AAR CORP.
$30,000,000
CREDIT FACILITY
------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of October 7, 1996
------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS..................................................... 1
ARTICLE II. THE CREDITS.................................................... 14
2.1. The Advances................................................... 14
2.2. Extension of Revolving Credit Termination Date................. 15
2.3. Mandatory Payment.............................................. 15
2.4. Fees........................................................... 15
2.5. Optional Reductions in Aggregate Commitment.................... 16
2.6. Ratable Loan................................................... 16
2.7. Types of Advances.............................................. 16
2.8. Minimum Amount of Each Advance................................. 16
2.9. Optional Principal Payments.................................... 16
2.10. Method of Selecting Types and Interest Periods
for New U.S. Dollar Advances................................. 16
2.11. Method of Requesting Alternate Currency Advances............... 17
2.12. Making the Loans............................................... 18
2.13. Conversion and Continuation of
Outstanding U.S. Dollar Advances............................. 18
2.14. Restrictions on Interest Period................................ 19
2.15. Changes in Interest Rate, etc.................................. 19
2.16. Rates Applicable After Default................................. 19
2.17. Method of Payment.............................................. 20
2.18. Foreign Taxes.................................................. 21
2.19. Judgment Currency.............................................. 22
2.20. Notes; Telephonic Notice....................................... 22
2.21. Interest Payment Dates;
Interest and Fee Basis....................................... 23
2.22. Notification of Advances, Interest Rates
Prepayments and Commitment Reductions........................ 23
2.23. Lending Installations.......................................... 23
2.24. Non-Receipt of Funds by the Agent.............................. 24
2.25. Withholding Tax Exemption...................................... 24
(i)
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ARTICLE III. CHANGE IN CIRCUMSTANCES....................................... 25
3.1. Yield Protection............................................... 25
3.2. Changes in Capital Adequacy Regulations........................ 25
3.3. Availability of Eurodollar Advances............................ 26
3.4. Funding Indemnification........................................ 26
3.5. Lender Statements; Survival of Indemnity....................... 26
3.6. Refund to Borrower............................................. 27
ARTICLE IV. CONDITIONS PRECEDENT........................................... 27
4.1. Conditions Precedent to the Restatement Effective Date......... 27
4.2. Each Advance................................................... 28
ARTICLE V. REPRESENTATIONS AND WARRANTIES.................................. 29
5.1. Corporate Existence and Standing............................... 29
5.2. Authorization and Validity..................................... 29
5.3. No Conflict; Government Consent................................ 29
5.4. Financial Statements........................................... 30
5.5. Material Adverse Change........................................ 30
5.6. Taxes.......................................................... 30
5.7. Litigation and Contingent Obligations.......................... 30
5.8. Subsidiaries................................................... 30
5.9. ERISA.......................................................... 31
5.10. Accuracy of Information........................................ 31
5.11. Regulation U................................................... 31
5.12. Compliance With Laws........................................... 31
5.13. Investment Company Act......................................... 31
ARTICLE VI. COVENANTS...................................................... 32
6.1. Financial Reporting............................................ 32
6.2. Use of Proceeds................................................ 33
6.3. Notice of Default.............................................. 34
6.4. Conduct of Business............................................ 34
6.5. Taxes.......................................................... 34
6.6. Insurance...................................................... 34
6.7. Compliance with Laws........................................... 34
6.8. Maintenance of Properties...................................... 35
6.9. Inspection..................................................... 35
6.10. Restricted Payments............................................ 35
6.11. Merger......................................................... 35
(ii)
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6.12. Sale of Assets................................................. 36
6.13. Sale of Accounts............................................... 36
6.14. Investments and Acquisitions................................... 37
6.15. Contingent Obligations......................................... 38
6.16. Liens.......................................................... 39
6.17. Bank of America Agreement...................................... 40
6.18. Rentals........................................................ 40
6.19. Retirement and Modification of
Subordinated Indebtedness.................................... 40
6.20. Affiliates..................................................... 41
6.21. Working Capital................................................ 41
6.22. Consolidated Tangible Net Worth................................ 41
6.23. Ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth.............................. 41
6.24. Consolidated Secured Liabilities............................... 41
6.25. Limitation on Funded Debt...................................... 41
6.26. Fixed Charge Coverage Ratio.................................... 41
ARTICLE VII. DEFAULTS...................................................... 42
ARTICLE VIII. ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............... 45
8.1. Acceleration................................................... 45
8.2. Amendments..................................................... 45
8.3. Preservation of Rights......................................... 46
ARTICLE IX. GENERAL PROVISIONS............................................. 46
9.1. Survival of Representations.................................... 46
9.2. Governmental Regulations....................................... 46
9.3. Taxes.......................................................... 47
9.4. Headings....................................................... 47
9.5. Entire Agreement............................................... 47
9.6. Several Obligations; Benefits of this Agreemen................. 47
9.7. Expenses; Indemnification...................................... 47
9.8. Numbers of Documents........................................... 48
9.9. Accounting..................................................... 48
9.10. Severability of Provisions..................................... 48
9.11. Nonliability of Lenders........................................ 48
9.12. Choice of Law.................................................. 48
9.13. Consent to Jurisdiction........................................ 48
9.14. Confidentiality................................................ 49
9.15. WAIVER OF JURY TRIAL........................................... 49
(iii)
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ARTICLE X. THE AGENT....................................................... 49
10.1. Appointment.................................................... 49
10.2. Powers......................................................... 49
10.3. General Immunity............................................... 49
10.4. No Responsibility for Loans, Recitals, Etc..................... 50
10.5. Action on Instructions of Lenders.............................. 50
10.6. Employment of Agents and Counse................................ 50
10.7. Reliance on Documents; Counse.................................. 50
10.8. Agent's Reimbursement and Indemnification...................... 50
10.9. Rights as a Lender............................................. 51
10.10. Lender Credit Decision......................................... 51
10.11. Successor Agent................................................ 51
ARTICLE XI. SETOFF: RATABLE PAYMENTS........................................ 52
11.1. Setoff......................................................... 52
11.2. Ratable Payments............................................... 52
ARTICLE XII. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.............. 52
12.1. Successors and Assigns......................................... 52
12.2. Participations................................................. 53
12.2.1. Permitted Participants; Effect........................ 53
12.2.2. Voting Rights......................................... 53
12.2.3. Benefit of Setoff..................................... 53
12.3. Assignments.................................................... 54
12.3.1. Permitted Assignments................................. 54
12.3.2. Effect; Effective Date................................ 54
12.4. Dissemination of Information................................... 54
12.5. Tax Treatment.................................................. 55
ARTICLE XIII. NOTICES....................................................... 55
13.1. Giving Notice.................................................. 55
13.2. Change of Address.............................................. 55
ARTICLE XIV. COUNTERPARTS, TERMINATION OF ORIGINAL CREDIT AGREEMENT AND
EFFECTIVENESS............................................................... 55
(iv)
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
(v)
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 7, 1996,
amending and restating CREDIT AGREEMENT, dated as of October 15, 1991, among AAR
CORP., a Delaware corporation, the Lenders from time to time party hereto, and
THE FIRST NATIONAL BANK OF CHICAGO, as Agent for the Lenders.
WITNESSETH:
WHEREAS, the Borrower and the Lenders are party to a Credit Agreement,
dated as of October 15, 1991, as amended by an Amendment No. 1 thereto dated as
of May 31, 1994 and an Amendment No. 2 thereto dated as of May 31, 1995 (the
"Original Credit Agreement"); and
WHEREAS, the parties hereto agree that the Original Credit Agreement shall
be and hereby is amended and restated in its entirety as follows, provided that
if the Restatement Effective Date has not occurred on or prior to October 31,
1996, this amendment and restatement shall be void and of no further effect,
with the Original Credit Agreement to remain in effect:
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 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 The First National Bank of Chicago 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 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 Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of Federal Funds Effective Rate for such day plus 1/2% per annum.
"Alternative Currency" means, with respect to an Alternative 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 Borrowing Request" is defined in Section 2.11.
"Alternate Currency Advance" means an Advance denominated in an Alternate
Currency made pursuant to Section 2.1(b).
"Alternate Currency Loan" means, with respect to a Lender, such Lender's
portion of any Alternate Currency Advance.
"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.
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"Bank of America Agreement" means the Amended and Restated Credit Agreement
dated as of September 9, 1996 between the Borrower and Bank of America Illinois,
as the same may from time to time be amended, supplemented or otherwise
modified, and including any replacement credit facility between the Borrower and
Bank of America Illinois.
"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 New York and are open for
international business (including dealings in U.S. Dollars) in London, (ii) with
respect to any borrowing or payment of Alternate Currency Advances, a day (other
than a 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 such
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.
"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.
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"Commitment" means, for each Lender, the obligation of such Lender to make
Loans 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 of the Borrower and its
Subsidiaries having a final maturity of more than one year. Funded Debt shall
not include payments due within one year from the date as of which a calculation
of 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 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.
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"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) and (h) of Section 6.16)
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) the consolidated stockholders' equity of the Borrower and its
Subsidiaries determined in accordance with Agreement Accounting Principles, less
their consolidated Intangible Assets, 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, 1991 in the book value of
any asset owned by the Borrower or a Consolidated Subsidiary, (ii) all
investments in unconsolidated Subsidiaries and all equity investments in Persons
which are not Subsidiaries and (iii) 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 (iii), 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 Consolidated Tangible
Net Worth plus 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 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.
"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.
"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes.
"Default" means an event described in Article VII.
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"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 First Chicago 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 l974, 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 determined by the Agent to be the
rate at which deposits in U.S. dollars are offered by First Chicago to
first-class banks in the London interbank market at approximately 11 a.m.
(London time) two Business Days prior to the first day of such Eurodollar
Interest Period, in the approximate amount of First Chicago's relevant
Eurodollar Loan and having a maturity approximately equal to such Eurodollar
Interest Period.
"Eurodollar Conversion Notice" is defined in Section 2.13.
"Eurodollar Interest Period" means, with respect to a Eurodollar Advance, a
period of fourteen (14) days or one, two or three 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 is fourteen
(14) days subsequent to such date or which corresponds numerically to such date
one, two or three months thereafter, provided, however, that if there is no such
numerically corresponding day in such next, second or third succeeding month,
such Eurodollar Interest Period shall end on the last Business Day of such next,
second or third 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.
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"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. As used in
this definition, "Applicable Margin" means (x) .75% at all times when the
Borrower has an Investment Grade Rating and there has been no HLT
Classification, (y) 1.50% at all times when the Borrower does not have an
Investment Grade Rating and there has been no HLT Classification and (z) 2.50%
at all times when there has been an HLT Classification. 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,
First Chicago'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 Termination Date" means the twentieth (20th) Payment Date
following the Revolving Credit Termination Date.
"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.
"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.
"Fixed Rate" means the Eurodollar Rate or a Transaction Rate.
Page 7
"Fixed Rate Advance" means (a) any Alternate Currency Advance (each of
which bears interest at a Transaction Rate) or (b) any U.S. Dollar Advance which
bears interest at the Eurodollar Rate.
"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 Base Rate for such day plus (b) the Applicable Margin, changing when
and as the Alternate Base Rate changes. As used in this definition, "Applicable
Margin" means (i) at all times prior to the Revolving Credit Termination Date
(x) zero % at all times when the Borrower has an Investment Grade Rating and
there has been no HLT Classification, (y) .50% at all times when the Borrower
does not have an Investment Grade Rating and there has been no HLT
Classification and (z) 1.50% at all times when there has been an HLT
Classification and (ii) at all times on or after the Revolving Credit
Termination Date (x) .50% at all times when the Borrower has an Investment Grade
Rating and there has been no HLT Classification, (y) 1.00% at all times when the
Borrower does not have an Investment Grade Rating and there has been no HLT
Classification and (z) 2.00% at all times when there has been an HLT
Classification.
"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.
"HLT Classification" means, in the context of there having been an HLT
Classification, that either (i) the Agent has received notice from any
governmental or quasi-governmental authority, central bank or comparable agency
having jurisdiction over the Agent or any Lender that the Advances or the
Commitments hereunder are classifiable as being part of a "highly leveraged
transaction" or (ii) the Agent has otherwise determined that compliance with any
law or any governmental or quasi-governmental rule, regulation, order, policy,
guideline or directive (whether or not having the force of law) requires that
the Advances or Commitments hereunder be classified as part of a "highly
leveraged
Page 8
transaction". The effective date of an "HLT Classification" for all purposes of
this Agreement shall be the date of receipt by the Agent of the notice referred
to in clause (i) or the date of the determination by the Agent referred to in
clause (ii), as the case may be, provided that in either case the Lender acting
as Agent hereunder does in fact promptly classify either its respective Loans or
its respective Commitment hereunder as being part of a "highly leveraged
transaction" to the extent required by the source of such required
classification.
"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 pursuant to
any of clauses (a), (d), (e), (f) and (h) of Section 6.16) 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 or a Transaction Rate
Interest Period.
"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 ▇▇▇▇▇'▇ 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.
Page 9
"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 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.
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"Payment Notes" has the meaning provided in Section 6.12.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"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.
"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
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.
Page 11
"Required Lenders" means Lenders in the aggregate having at least 66-2/3%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 66-2/3% 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 August 31, 1999 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,
Page 12
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 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 or Eurodollar 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
Page 13
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.
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.
The foregoing commitment to make U.S. Dollar Advances shall expire at the
close of business on the Revolving Credit Termination Date; PROVIDED, that
notwithstanding anything in this Agreement to the contrary, Eurodollar
Advances may only be requested and made prior to, but not on, the Revolving
Credit Termination Date.
(b) DISCRETIONARY ALTERNATE CURRENCY ADVANCES. From and including
the date of this Agreement and to (but not including) 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 Loans 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 August 31, 1999. 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 such 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 Floating Rate 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 3
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 agrees to pay to the Agent, for the ratable
account of the Lenders, a commitment fee on the average daily amount by which
the Aggregate Commitment exceeds the aggregate Dollar Amount of all Loans
outstanding hereunder, for the period from the date hereof to and including the
Revolving Credit Termination Date, payable on each Payment Date hereafter and on
the Revolving Credit Termination Date, equal to (x) .30% at all times when the
Borrower has an Investment Grade Rating and (y) .425% at
Page 15
all times when the Borrower does not have an Investment Grade Rating. In
addition, upon any HLT Classification, the Borrower agrees to pay to the Agent
upon demand, for the pro rata account of each of the Lenders, an HLT
Classification fee equal to .125% of the Aggregate Commitment in effect at the
time of such HLT Classification. For the purpose of calculating fees under this
Section 2.4, the Dollar Equivalent of outstanding Alternate Currency Advances
shall be calculated daily.
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 ten 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 commitment 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 in proportion to the ratio that their
respective Commitments bear to the Aggregate Commitment.
2.7. TYPES OF ADVANCES. The U.S. Dollar Advances may be Floating Rate
Advances or Eurodollar 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 unused 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. 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, the
Page 16
Eurodollar Interest Period applicable to each new U.S. Dollar 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 10:00 a.m. (Chicago time) at least (a) one Business Day
before the Borrowing Date of each Floating Rate Advance and (b) three Business
Days before the Borrowing Date for each Eurodollar Advance, in each case
specifying:
(i) the Borrowing Date of such Advance, which shall be a Business Day
prior to or, for Floating Rate Advances only, on, the Revolving
Credit Termination Date,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the Eurodollar Interest
Period applicable thereto.
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 (5) 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.
Page 17
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 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. 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 or converted into U.S. Dollar
Advances of 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 Section 2.1(b)
and Section 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 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 be automatically converted into a Floating Rate Advance unless the
Borrower shall have given the Agent a Eurodollar Conversion Notice requesting
that, at the end of such Eurodollar Interest Period, such Eurodollar Advance be
converted
Page 18
into a new Eurodollar Advance for a new Eurodollar Interest Period. Subject to
the terms of Section 2.8, the Borrower may from time to time prior to the
Revolving Credit Termination Date elect to convert all or any part of any
Floating Rate Advance into a Eurodollar Advance, or to convert all or any part
of any Eurodollar Advance into a new Eurodollar Advance for a new Eurodollar
Interest Period; PROVIDED, that any conversion of any existing Eurodollar
Advance shall be made on, and only on, the last day of its respective Eurodollar
Interest Period. The Borrower shall give the Agent irrevocable notice (a
"Eurodollar Conversion Notice") of each conversion of an outstanding U.S. Dollar
Advance into a Eurodollar Advance not later than 10:00 a.m. (Chicago time) at
least three Business Days prior to the date of the requested conversion,
specifying:
(i) the requested date of such conversion, which date shall be a
Business Day prior to the Revolving Credit Termination Date;
(ii) the aggregate amount and Type of the U.S. Dollar Advance which is
to be converted or continued; and
(iii) the amount and Eurodollar Interest Period applicable to each
Eurodollar Advance into which such U.S. Dollar Advance is to be
converted.
Notwithstanding anything to the contrary contained in this Section 2.13, no U.S.
Dollar Advance may be converted into or continued as a Eurodollar Advance (a) at
any time subsequent to the Revolving Credit Termination Date or (b) (except with
the consent of the Required Lenders) when any Default or Unmatured Default has
occurred and is continuing.
2.14. RESTRICTIONS ON INTEREST PERIODS. No Interest Period may end after
the Revolving Credit Termination Date. No more than ten (10) 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 referred to in the definition "Floating Rate".
Each Fixed Rate Advance shall bear interest from and including the first day of
the Interest Period applicable thereto to (but not including) 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 referred to in the definition of
"Eurodollar Rate".
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
Page 19
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 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 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 and the Alternate Currency Advances. In the absence of such
instructions, the Agent shall apply such payment first to the
Page 20
outstanding Floating Rate Advances and then apply any remainder to the
outstanding Eurodollar Advances and the outstanding Alternate Currency Advances
in whatever proportion it shall determine in its sole discretion; PROVIDED, that
as between Eurodollar 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 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
Page 21
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, non-appealable 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.
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
Page 22
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 0fficer. 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.
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 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 commitment 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.
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, Eurodollar 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 Base 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).
Page 23
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 Loans 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 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
Page 24
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 reduces 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.
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, 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
Page 25
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
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
Section 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 Eurodollar 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 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
Page 26
statement of such Lender as to the amount due, if any, under Sections 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
Section 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")
which is the date upon 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 articles of incorporation and by-laws or, in
lieu thereof, a certificate of the Secretary or Assistant
Secretary of the Borrower to the effect that neither said
articles or incorporation or by-laws have been amended since the
date of the Original Credit Agreement except for such amendments,
if any, as are attached to said certificate.
(ii) 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
Page 27
deemed necessary by counsel for any Lender) authorizing the
execution of the Loan Documents.
(iii) 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.
(iv) 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.
(v) A written opinion of the Borrower's counsel, addressed to the
Lenders in substantially the form of Exhibit "E" hereto.
(vi) Replacement Notes payable to the order of each of the Lenders.
(vii) Written money transfer instructions, in substantially the form of
Exhibit "F" hereto, addressed to the Agent and signed by an
Authorized Officer, together with such other related money
transfer authorizations as the Agent may have reasonably
requested.
(viii) 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.
(iv) If such Advance is a 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
Page 28
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 judgement the
Lenders and their counsel.
Each Borrowing Notice with respect to each such Advance shall constitute a
representation and warranty by the Borrower that the conditions contained in
Sections 4.2(i) and (ii) 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:
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,
Page 29
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, l996 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, 1996, 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 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 May 31, 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, 1996, 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, 1996.
5.8. SUBSIDIARIES. As of the date hereof, the Borrower's Form 10-K filed
with the Securities and Exchange Commission for its fiscal year ended May 31,
1996 contains an
Page 30
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.l0. ACCURACY OF INFORMATION. No information, exhibit or report
furnished by the Borrower or any of its Subsidiaries to the Agent or to 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.
5.12. COMPLIANCE WITH LAWS. The Borrower and its Subsidiaries have
complied in all material 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 could 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.
Page 31
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 (if requested by the Lenders), and (b) a
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 any Lender, 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 any Lender, 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.
Page 32
(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 l0 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 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
Page 33
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) make
any payments on any of the Borrower's commercial paper which has been placed or
underwritten by First Chicago or any Affiliate of First Chicago, (ii) purchase
or carry any "margin stock" (as defined in Regulation U), (iii) acquire any
security in any transaction which is subject to Sections 13 and 14 of the
Securities Exchange Act of 1934 or (iv) 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 could reasonably be expected to 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 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.
Page 34
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 June 1, 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.
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.
Page 35
(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 6.20.
(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.
(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
Page 36
and its Subsidiaries during any fiscal year of the Borrower shall not
exceed an amount equal to 25% 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 Sectin 6.12.
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-l or better by Standard and Poor's
Corporation or P-l or better by ▇▇▇▇▇'▇ 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.
(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.
Page 37
(i) Investments in the unrated ▇▇▇▇▇▇▇ Sachs Money Market Trust
Institution Liquid Asset Fund in an amount not to exceed $15,000,000 in the
aggregate, provided, that if at any time such Fund changes its investment
strategy or risk profile or is credit rated, it is reasonably acceptable to
the Agent.
(j) Investments evidenced by Payment Notes.
(k) Acquisitions and other Investments in addition to those permitted
under clauses (a) through (j) of this Section, provided that after giving
effect thereto the aggregate amount of all such Acquisitions and
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) 25% of
Consolidated Tangible Net Worth as of the last day of the Borrower's fiscal
year immediately preceding the date on which any such Acquisition or
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. CONTINGENT OBLIGATIONS. The Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any Contingent Obligation (including,
without limitation, any Contingent Obligation with respect to the obligations of
a Subsidiary), except:
(a) 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.
(b) 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 6.18.
(c) Contingent Obligations by the Borrower or any Subsidiary (other
than those permitted under clauses (a) and (b) above), provided that the
sum of (i) Consolidated Funded Debt plus (ii) the aggregate amount of all
Contingent Obligations of the Borrower and its Subsidiaries does not at any
time exceed an amount equal to 50% of Consolidated Total Capitalization.
Page 38
6.16. 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 which adequate reserves in accordance with
generally accepted principles of accounting 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.
Page 39
(i) Subject to Section 6.15(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 on the real estate located in Wooddale, Illinois, known as
the Corporate Headquarters of the Borrower, securing obligations of the
Borrower not to exceed $10,000,000 in the aggregate at any time
outstanding.
6.17. BANK OF AMERICA AGREEMENT. The Borrower will give the Lenders a
copy of each amendment, supplement or other modification to the Bank of America
Agreement promptly, and in any event within thirty (30) days, following
execution thereof.
6.18. 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 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.
6.19. 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.
Page 40
6.20. 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.
6.21. 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.
6.22. CONSOLIDATED TANGIBLE NET WORTH. The Borrower will maintain at all
times Consolidated Tangible Net Worth in an amount not less than the sum of (a)
$160,000,000 plus (b) the net cash proceeds received by the Borrower from the
sale of any of its capital stock on or after May 31, 1996 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, 1996,
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, 1996.
6.23. RATIO OF CONSOLIDATED LIABILITIES TO CONSOLIDATED TANGIBLE NET
WORTH. The Borrower will maintain at all times Consolidated Liabilities not in
excess of 200% of Consolidated Tangible Net Worth.
6.24. 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, there shall be excluded all obligations of the Borrower secured by
the real estate located in Wooddale, Illinois, known as the Corporate
Headquarters of the Borrower.
6.25. LIMITATION ON FUNDED DEBT. The Borrower will not permit the sum of
(i) Consolidated Funded Debt plus (ii) the aggregate amount of all Contingent
Obligations of the Borrower and its Subsidiaries to at any time exceed an amount
equal to 50% of Consolidated Total Capitalization.
6.26. 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 (4) of the previous five (5) fiscal
quarters of the Borrower that occurred immediately prior to the calculation
date, at the Borrower's option.
Page 41
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.
ARTICLE VII
DEFAULTS
The occurrence of any one or more of the following events shall constitute
a Default:
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 commitment fee or other obligations under any
of the Loan Documents within five Borrowing 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 6.19; 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, 6.18 or
6.20 which is not remedied within 10 days after written notice from the Agent or
any Lender.
Page 42
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) 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) 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) 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 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
Page 43
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 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
Page 44
the Borrower or any other Person of any 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.
7.13. Any Change in Control shall occur.
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:
Page 45
(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.
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.
Page 46
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 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.
Page 47
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.
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.
Page 48
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 their respective Affiliates, (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.
ARTICLE X
THE AGENT
10.1. APPOINTMENT. The First National Bank of Chicago 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 (i) 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 or
(ii) any determination by the Agent (in the absence of its gross negligence or
Page 49
willful misconduct) that compliance with any law or any governmental or
quasi-governmental rule, regulation, order, policy, guideline or directive
(whether or not having the force of law) requires an HLT Classification in
respect of the Advances and Commitments hereunder.
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
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 in proportion to their respective
Commitments (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,
Page 50
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.l0. 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 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 thirty 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
Page 51
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 ratable proportion 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 in proportion to their Loans. 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 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
Page 52
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 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
Page 53
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 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 substantially in the form attached as
Exhibit "II" to Exhibit "H" hereto 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 Commitment, 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.
Page 54
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 Eurodollar 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 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 or telephone, that it has taken such action.
Page 55
IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have executed
this Agreement as of the date first above written.
COMMITMENTS AAR CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Title: Vice President - CFO & Treasurer
----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President - Chief Financial
Officer and Treasurer
$30,000,000 THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Title: Senior Vice President
----------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Senior Vice President
--------------------
$30,000,000
Page 56
SCHEDULE "1"
OTHER INVESTMENTS
(See Section 6.14)
Investment Investment Amount of
In By Investment
---------- ----- ----------
NONE
SCHEDULE "2"
LIENS
(See Section 6.16)
Mortgage lien on facilities located in Frankfort, New York to secure
indebtedness of AAR Engine Component Services, a division of Subsidiary AAR
Engine Services, Inc. to Fleet Bank (formerly 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 Powerboss, Inc. 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.
EXHIBIT "A"
NOTE
$ October 7, 1996
--------------
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 Dollars or the aggregate unpaid
principal amount of all Loans made by the Lender to the Borrower pursuant to
Article II of the Amended and Restated 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 Amended and Restated Credit Agreement. The Borrower
shall pay the principal of and accrued and unpaid interest on the Loans 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 Amended and Restated
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 The First National Bank of Chicago, 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
Amended and Restated 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 Amended and Restated Credit Agreement.
This Note is one of the Notes issued pursuant to, and is entitled to the
benefits of, the Amended and Restated Credit Agreement, dated as of October 7,
1996, as it may be amended, supplemented, extended or otherwise modified from
time to time, among the Borrower, The First National Bank of Chicago,
individually and as Agent, and the lenders named therein, including the Lender
(the "Amended and Restated Credit Agreement"). Reference is hereby made to the
Amended and Restated 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 Amended and Restated Credit Agreement.
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 BANKS.
AAR CORP.
By:
---------------------------------
Title:
------------------------------
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF AAR CORP.
DATED OCTOBER 7, l996
Principal Maturity Principal
Amount of Currency of Interest Amount Unpaid
Date Loan of Loan Period Paid Balance
---- --------- -------- ----------- --------- -------
EXHIBIT "B"
EXTENSION LETTER
, 19
--------- --
To: The First National Bank of Chicago,
as Agent for the Lenders party to the
Amended and Restated Credit Agreement referred to below
Re: Proposed Extension of the Revolving Credit Termination Date
-----------------------------------------------------------
Gentlemen:
We make reference to that certain Amended and Restated Credit Agreement
dated as of October 7, 1996, among AAR Corp., the Lenders party thereto and The
First National Bank of Chicago as Agent for the Lenders, as it may from time to
time be amended, modified, renewed or extended (the "Amended and Restated Credit
Agreement"). All capitalized terms used herein shall have the meanings
attributed to them in the Amended and Restated Credit Agreement.
The Revolving Amended and Restated Credit Termination Date currently in
effect under the Amended and Restated Credit Agreement is __________, 19 .
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 Amended and Restated Credit Termination Date to __________, 19 .
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
Amended and Restated Credit Agreement shall henceforth be __________, 19__.
Sincerely yours,
AAR CORP.
By:
-------------------------------
Title:
---------------------------
ACCEPTED AND AGREED TO:
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------
Title:
----------------------------
[Add Signature Lines for all Lenders]
EXHIBIT "C"
BORROWING NOTICE
, 19
------------ --
To: The First National Bank of Chicago, as Agent for the Lenders party to
the Amended and Restated Credit Agreement referred to below
Re: U.S. Dollar Borrowing Notice
----------------------------
Gentlemen:
We make reference to that certain Amended and Restated Credit Agreement
dated as of October 7, 1996, among AAR Corp., the Lenders party thereto and The
First National Bank of Chicago as Agent for the Lenders, as it may from time to
time be amended, modified, renewed or extended (the "Amended and Restated Credit
Agreement"). All capitalized terms used herein shall have the meanings
attributed to them in the Amended and Restated Credit Agreement.
The Borrower hereby gives irrevocable notice pursuant to Section 2.10 of
the Amended and Restated Credit Agreement for the following U.S. Dollar
Advance(s):
Borrowing Date: , 19 (1)
------------ --
Principal Amount(2) Type of Advance(3) Interest Period(4)
----------------- ---------------- ---------------
$
Sincerely yours,
AAR CORP.
By:
------------------------------
Title:
---------------------------
-----------------------
(1) Borrowing Date must be a Business Day prior to or on the Revolving Credit
Termination Date.
(2) Subject to the minimum amount requirements set forth in Section 2.8.
(3) Specify Floating Rate Advance or Eurodollar Advance.
(4) Applicable to Eurodollar Advances only. See definition of Eurodollar
Interest Period and Section 2.14 (Restrictions on Interest Periods).
EXHIBIT "D"
ALTERNATE CURRENCY BORROWING REQUEST
, 19
------------ --
To: The First National Bank of Chicago,
as Agent for the Lenders party to the
Amended and Restated Credit Agreement referred to below
Re: Alternate Currency Borrowing Request
------------------------------------
Gentlemen:
We make reference to that certain Amended and Restated Credit Agreement
dated as of October 7, 1996, among AAR Corp., the Lenders party thereto and The
First National Bank of Chicago as Agent for the Lenders, as it may from time to
time be amended, modified, renewed or extended (the "Amended and Restated Credit
Agreement"). All capitalized terms used herein shall have the meanings
attributed to them in the Amended and Restated Credit Agreement.
The Borrower hereby gives its irrevocable request, pursuant to Section 2.11
of the Amended and Restated Credit Agreement, for the following Alternate
Currency Advance(s):
Borrowing Date: , 19 (1)
------------ --
Principal Alternate Transaction Transaction Rate
Amount(2) Currency Rate(3) Interest Period(4)
------ -------- ---- ---------------
$
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 Amended and Restated Credit Agreement of
counterparts of this Request executed by each of the
Lenders, the Lenders shall be jointly and severally committed to make the
Alternate Currency Advance(s) requested hereby, subject to the terms and
conditions of the Amended and Restated Credit Agreement.
Sincerely yours,
AAR CORP.
By:
------------------------------
Title:
---------------------------
ACCEPTED AND AGREED TO:
THE FIRST NATIONAL BANK OF CHICAGO
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).
EXHIBIT "E"
October 7, 1996
The Lenders who are parties to the
Amended and Restated 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
Amended and Restated Credit Agreement among the Borrower, The First National
Bank of Chicago, individually and as Agent, and the Lenders named therein,
providing for Advances in an aggregate principal amount not exceeding
$30,000,000 at any one time outstanding and dated as of October 7, 1996 (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:
l. 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, 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 May 31, 1996, 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,
------------------------------------
EXHIBIT "F"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: The First National Bank of Chicago,
as Agent (the "Agent") under the
Amended and Restated Credit Agreement Described Below.
Re: Amended and Restated Credit Agreement, dated October 7, 1996 (as the
same may be amended or modified, the "Amended and Restated 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 Amended and Restated 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 Amended and
Restated Credit Agreement or based on any telephonic notice made in accordance
with Section 2.20 of the Amended and Restated 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
Bank Officer Name Date ______________
----------------------------------- -----------------------------------
(Please Print) Signature
(Deliver Completed Form to Credit Support Staff For Immediate Processing)
EXHIBIT "G"
COMPLIANCE CERTIFICATE
To: The Lenders parties to the
Amended and Restated Credit Agreement Described Below
This Compliance Certificate is furnished pursuant to that certain Amended
and Restated Credit Agreement dated as of October 7, 1996 (as amended, modified,
renewed or extended from time to time, the "Agreement") among the Borrower, the
lenders party thereto and The First National Bank of Chicago, 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 CERTIFIES 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:
------------------------------------------------------
------------------------------------------------------
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 _____________, 19__.
------------------------------
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule of Compliance as of ___________, 19__ with Provisions
of Sections 6.21, 6.22, 6.23, 6.24, 6.25 and 6.26 of the Agreement
EXHIBIT "H"
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
______________________ (the "Assignor") and ___________________ (the "Assignee")
is dated as of ___________, 19__. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Amended and
Restated Credit Agreement, dated as of October 7, 1996 (which, as it may be
amended, modified, renewed or extended from time to time, is herein called the
"Amended and Restated Credit Agreement"), among AAR Corp. (the "Borrower"),
certain lenders party thereto and The First National Bank of Chicago, as agent
for such lenders. Capitalized terms used herein and not otherwise defined
herein shall have the meanings attributed to them in the Amended and Restated
Credit Agreement. The Assignor desires to assign to the Assignee, and the
Assignee 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 Assignee shall equal $____________ and its percentage of the Aggregate
Commitment shall equal ___%.
2. ASSIGNMENT. For and in consideration of the assumption of obligations
by the Assignee 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 Amended and Restated Credit Agreement and the
other Loan Documents. Pursuant to Section 12.3.2 of the Amended and Restated
Credit Agreement, on and after the Effective Date the Assignee 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 Assignee were a "Lender" under the Amended and Restated
Credit Agreement with ___% of the Aggregate Commitment. The Effective Date
shall be the later of ___________, 19__ 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 substantially in the form
of Exhibit "II" attached hereto required to be delivered to the Agent by Section
12.3.1 of the Amended and Restated 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 Assignee 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 Assignee 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 Assignee 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 Amended and Restated Credit Agreement
which are assigned to the Assignee hereunder, which assumption includes, without
limitation, the obligation to fund the unfunded portion of the Aggregate
Commitment in accordance with the provisions set forth in the Amended and
Restated Credit Agreement as if the Assignee were a "Lender" under the Amended
and Restated Credit Agreement with ____% of the Aggregate Commitment. The
Assignee agrees to be bound by all provisions relating to "Lenders" under and as
defined in the Amended and Restated 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 Assignee
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 Assignee 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 Assignee 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 Assignee 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 Assignee 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 Assignee
shall pay the Assignor an amount equal to the Purchased Percentage of such Fixed
Rate Loan. On and after the Effective Date, the Assignee 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
Assignee 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 Assignee
hereunder, the Assignee shall pay to the Assignor interest for such period on
such Fixed Rate Loan at the applicable rate provided by the Amended and Restated
Credit Agreement. In the event that either party hereto receives any payment to
which the other party hereto 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 ASSIGNEE. On each day on which the Assignee receives a
payment of interest or commitment fees under the Amended and Restated Credit
Agreement (other than a payment of interest or commitment fees which the
Assignee 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 Assignee 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 Assignee
and (ii) the amount of the interest or fee, as applicable, which would have been
received by the Assignee if each interest rate was ___ of 1% less than the
interest rate paid by the Borrower or if the commitment fee was ___ of 1% less
than the commitment fee paid by the Borrower, as applicable. In addition, the
Assignee agrees to pay ___% of the fee required to be paid to the Agent pursuant
to Section ___________ of the Amended and Restated Credit Agreement.
6. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. The
Assignee 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 Assignee 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
Assignee and shall not be responsible for (i) the due execution, legality,
validity, enforceability, genuineness, sufficiency or collectability of the
Amended and Restated Credit Agreement or 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 Assignee 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 Assignee's performance or
non-performance of obligations assumed under this Assignment Agreement.
8. SUBSEQUENT ASSIGNMENTS. After the Effective Date, the Assignee shall
have the right pursuant to Section 12.3.1 of the Amended and Restated Credit
Agreement to assign the rights which are assigned to the Assignee 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 Assignee shall agree to assume all of
the Assignee's obligations hereunder in a manner satisfactory to the Assignor
and (iii) the Assignee 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
Assignee shall remain the percentage specified in Section 1 hereof and the
dollar amount of the Commitment of the Assignee 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 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 Amended and Restated 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.
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 ASSIGNEE]
By:
--------------------------------
Title:
-----------------------------
-----------------------------
-----------------------------
EXHIBIT "I"
NOTICE
OF ASSIGNMENT
-------------
To: [AAR CORP.]*
THE FIRST NATIONAL BANK OF CHICAGO,
as Agent under the Amended and Restated Credit Agreement
Described Below.
From: [NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
, 19
----------- --
1. We refer to that Amended and Restated Credit Agreement, dated as
of October 7, 1996 (which, as it may be amended, modified, renewed or extended
from time to time, is herein called the "Amended and Restated Credit Agreement")
among AAR Corp. (the "Borrower"), certain lenders party thereto (each a
"Lender"), including __________________ (the "Assignor") and The First National
Bank of Chicago, 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 Amended and Restated 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
Amended and Restated Credit Agreement.
3. The Assignor and ___________________ (the "Assignee") have
entered into an Assignment Agreement, dated as of ___________, 19__, pursuant to
which, among other things, the Assignor has sold, assigned, delegated and
transferred to the Assignee, and the Assignee has purchased, accepted and
assumed from the Assignor, an undivided interest in and to all of the Assignor's
rights and obligations under the Amended and Restated Credit Agreement such that
Assignee's percentage of the Aggregate Commitment shall equal ___%, effective as
of the "Effective Date" (as hereinafter defined). The "Effective Date" shall be
the later of ________, 19__ or two Business Days (or such shorter period as
agreed to by the Agent) after this Notice
--------------------
*To be included only if consent must be obtained from the Borrower pursuant to
Section 12.3.1 of the Amended and Restated Credit Agreement.
of Assignment and any consents and fees required by Sections 12.3.1 and 12.3.2
of the Amended and Restated 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 Assignee has not been satisfied.
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 in the Aggregate Commitment and Advances will be ____% (as such
percentage may be reduced or increased by assignments which become effective
prior to the assignment to the Assignee becoming effective) and the percentage
of the Assignee in the Aggregate Commitment and Advances will be ____%.
5. The Assignor and the Assignee 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 _______, 19__ 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 Assignee. At the request of the Agent, the
Assignor will give the Agent written confirmation of the occurrence of the
Effective Date.
6. The Assignee 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 Amended and Restated Credit Agreement
which it has hereby assumed and (ii) to be bound by the terms and conditions of
the Amended and Restated Credit Agreement as if it were a "Lender".
7. The Assignor and the Assignee 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
Assignee, it being understood that the Assignor and the Assignee shall make
between themselves any desired allocations.
8. The Assignor or the Assignee 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 Amended and Restated Credit Agreement.
9. The Assignor and the Assignee request and direct that the Agent
prepare and cause the Borrower to execute and deliver [new Notes or, as
appropriate,] replacements notes, to the Assignor and the Assignee in accordance
with Section 12.3.2 of the Amended and Restated Credit Agreement. The Assignor
[and the Assignee] agree[s] 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 Assignee advises the Agent that the address listed below is
its address for notices under the Amended and Restated Credit Agreement:
-------------------------
-------------------------
-------------------------
ASSIGNOR ASSIGNEE
By: By:
--------------------------- ---------------------------
Title: Title:
------------------------ ------------------------
EXHIBIT "II"
CONSENT AND RELEASE
TO: [NAME OF ASSIGNOR]
----------------------------
----------------------------
[NAME OF ASSIGNEE]
----------------------------
----------------------------
_________________, 19___
1. We acknowledge receipt from ____________________________ (the
"Assignor") and _________________________ (the "Assignee") of the Notice of
Assignment, dated as of ___________________, 19__ (the "Notice").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings attributed to them in the Notice.
****[2. In consideration of the assumption by the Assignee of the
obligations of the Assignor as referred to in the Notice, the Borrower hereby
(i) irrevocably consents, as required by Section 12.3.1 of the Amended and
Restated Credit Agreement, to the assignment and delegation referred to in
the Notice and (ii) as of the Effective Date, irrevocably reduces the
percentage of the Assignor in the Aggregate Commitment by the percentage of
the Aggregate Commitment assigned to the Assignee and releases the Assignor
from all of its obligations to the Borrower under the Loan Documents to
the extent that such obligations have been assumed by the Assignee.]****
****[3. The Borrower directs the Agent to prepare for issuance by
the Borrower new Notes as requested by the Assignor and the Assignee in the
Notice.]****
4. In consideration of the assumption by the Assignee of the
obligations of the Assignor as referred to in the Notice, the Agent hereby
(i) irrevocably consents, as required by Section 12.3.1 of the Amended and
Restated Credit Agreement, to the assignment and delegation referred to in
the Notice, (ii) as of the Effective Date, irrevocably releases the Assignor
from its obligations to the Agent under the Loan Documents to the extent that
such obligations have been assumed by the Assignee, and (iii) agrees that, as
of the Effective Date, the Agent shall consider the Assignee as a "Lender"
for all purposes under the Loan Documents to the extent of the assignment and
delegation referred to in the Notice.
****[AAR CORP.]**** THE FIRST NATIONAL BANK OF CHICAGO,
as Agent
By:__________________________ By:______________________________________
Title:_______________________ Title:___________________________________
Paragraph 2 is to be included only if the consent of the Borrower is required
pursuant to Section 12.3.1 of the Amended and Restated Credit Agreement.