nor will it permit any
Subsidiary to, declare or make any Restricted Payments, which together with all
Restricted Payments made on or after May 31, 1995 would exceed an amount equal
to the sum of (i) $20,000,000 plus (ii) 50% of Consolidated Net Income for the
period commencing June 1, 1994 and extending to and including the last day of
the fiscal year of the Borrower immediately preceding the date on which such
Restricted Payment was made, said period to be taken as one accounting period,
except that:
(a) The Borrower may declare and pay dividends payable solely in
stock of the Borrower of the same class as that on which such dividend is
paid.
(b) The Borrower may purchase, redeem or otherwise acquire or
retire any class of its stock out of the proceeds of, or in exchange for, a
substantially concurrent issue and sale of the same class of such stock in
addition to that now issued and outstanding.
(c) Any Subsidiary may declare and pay dividends to the
Borrower.
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6.11. MERGER. The Borrower will not, nor will it permit any Subsidiary
to, merge or consolidate with or into any other Person, except that:
(a) Any Domestic Subsidiary may merge or consolidate with the
Borrower (providing the Borrower shall be the continuing or surviving
corporation).
(b) Any Domestic Subsidiary may merge or consolidate with any
other Domestic Subsidiary which is a Wholly-Owned Subsidiary.
(c) Any Foreign Subsidiary may merge or consolidate with any
other Subsidiary which is a Wholly-Owned Subsidiary (provided that if a
Domestic Subsidiary is involved, such Domestic Subsidiary shall be the
continuing or surviving corporation).
6.12. SALE OF ASSETS. The Borrower will not, nor will it permit any
Subsidiary to, sell, lease, transfer, assign or otherwise dispose of (including,
for the avoidance of doubt, in connection with a sale leaseback transaction),
any of its assets (including, for the avoidance of doubt, the capital stock of
Subsidiaries, but excluding (i) inventory sold in the ordinary course of the
Borrower's or any Subsidiary's business, (ii) property formerly used in the
Borrower's or any Subsidiary's business which is worn out or obsolete, (iii)
assets of any Domestic Subsidiary transferred to the Borrower or to another
Domestic Subsidiary which is a Wholly-Owned Subsidiary, (iv) assets of any
Foreign Subsidiary transferred to the Borrower or to another Subsidiary which is
a Wholly-Owned Subsidiary, (v) assets permitted to be sold or otherwise
transferred pursuant to SECTION 6.13 and (vi) promissory notes ("PAYMENT NOTES")
received as partial or full payment for assets sold) if, after giving effect
thereto, the sum of all such assets transferred, assigned or otherwise disposed
of during the twelve-month period ending with (and including) the month of such
disposition either (a) represents more than 10% of Consolidated Assets
determined as of the date of (and after giving effect to) such disposition or
(b) were responsible for more than 10% of the consolidated net sales or of the
consolidated net income of the Borrower and its Subsidiaries during such
twelve-month period.
6.13. SALE OF ACCOUNTS. Anything in SECTION 6.12 to the contrary
notwithstanding, the Borrower will not, nor will it permit any Subsidiary to,
sell, with or without recourse, transfer, assign, encumber or otherwise dispose
of any of its notes or accounts receivable, leases or chattel paper
(collectively referred to in this Section as "ACCOUNTS") to any Person, except
that:
(a) The Borrower or any Subsidiary may sell or otherwise dispose
of any of its Accounts to the Borrower or any Subsidiary on terms and
conditions which are in compliance with SECTION 6.19.
(b) The Borrower or any Subsidiary may enter into any
arrangement with another Person pursuant to which such Person collects the
Accounts of the Borrower or such Subsidiary on behalf of the Borrower or
such Subsidiary, so long as such arrangement does not provide for any
transfer of title to, or any other interest in, such Accounts to such
Person.
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(c) The Borrower or any Subsidiary may sell or otherwise dispose
of its Foreign Accounts to any Person for the purposes of collection,
provided that the aggregate face amount of all such Foreign Accounts so
transferred by the Borrower and its Subsidiaries during any fiscal year of
the Borrower shall not exceed an amount equal to 20% of the gross Accounts
of the Borrower and its Subsidiaries as of the last day of the Borrower's
immediately preceding fiscal year and determined from the Borrower's
consolidated balance sheet delivered pursuant to SECTION 6.1(i).
(d) The Borrower or any Subsidiary may sell or otherwise dispose
of its Accounts which arise from the sale of machinery and equipment and
have payment terms longer than 90 days and payable in installments.
(e) The Borrower or any Subsidiary may sell or otherwise dispose
of Payment Notes as permitted under SECTION 6.12.
(f) The Borrower or any Subsidiary may sell or otherwise dispose
of its interest in notes or accounts receivable on a limited recourse
basis, provided that such transfer qualifies as a sale under Agreement
Accounting Principles and that the amount of such financing does not exceed
$50,000,000 at any one time outstanding (the "Receivables Securitization").
6.14. INVESTMENTS AND ACQUISITIONS. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:
(a) Short-term obligations of, or fully guaranteed by, the
United States of America.
(b) Commercial paper rated A-1 or better by Standard and Poor's
Ratings Services, a division of the McGraw Hill Companies, Inc. or P-1 or
better by Moody's Investors Service, Inc.
(c) Demand deposit accounts maintained in the ordinary course of
business.
(d) Certificates of deposit issued by and time deposits with
commercial banks (whether domestic or foreign) having capital and surplus
in excess of $100,000,000.
(e) Existing Investments in Subsidiaries and other Investments
in existence on the date hereof and described in SCHEDULE "1" hereto.
(f) Loans by the Borrower to its Domestic Subsidiaries.
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(g) Equity Investments by AAR Financial Services Corp. in
leveraged leases of aircraft, aircraft engines and related products.
(h) Loans by the Borrower and its Subsidiaries to their
respective officers and key employees in an aggregate amount not to exceed
$4,000,000 at any one time outstanding.
(i) Investments in any institutional money market fund (i) rated
A-1 or better by Standard and Poor's Ratings Services, a division of the
McGraw Hill Companies, Inc., (ii) rated P-1 or better by Moody's Investors
Service, Inc. or (iii) that invests in High Quality Money Market
Instruments. For purposes of this Agreement, "High Quality Money Market
Instruments" are (i) U.S. dollar-denominated instruments that have a
remaining maturity of 397 days or less and (ii) issued by an issuer that is
rated in one of the two highest rating categories for short-term debt by
any two nationally recognized statistical rating organizations ("NRSROs")
or, if only one NRSRO has issued a rating, by that NRSRO, or if unrated,
the investment advisor determines the issuer is of comparable quality.
(j) Investments evidenced by Payment Notes.
(k) Any Acquisition that after giving effect thereto does not
cause the sum of (i) Consolidated Funded Debt plus (ii) the aggregate
amount of Contingent Obligations of the Borrower and its Subsidiaries to
exceed 55% of Consolidated Total Capitalization.
(l) Investments (including without limitation Investments in
funds (insured or uninsured) managed by banks federally chartered by the
United States of America and having stockholders' equity in excess of
$150,000,000) in addition to those permitted under clauses (a) through (k)
of this Section, PROVIDED that after giving effect thereto the aggregate
amount of all such Investments for the Borrower and all Subsidiaries during
the term of this Agreement shall not exceed the greater of (i) $6,000,000
or (ii) 20% of Consolidated Tangible Net Worth as of the last day of the
Borrower's fiscal year immediately preceding the date on which any such
Investment is made.
In determining the amount of Investments permitted under this Section,
Investments shall always be taken at the original cost thereof, regardless of
any subsequent appreciation or depreciation therein, and loans and advances
shall be taken at the principal amount thereof then remaining unpaid from time
to time.
6.15. LIENS. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the property of the
Borrower or any of its Subsidiaries, except:
(a) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith and by appropriate proceedings and for
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which adequate reserves in accordance with Agreement Accounting Principles
shall have been set aside on its books.
(b) Deposits or pledges to secure performance of bids, tenders,
contracts (other than contracts for the repayment of Indebtedness), leases,
public or statutory obligations, surety or appeal bonds, or other deposits
or pledges for purposes of like general nature in the ordinary course of
the Borrower's business or any Subsidiary's business.
(c) Liens incurred by the Borrower or any Subsidiary in
connection with the acquisition of property provided such Liens shall
attach only to the property acquired in the transactions in which such
Liens were created or assumed and shall secure only Indebtedness incurred
to finance the cost of acquiring such property.
(d) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.
(e) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due
or which are being contested in good faith by appropriate proceedings and
for which adequate reserves shall have been set aside on its books.
(f) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of the same or interfere with
the use thereof in the business of the Borrower or the Subsidiaries.
(g) Liens existing on the date hereof and described in
SCHEDULE "2" hereto.
(h) Liens which secure only Indebtedness of any Domestic
Subsidiary to the Borrower.
(i) Subject to SECTION 6.14(c), Liens on property the purchase
of which is being financed by the Borrower or any Domestic Subsidiary, as
the case may be, by Letters of Credit issued for the account of the
Borrower or any Domestic Subsidiary, as the case may be, provided such
Liens secure only the Letter of Credit which is being used to finance the
purchase of such property and provided further such Liens attach only to
such property.
(j) Liens incurred by the Borrower in connection with the real
estate located in Wood Dale, Illinois, known as the Corporate Headquarters
of the Borrower.
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(k) Liens incurred by the Borrower and its Subsidiaries in
connection with the Receivables Securitization.
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6.16. RENTALS. The Borrower will not, nor will it permit any Subsidiary
to, create, incur or suffer to exist any obligation for Rentals if, as a
consequence thereof, obligations for Rentals created, incurred or suffered to
exist in any one fiscal year shall be in an aggregate consolidated amount for
the Borrower and its Subsidiaries in excess of 5% of Consolidated Revenues (as
defined below) as at the end of the Borrower's fiscal year immediately preceding
the date on which such obligation is entered into, on a non-cumulative basis
from year to year. It is expressly agreed and understood that, for the purposes
of this Section, any contract between the Borrower or any Domestic Subsidiary
and the vendor of aircraft fuel shall not be considered a lease and any payments
made under any such contract by the Borrower or any Domestic Subsidiary to such
vendor shall not be considered a lease payment. "CONSOLIDATED REVENUES" shall
mean the amount of "net revenues" as shown on the Borrower's consolidated income
statement.
6.17. RETIREMENT AND MODIFICATION OF SUBORDINATED INDEBTEDNESS. The
Borrower will not, nor will it permit any Subsidiary to, purchase, acquire,
redeem or retire, or make any payment on account of principal of, any
Subordinated Debt except at the stated maturity thereof or as required by
mandatory prepayment provisions or sinking fund provisions relating thereto. The
Borrower will not, nor will it permit any Subsidiary to, alter, amend, modify,
rescind, terminate or waive, or permit any breach or event of default to exist
under, any note or notes evidencing such Subordinated Debt.
6.18. AFFILIATES. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction. The transactions entered into in connection
with the Receivables Securitization shall be deemed to be arms-length
transactions.
6.19. WORKING CAPITAL. The Borrower will maintain at all times a ratio of
Consolidated Current Assets to Consolidated Current Liabilities of at least 1.50
to 1.00.
6.20. CONSOLIDATED NET WORTH. The Borrower will maintain at all times
Consolidated Net Worth in an amount not less than the sum of (a) $260,000,000
PLUS (b) the net cash proceeds received by the Borrower from the sale of any of
its capital stock on or after May 31, 1998 PLUS (c) an amount equal to the
aggregate of one-third of Consolidated Net Income earned during each of its
fiscal years beginning with its fiscal year commencing June 1, 1998, said fiscal
years to be taken as one accounting period MINUS (d) amounts (not to exceed
$10,000,000 in the aggregate for the purposes of this covenant) either used for
the purchase or retirement of the Borrower's capital stock or representing the
after-tax write-down of assets and associated costs on or after May 31, 1998.
6.21. CONSOLIDATED SECURED LIABILITIES. The Borrower will maintain at all
times Consolidated Secured Liabilities in an amount not in excess of
$20,000,000. For purposes of
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calculating Consolidated Secured Liabilities hereunder the obligations of the
Borrower not in excess of $10,000,000, secured by the real estate located in
Wood Dale, Illinois, known as the Corporate Headquarters of the Borrower, shall
not be included.
6.22. LIMITATION ON CONSOLIDATED FUNDED DEBT. The Borrower will not
permit the sum of (i) Consolidated Funded Debt plus (ii) the aggregate amount of
Contingent Obligations of the Borrower and its Subsidiaries to exceed 60% of
Consolidated Total Capitalization.
6.23. FIXED CHARGE COVERAGE RATIO. The Borrower will maintain a Fixed
Charge Coverage Ratio of not less than 1.20:1:00 as of the last day of each
fiscal quarter of the Borrower commencing on the date immediately preceding the
Revolving Credit Termination Date and thereafter. The Fixed Charge Coverage
Ratio shall be determined based on four of the previous five fiscal quarters of
the Borrower that occurred immediately prior to the calculation date, at the
Borrower's option.
As used herein the following terms have the following meanings:
"FIXED CHARGE COVERAGE RATIO" means, for any period, the ratio of (a)
Consolidated Earnings Available for Fixed Charges to (b) Consolidated Fixed
Charges for such period.
"CONSOLIDATED EARNINGS AVAILABLE FOR FIXED CHARGES" means, for any period,
the sum of (i) Consolidated Net Income (excluding gains and losses from the sale
of assets other than in the ordinary course of business and income or losses
derived from discontinued operations), PLUS to the extent deducted in
determining Consolidated Net Income (ii) all provisions for any federal, state,
or other income taxes made by the Borrower and its Subsidiaries during such
period, PLUS (iii) Consolidated Fixed Charges during such period, and PLUS (v)
deferred financing costs for such period.
"CONSOLIDATED FIXED CHARGES" means, without duplication, for any period,
the sum of (i) current maturities for such period, (ii) interest expense on
indebtedness (excluding capitalized leases) for such period, PLUS (iii) total
rental expense under all leases other than capitalized leases, and PLUS (iv)
imputed interest expense under capitalized leases for the Borrower and its
Subsidiaries for such period.
6.24. FIRST CHICAGO AGREEMENT. The Borrower will give the Lenders a copy
of each amendment, supplement or other modification of the First Chicago
Agreement within thirty (30) days, following execution thereof.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
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7.1. Any representation or warranty made (or deemed made pursuant to
SECTION 4.2) by or on behalf of the Borrower or any of its Subsidiaries to the
Lenders or the Agent under or in connection with this Agreement, any Loan or any
certificate or information delivered in connection with this Agreement or any
other Loan Document shall be materially false on the date as of which made.
7.2. Nonpayment of principal of any Note when due or nonpayment of
interest upon any Note or of any fees or other obligations under any of the Loan
Documents within five Business Days after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions of
SECTION 6.2, 6.3, 6.10 or 6.18; or the breach by the Borrower of any of the
terms or provisions of SECTION 6.11, 6.12, 6.13, 6.14, 6.15, 6.16, 6.17, or 6.19
which is not remedied within 10 days after written notice from the Agent or any
Lender.
7.4. The breach by the Borrower (other than a breach which constitutes a
Default under SECTION 7.1, 7.2 or 7.3) of any of the terms or provisions of this
Agreement which is not remedied within 30 days after written notice from the
Agent or any Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay any
Indebtedness (other than the Obligations), including, without limitation, with
respect to the Receivables Securitization, in an aggregate principal amount
exceeding $2,000,000 when due; or the default by the Borrower or any of its
Subsidiaries in the performance of any term, provision or condition contained in
any agreement or agreements under which any Indebtedness (other than the
Obligations), including, without limitation, with respect to the Receivables
Securitization, in an aggregate principal amount exceeding $2,000,000 was
created or is governed, or any other event shall occur or condition exist, the
effect of which is to cause, or to permit the holder or holders of such
Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any Indebtedness of the Borrower or any of its Subsidiaries (other
than the Obligations), including, without limitation, with respect to the
Receivables Securitization, in an aggregate principal amount exceeding
$2,000,000 shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof; or the Borrower or any of its Subsidiaries shall not pay, or admit in
writing its inability to pay, its debts generally as they become due.
7.6. The Borrower or any of its Domestic Subsidiaries shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws as
now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any substantial part of its property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (v) take any corporate action to authorize or
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effect any of the foregoing actions set forth in this Section 7.6 or (vi) fail
to contest in good faith any appointment or proceeding described in SECTION 7.7.
7.7. Without the application, approval or consent of the Borrower or any
of its Domestic Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Domestic
Subsidiaries or any substantial part of its property, or a proceeding described
in SECTION 7.6(iv) shall be instituted against the Borrower or any of its
Domestic Subsidiaries and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 30 consecutive
days.
7.8. Any Foreign Subsidiary shall have taken or instituted or permitted
to be taken or instituted any action or proceeding, or any such action or
proceeding is instituted against such Foreign Subsidiary, whereby a substantial
amount of its property shall or may be assigned or in any manner transferred or
delivered to any receiver, assignee, liquidator or other Person, whether
appointed by such Foreign Subsidiary or by a court or by any governmental
authority or any law, whereby such property shall or may be distributed among
the creditors of such Foreign Subsidiary, provided the aggregate claims of all
such creditors against such Foreign Subsidiary or against all such Foreign
Subsidiaries shall exceed $1,000,000 and such action or proceeding remains
undismissed or unstayed on appeal for a period of 90 days; or any governmental
authority having jurisdiction shall have taken or instituted any action or
proceeding for the dissolution or disestablishment of any Foreign Subsidiary or
for the suspension of its operations, provided the assets of any such Foreign
Subsidiary or the aggregate assets of all such Foreign Subsidiaries shall exceed
$500,000 and such action or proceeding remains undismissed or unstayed on appeal
for a period of 90 days; or all of the property of any Foreign Subsidiary shall
have been condemned, seized or appropriated, provided the net assets of any such
Foreign Subsidiary or the aggregate net assets of all such Foreign Subsidiaries
shall exceed $1,000,000; or the total of all claims against any Foreign
Subsidiary or all Foreign Subsidiaries resulting from any action or proceeding
described in this Section 7.8 and the amount of assets or net assets, as the
case may be, of any Foreign Subsidiary or all Foreign Subsidiaries which are
subject to any action, proceeding, condemnation, seizure or appropriation
described in this Section 7.8 shall exceed $1,000,000.
7.9. Any court, government or governmental agency shall condemn, seize
or otherwise appropriate, or take custody or control of all or any substantial
portion of the property of the Borrower or any of its Subsidiaries.
7.10. The Borrower or any of its Subsidiaries shall fail within 30 days
to pay, bond or otherwise discharge any judgment or order for the payment of
money in excess of $1,000,000, which is not stayed on appeal or otherwise being
appropriately contested in good faith.
7.11. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $10,000,000; or any Reportable Event shall occur in connection
with any Plan; or the Borrower or any other member of the Controlled Group shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all Unfunded Liabilities of all Single Employer Plans
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and all other amounts required to be paid to Multiemployer Plans by the Borrower
or any other member of the Controlled Group as withdrawal liability, exceeds
$10,000,000.
7.12. Any court, government or governmental agency shall find or hold, or
formally notify the Borrower or any Subsidiary, that the Borrower or any
Subsidiary (i) has violated any federal, state or local environmental, health or
safety law or regulation, or (ii) bears responsibility for any removal or
remedial or similar action in connection with the release by the Borrower or any
other Person of any toxic or hazardous waste or substance into the environment,
or is otherwise liable in any manner in connection with any such release; and
such finding, holding or notification could reasonably be expected (taking into
account the expected outcome of any legal appeals available to the Borrower or
such Subsidiary, as well as the likelihood and extent of contribution from any
other Persons who may be jointly and severally liable with the Borrower or such
Subsidiary) to have a material adverse effect on the ability of the Borrower to
perform its obligations under the Loan Documents.
7.13. Any Change in Control shall occur.
7.14. [Intentionally omitted.]
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ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
8.1. ACCELERATION. If any Default described in SECTION 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the Agent
or any Lender. If any other Default occurs, the Required Lenders may terminate
or suspend the obligations of the Lenders to make Loans hereunder, or by written
notice to the Borrower declare the Obligations to be due and payable, or both,
whereupon the Obligations shall become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which the
Borrower hereby expressly waives. The Required Lenders agree to give the
Borrower prompt subsequent notice of any termination or suspension of the
obligations of the Lenders to make Loans hereunder; PROVIDED, that the giving of
such notice shall not be a condition to the effectiveness of any such
termination or suspension.
If, within 30 days after acceleration of the maturity of the Obligations or
termination of the obligations of the Lenders to make Loans hereunder as a
result of any Default (other than any Default as described in SECTION 7.6 or 7.7
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Agent shall, by notice to the
Borrower, rescind and annul such acceleration and/or termination.
8.2. AMENDMENTS. Subject to the provisions of this Article VIII, the
Required Lenders (or the Agent with the consent in writing of the Required
Lenders) and the Borrower may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of each Lender affected thereby:
(i) Extend the maturity of any Loan or Note or reduce the
principal amount thereof, or reduce the rate or extend the
time of payment of interest or fees thereon.
(ii) Reduce the percentage specified in the definition of
Required Lenders.
(iii) Extend the Revolving Credit Termination Date, or reduce the
amount or extend the payment date for, the mandatory
payments required under SECTION 2.3, or increase the amount
of the Commitment of any Lender hereunder, or permit the
Borrower to assign its rights under this Agreement.
(iv) Amend this Section 8.2.
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(v) Release any guarantor of any Advance or release all or
substantially all of any collateral, if any, supporting the
Obligations.
No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under SECTION 12.3.2 without obtaining the consent of any
other party to this Agreement.
8.3. PRESERVATION OF RIGHTS. No delay or omission of the Lenders or the
Agent to exercise any right under the Loan Documents shall impair such right or
be construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrower to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to SECTION 8.2, and then only
to the extent in such writing specifically set forth. All remedies contained in
the Loan Documents or by law afforded shall be cumulative and all shall be
available to the Agent and the Lenders until the Obligations have been paid in
full.
ARTICLE IX
GENERAL PROVISIONS
9.1. SURVIVAL OF REPRESENTATIONS. All representations and warranties of
the Borrower contained in this Agreement shall survive delivery of the Notes and
the making of the Loans herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this Agreement to
the contrary notwithstanding, no Lender shall be obligated to extend credit to
the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.
9.3. TAXES. Any taxes (excluding federal income taxes on the overall net
income of any Lender) or other similar assessments or charges payable or ruled
payable by any governmental authority in respect of the Loan Documents shall be
paid by the Borrower, together with interest and penalties, if any.
9.4. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any of
the provisions of the Loan Documents.
9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
and understanding among the Borrower, the Agent and the Lenders and supersede
all prior
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agreements and understandings among the Borrower, the Agent and the Lenders
relating to the subject matter thereof.
9.6. SEVERAL OBLIGATIONS; BENEFITS OF THIS AGREEMENT. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and assigns.
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the Agent
for any and all reasonable costs and out-of-pocket expenses (including
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, review, amendment, modification,
and administration of the Loan Documents. The Borrower also agrees to reimburse
the Agent and the Lenders for any and all reasonable costs and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the Agent
and the Lenders, which attorneys may be employees of the Agent or the Lenders)
paid or incurred by the Agent or any Lender in connection with the collection
and enforcement of the Loan Documents. The Borrower further agrees to indemnify
the Agent and each Lender, its directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not the Agent or any Lender is a party thereto) which any of
them may pay or incur arising out of any term or condition contained in this
Agreement or the other Loan Documents, or the direct or indirect application or
proposed application of the proceeds of any Loan hereunder, except to the extent
any of the foregoing arises solely from the gross negligence or wilful
misconduct of the party requesting indemnification. The obligations of the
Borrower under this Section shall survive the termination of this Agreement.
9.8. NUMBERS OF DOCUMENTS. All statements, notices, closing documents,
and requests hereunder shall be furnished to the Agent with sufficient
counterparts so that the Agent may furnish one to each of the Lenders.
9.9. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.
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9.11. NONLIABILITY OF LENDERS. The relationship between the Borrower and
the Lenders and the Agent shall be solely that of borrower and lender. Neither
the Agent nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Agent nor any Lender undertakes any responsibility to the
Borrower to review or inform the Borrower of any matter in connection with any
phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER,
THE AGENT AND EACH LENDER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE BORROWER
TO BRING PROCEEDINGS AGAINST THE AGENT OR ANY LENDER, OR THE RIGHT OF THE AGENT
OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER, IN THE COURTS OF ANY
OTHER JURISDICTION.
9.14. CONFIDENTIALITY. Each Lender agrees to use any confidential
information which it may receive from the Borrower pursuant to this Agreement
solely for the purposes of administering and monitoring this Agreement and to
hold such confidential information in confidence, except for disclosure (i) to
other Lenders and Affiliates of any Lender, (ii) to legal counsel, accountants,
and other professional advisors to that Lender who are advised of and agree to
be bound by this Section 9.14, (iii) to regulatory officials, (iv) as requested
pursuant to or as required by law, regulation, or legal process, (v) in
connection with any legal proceeding to which that Lender is a party, and (vi)
permitted by SECTION 12.4; PROVIDED that in the case of each of the preceding
CLAUSES (iv) and (v), such Lender agrees, to the extent reasonably possible and
to the extent that it is legally permitted to do so, to give the Borrower prior
notice of such disclosure and not resist any efforts by the Borrower to obtain
confidential treatment therefor.
9.15. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
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ARTICLE X
THE AGENT
10.1. APPOINTMENT. Bank of America NT & SA is hereby appointed Agent
hereunder and under each other Loan Document, and each of the Lenders
irrevocably authorizes the Agent to act as the agent of such Lender. The Agent
agrees to act as such upon the express conditions contained in this Article X.
The Agent shall not have a fiduciary relationship in respect of any Lender by
reason of this Agreement.
10.2. POWERS. The Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to the Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. The
Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
10.3. GENERAL IMMUNITY. Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to the Borrower, the Lenders or
any Lender for any action taken or omitted to be taken by it or them hereunder
or under any other Loan Document or in connection herewith or therewith except
for its or their own gross negligence or willful misconduct.
10.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. Neither the Agent nor
any of its directors, officers, agents or employees shall be responsible for or
have any duty to ascertain, inquire into, or verify (i) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (ii) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document; (iii) the satisfaction of any
condition specified in ARTICLE IV, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness or genuineness of
any Loan Document or any other instrument or writing furnished in connection
therewith.
10.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders and on all holders of
Notes. The Agent shall be fully justified in failing or refusing to take any
action hereunder and under any other Loan Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against any and all
liability, cost and expense that it may incur by reason of taking or continuing
to take any such action.
10.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute any of its
duties as Agent hereunder and under any other Loan Document by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. The Agent shall be entitled to advice of
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counsel concerning all matters pertaining to the agency hereby created and its
duties hereunder and under any other Loan Document.
10.7. RELIANCE ON DOCUMENTS: COUNSEL. The Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be genuine and correct and to
have been signed or sent by the proper person or persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
10.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The Lenders agree to
reimburse and indemnify the Agent ratably according to their respective
Percentages (i) for any amounts not reimbursed by the Borrower for which the
Agent is entitled to reimbursement by the Borrower under the Loan Documents,
(ii) for any other expenses incurred by the Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents and (iii) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby, or the enforcement of any of the terms
thereof or of any such other documents, provided that no Lender shall be liable
for any of the foregoing to the extent they arise from the gross negligence or
willful misconduct of the Agent.
10.9. RIGHTS AS A LENDER. With respect to its Commitment, Loans made by
it and the Note issued to it, the Agent shall have the same rights and powers
hereunder and under any other Loan Document as any Lender and may exercise the
same as though it were not the Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and generally
engage in any kind of trust, debt, equity or other transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Subsidiaries in which the Borrower or such Subsidiary is
not restricted hereby from engaging with any other Person.
10.10. LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any other Lender and based
on the financial statements prepared by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
10.11. SUCCESSOR AGENT. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, and the Agent may be removed at
any time with or without cause by written notice received by the Agent from the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint, on behalf of
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<Page>
the Borrower and the Lenders, a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may appoint, on behalf of the Borrower and
the Lenders, a successor Agent. Such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder and under
the other Loan Documents. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as the Agent hereunder and under the other Loan Documents.
ARTICLE XI
SETOFF; RATABLE PAYMENTS
11.1. SETOFF. In addition to, and without limitation of, any rights of
the Lenders under applicable law, so long as any Default has occurred and is
continuing, any indebtedness from any Lender to the Borrower (including all
account balances, whether provisional or final and whether or not collected or
available) may be offset and applied toward the payment of the Obligations then
due and owing to such Lender.
11.2. RATABLE PAYMENTS. If any Lender, whether by setoff or otherwise,
has payment made to it upon its Loans (other than payments received pursuant to
SECTIONS 2.18, 3.1, 3.2 or 3.4) in a greater proportion than that received by
any other Lender, such Lender agrees, promptly upon demand, to purchase a
portion of the Loans held by the other Lenders so that after such purchase each
Lender will hold its Percentage of Loans. If any Lender, whether in connection
with setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
according to their respective Percentages. In case any such payment is disturbed
by legal process, or otherwise, appropriate further adjustments shall be made.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or
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obligations under the Loan Documents and (ii) any assignment by any Lender must
be made in compliance with SECTION 12.3. Notwithstanding CLAUSE (ii) of this
Section, any Lender may at any time, without the consent of the Borrower or the
Agent, assign all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; provided, however, that no such assignment
shall release the transferor Lender from its obligations hereunder. The Agent
may treat the payee of any Note as the owner thereof for all purposes hereof
unless and until such payee complies with SECTION 12.3 in the case of an
assignment thereof or, in the case of any other transfer, a written notice of
the transfer is filed with the Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and provisions of the
Loan Documents. Any request, authority or consent of any Person, who at the time
of making such request or giving such authority or consent is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee or
assignee of such Note or of any Note or Notes issued in exchange therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at
any time sell to one or more banks or other entities ("PARTICIPANTS")
participating interests in any Loan owing to such Lender, any Note held by
such Lender, any Commitment of such Lender or any other interest of such
Lender under the Loan Documents. Any Lender selling such participating
interests to a Participant agrees to promptly notify the Borrower of such
sale and the identity of such Participant. In the event of any such sale by
a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the holder of any
such Note for all purposes under the Loan Documents, all amounts payable by
the Borrower under this Agreement shall be determined as if such Lender had
not sold such participating interests, and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents.
12.2.2. VOTING RIGHTS. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment,
modification or waiver of any provision of the Loan Documents other than
any amendment, modification or waiver with respect to any Loan or
Commitment in which such Participant has an interest which forgives
principal, interest or fees or reduces the interest rate or fees payable
with respect to any such Loan or Commitment, postpones any date fixed for
any regularly-scheduled payment of principal of, or interest or fees on,
any such Loan or Commitment, releases any guarantor of any such Loan or
releases any substantial portion of collateral, if any, securing any such
Loan.
12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided in
SECTION 11.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount
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of its participating interest were owing directly to it as a Lender under
the Loan Documents, provided that each Lender shall retain the right of
setoff provided in SECTION 11.1 with respect to the amount of participating
interests sold to each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of setoff
provided in SECTION 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such amounts to
be shared in accordance with SECTION 11.2 as if each Participant were a
Lender.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time
assign to one or more banks or other entities ("PURCHASERS") all or any
part of its rights and obligations under the Loan Documents. Such
assignment shall be substantially in the form of EXHIBIT "H" hereto. Unless
a Default has occurred and is continuing, the written consent of the
Borrower and the Agent shall be required prior to an assignment becoming
effective with respect to a Purchaser which is not a Lender or an Affiliate
thereof. Such consent shall be in form and substance satisfactory to the
Agent and shall not be unreasonably withheld.
12.3.2. EFFECT; EFFECTIVE DATE. Upon (i) delivery to the Agent of a
notice of assignment, substantially in the form attached as EXHIBIT "I" to
EXHIBIT "H" hereto (a "NOTICE OF ASSIGNMENT"), together with any consents
required by SECTION 12.3.1, and (ii) payment of a $2,500 fee to the Agent
for processing such assignment, such assignment shall become effective on
the effective date specified in such Notice of Assignment. On and after the
effective date of such assignment, such Purchaser shall for all purposes be
a Lender party to this Agreement and any other Loan Document executed by
the Lenders and shall have all the rights and obligations of a Lender under
the Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or
the Agent shall be required to release the transferor Lender with respect
to the percentage of the Aggregate Commitment and Loans assigned to such
Purchaser. Upon the consummation of any assignment to a Purchaser pursuant
to this Section 12.3.2, the transferor Lender, the Agent and the Borrower
shall make appropriate arrangements so that replacement Notes are issued to
such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting
their respective Commitments, as adjusted pursuant to such assignment.
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes each Lender
to disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries; PROVIDED
that each Transferee and prospective Transferee agrees in writing for the
benefit of the Borrower to be bound by SECTION 9.14.
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12.5. TAX TREATMENT. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof, the transferor Lender shall cause
such Transferee, concurrently with the effectiveness of such transfer, to comply
with the provisions of SECTION 2.25.
ARTICLE XIII
NOTICES
13.1. GIVING NOTICE. Except as otherwise permitted by SECTION 2.20 with
respect to Borrowing Notices and Continuation/Conversion Notices, all notices
and other communications provided to any party hereto under this Agreement or
any other Loan Document shall be in writing or by facsimile and addressed or
delivered to such party at its address set forth below its signature hereto or
at such other address as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if transmitted by
facsimile, shall be deemed given when transmitted.
13.2. CHANGE OF ADDRESS. The Borrower, the Agent and any Lender may each
change the address for service of notice upon it by a notice in writing to the
other parties hereto.
ARTICLE XIV
COUNTERPARTS, TERMINATION OF ORIGINAL CREDIT AGREEMENT
AND EFFECTIVENESS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. By their execution of
this Agreement, each of the Borrower and the Lenders hereby agree that as of the
Restatement Effective Date the Original Credit Agreement shall be terminated and
of no further force and effect, except for the terms and provisions of the
Original Credit Agreement which expressly survive the termination thereof and
except for the Borrower's obligation to repay all accrued and unpaid fees
thereunder in accordance with the terms thereof. This Agreement shall be
effective when it has been executed by the Borrower, the Agent and the Lenders
and each party has notified the Agent by telex, facsimile or telephone, that it
has taken such action.
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<Page>
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
AAR CORP.
By: /s/ Timothy J. Romenesko
--------------------------------------------
Title: Vice President
-----------------------------------------
1100 North Wood Dale Road
Wood Dale, Illinois 60191
Attention: Timothy J. Romenesko
Vice President - Chief Financial Officer
Commitment: BANK OF AMERICA NATIONAL TRUST AND
$50,000,000 SAVINGS ASSOCIATION, as a Lender and as
the Issuer
By: /s/ Steven J. Standbridge
--------------------------------------------
Title: Vice President
-----------------------------------------
231 South La Salle Street
Chicago, Illinois 60697
Attention:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as the Agent
By: /s/ David A. Johanson
--------------------------------------------
Title: Vice President
-----------------------------------------
231 South LaSalle Street
Chicago, Illinois 60697
Attention:
DOCUMENT NUMBER:
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<Page>
SCHEDULE "l"
OTHER INVESTMENTS
(See Section 6.14)
INVESTMENT INVESTMENT AMOUNT OF
IN BY INVESTMENT
NONE
- 62 -
<Page>
SCHEDULE "2"
LIENS
(See Section 6.15)
Mortgage lien on facilities located in Frankfort, New York to secure
indebtedness of Subsidiary AAR Engine Component Services, Inc. to Norstar Bank
in connection with Industrial Revenue Bond financing of such facilities.
Mortgage lien on facilities located in Aberdeen, North Carolina to secure
indebtedness of Subsidiary AAR Brooks and Perkins Corp. to North Carolina
National Bank in connection with Industrial Revenue Bond financing of such
facilities.
Security interest in aircraft and related equipment to secure indebtedness of
AAR Financial Services Corp. in connection with ownership of such aircraft and
related equipment.
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<Page>
EXHIBIT "A"
SECOND AMENDED AND RESTATED NOTE
$___________________ as of May 27, 1998
For value received, AAR Corp., a Delaware corporation (the "BORROWER"),
promises to pay to the order of _______________ (the "LENDER"), for the account
of its applicable Lending Installation, the lesser of the principal sum of
_________________ or the aggregate unpaid principal amount of all Loans made by
the Lender to the Borrower pursuant to Article II of the Credit Agreement
referred to below, together with interest on the unpaid principal amount hereof
at the rates and on the dates set forth in the Credit Agreement. The Borrower
shall pay the principal of and accrued and unpaid interest on the Advances in
full on the Facility Termination Date and shall make such other mandatory
payments as are required to be made pursuant to Section 2.3 of the Credit
Agreement. All such payments of principal and interest shall be made (i) if in
U.S. Dollars, in lawful money of the United States in immediately available
funds at the main office of Bank of America National Trust and Savings
Association, as Agent, in Chicago, Illinois or (ii) if in any other currency, in
such funds as may then be customary for the settlement of international
transactions in such other currency at the place specified for payment thereof
pursuant to the Credit Agreement.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder; PROVIDED, that the failure of the Lender to make any such
recordation shall not affect the obligations of the Borrower hereunder or under
the Credit Agreement.
This Note is issued pursuant to, and is entitled to the benefits of, the
Second Amended and Restated Credit Agreement, dated as of May 27, 1998, as it
may be amended, supplemented, extended or otherwise modified from time to time,
among the Borrower, Bank of America National Trust and Savings Association,
individually and as Agent, and the lenders named therein, including the Lender
(the "CREDIT AGREEMENT"). Reference is hereby made to the Credit Agreement for a
statement of the terms and conditions governing this Note, including the terms
and conditions under which this Note may be prepaid or its maturity date
accelerated. Capitalized terms used herein and not otherwise defined herein are
used with the meanings attributed to them in the Credit Agreement.
This Note is a restatement of the indebtedness evidenced by, and is a
replacement of, that certain Note of the Borrower dated September 9, 1996 in the
face principal amount of $_________ payable to the order of the Lender, and
nothing contained herein or in the Credit Agreement shall be construed to deem
paid or forgiven the unpaid principal amount of, or unpaid accrued interest on,
said Note outstanding at the time of its replacement by this Note.
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<Page>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT
THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL
LAWS APPLICABLE TO NATIONAL BANK.
AAR CORP.
By:
-------------------------------
Title:
----------------------------
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<Page>
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
SECOND AMENDED AND RESTATED NOTE OF AAR CORP.
Dated as of May 27, 1998
<Table>
<Caption>
PRINCIPAL CURRENCY MATURITY PRINCIPAL
TYPE OF AMOUNT OF OF OF INTEREST AMOUNT UNPAID
DATE LOAN LOAN PERIOD PAID PAID BALANCE
---- ------- --------- -------- ----------- --------- -------
</Table>
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<Page>
EXHIBIT "B"
EXTENSION LETTER
___________, ____
To: Bank of America NT & SA, as Agent for the Lenders party to the Credit
Agreement referred to below
Re: PROPOSED EXTENSION OF THE REVOLVING CREDIT TERMINATION DATE
Ladies/Gentlemen:
We make reference to that certain Second Amended and Restated Credit
Agreement dated as of May 27, 1998, among AAR Corp., the Lenders party thereto
and Bank of America National Trust and Savings Association, as Agent for the
Lenders, as it may from time to time be amended, modified, renewed or extended
(the "Credit Agreement"). All capitalized terms used herein shall have the
meanings attributed to them in the Credit Agreement.
The Revolving Credit Termination Date currently in effect under the Credit
Agreement is __________, ____.
The Borrower desires to extend the Revolving Credit Termination Date by one
year and accordingly requests hereby that the Lenders agree to extend the
Revolving Credit Termination Date to __________, 20__.
If the foregoing proposed extension of the Revolving Credit Termination
Date meets with your approval, please so indicate by executing and returning to
both the Agent and the Borrower the accompanying copy of this letter. Upon
receipt by both the Agent and the Borrower of counterparts of this letter
executed by each of the Lenders, the Revolving Credit Termination Date under the
Credit Agreement shall henceforth be __________, 20__.
Sincerely yours,
AAR CORP.
By:
--------------------------------
Title:
-----------------------------
ACCEPTED AND AGREED TO:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
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<Page>
By:
----------------------------
Title:
-------------------------
[Add Signature Lines for all Lenders]
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<Page>
EXHIBIT "C"
BORROWING NOTICE
______________, ____
To: Bank of America NT & SA, as Agent for the Lenders party to the Credit
Agreement referred to below
Re: U.S. DOLLAR BORROWING NOTICE
Ladies/Gentlemen:
We make reference to that certain Second Amended and Restated Credit
Agreement dated as of May 27, 1998, among AAR Corp., the Lenders party thereto
and Bank of America National Trust and Savings Association, as Agent for the
Lenders, as it may from time to time be amended, modified, renewed or extended
(the "Credit Agreement"). All capitalized terms used herein shall have the
meanings attributed to them in the Credit Agreement.
The Borrower hereby gives irrevocable notice pursuant to Section 2.10 of
the Credit Agreement for the following U.S. Dollar Advance(s)(1):
Borrowing Date: ______________, ____(2)
<Table>
<Caption>
PRINCIPAL AMOUNT(3) TYPE OF ADVANCE(4) INTEREST PERIOD(5)
- ------------------- ------------------ ------------------
</Table>
Sincerely yours,
AAR CORP.
By:
---------------------------------
Title:
------------------------------
- ----------
(1) No Quoted Rate Advance will be made unless the provisions of Section 2.10
of the Credit Agreement applicable thereto are met.
(2) Borrowing Date must be a Business Day prior to or on the Revolving Credit
Termination Date.
(3) Subject to the minimum amount requirements set forth in Section 2.8.
(4) Specify Floating Rate Advance, Eurodollar Advance or Quoted Rate Advance.
(5) Applicable to Eurodollar Advances and Quoted Rate Advances only. See
definitions of "Eurodollar Interest Period" and "Quoted Rate Interest
Period" and Section 2.14 (Restrictions on Interest Periods).
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<Page>
EXHIBIT "D"
ALTERNATE CURRENCY BORROWING REQUEST
_____________, ____
To: Bank of America NT & SA,
as Agent for the Lenders party to the
Credit Agreement referred to below
Re: ALTERNATE CURRENCY BORROWING REQUEST
Ladies/Gentlemen:
We make reference to that certain Second Amended and Restated Credit
Agreement dated as of May 27, 1998, among AAR Corp., the Lenders party thereto
and Bank of America National Trust and Savings Association, as Agent for the
Lenders, as it may from time to be amended, modified, renewed or extended (the
"Credit Agreement"). All capitalized terms used herein shall have the meanings
attributed to them in the Credit Agreement.
The Borrower hereby gives its irrevocable request, pursuant to Section 2.11
of the Credit Agreement, for the following Alternate Currency Advance(s):
Borrowing Date: _______________, 19__(1)
<Table>
<Caption>
PRINCIPAL ALTERNATE TRANSACTION TRANSACTION RATE
AMOUNT(2) CURRENCY RATE(3) INTEREST PERIOD(4)
- --------- --------- ----------- ------------------
</Table>
If the foregoing requested Alternate Currency Advance(s) meets with your
approval, please so indicate by executing and returning to the Agent the
accompanying copy of this Request. Upon receipt by the Agent prior to the time
specified in Section 2.11 of Credit Agreement of counterparts of this Request
executed by each of the Lenders, the Lenders shall be severally committed to
make the Alternate Currency Advance(s) requested hereby, subject to the terms
and conditions of the Credit Agreement.
Sincerely yours,
AAR CORP.
By:
----------------------------------
Title:
-------------------------------
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<Page>
ACCEPTED AND AGREED TO:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By:
----------------------------------
Title:
-------------------------------
[Add Signature Lines for all Lenders]
- ----------
(1) Borrowing Date must be a Business Day prior to the Revolving Credit
Termination Date.
(2) Subject to the minimum amount requirements set forth in Section 2.8.
(3) Specify an absolute fixed rate of interest per annum.
(4) Insert a fixed number of days (not to exceed 180 days).
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<Page>
EXHIBIT "E"
May 27, 1998
The Lenders who are parties to the
Credit Agreement described below:
Gentlemen/Ladies:
We are counsel for AAR Corp., a Delaware corporation (the "Borrower"), and
have represented the Borrower in connection with its execution and delivery of a
Second Amended and Restated Credit Agreement among the Borrower, Bank of America
National Trust and Savings Association, individually and as Agent, and the
Lenders named therein, providing for Advances in an aggregate principal amount
not exceeding $50,000,000 at any one time outstanding and dated as of May 27,
1998 (the "Agreement"). All capitalized terms used in this opinion and not
otherwise defined shall have the meanings attributed to them in the Agreement.
We have examined the Borrower's articles of incorporation, by-laws,
resolutions, the Loan Documents and such other matters of fact and law which we
deem necessary in order to render this opinion. Based upon the foregoing, it is
our opinion that:
1. The Borrower and each Subsidiary are corporations duly
incorporated, validly existing and in good standing under the laws of their
states of incorporation and have all requisite authority to conduct their
business in each jurisdiction in which their business is conducted.
2. The execution and delivery of the Loan Documents by the Borrower
and the performance by the Borrower of the Obligations have been duly authorized
by all necessary corporate action and proceedings on the part of the Borrower
and will not:
(a) require any consent of the Borrower's shareholders;
(b) violate any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on the Borrower or any of its
Subsidiaries or the Borrower's or any Subsidiary's articles of
incorporation or by-laws or any indenture, instrument or agreement binding
upon the Borrower or any of its Subsidiaries; or
(c) result in, or require, the creation or imposition of any
Lien pursuant to the provisions of any indenture, instrument or agreement
binding upon the Borrower or any of its Subsidiaries.
3. The Loan Documents have been duly executed and delivered by the
Borrower and constitute legal, valid and binding obligations of the Borrower
enforceable in accordance with their terms except to the extent the enforcement
thereof may be limited by bankruptcy,
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<Page>
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
4. Except as set forth in the Borrower's Form 10-K filed with the
Securities and Exchange Commission for its fiscal year ended _______________,
199_, there is no litigation or proceeding against the Borrower or any of its
Subsidiaries which, if adversely determined, could have a Material Adverse
Effect.
5. No approval, authorization, consent, adjudication or order of any
governmental authority, which has not been obtained by the Borrower or any of
its Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under the Agreement or in connection with the payment
by the Borrower of the Obligations.
This opinion may be relied upon by the Lenders and their participants,
assignees and other transferees. No opinion is expressed herein as to the
relation between the Agent and the Lenders or the relation between the Lenders.
Very truly yours,
-----------------------------------
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<Page>
EXHIBIT "F"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: Bank of America NT & SA
231 S. LaSalle Street
Chicago, Illinois 60697
as Agent (the "Agent")
under the Credit Agreement
described below
Re: Second Amended and Restated Credit Agreement, dated May 27, 1998 (as the
same may be amended or modified, the "Credit Agreement"), among AAR Corp.
(the "Borrower"), the Agent, and the Lenders named therein
Terms used herein and not otherwise defined shall have the meanings
assigned thereto in the Credit Agreement.
The Agent is specifically authorized and directed to act upon the following
standing money transfer instructions with respect to the proceeds of Advances or
other extensions of credit from time to time until receipt by the Agent of a
specific written revocation of such instructions by the Borrower, provided,
however, that the Agent may otherwise transfer funds as hereafter directed in
writing by the Borrower in accordance with Section 13.1 of the Credit Agreement
or based on any telephonic notice made in accordance with Section 2.20 of the
Credit Agreement.
Facility Identification Number(s) ________
Customer/Account Name ________
Transfer Funds To ________
For Account No. ________
Reference/Attention To ________
Authorized Officer (Customer Representative) Date_________________
- --------------------------------- ----------------------
(Please Print) Signature
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<Page>
Bank Officer Name Date__________________
- --------------------------------- ----------------------
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
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<Page>
EXHIBIT "G"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Second
Amended and Restated Credit Agreement dated as of May 27, 1998 (as amended,
modified, renewed or extended from time to time, the "Agreement") among the
Borrower, the lenders party thereto and Bank of America National Trust and
Savings Association, as Agent for the Lenders. Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings ascribed
thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFY THAT:
1. I am the duly elected ___________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made, or have
caused to be made under my supervision, a detailed review of the transactions
and conditions of the Borrower and its Subsidiaries during the accounting period
covered by the attached financial statements;
3. The examinations described in PARAGRAPH 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Unmatured Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate, except as set forth below; and
4. SCHEDULE I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct.
Described below are the exceptions, if any, to PARAGRAPH 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
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<Page>
The foregoing certifications, together with the computations set forth in
SCHEDULE I hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this _____ day of _______________,
____.
-------------------------
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<Page>
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule Of Compliance as of __________, ____ with Provisions
of Sections 6.19, 6.20, 6.21, 6.22 and 6.23 of the Agreement
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<Page>
EXHIBIT "H"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
____________________ (the "Assignor") and _________________ (the "Purchaser") is
dated as of ______________, ____. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Second Amended
and Restated Credit Agreement, dated as of May 27, 1998 (which, as it may be
amended, modified, renewed or extended from time to time, is herein called the
"Credit Agreement"), among AAR Corp. (the "Borrower"), certain lenders party
thereto and Bank of America National Trust and Savings Association, as agent for
such lenders. Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Credit Agreement. The Assignor
desires to assign to the Purchaser, and the Purchaser desires to assume from the
Assignor, an undivided interest (the "Purchased Percentage") in the Commitment
of the Assignor such that after giving effect to the assignment and assumption
hereinafter provided, the Commitment of the Purchaser shall equal
$_______________ and its Percentage shall equal _____%.
2. ASSIGNMENT. For and in consideration of the assumption of
obligations by the Purchaser set forth in SECTION 3 hereof and the other
consideration set forth herein, and effective as of the Effective Date (as
hereinafter defined), the Assignor does hereby sell, assign, transfer and
convey all of its right, title and interest in and to the Purchased Percentage
of (i) the Commitment of the Assignor (as in effect on the Effective Date), (ii)
any Loan outstanding on the Effective Date and (iii) the Credit Agreement and
the other Loan Documents. Pursuant to Section 12.3.2 of the Credit Agreement, on
and after the Effective Date the Purchaser shall have the same rights, benefits
and obligations as the Assignor had under the Loan Documents with respect to the
Purchased Percentage of the Loan Documents, all determined as if the Purchaser
were a "Lender" under the Credit Agreement with _____% of the Aggregate
Commitment. The Effective Date shall be the later of _______________, ____ or
two Business Days (or such shorter period agreed to by the Agent) after a Notice
of Assignment substantially in the form of EXHIBIT "I" attached hereto and any
consents required to be delivered to the Agent by Section 12.3.1 of the Credit
Agreement have been delivered to the Agent. In no event will the Effective Date
occur if the payments required to be made by the Purchaser to the Assignor on
the Effective Date under SECTIONS 4 and 5 hereof are not made on the proposed
Effective Date. The Assignor will notify the Purchaser of the proposed Effective
Date on the Business Day prior to the proposed Effective Date.
3. ASSUMPTION. For and in consideration of the assignment of rights by
the Assignor set forth in SECTION 2 hereof and the other consideration set forth
herein, and effective as of the Effective Date, the Purchaser does hereby accept
that assignment, and assume and covenant and agree fully, completely and timely
to perform, comply with and discharge, each and all of the obligations, duties
and liabilities of the Assignor under the Credit Agreement which are assigned to
the Purchaser hereunder, which assumption includes, without limitation,
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the obligation to fund the unfunded portion of the Aggregate Commitment in
accordance with the provisions set forth in the Credit Agreement as if the
Purchaser were a "Lender" under the Credit Agreement with _____% of the
Aggregate Commitment. The Purchaser agrees to be bound by all provisions
relating to "Lenders" under and as defined in the Credit Agreement, including,
without limitation, provisions relating to the dissemination of information and
the payment of indemnification.
4. PAYMENTS OBLIGATIONS. On and after the Effective Date, the
Purchaser shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the Purchased Percentage of the Assignor's
Commitment and Loans. The Purchaser shall advance funds directly to the Agent
with respect to all Loans and reimbursement payments made on or after the
Effective Date. In consideration for the transfer to the Purchaser of the
Purchased Percentage of the Loans made by the Assignor which are outstanding on
the Effective Date, (i) with respect to all Floating Rate Loans made by the
Assignor outstanding on the Effective Date, the Purchaser shall pay the
Assignor, on the Effective Date, an amount equal to the Purchased Percentage of
all such Floating Rate Loans; and (ii) with respect to each Fixed Rate Loan made
by the Assignor outstanding on the Effective Date, (a) on the last day of the
Interest Period therefor or (b) on such earlier date agreed to by the Assignor
and the Purchaser or (c) on the date on which any such Fixed Rate Loan either
becomes due (by acceleration or otherwise) or is prepaid (the date as described
in the foregoing clauses (a), (b) or (c) being hereinafter referred to as the
"PAYMENT DATE"), the Purchaser shall pay the Assignor an amount equal to the
Purchased Percentage of such Fixed Rate Loan. On and after the Effective Date,
the Purchaser will also remit to the Assignor any amounts of interest on Loans
and fees received from the Agent which relate to the Purchased Percentage of
Loans made by the Assignor accrued for periods prior to the Effective Date, in
the case of Floating Rate Loans, or the Payment Date, in the case of Fixed Rate
Loans, and not heretofore paid by the Purchaser to the Assignor. In the event
interest for the period from the Effective Date to but not including the Payment
Date is not paid by the Borrower with respect to any Fixed Rate Loan sold by the
Assignor to the Purchaser hereunder, the Purchaser shall pay to the Assignor
interest for such period on such Fixed Rate Loan at the applicable rate provided
by the Credit Agreement. In the event that either party hereto receives any
payment to which the other is entitled under this Assignment Agreement, then the
party receiving such amount shall promptly remit it to the other party hereto.
[5. FEES PAYABLE BY PURCHASER. On each day on which the Purchaser
receives a payment of interest or fees under the Credit Agreement (other than a
payment of interest or fees which the Purchaser is obligated to deliver to the
Assignor pursuant to SECTION 4 hereof, which shall be excluded in determining
fees payable to the Assignor pursuant to this Section) the Purchaser shall pay
to the Assignor a fee. The amount of such fee shall be the difference between
(i) the amount of such interest or fee, as applicable, received by the Purchaser
and (ii) the amount of the interest or fee, as applicable, which would have been
received by the Purchaser if each interest rate was _____of 1% less than the
interest rate paid by the Borrower or if the fee was _____ of 1% less than the
fee paid by the Borrower, as applicable. In addition, the Purchaser agrees to
pay _____% of the fee required to be paid to the Agent pursuant to Section
__________ of the Credit Agreement.]
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6. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. The
Purchaser represents and warrants to the Assignor that it is capable of making
and has made and shall continue to make its own credit determinations and
analysis based upon such information as the Purchaser deemed sufficient to enter
into the transaction contemplated hereby and not based on any statements or
representations by the Assignor. It is understood and agreed that the assignment
and assumption hereunder are made without recourse to the Assignor and that the
Assignor makes no representation or warranty of any kind to the Purchaser and
shall not be responsible for (i) the due execution, legality, validity,
enforceability, genuineness, sufficiency or collectibility of the Credit
Agreement, any other Loan Document, including without limitation, documents
granting the Assignor and the other Lenders a security interest in assets of the
Borrower or any guarantor, (ii) any representation, warranty or statement made
in or in connection with any of the Loan Documents, (iii) the financial
condition or creditworthiness of the Borrower or any guarantor, (iv) the
performance of or compliance with any of the terms or provisions of any of the
Loan Documents, (v) inspecting any of the property, books or records of the
Borrower or (vi) the validity, enforceability, perfection, priority, condition,
value or sufficiency of any collateral securing or purporting to secure the
Loans. Neither the Assignor nor any of its officers, directors, employees,
agents or attorneys shall be liable for any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents, except for its or their own bad faith or willful misconduct.
7. INDEMNITY. The Purchaser agrees to indemnify and hold the Assignor
harmless against any and all losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the Assignor
in connection with or arising in any manner from the Purchaser's performance or
non-performance of obligations assumed under this Assignment Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Purchaser
shall have the right pursuant to Section 12.3.1 of the Credit Agreement to
assign the rights which are assigned to the Purchaser hereunder to any entity or
person, provided that (i) any such subsequent assignment does not violate any of
the terms and conditions of the Loan Documents or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Loan Documents has been obtained, (ii) the assignee under such
assignment from the Purchaser shall agree to assume all of the Purchaser's
obligations hereunder in a manner satisfactory to the Assignor and (iii) the
Purchaser is not thereby released from any of its obligations to the Assignor
hereunder.
9. REDUCTIONS OF AGGREGATE COMMITMENT. If any reduction in the
Aggregate Commitment occurs between the date of this Assignment Agreement and
the Effective Date, the percentage of the Aggregate Commitment assigned to the
Purchaser shall remain the percentage specified in SECTION 1 hereof and the
dollar amount of the Commitment of the Purchaser shall be recalculated based on
the reduced Aggregate Commitment.
10. ENTIRE AGREEMENT. This Assignment Agreement and the attached
consent embody the entire agreement and understanding between the parties hereto
and supersede all
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prior agreements and understandings between the parties hereto relating to the
subject matter hereof.
11. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Illinois.
12. NOTICES. Notices shall be given under this Assignment Agreement in
the manner set forth in the Credit Agreement. For the purpose hereof, the
addresses of the parties hereto (until notice of a change is delivered) shall be
the address set forth under each party's name on the signature pages hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[NAME OF ASSIGNOR]
By:
---------------------------------
Title:
------------------------------
------------------------------------
------------------------------------
[NAME OF PURCHASER]
By:
---------------------------------
Title:
------------------------------
------------------------------------
------------------------------------
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<Page>
EXHIBIT "I" TO EXHIBIT "H"
NOTICE
OF ASSIGNMENT
To: AAR CORP.
---------------
---------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent under the Credit Agreement
Described Below.
From: [NAME OF ASSIGNOR]
[NAME OF PURCHASER]
______________, ____
1. We refer to that Second Amended and Restated Credit Agreement,
dated as of March 10, 1998 (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the "Credit Agreement") among AAR
Corp. (the "Borrower"), certain lenders party thereto (each a "Lender"),
including _____________ (the "Assignor") and Bank of America National Trust and
Savings Association, as agent for the Lenders (as such, the "Agent").
Capitalized terms used herein and in any consent delivered in connection
herewith and not otherwise defined herein or in such consent shall have the
meanings attributed to them in the Credit Agreement.
2. This Notice of Assignment (this "Notice") is given and delivered to
the Borrower and the Agent pursuant to Section 12.3.2 of the Credit Agreement.
3. The Assignor and ________________ (the "Purchaser") have entered
into an Assignment Agreement, dated as of __________, ____, pursuant to which,
among other things, the Assignor has sold, assigned, delegated and transferred
to the Purchaser, and the Purchaser has purchased, accepted and assumed from the
Assignor, an undivided interest in and to all of the Assignor's rights and
obligations under the Credit Agreement such that Purchaser's Percentage shall
equal _____%, effective as of the "Effective Date" (as hereinafter defined). The
"EFFECTIVE DATE" shall be the later of __________, ____ or two Business Days (or
such shorter period as agreed to by he Agent) after this Notice of Assignment
and any consents and fees required by Sections 12.3.1 and 12.3.2 of the Credit
Agreement have been delivered to the Agent, provided that the Effective Date
shall not occur if any condition precedent agreed to by the Assignor and the
Purchaser has not been satisfied.
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4. As of this date, the percentage of the Assignor in the Aggregate
Commitment and Advances is _____%. As of the Effective Date, the Percentage of
the Assignor will be _____% (as such Percentage may be reduced or increased by
assignments which become effective prior to the assignment to the Purchaser
becoming effective) and the Percentage of the Purchaser will be _____%.
5. The Assignor and the Purchaser hereby give to the Borrower and the
Agent notice of the assignment and delegation referred to herein. The Assignor
will confer with the Agent before __________, ____ to determine if the
Assignment Agreement will become effective on such date pursuant to SECTION 3
hereof, and will confer with the Agent to determine the Effective Date pursuant
to SECTION 3 hereof if it occurs thereafter. The Assignor shall notify the Agent
if the Assignment Agreement does not become effective on any proposed Effective
Date as a result of the failure to satisfy the conditions precedent agreed to by
the Assignor and the Purchaser. At the request of the Agent, the Assignor will
give the Agent written confirmation of the occurrence of the Effective Date.
6. The Purchaser hereby accepts and assumes the assignment and
delegation referred to herein and agrees as of the Effective Date (i) to perform
fully all of the obligations under the Credit Agreement which it has hereby
assumed and (ii) to be bound by the terms and conditions of the Credit Agreement
as if it were a "Lender".
7. The Assignor and the Purchaser request and agree that any payments
to be made by the Agent to the Assignor on and after the Effective Date shall,
to the extent of the assignment referred to herein, be made entirely to the
Purchaser, it being understood that the Assignor and the Purchaser shall make
between themselves any desired allocations.
8. The Assignor or the Purchaser shall pay to the Agent on or before
the Effective Date the processing fee of $2,500 required by Section 12.3.2 of
the Credit Agreement.
9. The Assignor and the Purchaser request and direct that the Agent
prepare and cause the Borrower to execute and deliver new Notes or, as
appropriate, replacement Notes, to the Assignor and the Purchaser in accordance
with Section 12.3.2 of the Credit Agreement. The Assignor agrees to deliver to
the Agent the original Note received by it from the Borrower upon its receipt of
a new Note in the amount set forth above.
10. The Purchaser advises the Agent that the address listed below is
its address for notices under the Credit Agreement:
------------------------------
------------------------------
------------------------------
ASSIGNOR PURCHASER
By: By:
------------------------------- -----------------------------
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Title: Title:
---------------------------- --------------------------
DOCUMENT NUMBER:
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<Page>
FIRST AMENDMENT DATED
AS OF DECEMBER 28, 1998
TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF MAY 27, 1998
THIS AMENDMENT, dated as of December 28, 1998 is entered into among AAR
CORP., a Delaware corporation (the "BORROWER"), the Lenders listed from time to
time on the signature pages of the Agreement (as hereinafter defined), and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (successor by merger to Bank
of America Illinois, formerly known as Continental Bank N.A.) (the "AGENT").
RECITALS:
A. The Borrower, the Agent and the Lenders have entered into a Second
Amended and Restated Credit Agreement dated as of May 27, 1998 (said Second
Amended and Restated Credit Agreement shall hereinafter be referred to as the
"AGREEMENT"; the terms defined in the Agreement and not otherwise defined herein
shall be used herein in the Agreement).
B. The Borrower, the Agent and the Lenders wish to amend certain
provisions of the Agreement.
C. Therefore, the parties hereto agree as follows:
1. AMENDMENTS TO THE AGREEMENT.
1.1 ARTICLE I OF THE AGREEMENT. ARTICLE I, DEFINITIONS, of the
Agreement is hereby amended as of the date hereof by deleting the defined terms,
"Applicable Margin" and "Facility Fee" and inserting the following in lieu
thereof, respectively:
"APPLICABLE MARGIN" means,
(i) with respect to any Eurodollar Advance, (A) at all times
prior to the Revolving Credit Termination Date, 0.225% when
the Borrower has an Investment Grade Rating and 0.50% when
the Borrower does not have an Investment Grade Rating and
(B) at all times after the Revolving Credit Termination
Date, 0.75% when the Borrower has an Investment Grade
Rating, and 1.50% when the Borrower does not have an
Investment Grade Rating, or
(ii) with respect to any Floating Rate Advance, zero % at all
times when the Borrower has an Investment Grade Rating and
0.50% at all times when the Borrower does not have an
Investment Grade Rating.
<Page>
"FACILITY FEE" means a facility fee on the Aggregate Commitment in
an amount equal to (a)0.175% per annum when the Borrower has an
Investment Grade Rating or (b) 0.25% per annum when the Borrower
does not have an Investment Grade Rating.
2. WARRANTIES. To induce the Lenders and the Agent to enter into this
Amendment, the Borrower warrants that:
2.1 AUTHORIZATION. The Borrower is duly authorized to execute the
deliver this Amendment and is and will continue to be duly authorized to borrow
monies under the Agreement, as amended hereby, and to perform its obligations
under the Agreement, as amended hereby.
2.2 NO CONFLICTS. The execution and delivery of this Amendment,
and the performance by the Borrower of its obligations under the Agreement, as
amended hereby, do not and will not conflict with any provision of law of the
charter or by-laws of the Borrower or of any agreement binding upon the
Borrower.
2.3 VALIDITY AND BINDING EFFECT. The Agreement, as amended
hereby, is a legal, valid and binding obligation of the Borrower, enforceable
against the Borrower in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors' rights or by general
principles of equity limiting the availability of equitable remedies.
3. GENERAL.
3.1 EXPENSES. The Borrower agrees to pay the Agent upon demand
for all reasonable expenses, including reasonable attorneys' fees, incurred by
the Agent in connection with the preparation, negotiation and execution of this
Amendment.
3.2 LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS.
3.3 SUCCESSORS. This Amendment shall be binding upon the
Borrower, the Lenders and the Agent and their respective successors and assigns,
and shall inure to the benefit of the Borrower, the Lenders and the Agent and
the respective successors and assigns of the Lenders and the Agent.
3.4 CONFIRMATION OF THE AGREEMENT. Except as amended hereby, the
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects.
3.5 REFERENCES TO THE AGREEMENT. Each reference in the Agreement
to "this Agreement," "hereunder," "hereof," or words of like import, and each
reference to the Agreement in any and all instruments or documents provided for
in the Agreement or delivered or to be
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delivered thereunder or in connection therewith, shall, except where the context
otherwise requires, be deemed a reference to the Agreement as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed at Chicago, Illinois by their respective officers thereunto duly
authorized as of the date first written above.
AAR CORP.
By: /s/ Timothy J. Romenesko
--------------------------------
Title: Vice President
-----------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender
and as the Issuer
By: /s/ J. Gates Jr.
--------------------------------
Title: Vice President
-----------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as the Agent
By: /s/ David A. Johanson
--------------------------------
Title: David A. Johanson
-----------------------------
Vice President
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EXECUTION COPY
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
"SECOND AMENDMENT"), is made and dated as of February 5, 2002 among AAR Corp., a
Delaware corporation ("BORROWER"), the Lenders party hereto ("LENDERS"), and
BANK OF AMERICA, N.A., as Agent (in such capacity, "AGENT").
RECITALS
1. The Borrower, the Lenders and the Agent are parties to that certain
Second Amended and Restated Credit Agreement, dated as of May 27, 1998, as
amended by that certain First Amendment to Second Amended and Restated Credit
Agreement, dated as of December 28, 1998 (as heretofore amended, the "EXISTING
CREDIT AGREEMENT").
2. The Borrower, the Lenders, and the Agent have agreed to certain
amendments to the Existing Credit Agreement, including changes in pricing and
covenants, extension of the Revolving Credit Termination Date, and elimination
of the term-out option on the terms and conditions specified herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
PART I
DEFINITIONS
SECTION 1.1. CERTAIN DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Second Amendment have the
following meanings:
"AMENDED CREDIT AGREEMENT" means the Existing Credit Agreement as
amended hereby.
"SECOND AMENDMENT EFFECTIVE DATE" shall mean the date upon which
each of the conditions set forth in Part 4 have been satisfied.
SECTION 1.2. OTHER DEFINITIONS. Unless otherwise defined herein or the
context otherwise requires, terms used in this Second Amendment have the
meanings provided in the Amended Credit Agreement.
<Page>
PART 2
AMENDMENTS TO EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Second Amendment
Effective Date, the Existing Credit Agreement is hereby amended in accordance
with this Part 2. Except as so amended, the Existing Credit Agreement shall
continue in full force and effect.
SECTION 2.1. ADDITION OF NEW DEFINITIONS IN ARTICLE I. Article I of the
Existing Credit Agreement (Definitions) is amended by inserting the following
new definitions in the proper alphabetical order:
"ADJUSTMENT DATE" means February 19, 2002.
"BANK ONE AGREEMENT" means that certain Second Amended and Restated
Credit Agreement, dated as of February 10, 1998, among the Borrower, the
lenders from time to time party thereto, and Bank One, N.A., as agent, as
amended, restated, extended, supplemented or otherwise modified in writing
from time to time and including any replacement credit facility.
"LASALLE AGREEMENT" means that certain Revolving Loan Agreement,
dated as of April 11, 2001, between the Borrower and LaSalle Bank National
Association, as amended (including the first amendment dated as of November
30, 2001), restated, extended, supplemented or otherwise modified in
writing from time to time and including any replacement credit facility.
"PARALLEL AGREEMENTS" means (a) the Bank One Agreement, (b) the
LaSalle Agreement, and (c) the U.S. Bank Agreement, and (d) any unsecured
revolving or unsecured term credit facility, entered into from time to time
by the Borrower or any of its Subsidiaries providing for loans, letters of
credit and/or other credit equal to or greater than $10,000,000 which is
not subordinated to the Obligations, including, in each case, all
instruments or agreements evidencing or relating thereto, and as the same
may from time to time be amended, extended, supplemented or otherwise
modified, and including any replacement credit facility (each, a "PARALLEL
AGREEMENT").
"PARALLEL AGREEMENT COMMITMENTS" means the sum of the aggregate
outstanding commitments of each of the lenders under the Parallel
Agreements and this Agreement as of the Adjustment Date, whether drawn or
undrawn, as adjusted, when and as appropriate to give effect to (i) the
termination in the commitments under the U.S. Bank Agreement upon the
scheduled maturity thereof in August 2002, (ii) the scheduled reductions in
the Aggregate Commitment and the commitment under the Bank One Agreement
occurring on or about the Reduction Dates, and (iii) any increases in the
commitments of any lenders under any Parallel Agreements from time to time.
"RATABLE AMOUNT" means the proportion that the Aggregate Commitment
bears to the Parallel Agreement Commitments at any time and from time to
time.
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<Page>
"REDUCTION DATE" has the meaning ascribed to such term in Section
2.5(b) hereof.
"SECOND AMENDMENT EFFECTIVE DATE" means the date upon which the
Second Amendment to Second Amended and Restated Credit Agreement among the
Borrower, the Lenders and the Agent becomes effective according to the
terms thereof.
"SYNTHETIC LEASE DOCUMENTS" means the 'Operative Documents' as
defined in Appendix A to that certain Participation Agreement (AAR Trust
No. 2000-1) dated as of June 28, 2000 (as amended, modified, supplemented,
restated and/or replaced from time to time) among Borrower, as guarantor,
AAR International, Inc. and AAR Parts Trading, Inc., (formerly AAR Aircraft
& Engine Group, Inc.), as lessees, Wells Fargo Bank Northwest, National
Association (formerly First Security Bank, National Association), not in
its individual capacity, except as expressly provided therein, but solely
as certificate trustee under the AAF Trust 2000-1, as certificate trustee,
Wells Fargo Bank Nevada, National Association (formerly First Security
Trust Company of Nevada), not in its individual capacity, except as
expressly provided therein, but solely as administrative agent, the persons
named on Schedule I thereto as certificate holders, Hatteras Funding
Corporation, the persons named on the Schedule II thereto as facility
lenders and liquidity banks, and Bank of America, N.A., not in its
individual capacity but solely as administrator, as amended, restated,
extended, supplemented or otherwise modified in writing from time to time
and including any replacement credit facility."
"U.S. BANK AGREEMENT" means that certain Revolving Loan Agreement,
dated as of October 3, 2001, between the Borrower and U.S. Bank, National
Association, as amended (including the first amendment dated November 30,
2001), restated, extended, supplemented o otherwise modified in writing
from time to time and including any replacement credit facility."
SECTION 2.2. AMENDMENT OF CERTAIN DEFINITIONS IN ARTICLE I. Article I of
the Existing Credit Agreement is amended by revising the definitions of each of
the following terms to read in their entirety respectively as follows:
"AGGREGATE COMMITMENT" means $40,000,000, constituting the
aggregate of the Commitments of all the Lenders, as reduced from time to
time pursuant to the terms hereof.
"APPLICABLE MARGIN" means
(a) When the Borrower has an Investment Grade Rating,
1.25% at all times when the Obligations are less than or equal to
60% of the Aggregate Commitment, and 2.00% at all times when the
Obligations exceed 60% of the Aggregate Commitment (in each case,
as the Aggregate Commitment may be reduced from time to time in
accordance herewith); and
(b) When the Borrower does not have an Investment Grade
Rating, 1.525% at all times when the Obligations are less than or
equal to 60% of the Aggregate Commitment, and 2.275% at all times
when the Obligations exceed
3
<Page>
60% of the Aggregate Commitment (in each case, as the Aggregate
Commitment may be reduced from time to time in accordance
herewith).
"BANK OF AMERICA" means Bank of America, N.A., its successor and
assigns. All references to "Bank of America NT&SA" shall be deemed
references to Bank of America.
"FACILITY FEE" means a facility fee on the amount of the Aggregate
Commitment, (i) for the period prior to the Second Amendment Effective
Date, in an amount equal to (A) 0.175% per annum when the Borrower has an
Investment Grade Rating or (b) 0.25% per annum when the Borrower does not
have an Investment Grade Rating; and (ii) for the period from the Second
Amendment Effective Date to and including the Revolving Credit Termination
Date, in an amount equal to (A) 0.35% per annum when the Borrower has an
Investment Grade Rating and (B) 0.425% when the Borrower does not have and
Investment Grade Rating.
"FACILITY TERMINATION DATE" means the Revolving Credit Termination
date."
"REVOLVING CREDIT TERMINATION DATE" means the earliest of (a)
February 9, 2004, (b) the "maturity date" under the LaSalle Agreement, as
defined therein, and (c) the "revolving credit termination date" under the
Bank One Agreement, as defined therein; PROVIDED, HOWEVER, that if from
time to time such "maturity date," such "revolving credit termination
date," or other comparable facility termination dates (if any) in such
foregoing Parallel Agreements is earlier, by amendment or otherwise, or
either such respective Parallel Agreement is terminated and/or the
commitment thereunder is terminated, then "Revolving Credit Termination
Date" shall mean such earlier date of termination.
SECTION 2.3. MODIFICATION OF CERTAIN DEFINITIONS REGARDING INTEREST
PERIODS. Each of the definitions of "Eurodollar Interest Period," "Transaction
Rate Interest Period," and "Quoted Rate Interest Period" in Article I of the
Existing Credit Agreement is amended by inserting the following at the end
thereof:
"No such period shall extend beyond any Reduction Date unless, on such
Reduction Date, either (i) the aggregate principal amount of all
outstanding Advances shall not exceed the Aggregate Commitment after giving
effect to the reduction scheduled to take effect as of such Reduction Date
or (ii) the sum of (A) the aggregate principal amount of all Floating Rate
Advances PLUS (B) the aggregate principal amount of all Advances other than
Floating Rate Advances with a Interest Period ending on or prior to that
Reduction Date is at least equal to the amount by which the Aggregate
Commitment is scheduled to be reduced on that Reduction Date."
SECTION 2.4. DELETION OF CERTAIN DEFINITIONS. The definitions of
"Revolving Credit Termination Balance" and "Termination Balance" in Article I of
the Existing Credit Agreement (Definitions) are deleted in their entirety.
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SECTION 2.5. AMENDMENT TO SECTION 2.1. The first paragraph of Section 2.1
of the Existing Credit Agreement is amended by deleting the last two sentences
thereof.
SECTION 2.6. AMENDMENT TO SECTION 2.3. Section 2.3 of the Existing Credit
Agreement (Mandatory Payments) is amended and restated in its entirety as
follows:
2.3 REPAYMENT OF ADVANCES.
(a) The Borrower shall repay to the Lenders on the Revolving
Credit Termination Date the aggregate principal amount of all Advances and
other unpaid Obligations outstanding on such date.
(b) The Borrower shall repay each Alternate Currency Advance in
full on the last day of its respective Transaction Rate Interest Period.
(c) From and after the Second Amendment Effective Date until the
Adjustment Date, if the Borrower (or any Subsidiary) makes any scheduled,
mandatory, or optional prepayments or repayments under any Parallel
Agreement which would result in the aggregate of such payments under any
such Parallel Agreement being greater than (as a percentage of the
outstanding commitments thereunder) the aggregate of such payments since
the Second Amendment Effective Date hereunder, then the Borrower shall
concurrently prepay the Advances hereunder in an amount necessary to result
in the aggregate of such payments hereunder since the Second Amendment
Effective Date being not less than the aggregate of such payments (as a
percentage of the outstanding commitments) under any such Parallel
Agreement, subject to compliance with Section 3.4.
(d) On the Adjustment Date, the Borrower shall repay and adjust
the outstanding borrowings and advances under the Parallel Agreements,
including the Advances under this Agreement, in such a manner so that the
aggregate outstanding borrowings and advances under the Parallel Agreements
(including this Agreement) shall not exceed $60,000,000 as of the
Adjustment Date. The foregoing limitation shall only apply on the
Adjustment Date and shall not apply to subsequent borrowings.
(e) From and after the Adjustment Date, the outstanding Advances
shall not at any time exceed the Ratable Amount of the total outstanding
borrowings and advances under the Parallel Agreements (including this
Agreement). If, at any time or from time to time, the aggregate amount of
the outstanding Advances exceeds the Ratable Amount of the total
outstanding borrowings and advances under the Parallel Agreements
(including this Agreement), then the Borrower shall make an immediate
repayment of the Advances to cause the Advances not to exceed such Ratable
Amount.
SECTION 2.7. AMENDMENT TO SECTION 2.5. Section 2.5 of the Existing Credit
Agreement (Optional Reductions in Aggregate Commitment) is amended as follows:
(a) The word "Optional" in the heading is deleted.
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(b) The existing wording in Section 2.5 is re-lettered as subsection
(a), and the following sentence is added at the end thereof:
"Any optional reduction in the Aggregate Commitments shall be
applied against future scheduled reductions in the Aggregate
Commitment in inverse order of scheduled occurrence."
(c) The following new subsections are inserted after such subsection
(a) reading as follows:
(b) The Aggregate Commitment shall automatically be
reduced by $5,000,000 on each of June 30, 2002, December 31, 2002,
and June 30, 2003 (each a "REDUCTION DATE").
(c) No later than the Adjustment Date, the Borrower shall
have arranged or implemented amendments or other modifications to
the Parallel Agreements to provide that (i) the aggregate
outstanding commitments under the Bank One Agreement shall be
$40,000,000, (ii) the aggregate outstanding commitments under the
LaSalle Agreement shall be $25,000,000, and (iii) the aggregate
outstanding commitments under the U.S. Bank Agreement shall be
$10,000,000. From and after the Adjustment Date, the Aggregate
Commitment shall not exceed at any time the Ratable Amount of the
Parallel Agreement Commitments. To the extent that the Borrower
does not take any necessary steps to reduce the Aggregate
Commitment in accordance with the requirements of this section,
then the Aggregate Commitment shall automatically and concurrently,
without notice or demand, reduce hereunder to an amount equal to
the Ratable Amount of the Parallel Agreement Commitments.
(d) Notwithstanding any provision herein to the contrary,
for the avoidance of doubt, the Aggregate Commitment shall not
automatically be reduced due to the reduction in the commitment
under the Bank One Agreement scheduled to take effect on and after
December 31, 2003, such scheduled reduction occurring on and after
December 31, 2003 being in an amount not to exceed $5,000,000 in
the aggregate.
SECTION 2.8. AMENDMENTS TO SECTION 2.9. Section 2.9 of the Existing Credit
Agreement (Optional Principal Payments) is amended as follows:
(a) The section heading is amended to read "Prepayments."
(b) The existing Section 2.9 is re-lettered as Subsection (a), and the
last sentence is deleted in its entirety.
(c) The following new subsections are inserted after subsection (a) as
follows:
"(b) If, upon any reduction in the Aggregate Commitment,
including, without limitation, through the operation of Section
2.5(b) hereof, the aggregate
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Dollar Amount of all outstanding Advances exceeds the Aggregate
Commitment as so reduced, Borrower shall immediately prepay the
Advances in an aggregate amount equal to such excess, subject to
compliance with Section 3.4.
"(c) In addition to any prepayment required under
subsection (b), if, as of the last day of any calendar month, the
Agent determines that the aggregate Dollar Amount of all
outstanding Advances exceeds the Aggregate Commitment then in
effect by reason of currency fluctuations or otherwise, the
Borrower shall, within three Business Days of demand by the Agent,
prepay (in U.S. Dollars) the Advances in an aggregate amount equal
to such excess, subject to compliance with Section 3.4."
SECTION 2.9. AMENDMENTS TO SECTION 2.14. Section 2.14 of the Existing
Credit Agreement (Restrictions on Interest Period) is amended by deleting the
last sentence and inserting the following as the last sentence thereof: "No more
than five Quoted Rate Interest Periods may be in effect at any one time."
SECTION 2.10. AMENDMENTS TO SECTION 4.2. Section 4.2 of the Existing Credit
Agreement (Each Advance) is amended by inserting a new subsection (vi) after
subsection (v) as follows:
"(vi) Concurrent with each Borrowing Notice, (A) prior to the Adjustment
Date, the Borrower has made or is making ratable borrowings under
the Parallel Agreements as a percentage of the Parallel Agreement
Commitments, except with respect to any Parallel Agreement where
the Borrower has exhausted the available aggregate commitment
thereunder; and (B) from and after the Adjustment Date, the
Borrower has made or is making ratable borrowings under each of the
Parallel Agreements (including this Agreement) so that the amount
of the outstanding Advances, as a proportion of all borrowings and
advances outstanding at any time under the Parallel Agreements
(including this Agreement), does not at any time exceed the Ratable
Amount. In addition, the Borrower shall have delivered to the Agent
with each such Borrowing Notice (for delivery to the Lenders)
copies of the borrowing notices delivered under such Parallel
Agreements.
SECTION 2.11. AMENDMENTS TO SECTION 6.1. Section 6.1 of the Existing Credit
Agreement (Financial Reporting) is amended by re-lettering subsection (xi) as
subsection (xii) and inserting new subsection (xi) which read in their entirety
as follows:
"(xi) Copies of all amendments and waivers proposed in connection
with any Parallel Agreement at least three Business Days' prior to the date
of their effectiveness, copies of all such amendments and waivers as
finally executed and delivered, and copies of all notices of default from
lenders, agents or trustees under any Parallel Agreement.
SECTION 2.12. AMENDMENTS TO SECTION 6.20. Section 6.20(d) of the Existing
Credit Agreement (Consolidated Net Worth) is amended by deleting the reference
to "$10,000,000" in clause (d) thereof and replacing it with the amount of
"$30,000,000".
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SECTION 2.13. AMENDMENTS TO SECTION 6.23. Section 6.23 of the Existing
Credit Agreement (Fixed Charge Coverage Ratio) is amended and restated in its
entirety as follows:
6.23 FIXED CHARGE COVERAGE RATIO. The Borrower will maintain a
Fixed Charge Coverage Ratio of not less than 1.20:1.00 as of the last day
of each fiscal quarter of the Borrower commencing on the quarter ended
August 31, 2002 and thereafter. The Fixed Charge Coverage Ratio shall be
determined based on four of the previous five fiscal quarters of the
Borrower that occurred immediately prior to the calculation date, at the
Borrower's option, except that for the quarter ended August 31, 2002, the
Fixed Charge Coverage Ratio may be determined solely on that quarter's
results if the result is greater than four of the previous five fiscal
quarters results.
SECTION 2.14. ADDITION OF A NEW SECTION 6.25. Article VI of the Existing
Credit Agreement (Covenants) is further amended by inserting a new Section 6.25,
immediately following Section 6.24, which reads in its entirety as follows:
6.25 COVENANT TO MAINTAIN COMPARABLE TERMS AMONG LENDERS. Unless
the Required Banks otherwise agree in each instance, this Agreement shall
be deemed automatically amended from time to time MUTATIS MUTANDIS without
further action on the part of the parties hereto so that (a) the effective
interest rates, Applicable Margins, and Facility Fees hereunder are not
less than the comparable effective interest rates, margins and fees under
any Parallel Agreement; and (b) the affirmative and negative covenants
hereunder are not materially less burdensome on the Borrower or materially
less favorable to the Lender than comparable affirmative and negative
covenants contained in any Parallel Agreement.
SECTION 2.15. ADDITION OF A NEW SECTION 6.26. Article VI of the Existing
Credit Agreement (Covenants) is further amended by inserting a new Section 6.26,
immediately following new Section 6.25, which reads in its entirety as follows:
6.26 SYNTHETIC LEASE BORROWINGS AND AGGREGATE COMMITMENT.
(a) The Borrower will not and will cause its Subsidiaries and
Affiliates not to deliver any Notice of Delivery which would cause the
aggregate of (w) the amounts requested to be funded in such Notice of
Delivery, (x) the amounts requested to be funded in all other Notices of
Delivery which have neither been funded nor revoked, (y) all outstanding
Loans with respect to all Aircraft and Engines, and (z) all outstanding
Certificate Amounts with respect to all Aircraft and Engines to exceed
$40,000,000. The Borrower covenants to cause, at all times, the aggregate
Loans and Certificate Amounts not to exceed $40,000,000.
(b) The Borrower covenants and agrees that, on or before February
28, 2002, it will, and shall cause its Subsidiaries and/or Affiliates as
appropriate to, use commercially reasonable best efforts, to cause the
implementation and effectiveness of an amendment to the Synthetic Lease
Documents which (i) effects a reduction in the Maximum Revolving Commitment
Amount and a pro rata reduction in each Participant's Commitment to cause
the aggregate of all Participants' Revolving Commitments to be
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equal to $40,000,000, and (ii) amends the net worth and fixed charged
coverage ratios therein to conform to the same ratios in the Amended Credit
Agreement. The failure of any other party to the Synthetic Lease Documents
to agree to such amendments for whatever reasons on or before February 28,
2002 or thereafter, or the failure of such amendments to occur because they
would effectively cause, a default under the Synthetic Lease Documents, a
termination of the synthetic lease program, or a Liquidity Purchase
thereunder, shall not constitute a default under this covenant. In
addition, the Borrower's covenant and agreement under this paragraph (b) is
subject to the Agent complying with its agreement under Section 5.3 of the
Second Amendment. Capitalized terms used in this Section 6.26 and not
otherwise defined herein shall have the meaning set forth therefor in the
Synthetic Lease Documents.
SECTION 2.16. AMENDMENTS TO SECTION 7.3.Section 7.3 of the Existing Credit
Agreement is amended to read in its entirety as follows:
7.3. The breach by the Borrower of any of the terms or provisions
of SECTIONS 6.2, 6.3, 6.10, 6.18, or 6.26(a); or the breach by the
Borrower of any of the terms or provisions of SECTIONS 6.1, 6.11, 6.12,
613, 614, 615, 6.16, 6.17, 6.19 or 6.26(b) which is not remedied within 10
days after written notice from the Agent or any Lender; or the breach by
the Borrower of any of the terms or provisions made applicable hereunder
pursuant to SECTION 6.25 hereof which is not remedied with any cure or
grace period applicable thereto under the respective Parallel Agreement.
SECTION 2.17. AMENDMENTS TO SECTION 12.3. Section 12.3.1 of the Existing
Credit Agreement is amended by deleting the last two sentences thereof in their
entirety.
PART 3
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders and the Agent that, on
and as of the Second Amendment Effective Date, and after giving effect to this
Second Amendment:
SECTION 3.1. AUTHORITY. The Borrower has all the necessary corporate power
to make, execute, deliver, and perform this Second Amendment, and this Second
Amendment constitutes the legal, valid and enforceable obligation of the
Borrower, enforceable against the Borrower in accordance with its terms.
SECTION 3.2. NO LEGAL OBSTACLE TO AGREEMENT. Neither the execution of this
Second Amendment, the making by the Borrower of any borrowings under the Amended
Credit Agreement, nor the performance of the Amended Credit Agreement has
constituted or resulted in or will constitute or result in a breach of the
provisions of any contract to which Borrower is a party, or the violation of any
law, judgment, decree or governmental order, rule or regulation applicable to
the Borrower, or result in the creation under any agreement or instrument of any
security interest, lien, charge, or encumbrance upon any of the assets of the
Borrower. No approval or authorization of any governmental authority is required
to permit the execution, delivery or performance by the Borrower of this Second
Amendment, the Amended Credit
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Agreement, or the transactions contemplated hereby or thereby, or the making of
any borrowings by the Borrower under the Amended Credit Agreement.
Section 3.3. INCORPORATION OF CERTAIN REPRESENTATIONS. The representations
and warranties set forth in Article V of the Amended Credit Agreement are true
and correct in all material respects on and as of the Second Amendment Effective
Date as though made on and as of the date hereof except for any representations
and warranties that expressly relate solely to an earlier date, which
representations and warranties were true and accurate in all material respects
on and as of such earlier date.
Section 3.4. DEFAULT. No Default or Unmatured default has occurred and is
continuing under the Amended Credit Agreement.
PART 4
CONDITIONS TO EFFECTIVENESS
This Second Amendment shall be and become effective on the Second Amendment
Effective Date when (i) each of the following conditions set forth in this Part
4 shall have been satisfied, and (ii) the Required Lenders and the Borrower
shall have duly executed counterparts of this Second Amendment and provided
original copies thereof to the Agent:
SECTION 4.1. CORPORATE RESOLUTIONS. The Agent shall have received a
copy of the resolution or resolutions passed by the Board of Directors of
the Borrower, certified by the Secretary or an Assistant Secretary of
Borrower as being in full force and effect on the date hereof, authorizing
the amendments to the Existing Credit Agreement herein provided for and the
execution, delivery and performance of this Second Amendment and any note
or other instrument or agreement required hereunder.
SECTION 4.2. AUTHORIZED SIGNATORIES. The Agent shall have received
a certificate, signed by the Secretary or an Assistant Secretary of the
Borrower, dated as of the date hereof, as to the incumbency of the person
or persons authorized to execute and deliver this Second Amendment and any
instrument or agreement required hereunder on behalf of the Borrower.
SECTION 4.3. CLOSING CERTIFICATE. The Agent shall have received an
officer's certificate from the Borrower, executed by either the Chief
Executive Officer or the Chief Financial Officer of the Borrower,
certifying that after giving effect to this Second Amendment, no Default or
Unmatured Default will be in existence, such certificate being in form
reasonably satisfactory to the Agent.
SECTION 4.4. LEGAL OPINION. The Agent shall have received a legal
opinion of senior counsel to the Borrower, in form and content reasonably
satisfactory to the Agent, opining that this Second Amendment has been duly
authorized, executed and delivered by the Borrower and constitutes the
valid, binding, and enforceable obligation of the
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Borrower, except as such enforceability may be subject to (i) bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights
generally and (ii) general principles of equity.
SECTION 4.5. PARALLEL AGREEMENTS. The Borrower shall have delivered
to the Agent true, correct and complete copies of all existing Parallel
Agreements, including all existing and currently proposed amendments and
waivers thereto.
PART 5
MISCELLANEOUS
SECTION 5.1. REFERENCES TO THE CREDIT AGREEMENT. Each reference to the
Credit Agreement in the Amended Credit Agreement, the Notes or any other
instruments, agreements, certificates or other documents executed in connection
therewith (collectively, the "Loan Documents"), shall be deemed to be a
reference to the Amended Credit Agreement, and as the same may be further
amended, restated, supplemented or otherwise modified from time to time in
accordance therewith.
SECTION 5.2. REAFFIRMATION: RELEASE OF CLAIMS. The Borrower acknowledges
and confirms that (a) the Borrower's obligations to repay the Advances and the
other Obligations arising under the Amended Credit Agreement is unconditional
and, as of the Second Amendment Effective Date, not subject to any offsets,
defenses or counterclaims, (b) the Agent and the Lenders have fully performed
all of their respective obligations under the Existing Credit Agreement and the
other Loan Documents, and (c) by entering into this Second Amendment, the
Lenders do not waive or release any term or condition of the Amendment credit
Agreement or any of the other Loan Documents or any of their rights or remedies
under such Loan Documents or applicable law or any of the Obligations of the
Borrower, except as expressly set forth herein or modified hereby. To induce the
Agent and the Lenders to enter into this Second Amendment, the Borrower hereby
releases, acquits and forever discharges the Agent, the Lenders, and all
officers, directors, agents, employees, successors and assigns of the Agent and
any of the Lenders, from any and all liabilities, claims, demands, actions or
causes of actions of any kind or nature (if there by any), whether absolute or
contingent, disputed or undisputed, at law or in equity, or known or unknown,
that the Borrower now has or ever had against such Persons arising under or in
connection with, directly or indirectly, any of the Loan Documents on or prior
to the Second Amendment Effective Date.
SECTION 5.3. AMENDMENT OF SYNTHETIC LEASE DOCUMENTS. The Agent shall, or
shall cause its Affiliates, to us its commercially reasonable best efforts to
arrange and coordinate an amendment of the Synthetic Lease Documents with the
participants thereunder, effective on or before February 28, 2002, which (i)
reduces the Maximum Revolving Commitment Amount (as defined in the Synthetic
Lease Documents) to an amount equal to $40,000,000 and (ii) amends the net worth
and fixed charge coverage ratios therein to conform to the same ratios in the
Amended Credit Agreement.
SECTION 5.4. EXPENSES OF AGENT. Within seven (7) Business Days of the
receipt from the Agent of a detailed bill, the Borrower shall pay all reasonable
costs and expenses incurred by
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the Agent in connection with the preparation, negotiation and execution of this
Second Amendment and any other Loan Documents executed pursuant hereto and any
and all modifications, and supplements thereto, including, without limitation,
the reasonable costs and fees of the Agent's legal counsel and any taxes or
expenses associated with or incurred in connection with any instrument or
agreement referred to herein or contemplated hereby.
SECTION 5.5 BENEFITS. This Second Amendment shall be binding upon, and
shall inure to the benefit of, the parties hereto and their respective
successors and assigns.
SECTION 5.6. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES.
SECTION 5.7. EFFECT. Except as expressly herein amended, the terms and
conditions of the Existing Credit Agreement shall remain in full force and
effect without amendment or modification, express or implied. The entering into
this Second Amendment by the Lenders shall not be construed or interpreted as an
agreement by the Lenders to enter into any future amendment or modification of
the Amended Credit Agreement or any of the other Loan Documents.
SECTION 5.8. COUNTERPARTS; TELECOPIED SIGNATURES. This Second Amendment
may be executed in any number of counterparts and by different parties to this
Second Amendment on separate counterparts, each of which when so executed shall
be deemed to be an original and shall be binding upon all parties, their
successors and assigns, and all of such counterparts taken together shall be
deemed to constitute one and the same instrument. Any signature delivered or
transmitted by a party by facsimile transmission shall be deemed to be an
original signature hereto.
SECTION 5.9 INTEGRATION. This Second Amendment, together with the Loan
Documents, contains the entire and exclusive agreement of the parties hereto
with reference to the matters discussed herein and therein. This Second
Amendment supersedes all prior drafts and communications with respect thereto.
This Second Amendment may not be amended except in a writing.
SECTION 5.10. FURTHER ASSURANCES. The Borrower agrees to take such further
actions as the Agent shall reasonably request from time to time in connection
herewith to evidence or give effect to the amendments set forth herein or any of
the transactions contemplated hereby.
SECTION 5.11. SECTION TITLES. Section titles and references used in this
Second Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed and delivered as of the date first written above
AAR CORP.
By /s/ Timothy J. Romenesko
----------------------------------
Timothy J. Romenesko
Vice President
BANK OF AMERICA, N.A., AS AGENT AND LENDER
By /s/ Wayne R. Porritt
----------------------------------
Wayne R. Porritt
Managing Director
[SEAL]
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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be duly executed and delivered as of the date first written above
AAR CORP.
By
----------------------------------
Timothy J. Romenesko
Vice President
BANK OF AMERICA, N.A., AS AGENT AND LENDER
By /s/ Wayne R. Porritt
----------------------------------
Wayne R. Porritt
Managing Director
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