Exhibit 10.14


 


 


November 30, 2004


 


AAR CORP.

AAR Receivables Corporation II

1100 North Wood Dale Road

Wood Dale, IL 60191


 


Re:                               Amendment
No. 3 to Purchase Agreement dated as of March 21, 2003 (this “Amendment”)


 


 


Gentlemen:


 


AAR
Receivables Corporation II, an Illinois corporation (“Seller”), AAR
CORP., a Delaware corporation in its individual capacity (in such capacity, “AAR”)
and as initial servicer (in such capacity, together with its successors and
permitted assigns in such capacity, “Servicer”), have entered into a
certain Receivables Purchase Agreement dated as of March 21, 2003 (as
heretofore amended or otherwise modified, the “Agreement”; capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
them in the Agreement) with LaSalle Business Credit, LLC, a Delaware limited
liability company (individually, “LaSalle”), as agent for itself and the
Purchasers referred to below (in such capacity, together with its successors
and assigns in such capacity, “Agent”), and the financial institutions
from time to time parties thereto as “Purchasers.”  Seller, Servicer, Agent and the Purchasers
now desire to further amend the Agreement as provided herein, subject to the
terms and conditions hereinafter set forth.


 


In addition,
AAR executed and delivered a certain Performance Guaranty dated as of March 21,
2003 (the “Performance Guaranty”), which Agent and Purchasers require to
be reaffirmed as a condition to the effectiveness hereof.


 


NOW,
THEREFORE, in consideration of the foregoing recitals, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:


 


1.             Section 1.1(d) of the
Agreement is hereby amended and restated in its entirety to read as follows:


 


“Seller may,
by written request delivered to Agent not more than six (6) and not less than
five (5) months prior to the Facility Termination Date and payment of a
non-refundable fee of $50,000 to Agent, request that Agent and the Purchasers
undertake a new credit review and analysis in contemplation of the extension of


 





















 


the Facility
Termination Date, and Agent and the Purchasers agree to undertake such review
and analysis and to use their best efforts to complete such review and analysis
by no later than three (3) months prior to the Facility Termination Date.  Upon completion of such review and analysis,
Agent and the Purchasers shall promptly notify Seller as to whether, in the
sole discretion of Agent and the Purchasers, they are willing to extend the
Facility Termination Date and the terms therefor.  Any such extension pursuant to this clause
(c) shall thereupon become effective upon mutual agreement to such terms, the
finalization and execution of any necessary documentation therefor, and the
satisfaction of any other conditions to the effectiveness thereof pursuant to
such documentation.  Notwithstanding
anything contained herein to the contrary, (i) in no event shall Agent or any
Purchaser have any obligation to agree to any such extension, all of which
shall be at its sole discretion and (ii) no such extension shall be for a
period in excess of 364 days from the effective date thereof.”


 


2.             Exhibit 1 of the Agreement
is hereby amended by amending and restating in their entirety the existing
definitions of “Concentration Percentage,” “Contra Adjustment,” “Excess
Concentration,” “Facility Termination Date,” “Group A Obligor,” “Group B
Obligor,” “Group C Obligor,” “Group D Obligor,” “Group E Obligor” and “Purchase
Limit” set forth therein to read as follows:


 


“‘Concentration
Percentage’ means: (a) for any Group A Obligor, 25%, (b) for any Group B
Obligor, 25%, (c) for any Group C Obligor, 15%, (d) for any Group D Obligor, 5%
and (e) for Permitted Government Receivables, as a class, 35%.”


 


“‘Contra
Adjustment’ means an amount equal to 3% of the Outstanding Balance of Eligible
Receivables in the Receivables Pool.”


 


“‘Excess
Concentration’ means, at any time, the sum of (X) the sum of the amounts by which
the Outstanding Balance of Eligible Receivables of each Obligor (other than a
Group E Obligor) then in the Receivables Pool exceeds an amount equal to the
product of (a) the Concentration Percentage for such Obligor multiplied by (b)
the Outstanding Balance of all Eligible Receivables then in the Receivables
Pool, plus (Y) the sum of the amounts by the which the Outstanding
Balance of Eligible Receivables of each Group E Obligor exceeds (a) the lesser
of (i) $500,000, or (ii) the amount of Eligible Receivables of such Group E
Obligor as exists as of the Third Amendment Effective Date or (b) such greater
or lesser dollar limitation as may be expressly designated in writing by Agent
from time to time in its sole discretion.”


 


“‘Facility
Termination Date’ means the earlier to occur of (a) March 21, 2006, (b) the
occurrence or declaration of the “Facility Termination Date” pursuant to Section
2.2 of the Agreement and (c) the date the Purchase Limit is terminated or
permanently reduced to zero pursuant to Section 1.1(b) of the Agreement.”


 


“‘Group A
Obligor’ means any Obligor (other than a Governmental Authority or a Group E
Obligor) with a short-term rating of at least: (a) “A-1” by Standard &


 





















 


Poor’s, or if
such Obligor does not have a short-term rating from Standard & Poor’s, a
rating of “A+” or better by Standard & Poor’s on its long-term senior
unsecured and unenhanced debt securities, and (b) “P-1” by Moody’s, or
if such Obligor does not have a short-term rating from Moody’s, “A1” or better
by Moody’s on its long-term senior unsecured and unenhanced debt securities.”


 


“‘Group B
Obligor’ means an Obligor (other than a Governmental Authority or a Group E
Obligor), not a Group A Obligor with a short-term rating of at least: (a) “A-2”
by Standard & Poor’s, or if such Obligor does not have a short-term rating
from Standard & Poor’s, a rating of “BBB+” to “A” by Standard & Poor’s
on its long-term senior unsecured and unenhanced debt securities, and
(b) “P-2” by Moody’s, or if such Obligor does not have a short-term rating from
Moody’s, “Baa1” to “A2” by Moody’s on its long-term senior unsecured and
unenhanced debt securities.”


 


“‘Group C
Obligor’ means an Obligor (other than a Governmental Authority or a Group E
Obligor), not a Group A Obligor, a Group B Obligor with a short-term rating of
at least: (a) “A-3” by Standard & Poor’s, or if such Obligor does not have
a short-term rating from Standard & Poor’s, a rating of “BBB-” to “BBB” by
Standard & Poor’s on its long-term senior unsecured and unenhanced debt securities,
and (b) “P-3” by Moody’s, or if such Obligor does not have a short-term
rating from Moody’s, “Baa3” to “Baa2” by Moody’s on its long-term senior
unsecured and unenhanced debt securities.”


 


“‘Group D
Obligor’ means any Obligor that is not a Group A Obligor, Group B Obligor,
Group C Obligor, Group E Obligor or Governmental Authority.”


 


“‘Group E
Obligor’ means, any Obligor (a) which has a short-term rating or a rating on
its long-term senior unsecured and unenhanced debt securities by Standard &
Poor’s or by Moody’s and such rating is at a level below that required
to qualify as a Group A Obligor, Group B Obligor, or Group C Obligor; or (b)
whose short-term rating or rating on its long-term senior unsecured and
unenhanced debt securities has been placed on credit watch by Standard &
Poor’s or by Moody’s for downgrade to a level below that required to qualify as
a Group A Obligor, Group B Obligor, or Group C Obligor; or (c) whose short-term
rating or rating on its long-term senior unsecured and unenhanced debt
securities has been withdrawn by Standard & Poor’s or by Moody’s.”


 


“‘Purchase
Limit’ means $50,000,000, as such amount may be reduced pursuant to Section
1.1(b) of the Agreement. References to the unused portion of the Purchase Limit
shall mean, at any time, the Purchase Limit minus the then outstanding Capital.”


 


3.             Exhibit 1 of the Agreement
is hereby further amended by adding a new definition of “Amendment No. 3
Effective Date” to read as follows:


 


“‘Third Amendment Effective Date’ means November 30, 2004.”


 





















 


4.             In connection with the deletion of
the requirement by the Agent and the Purchasers that the Sellers maintain
credit insurance policies with respect to the Permitted Foreign Receivables,
the Agreement is hereby amended as follows:


 


4.1.          Section
3.1(xxi) of the Agreement is hereby deleted in its entirety and is replaced
by “(xxi) [Reserved].”;


 


4.2.          The
definition of “Obligor” set forth in Exhibit 1 of the Agreement
is hereby amended and restated in its entirety to read as follows:


 


“Obligor” means, with respect to any
Receivable, the Person obligated to make payments pursuant to the Contract
relating to such Receivable; it being agreed that any Person and its Affiliates
shall be deemed to be one and the same Obligor for all purposes hereunder.”


 


4.3.          The
definition of “Permitted Foreign Receivable” is hereby amended to delete
clause (iv) thereof in its entirety.


 


4.4.          The
definitions of both “Qualified Insurer” and “Qualified Policy”
are hereby deleted and all references thereto in the Agreement and the other
Transaction Documents shall be deemed of no force or effect.


 


4.5.          Clause
(d) of the definition of “Related Security” is hereby amended and
restated in its entirety to read as follows:


 


“(d)         all
of the Seller’s and the relevant Originator’s rights, interests and claims
under the Contracts and all guaranties, letters of credit, indemnities,
insurance (including credit insurance on any Pool Receivable) and other
agreements (including the related Contract) or arrangements of whatever character
from time to time supporting or securing payment of such Receivable or
otherwise relating to such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise,”; and


 


4.6.          Clause
(x) of Exhibit IV is hereby deleted in its entirety and is replaced by “(x)
[Reserved].”


 


5.             All references in the Agreement to Schedule
VII to the Agreement shall be deemed to be references to Schedule VII
in the form attached hereto and made a part hereof.


 


6.             Reaffirmations and Representations:


 


6.1.          AAR expressly
reaffirms, ratifies and assumes all of its obligations and liabilities to Agent
as set forth in the Performance Guaranty. 
AAR further agrees to be bound by and abide by and operate and perform
under and pursuant to and comply fully with all of the terms, conditions,
provisions, agreements, representations, undertakings, warranties, obligations
and covenants contained in the Performance Guaranty, in so far as such
obligations and liabilities may be


 





















 


modified by
this Amendment, as though such Performance Guaranty were being re-executed on
the date hereof, except to the extent that such terms expressly relate to an
earlier date.


 


6.2.          Except as expressly
amended hereby and by any other supplemental documents or instruments executed
by either party hereto in order to effectuate the transactions contemplated
hereby, the Agreement, the Exhibits thereto and other Transaction Documents are
hereby reaffirmed, ratified and confirmed by the parties hereto and remain in
full force and effect in accordance with the terms thereof. Seller and Servicer
expressly ratify, confirm and reaffirm without condition, all liens and
security interests granted to Agent pursuant to the Agreement and the other
Transaction Documents and to all extensions, renewals, refinancings, amendments
or modifications of any of the foregoing.


 


6.3.          In addition to the
representations and warranties made by the Seller, Servicer and AAR pursuant to
the Agreement and the other Transaction Documents, the Seller and AAR each
hereby represents and warrants to the Agent and the Purchasers that (i) they
have continued to operate their business and conduct their operations in
compliance with the terms of the Agreement (including, without limitation, the
requirements of clause 2 of Exhibit IV and Exhibit VI) and (ii)
all of the facts and assumptions set forth in the opinion of Schiff Hardin
& Waite, counsel to the Seller and AAR, dated as of March 21, 2003
concerning “true sale” and substantive consolidation matters continue to be
true, complete and correct as of the effective date of this Amendment.


 


7.             The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent (unless
specifically waived in writing by Agent):


 


7.1.          Agent shall have
received (a) fully executed copies of this Amendment executed by all parties
hereto, (b) fully executed copies of that certain Fee Letter (the “Fee
Letter”) dated as of the date hereof by and among all of the parties hereto
executed by all of the parties thereto, and (c) each of the other documents set
forth on the List of Closing Documents set forth on Annex A
attached hereto, in each case, executed where applicable by each of the parties
thereto and in all cases, in form and substance satisfactory to Agent;


 


7.2.          All proceedings
taken in connection with the transactions contemplated by this Amendment and
all documents, instruments and other legal matters incident thereto shall be
reasonably satisfactory to Agent;


 


7.3.          The representations
and warranties set forth herein and in the Agreement are true and correct in
all material respects with the same effect as if such representations and
warranties had been made on the date hereof;


 


7.4.          No event has
occurred, is continuing or would result herefrom that constitutes (a) a Termination
Event or (b) an Unmatured Termination Event; and


 





















 


7.5.          Agent shall have
received payment by Seller and Servicer of all fees arising under or referenced
in the Fee Letter and payable on or prior to the date hereof.


 


8.             This Amendment may be executed in
one or more counterparts, each of which shall constitute an original, but all
of which taken together shall be one and the same instrument. This Amendment
may also be executed by facsimile and each facsimile signature hereto shall be
deemed for all purposes to be an original signatory page.


 


9.             This Amendment shall be construed
in accordance with and governed by the internal laws (as distinguished from the
conflicts of law provisions) of the State of Illinois.


 


10.           Seller and Servicer hereby jointly and
severally agree to reimburse Agent for all of its out-of-pocket legal fees and
expenses incurred in the preparation and documentation of this Amendment and
related documents.


 


	
   

  	
  LASALLE
  BUSINESS CREDIT, LLC, as the

  
	
   

  	
  sole Purchaser and as Agent

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/John Mostofi

  	
   

  
	
   

  	
  Title 

  	
  Senior Vice President

  	
   

  



 


 


	
  ACKNOWLEDGED AND AGREED TO

  	
   

  
	
  as of the date and year first above written

  	
   

  
	
   

  	
   

  
	
  AAR RECEIVABLES CORPORATION II, as Seller

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Timothy J. Romenesko

  	
   

  
	
  Title: 

  	
  Vice President & Treasurer

  	
   

  
	
   

  
	
  AAR CORP., as Servicer and 

  
	
  Performance Guarantor

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Timothy J. Romenekso

  	
   

  
	
  Title: 

  	
  Vice President & Chief Financial
  Officer

  	
   

  
						



 





















 


SCHEDULE VII


PERMITTED FOREGIN OBLIGORS
(referenced in Permitted Foreign Receivables definition)


 


	
  Home Office Number

  	
   

  	
  Home Office Name_name

  
	
  6AAR617

  	
   

  	
  HAECO

  
	
  A630

  	
   

  	
  VARIG BRAZILIAN AIRLINES

  
	
  A2040

  	
   

  	
  AIR NEW ZEALAND

  
	
  B5020

  	
   

  	
  ALLISON ENGINE COMPANY (ROLLS
  ROYCE)

  
	
  8AAR174

  	
   

  	
  SRI LANKA AIR

  
	
  AR10117

  	
   

  	
  VIETNAM AIRLINES CORP.

  
	
  9AAR811

  	
   

  	
  MIP FAHRZEUGBAU AND DIENSTLEIS

  
	
  A2466

  	
   

  	
  FAR EASTERN AIR TRANSPORT

  
	
  B6180

  	
   

  	
  VOLVO AERO SERVICES

  
	
  4AAR687

  	
   

  	
  AIR CHINA

  
	
  6AAR296

  	
   

  	
  CEBU AIR INC.

  
	
  AAR5065

  	
   

  	
  KBK INC

  
	
  K24910

  	
   

  	
  STANDARD AERO ENGINE LTD.

  
	
  L32835

  	
   

  	
  GAMCO

  
	
  A1610

  	
   

  	
  ALITALIA AIRLINES

  
	
  A2360

  	
   

  	
  IBERIA A/L OF SPAIN

  
	
  A8270

  	
   

  	
  WIDEROE'S FLYVESELSKAP AS

  
	
  A1510

  	
   

  	
  INDIAN AIRLINES

  
	
  9AAR578

  	
   

  	
  CAN JET

  
	
  A2462

  	
   

  	
  CHINA AIRLINES

  
	
  A2440

  	
   

  	
  SWISSAIR SR TECHNICS LTD

  
	
  A1740

  	
   

  	
  KOREAN AIRLINES

  
	
  L32360

  	
   

  	
  ST AEROSPACE ENGINES PTE LTD

  
	
  A1140

  	
   

  	
  FINNAIR

  
	
  L29640

  	
   

  	
  MTU MAINTENANCE

  
	
  1AAR116

  	
   

  	
  JAS AIRCRAFT CORP

  
	
  A1160

  	
   

  	
  AIR FRANCE

  
	
  A1230

  	
   

  	
  LUFTHANSA

  
	
  A2010

  	
   

  	
  KLM

  
	
  5AAR395

  	
   

  	
  BOMBARDIER SERVICE CORP

  
	
  B5380

  	
   

  	
  FIAT AVIO SPA

  
	
  A1660

  	
   

  	
  JAPAN A/L

  
	
  A1930

  	
   

  	
  MEXICANA

  
	
  B5980

  	
   

  	
  FOKKER B.V.

  
	
  B5300

  	
   

  	
  ISRAEL AIRCRAFT INDUSTRIES

  
	
  AAR1943

  	
   

  	
  AIR ATLANTA ICELANDIC

  
	
  A1500

  	
   

  	
  AIR INDIA LTD

  
	
  7AAR883

  	
   

  	
  EAGLE SERVICES ASIA PTE

  
	
  A1920

  	
   

  	
  AEROMEXICO

  
	
  A1840

  	
   

  	
  MALAYSIAN AIRLINE SYSTEMS