Exhibit 10.1

 

[EXECUTION COPY]

 

 

 

CREDIT AGREEMENT

 

AMONG

 

AAR CORP.
AS THE PARENT GUARANTOR

 

AND

 

AAR CANADA HOLDINGS ULC
AS BORROWER

 

AND

 

CANADIAN IMPERIAL BANK OF COMMERCE
AS LENDER

 

DATED AS OF OCTOBER 18, 2017

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE 1 INTERPRETATION

1

1.1

General Definitions

1

1.2

References to Agreements

1

1.3

Reference to Statutes

1

1.4

Headings, etc.

2

1.5

Number and Gender

2

1.6

Accounting Principles

2

 

 

ARTICLE 2 THE CREDIT FACILITY

2

2.1

Term Facility

2

2.2

Purpose of Facility

2

2.3

Availability

2

2.4

Repayments

3

2.5

Voluntary Repayments

3

2.6

Revolver Security Event Offer

3

 

 

ARTICLE 3 PRIME RATE LOAN

4

3.1

Request for a Prime Rate Loan

4

3.2

Interest on Prime Rate Basis

5

3.3

Computation of Interest

5

3.4

Payment of Interest

5

3.5

Interest on Loan Generally

5

3.6

Annual Equivalents

5

 

 

ARTICLE 4 BANKER’S ACCEPTANCES

6

4.1

Requests for the Issuance of BAs

6

4.2

Stamping Fee

6

4.3

Lender to Discount BAs

6

4.4

Payment of BAs

7

4.5

Waiver

7

4.6

Power of Attorney to Sign Drafts

7

 

 

ARTICLE 5 CONVERSIONS AND ROLLOVERS

7

5.1

Request for Conversions

7

5.2

Conversion or Rollover

8

5.3

Requirements for Conversions or Rollovers

8

 

 

ARTICLE 6 FEES

8

6.1

Up-Front Fee

8

 

 

ARTICLE 7 MANNER OF PAYMENTS

8

7.1

Currency of Payments

8

7.2

Application of Payments

9

7.3

Payment on Any Business Day by 3:00 P.M. (Montréal time)

9

 

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TABLE OF CONTENTS
(continued)

 

 

Page

 

 

ARTICLE 8 GUARANTEES

9

8.1

Guarantees

9

8.2

Maintenance of Guarantors

9

 

 

ARTICLE 9 CONDITIONS PRECEDENT

10

9.1

Conditions Precedent

10

 

 

ARTICLE 10 REPRESENTATIONS AND WARRANTIES

10

10.1

Existence

10

10.2

Authority and Enforceability

10

10.3

Absence of Litigation

11

10.4

Financial Statements

11

10.5

Accuracy of Information

11

10.6

No Material Adverse Change

11

10.7

Compliance with Laws

12

10.8

No Default

12

10.9

Repetition of Representations and Warranties

12

 

 

ARTICLE 11 GENERAL COVENANTS

12

11.1

Preservation of Existence, etc.

12

11.2

Business, Compliance with Applicable Law

12

11.3

Insurance

13

11.4

Visits and Inspections

13

11.5

Payment of Legal and Other Fees and Disbursements

13

11.6

Most Favoured Lenders Clause

13

 

 

ARTICLE 12 INFORMATION COVENANTS

14

12.1

Quarterly Financial Statements and Information

14

12.2

Annual Financial Statements and Information

14

12.3

Projections

15

12.4

Other Information

15

12.5

Notice of Default

15

 

 

ARTICLE 13 NEGATIVE COVENANTS

15

13.1

Negative Covenants in the US Syndicated Credit Agreement

15

13.2

Financial Covenants

16

 

 

ARTICLE 14 EVENTS OF DEFAULT

16

14.1

Non-Payment

16

14.2

Misrepresentation

16

14.3

Ratio

16

14.4

Negative Covenants

16

14.5

Breach of Other Covenants

16

14.6

Cross-Default

17

14.7

Insolvency

17

14.8

Unsatisfied Awards

17

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

14.9

Change in Control

17

 

 

ARTICLE 15 REMEDIES

17

15.1

Termination and Acceleration

17

15.2

Compensation and Set-Off

18

15.3

Notices

19

15.4

Dealings with the Borrower

19

 

 

ARTICLE 16 INDEMNITIES

20

16.1

Market Disruption

20

16.2

Change in Law

20

16.3

Reimbursement of Losses and Expenses

22

16.4

Mitigation; Replacement of Lenders

22

16.5

Tax Documentation; Refunds

23

16.6

General Indemnity

24

 

 

ARTICLE 17 MISCELLANEOUS

24

17.1

Notices

24

17.2

Calculations and Determinations Shall Constitute Prima Facie Proof

24

17.3

Maintenance of Loan Records by the Lender

24

17.4

Rights and Recourses Cumulative

25

17.5

Assignments by the Borrower

25

17.6

Assignments by Lender

25

17.7

Counterparts

26

17.8

Severability

26

17.9

Replacement of Previous Agreements

26

17.10

Obligation to Pay Absolute

26

17.11

Governing Law

26

17.12

Submission to Jurisdiction

27

17.13

Amendments

27

17.14

Confidentiality

27

 

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Schedule “A”

Definitions

 

 

Schedule “B”

Compliance Certificate

 

 

Schedule “C”

Conversion Request

 

 

Schedule “D”

Draw Request

 

 

Schedule “E”

Relevant Margin

 

 

Schedule “F”

Repayment Notice

 

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THIS CREDIT AGREEMENT dated as of October 18, 2017.

 

AMONG:

AAR CORP., as Parent Guarantor;

 

 

AND:

AAR CANADA HOLDINGS ULC, as Borrower;

 

 

AND:

CANADIAN IMPERIAL BANK OF COMMERCE, as Lender;

 

WITNESSETH:

 

WHEREAS the Borrower wishes to borrow certain monies from the Lender and the
Lender is prepared to lend such monies to the Borrower upon the terms and
subject to the conditions herein contained;

 

NOW THEREFORE in consideration of the premises, the mutual covenants contained
herein and for other consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto have agreed as follows:

 

ARTICLE 1

 

INTERPRETATION

 

1.1                               General Definitions

 

The capitalized words and expressions, wherever used in this Agreement or in any
agreement ancillary hereto, unless there be something in the subject or the
context inconsistent therewith, shall have the meaning ascribed thereto in
Schedule “A”.

 

1.2                               References to Agreements

 

Each reference in this Agreement to any agreement (including this Agreement and
any other defined term that is an agreement) shall be construed so as to include
such agreement (including any attached schedules) and each amendment,
supplement, amendment and restatement, novation and other modification made to
it at or before the time in question. The terms “this Agreement”, “this Credit
Agreement”, “hereof”, “hereunder” and similar expressions refer to this
agreement and not to any particular Article, Section, subsection, paragraph,
subparagraph, clause or other portion of this agreement.

 

1.3                               Reference to Statutes

 

Each reference in this Agreement to any code, statute, regulation, official
interpretation, directive or other legislative enactment of any Canadian or
foreign jurisdiction (including any political subdivision thereof) shall, unless
otherwise expressly stated or indicated by the context, be

 

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construed so as to include such code, statute, regulation, official
interpretation, directive or enactment, as amended, re-enacted, re-issued or
replaced from time to time.

 

1.4                               Headings, etc.

 

The division of this Agreement into Articles, Sections and subsections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.

 

1.5                               Number and Gender

 

In this Agreement, words in the singular (including defined terms) include the
plural and vice versa (the necessary changes being made to fit the context) and
words in one gender include all genders.

 

1.6                               Accounting Principles

 

Unless otherwise specifically defined or used herein, all accounting terms used
in this Credit Agreement shall be interpreted, and all accounting determinations
and computations (including definitions) shall be made in accordance with GAAP,
as in effect from time to time, applied in a manner consistent with that used in
preparing the Parent Guarantor’s audited Financial Statements.

 

ARTICLE 2

 

THE CREDIT FACILITY

 

2.1                               Term Facility

 

The Lender agrees, upon the terms and subject to the conditions of this
Agreement, to make a term loan (the “Term Facility” or the “Facility”) to the
Borrower, in a principal amount of up to but not exceeding CDN$31,000,000.

 

2.2                               Purpose of Facility

 

The single Advance under the Term Facility shall be used by the Borrower
exclusively for the purpose of financing or refinancing, as the case may be, the
Premier Aviation Acquisition and for related corporate purposes.

 

2.3                               Availability

 

2.3.1                                             Save and except for the
purposes of conversions and continuations permitted under Article 5, any
repayment of the Term Facility may not be reborrowed.

 

2.3.2                                             Where under any of the terms
hereof, the Term Facility is cancelled, reduced or terminated, the same may not
subsequently be increased, with any such cancellation, reduction or termination
thereof being permanent.

 

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2.3.3                                             Upon delivery to the Lender of
an irrevocable Draw Request, the Borrower shall have the right to draw down up
to the whole Term Facility on the Closing Date by way of a single Advance,
provided that any unused portion of the Term Facility after the Closing Date
will cease to be available.

 

2.3.4                                             The Term Facility is available
in Canadian Dollars, by way of a Prime Rate Loan or the issuance of BAs.

 

2.4                               Repayments

 

The Borrower hereby binds and obliges itself to repay in full on the last day of
the Term Period the outstanding principal amount of the Loan under the Term
Facility, together with any other amount in interest, fees and accessories, in
each case, then due and payable pursuant to the Loan Documents.  The Loan shall
not amortize.

 

2.5                               Voluntary Repayments

 

2.5.1                                             The Borrower may voluntarily
repay in advance the whole or any part of the Loan under the Term Facility,
without prepayment premium or penalty.

 

2.5.2                                             The Borrower shall issue a
Repayment Notice not later than three (3) Business Days prior to any such
repayment of the Term Facility. Once delivered, no Repayment Notice may be
revoked by the Borrower.

 

2.5.3                                             Where such repayment is for
less than the whole of the Term Facility, then such repayment must be for at
least CDN$5,000,000 and in whole multiples of CDN$1,000,000.

 

2.6                               Revolver Security Event Offer

 

2.6.1                                             Within 30 days following the
occurrence of any Revolver Security Event that is then continuing, the Borrower
shall provide a written notice to the Lender containing the following
information (such notice, a “Revolver Security Event Offer”):

 

(A)                               that a Revolver Security Event has occurred
and that such Lender has the right to require the Borrower to either (i) repay
in full such Lender’s Loans at a prepayment price in cash equal to 100% of the
outstanding principal amount thereof, together with any other amount in
interest, fees and accessories, in each case then due and payable pursuant to
the Loan Documents, but net of such portion of the up-front fee paid pursuant to
Section 6.1 which corresponds, rateably, to the then remaining period of the
Term Period (the “Prepayment Option), or (ii) grant in favour of the Lender
first-ranking security over assets of the Borrower to secure the Obligations
(the “Security Option”);

 

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(B)                               with respect to the Prepayment Option, the
date of prepayment (the “Prepayment Date”) (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and

 

(C)                               a statement that any Lender wishing to
exercise either the Prepayment Option or the Security Option must comply with
Section 2.6.2.

 

2.6.2                                             In order to accept any
Revolver Security Event Offer, the Lender shall notify the Borrower in writing
at its address for notices contained in this Agreement prior to 12:00 noon,
Montréal time, on the Business Day next preceding the Prepayment Date with
respect to such Revolver Security Event Offer (the “Election Time”) of such
Lender’s election to either exercise (i) the Prepayment Option, or (ii) the
Security Option. Subject only to the provisions of Section 2.6.5, such Lender’s
election shall be at the Lender’s sole and absolute discretion.

 

2.6.3                                             If the Lender has elected to
exercise the Prepayment Option, then prior to 1:00 p.m., Montréal time, on the
Prepayment Date the Borrower shall pay to the Lender the aggregate amount
payable pursuant to Section 2.6.1(A)(i).

 

2.6.4                                             If the Lender has elected to
exercise the Security Option, then, by not later than the 45th day following the
Election Time, the Borrower (i) shall have entered into such agreements,
instruments or documents with the Lender documents which,  and taken such
actions required to, create, grant and perfect the security contemplated by
Section 2.6.1(A)(ii), and (ii) shall have delivered to the Lender all customary
corporate certificates, title reports or title insurance, as the case may be,
and legal opinions in respect thereto, in form and substance reasonably
satisfactory to the Lender.

 

2.6.5                                             Notwithstanding anything above
to the contrary, in the event that (i) the Borrower is contractually unable to
grant security pursuant to the Security Option because of the terms of any
financing of the Parent Guarantor replacing, refinancing or supplementing the US
Syndicated Credit Agreement, or (ii) the assets of the Borrower available to be
pledged pursuant to Sections 2.6.1(A)(ii) and 2.6.4. are not reasonably
satisfactory to the Lender, then the Revolver Security Event Offer shall be
limited to the Prepayment Option hereinabove contemplated.

 

ARTICLE 3

 

PRIME RATE LOAN

 

3.1                               Request for a Prime Rate Loan

 

The Draw Request or any Conversion Request pursuant to which an Advance is
requested by way of Prime Rate Loan shall be delivered at the latest by
11:00 A.M. (Montréal time) on the

 

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Business Day immediately preceding the proposed Borrowing Date and shall specify
the following information:

 

3.1.1                                             the proposed Borrowing Date
which must be a Business Day; and

 

3.1.2                                             the aggregate principal amount
requested to be advanced. Such aggregate principal amount must be at least
CDN$5,000,000 and a whole multiple of CDN$1,000,000.

 

3.2                               Interest on Prime Rate Basis

 

The Borrower shall pay the Lender interest on any Prime Rate Loan at an annual
rate during the period in which such loan is outstanding equal to the Prime Rate
at the close of business on each day during such period plus the then applicable
Relevant Margin.

 

3.3                               Computation of Interest

 

3.3.1                                             Interest in respect of any
Prime Rate Loan shall be computed on the basis of a 365 day year for the actual
number of days elapsed.

 

3.3.2                                             Interest on any Prime Rate
Loan shall accrue on the daily outstanding balance of such Prime Rate Loan from
and including the date it is advanced until, but excluding, the date it is
repaid in full.

 

3.3.3                                             Interest in respect of any
Prime Rate Loan shall be compounded monthly on the Interest Payment Date.

 

3.4                               Payment of Interest

 

Interest in respect of any Prime Rate Loan is payable in arrears on the
applicable Interest Payment Date, with interest on all overdue interest at the
rate applicable to principal during the period in which it remains unpaid, plus
2%, computed daily, compounded monthly on the applicable Interest Payment Date,
such overdue interest being payable upon the demand of the Lender. Interest
payable on any Prime Rate Loan shall be payable both before and after demand,
default and judgment at the applicable rate set forth herein.

 

3.5                               Interest on Loan Generally

 

Where no specific provision for interest on any amount outstanding and payable
by the Borrower is made in this Agreement, interest thereon shall be computed
and payable on a Prime Rate Basis.

 

3.6                               Annual Equivalents

 

The annual rate to which is equivalent the rate determined in accordance with
the provisions of subsection 3.3.1 is the following rate: (the quoted rate) x
(number of days in the year) ÷ 365 = % per annum.

 

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ARTICLE 4

 

BANKER’S ACCEPTANCES

 

4.1                               Requests for the Issuance of BAs

 

The Draw Request or any Conversion Request pursuant to which the Borrower
requests an issue of BAs shall be delivered to the Lender by
12:00 P.M. (Montréal time) at least two (2) Business Days prior to the proposed
Issuance Date and shall specify the following information:

 

4.1.1                                             the Selected Period during
which it desires such issue of BAs to be outstanding. Such Selected Period must
be of one, two, three or six months or such other period as may be acceptable to
the Lender, in its discretion;

 

4.1.2                                             the aggregate face amount of
such issue of BAs. Such aggregate face amount must be at least CDN$5,000,000 and
a whole multiple of CDN$1,000,000;

 

4.1.3                                             the proposed Issuance Date
which must be a Business Day falling during the Term Period; and

 

4.1.4                                             the Selected Maturity Date
which must be a Business Day falling during the Term Period.

 

4.2                               Stamping Fee

 

4.2.1                                             In connection with and in
consideration for the acceptance by the Lender of BAs, a Stamping Fee shall be
deducted from the Discounted Proceeds equal to the product resulting from
multiplying the face amount of each BA so accepted by the Lender by a fraction,
the numerator of which shall consist of the product resulting from multiplying
the Relevant Margin by the number of days in the Selected Period applicable to
such BA and the denominator of which shall consist of 365;

 

4.2.2                                             In payment of the Stamping Fee
payable in connection with any BA, the Lender shall retain from the Discounted
Proceeds relating to such BA an amount equal to such Stamping Fee.

 

4.3                               Lender to Discount BAs

 

4.3.1                                             The Lender hereby agrees to
purchase the BAs accepted by it under the terms hereof on the Issuance Date of
such BAs for an amount equal to the Discounted Proceeds of such BAs;

 

4.3.2                                             Any BA so purchased by the
Lender may be held by it for its own account or sold or traded in (i) the money
market, either directly or through securities brokers or dealers, in accordance
with such arrangements as the Lender may consider appropriate to make or (ii) a
clearing house within the meaning of the Depository Bills and Notes Act
(Canada).

 

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4.4                               Payment of BAs

 

On each Selected Maturity Date, the Borrower shall pay the face amount of all
BAs maturing on such date. Where the Borrower fails to make such payment, the
Borrower shall be deemed to have requested that portion of the BA Liability
corresponding to the BAs then maturing to be converted on such Selected Maturity
Date into a Prime Rate Loan.

 

4.5                               Waiver

 

The Borrower shall not claim from the Lender any days of grace for the payment
at maturity of any BA issued and accepted by the Lender. Furthermore, the
Borrower waives any defence to payment which might otherwise exist if for any
reason a BA issued hereunder shall be held by or for the account of the Lender
in its own right at the maturity thereof.

 

4.6                               Power of Attorney to Sign Drafts

 

In order to facilitate the issuance of BAs hereunder, the Borrower hereby
authorizes the Lender, acting reasonably, to sign, endorse and complete BAs on
its behalf in handwritten or by facsimile or mechanical signature or otherwise
and once so signed, endorsed and completed, to purchase, discount and negotiate
same or, as the case may be, deposit same in a clearing house as contemplated in
the Depositary Bills and Notes Act (Canada), the whole as and when deemed
necessary by the Lender for all purposes of this Article 4. The Lender shall
(i) maintain a record with respect to any BA completed in accordance with this
Section 4.6, voided by it for any reason, accepted and purchased or purchased,
and cancelled at its respective maturity; and (ii) retain such records in the
manner and for the statutory periods provided by Applicable Law which apply to
the Lender and make such records available to the Borrower.  On request by the
Borrower, the Lender shall cancel and return to the possession of the Borrower
all BAs which have been pre-signed or pre-endorsed on behalf of the Borrower and
which are held by the Lender.

 

Neither the Lender nor any of its directors, officers, employees or
representatives shall be liable for any action taken or omitted to be taken by
it or them under this Article 4, except for its (his) or their own intentional
or gross fault or wilful misconduct. The foregoing appointment will cease to be
effective three Business Days following receipt by the Lender of a notice from
the Borrower revoking such appointment provided that any such revocation will
not affect BAs previously executed and delivered by the Lender pursuant to such
appointment.

 

ARTICLE 5

 

CONVERSIONS AND ROLLOVERS

 

5.1                               Request for Conversions

 

The Borrower may request the Lender to convert all or any portion of any Type of
Advance under the Term Facility into another Type or to rollover any such Type
into the same Type, by delivering to the Lender a Conversion Request within the
delays herein contemplated. Any Conversion Request delivered on any Business Day
after the time by which it is required

 

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hereunder to be delivered, shall be deemed to have been received the next
following Business Day.

 

5.2                               Conversion or Rollover

 

On the relevant Conversion Date, the Borrower shall, without creating novation,
repay such portion of the Type of Advance that it desires be converted or
rolled-over and shall be deemed to have requested a Drawdown in the amount, the
currency and the Type of Advance into which it desires to convert or rollover.

 

The provisions of this Agreement relating to Drawdowns shall apply mutatis
mutandis to any such Advance requested by way of conversion or rollover.

 

5.3                               Requirements for Conversions or Rollovers

 

Any conversion or rollover requested pursuant to Section 5.1:

 

5.3.1                                             of the BA Liability may only
be made on the relevant Selected Maturity Date; and

 

5.3.2                                             of the Prime Rate Loan may
only be made on a Business Day.

 

Save as otherwise herein provided, while a Default has occurred and is
continuing, a conversion into, or rollover of, BAs may only be effected on the
relevant Conversion Date with the consent of the Lender. Once delivered, no
Conversion Request may subsequently be revoked or withdrawn by the Borrower.

 

ARTICLE 6

 

FEES

 

6.1                               Up-Front Fee

 

The Borrower hereby covenants and agrees to pay to the Lender a non-refundable
one time up-front fee equal to 0.40% of the aggregate amount of the Term
Facility on the Closing Date. The up-front fee is deemed fully earned on the day
the Loan is advanced hereunder and is not refundable, in whole or in part, under
any circumstances.

 

ARTICLE 7

 

MANNER OF PAYMENTS

 

7.1                               Currency of Payments

 

All payments or repayments, as the case may be, of any amount hereunder shall be
made in Canadian Dollars only.

 

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7.2                               Application of Payments

 

7.2.1                                             Except as otherwise expressly
provided herein, each payment of principal and interest or other amounts due in
respect of the Loan shall be applied, first, to the payment of any amount (other
than the principal of or interest on the Loan) due in respect of the Loan,
second, to the payment of interest on the Loan (as well as any interest on
overdue principal and, to the extent permitted by law, interest and other
amounts payable in respect thereof) then due, and third, the balance, if any,
remaining thereafter, to the payment of the principal of the Loan remaining.

 

7.3                               Payment on Any Business Day by
3:00 P.M. (Montréal time)

 

All amounts due to the Lender from the Borrower hereunder shall be payable by
the Borrower in Canadian Dollars in immediately available funds to the Lender by
wire transfer to:  CIBC Branch 00001, 1155 Rene-Levesque West Blvd., Montreal,
Quebec, H3B 3Z4, Swift Code: CIBCCATT, Bank ID: 0010 or to such other account as
is specified by the Lender no later than 12:30 P.M., New York City time, on the
due date therefor (the “Lender Account”).  Whenever any payment or repayment
falls due on a day which is not a Business Day, such payment or repayment shall
be made on the next following Business Day. Furthermore, any amount received
after 3:00 P.M. (Montréal time) on any Business Day shall be applied to the
appropriate payment or repayment which was required to be made on such Business
Day, on the next following Business Day. Until so applied, interest shall
continue to accrue as provided in this Agreement on the amount of such payment
or repayment.

 

ARTICLE 8

 

GUARANTEES

 

8.1                               Guarantees

 

To secure the due payment and performance of the Obligations, the Parent
Guarantor shall:

 

8.1.1                                             jointly and severally
guarantee the Obligations; and

 

8.1.2                                             cause each of its Subsidiaries
(other than the Borrower) that is required to become a party to the Guarantee
pursuant to Section 8.2 to jointly and severally guarantee the Obligations;

 

in all cases, pursuant to the Guarantee.

 

8.2                               Maintenance of Guarantors

 

If and for so long as any Subsidiary of the Parent Guarantor shall be a
guarantor under or pursuant to the US Syndicated Credit Agreement, such
Subsidiary shall concurrently be a party to the Guarantee.

 

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ARTICLE 9

 

CONDITIONS PRECEDENT

 

9.1                               Conditions Precedent

 

No Advance shall be made by the Lender hereunder until the following conditions
precedent shall have been met to the satisfaction of the Lender or, as the case
may be, waived by the Lender:

 

9.1.1                                             the Lender shall have received
true and complete copies of the constitutive documents, charter, by-laws,
resolutions, certificates of incumbency and certificate of attestation or its
equivalent from the jurisdiction of incorporation or organization of each of the
Loan Parties;

 

9.1.2                                             a favorable opinion of
Stikeman Elliott LLP, Canadian counsel to the Loan Parties, addressed to the
Lender, in form and substance reasonably satisfactory to the Lender;

 

9.1.3                                             an opinion of Borrower’s Legal
Department, addressed to the Lender, in form and substance reasonably
satisfactory to the Lender; and

 

9.1.4                                             the fees set forth in
Article 6 shall have been paid to the Lender.

 

ARTICLE 10

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Lender to make the Term Facility available to the Borrower, the
Parent Guarantor and the Borrower jointly and severally represent and warrant to
and in favour of the Lender as follows:

 

10.1                        Existence

 

Each Loan Party is a corporation or limited partnership or other legal person
duly and validly incorporated or formed, organized, existing and in good
standing under the Laws of its jurisdiction of organization, except where the
failure to be in good standing would not reasonably be expected to have a
Material Adverse Effect.

 

10.2                        Authority and Enforceability

 

Each Loan Party is duly authorized to execute and deliver each Loan Document to
which such Person is a party and perform its obligations under each Loan
Document to which it is a party.  The Borrower is duly authorized to borrow
monies hereunder.  The execution, delivery and performance by the Borrower and
each other Loan Party of each Loan Document to which such Person is a party, and
the borrowing by the Borrower hereunder, do not and will not (a) require any
consent or approval of any governmental agency or authority (other than any
consent or approval which has been obtained and is in full force and effect) or
which the failure to so obtain

 

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could not reasonably be expected to have a Material Adverse Effect, (b) conflict
with (i) any provision of law, (ii) the Organization Documents or material
agreements disclosed in the Borrower’s most recent filing with the SEC on
Form 10-K or (iii) any material agreement, indenture, instrument or other
document, or any judgment, order or decree, which is binding upon the Borrower
or any other Loan Party or any of their respective properties or (c) require, or
result in, the creation or imposition of any Lien on any asset of the Borrower
or any other Loan Party (other than Liens, if any, created pursuant to the Loan
Documents).  This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto and is, or when so delivered will be, the legal,
valid and binding obligation of such Person, enforceable against such Person in
accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors’ rights generally and to general
principles of equity.

 

10.3                        Absence of Litigation

 

Except as disclosed in the Parent Guarantor’s most recent Annual Report on
Form 10-K or any subsequent report filed by Parent Guarantor on Form 10-Q or
Form 8-K with the SEC, in all cases, prior to the date of this Agreement, no
litigation (including derivative actions), arbitration proceeding or
governmental investigation or proceeding is pending or, to the Borrower’s
knowledge, threatened against the Borrower or any other Loan Party which could
reasonably be expected to have a Material Adverse Effect.

 

10.4                        Financial Statements

 

The audited Financial Statements of the Parent Guarantor for its most recent
fiscal year, copies of which have been delivered to the Lender, were prepared in
accordance with GAAP (subject, in the case of such unaudited statements, to the
absence of footnotes and to normal year-end adjustments) and present fairly the
consolidated financial condition of the Parent Guarantor and its Subsidiaries as
at such dates and the results of their operations for the periods then ended.

 

10.5                        Accuracy of Information

 

All material information furnished by any Loan Party to the Lender in writing
pursuant to this Agreement is and will be, true and accurate in every material
respect on the date as of which such information is dated or certified, and none
of such information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by the Lender that any
projections and forecasts provided by any Loan Party are based on good faith
estimates and assumptions believed by such Loan Party to be reasonable as of the
date of the applicable projections or assumptions and that actual results during
the period or periods covered by any such projections and forecasts may differ
from projected or forecasted results).

 

10.6                        No Material Adverse Change

 

Since the date of the most recent audited consolidated Financial Statements of
the Parent Guarantor furnished to the Lender prior to the Closing Date, there
has been no change in the financial condition, operations, assets, business or
properties of the Loan Parties, taken as a whole, that has had or could
reasonably be expected to have a Material Adverse Effect.

 

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10.7                        Compliance with Laws

 

Except with respect to any matters that, individually or in the aggregate, would
not reasonably be expected to result in a Material Adverse Effect, each Loan
Party to its knowledge is currently in compliance with all applicable statues,
regulations and orders of, and all applicable restrictions imposed by, all
Governmental Authorities, in respect of the conduct of its business and
ownership of its property.  Each Loan Party has timely filed or caused to be
filed all Tax returns and reports required by law to have been filed by it and
has paid or caused to be paid all Taxes due and payable with respect to such
returns, except and solely to the extent that, in each case (a) such Taxes are
being contested in good faith by appropriate proceedings or (b) the filing or
amount of which is not individually or in the aggregate Material.

 

10.8                        No Default

 

No Default has occurred which has not been disclosed to the Lender and either
remedied (or otherwise ceased to be continuing) or expressly waived by the
Lender in writing.

 

10.9                        Repetition of Representations and Warranties

 

The representations and warranties made under this Agreement (other than the
representations and warranties set forth in Sections 10.3 and 10.6) shall be
deemed to be repeated by the Parent Guarantor and the Borrower on each Borrowing
Date (other than in connection with any rollover, or any conversion into a Prime
Rate Loan) by reference to the facts and circumstances then existing, it being
understood that to the extent such representations and warranties relate to a
specifically identified earlier date they shall be true and correct as of such
earlier date.

 

ARTICLE 11

 

GENERAL COVENANTS

 

So long as the Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled), and unless the
Lender shall otherwise consent in writing, the Parent Guarantor and the Borrower
jointly and severally covenant and agree that:

 

11.1                        Preservation of Existence, etc.

 

Each Loan Party will (i) except as permitted by the US Syndicated Credit
Agreement, preserve and maintain its existence, and (ii) qualify and remain
qualified to the extent required by Applicable Law and authorized to do business
in each jurisdiction where the nature of its business makes such qualification
necessary except, in all cases contemplated in this clause (ii), where the
failure to do so would not reasonably be expected to have a Material Adverse
Effect.

 

11.2                        Business, Compliance with Applicable Law

 

Each Loan Party will comply with Applicable Law except where non-compliance
therewith would not reasonably be expected to have a Material Adverse Effect.

 

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11.3                        Insurance

 

The Borrower will maintain with responsible insurance companies, such insurance
coverage as may be required by any law or governmental regulation or court
decree or order applicable to it and such other insurance, to such extent and
against such hazards and liabilities, as is customarily maintained by companies
similarly situated.

 

11.4                        Visits and Inspections

 

Upon prior reasonable written notice, each Loan Party shall permit
representatives of the Lender to visit and inspect its properties during normal
business hours and to make reasonable examinations of the books of account,
records, reports and other papers of the Loan Parties and to take copies and
extracts therefrom.

 

11.5                        Payment of Legal and Other Fees and Disbursements

 

The Borrower covenants to pay upon demand all reasonable out of pocket costs and
expenses incurred from time to time by the Lender (including the reasonable
fees, charges and disbursements of counsel), in connection with:

 

11.5.1                                      the negotiation, preparation and
delivery of the Loan Documents, as well as any amendment, restatement or
supplemental thereto; and

 

11.5.2                                      the enforcement or protection of its
rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Loans
made hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans.

 

11.6                        Most Favoured Lenders Clause

 

If the Parent Guarantor shall amend or restate the US Syndicated Credit
Agreement in such a way that (i) the financial covenants therein contained shall
become in any way more restrictive upon the Parent Guarantor than the financial
covenants contained in Section 13.2, (ii) the maturity date therein contemplated
shall be shortened to a date which is earlier than November 1, 2021, or
(iii) the Applicable Rate pricing grid therein contained shall become more
favourable to the lenders thereunder than the Relevant Margin herein contained
(each, a “More Favourable Provision”), then, in any such case, each such More
Favourable Provision shall thereupon be deemed to be incorporated by reference
in this Agreement, mutatis mutandis, as if then set forth herein in full
(provided that the Relevant Margin shall at all times be no greater than 25 bps
higher than the Applicable Rate set forth from time to time in the US Syndicated
Credit Agreement, and in the event of any amendment or restatement of the US
Syndicated Credit Agreement that results in a lower pricing grid thereunder, the
Relevant Margin herein contained shall be automatically adjusted downward in an
amount sufficient to cause the Relevant Margin to be no greater than 25 bps
higher than such Applicable Rate). Promptly and in any event within 10 Business
Days after any such incorporation by reference, the Borrower shall notify the
Lender of such occurrence in writing.  Thereafter, upon the request of the
Lender, the Parent Guarantor and the Borrower shall execute and deliver an
instrument, in form and

 

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substance satisfactory to the parties hereto, modifying this Agreement by
incorporating herein any such More Favourable Provision.

 

ARTICLE 12

 

INFORMATION COVENANTS

 

So long as the Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled) and unless the Lender
shall otherwise consent in writing, the Parent Guarantor and the Borrower
jointly and severally covenant and agree that:

 

12.1                        Quarterly Financial Statements and Information

 

12.1.1                                      Within 45 days after the end of the
first three fiscal quarters in each of the fiscal years of the Parent Guarantor,
and within 90 days after the end of the fourth fiscal quarter in each of the
fiscal years of the Parent Guarantor, the Borrower shall furnish to the Lender,
by electronic mail, one (1) copy of the management prepared Financial Statements
of the Borrower on an unconsolidated basis, setting forth, in comparative form,
the figures for the corresponding period of the previous fiscal year (provided
that, such Financial Statements of the Borrower shall not be required to include
any related statement of cash flows for the related period);

 

12.1.2                                      Within 45 days after the end of the
first three fiscal quarters in each of the fiscal years of the Parent Guarantor,
the Parent Guarantor shall furnish to the Lender, by electronic mail, one
(1) copy of the management prepared Financial Statements of the Parent Guarantor
on a consolidated basis, setting forth, in comparative form, the figures for the
corresponding period of the previous fiscal year; and

 

12.1.3                                      Within 45 days after the end of the
first three fiscal quarters in each of the fiscal years of the Parent Guarantor,
the Parent Guarantor and the Borrower shall furnish to the Lender, by electronic
mail, one (1) copy of, a Compliance Certificate.

 

12.2                        Annual Financial Statements and Information

 

Within 90 days after the end of each fiscal year of the Parent Guarantor, the
Parent Guarantor shall furnish to the Lender, by electronic mail, one (1) copy
of:

 

12.2.1                                      the Financial Statements of the
Parent Guarantor, on a consolidated basis, for such fiscal year, provided that
(i) such Financial Statements shall be audited by a firm of independent
accountants of recognized standing and accompanied by an opinion of such
accountants to the effect that such Financial Statements

 

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present fairly in all material respects the consolidated financial position of
the Parent Guarantor as at the end of such fiscal year, and (ii) all such
Financial Statements shall set forth in comparative form, the figures for the
previous fiscal year; and

 

12.2.2                                      a Compliance Certificate.

 

12.3                        Projections

 

No later than 60 days after the beginning of each fiscal year of the Parent
Guarantor, provided that financial projections have been approved by the board
of directors of the Parent Guarantor for such fiscal year, the financial
projections of the Loan Parties for such fiscal year, with each set of financial
projections to be prepared and delivered in the form approved by the board of
directors of the Parent Guarantor.

 

12.4                        Other Information

 

The Parent Guarantor and the Borrower shall furnish to the Lender from time to
time all available data, certificates, reports, statements, documents or further
information regarding the business, assets, liabilities, financial position,
results of operations or business prospects of any Loan Party reasonably
requested by the Lender, promptly after such request.

 

12.5                        Notice of Default

 

The Parent Guarantor and the Borrower shall furnish to the Lender prompt notice
of any Default after any Responsible Officer has become aware thereof and has
made a reasonable determination with respect thereto (which notice shall in any
event be given within 10 Business Days after any Responsible Officer has become
aware thereof).

 

ARTICLE 13

 

NEGATIVE COVENANTS

 

So long as the Loan or any other amount payable hereunder is outstanding and
unpaid or the Borrower shall have the right to borrow hereunder (whether or not
the conditions to borrowing have been or can be fulfilled) and unless the Lender
shall otherwise consent in writing, each of the Parent Guarantor and the
Borrower jointly and severally covenant that:

 

13.1                        Negative Covenants in the US Syndicated Credit
Agreement

 

The Parent Guarantor shall comply, and shall cause each other Loan Party that is
a party to the US Syndicated Credit Agreement to comply, with each of the
negative covenants found in Article VII of the US Syndicated Credit Agreement
(other than Section 7.13 thereof) that are directly applicable to the Parent
Guarantor or such other Loan Party, as the case may be, which covenants
(together with all underlying definitions found in the US Syndicated Credit
Agreement) shall be deemed to be incorporated by reference in this Agreement,
mutatis mutandis, as if set forth herein in full and made directly to, and in
favour of, the Lender.

 

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13.2                        Financial Covenants

 

The Parent Guarantor will not permit:

 

13.2.1                                      the Interest Coverage Ratio for any
Computation Period to be less than 3.00 to 1.00; and

 

13.2.2                                      the Adjusted Total Debt to EBITDA
Ratio for any Computation Period to be greater than 3.50 to 1.00.

 

ARTICLE 14

 

EVENTS OF DEFAULT

 

The occurrence of any one or more of the following events shall constitute an
Event of Default (each such event being herein referred to as an “Event of
Default”):

 

14.1                        Non-Payment

 

The Borrower fails to pay, when due, any amount of principal owed by it and
outstanding hereunder, or fails to pay interest, fees and accessories
outstanding hereunder and in the case of such a Default, as it relates to the
failure to make payment of interest, fees or accessories, such Default shall not
be remedied within five (5) Business Days after the Borrower shall have received
notice of the amount due.

 

14.2                        Misrepresentation

 

Any representation or warranty made or deemed made by any Loan Party hereunder
is found to have been, when made or deemed made, either incorrect or inaccurate
in any material respect.

 

14.3                        Ratio

 

The Parent Guarantor fails to maintain any financial covenants in accordance
with Section 13.2.

 

14.4                        Negative Covenants

 

Any Loan Party fails to comply with any provision of Section 11.1, 12.5 or 13.1
(other than where such failure to comply arises as a result of a breach of
Section 7.07, 7.08, 7.09, 7.10, 7.11 or 7.12 of the US Syndicated Credit
Agreement (as set forth in this Agreement pursuant to Section 13.1 hereof)).

 

14.5                        Breach of Other Covenants

 

Any Loan Party fails to perform or comply with any provision or obligation
(other than those specifically referred to in the other Sections of this
Article) contained herein and such failure continues unremedied for a period of
30 days following the earlier of (i) the issuance to the Borrower and the Parent
Guarantor by the Lender of notice thereof, and (ii) the date on which the
Borrower has knowledge of such Default.

 

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14.6                        Cross-Default

 

Any Loan Party is in default with respect to any Indebtedness (other than
amounts due to the Lender hereunder) having an aggregate principal amount in
excess of $20,000,000 (or, if applicable, the equivalent thereof in other
currencies) and such default shall (i) consist of the failure to pay such
Indebtedness when due, whether by acceleration or otherwise, or (ii) accelerate
the maturity of such Indebtedness or permit the holder or holders thereof, or
any trustee or agent for such holder or holders, to cause such Indebtedness to
become due and payable (or require such Loan Party to purchase or redeem such
Indebtedness or post cash collateral in respect thereof) prior to its expressed
maturity.

 

14.7                        Insolvency

 

An Insolvency Event shall have occurred with respect to any Loan Party.

 

14.8                        Unsatisfied Awards

 

One or more final Awards for the payment of money are rendered by a competent
tribunal against the Borrower in an aggregate amount in excess of $20,000,000
and any such Award shall not be vacated or discharged or stayed or bonded
pending appeal within 60 days after the entry thereof or enforcement proceedings
shall have been commenced by any creditor upon such judgment or order.

 

14.9                        Change in Control

 

A Change in Control occurs.

 

ARTICLE 15

 

REMEDIES

 

15.1                        Termination and Acceleration

 

If an Event of Default shall have occurred and be continuing, the Lender may do
any one or more of the following:

 

15.1.1                                      declare the whole or any item or
part of the Term Facility to be cancelled, terminated or reduced, whereupon the
Lender shall not be required to make any further Advance hereunder in respect of
such portion of the Term Facility cancelled, terminated or reduced;

 

15.1.2                                      accelerate the maturity of all or
any item or part of the Loan and declare it to be immediately due and payable,
whereupon it shall be so accelerated and become so due and payable, including,
without limitation, for greater certainty, any BA Liability, notwithstanding
that any holder of any outstanding BA shall not have demanded payment or shall
not then be entitled to do so;

 

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15.1.3                                      suspend any rights of the Borrower
hereunder, whereupon such rights shall be so suspended; and

 

15.1.4                                      take any other action, commence any
other suit, action or proceeding or exercise such other rights as may be
permitted by Applicable Law (whether or not provided for hereunder) at such
times and in such manner as the Lender may consider expedient,

 

all without any additional notice, demand, presentment for payment, protest,
noting of protest, dishonour, notice of dishonour or any other action being
required other than those required by Law. If an Event of Default referred to in
Section 14.7 occurs, the Term Facility shall immediately and automatically be
cancelled and the Loan shall be accelerated and become immediately and
automatically due and payable without any action on the part of the Lender being
required.

 

15.2                        Compensation and Set-Off

 

15.2.1                                      In addition to any rights now or
hereafter granted under Applicable Law and not by way of limitation of any such
rights, after the occurrence of an Event of Default which is continuing, the
Lender is hereby authorized by the Borrower, at any time and from time to time,
subject to the Lender giving reasonable notice to the Borrower, to subsequently
effect compensation, to set-off and to appropriate and to apply any and all
deposits (general or special, time or demand, including Indebtedness evidenced
by certificates of deposit, in each case whether matured or unmatured), and any
other Indebtedness at any time held or owing by the Lender to or for the credit
or the account of the Borrower against and on account of the obligations and
liabilities of the Borrower to the Lender hereunder, irrespective of whether or
not the Lender shall have made any demand hereunder or shall have declared the
Loan to be due and payable as permitted hereunder and although said obligations
and liabilities, or any of them, shall be contingent or unmatured. The Lender
agrees to notify the Borrower promptly after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application.

 

15.2.2                                      For the purposes of the application
of this Section, the Borrower and the Lender agree that the benefit of any term
applicable to any Lender’s deposit, credit indebtedness, liability or obligation
referred to in this Section shall be lost immediately before the time when the
Lender shall exercise its rights under this Section in respect of such deposit,
credit indebtedness, liability or obligation of the Lender.

 

15.2.3                                      If, for the purpose of obtaining or
enforcing judgment against any Loan Party in any court in any jurisdiction, it
becomes necessary to convert into any other currency (such other currency being
hereinafter in this Section 15.2.3 referred to as the “Judgment Currency”) an
amount due under any Loan Document in any currency (the “Obligation Currency”)
other than the Judgment Currency,

 

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the conversion shall be made at the rate of exchange prevailing on the Business
Day immediately preceding the date of actual payment of the amount due, in the
case of any proceeding in the courts of the Province of Ontario or in the courts
of any other jurisdiction that will give effect to such conversion being made on
such date, or the date on which the judgment is given, in the case of any
proceeding in the courts of any other jurisdiction (the applicable date as of
which such conversion is made pursuant to this Section 15.2.3 being hereinafter
in this Section 15.2.3 referred to as the “Judgment Conversion Date”).

 

15.2.4                                      If, in the case of any proceeding in
the court of any jurisdiction referred to in Section 15.2.3, there is a change
in the rate of exchange prevailing between the Judgment Conversion Date and the
date of actual receipt for value of the amount due, the applicable Loan Party
shall pay such additional amount (if any, but in any event not a lesser amount)
as may be necessary to ensure that the amount actually received in the Judgment
Currency, when converted at the rate of exchange prevailing on the date of
payment, will produce the amount of the Obligation Currency which could have
been purchased with the amount of the Judgment Currency stipulated in the
judgment or judicial order at the rate of exchange prevailing on the Judgment
Conversion Date.  Any amount due from any Loan Party under this Section 15.2.4
shall be due as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of any of the Loan
Documents

 

15.2.5                                      The term “rate of exchange” in this
Section 15.2 means the rate of exchange at which the Lender, on the relevant
date at or about 12:00 noon (Ontario time), would be prepared to sell, in
accordance with its normal course foreign currency exchange practices, the
Obligation Currency against the Judgment Currency.

 

15.3                        Notices

 

Save as otherwise expressly provided for herein, no notice of any kind shall be
required to be given to the Borrower by the Lender for the purpose of putting
the Borrower in default, the Borrower being in default by the mere lapse of time
allowed for the performance of an obligation or by the mere occurrence of any
event constituting an Event of Default.

 

15.4                        Dealings with the Borrower

 

The Lender may grant extensions of time and other indulgences, take and give up
securities, accept compositions, grant releases and discharges and otherwise
deal with the Borrower as the Lender may see fit, without prejudice to the
liability of the Borrower or to the Lender’s rights pursuant to the terms
hereof.

 

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ARTICLE 16

 

INDEMNITIES

 

16.1                        Market Disruption

 

If the Lender shall have determined that by reason of circumstances affecting
the relevant markets for deposits in the relevant currencies generally:

 

16.1.1                                      by reason of circumstances affecting
the market for BAs, adequate and reasonable means do not exist for ascertaining
the Discount Rate for any Selected Period, including because no purchasers are
available to the Lender to enable it to discount BAs having any Selected Period;
or

 

16.1.2                                      by reason of circumstances affecting
the relevant markets generally, deposits in the relevant currencies are not
available to the Lender in such market in the ordinary course of business in
sufficient amounts to enable it to accept BAs or discount BAs for any Selected
Period;

 

the Lender shall promptly give notice of such determination to the Borrower, and
until the Lender notifies the Borrower that the circumstances giving rise to
such notice no longer exist (i) if any Conversion Request requests the
conversion of the Loan into, or the continuation of the Loan as, BAs, the
obligations of the Lender to convert or continue such Loan shall be suspended
and the portion of such Loan to be advanced by the Lender shall be converted
into or continued as a Prime Rate Loan, on the last day of the applicable
Selected Period, and (ii) if the Draw Request requests a Loan by way of BAs, the
obligations of the Lender to make any such Loan shall be suspended and the
portion of any such Loan to be advanced by the Lender shall be made as a Prime
Rate Loan.

 

16.2                        Change in Law

 

If the Lender determines (which determination shall be evidenced by a
certificate submitted to the Borrower by the Lender) that:

 

16.2.1                                      a Change in Law has made or shall
make it unlawful or contrary to any Applicable Law for the Lender to make or
maintain all or any part of the BA Liability hereunder, then the obligations of
the Lender to make or maintain such part of such BA Liability shall be suspended
and, subject to the provisions of any such Applicable Law and those of
Section 16.3 with respect to losses and expenses, the Borrower may convert such
BA Liability or any part thereof or alternatively may repay in full any such or
other affected Loan or liability to the Lender without prepayment premium or
penalty, together, in each case, with all interest accrued thereon, which
conversion or repayment shall be made, with respect to each relevant Selected
Amount, at the expiry of its Selected Period, or if in the reasonable judgment
of the Lender immediate conversion or repayment is required by law, immediately
upon demand of the Lender; or

 

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16.2.2                                      a Change in Law has:

 

16.2.2.1                            imposed, modified, or deemed applicable any
loan ceiling against the Lender or imposed, modified or deemed applicable any
special Tax (other than a Tax on the net income, profit or capital of the Lender
or any Excluded Tax), deposit insurance, reserve, deposit or similar requirement
with respect to assets held by, deposits in or for the account of, the
acquisition of funds by, or loans by the Lender; or

 

16.2.2.2                            changed the basis of taxation of payments to
the Lender under this Agreement (other than a Tax on the net income, profit or
capital of the Lender or any Excluded Tax); or

 

16.2.2.3                            imposed on the Lender any other condition
(including the amount of capital required or expected to be maintained by the
Lender as a result of this Agreement or the Facility) or monetary restraint with
respect to this Agreement, the BA Liability or any part thereof of the Lender
(other than a Tax on the net income, profit or capital of the Lender or any
Excluded Tax); and

 

the result of any of the foregoing is to increase the cost to the Lender of
making or maintaining the Facility or BA Liability or any part of any one
thereof or to reduce any amount receivable by the Lender with respect to the BA
Liability or any part of any one thereof of the Lender by an amount which the
Lender deems in its sole discretion to be material, then, the Borrower, within
30 Business Days of receipt of the certificate referred to above (which
certificate shall contain all required computations and reasonable explanations
of the amounts required to be paid):

 

16.2.2.4                            shall pay to the Lender, such additional
amount computed by the Lender as will, on an after-tax basis, compensate the
Lender for such additional cost or reduction in amounts receivable which the
Lender determines to be attributable to the Borrower or the Loan made to the
Borrower; and

 

16.2.2.5                            subject to the provisions of Section 16.3
with respect to losses and expenses, shall have the right to repay in full the
BA Liability together with accrued interest thereon (as applicable) but without
prepayment premium or penalty.

 

The Lender shall not claim any such additional amount from the Borrower unless
it claims similar compensation from other borrowers that are similarly
affected.  Failure or delay on the part of the Lender to demand compensation
pursuant to the foregoing provisions of this Section shall not constitute a
waiver of such Lender’s right to demand such compensation, provided that the
Borrower shall not be required to compensate the Lender pursuant to the
foregoing provisions of this Section for any increased costs incurred or
reductions suffered more than nine

 

21

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months prior to the date that such Lender notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of
retroactive effect thereof).

 

16.3                        Reimbursement of Losses and Expenses

 

Whenever the Lender shall sustain or incur any losses and expenses as a result
of:

 

16.3.1                                      the failure of the Borrower to
borrow (other than a Prime Rate Loan) pursuant to the Draw Request once
delivered; or

 

16.3.2                                      the declaration by the Lender
following the occurrence of an Event of Default, that the Loan (other than a
Prime Rate Loan) is immediately due and payable; or

 

16.3.3                                      the failure of the Borrower to pay
when due principal or interest (other than with respect to a Prime Rate Loan)
under this Agreement (whether at maturity, by reason of acceleration or
otherwise); or

 

16.3.4                                      the conversion or repayment of the
whole or any part of the BA Liability (including pursuant to Section 16.1 or
16.2) on any day other than the Selected Maturity Date with respect thereto; or

 

16.3.5                                      the failure of the Borrower to
convert pursuant to a Conversion Request once delivered;

 

(the events contemplated above shall be referred to individually as a “Loss
Event” and the funds converted, not converted, repaid, not borrowed or not
repaid, as the case may be, which are subject to any such Loss Event shall be
collectively referred to as the “Affected Funds”);

 

the Borrower agrees to pay the Lender, upon demand, an amount certified by the
Lender to be necessary to compensate it for all such losses and expenses.

 

16.4                        Mitigation; Replacement of Lenders

 

If the Lender requests compensation under Section 16.2, or if the Lender gives a
notice pursuant to Section 16.1, then the Lender shall use reasonable efforts to
designate a different Lending Office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of the Lender such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 16.2 in the future, or eliminate the need for the notice pursuant to
Section 16.1, as applicable, and (ii) in each case, would not subject the Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.  The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by the Lender in connection with any such designation or
assignment.

 

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If the Lender requests compensation under Section 16.2, the Borrower may, at its
sole expense and effort, upon notice to the Lender, require the Lender to assign
and delegate, without recourse (in accordance with and subject to the
restrictions contained in, and consents required by, Section 17.6), all of its
interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations, provided that:

 

(a)                                 the Lender shall have received payment of an
amount equal to 100% of the outstanding principal of its Loans, accrued interest
thereon and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 16.3) from the assignee (to the
extent of such outstanding principal and accrued interest) or the Borrower (in
the case of all other amounts);

 

(b)                                 in the case of any such assignment resulting
from a claim for compensation under Section 16.2, such assignment will result in
a reduction in such compensation or payments thereafter; and

 

(c)                                  such assignment does not conflict with
applicable Laws.

 

The Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by the Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

16.5                        Tax Documentation; Refunds

 

The Lender shall deliver to the Borrower, at the time or times prescribed by
applicable Laws or when reasonably requested by the Borrower, such properly
completed and executed forms or documentation prescribed by applicable Laws or
by the taxing authorities of any jurisdiction and such other reasonably
requested information as may be necessary to reduce or eliminate any Taxes for
which the Lender requests compensation under Section 16.2.

 

Unless required by applicable Laws, at no time shall the Lender have any
obligation to file for or otherwise pursue any refund of Taxes for which the
Lender has received compensation under Section 16.2.  If the Lender determines,
in its sole discretion, that it has received a refund of any Taxes for which it
has received compensation under Section 16.2, it shall pay to the Borrower an
amount equal to such refund, net of all out-of-pocket expenses incurred by the
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower,
upon the request of the Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Lender in the event the Lender is required to
repay such refund to such Governmental Authority.

 

This Section shall not be construed to require the Lender to make available its
tax returns (or any other information relating to its Taxes that it deems
confidential) to the Borrower or any other Person.

 

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16.6                        General Indemnity

 

The Borrower hereby indemnifies and holds harmless the Indemnified Parties from
any and all losses and expenses that may be incurred by or awarded against any
Indemnified Party, arising out of or relating to any investigation, litigation
or proceeding relating to this Agreement or any use made or proposed to be made
with the proceeds of the Facility, whether or not such investigation, litigation
or proceeding is brought by the Borrower or any other Person and whether or not
such Indemnified Party is a party thereto, except to the extent such losses and
expenses are found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from any Indemnified Party’s intentional or gross
fault or wilful misconduct or any Indemnified Party’s breach of this Agreement.

 

ARTICLE 17

 

MISCELLANEOUS

 

17.1                        Notices

 

Except as otherwise specified herein, all notices, requests, demands or other
communications to or upon the respective parties hereto shall be deemed to have
been duly given or made to the party to which such notice, request, demand or
other communication is required or permitted to be given or made under this
Agreement, when delivered to such party (by certified mail, postage prepaid, or
by telecopier or hand delivery) at its address and attention set forth with its
signature below or at such other address as any of the parties hereto may
hereafter notify the others in writing. No other method of giving notice is
hereby precluded. Notices and other communications to the Lender may be
delivered by electronic communication (including email and internet or intranet
websites) pursuant to procedures approved by the Lender.

 

17.2                        Calculations and Determinations Shall Constitute
Prima Facie Proof

 

In the absence of demonstrable error, any calculation or determination to be
made by the Lender in accordance with this Agreement, when made, shall
constitute prima facie evidence for all of the parties hereto.

 

17.3                        Maintenance of Loan Records by the Lender

 

17.3.1                                      The Lender will open and maintain on
its books a loan record for the Borrower evidencing the aggregate Indebtedness
of the Borrower to the Lender hereunder and each constituent part of the Loan.
The Lender shall record therein the amount of each direct Advance and the
issuance of each BA, and shall enter therein each payment of principal and
interest on the said loans and all amounts paid by the Borrower on account of
BAs and all other amounts paid by the Borrower and becoming due under this
Agreement;

 

17.3.2                                      The said loan records shall
constitute, in the absence of demonstrable error, prima facie evidence of the
whole and each constituent part of the Loan, the date any Advance is made to the
Borrower and the aggregate amounts from

 

24

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time to time paid by the Borrower on account of the Loan, in principal,
interest, fees and other amounts due hereunder.

 

17.4                        Rights and Recourses Cumulative

 

The rights and remedies of the Lender under this Agreement shall be cumulative
and not exclusive of any right or remedy which the Lender would otherwise have
and no failure or delay by the Lender in exercising any right shall operate as a
waiver thereof, nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other power or
right.

 

17.5                        Assignments by the Borrower

 

The rights of the Borrower hereunder are declared to be purely personal and may
therefore not be assigned or transferred, nor can the Borrower assign or
transfer any of its obligations, any such assignment being null and void insofar
as the Lender is concerned and rendering any balance then outstanding of the
Loan immediately due and payable at the option of the Lender and relieving the
Lender from the obligation of making any or any further Advances hereunder.

 

17.6                        Assignments by Lender

 

17.6.1                                      The Lender may at any time enter
into Assignments, provided that no such Assignment to a separate legal entity
shall be effective until the Borrower shall consent to same, which consent shall
not be unreasonably withheld, provided, however, that (i) no such consent shall
be required for an Assignment to an Affiliate of the Lender, (ii) where such
Assignment is to occur at a time when an Event of Default has occurred and is
continuing, no such consent shall be required and (iii) the assignee or
transferee shall not be entitled to any amount under Section 16.1, 16.2 or 16.3
in excess of the compensation which would be payable to the assignor or
transferor had such assignment or transfer not been made, based on the
circumstances existing at the time of such Assignment.

 

17.6.2                                      Any Assignment contemplated in this
Section 17.6 must be either for the entire amount of the Loan of the Lender or,
where it is for a lesser amount, such amount must not be less than
CDN$5,000,000. Notwithstanding the foregoing, where any such Assignment is being
made while an Event of Default has occurred and is continuing, the restrictions
contained in this subsection 17.6.2 shall not apply to such Assignment.

 

17.6.3                                      Without in any way limiting the
generality of any of the foregoing, the Borrower shall, at the reasonable
request of the Lender, execute and deliver to the Lender or to such party or
parties as the Lender may designate any and all further instruments or documents
and use its reasonable efforts to obtain any and all further authorizations or
approvals, and make any and all further registrations, filings or notifications,
as may be necessary or desirable to give full force and effect to an Assignment
by the Lender.

 

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17.6.4                                      For the purposes of this
Section 17.6, the Lender, may provide, on a confidential and need-to-know basis,
any prospective assignees, transferees or participants with this Agreement, as
well as all information, reports, budgets, projections and documents, which are
made available to the Lender by the Parent Guarantor or the Borrower in
connection with this Agreement from time to time, provided that such prospective
assignee, transferee or participant has signed a duly executed non-disclosure
and confidentiality agreement obliging it to the same standards of care relating
to the Borrower’s confidential information as the Lender.

 

17.6.5                                      All expenses incurred by the Lender
and the Loan Parties in connection with any Assignment will be for the account
of the Lender.

 

17.7                        Counterparts

 

This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such separate counterparts shall
together constitute but one and the same instrument. Transmission of an executed
signature page by facsimile, email or other electronic means is as effective as
a manually executed counterpart of this Agreement.

 

17.8                        Severability

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

17.9                        Replacement of Previous Agreements

 

This Agreement replaces and supersedes all verbal or oral agreements,
understandings and undertakings between the Lender and the Borrower relating to
the Facility.

 

17.10                 Obligation to Pay Absolute

 

The obligations of the Borrower to make payments on the Loan as and when due in
accordance with this Agreement shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances without condition or deduction for any counterclaim, defense,
recoupment or setoff.

 

17.11                 Governing Law

 

This Agreement and the interpretation and enforcement thereof shall be governed
by and in accordance with the Laws of the Province of Ontario and the federal
Laws of Canada applicable therein.

 

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17.12                 Submission to Jurisdiction

 

Each of the parties hereto irrevocably submits to the non-exclusive jurisdiction
of the Courts of the Province of Ontario with respect to any matter arising
hereunder or in relation herewith. The parties hereto irrevocably waive any
objections on the ground of venue or forum non conveniens or any similar
grounds.

 

17.13                 Amendments

 

No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower or any other Loan
Party therefrom, shall be effective unless in writing signed by the Lender and
the Borrower or the applicable Loan Party, and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.

 

17.14                 Confidentiality

 

The Lender agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its Affiliates and to
its and its Affiliates’ respective partners, directors, officers, employees,
agents, trustees, advisors and representatives with a need to know (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority), (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any action or proceeding relating to this Agreement or any other
Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this
Section, to any assignee of, or any prospective assignee of, any of its rights
or obligations under this Agreement, (g) with the consent of the Parent
Guarantor or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to
the Lenders or any of their respective Affiliates on a nonconfidential basis
from a source other than the Parent Guarantor.  For purposes of this Section,
“Information” means all information received from the Parent Guarantor or any
Subsidiary thereof relating to the Parent Guarantor or any Subsidiary thereof or
any of their respective businesses, other than any such information that is
available to the Lender on a nonconfidential basis prior to disclosure by the
Parent Guarantor or any Subsidiary thereof, provided that, in the case of
information received from the Parent Guarantor or any Subsidiary thereof after
the date hereof, such information is clearly identified at the time of delivery
as confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.  The Lender acknowledges that
(a) the Information may include material non-public information concerning the
Parent Guarantor or its Subsidiaries, as the case may be, (b) it has developed
compliance procedures regarding the use of material non-public information and
(c) it will handle such material non-public information in accordance with
applicable Law,

 

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[INTENTIONALLY LEFT BLANK]

 

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CREDIT AGREEMENT — SIGNATURE PAGE

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date
and in the place first herein above mentioned.

 

 

 

AAR CORP.,
AS PARENT GUARANTOR

 

 

 

 

Per:

/s/ Jason Secore

 

 

Name: Jason Secore

 

 

Title: Treasurer

 

 

 

 

Address:

1100 North Wood Dale Road
Wood Dale, Illinois 60191

 

 

 

 

Attention:

Jason Secore

 

 

 

 

Telecopier:

630-227-2104

 

 

 

AAR CANADA HOLDINGS ULC.,
AS BORROWER

 

 

 

 

Per:

/s/ Robert J. Regan

 

 

Name: Robert J. Regan

 

 

Title: Vice President

 

 

 

 

Address:

1100 North Wood Dale Road
Wood Dale, Illinois 60191

 

 

 

 

Attention:

Jason Secore

 

 

 

 

Telecopier:

630-227-2104

 

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CREDIT AGREEMENT — SIGNATURE PAGE

 

 

 

 

CANADIAN IMPERIAL BANK OF COMMERCE,
AS LENDER

 

 

 

 

Per:

/s/ Françoise Forel

 

 

 

 

and Per:

/s/ Étienne Lessard

 

 

 

 

Address:

1155 René-Lévesque West Blvd.
Suite 300
Montréal, Québec H3B 4P9

 

 

 

 

Attention:

Francoise Forel, Senior Manager

 

 

 

 

Telecopier:

514-876-2374

 

 

 

 

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SCHEDULE “A”

 

DEFINITIONS

 

“1-Month CDOR BA Rate” means, for any day, the CDOR BA Rate for BAs having a
maturity of 30 days;

 

“Adjusted Total Debt to EBITDA Ratio” shall have the meaning ascribed to it in
the US Syndicated Credit Agreement;

 

“Advance” means any amount of money or credit advanced or to be advanced (as the
context requires) to the Borrower pursuant to this Agreement, whether by way of
cash advance (or the covering of overdrafts) by the Lender or acceptance of BAs
by the Lender;

 

“Affiliate” means any Person which, directly or indirectly, Controls, is
Controlled by or is under direct or indirect common Control with, any other
Person;

 

“Applicable Law” means, with respect to any Person, any Law applicable to such
Person or its properties or assets and any Award binding on such Person or its
properties or assets;

 

“Assignment” or “Assign” means the sale, assignment, transfer or other
disposition of the Loan or any portion thereof and the equivalent portion of the
Facility and other obligations of the Lender under this Agreement but expressly
excludes any participation, and “Assigning”, “Assignor” and “Assignee” have the
correlative meanings;

 

“Authorization” means any authorization, approval, consent, exemption, licence,
permit, franchise or no-action letter from any Governmental Authority having
jurisdiction with respect to any specified Person, property, transaction or
event, or with respect to any of such Person’s properties or assets;

 

“Award” means any judgment, decree, injunction, rule, award or order of any
Governmental Authority;

 

“BA” means a non-interest bearing bill of exchange within the meaning of the
Bills of Exchange Act (Canada) or a depository bill within the meaning of the
Depository Bills and Notes Act (Canada), as applicable, drawn by the Borrower
and addressed to the Lender, made payable to the Lender, bearer or a clearing
house bearing such distinguishing letters and numbers and being in such form as
the Lender may require;

 

“BA Liability” means, as at any time, the aggregate of the face amount of the
BAs accepted by the Lender and still outstanding;

 

“Borrower” refers to AAR Canadian Holdings ULC, and includes any successor
thereto;

 

“Borrowing Date” means any day on which an Advance is made whether it be a
Drawdown, a conversion or a rollover and includes, for greater certainty, any
Issuance Date;

 

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“Business Day” means any day excluding Saturday, Sunday or any other day which
in Montréal, Québec or Toronto, Ontario is a legal holiday or a day on which
banks are authorized by law or by local proclamation to close;

 

“Canadian Dollars” or “CDN$” means the lawful currency of Canada;

 

“CDOR BA Rate” means, for any Business Day, the discount rate (expressed as an
annual percentage rounded upwards to the nearest fifth decimal point) quoted on
the Reuters Money Market page as of 10:00 A.M. (Montréal time) on such day for
bankers’ acceptances denominated in Canadian Dollars accepted by the Lender,
having a maturity similar to that of the BAs with respect to which such rate is
being determined and, where different rates are shown for different amounts, for
an amount which is closest to the aggregate face amount of BAs the Borrower has
requested the Lender accept on such day. If for any such Business Day such rate
does not appear on such CDOR Page, “CDOR BA Rate” shall mean for such day, the
arithmetical mean of the discount rates (expressed as an annual percentage,
rounded upwards to the nearest fifth decimal point), charged by money market
jobbers for non-interest bearing bills of exchange accepted by the Lender,
having a maturity similar to that of the BAs with respect to which such rate is
being determined and having a face amount which is closest to the aggregate face
amount of BAs the Borrower has requested the Lender accept on such day;

 

“Change in Control” means a Change in Control (as defined in the US Syndicated
Credit Agreement);

 

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following:  (a) the adoption or taking effect of any law, rule,
regulation or treaty, (b) any change in any law, rule, regulation or treaty or
in the administration, interpretation, implementation or application thereof by
any Governmental Authority or (c) the making or issuance of any request, rule,
guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that notwithstanding anything herein to the
contrary, all requests, rules, guidelines or directives promulgated by the Bank
for International Settlements, the Basel Committee on Banking Supervision (or
any successor or similar authority), in each case pursuant to Basel III, shall
in each case be deemed to be a “Change in Law”, regardless of the date enacted,
adopted or issued;

 

“Closing Date” means the date of the disbursement of the Term Facility to be
made on or about October 18, 2017;

 

“Compliance Certificate” means a certificate substantially in the form of the
one attached hereto as Schedule “B”;

 

“Computation Period” shall have the meaning ascribed to it in the US Syndicated
Credit Agreement;

 

“Control”, “Controls” and “Controlled” shall have the meaning ascribed to it in
the US Syndicated Credit Agreement;

 

“Conversion Date” means any day on which a conversion or rollover is effected;

 

4

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“Conversion Request” means a notice, substantially in the form of the one
attached hereto as Schedule “C”;

 

“Debtor Relief Laws” means the Bankruptcy and Insolvency Act (Canada), the
Companies’ Creditors Arrangement Act (Canada), and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of Canada or other applicable jurisdictions from time to time
in effect and affecting the rights of creditors generally.

 

“Default” means any Event of Default or any default, breach, failure, event,
state or condition which, unless remedied or waived, with the lapse of time or
giving of notice, or both, would constitute an Event of Default;

 

“Discount Rate” means, with respect to any BA accepted by the Lender, the CDOR
BA Rate for the applicable Selected Period;

 

“Discounted Proceeds” means, with respect to any BA, an amount equal to the
result of the following mathematical formula, rounded to the nearest whole cent:

 

[g242441km09i001.jpg]

 

where,

 

“A” is the Discount Rate;

 

“B” is the number of days comprised in the Selected Period selected by the
Borrower with respect to the relevant BAs the Lender is requested to issue; and

 

“C” is 365;

 

“Draw Request” means the notice substantially in the form of the one attached
hereto as Schedule “D” pursuant to which the Borrower requests an Advance under
the Facility;

 

“Drawdown” means a fresh Advance which is not derived from a conversion or
rollover pursuant to Article 5;

 

“Event of Default” means any of the events described in Article 14;

 

“Excluded Taxes” means any Taxes (a) that are imposed or collected by a
jurisdiction by reason of the Lender being incorporated or resident in that
jurisdiction, carrying on business in, or having a permanent establishment or a
connection in that jurisdiction or participating in a transaction separate from
this Agreement in that jurisdiction, in each case determined by application of
the laws of that jurisdiction, other than by reason of making Advances under
this Agreement or performing its obligations under any Loan Document, receiving
payments under any Loan Document, or enforcing rights under this Agreement or
any other Loan Document, (b) that are attributable to the Lender’s failure to
comply with Section 16.5 of this Agreement,

 

5

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(c) any Taxes imposed on a payment by or on account of any obligation of a Loan
Party hereunder: (i) to a person with which the Loan Party does not deal at
arm’s length (for the purposes of the Income Tax Act (Canada)) at the time of
making such payment or (ii) in respect of a debt or other obligation to pay an
amount to a person with whom the payer is not dealing at arm’s length (for the
purposes of the Income Tax Act (Canada)) at the time of such payment, and
(d) any Taxes imposed on the Lender by reason of the Lender: (i) being a
“specified shareholder” (as defined in subsection 18(5) of the Income Tax Act
(Canada)) of any Loan Party, or (ii) not dealing at arm’s length (for the
purposes of the Income Tax Act (Canada)) with a “specified shareholder” (as
defined in subsection 18(5) of the Income Tax Act (Canada)) of any Loan Party.

 

“Facility” shall have the meaning ascribed to it in Section 2.1.

 

“Financial Statements” means, with respect to any Person, for any period, all
prepared in accordance with GAAP, the balance sheet of such Person as at the end
of such period and the related statements of income, of retained earnings, and
of cash flow for such period;

 

“GAAP” shall have the meaning ascribed to it in the US Syndicated Credit
Agreement;

 

“Governmental Authority” means Canada, the Provinces thereof, any other
sovereign country and any other regional, municipal, state, provincial, local or
other subdivision of any jurisdiction, and any other governmental entity of any
such jurisdiction and includes any agency, department, commission, office,
régie, ministry, tribunal, central bank or other Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government;

 

“Guarantee” means that certain guarantee agreement entered into among the Parent
Guarantor and the other Loan Parties named therein from time to time, and the
Lender, in form and substance satisfactory to the Lender, as same may be
amended, supplemented or restated from time to time;

 

“Guarantors” means, collectively, the Parent Guarantor and each of the
Subsidiaries which  is or shall become from time to time a guarantor pursuant to
Article 8 hereof;

 

“Indebtedness” shall have the meaning ascribed to the defined term “Debt” in the
US Syndicated Credit Agreement;

 

“Indemnified Parties” refers collectively to the Lender, its Affiliates as well
as their respective directors, officers, employees, advisors and agents and
“Indemnified Party” refers to any one thereof;

 

“Insolvency Event” means with respect to any Person, the occurrence of any of
the following events:

 

1.                                      such Person institutes or consents to
the institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment

 

6

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continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

 

2.                                      such Person becomes unable or admits in
writing its inability or fails generally to pay its debts as they become due, or
(ii) any writ or warrant of attachment or execution or similar process is issued
or levied against all or any material part of the property of any such Person
and is not released, vacated or fully bonded within 60 days after its issue or
levy.

 

3.                                      (a) the commencement of an involuntary
proceeding against such Person (i) seeking bankruptcy, liquidation,
reorganization, dissolution, winding up, a composition or arrangement with
creditors, a readjustment of debts, or other relief with respect to it or its
debts under any bankruptcy laws or other customary insolvency actions or
(ii) seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its assets, the issuance
of a writ of attachment, execution, or similar process, or like relief, and such
involuntary proceeding shall remain undismissed and unstayed for a period of
30 days, (b) an order for relief is entered against such Person under the
Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act
(Canada) or any other present or future federal bankruptcy or insolvency Laws of
Canada, (c) filing by such Person of an answer admitting the material
allegations of a petition filed against it in any involuntary proceeding
commenced against it, or (d) consent by such Person to any relief referred to in
this paragraph 3 or to the appointment of or taking possession by any such
official in any involuntary proceeding commenced against it; or

 

“Interest Coverage Ratio” shall have the meaning ascribed to it in the US
Syndicated Credit Agreement;

 

“Interest Payment Date” means with respect to the Prime Rate Loan, the first
(1st) Business Day of each and every calendar month of each year with respect to
amounts of interest accrued to and including the last day of the previous month;

 

“Issuance Date” means with respect to any BA, the date on which the Lender
accepted same;

 

“Law” means any international treaty or any federal, provincial, territorial,
state, municipal, county or local statute, law, ordinance, code, rule,
regulation or order (including any consent, decree or administrative order) or
any directive, guideline or policy of any Governmental Authority;

 

“Lender” means Canadian Imperial Bank of Commerce, and shall include its
successors and permitted assigns;

 

“Lender’s Prime Rate” means, for any day, the rate of interest, expressed as an
annual rate, quoted or announced on such day by the Lender in the City of
Montréal, as being its reference rate then in effect for determining interest
rates on commercial loans made in Canada, in Canadian Dollars;

 

7

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“Lending Office” means such office or offices as the Lender may from time to
time notify the Borrower;

 

“Lien” means any interest in property securing an obligation owed to, or a claim
by, a Person other than the owner (which for the purposes hereof shall include a
possessor under a title retention agreement and a lessee under a capital lease)
including by way of mortgage, pledge, charge, lien, assignment by way of
security, hypothecation, security interest, conditional sale agreement, deposit
arrangement, deemed trust, title retention, capital lease, factoring or
securitization arrangement;

 

“Loan” means, as the context requires, all Advances outstanding, as at any time
under the Term Facility, including the BA Liability, together with any other
amount in principal, interest, fees and accessories and interest on arrears of
interest, fees and accessories, in each case, due and payable to the Lender by
the Borrower under the Term Facility;

 

“Loan Documents” means, collectively, this Agreement, the Guarantee Agreement
and each other document, instrument or agreement (which is designated as a Loan
Document therein) entered into by or between any Loan Party and the Lender in
connection with the transactions contemplated herein or therein or which is
supplemental hereto or thereto;

 

“Loan Parties” means, collectively, the Borrower and the Guarantors;

 

“Material” shall have the meaning ascribed to it in the US Syndicated Credit
Agreement;

 

“Material Adverse Effect” means a material adverse effect upon (i) the business,
financial condition, operations or properties of the Loan Parties taken as a
whole, (ii) the ability of the Borrower to perform any of the obligations under
any Loan Document to which it is a party, or (iii) the ability of the Parent
Guarantor to perform its obligations under the Loan Documents to which it is a
party or (iv) the legality, validity, binding effect or enforceability against
the Borrower or the Parent Guarantor of any Loan Document to which it is a
party;

 

“Obligations” refers collectively to the performance by Loan Parties of all of
their obligations under the Loan Documents including the obligation of the
Borrower to repay the Loan on the terms and conditions provided for hereunder;

 

“Organization Documents” shall have the meaning ascribed to it in the US
Syndicated Credit Agreement;

 

“Parent Guarantor” refers to AAR Corp., and includes any successor thereto;

 

“Person” means any individual, corporation, company, limited liability company,
estate, limited or general partnership, trust, joint venture, other legal
entity, unincorporated association or Governmental Authority;

 

“Premier Aviation Acquisition” means the purchase by the Borrower of all of the
issued and outstanding equity shares of (i) Premier Aviation Overhaul Centre
Inc. which owns an MRO facility in Trois-Rivières, Quebec, and (ii) a newly
established affiliate of Premier Aviation Windsor Inc., which owns an MRO
facility in Windsor, Ontario;

 

8

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“Prime Rate” means, for any day, a rate per annum equal to the greater of
(i) the Lender’s Prime Rate for such day; and (ii) the 1-Month CDOR BA Rate in
effect on such day plus 1.0%;

 

“Prime Rate Basis” means the calculation of interest on the Prime Rate Loan as
provided in Sections 3.2 and 3.3;

 

“Prime Rate Loan” means, as at any time, that portion of the Facility with
respect to which the Borrower has elected or, under the terms of this Agreement,
is required to pay interest on a Prime Rate Basis;

 

“Relevant Margin” has the meaning ascribed to it in Schedule “E”;

 

“Repayment Notice” means a notice substantially in the form of the one attached
hereto as Schedule “F”;

 

“Responsible Officer” shall have the meaning ascribed to it in the US Syndicated
Credit Agreement;

 

“Revolver Security Event” means that any Loan Party shall have pledged
collateral (other than any provision of cash collateral required pursuant to the
US Syndicated Credit Agreement) to secure the Parent Guarantor’s obligations
under the US Syndicated Credit Agreement;

 

“Selected Amount” means, in connection with BAs, the aggregate face amount of
BAs having the same Issuance Date and Selected Maturity Date;

 

“Selected Maturity Date” means, with respect to BAs, the maturity date selected
by the Borrower under the Draw Request or Conversion Request, as the case may
be;

 

“Selected Period” means, with respect to any Selected Amount, the period
commencing as of and from the Issuance Date applicable to such Selected Amount
up to and including the day preceding the Selected Maturity Date applicable to
such Selected Amount;

 

“Stamping Fee” refers to the fee payable pursuant to the provisions of
Section 4.2;

 

“Subsidiary” shall have the meaning ascribed to it in the US Syndicated Credit
Agreement;

 

“Taxes” means all taxes of any kind or nature whatsoever including federal large
corporation taxes, provincial capital taxes, realty taxes (including utility
charges which are collectible like realty taxes), business taxes, property
transfer taxes, income taxes, sales taxes, levies, stamp taxes, royalties,
duties, and all fees, deductions, compulsory loans and withholdings imposed,
levied, collected, withheld or assessed as of the Closing Date or at any time in
the future, by any Governmental Authority having power to tax, together with
penalties, fines, additions to tax and interest thereon, and “Tax” shall have a
correlative meaning;

 

“Term Facility” has the meaning set forth in Section 2.1;

 

“Term Period” means the period commencing on the Closing Date and terminating on
the earlier of:

 

9

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1.                                      November 1, 2021; and

 

2.                                      the date that the Term Facility is
terminated and cancelled in its entirety as herein contemplated;

 

“Type” means, with respect to any Advance, its nature as a Prime Rate Loan or an
issue of BAs;

 

“US Syndicated Credit Agreement” means that certain Credit Agreement dated as of
April 12, 2011 among, inter alia, the Parent Guarantor, as Borrower, and Bank of
America, N.A., as Administrative Agent, as amended through November 1, 2016, and
as same may be further amended, supplemented or restated from time to time.

 

10

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SCHEDULE “B”

 

COMPLIANCE CERTIFICATE

 

Financial Statement Date:

 

To:                             CANADIAN IMPERIAL BANK OF COMMERCE
AS LENDER
1155 René-Lévesque West Blvd.
Suite 300
Montréal, Québec  H3B 4P9

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of October 18, 2017
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among AAR Corp., as the Parent Guarantor, AAR Canada
Holdings ULC (the “Borrower”), and Canadian Imperial Bank of Commerce, as
Lender.

 

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the [                                     ] of the Parent Guarantor,
and that, as such, he/she is authorized to execute and deliver this Certificate
to the Lender on the behalf of the Parent Guarantor, and that:

 

[Use following paragraph 1 for fiscal year-end financial statements]

 

a.                                      The Parent Guarantor has delivered the
year-end audited financial statements required by Section 12.2 of the Agreement
for the fiscal year of the Parent Guarantor ended as of the above date, together
with the opinion of an independent accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end financial statements]

 

b.                                      The Parent Guarantor and the Borrower
have delivered the unaudited financial statements required by Section 12.1 of
the Agreement for the fiscal quarter of the Parent Guarantor and the Borrower,
ended, in each case, as of the above date.  Such financial statements fairly
present (i) in the case of the Parent Guarantor’s financial statements, the
financial condition, results of operations and cash flows of the Parent
Guarantor and its Subsidiaries, and (ii) in the case of the Borrower’s financial
statements, the financial condition, results and operations and cash flows of
the Borrower, in all cases, in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of
footnotes.

 

11

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c.                                       The undersigned has reviewed and is
familiar with the terms of the Agreement and has made, or has caused to be made
under his/her supervision, a detailed review of the transactions and condition
(financial or otherwise) of the Parent Guarantor during the accounting period
covered by such financial statements.

 

d.                                      A review of the activities of the Parent
Guarantor and Borrower during such fiscal period has been made under the
supervision of the undersigned with a view to determining whether during such
fiscal period the Parent Guarantor and Borrower have performed and observed all
of their respective Obligations under the Loan Documents, and

 

[select one:]

 

[to the best knowledge of the undersigned, during such fiscal period each of the
Borrower and the Parent Guarantor performed and observed each covenant and
condition of the Loan Documents applicable to it, and no Default has occurred
and is continuing.]

 

—or—

 

[to the best knowledge of the undersigned, during such fiscal period the
following covenants or conditions have not been performed or observed and the
following is a list of each such Default and its nature and status:]

 

e.                                       The financial covenant analyses and
information set forth on Schedule 1 attached hereto are true and accurate on and
as of the date of this Certificate.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of                       ,               .

 

 

AAR CORP.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

12

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For the Quarter/Year ended                    (“Statement Date”)

 

SCHEDULE 1
to the Compliance Certificate

 

I.                                        Section 7.13(a) — Minimum Interest
Coverage Ratio.

 

A.                                    Minimum Interest Coverage Ratio:

 

1.

 

EBITDA

 

$

 

 

 

 

 

 

 

 

2.

 

Interest Expense

 

$

 

 

 

 

 

 

 

 

3.

 

Ratio of (1) to (2)

 

$

 

 

 

 

 

 

 

 

4.

 

Minimum allowed

 

$

 

 

 

II.                                   Section 7.13(c) — Maximum Adjusted Total
Debt to EBITDA Ratio.

 

A.                                    Adjusted Total Debt to EBITDA Ratio:

 

1.

 

Total Debt

 

$

 

 

 

 

 

 

 

 

2.

 

Unrestricted Cash

 

$

 

 

 

 

 

 

 

 

3.

 

Remainder of (1) minus (2)

 

$

 

 

 

 

 

 

 

 

4.

 

EBITDA

 

$

 

 

 

 

 

 

 

 

5.

 

Ratio of (3) to (4)

 

to 1.00

 

 

 

 

 

 

 

6.

 

Maximum allowed

 

3.50 to 1.00

 

 

13

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SCHEDULE “C”

 

CONVERSION REQUEST

 

Date:       

 

CANADIAN IMPERIAL BANK OF COMMERCE
AS LENDER
1155 René-Lévesque West Blvd.
Suite 300
Montréal, Québec  H3B 4P9

 

Ladies and Gentlemen:

 

We refer you to the credit agreement dated as of October 18, 2017 entered into
among AAR Corp., as the Parent Guarantor, AAR Canada Holdings ULC, as Borrower,
and Canadian Imperial Bank of Commerce, as Lender (as amended, supplemented,
restated, replaced or otherwise modified from time to time, the “Credit
Agreement”).

 

Unless otherwise defined herein or unless there is something in the subject or
the context inconsistent therewith, all capitalized terms and expressions used
herein shall have the same meaning as that ascribed to them from time to time in
the Credit Agreement.

 

Pursuant to Section 5.1 of the Credit Agreement, we hereby request a conversion
or rollover of a portion of the Term Facility, as indicated in Table 1 attached
hereto, such conversion or rollover to occur on Note 1.

 

 

 

Yours truly,

 

 

 

 

 

 

 

 

AAR CANADA HOLDINGS ULC

 

 

 

 

 

 

 

PER:

 

 

--------------------------------------------------------------------------------

Notes:

 

1.                                      Specify the date of the conversion or
rollover.

 

--------------------------------------------------------------------------------

 

TABLE 1

 

FROM:

 

TO:

 

Form of
Advance

 

Selected Maturity
Date

 

Form of
Advance

 

Borrowing
Date or
Issuance Date

 

Selected
Maturity
Date

 

Selected
Period

 

Amount or
Selected
Amount

 

Interest
(if
applicable)

 

Prime Rate Loan

 

N/A

 

Prime Rate
Loan

 

201

 

N/A

 

N/A

 

CDN$

 

 

Prime Rate
Basis

 

BA

 

Note 2

 

BA

 

201

 

Note 2

 

1 month
2 months
3 months
6 months

 

CDN$
CDN$
CDN$
CDN$
CDN$

 

 

N/A

 

 

f.                                        Specify the Selected Maturity Date,
which must fall within the Term Period.

 

2

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SCHEDULE “D”

 

DRAW REQUEST

 

Date:           

 

CANADIAN IMPERIAL BANK OF COMMERCE
AS LENDER
1155 René-Lévesque West Blvd.
Suite 300
Montréal, Québec  H3B 4P9

 

Ladies and Gentlemen:

 

We refer you to the credit agreement dated as of October 18, 2017 entered into
among AAR Corp., as the Parent Guarantor, AAR Canada Holdings ULC, as Borrower,
and Canadian Imperial Bank of Commerce, as Lender (as amended, supplemented,
restated, replaced or otherwise modified from time to time, the “Credit
Agreement”).

 

Unless otherwise defined herein or unless there is something in the subject or
the context inconsistent therewith, all capitalized terms and expressions used
herein shall have the same meaning as that ascribed to them from time to time in
the Credit Agreement.

 

We hereby request a Drawdown under the Term Facility, as indicated in Table 1
attached hereto.

 

Note 1

 

 

 

Yours truly,

 

 

 

 

 

 

 

 

AAR CANADA HOLDINGS ULC

 

 

 

 

 

 

 

PER:

 

 

--------------------------------------------------------------------------------

Notes:

 

 

1.                                      WHERE PURSUANT TO THIS DRAW REQUEST THE
BORROWER WISHES TO GIVE A DIRECTION OF PAYMENT, THE BORROWER SHOULD INCLUDE THE
REQUIRED PAYMENT INFORMATION.

 

--------------------------------------------------------------------------------

 

TABLE 1

 

Form of
Advance

 

Borrowing
Date or
Issuance Date

 

Selected
Maturity
Date

 

Selected
Period

 

Amount or
Selected
Amount

 

Interest
(if applicable)

 

Prime Rate Loan

 

201

 

N/A

 

N/A

 

Cdn$

 

Prime Rate Basis

 

BA

 

201

 

Note 2

 

1 month
2 months
3 months
6 months

 

Cdn$
Cdn$
Cdn$
Cdn$
Cdn$

 

N/A

 

 

ARTICLE 18SPECIFY THE SELECTED MATURITY DATE, WHICH MUST FALL WITHIN THE TERM
PERIOD.

 

2

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SCHEDULE “E”

 

RELEVANT MARGIN

 

“Relevant Margin” means the following percentages per annum, based upon the
Adjusted Total Debt to EBITDA Ratio as set forth in the most recent Compliance
Certificate received by the Lender pursuant to Section 12.2:

 

RELEVANT MARGIN

 

Pricing
Level

 

Adjusted Total Debt to EBITDA Ratio

 

BAs/Stamping Fee

 

Prime Rate loan

 

1

 

1 < 1.75:1

 

1.25

%

0.25

%

2

 

> 1.75:1 but < 2.75:1

 

1.50

%

0.50

%

3

 

> 2.75:1 but < 3.25:1

 

1.75

%

0.75

%

4

 

> 3.25:1

 

2.25

%

1.25

%

 

Any increase or decrease in the Relevant Margin resulting from a change in the
Adjusted Total Debt to EBITDA Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 12.2; provided, however, that if a Compliance
Certificate is not delivered when due in accordance with such Section, then,
upon the request of the Lender, Pricing Level 4 shall apply as of the first
Business Day after the date on which such Compliance Certificate was required to
have been delivered and shall remain in effect until the date on which such
Compliance Certificate is delivered. The Relevant Margin in effect from the
Closing Date through the date on which the Compliance Certificate for the period
ended November 30, 2017 is delivered to the Lender shall be determined based
upon Pricing Level 1.

 

--------------------------------------------------------------------------------

 

SCHEDULE “F”

 

REPAYMENT NOTICE

 

Date:       

 

CANADIAN IMPERIAL BANK OF COMMERCE
AS LENDER
1155 René-Lévesque West Blvd.
Suite 300
Montréal, Québec  H3B 4P9

 

Ladies and Gentlemen:

 

We refer you to the credit agreement dated as of October 18, 2017 entered into
among AAR Corp., as the Parent Guarantor, AAR Canada Holdings ULC, as Borrower,
and Canadian Imperial Bank of Commerce, as Lender (as amended, supplemented,
restated, replaced or otherwise modified from time to time, the “Credit
Agreement”).

 

Unless otherwise defined herein or unless there is something in the subject or
the context inconsistent therewith, all capitalized terms and expressions used
herein shall have the same meaning as that ascribed to them from time to time in
the Credit Agreement.

 

Pursuant to the provisions of Section 2.5 of the Credit Agreement, we hereby
notify you that on Note 1, we shall repay an amount of
                                             of the Term Facility to be applied
as follows:

 

Loan under Term Facility against
which payment is to be applied

 

AMOUNT

 

SELECTED
MATURITY DATE

 

PRIME RATE LOAN

 

CDN$                             

 

N/A

 

BA

 

CDN$                             

 

NOTE 2

 

 

 

 

Yours truly,

 

 

 

 

 

AAR CANADA HOLDINGS ULC

 

 

 

 

 

 

 

PER:

 

 

--------------------------------------------------------------------------------

Notes:

 

2.                                      SPECIFY THE DATE OF REPAYMENT.

ARTICLE 19INDICATE THE RELEVANT SELECTED MATURITY DATE.

 

4

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