Document:

Exhibit 10.2

 

EXECUTION VERSION

 

	
BANK OF AMERICA, N.A.

MERRILL LYNCH, PIERCE,   FENNER &

SMITH INCORPORATED

One Bryant Park

New York, New York 10036
    	
CITIGROUP GLOBAL MARKETS   INC.

390 Greenwich Street

New York, New York 10013
    

 

CONFIDENTIAL

 

April 10, 2011

 

Level 3 Communications, Inc.
 Level 3 Financing, Inc.
 1025 Eldorado Boulevard
 Broomfield, Colorado 80021

 

Project Apollo
 $650,000,000 Senior Secured Tranche B II Term Loan Facility
 $1,100,000,000 Senior Unsecured Bridge Facility
 Commitment Letter

 

Ladies and Gentlemen:

 

You have advised Bank of America, N.A. (“Bank of America”), Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”), Citi (as defined below and, together with Bank of America, the “Initial Lenders”), Citigroup Global Markets Inc. (“CGMI” and, together with MLPFS, the “Lead Arrangers”; the Initial Lenders and the Lead Arrangers are collectively referred to as the “Commitment Parties”, “we” or “us”) that Level 3 Communications, Inc., a Delaware corporation (“Parent”), intends to enter into an agreement and plan of amalgamation (the “Acquisition Agreement”) among (i) Global Crossing Limited, an exempt company with limited liability organized under the laws of Bermuda (“Apollo”), (ii) Apollo Amalgamation Sub, Ltd., an exempt company with limited liability organized under the laws of Bermuda, and a newly formed direct subsidiary of Parent (“AcquireCo”), and (iii) Parent.  Pursuant to the Acquisition Agreement, AcquireCo and Apollo will amalgamate and continue as an exempt company with limited liability under the laws of Bermuda and thereafter will become a wholly owned direct or indirect subsidiary of Level 3 Financing, Inc., a Delaware corporation (the “Borrower” and, together with Parent, “you”) (the foregoing transactions are referred to herein as, the “Acquisition”).  As used herein, “Citi” means Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Inc. and/or any of their affiliates as Citi shall determine to be appropriate to provide the services contemplated herein.

 

You have also advised us that, to finance the Existing Apollo Debt Repayment and the costs and expenses relating to the Acquisition and the related transactions, the Borrower intends (a) to

 

 

obtain a senior secured term loan facility in an aggregate principal amount of not more than $650,000,000 having the terms set forth on Annex I hereto (the “Tranche B II Term Facility”) and (b) either (i) to issue senior unsecured notes in an aggregate principal amount of not more than $1,100,000,000 (the “Senior Notes”) in a registered public offering or a Rule 144A offering or other private placement or obtain the proceeds of debt or equity securities issued by Parent that are specified by the Borrower to you to be used to finance the Transactions (“Designated Other Securities”) or (ii) if and to the extent that the Borrower does not issue $1,100,000,000 in aggregate principal amount of the Senior Notes or Designated Other Securities on or prior to the Closing Date (as defined below), on such date borrow not more than $1,100,000,000, less the gross cash proceeds from the issuance of the Senior Notes and Designated Other Securities issued pursuant to clause (i) above, in aggregate principal amount of loans under a senior unsecured bridge facility having the terms set forth on Annex II (the “Bridge Facility”, and together with the Tranche B II Term Facility, the “Facilities”).  Capitalized terms used but not defined herein have the meanings assigned thereto in the Annexes hereto (such Annexes are collectively referred to as the “Term Sheets”; the term sheets and this letter, the “Commitment Letter”).  For purposes of this Commitment Letter, the term “Senior Notes” shall include an offering of debt securities by a subsidiary of Parent that is not the Borrower or a “restricted” subsidiary for purposes of Parent’s or the Borrower’s existing indebtedness, which subsidiary will be merged with and into, or which debt securities will be assumed by, the Borrower on the Closing Date.

 

1.             Commitments; Titles and Roles.

 

In connection with the foregoing, (a) Bank of America is pleased to advise you of its commitment to provide up to 50% of the entire principal amount of each of the Tranche B II Term Facility and the Bridge Facility and (b) Citi is pleased to advise you of its commitment to provide up to 50% of the entire principal amount of each of the Tranche B II Term Facility and the Bridge Facility, in each case on the terms and subject to the conditions set forth or referred to in this Commitment Letter.  The commitments of the Initial Lenders hereunder are several and not joint and shall be subject only to the conditions set forth in Section 5 below under the heading “Conditions Precedent”.

 

In addition, each of MLPFS and CGMI is pleased to advise you of its willingness to act, and you hereby appoint each of MLPFS and CGMI, as a joint lead arranger and joint bookrunning manager with respect to the Facilities, in each case on the terms and subject to the conditions set forth or referred to in this Commitment Letter.  You agree that no other agents, co-agents, arrangers or bookrunning managers will be appointed, no other titles will be awarded and no compensation (other than compensation expressly contemplated by this Commitment Letter and the Fee Letter referred to below) will be paid to any Lender (as defined below) in order to obtain its commitment to participate in the Facilities unless you and we shall so agree; provided  that no later than seven business days after the date hereof, you may appoint up to three financial institutions (or any relevant affiliate) in consultation with the Lead Arrangers as additional joint lead arrangers and joint bookrunning managers and award such joint lead arrangers and joint bookrunning managers additional agent or co-agent titles in a manner determined by you in consultation with the Lead Arrangers (it being understood that, to the extent you appoint additional agents, co-agents, arrangers or bookrunning managers or confer other titles in respect of any or each of the Facilities, the commitments of the Initial Lenders in respect of the Facilities

 

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will be reduced by the amount of the commitments of such appointed entities (or their relevant affiliates), with such reduction allocated to reduce the commitments of the Initial Lenders at such time on a pro rata basis according to the respective amounts of their commitments, upon the execution by such financial institution (and any relevant affiliate) of customary joinder documentation and, thereafter, each such financial institution (and any relevant affiliate) shall constitute a “Commitment Party”, “Lead Arranger” and “Initial Lender” hereunder); provided  further that (x) in no event will Bank of America’s and Citi’s commitments be less than (A) 70% of the entire principal amount of each of the Tranche B II Term Facility and the Bridge Facility if one financial institution (and any relevant affiliates) is appointed pursuant to the foregoing proviso or (B) 65% of the entire principal amount of each of the Tranche B II Term Facility and the Bridge Facility if more than one financial institution (and any relevant affiliates) is appointed pursuant to the foregoing proviso and (y) no other participating institution shall be entitled to a greater percentage of the aggregate economics than either of Bank of America or Citi.

 

The Initial Lenders shall retain exclusive control over all rights and obligations with respect to their respective commitments hereunder, including all rights with respect to consents, modification and amendments, until the consummation of the Acquisition on the Closing Date, in each case, unless you and we shall otherwise agree.  You agree that only MLPFS and CGMI will have “upper left” designation in any and all marketing materials or other documentation used in connection with the Facilities and MLPFS and CGMI will share management of the physical books for the syndication of the Bridge Facility.  You may at any time reduce all or a portion of the commitment for the Bridge Facility upon written notice to the Commitment Parties.

 

2.                                       Syndication.

 

Each of the Initial Lenders intends, and reserves the right, to syndicate all or a portion of its commitment hereunder with respect to any of the Facilities to one or more financial institutions that will become parties to the definitive documentation for such Facility pursuant to syndications to be managed by the Lead Arrangers (the financial institutions becoming parties to such definitive documentation being collectively referred to as the “Lenders”), and the Lead Arrangers intend to commence such syndication promptly after the date hereof.

 

It is understood and agreed that the Lead Arrangers will, in consultation with you, manage and control all aspects of the syndication of each Facility, including decisions as to the selection of prospective Lenders and any roles or titles offered to proposed Lenders, when commitments will be accepted and the final allocations of the commitments among the Lenders.  It is understood that no Lender participating in either Facility will receive compensation from you in order to obtain its commitment, except on the terms contained herein and in the applicable Term Sheet.  It is also understood and agreed that the amount and distribution of the fees among the Lenders will be at the sole discretion of the Lead Arrangers.

 

You agree to actively assist, and to use your commercially reasonable efforts to cause Apollo to actively assist, the Lead Arrangers in achieving a syndication of each Facility that is satisfactory to the Lead Arrangers.  Such assistance shall include (a) your providing, and causing your advisors to provide and using your commercially reasonable efforts to cause Apollo and its advisors to provide, the Lead Arrangers upon request with all information reasonably deemed

 

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necessary by the Lead Arrangers to complete the syndication, including information and evaluations prepared by or on behalf of you or Apollo relating to the Transactions, (b) your assistance, and causing your advisors to assist and using your commercially reasonable efforts to cause Apollo and its advisors to assist, in the preparation of a customary Confidential Information Memoranda and other customary marketing materials to be used in connection with the syndication, (c) your using commercially reasonable efforts to ensure that the syndication benefits materially from your and Apollo’s existing relationships with banks and other financial institutions and (d) your otherwise assisting the Lead Arrangers in their syndication efforts by making your officers and advisors, and using your commercially reasonable efforts to make the officers and advisors of Apollo, available from time to time to attend and make presentations regarding the business, operations, assets, liabilities, financial position, results of operations and prospects of you and Apollo, as appropriate, and the Transactions at one or more meetings of prospective Lenders.  You further agree (i) to meet after the date hereof with each of Moody’s Investor Services, Inc. (“Moody’s”) and Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation (“S&P”), in order to obtain their indications of (A) a public corporate family rating of Parent from Moody’s, (B) a public corporate credit rating of Parent from S&P and (C) a public credit rating for the Facilities from each of Moody’s and S&P, in each case after giving effect to the Transactions, and (ii) in any event, to use your commercially reasonable efforts to obtain each such rating no later than the earlier of (A) the date that is five months after the date hereof and (B) the date that is 30 days prior to the Closing Date.  Notwithstanding any provision herein to the contrary, neither completion of syndication nor receipt of ratings is a condition to providing the Facilities on the Closing Date.  Your obligations in respect of syndication of the Facilities shall terminate upon the earlier of (a) the date of Successful Syndication (as defined in the Fee Letter) and (b) the determination of the Lead Arrangers upon notice to you.

 

3.             Information Requirements.

 

You hereby represent and warrant that (a) all information, other than the Projections (as defined below), that has been or will be made available to us or any of the Lenders by or on behalf of you, Apollo or any of your or its subsidiaries in connection with any aspect of the Transactions (the “Information”) is or will be, when made available, complete and correct in all material respects and does not or will not, when made available, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances under which such statements are made (it being understood that the foregoing representation and warranty, insofar as it relates to Information concerning Apollo, is made to the best of your knowledge) and (b) all financial projections concerning you and Apollo that have been or will be made available to us or any of the Lenders by or on behalf of you or any of your subsidiaries (the “Projections”) have been or will be prepared in good faith based upon assumptions that are believed by you in good faith to be reasonable at the time made and at the time the related Projections are so made available (it being understood that the Projections by their nature are inherently uncertain, no assurances are being given that the results reflected in the Projections will be achieved, and actual results may differ from the Projections and that such differences may be material).  You agree that if at any time prior to the later of (i) the Closing Date and (ii) the termination of the syndication of the Facilities as determined by the Lead Arrangers and notified to you, you become aware that the representation and warranty in the immediately preceding sentence would not be true if the

 

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Information and Projections were being furnished and such representation and warranty were being made at such time, then you will promptly, as appropriate, supplement the Information and the Projections so that such representation or warranty would be true under those circumstances.  You understand that we, in arranging and syndicating the Facilities, will be using and relying on the Information and Projections without independent verification thereof.

 

You hereby acknowledge that (a) the Commitment Parties or any of them will make available Information and Projections (collectively, the “Borrower Materials”) to the prospective Lenders by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the prospective Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to you, Apollo, your or its subsidiaries or the securities of any of the foregoing for purposes of United States federal and state securities laws (“MNPI”)) (each, a “Public Lender”).  You hereby agree that (i) you will identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” (which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof), (ii) by marking any Borrower Materials “PUBLIC,” you shall be deemed to have authorized each Commitment Party and the prospective Lenders to treat such Borrower Materials as not containing any MNPI, it being understood that certain of such Borrower Materials may be subject to the confidentiality requirements set forth in the definitive credit documentation, (iii) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor” and (iv) each Commitment Party shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable to be made available only on a portion of the Platform not designated “Public Investor”.  If the Lead Arrangers shall so request, you agree to assist (and to use commercially reasonable efforts to cause Apollo and its advisors to assist) in the preparation of an additional version of the Confidential Information Memoranda and other marketing materials to be used by Public Lenders that does not contain MNPI.  It is understood that, in connection with your assistance described above, at the request of the Lead Arrangers you will provide, and will cause all other applicable persons to provide, authorization letters to the Lead Arrangers authorizing the distribution of the Borrower Materials to prospective Lenders and containing a representation to the Lead Arrangers that any “PUBLIC” version thereof does not include MNPI.  You acknowledge and agree that the following documents may be distributed to Public Lenders: (A) drafts and final versions of the definitive documentation with respect to the Facilities, (B) administrative materials prepared by the Lead Arrangers for prospective Lenders (such as a lender meeting invitation, allocations and funding and closing memoranda) and (C) term sheets and notification of changes in the terms of the Facilities.

 

4.             Fees and Indemnities.

 

As consideration for our commitments and agreements hereunder, you agree to pay the fees set forth in the Fee Letter dated as of the date hereof among the parties hereto (the “Fee Letter”).

 

You also agree to reimburse each initial Commitment Party from time to time on demand for all reasonable out-of-pocket fees and expenses (including due diligence expenses and the reasonable fees, disbursements and other charges of only one counsel (Cravath, Swaine & Moore LLP) to

 

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the initial Commitment Parties, and of any local or regulatory counsel retained by the Commitment Parties, but not any internal counsel, and in each case subject to delivery to you of reasonable supporting documentation) incurred in connection with this Commitment Letter, the Fee Letter, the Facilities, the syndication thereof, the preparation of the definitive documentation therefor and the other transactions contemplated hereby.

 

You also agree to indemnify and hold harmless each Commitment Party, each affiliate thereof and the officers, directors, employees, agents, controlling persons, advisors and other representatives of any of the foregoing (each, an “Indemnified Party”) from and against (and will reimburse each Indemnified Party as the same are incurred for) any and all claims, damages, losses, liabilities and expenses (including the reasonable fees, disbursements and other charges of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (a) any aspect of the Transactions and any of the other transactions contemplated thereby or (b) the Facilities or any use made or proposed to be made with the proceeds thereof, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from (i) such Indemnified Party’s gross negligence or willful misconduct or (ii) a material breach by such Indemnified Party of its obligations under this Commitment Letter.  In the case of an investigation, litigation or proceeding to which the indemnity in this paragraph applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by you, your equityholders or creditors or an Indemnified Party, whether or not an Indemnified Party is otherwise a party thereto and whether or not any aspect of the Transactions is consummated.  You also agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to you arising out of, related to or in connection with any aspect of the Transactions, except for any liability of a Commitment Party to the extent of direct (as opposed to special, indirect, consequential or punitive) damages determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence, willful misconduct or material breach of its obligations hereunder.  You further agree that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to Apollo, any of its affiliates, any equityholder or creditor of any of the foregoing or any other person (other than, solely to the extent expressly set forth herein, to you) arising out of, related to or in connection with any aspect of the Transactions and that any such liability of a Commitment Party to you shall only arise to the extent direct damages to you have been caused by breach of such Commitment Party’s obligations hereunder to negotiate in good faith definitive documentation for the applicable Facility on the terms set forth herein, as determined in a final, non-appealable judgment by a court of competent jurisdiction.  It is understood and agreed that obligations of a Commitment Party hereunder are several, and not joint, with the obligations of any other Commitment Party hereunder or obligations of any other Lender.  Notwithstanding any other provision of this Commitment Letter, no Indemnified Party shall be liable for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems.  You shall not, without the prior written consent of each applicable Indemnified Party (which consent shall not be unreasonably withheld), effect any settlement of any pending or threatened investigation, litigation or proceeding against an Indemnified Party in respect of which indemnity could have been sought hereunder by such Indemnified Party unless (i) such settlement includes an

 

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unconditional release of such Indemnified Party from all liability or claims that are the subject matter of such investigation, litigation or proceeding and (ii) does not include any statement as to any admission.

 

5.                                       Conditions Precedent.

 

Each Commitment Party’s commitment hereunder and each Lead Arranger’s agreement to perform the services described herein are subject only to the satisfaction of each of the following conditions precedent:

 

(a) the negotiation, execution and delivery of definitive documentation with respect to each Facility (the “Facilities Documentation”, which shall be prepared by counsel for the Commitment Parties based upon, and substantially consistent with, the terms set forth in this Commitment Letter (including the Annexes hereto) and otherwise reasonably satisfactory to the Commitment Parties and Parent but shall be subject to the Documentation Principles (as defined below);

 

(b) prior to and during the syndication of the Facilities, there shall be no offering, placement or arrangement of any debt securities, convertible debt securities (including any other equity-linked debt security), equity securities or bank financing by or on behalf of you, Apollo or any of your or its respective subsidiaries (other than (i) the Facilities, (ii) the Designated Other Securities, (iii) the Senior Notes, (iv) up to $300 million in aggregate principal amount or gross proceeds of other debt securities, convertible debt securities (including any other equity-linked debt security) or equity securities (or a combination thereof) issued by Parent (which are not guaranteed by any subsidiary of Parent, Apollo or any subsidiary of Apollo), provided that no more than $150 million of such amount shall be used for any purpose other than to refinance existing indebtedness (any such securities referred to in this clause (iv), “Parent Refinancing Securities”) and (v) up to $95 million of borrowed money by your foreign subsidiaries);

 

(c) except as disclosed in the introductory paragraph to Article III or Article IV of  the Acquisition Agreement, since December 31, 2010, no (i) Company Material Adverse Effect (as defined in the Acquisition Agreement) shall have occurred and (ii) Combined Material Adverse Effect (to be defined using a definition comparable to the definition of “Company Material Adverse Effect” and “Parent Material Adverse Effect” as set forth in the Acquisition Agreement but as applied to the Parent and its subsidiaries and Apollo and its subsidiaries taken as a whole) shall have occurred;

 

(d) the Lead Arrangers having been afforded a period of at least 20 consecutive days following the commencement of the general syndication of the Facilities and prior to the Closing Date to syndicate the Facilities, provided that such period does not include any day from and including August 22, 2011, through September 6, 2011, November 21, 2011, through November 25, 2011, and December 19, 2011, through January 2, 2012;

 

(e) the payment of fees pursuant to the Fee Letter that are due and payable on or prior to the Closing Date and for which, if applicable, reasonably detailed invoices have been delivered prior to the Closing Date; and

 

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(f) the other conditions expressly set forth in (i) “Conditions Precedent to Initial Borrowing” in Annex I to this Commitment Letter, (ii) “Conditions Precedent” in Annex II-A to this Commitment Letter and (iii) Annex III to this Commitment Letter.

 

It is understood that, with respect to guarantees and collateral, paragraph 5 in Annex III to this Commitment Letter is the only condition precedent.  The provisions of paragraph 5 in Annex III to this Commitment Letter are referred to herein as the “Funds Certain Provisions”.

 

In addition, notwithstanding anything in this Commitment Letter, the Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Acquisition to the contrary, (i) the only representations and warranties relating to Parent, the Borrower or Apollo or their respective businesses or subsidiaries the accuracy of which shall be a condition to the funding of the Facilities on the Closing Date shall be (A) such representations and warranties made by Apollo in the Acquisition Agreement as are material to the interests of the Commitment Parties, but only to the extent that the Parent or AcquireCo has the right to terminate its obligations under the Acquisition Agreement as a result of a breach of such representations in the Acquisition Agreement or to the extent the accuracy of such representation is a condition precedent to your obligations under the Acquisition Agreement and (B) the Specified Representations (as defined below) and (ii) the terms of the Facilities Documentation shall be such that they do not impair the availability of the proceeds of the Facilities on the Closing Date if the conditions set forth in paragraphs (a) through (f) above are satisfied or waived.  For purposes hereof, “Specified Representations” means the representations and warranties of Parent and the Borrower in the Facilities Documentation relating to corporate existence, power and authority, the due execution, delivery and enforceability of the Loan Documents, the validity, priority and perfection of liens (subject to the Funds Certain Provisions), solvency, PATRIOT ACT information, no conflicts with organizational documents, no consent from governmental authorities (that has not been obtained) to the advance of the funds under the Facilities Documentation, Federal Reserve margin regulations and the Investment Company Act.  The requirements of this paragraph are the “Documentation Principles”.

 

6.             Confidentiality and Other Obligations.

 

This Commitment Letter (including the Annexes hereto) and the Fee Letter and the contents hereof and thereof are confidential and, except for the disclosure hereof or thereof on a confidential basis to your directors, officers and other senior management, accountants, attorneys and other professional advisors retained in connection with the Transactions, may not be disclosed in whole or in part to any person without our prior written consent; provided, however, that you may disclose this Commitment Letter (including the Annexes hereto) but not the Fee Letter (other than in mutually agreed redacted form to Apollo, which may only be disclosed pursuant to the following clause (a)) (a) on a confidential basis to the directors, officers and other senior management, attorneys and other professional advisors of Apollo in connection with their consideration of the Acquisition and the other Transactions, (b) after your acceptance of this Commitment Letter and the Fee Letter, in filings with the Securities and Exchange Commission and other applicable regulatory authorities and stock exchanges (which may specify the amount of fees to the extent required to be disclosed), (c) after written notice to us (to the extent permitted by law) of any legally required disclosure, as otherwise required by law and (d) to the

 

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extent required in connection with any proceeding for the enforcement of this Commitment Letter and related documents.

 

You acknowledge that the Commitment Parties or their affiliates may be providing financing or other services to persons whose interests may conflict with yours.  Consistent with each Commitment Party’s policy to hold in confidence the affairs of its customers, such Commitment Party agrees not to furnish confidential information obtained from you to any of its other customers and to treat confidential information relating to you, Apollo and your and its respective affiliates with the same degree of care as it treats its own confidential information.  You also acknowledge that no Commitment Party will make available to you confidential information that it has obtained or may obtain from any other customer.  In connection with the services and transactions contemplated hereby, you agree that the Commitment Parties are permitted to access, use and share with any of their respective bank or non-bank affiliates, agents, advisors (legal or otherwise) or representatives any information concerning you, Apollo or any of your or its respective affiliates that is or may come into the possession of the Commitment Parties or any of such affiliates.

 

In connection with all aspects of each transaction contemplated hereby, you acknowledge and agree that: (a) the Facilities and any related arranging or other services described in this Commitment Letter are arm’s-length commercial transactions between you and your affiliates, on the one hand, and each Commitment Party, on the other hand, and you are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated by this Commitment Letter; (b) in connection with each transaction contemplated hereby and the process leading to such transaction, each Commitment Party is and has been acting solely as a principal and is not acting as an agent or fiduciary for you or any of your affiliates, equityholders, creditors or employees or any other person; (c) none of the Commitment Parties has assumed or will assume an advisory (except as otherwise expressly agreed in writing by the relevant parties) or fiduciary responsibility in favor of you or any of your affiliates, equityholders, creditors or employees or any other person with respect to any of the transactions contemplated hereby or the process leading thereto (irrespective of whether any of the Commitment Parties has advised or is currently advising you or your affiliates on other matters), and none of the Commitment Parties has any obligation to you or your affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth in this Commitment Letter; (d) each Commitment Party and its affiliates may be engaged in a broad range of transactions that involve interests that differ from those of you and your affiliates, and no Commitment Party has any obligation to disclose any of such interests by virtue of any fiduciary or advisory relationship; and (e) none of the Commitment Parties has provided any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby, and you have consulted your own legal, accounting, regulatory and tax advisors to the extent you have deemed appropriate.  You hereby waive and release, to the fullest extent permitted by law, any claims that you may have against any of the Commitment Parties with respect to any breach or alleged breach of fiduciary duty.  In addition, you acknowledge that you have retained each of Citi and an affiliate of Bank of America as financial advisors (in such capacity, each a “Financial Advisor”) in connection with the Acquisition. You agree not to assert any claim you might allege based on any actual or potential conflicts of interest that might be asserted to arise or result from, on the one hand, the engagement of any such Financial Advisor

 

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and, on the other hand, our and our affiliates’ relationships with you as described and referred to herein.

 

Each Commitment Party hereby notifies you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), such Commitment Party is required to obtain, verify and record information that identifies you and the Guarantors, which information includes your and the Guarantors’ names and addresses and other information that will allow such Commitment Party to identify you and the Guarantors in accordance with the Act.

 

7.                                       Survival of Obligations.

 

The provisions of Sections 2, 3, 4, 6, 8 and this Section 7 shall remain in full force and effect regardless of whether any definitive documentation for the Facilities shall be executed and delivered.  The provisions of Sections 4, 6, 8 and this Section 7 shall remain in full force and effect notwithstanding the termination of this Commitment Letter or any commitment or agreement of any of the Commitment Parties hereunder.

 

8.                                       Miscellaneous.

 

The Initial Lenders’ commitments hereunder and the Lead Arrangers’ agreements to perform the services described herein will terminate upon the first to occur of (a) the consummation of the Acquisition, (b) the abandonment or termination of the Acquisition Agreement, (c) a material breach of your obligations with respect to payment of fees under the Fee Letter and (d) April 10, 2012, unless the closing of the applicable Facility, on the terms and subject to the conditions contained herein, shall have occurred on or before such date.  In addition, the Initial Lenders’ commitments hereunder in respect of any Facility shall be superseded by the commitments in respect of such Facility set forth in the definitive documentation with respect to such Facility, and upon the execution and delivery of such definitive documentation by the parties thereto each Initial Lender shall be released from its commitment hereunder in respect of such Facility.  Notwithstanding the foregoing, each Initial Lender shall remain liable to fund its obligations hereunder in the event any assignee of such Initial Lender shall fail to provide its portion of the Facilities.  Each Commitment Party shall retain exclusive control over all rights and obligations with respect to its commitments in respect of the Facilities, including all rights with respect to consents, modifications, supplements, waivers and amendments, until the Closing Date has occurred.

 

This Commitment Letter and the Fee Letter shall be governed by, and construed in accordance with, the laws of the State of New York.  Each party hereto irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter (including the Annexes hereto) or the Fee Letter, the Transactions and the other transactions contemplated hereby or thereby or the actions of the Commitment Parties in the negotiation, performance or enforcement hereof or thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of any New York State court or Federal court sitting in the Borough of Manhattan in New York City in respect of any suit, action or proceeding arising out of or relating to the provisions of this Commitment Letter (including the Annexes hereto), the Fee Letter, the Transactions and the other transactions

 

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contemplated hereby or thereby and irrevocably agrees that all claims in respect of any such suit, action or proceeding shall be brought, heard and determined exclusively in any such court.  The parties hereto agree that service of any process, summons, notice or document by registered mail addressed to you shall be effective service of process against you for any suit, action or proceeding relating to any such dispute.  Each of the parties hereto waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceedings brought in any such court, and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts whose jurisdiction you are or may be subject by suit upon judgment.

 

This Commitment Letter (including the Annexes hereto) and the Fee Letter embodies the entire agreement and understanding among the Commitment Parties and you with respect to the Facilities and supersedes all prior agreements and understandings relating to the subject matter hereof.  Those matters that are not covered by or made clear under the provisions of this Commitment Letter (including the Annexes hereto) or the Fee Letter are subject to the approval and agreement of us and you.  No person has been authorized by any Commitment Party to make any oral or written statements that are inconsistent with this Commitment Letter.

 

This Commitment Letter is not assignable by you without our prior written consent (and any purported assignment without such consent will be null and void) and is intended to be solely for the benefit of the parties hereto and, to the extent expressly set forth herein, the Indemnified Parties, and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto and, to the extent expressly set forth herein, the Indemnified Parties.  This Commitment Letter may not be amended, and no term or provision hereof may be waived or modified, except by an instrument in writing signed by each of the parties hereto.  Any and all obligations of, and services to be provided by, any of us hereunder may be performed, and any and all of our rights hereunder may be exercised, by or through our affiliates, and the indemnification and expense reimbursement provisions contained herein shall apply with equal force and effect to any such affiliates.

 

This Commitment Letter may be executed in multiple counterparts and by different parties hereto in separate counterparts, all of which, taken together, shall constitute an original.  Delivery of an executed counterpart of a signature page to this Commitment Letter by facsimile transmission or other electronic transmission (in .pdf format) shall be effective as delivery of a manually executed counterpart hereof or thereof.

 

[The remainder of this page intentionally left blank.]

 

11

 

Please confirm that the foregoing is in accordance with your understanding by signing and returning to the Commitment Parties  the enclosed copy of this Commitment Letter, together, if not previously executed and delivered, with the Fee Letter on or before 11:59 p.m. (New York time) on April 11, 2011, whereupon this Commitment Letter and the Fee Letter will become binding agreements between us and you.  If the Commitment Letter and Fee Letter have not been signed and returned as described in the preceding sentence by such date, this offer will terminate on such date.  We look forward to working with you on this transaction.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
BANK OF AMERICA, N.A.,
    
	
 
    	
 
    
	
 
    	
by
    
	
 
    	
 
    	
/s/   Scott Tolchin
    
	
 
    	
 
    	
Name:   Scott Tolchin
    
	
 
    	
 
    	
Title:     Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
    
	
 
    	
 
    
	
 
    	
By
    
	
 
    	
 
    	
/s/   Scott Tolchin
    
	
 
    	
 
    	
Name:   Scott Tolchin
    
	
 
    	
 
    	
Title:     Managing Director
    
	
 
    	
 
    	
 
    
	
 
    	
CITIGROUP GLOBAL MARKETS INC.,
    
	
 
    	
 
    
	
 
    	
By
    
	
 
    	
 
    	
/s/   Stuart Dickson
    
	
 
    	
 
    	
Name:   Stuart Dickson
    
	
 
    	
 
    	
Title:     Managing Director
    

 

[Signature page to the Project Apollo Commitment Letter]

 

 

	
Accepted and agreed as of the date first above   written:
    
	
 
    
	
 
    
	
LEVEL 3 COMMUNICATIONS, INC.,
    
	
 
    
	
by
    	
 
    	
 
    
	
 
    	
/s/   Robert M. Yates
    	
 
    
	
 
    	
Name:
    	
Robert   M. Yates
    	
 
    
	
 
    	
Title:
    	
Senior   Vice President and Assistant Chief Legal Officer
    	
 
    
	
 
    	
 
    	
 
    
	
LEVEL 3 FINANCING, INC.,
    	
 
    
	
 
    	
 
    	
 
    
	
by
    	
 
    	
 
    
	
 
    	
/s/   John M. Ryan
    	
 
    
	
 
    	
Name:
    	
John   M. Ryan
    	
 
    
	
 
    	
Title:
    	
Executive   Vice President, Chief Legal Officer and Secretary
    	
 
    

 

[Signature page to the Project Apollo Commitment Letter]

 

 

ANNEX I

CONFIDENTIAL

 

Project Apollo

$650,000,000 Senior Secured Tranche B II Term Loan Facility

Summary of Terms and Conditions

 

The Tranche B II Term Facility described herein will be established pursuant to an amendment to the Amended and Restated Credit Agreement dated as of April 16, 2009, among Level 3 Communications, Inc., Level 3 Financing, Inc., the Lenders party thereto, Merrill Lynch Capital Corporation, as Administrative Agent and Collateral Agent, and the other parties thereto, as amended through the Closing Date (as so amended, the “Existing Credit Agreement”), effected under Section 9.02(d) of the Existing Credit Agreement, and commitments in respect of and loans under the Tranche B II Term Facility shall constitute a separate “Class” for all purposes of the Existing Credit Agreement.  Capitalized terms used but not defined in this Annex I shall have the meanings assigned thereto in the Existing Credit Agreement or in the Commitment Letter to which this Annex I is attached, as applicable.  Except as otherwise set forth below, the Tranche B II Term Facility shall have the terms applicable to term loans issued under the Existing Credit Agreement.

 

	
Borrower:
    	
 
    	
Level   3 Financing, Inc., a Delaware corporation (the “Borrower”)  that   is a wholly-owned subsidiary of Level 3 Communications, Inc., a Delaware   corporation (“Parent”).
    
	
 
    	
 
    	
 
    
	
Administrative   and Collateral Agent:
    	
 
    	
Bank   of America, N.A. will continue to act as the Administrative Agent and   Collateral Agent under the Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Joint   Lead Arrangers and Joint Bookrunning Managers:
    	
 
    	
Merrill   Lynch, Pierce, Fenner & Smith Incorporated and Citigroup Global Markets   Inc. will act as joint lead arrangers and joint bookrunning managers for the   Tranche B II Term Facility (in such capacity, the “Lead Arrangers”).
    
	
 
    	
 
    	
 
    
	
Tranche   B II Term Lenders:
    	
 
    	
A   syndicate of financial institutions (the “Tranche B II Term Lenders”)   arranged by the Lead Arrangers in consultation with Parent and the Borrower.
    
	
 
    	
 
    	
 
    
	
Tranche   B II Term Facility:
    	
 
    	
A   senior secured term loan facility in an aggregate principal amount of not   more than $650,000,000 (the “Tranche B II Term Facility”).  Loans under the Tranche B II Term Facility   (the “Tranche B II Term Loans”) will be available in U.S. dollars.
    
	
 
    	
 
    	
 
    
	
Transactions:
    	
 
    	
Parent   intends to enter into an agreement and plan of amalgamation (together with   all exhibits and schedules thereto, and all definitive documentation relating   thereto, the “Acquisition Agreement”) with Global Crossing Limited, an   exempt company with limited liability organized under the laws of Bermuda (“Apollo”),   and a newly formed indirect subsidiary of Parent (“AcquireCo”)   pursuant to which AcquireCo and Apollo will
    

 

[Signature page to the Project Apollo Commitment Letter]

 

 

	
 
    	
 
    	
amalgamate   with the amalgamated entity surviving as a direct or indirect wholly-owned   subsidiary of the Borrower (the “Acquisition”).

In   connection with the Acquisition, (a) Apollo will repay or prepay all of its   indebtedness other than certain capital leases and other debt in an amount   not to exceed $200 million in the aggregate (the “Existing Apollo Debt   Repayment”), (b) the Borrower will obtain the Tranche B II Term Facility,   (c) the Borrower will either (i) issue senior unsecured notes in an aggregate   principal amount of not more than $1,100,000,000 (the “Senior Notes”)   in a registered public offering or a Rule 144A offering or other private   placement or Parent will issue Designated Other Securities or (ii) if and to   the extent that the Borrower does not issue Senior Notes and Parent does not   issue Designated Other Securities on or prior to the Closing Date (as defined   below) in an aggregate principal amount equal to $1,100,000,000, on such date   borrow not more than $1,100,000,000 less the gross cash proceeds from the   issuance of the Senior Notes and any Designated Other Securities issued   pursuant to clause (i) above, in aggregate principal amount of loans under   the Bridge Facility and (d) Parent and the Borrower will pay the fees and   expenses incurred in connection with the foregoing.  For purposes hereof, the term “Senior   Notes” shall include an offering of debt securities by a subsidiary of   Parent that is not the Borrower or a “restricted” subsidiary for purposes of   Parent’s or the Borrower’s existing indebtedness, which subsidiary will be   merged with and into, or which debts securities will be assumed by, the   Borrower on the Closing Date. The Acquisition, the Existing Apollo Debt   Repayment and the other transactions described under this heading or   contemplated hereby are collectively referred to as the “Transactions”.
    
	
 
    	
 
    	
 
    
	
Availability:
    	
 
    	
The   full amount of the Tranche B II Term Facility may be drawn in a single   drawing on the date on which the Acquisition is consummated (the “Closing   Date”). Amounts borrowed under the Tranche B II Term Facility that are   repaid or prepaid may not be reborrowed.
    
	
 
    	
 
    	
 
    
	
Loan   Proceeds Note; Apollo Loan Proceeds Note; Purpose:
    	
 
    	
On   the Closing Date, (a) the Borrower will make a loan to Level 3   Communications, LLC, a Delaware corporation (“Level 3 LLC”), in an aggregate   principal amount equal to the aggregate principal amount of the Tranche B II   Term Loans, and the Loan Proceeds Note evidencing certain indebtedness owed   by Level 3 LLC to the Borrower will be amended, in the manner reasonably   satisfactory to the Lead Arrangers, to increase the principal amount thereof   by the amount of such loan, (b) Level 3 LLC will make a loan to
    

 

Annex I-2

 

	
 
    	
 
    	
Apollo   in an aggregate principal amount equal to the amount required to finance the   Existing Apollo Debt Repayment and payment of fees and expenses in connection   with the foregoing, and Apollo will issue and deliver to Level 3 LLC an   intercompany note, in form and substance reasonably satisfactory to the Lead   Arrangers, evidencing such loan (the “Apollo Loan Proceeds Note”) and   (c) Parent and the Borrower shall pay fees and expenses relating to the   Transactions (and, to finance such payment, Level 3 LLC may use a portion of   the proceeds of the loan referred to in clause (a) above to repay a portion   of the Parent Intercompany Note).
    
	
 
    	
 
    	
 
    
	
Senior   Notes Proceeds Note:
    	
 
    	
Upon   the issuance of any Senior Notes (or, with respect to any Senior Notes issued   prior to the Closing Date, on the Closing Date), the Borrower will make a   loan to Level 3 LLC in an aggregate principal amount equal to the aggregate   principal amount of the Senior Notes so issued in return for an intercompany   demand note evidencing such loan (each, a “Senior Notes Proceeds Note”).
   The Parent Intercompany Note (as defined in Financing Inc.’s existing notes   (the “Existing Financing Inc. Notes”)) shall be subordinated to the   right of Borrower to payment under any Senior Notes Proceeds Note on terms   identical to the subordination of the Parent Intercompany Note to the proceeds   notes (the “Offering Proceeds Notes”) issued in respect of the   Existing Financing Inc. Notes. Each Senior Notes Proceeds Note shall be   subordinated to the right of Borrower to payment under the Loan Proceeds Note   on terms identical to the subordination of the Offering Proceeds Notes to the   Loan Proceeds Note.
    
	
 
    	
 
    	
 
    
	
Interest   Rates:
    	
 
    	
The   interest rates under the Tranche B II Term Facility will be, at the option of   the Borrower, (a) LIBO Rate plus 4.00% or (b) Alternate Base Rate plus 3.00%.
   For purposes of the Tranche B II Term Facility, “Alternate Base Rate”   shall mean, for any day, a rate per annum equal to the greatest of (a) the   Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in   effect on such day plus 1/2 of 1.00% and (c) the LIBO Rate from time to time   for an interest period of one month plus 1.00%.
   The LIBO Rate shall be subject to a “floor” of 1.50%, and the Alternate Base   Rate shall be subject to a “floor” of 2.50%. 

The   Borrower may select interest periods of one, two, three or six months for   LIBO Rate borrowings. Interest will be payable in arrears (a) in the case of   LIBO Rate borrowings, at the end of each interest period and, in the case of   any interest period longer than
    

 

Annex I-3

 

	
 
    	
 
    	
three   months, at the end of each three months and (b) in the case of Alternate Base   Rate borrowings, on March 31, June 30, September 30 and December 31 of each   year and, in each case, upon repayment or prepayment of any Tranche B II Term   Loan on the amount repaid or prepaid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Amounts   not paid when due will bear interest (a) in the case of overdue principal,   the applicable interest rate plus 2.00% per annum and (b) in the case of any   other overdue amount, the interest rate applicable to Alternate Base Rate   loans plus 2.00% per annum.
    
	
 
    	
 
    	
 
    
	
Calculation   of Interest:
    	
 
    	
All   interest will be computed on the basis of the actual number of days elapsed   in a year of 365 days (or 366 days in a leap year) and shall be payable for   the actual number of days elapsed.
    
	
 
    	
 
    	
 
    
	
Upfront   Fees/OID:
    	
 
    	
1.0%.
    
	
 
    	
 
    	
 
    
	
Cost   and Yield Protection:
    	
 
    	
As   set forth in the Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
Six years from the Closing Date.
    
	
 
    	
 
    	
 
    
	
Scheduled   Amortization:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Mandatory   Prepayments:
    	
 
    	
As   set forth in the Existing Credit Agreement, consisting of: (a) prepayments   with 100% of Net Available Proceeds from Asset Dispositions not reinvested or   applied to prepay Indebtedness, in each case as permitted under the Existing   Credit Agreement, to the extent such Net Available Proceeds exceed   $10,000,000; (b) prepayments with 100% of any payment or prepayment of the   Loan Proceeds Note; and (c) prepayments upon the occurrence of a Change of   Control Triggering Event.
   Tranche B II Term Loans will participate in the mandatory prepayments ratably   with the other Classes of Loans outstanding under the Existing Credit   Agreement.
   Mandatory prepayments will be made without premium or penalty, subject to   reimbursement of the Tranche B II Term Lenders’ redeployment costs in the   case of prepayment of any LIBOR loan other than on the last day of the   interest period applicable thereto. Any Lender will be permitted, on the   terms set forth in the Existing Credit Agreement, to decline a portion of any   mandatory prepayment otherwise due to it.
    
	
 
    	
 
    	
 
    
	
Optional   Prepayments:
    	
 
    	
Optional   prepayments, in whole or in part, of Tranche B II Term Loans will be   permitted at any time, without premium or penalty,
    

 

Annex I-4

 

	
 
    	
 
    	
in   each case, subject to reimbursement of the Tranche B II Term Lenders’   redeployment costs in the case of prepayment of any LIBOR loan other than on   the last day of the interest period applicable thereto; provided that   in the event that all or any portion of the Tranche B II Term Loans are   repaid from the incurrence of bank indebtedness or repriced (or effectively   refinanced) through any amendment of the Tranche B II Term Facility such that   the “effective yield” (taking into account, for example, upfront fees,   interest rate spreads, interest rate benchmark floors and original issue   discount, but excluding the effect of any arrangement, structuring,   syndication or other fees payable in connection therewith that are not shared   with all lenders or holders thereof) thereof is less than the “effective   yield” applicable to the Tranche B II Term Loans at the time of the initial   borrowing thereof, each Tranche B II Term Lender will be paid a premium in an   amount equal to 1.0% of the amount of such Tranche B II Term Loans repaid or   repriced (or effectively refinanced), if such repayment or repricing (or   effective refinancing) occurs prior to the first anniversary of the Closing   Date.
   Optional prepayments will be applied to Tranche B II Term Loans and other   Classes of Loans outstanding under the Existing Credit Agreement in the   manner directed by the Borrower.
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
The   obligations under the Tranche B II Term Facility will be guaranteed (a) on   the Closing Date by (i) Parent, (ii) BTE Equipment, LLC, (iii) Eldorado   Equipment, Inc., (iv) Level 3 International, Inc. (v) Level 3 Enhanced   Services, Inc. and (vi) Broadwing, LLC and (b) subject to receipt of   applicable regulatory approvals, by (i) Level 3 Communications, LLC (“Level   3 LLC”) (ii) TelCove Operations, LLC, (iii) Broadwing Communications,   LLC, (iv) WilTel Communications, LLC, (v) each material (as determined in   accordance with the Existing Credit Agreement) domestic subsidiary of Apollo   including, Global Crossing Telecommunications, Inc., a Michigan corporation,   and (vi)  each subsidiary of Parent   that guarantees the Existing Credit Agreement after the Closing Date.  Each of the Guarantors of the Tranche B II   Term Facility is herein referred to as a “Tranche B II Term Facility   Guarantor” and its guarantee is referred to herein as a “Tranche B II   Term Facility Guarantee”.

The   Tranche B II Term Facility Guarantee of any Tranche B II Term Facility   Guarantor will rank on a pari passu basis with the guarantee of such   Guarantor of Loans of any other Class under the Existing Credit   Agreement.  Subject to receipt of   regulatory approval with respect to guarantees by Tranche B II Term Facility   Guarantors that are Regulated Guarantor Subsidiaries, on and after
    

 

Annex I-5

 

	
 
    	
 
    	
the   Closing Date, the Tranche B II Term Facility Guarantors shall consist at all   times of the same entities as are guarantors under the Existing Credit   Agreement.
    
	
 
    	
 
    	
 
    
	
Security:
    	
 
    	
The   obligations under the Tranche B II Term Facility and the Tranche B II Term   Facility Guarantees will be secured (a) on the Closing Date by substantially   all assets of (i) the Borrower (including pledges of the Loan Proceeds Note,   the Bridge Loan Proceeds Note, the Apollo Loan Proceeds Note and any Senior   Notes Proceeds Note) (ii) Parent, (iii) BTE Equipment, LLC, (iv) Eldorado   Equipment, Inc., (v) Level 3 International, Inc. (vi) Level 3 Enhanced   Services, Inc. and (b) subject to receipt of applicable regulatory approvals,   by substantially all assets of (i) Broadwing, LLC, (ii) Level 3 LLC, (iii)   TelCove Operations, LLC, (iv) Broadwing Communications, LLC, (v) WilTel   Communications, LLC, (iv) each material (as determined in accordance with the   Existing Credit Agreement) domestic subsidiary of Apollo including, Global   Crossing Telecommunications, Inc., a Michigan corporation, and (vi) each   subsidiary of Parent whose assets secure the Existing Credit Agreement after   the Closing Date.
    
   Liens securing the Tranche B II Term Facility and the Tranche B II Term   Facility Guarantees will be pari passu with liens securing Loans of any other   Class under the Existing Credit Agreement. Subject to receipt of regulatory   approval with respect to liens on the assets of Tranche B II Term Facility   Guarantors that are Regulated Grantor Subsidiaries, on and after the Closing   Date, the Tranche B II Term Facility and the Tranche B II Term Facility   Guarantees shall at all times be secured by the same assets as secure the   Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Conditions   Precedent to Borrowing:
    	
 
    	
Subject   to the Documentation Principles and the Funds Certain Provisions, the making   of the Tranche B II Term Loans will be subject to (a) prior written notice of   borrowing, (b) the accuracy of representations and warranties with respect to   corporate existence, power and authority, the due execution, delivery and   enforceability of the Loan Documents, the validity, priority and perfection   of liens (subject to paragraph above), solvency, PATRIOT ACT information, no   conflicts with organizational documents, no consent from governmental   authorities (that has not been obtained) to the advance of the funds under   the Facilities Documentation, Federal Reserve margin regulations and the   Investment Company Act and (c) the conditions precedent set forth in Annex   III to the Commitment Letter and the other conditions precedent set forth or   referred to in Section 5 of the Commitment Letter.
    

 

Annex I-6

 

	
Representations   and Warranties:
    	
 
    	
Subject   to the Documentation Principles and the Funds Certain Provisions, the same   (subject to appropriate changes necessary to give effect to the Transactions)   those set forth in the Existing Credit Agreement, consisting of   representations and warranties with respect to organization; powers;   authorization; enforceability; governmental approvals; no conflicts;   financial condition; no material adverse change; properties; litigation and   environmental matters; compliance with laws and agreements; investment   company status; taxes; ERISA; disclosure; subsidiaries; insurance; labor   matters; intellectual property; security interests; FCC compliance; qualified   credit facility; senior indebtedness; solvency; and PATRIOT Act information.
    
	
 
    	
 
    	
 
    
	
Affirmative   Covenants:
    	
 
    	
The   same (subject to appropriate changes necessary to give effect to the   Transactions) as those set forth to the Existing Credit Agreement, consisting   of covenants with respect to financial statements and other information;   notices of material events; information regarding collateral; existence;   conduct of business; payment of taxes; maintenance of properties; insurance;   casualty and condemnation; annual information meeting; compliance with laws;   use of proceeds; guarantee and collateral requirement; further assurances;   and guarantee permit condition and collateral permit condition.
    
	
 
    	
 
    	
 
    
	
Negative   Covenants:
    	
 
    	
The   same (subject to appropriate changes necessary to give effect to the   Transactions) as those set forth in the Existing Credit Agreement, consisting   of covenants with respect to limitations on consolidated debt; limitations on   indebtedness of the Borrower and Borrower restricted subsidiaries;   limitations on restricted payments; limitations on dividend and other payment   restrictions affecting restricted subsidiaries; limitations on liens;   limitations on sales and leaseback transactions; limitations on asset   dispositions; limitations on issuance and sales of capital stock of   restricted subsidiaries; transactions with affiliates; limitations on   designations of unrestricted subsidiaries; limitations on actions with   respect to existing intercompany obligations and with respect to the Bridge   Loan Proceeds Note, the Senior Notes Proceeds Notes and the Apollo Loan   Proceeds Note; and limitations on consolidation, merger, conveyance transfer   or lease.
    
	
 
    	
 
    	
 
    
	
Financial   Covenants:
    	
 
    	
None.
    
	
 
    	
 
    	
 
    
	
Events   of Default:
    	
 
    	
As   set forth in the Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Assignments   and Participations:
    	
 
    	
As   set forth in the Existing Credit Agreement.
    

 

Annex I-7

 

	
Waivers   and Amendments:
    	
 
    	
As   set forth in the Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Expenses   and Indemnification:
    	
 
    	
As   set forth in the Existing Credit Agreement.
    
	
 
    	
 
    	
 
    
	
Governing   Law and Forum:
    	
 
    	
New   York.
    
	
 
    	
 
    	
 
    
	
Counsel   to the Lead Arrangers:
    	
 
    	
Cravath,   Swaine & Moore LLP (and such local or regulatory counsel as may be selected   by the Lead Arrangers).
    

 

Annex I-8

 

ANNEX II-A

CONFIDENTIAL

 

Project Apollo

$1,100,000,000 Senior Unsecured Bridge Facility

Summary of Terms and Conditions

 

Capitalized terms used but not defined in this Annex II-A shall have the meanings assigned thereto in the Commitment Letter to which this Annex II-A is attached.

 

	
Borrower:
    	
 
    	
Level   3 Financing, Inc., a Delaware corporation (the “Borrower”) that is a   wholly-owned subsidiary of Level 3 Communications, Inc., a Delaware   corporation (“Parent”).
    
	
 
    	
 
    	
 
    
	
Administrative   Agent:
    	
 
    	
An   affiliate of Citigroup Global Markets Inc. (in such capacity, the “Administrative   Agent”) will act as the Administrative Agent for the Bridge Lenders   holding the Bridge Loans (in each case, as defined below) from time to time.
    
	
 
    	
 
    	
 
    
	
Joint   Lead Arrangers and Joint Bookrunning Managers:
    	
 
    	
The   Lead Arrangers for the Tranche B II Term Facility.
    
	
 
    	
 
    	
 
    
	
Bridge   Lenders:
    	
 
    	
A   syndicate of financial institutions (the “Bridge Lenders”) arranged by   the Lead Arrangers in consultation with Parent and the Borrower.
    
	
 
    	
 
    	
 
    
	
Bridge   Facility:
    	
 
    	
A   senior unsecured bridge facility in an aggregate principal amount of not more   than $1,100,000,000 (the “Bridge Facility”) minus (i) the gross   proceeds of any Senior Notes and any Designated Other Securities issued in   accordance with the Commitment Letter and issued on or prior to the Closing   Date and (ii) any gross proceeds of the Tranche B II Term Facility in excess   of $650 million. Loans under the Bridge Facility (the “Bridge Loans”)   will be available in U.S. dollars.
    
	
 
    	
 
    	
 
    
	
Availability:
    	
 
    	
The   full amount of the Bridge Facility may be drawn in a single drawing on the   Closing Date. Amounts borrowed under the Bridge Facility that are repaid or   prepaid may not be reborrowed
    
	
 
    	
 
    	
 
    
	
Bridge   Loan Proceeds Note; Apollo Loan Proceeds Note; Purpose:
    	
 
    	
On   the Closing Date, (a) the Borrower will make a loan to Level 3 LLC in an   aggregate principal amount equal to the aggregate principal amount of the   Bridge Loans in return for an intercompany demand note (the “Bridge Loan   Proceeds Note”) in a principal amount equal to the aggregate principal   amount of the Bridge Loans, (b) Level 3 LLC will make a loan to Apollo in an   aggregate principal amount equal to the amount required to finance the Existing   Apollo Debt Repayment and payment of fees and expenses in connection with the   foregoing, and Apollo will issue and deliver to Level 3 LLC the
    

 

 

	
 
    	
 
    	
Apollo   Loan Proceeds Note) and (c) Parent and the Borrower shall pay fees and   expenses relating to the Transactions (and, to finance such payment, Level 3   LLC may use a portion of the loan from the Borrower to repay a portion of the   Parent Intercompany Note).
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The   Parent Intercompany Note (as defined in the Existing Financing Inc. Notes)   shall be subordinated to the right of Borrower to payment under the Bridge   Loan Proceeds Note on terms identical to the subordination of the Parent   Intercompany Note to the proceeds notes (the “Offering Proceeds Notes”)   issued in respect of the Existing Financing Inc. Notes. The Bridge Loan   Proceeds Note shall be subordinated to the right of Borrower to payment under   the Loan Proceeds Note (as defined in the Existing Financing Inc. Notes) on   terms identical to the subordination of the Offering Proceeds Notes to the Loan   Proceeds Note.
    
	
 
    	
 
    	
 
    
	
Interest   Rate:
    	
 
    	
14.00%   per annum. Any amount not paid when due shall bear interest at a rate equal   to the Interest Rate plus 200 basis points. In no event shall the interest   rate in effect at any time exceed the highest lawful rate permitted under   applicable law. 

Interest   will be payable quarterly in arrears
    
	
 
    	
 
    	
 
    
	
Calculation   of Interest:
    	
 
    	
All   interest will be computed on the basis of the actual number of days elapsed   in a year of 365 days (or 366 days in a leap year) and shall be payable for   the actual number of days elapsed.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
12   months from the Closing Date (the “Bridge Loan Maturity Date”).
    
	
 
    	
 
    	
 
    
	
Mandatory   Prepayments:
    	
 
    	
The   Borrower will prepay the Bridge Loans, without premium or penalty, together   with accrued interest to the prepayment date, with any of the following:   (a) the net cash proceeds from the issuance of any debt or equity   securities of Parent or any of its subsidiaries; (b) the net cash   proceeds from any capital contribution or the sale or issuance by Parent or   any of its subsidiaries of any capital stock or any securities convertible   into or exchangeable for capital stock or any warrants, rights or options to   acquire capital stock (other than issuances to employees as compensation);   and (c) subject to prepayment requirements under the Tranche B II Term   Facility, the net cash proceeds from insurance proceeds or asset sales by   Parent or any of its subsidiaries. The Borrower will apply the portion of   such net proceeds that may be so applied in compliance with the Existing   Credit Agreement, the indentures for the Existing Financing Inc. Notes and   the indentures for Parent’s existing notes (the “Parent Indentures”)   to prepay the Bridge Loans.
    

 

Annex II-A-2

 

	
Optional   Prepayment:
    	
 
    	
The   Bridge Loans may be prepaid at par prior to the Bridge Loan Maturity Date,   without premium or penalty, in whole or in part, upon written notice, at the   option of the Borrower, at any time, together with accrued interest to the   prepayment date.
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
The   obligations under the Bridge Loans will be guaranteed (a) on the Closing Date   by (i) Parent, (ii) BTE Equipment, LLC, (iii) Eldorado Equipment, Inc., (iv)   Level 3 International, Inc. and (v) Level 3 Enhanced Services, Inc., and (b)   subject to receipt of applicable regulatory approvals, by (i) Level 3   Communications, LLC (“Level 3 LLC”), (ii) Global Crossing   Telecommunications, Inc., a Michigan corporation, and (iii) each subsidiary   of Parent that guarantees any of the Existing Financing Inc. Notes after the   Closing Date. Each of the Guarantors of the Bridge Facility is herein   referred to as a “Bridge Facility Guarantor” and its guarantee is   referred to herein as a “Bridge Facility Guarantee”.
   Parent and Level 3 LLC currently are the only guarantors of the Existing   Financing Inc. Notes. Level 3 LLC is a Regulated Guarantor Subsidiary and,   accordingly, regulatory approvals will be required for Level 3 LLC to   guarantee the Bridge Facility.
    
	
 
    	
 
    	
 
    
	
Ranking:
    	
 
    	
The   Bridge Loans will be unsecured senior obligations of the Borrower, ranking pari passu with or senior to all other unsecured   obligations of the Borrower, including obligations under the Existing Credit   Agreement and the Existing Financing Inc. Notes. The Bridge Facility   Guarantees will be unsecured senior obligations of each Bridge Facility   Guarantor, ranking pari passu with   or senior to all other unsecured obligations of such Bridge Facility   Guarantor, including the guarantee of the obligations under the Existing   Credit Agreement and the Existing Financing Inc. Notes by such Bridge   Facility Guarantor.
    
	
 
    	
 
    	
 
    
	
Change   of Control:
    	
 
    	
In   the event of a Change of Control Triggering Event (as defined in the   indenture governing Financing Inc.’s 9.375% Senior Notes due 2019 (the “2019   Notes”)), each Bridge Lender will have the right to require the Borrower,   and the Borrower must offer, to prepay the outstanding principal amount of   the Bridge Loans plus accrued and unpaid interest thereon to the date of   prepayment plus a prepayment fee equal to 1% of such outstanding principal   amount. Prior to making any such offer, the Borrower will, within 30 days of   the Change of Control Triggering Event, repay all obligations under the   Existing Credit Agreement or obtain any required consent of the Lenders under   the Existing Credit Agreement to make such prepayment of the Bridge Loans.
    

 

Annex II-A-3

 

	
Conversion   into Rollover Loans:
    	
 
    	
If   the Bridge Loans have not been previously prepaid in full for cash on or prior   to the Bridge Loan Maturity Date, the principal amount of the Bridge Loans   outstanding on the Bridge Loan Maturity Date may, subject to the conditions   precedent set forth in Annex II-B to the Commitment Letter, be converted into   unsecured senior rollover loans with a maturity of six years from the Bridge   Loan Maturity Date (the “Rollover Loans”) and otherwise having the   terms set forth in Annex II-B to the Commitment Letter. On or after the   Bridge Loan Maturity Date, each Bridge Lender will have the right to exchange   the outstanding Rollover Loans held by it for unsecured senior exchange notes   (the “Exchange Notes”) of the Borrower having the terms set forth in   Annex II-C to the Commitment Letter.
   The Bridge Loans, the Rollover Loans, the Exchange Notes and the respective   guarantees thereof shall be pari passu   for all purposes.
    
	
 
    	
 
    	
 
    
	
Conditions   Precedent:
    	
 
    	
Subject   to the Documentation Principles and the Funds Certain Provisions, the making   of the Tranche B II Term Loans will be subject to (a) prior written notice of   borrowing, (b) the accuracy of representations and warranties with respect to   corporate existence, power and authority, the due execution, delivery and   enforceability of the Loan Documents, the validity, priority and perfection   of liens (subject to paragraph above), solvency, PATRIOT ACT information, no   conflicts with organizational documents, no consent from governmental   authorities (that has not been obtained) to the advance of the funds under   the Facilities Documentation, Federal Reserve margin regulations and the   Investment Company Act and (c) the conditions precedent set forth in Annex   III to the Commitment Letter and the other conditions precedent set forth or   referred to in Section 5 of the Commitment Letter.
    
	
 
    	
 
    	
 
    
	
Bridge   Facility Documentation:
    	
 
    	
Subject   to the Funds Certain Provisions and the Documentation Principles, the   Facilities Documentation for the Bridge Facility shall contain those terms   and conditions set forth in the Commitment Letter, and shall otherwise   contain representations and warranties, covenants, events of default and   waiver and consent provisions substantially consistent with the Tranche B II   Term Facility,   in each case, subject to (a) changes to add customary securities demand   and cooperation covenants, including a covenant for the Borrower to   use its best efforts to refinance the Bridge Facility with the proceeds of   the Permanent Securities as promptly as practicable following the Closing   Date and   (b) changes (taking into account reasonable business requirements of the   Borrower) to make more restrictive the covenants in the Tranche B II   Term Facility related to (i) restricted payments, including, to the greatest extent   possible under the “Limitation on Dividend and Other Payment Restrictions   Affecting Restricted
    

 

Annex II-A-4

 

	
 
    	
 
    	
Subsidiaries” covenant   set forth in the indentures governing the Existing Financing Inc. Notes and   Parent’s existing notes, the ability of the Borrower to pay dividends or   otherwise transfer property or assets to Parent prior to the Bridge Loan   Maturity Date (other than to pay interest and principal in respect of   existing indebtedness as it becomes due and incur related expenses) and (ii)   investments.
    
	
 
    	
 
    	
 
    
	
Assignments   and Participations:
    	
 
    	
The   Bridge Lenders shall have the right to assign their interest in the Bridge   Loans in whole or in part in compliance with applicable law to any third   parties only with the prior written consent of the Lead Arrangers. The Bridge   Lenders will be permitted to sell participations with voting rights limited   to significant matters such as changes in amount, interest rate and maturity   date.
    
	
 
    	
 
    	
 
    
	
Expenses   and Indemnification:
    	
 
    	
In   addition to those out-of-pocket expenses reimbursable under the Commitment   Letter, Parent or the Borrower will pay all reasonable costs and expenses of   the Lead Arrangers and the Administrative Agent associated with the   preparation, due diligence, administration, syndication and enforcement of   all loan documentation, including the legal fees and expenses of counsel to   the Lead Arrangers, regardless of whether or not the Bridge Facility is   closed. Parent or the Borrower will also pay the expenses of each Bridge   Lender in connection with the enforcement of any of the loan documentation   related to the Bridge Facility.
   Parent and the Borrower will jointly and severally indemnify each of the Lead   Arrangers, the Administrative Agent and the Bridge Lenders and hold them   harmless from and against all costs, expenses (including reasonable fees,   disbursements and other charges of counsel) and liabilities arising out of or   relating to any litigation or other proceeding (regardless of whether the   Lead Arrangers, the Administrative Agent or any Bridge Lender is a party   thereto) that relates to the Transactions or any transactions related   thereto, except to the extent determined by a final judgment of a court of   competent jurisdiction to have arisen solely from such person’s gross   negligence or willful misconduct.
    
	
 
    	
 
    	
 
    
	
Governing   Law and Forum:
    	
 
    	
New   York.
    
	
 
    	
 
    	
 
    
	
Counsel   for the Lead Arrangers:
    	
 
    	
Cravath,   Swaine & Moore LLP (and such local or regulatory counsel as may be   selected by the Lead Arrangers).
    
	
 
    	
 
    	
 
    
	
Fees:
    	
 
    	
As   provided in the Fee Letter.
    

 

Annex II-A-5

 

ANNEX II-B

CONFIDENTIAL

 

Project Apollo

$1,100,000,000 Senior Unsecured Rollover Facility

Summary of Terms and Conditions

 

Capitalized terms used but not defined in this Annex II-B shall have the meanings assigned thereto in the Commitment Letter to which this Annex II-B is attached.

 

	
Borrower:
    	
 
    	
Level   3 Financing, Inc., a Delaware corporation (the “Borrower”) that   is a wholly-owned subsidiary of Level 3 Communications, Inc., a Delaware   corporation (“Parent”).
    
	
 
    	
 
    	
 
    
	
Rollover   Facility:
    	
 
    	
A   senior unsecured rollover facility in an initial principal amount equal to   100% of the outstanding principal amount of the Bridge Loans on the Bridge   Loan Maturity Date (the “Rollover Facility”). Loans under the Rollover   Facility (the “Rollover Loans”) will be available in U.S. dollars.   Subject to the conditions precedent set forth below, the Rollover Facility   will be available to the Borrower to refinance the Bridge Loans on the Bridge   Loan Maturity Date. The Rollover Facility will be governed by the definitive   documents for the Bridge Facility and, except as set forth below, shall have   the same terms as the Bridge Facility (including with respect to Optional   Prepayments).
    
	
 
    	
 
    	
 
    
	
Interest   Rate:
    	
 
    	
The   Rollover Loans shall bear interest at a rate equal to the interest borne by   the Bridge Loans on the day immediately preceding the Bridge Loan Maturity   Date.
    
	
 
    	
 
    	
 
    
	
Calculation   of Interest:
    	
 
    	
All   interest will be computed on the basis of the actual number of days elapsed   in a year of 365 days (or 366 days in a leap year) and shall be payable for   the actual number of days elapsed
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
Six   years from the Bridge Loan Maturity Date.
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
Same   as under the Bridge Facility.
    
	
 
    	
 
    	
 
    
	
Ranking:
    	
 
    	
Same   as the Bridge Loans.
    
	
 
    	
 
    	
 
    
	
Conditions   Precedent to Rollover:
    	
 
    	
The   ability of the Borrower to refinance any Bridge Loans with Rollover Loans is   subject to the following conditions being satisfied:
    

 

 

	
 
    	
 
    	
(a)
    	
at   the time of any such refinancing, there shall exist no payment or bankruptcy   Event of Default;
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
all   fees due to the Lead Arrangers and the Initial Bridge Lenders shall have been   paid in full;
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(c)
    	
the   Bridge Lenders shall have received promissory notes evidencing the Rollover   Loans (if requested) and such other documentation as shall be set forth in   the loan documents; and
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(d)
    	
no   order, decree, injunction or judgment enjoining any such refinancing shall be   in effect.
    
	
 
    	
 
    	
 
    
	
Assignments   and Participations:
    	
 
    	
The   Bridge Lenders shall have the right to assign their interest in any Rollover   Loans in whole or in part in compliance with applicable law to any third   parties only with the prior written consent of the Lead Arrangers. The Bridge   Lenders will be permitted to sell participations with voting rights limited   to significant matters such as changes in amount, interest rate and maturity   date.
    
	
 
    	
 
    	
 
    
	
Rollover   Covenants:
    	
 
    	
From   and after the Bridge Loan Maturity Date, the covenants applicable to the   Rollover Loans will conform to those applicable to the 2019 Notes.
    
	
 
    	
 
    	
 
    
	
Governing   Law and Forum:
    	
 
    	
New   York.
    
	
 
    	
 
    	
 
    
	
Expenses   and Indemnification:
    	
 
    	
Same   as the Bridge Facility.
    
	
 
    	
 
    	
 
    
	
Fees:
    	
 
    	
As   provided in the Fee Letter.
    

 

Annex II-B-2

 

ANNEX II-C

CONFIDENTIAL

 

Project Apollo

$1,100,000,000 Senior Unsecured Exchange Notes

Summary of Terms and Conditions

 

Capitalized terms used but not defined in this Annex II-C shall have the meanings assigned thereto in the Commitment Letter to which this Annex II-C is attached.

 

	
Issuer:
    	
 
    	
Level   3 Financing, Inc., a Delaware corporation (in its capacity as issuer,   the “Issuer”) that is a wholly-owned subsidiary of Level 3   Communications, Inc., a Delaware corporation (“Parent”).
    
	
 
    	
 
    	
 
    
	
Exchange   Notes:
    	
 
    	
At   any time on or after the Bridge Loan Maturity Date, the Rollover Loans due to   the Bridge Lenders holding not less than $10 million of the outstanding   Rollover Loans may, at the option of such Bridge Lenders, be exchanged for an   equal principal amount of Exchange Notes. The Issuer will issue the Exchange   Notes under an indenture that complies with the Trust Indenture Act of 1939,   as amended (the “Indenture”). The Issuer will appoint a trustee   reasonably acceptable to the holders of the Exchange Notes. The Exchange   Notes and the Indenture will be fully executed and deposited into escrow at   the closing of the Bridge Loans. The Indenture will be in substantially the   form attached as an exhibit to the definitive agreement for the Bridge   Facility. The Indenture will include provisions substantially similar to   those in the Indenture for the 2019 Notes. Except as expressly set forth in   this Annex II-C, the Exchange Notes shall have the same terms as the Rollover   Loans.
    
	
 
    	
 
    	
 
    
	
Maturity:
    	
 
    	
Six   years from the Bridge Loan Maturity Date.
    
	
 
    	
 
    	
 
    
	
Interest   Rate:
    	
 
    	
The   Exchange Notes shall bear interest at a rate equal to the interest borne by   the Bridge Loans on the day immediately preceding the Bridge Loan Maturity   Date. Interest on the Exchange Notes will be calculated on the basis of a   360-day year of 12 30-day months, and will be payable semi-annually in   arrears.
    
	
 
    	
 
    	
 
    
	
Optional   Redemption:
    	
 
    	
The   Exchange Notes will not be redeemable at the option of the Issuer prior to   the fourth anniversary of the Closing Date (subject to a 35% equity clawback   until the third anniversary of the Closing Date and a customary make-whole   redemption provision at the treasury rate plus 0.50%) and will be redeemable   (a) on or after the fourth anniversary of the Closing Date but prior to   the fifth anniversary of the Closing Date at par plus accrued interest plus a   
    

 

 

	
 
    	
 
    	
premium   equal to 50% of the coupon, (b) on or after the fifth anniversary of the   Closing Date but prior to the sixth anniversary of the Closing Date at par   plus accrued interest plus a premium equal to 25% of the coupon and   (c) on or after the sixth anniversary at par plus accrued interest.
    
	
 
    	
 
    	
 
    
	
Mandatory   Offer to Repurchase:
    	
 
    	
Substantially   consistent with the indenture for the 2019 Notes.
    
	
 
    	
 
    	
 
    
	
Guarantors:
    	
 
    	
Same   as under as the Bridge Facility.
    
	
 
    	
 
    	
 
    
	
Ranking:
    	
 
    	
Same   as the Bridge Loans.
    
	
 
    	
 
    	
 
    
	
Registration   Rights:
    	
 
    	
The   Issuer shall file within 180 days after the date of the first issuance of   Exchange Notes (the “Issue Date”) and will use its commercially   reasonable efforts to cause to become effective as soon thereafter as   practicable, a registration statement (the “Exchange Offer Registration   Statement”) relating to an exchange offer (the “Registered Exchange   Offer”) whereby Parent, the Issuer and the Bridge Facility Guarantors   will offer registered notes having terms identical to the Exchange Notes in   exchange for all outstanding Exchange Notes.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
In   the event that the Exchange Offer Registration Statement is not declared   effective within 270 days following the Issue Date, or the Registered   Exchange Offer is not consummated within the later of (a) 300 days   following the Issue Date and (b) 30 business days following the initial   effectiveness date of the Exchange Offer Registration Statement, the Issuer   shall (i) as promptly as practicable, file a shelf registration   statement (the “Shelf Registration Statement”) covering resales of the   Exchange Notes, (ii) use commercially reasonable efforts to cause the   Shelf Registration Statement to be declared effective under the Securities   Act and (iii) use commercially reasonable efforts to keep the Shelf   Registration Statement effective until two years after its effective date.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
If   (a) on or prior to 180 days after the Issue Date, neither the Exchange   Offer Registration Statement nor the Shelf Registration Statement has been   filed with the Securities and Exchange Commission, (b) on or prior to   270 days after the Issue Date, neither the Exchange Offer Registration   Statement nor the Shelf
    

 

Annex II-C-2

 

	
 
    	
 
    	
Registration   Statement has been declared effective, (c) on or prior to the later of   (i) 300 days after the Issue Date and (ii) 30 business days after   the initial effectiveness date of the Exchange Offer Registration Statement,   neither the Registered Exchange Offer has been consummated nor the Shelf   Registration Statement has been declared effective, or (d) after either   the Exchange Offer Registration Statement or the Shelf Registration Statement   has been declared effective, such Registration Statement thereafter ceases to   be effective or usable (subject to certain expectations) in connection with   resales of the Exchange Notes in accordance with and during the periods   specified in the Registration Agreement (each such event referred to in   clauses (a) through (d), a ‘‘Registration Default’’), interest (‘‘Special   Interest’’) will accrue on the principal amount of the Exchange Notes (in   addition to the stated interest on the Exchange Notes) from and including the   date on which any such Registration Default shall occur to but excluding the   date on which all Registration Defaults have been cured. Special Interest   will accrue at a rate of 0.50% per annum during the 90-day period immediately   following the occurrence of such Registration Default and shall increase by   0.25% per annum at the end of each subsequent 90-day period, but in no event   shall such rate exceed 1.00% per annum.
    
	
 
    	
 
    	
 
    
	
Governing   Law and Forum:
    	
 
    	
New   York.
    

 

Annex II-C-3

 

ANNEX III

CONFIDENTIAL

 

Project Apollo

$650,000,000 Senior Secured Tranche B II Term Loan Facility

$1,100,000,000 Senior Unsecured Bridge Facility

Summary of Additional Conditions Precedent

 

The availability of the Facilities shall be subject to the satisfaction or waiver of the following additional conditions precedent.  Capitalized terms used but not defined in this Annex III shall have the meanings assigned thereto in the Commitment Letter to which this Annex III is attached.

 

1.                                   Acquisition.  The Acquisition shall have been consummated, or substantially concurrently with the borrowing under the Facilities shall be consummated, in accordance with the Acquisition Agreement; provided that, without the prior consent of the Lead Arrangers, no provision of the Acquisition Agreement shall have been amended, supplemented or otherwise modified, and no provision thereof shall have been waived by Parent, in a manner that is material and adverse to the interests of the Lenders.

 

2.                                   Existing Apollo Debt Repayment. Apollo shall have consummated, or substantially concurrently with the borrowing under the Facilities shall consummate (or arrangements therefore reasonably satisfactory to the Lead Arrangers shall have been made), the Existing Apollo Debt Repayment, and all commitments and all liens and guarantees relating thereto shall have been, or substantially concurrently with the borrowing under the Facilities shall be, terminated or released.  After giving effect to the Transactions, Apollo and its subsidiaries shall have no indebtedness other than (a) guarantees in respect of the Facilities and the Senior Notes, (b) obligations under the Apollo Loan Proceeds Note and guarantees in respect thereof and (c) other limited indebtedness to be agreed upon by Parent and the Lead Arrangers, including up to $200 million of capital leases and other indebtedness.

 

3.                                   No Conflicts.  The incurrence of indebtedness under the Facilities, including the liens and guarantees provided in connection therewith as set forth in the Commitment Letter, and the consummation of the other Transactions and the other transactions contemplated hereby will not result in (a) a default or event of default under the Existing Credit Agreement, the Existing Financing Inc. Notes, the Parent’s Indentures and other material indebtedness of Parent and its subsidiaries or (b) the creation or imposition of any liens on the assets of Parent, the Borrower, Apollo or any of their respective subsidiaries (other than liens created under the definitive documentation for the Tranche B II Term Facility) and the Lead Arrangers shall have received a usual and customary no conflicts opinion (consistent with the form delivered in connection with the Existing Credit Agreement) and a certificate of the chief financial officer of Parent certifying as to the methodology and details of calculation of such incurrence as evidence of the foregoing showing compliance.

 

4.                                   Financial Statements.  Parent and Apollo shall have made all annual and quarterly filings required to be made by them pursuant to the Securities and Exchange Act of 1934, as amended, and the Lead Arrangers shall have received (a) audited consolidated balance sheets and related statements of operations, stockholders’ equity and cash flows of each of Parent and Apollo for each of the three fiscal years most recently ended at least 90 days prior to the Closing Date, which shall be prepared in accordance with U.S. GAAP, (b) unaudited consolidated

 

 

balance sheets and related statements of operations, stockholders’ equity and cash flows of each of Parent and Apollo for each subsequent fiscal quarter ended at least 45 days prior to the Closing Date, which shall be prepared in accordance with U.S. GAAP, and (c) a pro forma consolidated balance sheet and related pro forma consolidated statement of operations of Parent as of the end of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to clause (a) and (b) above and for the four consecutive fiscal quarters then ended, prepared after giving effect to the Transactions and the other transactions contemplated hereby as if they had occurred as of the last day thereof (in each case of such balance sheet) or at the beginning of the four consecutive fiscal quarter period then ended (in the case of such statement of operations), in each case meeting the requirements of Regulation S-X for Form S-1 registration statement (but excluding information required by Rule 3-10 under Regulation S-X).

 

5.                                   Guarantee and Collateral Matters. Subject to the Funds Certain Provisions and the Documentation Principles, the Lead Arrangers shall have received UCC, tax and judgment lien searches with respect to the Borrower, Parent and each Tranche B II Term Facility Guarantor and Bridge Facility Guarantor.  Within fifteen business days of the date of the Acquisition Agreement, Parent and Apollo shall have made all filings required with respect to any regulatory approvals necessary to consummate borrowings under the Tranche B II Term Loan Facility and the Bridge Facility, in each case in the amounts contemplated by the Commitment Letter, including to provide Tranche B II Term Facility Guarantees by each Tranche B II Term Facility Guarantor, Bridge Facility Guarantees by each Bridge Facility Guarantor and collateral with respect to the Tranche B II Term Loan Facility by each Tranche B II Term Facility Guarantor.  The Tranche B II Term Facility Guarantees (in the case of the Tranche B II Term Facility) and the Bridge Facility Guarantees (in the case of the Bridge Facility) shall have been executed and be in full force and effect (and all material governmental authorizations and consents required in order for any regulated subsidiary of Parent or Apollo that is required to provide a Tranche B II Term Facility Guarantee or a Bridge Facility Guarantee, as the case may be, shall have been obtained and shall be in full force and effect); provided that, with respect to any Tranche B II Term Facility Guarantee or Bridge Facility Guarantee, in each case, by any entity that is a Regulated Guarantor Subsidiary under the Existing Credit Agreement (a “Regulated Entity”), if Parent and the Borrower shall have endeavored, and caused each Regulated Entity to have endeavored, in good faith using commercially reasonable efforts to cause such authorizations and consents to be obtained prior to the Closing date, but such authorizations and consents for a Regulated Entity have not been obtained then the guarantees by such entity shall not constitute a condition precedent to borrowing under the Facilities but Parent and the Borrower shall continue (and the facilities documentation shall require Parent and the Borrower to so continue) to endeavor, and cause each Regulated Entity to continue to endeavor, in good faith using commercially reasonable efforts to cause such approvals to be obtained by the earliest practicable date.  For purposes of the immediately preceding sentence, the requirement that Parent, the Borrower or any Regulated Entity use “commercially reasonable efforts” shall not be deemed to require it to make material payments in excess of normal fees and costs to or at the direction of governmental authorities or to change the manner in which it conducts its business in  any respect that the management of Parent shall determine in good faith to be adverse or materially burdensome.  All documents and instruments required to create and perfect the pledges of, and security interest and mortgages in, the collateral as set forth in Annex I to the Commitment Letter shall have been executed and delivered and, if applicable, be in proper form for filing; provided that, except with respect to the creation and perfection of security interests in

 

Annex III-2

 

the pledged equity interests of the domestic subsidiaries of Parent or Apollo, as the case may be, and other assets a lien on which may be perfected by the filing of a financing statement under the Uniform Commercial Code, to the extent security interest in any collateral is not provided or perfected on the Closing Date after Parent’s use of commercially reasonable efforts to do so, the delivery or perfection thereof shall not constitute a condition precedent to the borrowing under the Facilities but shall be required to be accomplished as promptly as practicable after the Closing Date (and in any event no later than the date to be mutually agreed upon by Parent and the Lead Arrangers); provided, further, that, with respect to any pledge, security interest or mortgage of assets of a Regulated Grantor Subsidiary requiring regulatory authorization or consent, if Parent and the Borrower shall have endeavored, and caused each Regulated Grantor Subsidiary to have endeavored, in good faith using commercially reasonable efforts to cause such regulatory authorization or consent to be obtained by the Closing Date, but such authorization or consent has not been obtained, then the pledge of, and security interest and mortgage in, the assets for which the required authorization or consent has not been obtained shall not constitute a condition precedent to borrowing under the Facilities but Parent and the Borrower shall continue to endeavor, and cause each Regulated Grantor Subsidiary to continue to endeavor, in good faith using commercially reasonable efforts to cause such authorization or consent to be obtained by the earliest practicable date.

 

6.                                   Customary Closing Documents.  Subject to the Funds Certain Provisions and the Documentation Principles, the Lead Arrangers shall have received, in each case in form and substance reasonably satisfactory to them: (a) customary legal opinions, corporate records, evidence of authority and documents from public officials, (b) customary secretary’s and officer’s certificates, (c) customary evidence of insurance and (d) a solvency certificate from the chief financial officer of Parent.  The Lead Arrangers will have received at least 10 days prior to the Closing Date all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act, that is requested on a timely basis.

 

7.                                   Offering Document.  In the case of the Bridge Facility, the Borrower shall have engaged one or more investment banks satisfactory to the Lead Arrangers (collectively, the “Investment Bank”) to sell or place the Senior Notes or debt securities substantially similar to the Senior Notes that will be used to refinance the Bridge Loans (the “Permanent Securities”) and shall ensure that, (a) the Investment Bank shall have received not later than the earlier of (i) 150 days after the date of the Commitment Letter to which this Annex III is attached and (ii) 20 days prior to the Closing Date a complete printed preliminary prospectus or preliminary offering memorandum or preliminary private placement memorandum suitable for use in a customary high-yield road show relating to the issuance of the Senior Notes or Permanent Securities (including all audited financial statements, all unaudited financial statements (which shall have been reviewed by the independent accountants for Parent or Apollo, as the case may be, as provided in Statement on Auditing Standards No. 100) and all appropriate pro forma financial statements prepared in accordance with, or reconciled to, U.S. GAAP and prepared in accordance with Regulation S-X under the Securities Act of 1933, as amended, and all other data (including selected financial data) that the Securities and Exchange Commission would require in a registered offering of such securities or that would be necessary for the Investment Bank to receive customary “comfort” (including “negative assurance” comfort) from independent accountants in connection with such offering; provided that such preliminary prospectus,

 

Annex III-3

 

preliminary offering memorandum or preliminary private placement memorandum shall not be required to contain a description of notes section or other information customarily provided by the Investment Bank, (b) upon delivery of the material described in clause (a), officers and advisers of Parent, Apollo and their respective subsidiaries shall have made themselves available from time to time to attend and make presentations regarding the business and prospects of Parent, Apollo and their respective subsidiaries at a meeting or meetings of prospective investors as required by the Investment Bank in its reasonable judgment to market the Senior Notes or Permanent Securities and (c) the Investment Bank shall be afforded a period of at least 30 calendar days following the receipt of the material described in clause (a) above to seek to offer and sell or privately place the Senior Notes or Permanent Securities with qualified purchasers thereof.  Each 20-day period referred to above must consist of 20 consecutive business days and must not include any day from and including August 22, 2011, through September 6, 2011, November 21, 2011, through November 25, 2011, and December 19, 2011, through January 2, 2012.

 

Annex III-4Exhibit 10.1

 

EXECUTION COPY

 

 

CREDIT AGREEMENT

 

Dated as of April 12, 2011

 

among

 

AAR CORP.,
  as the Borrower,

 

BANK OF AMERICA, N.A.,
 as Administrative Agent, Swing Line Lender
 and
 L/C Issuer,

 

WELLS FARGO BANK, N.A.,
  as Co-Syndication Agent and L/C Issuer,

 

RBS CITIZENS, N.A.,
  as Co-Syndication Agent,

 

U.S. BANK NATIONAL ASSOCIATION,
  as Documentation Agent,

 

and

 

The Other Lenders Party Hereto

 

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

 

as

 

Sole Lead Arranger and Sole Book Manager

 

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I.   DEFINITIONS AND ACCOUNTING TERMS
    	
1
    
	
 
    	
 
    
	
 
    	
1.01
    	
Defined Terms
    	
1
    
	
 
    	
1.02
    	
Other Interpretive Provisions
    	
26
    
	
 
    	
1.03
    	
Accounting Terms
    	
27
    
	
 
    	
1.04
    	
Rounding
    	
28
    
	
 
    	
1.05
    	
Times of Day
    	
28
    
	
 
    	
1.06
    	
Letter of Credit Amounts
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II.   THE COMMITMENTS AND CREDIT EXTENSIONS
    	
28
    
	
 
    	
 
    
	
 
    	
2.01
    	
Committed Loans
    	
28
    
	
 
    	
2.02
    	
Borrowings, Conversions and Continuations of Committed   Loans
    	
28
    
	
 
    	
2.03
    	
[Reserved]
    	
30
    
	
 
    	
2.04
    	
Letters of Credit
    	
30
    
	
 
    	
2.05
    	
Swing Line Loans
    	
38
    
	
 
    	
2.06
    	
Prepayments
    	
41
    
	
 
    	
2.07
    	
Termination or Reduction of Commitments
    	
41
    
	
 
    	
2.08
    	
Repayment of Loans
    	
42
    
	
 
    	
2.09
    	
Interest
    	
42
    
	
 
    	
2.10
    	
Fees
    	
43
    
	
 
    	
2.11
    	
Computation of Interest and Fees; Retroactive Adjustments   of Applicable Rate
    	
43
    
	
 
    	
2.12
    	
Evidence of Debt
    	
44
    
	
 
    	
2.13
    	
Payments Generally; Administrative Agent’s Clawback
    	
45
    
	
 
    	
2.14
    	
Sharing of Payments by Lenders
    	
46
    
	
 
    	
2.15
    	
[Reserved]
    	
47
    
	
 
    	
2.16
    	
Increase in Commitments
    	
47
    
	
 
    	
2.17
    	
Cash Collateral
    	
48
    
	
 
    	
2.18
    	
Defaulting Lenders
    	
49
    
	
 
    	
 
    	
 
    
	
ARTICLE III.   TAXES, YIELD PROTECTION AND ILLEGALITY
    	
51
    
	
 
    	
 
    
	
 
    	
3.01
    	
Taxes
    	
51
    
	
 
    	
3.02
    	
Illegality
    	
55
    
	
 
    	
3.03
    	
Inability to Determine Rates
    	
55
    
	
 
    	
3.04
    	
Increased Costs; Reserves on Eurodollar Rate Loans
    	
56
    
	
 
    	
3.05
    	
Compensation for Losses
    	
57
    
	
 
    	
3.06
    	
Mitigation Obligations; Replacement of Lenders
    	
58
    
	
 
    	
3.07
    	
Survival
    	
58
    

 

 

TABLE OF CONTENTS (cont’d)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE IV.   CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
    	
58
    
	
 
    	
 
    
	
 
    	
4.01
    	
Conditions of Initial Credit   Extension
    	
58
    
	
 
    	
4.02
    	
Conditions to all Credit Extensions
    	
60
    
	
 
    	
 
    	
 
    
	
ARTICLE V.   REPRESENTATIONS AND WARRANTIES
    	
61
    
	
 
    	
 
    
	
 
    	
5.01
    	
Organization
    	
61
    
	
 
    	
5.02
    	
Authorization; No Conflict
    	
61
    
	
 
    	
5.03
    	
Validity and Binding Nature
    	
61
    
	
 
    	
5.04
    	
Financial Condition; No Material Adverse Effect
    	
61
    
	
 
    	
5.05
    	
Litigation and Contingent Liabilities
    	
62
    
	
 
    	
5.06
    	
Ownership of Properties; Liens
    	
62
    
	
 
    	
5.07
    	
Equity Ownership; Subsidiaries
    	
62
    
	
 
    	
5.08
    	
Pension Plans
    	
62
    
	
 
    	
5.09
    	
Investment Company Act
    	
63
    
	
 
    	
5.10
    	
Regulation U
    	
63
    
	
 
    	
5.11
    	
Taxes
    	
63
    
	
 
    	
5.12
    	
Solvency; Etc.
    	
63
    
	
 
    	
5.13
    	
Environmental Matters
    	
64
    
	
 
    	
5.14
    	
Insurance
    	
64
    
	
 
    	
5.15
    	
Information
    	
65
    
	
 
    	
5.16
    	
Intellectual Property
    	
65
    
	
 
    	
5.17
    	
No Default
    	
65
    
	
 
    	
5.18
    	
Taxpayer Identification Number
    	
65
    
	
 
    	
 
    	
 
    
	
ARTICLE VI.   AFFIRMATIVE COVENANTS
    	
65
    
	
 
    	
 
    
	
 
    	
6.01
    	
Reports, Certificates and Other   Information
    	
65
    
	
 
    	
6.02
    	
Books, Records and Inspections
    	
68
    
	
 
    	
6.03
    	
Maintenance of Property; Insurance
    	
68
    
	
 
    	
6.04
    	
Compliance with Laws; Payment of Taxes and Liabilities
    	
69
    
	
 
    	
6.05
    	
Maintenance of Existence, Etc.
    	
69
    
	
 
    	
6.06
    	
Use of Proceeds
    	
69
    
	
 
    	
6.07
    	
Additional Guarantors
    	
69
    
	
 
    	
 
    	
 
    
	
ARTICLE VII.   NEGATIVE COVENANTS
    	
70
    
	
 
    	
 
    
	
 
    	
7.01
    	
Debt
    	
70
    
	
 
    	
7.02
    	
Liens
    	
71
    
	
 
    	
7.03
    	
Restricted Payments
    	
73
    
	
 
    	
7.04
    	
Mergers and Consolidations
    	
73
    
	
 
    	
7.05
    	
Sale of Assets, Etc.
    	
74
    
	
 
    	
7.06
    	
Acquisitions
    	
74
    
	
 
    	
7.07
    	
Modification of Organizational Documents
    	
75
    
	
 
    	
7.08
    	
Transactions with Affiliates
    	
75
    
	
 
    	
7.09
    	
Inconsistent Agreements
    	
76
    

 

ii

 

TABLE OF CONTENTS (cont’d)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
7.10
    	
Business Activities
    	
76
    
	
 
    	
7.11
    	
Investments
    	
76
    
	
 
    	
7.12
    	
Fiscal Year
    	
77
    
	
 
    	
7.13
    	
Financial Covenants
    	
77
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII.   EVENTS OF DEFAULT AND REMEDIES
    	
78
    
	
 
    	
 
    
	
 
    	
8.01
    	
Events of Default
    	
78
    
	
 
    	
8.02
    	
Remedies Upon Event of Default
    	
80
    
	
 
    	
8.03
    	
Application of Funds
    	
80
    
	
 
    	
 
    	
 
    
	
ARTICLE IX.   ADMINISTRATIVE AGENT
    	
81
    
	
 
    	
 
    
	
 
    	
9.01
    	
Appointment and Authority
    	
81
    
	
 
    	
9.02
    	
Rights as a Lender
    	
81
    
	
 
    	
9.03
    	
Exculpatory Provisions
    	
82
    
	
 
    	
9.04
    	
Reliance by Administrative Agent
    	
82
    
	
 
    	
9.05
    	
Delegation of Duties
    	
83
    
	
 
    	
9.06
    	
Resignation of Administrative Agent
    	
83
    
	
 
    	
9.07
    	
Non-Reliance on Administrative Agent and Other Lenders
    	
84
    
	
 
    	
9.08
    	
No Other Duties, Etc.
    	
84
    
	
 
    	
9.09
    	
Administrative Agent May File Proofs of Claim
    	
84
    
	
 
    	
9.10
    	
Guaranty Matters
    	
85
    
	
 
    	
9.11
    	
Co-Syndication Agents; Documentation Agents
    	
85
    
	
 
    	
 
    	
 
    
	
ARTICLE X.   MISCELLANEOUS
    	
85
    
	
 
    	
 
    
	
 
    	
10.01
    	
Amendments, Etc.
    	
85
    
	
 
    	
10.02
    	
Notices; Effectiveness; Electronic Communication
    	
86
    
	
 
    	
10.03
    	
No Waiver; Cumulative Remedies; Enforcement
    	
88
    
	
 
    	
10.04
    	
Expenses; Indemnity; Damage Waiver
    	
89
    
	
 
    	
10.05
    	
Payments Set Aside
    	
91
    
	
 
    	
10.06
    	
Successors and Assigns
    	
91
    
	
 
    	
10.07
    	
Treatment of Certain Information; Confidentiality
    	
95
    
	
 
    	
10.08
    	
Right of Setoff
    	
96
    
	
 
    	
10.09
    	
Interest Rate Limitation
    	
97
    
	
 
    	
10.10
    	
Counterparts; Integration; Effectiveness
    	
97
    
	
 
    	
10.11
    	
Survival of Representations and Warranties
    	
97
    
	
 
    	
10.12
    	
Severability
    	
98
    
	
 
    	
10.13
    	
Replacement of Lenders
    	
98
    
	
 
    	
10.14
    	
Governing Law; Jurisdiction; Etc.
    	
98
    
	
 
    	
10.15
    	
Waiver of Jury Trial
    	
99
    
	
 
    	
10.16
    	
No Advisory or Fiduciary Responsibility
    	
99
    
	
 
    	
10.17
    	
Electronic Execution of Assignments and Certain Other   Documents
    	
100
    
	
 
    	
10.18
    	
USA PATRIOT Act
    	
100
    

 

iii

 

TABLE OF CONTENTS (cont’d)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
SCHEDULES
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.01
    	
Commitments   and Applicable Percentages
    	
 
    
	
 
    	
2.04
    	
Existing   Letters of Credit
    	
 
    
	
 
    	
5.05
    	
Litigation
    	
 
    
	
 
    	
5.07
    	
Subsidiaries;   Other Equity Investments; Equity   Interests in the Borrower
    	
 
    
	
 
    	
7.01
    	
Existing   Debt
    	
 
    
	
 
    	
7.11
    	
Investments
    	
 
    
	
 
    	
10.02
    	
Administrative   Agent’s Office; Certain Addresses for Notices
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EXHIBITS
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
A
    	
Form of   Committed Loan Notice
    	
 
    
	
 
    	
C
    	
Form of   Swing Line Loan Notice
    	
 
    
	
 
    	
D
    	
Form of   Note
    	
 
    
	
 
    	
E
    	
Form of   Compliance Certificate
    	
 
    
	
 
    	
F-1
    	
Form of   Assignment and Assumption
    	
 
    
	
 
    	
F-2
    	
Form of   Administrative Questionnaire
    	
 
    
	
 
    	
G
    	
Form of   Guaranty
    	
 
    
	
 
    	
H
    	
Form of   Opinion of Loan Parties’ Counsel
    	
 
    

 

iv

 

CREDIT AGREEMENT

 

This CREDIT AGREEMENT (“Agreement”) is entered into as of April 12, 2011,  among AAR CORP., a Delaware corporation (the “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), BANK OF AMERICA, N.A.,  as Administrative Agent, Swing Line Lender and a L/C Issuer, WELLS FARGO BANK, N.A., as a Co-Syndication Agent and a L/C Issuer, RBS CITIZENS, N.A., as a Co-Syndication Agent, and U.S. BANK NATIONAL ASSOCIATION, as Documentation Agent.

 

The Borrower has requested that the Lenders provide a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS

 

1.01                        Defined Terms.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

“AAR AESL Group” has the meaning given in the definition of Unrestricted Subsidiary.

 

“AAR IFS Group” has the meaning given in the definition of Unrestricted Subsidiary.

 

“Acquired Debt” means Debt of a Person existing at the time such Person became a Restricted Subsidiary or assumed by the Borrower or a Restricted Subsidiary of the Borrower pursuant to an Acquisition permitted hereunder (and not created or incurred in connection with or in anticipation of such Acquisition) which is otherwise permitted by the terms of this Agreement.

 

“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of in excess of 50% of the Equity Interests of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

 

“Administrative Agent” means Bank of America, N.A. in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.

 

“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit F-2 or any other form approved by the Administrative Agent.

 

1

 

“Adjusted Total Debt to EBITDA Ratio” means, as of the last day of any Fiscal Quarter, the ratio of (a) the excess of Total Debt as of such day over Unrestricted Cash as of such day to (b) EBITDA for the Computation Period ending on such day.

 

“Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

 

“Aggregate Commitments” means the Commitments of all the Lenders.

 

“Agreement” means this Credit Agreement.

 

“Applicable Percentage” means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Commitment at such time, subject to adjustment as provided in Section 2.18.  If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

 

“Applicable Rate” 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 Administrative Agent pursuant to Section 6.01(c):

 

Applicable Rate

 

	
Pricing
   Level
    	
 
    	
Adjusted Total Debt
   to EBITDA Ratio
    	
 
    	
Commitment
   Fee
    	
 
    	
Eurodollar and
   Letters of Credit
    	
 
    	
Base Rate
    	
 
    
	
1
    	
 
    	
< 1.75:1
    	
 
    	
0.20
    	
%
    	
1.25
    	
%
    	
0.25
    	
%
    
	
2
    	
 
    	
3 1.75:1 but <   2.25:1
    	
 
    	
0.25
    	
%
    	
1.50
    	
%
    	
0.50
    	
%
    
	
3
    	
 
    	
3 2.25:1 but <   2.75:1
    	
 
    	
0.30
    	
%
    	
1.75
    	
%
    	
0.75
    	
%
    
	
4
    	
 
    	
3 2.75:1 but <   3.25:1
    	
 
    	
0.35
    	
%
    	
2.00
    	
%
    	
1.00
    	
%
    
	
5
    	
 
    	
3 3.25:1
    	
 
    	
0.40
    	
%
    	
2.25
    	
%
    	
1.25
    	
%
    

 

Any increase or decrease in the Applicable Rate 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 6.01(c); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Level 5 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 Applicable Rate in effect from the Closing Date through the date on which the Compliance Certificate for the period ended May 31, 2011 shall be determined based upon Pricing Level 3.

 

2

 

Notwithstanding anything to the contrary contained in this definition, the determination of the Applicable Rate for any period shall be subject to the provisions of Section 2.11(b).

 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

 

“Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its capacity as sole lead arranger and sole book manager.

 

“Asset Disposition” means any Transfer of property having a Disposition Value of $5,000,000 or more except:

 

(a)                                  any

 

(i)                                     Transfer from a Restricted Subsidiary to the Borrower or a Wholly-Owned Restricted Subsidiary;

 

(ii)                                  Transfer from the Borrower to a Wholly-Owned Restricted Subsidiary;

 

(iii)                               Transfer from the Borrower to a Restricted Subsidiary (other than a Wholly-Owned Restricted Subsidiary) or from a Restricted Subsidiary to another Restricted Subsidiary (other than a Wholly-Owned Restricted Subsidiary), which in either case is for Fair Market Value; and

 

(iv)                              Transfer of property from the Borrower or any Restricted Subsidiary in connection with a sale-and-leaseback transaction entered into within 365 days after the initial acquisition or construction of such property by the Borrower or any Restricted Subsidiary,

 

so long as, with respect to each of the foregoing, immediately before and immediately after the consummation of any such Transfer and after giving effect thereto, no Default or Event of Default exists; and

 

(b)                                 any Transfer made in the ordinary course of business and involving only property that is either (i) inventory held for rent or sale or (ii) equipment, fixtures, supplies or materials no longer required in the operation of the business of the Borrower or any of its Restricted Subsidiaries or that is obsolete.

 

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

 

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit F-1 or any other form approved by the Administrative Agent.

 

3

 

“Attorney Costs” means, with respect to any Person, all reasonable fees and charges of any counsel to such Person and all court costs and similar legal expenses.

 

“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended May 31, 2010, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

 

“Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to Section 2.07, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.

 

“Avborne IRB Documents” means (i) that certain Reimbursement Agreement dated as of October 3, 2005 between Avborne Heavy Maintenance, Inc., a Florida corporation (formerly known as Professional Modification Services, Inc.) and iStar Financial, Inc., a Maryland corporation, as modified by that certain Assignment and Assumption of Lender’s Interest in Reimbursement Agreement and Amendment to Reimbursement Agreement dated as of March 5, 2008 with iStar Financial Inc., a Maryland corporation (as Assignor), and JPMorgan Chase Bank, N.A., a national banking association (as Assignee); (ii) that certain Loan Agreement dated as of August 1, 1998, between the Miami-Dade Industrial Development Authority, a public body corporate and politic created and existing under the laws of the State of Florida (particularly Chapter 159, Part III, Florida Statutes), and Avborne Heavy Maintenance, Inc., a Florida corporation (formerly known as Professional Modification Services, Inc.), as amended by that certain First Amendment and Supplement to Loan Agreement, dated as of May 1, 2000 and (iii) that certain Guaranty of Payment and Performance dated as of March 5, 2008 by AAR Corp. to and for the benefit of JPMorgan Chase Bank, N.A., a national banking association (as Lender).

 

“Aviation Worldwide Acquisition” means the acquisition of Aviation Worldwide Services, L.L.C. and EP Aviation, LLC and their subsidiaries pursuant to the Membership Interest Purchase Agreement, dated as of March 25, 2010, by and among Xe Services LLC, AAR Airlift, LLC and AAR Corp., as amended as of April 7, 2010.

 

“Bank Product Agreements” means those certain cash management service agreements entered into from time to time between the Borrower or any Restricted Subsidiary and a Lender or its Affiliates in connection with any of the Bank Products.

 

“Bank Product Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees, and expenses owing by the Borrower or any Restricted Subsidiary to any Lender or its Affiliates pursuant to or evidenced by the Bank Product Agreements and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all such amounts that the Borrower or any Restricted Subsidiary is obligated to reimburse to the Administrative Agent or any Lender as a result of the Administrative Agent or such Lender purchasing participations or executing indemnities or reimbursement obligations with respect to

 

4

 

the Bank Products provided to the Borrower or any Restricted Subsidiary pursuant to the Bank Product Agreements.

 

“Bank Products” means any service or facility extended to the Borrower or any Restricted Subsidiary by any Lender or its Affiliates including:  (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) Hedging Agreements.

 

“Bank of America” means Bank of America, N.A. and its successors.

 

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Eurodollar Rate plus 1.00%.  The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate.  Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

 

“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.

 

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

 

“Borrower” has the meaning specified in the introductory paragraph hereto.

 

“Borrower Materials” means any materials and/or information provided by or on behalf of the Borrower to the Lenders and L/C Issuer under Section 6.01.

 

“Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the context may require.

 

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the City of Chicago and, if such day relates to any Eurodollar Rate Loan, means any such day that is also a London Banking Day.

 

“Capital Expenditures” means all expenditures which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Borrower, including expenditures in respect of Capital Leases, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.

 

5

 

“Capital Lease” means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of such Person.

 

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent, L/C Issuer or Swing Line Lender (as applicable) and the Lenders, as collateral for L/C Obligations, Obligations in respect of Swing Line Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the L/C Issuer or Swing Line Lender benefitting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to (a) the Administrative Agent and (b) the L/C Issuer or the Swing Line Lender (as applicable).  “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

 

“Cash Equivalent Investment” means, at any time, (a) any evidence of Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by a Lender or its holding company) rated at least A-l by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. or P-l by Moody’s Investors Service, Inc., (c) any deposit account, certificate of deposit, time deposit or banker’s acceptance, maturing not more than one year after such time, or any overnight Federal Funds transaction that is issued or sold by any Lender or its holding company (or by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000), (d) any repurchase agreement entered into with any Lender (or commercial banking institution of the nature referred to in clause (c)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) above and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Lender (or other commercial banking institution) thereunder, (e) money market accounts or mutual funds which invest exclusively in assets satisfying the foregoing requirements, and (f) other short term liquid investments approved in writing by the Administrative Agent.

 

“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, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) 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) or the United States regulatory authorities, 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.

 

6

 

“Change of Control” means the occurrence of any one or more of the following events: (a) any person (as such term is used in Section 13(d) of the Exchange Act), or two or more persons acting in concert, acquires beneficial ownership (as that term is defined in Rule 13d-3 under the Exchange Act), of more than 50% of the outstanding capital stock of the Borrower entitled to vote for the election of directors; or (b) either (x) a merger or consolidation or other business combination of the Borrower with one or more other corporations as a result of which the beneficial owners of the outstanding voting stock of the Borrower immediately prior to such business combination beneficially own (either by remaining outstanding or by being converted into voting securities of the surviving or resulting corporation or any parent thereof) less than 60% of the outstanding voting stock of the Borrower or the surviving or resulting corporation or any parent thereof immediately after such merger or consolidation or business combination, or (y) a transfer of substantially all of the assets of the Borrower other than to an entity of which the Borrower owns at least 80% of the voting stock; or (c) the election, over any period of time, to the Board of Directors of the Borrower without the recommendation or approval of the incumbent Board of Directors of the Borrower, of the lesser of (x) three directors, or (y) directors constituting a majority of the number of directors of the Borrower then in office.

 

“Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 10.01.

 

“Code” means the Internal Revenue Code of 1986.

 

“Commitment” means, as to each Lender, its obligation to (a) make Committed Loans to the Borrower pursuant to Section 2.01, (b) purchase participations in L/C Obligations, and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

 

“Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same Type and, in the case of Eurodollar Rate Committed Loans, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.

 

“Committed Loan” has the meaning specified in Section 2.01.

 

“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Committed Loans, pursuant to Section 2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

 

“Compliance Certificate” means a certificate substantially in the form of Exhibit E.

 

“Computation Period” means the period of four consecutive Fiscal Quarters ending on the last day of each Fiscal Quarter.

 

“Consolidated Assets” means, at any time, the total assets of the Borrower and its Restricted Subsidiaries which would be shown as assets on a consolidated balance sheet of the

 

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Borrower and its Restricted Subsidiaries as of such time prepared in accordance with GAAP, after eliminating all amounts properly attributable to minority interests, if any, in the stock and surplus of Restricted Subsidiaries.

 

“Consolidated Net Income” means, with respect to the Borrower and its Restricted Subsidiaries for any period, the net income (or loss) of the Borrower and its Restricted Subsidiaries for such period (taken as a cumulative whole), as determined in accordance with GAAP, after eliminating all offsetting debits and credits between the Borrower and its Restricted Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Borrower and its Restricted Subsidiaries in accordance with GAAP.

 

“Consolidated Rentals” means, for any Computation Period for the Borrower and its Restricted Subsidiaries, the aggregate fixed amounts payable by the Borrower and its Restricted Subsidiaries, determined on a consolidated basis, under Operating Leases.

 

“Contingent Liabilities” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including obligations incurred through an agreement, contingent or otherwise, by such Person: (a) to purchase such Debt or obligation or any property constituting security therefor; (b) to advance or supply funds (i) for the purchase or payment of such Debt or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such Debt or obligation; (c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such Debt or obligation of the ability of any other Person to make payment of the Debt or obligation; or (d) otherwise to assure the owner of such Debt or obligation against loss in respect thereof. In any computation of the Debt or other liabilities of the obligor under any Contingent Liability, the Debt or other obligations that are the subject of such Contingent Liability shall be assumed to be direct obligations of such obligor.

 

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

 

“Covenant Capital Expenditures” means Capital Expenditures minus, Excluded New Contract Aircraft Purchases.

 

“Credit Extension” means each of the following:  (a) a Borrowing and (b) an L/C Credit Extension.

 

“Debt” of any Person means, without duplication, (a) its liabilities for borrowed money determined in accordance with GAAP; (b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable and other accrued liabilities arising in the ordinary course of business but including all liabilities created or arising under any

 

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conditional sale or other title retention agreement with respect to any such property); (c) its Capital Lease obligations; (d) all liabilities for borrowed money (other than Nonrecourse Debt) secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities); (e) all obligations, contingent or otherwise, with respect to the face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit); (f) all Hedging Obligations of such Person; and (g) any Contingent Liability of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof.  Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.  For further certainty, obligations of the Borrower and its Restricted Subsidiaries as lessee in respect of operating leases (including “leveraged leases” and “synthetic leases” that are accounted for as operating leases) under GAAP shall not constitute “Debt” and obligations of the Borrower and its Subsidiaries in respect of intercompany expenses, billings and other charges between and among the Borrower and its Subsidiaries consistent with their historical business practices shall not constitute “Debt”.

 

“Debt Prepayment Application” means, with respect to any Transfer of property, the application by the Borrower or its Restricted Subsidiaries of cash in an amount equal to the Net Proceeds Amount with respect to such Transfer to pay Debt of the Borrower (other than (i) Subordinated Debt and (ii) Debt owing to the Borrower, any of its Subsidiaries or any Affiliate).

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

 

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

 

“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.

 

“Defaulting Lender” means, subject to Section 2.18(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, any L/C Issuer, and Swing Line Lender or any other Lender

 

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any other amount required to be paid by it hereunder (including in respect of its Loans or participations in respect of Letters of Credit or Swing Line Loans) within two Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower, the Administrative Agent or any L/C Issuer or Swing Line Lender in writing that it does not intend to comply with its funding obligations, or has made a public statement to that effect with respect to its funding obligations hereunder or under other agreements in which it commits to extend credit (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after request by the Administrative Agent or the Borrower, to confirm in a writing to the Administrative Agent and the Borrower that it will comply with its funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.18(b)) upon delivery of written notice of such determination to the Borrower, each L/C Issuer, each Swing Line Lender and each Lender.

 

“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

 

“Disposition Value” means, at any time, with respect to any property

 

(a)           in the case of property that does not constitute Restricted Subsidiary Stock, the book value thereof, valued at the time of such Disposition in good faith by the Borrower, and

 

(b)           in the case of property that constitutes Restricted Subsidiary Stock, an amount equal to that percentage of book value of the assets of the Restricted Subsidiary that issued such stock as is equal to the percentage that the book value of such Restricted Subsidiary Stock represents of the book value of all of the outstanding capital stock of such Restricted Subsidiary (assuming, in making such calculations, that all securities convertible into such capital stock are so converted and giving full effect to all transactions that would occur or be required in

 

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connection with such conversion) determined at the time of the Disposition thereof, in good faith by the Borrower.

 

“Dollar” and “$” mean lawful money of the United States.

 

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

 

“EBITDA” means, for any period, Consolidated Net Income for such period plus, to the extent deducted in determining such Consolidated Net Income, Interest Expense, income and franchise tax expense, depreciation and amortization, losses (less gains) from Asset Dispositions, other expenses and fees in connection with the consummation of the transaction evidenced by this Agreement, extraordinary losses (less extraordinary gains), write-offs or write-downs of certain aged inventory of the AAR Parts Trading Inc. business unit and aircraft purchased, or aircraft for which commitments to purchase were entered into, prior to September 11, 2001 (with the aggregate amount of such write-offs and write-downs not exceeding $5,690,000 at any time for purposes of this calculation), charges and other expenses incurred in connection with certain environmental remediation activities at the Borrower’s operations facilities in Michigan (with the aggregate of such charges and other expenses not exceeding $12,000,000 at any time for purposes of this calculation), transaction costs in an aggregate amount not to exceed $2,000,000 incurred in connection with the Aviation Worldwide Acquisition and the Huntington Debt (such transaction costs shall not be added back for any period after August 31, 2011), and transaction costs incurred in connection with the issuance by the Borrower of high-yield debt or equity, for such period.  EBITDA shall be calculated on a pro forma basis to give effect to any Acquisition consummated at any time on or after the first day of a Computation Period as if such Acquisition had been consummated on the first day of such Computation Period.

 

“EBITDAR” means, for any period, EBITDA plus, to the extent deducted from Consolidated Net Income when determining EBITDA, Consolidated Rentals for such period.

 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii), and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).

 

“Environmental Claim” means all claims, however asserted, by any governmental, regulatory or judicial authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment.

 

“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any of its Subsidiaries directly or indirectly resulting from or based upon

 

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(a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

 

“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate or the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

 

“Eurodollar Rate” means:

 

(a)           for any Interest Period with respect to a Eurodollar Rate Loan, the rate per annum equal to (i) the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or such other commercially available source providing quotations of BBA LIBOR as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two London Banking Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day

 

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of such Interest Period) with a term equivalent to such Interest Period or, (ii) if such rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the Eurodollar Rate Loan being made, continued or converted and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two London Banking Days prior to the commencement of such Interest Period; and

 

(b)           for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to (i) BBA LIBOR, at approximately 11:00 a.m., London time determined two London Banking Days prior to such date for Dollar deposits being delivered in the London interbank market for a term of one month commencing that day or (ii) if such published rate is not available at such time for any reason, the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the date of determination in same day funds in the approximate amount of the Base Rate Loan being made or maintained and with a term equal to one month would be offered by Bank of America’s London Branch to major banks in the London interbank Eurodollar market at their request at the date and time of determination.

 

“Eurodollar Rate Committed Loan” means a Committed Loan that bears interest at a rate based on clause (a) of the definition of “Eurodollar Rate.”

 

“Eurodollar Rate Loan” means a Eurodollar Rate Committed Loan.

 

“Event of Default” has the meaning specified in Section 8.01.

 

“Exchange Act” means the Securities Exchange Act of 1934.

 

“Excluded New Contract Aircraft Purchases” means New Aircraft Purchases not to exceed $100,000,000 at any point during the immediately preceding twelve month period.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) any backup withholding tax that is required by the Code to be withheld from amounts payable to a Lender that has failed to comply with clause (A) of Section 3.01(e)(ii), and (d) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 10.13), any United States  withholding tax that (i) is required to be imposed on amounts payable to such Foreign Lender pursuant to the Laws in force at the time such Foreign Lender becomes a party hereto (or designates a new Lending Office) or (ii) is attributable to such Foreign Lender’s failure or

 

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inability (other than as a result of a Change in Law) to comply with clause (B) of Section 3.01(e)(ii), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 3.01(a)(ii) or (c).

 

“Existing Credit Agreement” means that certain Credit Agreement, dated as of August 31, 2006, among AAR Corp., the lenders from time to time party thereto and Bank of America, N.A. (as successor by merger to LaSalle Bank National Association) as amended from time to time.

 

“Existing Letters of Credit” means those letters of credit set forth on Schedule 2.04 which shall be deemed to have been issued pursuant to the terms and conditions hereof and shall constitute Letters of Credit hereunder.

 

“Fair Market Value” means, at any time and with respect to any property, the sale value of such property that would be realized in an arm’s-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell).

 

“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.

 

“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

 

“Fee Letter” means the letter agreement, dated March 3, 2011, among the Borrower, the Administrative Agent and the Arranger.

 

“Fiscal Quarter” means a fiscal quarter of a Fiscal Year.

 

“Fiscal Year” means the fiscal year of the Borrower and its Subsidiaries, which period shall be the 12-month period ending on May 31st of each year.  References to a Fiscal Year with a number corresponding to any calendar year (e.g., “Fiscal Year 2011”) refer to the Fiscal Year ending on May 31st of such calendar year.

 

“Fixed Charge Coverage Ratio” means, for any Computation Period, the ratio of (a) the total for such period of EBITDAR for the Borrower and its Restricted Subsidiaries minus the sum of net income taxes paid in cash by the Borrower and its Restricted Subsidiaries and all Covenant Capital Expenditures incurred by the Borrower and its Restricted Subsidiaries to (b)

 

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the sum for such period of (i) cash Interest Expense paid by the Borrower and its Restricted Subsidiaries plus (ii) required payments of principal of Funded Debt for the Borrower and its Restricted Subsidiaries (excluding (A) the Loans and revolving loans under the Huntington Debt), (B) required principal payments under the Borrower’s notes due May 15, 2011, the aggregate initial principal amount of which is $55,000,000, (C) required principal payments under the Borrower’s convertible notes due March 1, 2014 and March 1, 2016, (D) required repurchases of the Borrower’s convertible notes due February 1, 2026, and (E) the loans under the Wood Dale Mortgage Documents) plus (iii) Consolidated Rentals paid by the Borrower and its Restricted Subsidiaries plus (iv) Restricted Payments paid by the Borrower during such Computation Period.

 

“Foreign Lender” means any Lender that is organized under the Laws of a jurisdiction other than that in which the Borrower is resident for tax purposes (including such a Lender when acting in the capacity of the L/C Issuer).  For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

 

“FRB” means the Board of Governors of the Federal Reserve System of the United States.

 

“Fronting Exposure” means, at any time there is a Defaulting Lender, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof.

 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.

 

“Funded Debt” means, as to any Person, all Debt of such Person that matures more than one year from the date of its creation (or is renewable or extendible, at the option of such Person, to a date more than one year from such date).

 

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

 

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to

 

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government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Debt or other obligation of the payment or performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Debt or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other obligation of any other Person, whether or not such Debt or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Debt to obtain any such Lien).  The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith.  The term “Guarantee” as a verb has a corresponding meaning.

 

“Guarantors” means, collectively, each existing and future direct and indirect Significant Subsidiary that is a Domestic Subsidiary and each other Domestic Subsidiary that from time to time shall upon the request of the Borrower become a party to the Guaranty.

 

“Guaranty” means the Guaranty made by the Guarantors in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit G.

 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

 

“Hedging Agreement” means any interest rate, currency or commodity swap agreement, cap agreement or collar agreement, and any other agreement or arrangement designed to protect a Person against fluctuations in interest rates, currency exchange rates or commodity prices.

 

“Hedging Obligation” means, with respect to any Person, any liability of such Person under any Hedging Agreement.

 

“Hedging Termination Value” means, in respect of any one or more Hedging Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedging Agreements, (a) for any date on or after the date such Hedging

 

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Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedging Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedging Agreements (which may include a Lender or any Affiliate of a Lender).

 

“Huntington Debt” means the Debt outstanding under that certain Master Loan Agreement dated as of April 22, 2010 between EP Aviation, LLC and The Huntington National Bank, and its successors and assigns, as amended, restated, supplemented or otherwise modified from time to time.

 

“Indemnified Taxes” means Taxes other than Excluded Taxes.

 

“Indemnitees” has the meaning specified in Section 10.04(b).

 

“Information” has the meaning specified in Section 10.07.

 

“Intangible Assets” means assets that are considered to be intangible assets under GAAP, including customer lists, goodwill, computer software, copyrights, trade names, trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount and capitalized research and development costs.

 

“Interest Expense” means for any period the consolidated net interest expense of the Borrower and its Restricted Subsidiaries for such period (including all imputed interest on Capital Leases).

 

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each calendar month and the Maturity Date.

 

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or (in the case of any Eurodollar Rate Committed Loan) converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:

 

(i)            any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

 

(ii)           any Interest Period pertaining to a Eurodollar Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically

 

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corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

 

(iii)          no Interest Period shall extend beyond the Maturity Date.

 

“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interest of another Person, (b) a loan, advance or capital contribution to, or Guarantee or assumption of Debt of, another Person or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit.  For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

 

“IRS” means the United States Internal Revenue Service.

 

“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

 

“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.

 

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

 

“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

 

“L/C Issuer” means Bank of America, Wells Fargo Bank, N.A., or another Lender designated by the Borrower and approved by the Administrative Agent, in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed

 

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Amounts, including all L/C Borrowings.  For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“Lender” has the meaning specified in the introductory paragraph hereto and, as the context requires, includes the Swing Line Lender.

 

“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.

 

“Letter of Credit” means any commercial letter of credit or any standby letter of credit issued hereunder and shall include the Existing Letters of Credit.

 

“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

 

“Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

 

“Letter of Credit Fee” has the meaning specified in Section 2.04(h).

 

“Letter of Credit Sublimit” means an amount equal to $50,000,000.  The Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

 

“Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.

 

“Loan Documents” means this Agreement, each Note, each Issuer Document, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.17 of this Agreement, the Fee Letter, and the Guaranty.

 

“Loan Parties” means, collectively, the Borrower and each Guarantor.

 

“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.

 

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“Material” means material in relation to the business, operations, affairs, financial condition, assets, properties or prospects of the Borrower and its Restricted Subsidiaries taken as a whole.

 

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the financial condition, operations, assets, business, or properties of the Borrower and its Restricted Subsidiaries taken as a whole; (b) a material impairment of the ability of the Borrower to perform any of the obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower of any Loan Document to which it is a party.

 

“Maturity Date” means April 12, 2016; provided, however, that  if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

 

“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

 

“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

 

“Net Cash Proceeds” means, with respect to any issuance of Equity Interests by the Borrower, the aggregate cash proceeds received by the Borrower pursuant to such issuance, net of the direct costs relating to such issuance (including sales and underwriters’ commissions).

 

“Net Proceeds Amount” means, with respect to any Transfer of any property by any Person, an amount equal to the difference of (a) the aggregate amount of the consideration (valued at the Fair Market Value of such consideration at the time of the consummation of such Transfer) received by such Person in respect of such Transfer, minus (b) all ordinary and reasonable out-of-pocket costs and expenses actually incurred by such Person in connection with such Transfer.

 

“Net Worth” means, as of any date, (a) the sum of (i) the par value (or value stated on the books of the corporation) of the capital stock (but excluding the par value of treasury stock and capital stock subscribed and unissued) of the Borrower and its Restricted Subsidiaries plus (ii) the amount of the paid-in capital and retained earnings of the Borrower and its Restricted Subsidiaries, in each case as such amounts would be shown on a consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of such time prepared in accordance with GAAP, minus (b) to the extent included in clause (a), all amounts properly attributable to minority interests, if any, in the stock and surplus of Restricted Subsidiaries and excluding the effect of write-offs or write-downs of certain aged inventory of the AAR Parts Trading Inc. business unit and aircraft purchased, or aircraft for which commitments to purchase were entered into, prior to September 11, 2001 (with the aggregate amount of such write-offs and write-downs not to exceed $5,690,000).

 

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“New Aircraft Purchases” means the purchase price paid for new aircraft acquired for purposes of supporting new contracts awarded to the Borrower or a Restricted Subsidiary (documented by a schedule provided by the Borrower to the Administrative Agent outlining a list of acquired aircraft, the purchase price, purchase date, and documents disclosing the award of a new contract (or an amendment to an existing contract) to be serviced by such acquired aircraft).  For purposes of calculating Fixed Charge Coverage Ratio, New Aircraft Purchases (i) for the Fiscal Quarter ended May 31, 2010 was $0, (ii) for the Fiscal Quarter ended August 31, 2010 was $26,000,000, (iii) for the Fiscal Quarter ended November 30, 2010 was $16,450,000, (iv) for the Fiscal Quarter ended February 28, 2011 was $6,985,000, and (v) for the Fiscal Quarter ended May 31, 2011 is $21,365,140.

 

“Nonrecourse Debt” means any Debt of any Person which, by the terms thereof, does not represent a claim against any general assets or revenues of such Person other than the specific assets that are subject to a Lien securing such Debt.

 

“Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit D.

 

“Obligations” means all obligations (monetary (including post-petition interest, allowed or not) or otherwise) of the Borrower and other Loan Parties under this Agreement and any other Loan Document including Attorney Costs and any reimbursement obligations of the Borrower in respect of Letters of Credit and surety bonds, all Hedging Obligations permitted hereunder which are owed to any Lender or its Affiliate or the Administrative Agent, and all Bank Products Obligations, all in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due.

 

“Operating Leases” means any lease of (or other agreement conveying the right to use) any real or personal property by the Borrower or any Restricted Subsidiary, as lessee, other than any Capital Lease.

 

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

 

“Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

 

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“Outstanding Amount” means (i) with respect to Committed Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Borrower of Unreimbursed Amounts.

 

“Participant” has the meaning specified in Section 10.06(d).

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Act” means the Pension Protection Act of 2006.

 

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

 

“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

 

“Permitted Receivables Transactions” means any sale of notes or accounts receivable by the Borrower or a Restricted Subsidiary so long as such sale constitutes a “true sale” under GAAP and recourse to the Borrower and its Restricted Subsidiaries in connection with such sale is limited to the retained portion of the notes or accounts receivable.

 

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.

 

“Platform” has the meaning specified in Section 10.02(b).

 

“Priority Debt” means without duplication the sum of (a) all Debt of the Borrower and/or the Restricted Subsidiaries secured by Liens other than those permitted by paragraphs (a) through (m), both inclusive, of Section 7.02, and (b) all other Debt of Restricted Subsidiaries other than (i) Debt owed to the Borrower or other Restricted Subsidiaries and (ii) Debt outstanding at the time such Person became a Subsidiary.

 

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“Property Reinvestment Application” means, with respect to any Transfer of property, the application of an amount equal to the Net Proceeds Amount with respect to such Transfer to acquire, develop or maintain assets used in the ordinary course of the Borrower’s or Restricted Subsidiaries’ business.

 

“Register” has the meaning specified in Section 10.06(c).

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

 

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

 

“Required Lenders” means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

 

“Responsible Officer” means the chief executive officer, the chief financial officer, the president and chief operating officer, the chief accounting officer, the treasurer or the assistant treasurer of a Loan Party and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party.  Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of the Borrower or any Restricted Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).

 

“Restricted Subsidiary” means each Subsidiary of the Borrower other than an Unrestricted Subsidiary.

 

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“Restricted Subsidiary Stock” means, with respect to any Person, the stock (or any options or warrants to purchase stock or other Equity Interests exchangeable for or convertible into stock) of any Restricted Subsidiary of such Person.

 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

 

“SEC Filings” means, as at any date, the Borrower’s Annual Report on Form 10-K prepared in compliance with the requirements therefor and filed with the SEC most recently prior to such date, and all of the Borrower’s Quarterly Reports on Forms 10-Q and/or other reports, including on Form 8-K, in each case prepared in compliance with the requirements therefor and filed with the SEC since the date of such Form 10-K filing.

 

“Significant Subsidiary” means at any time any Restricted Subsidiary which accounts for more than (i) 10% of the Consolidated Assets of the Borrower and its Restricted Subsidiaries or (ii) 10% of the consolidated revenue of the Borrower and its Restricted Subsidiaries; provided, however, that if no single Restricted Subsidiary qualifies as a Significant Subsidiary under clauses (i) or (ii), but two or more Restricted Subsidiaries, when taken together, account for more than 10% of the Consolidated Assets or the consolidated revenue of the Borrower and its Restricted Subsidiaries, then the Borrower shall designate Restricted Subsidiaries as Significant Subsidiaries until the remaining Restricted Subsidiaries that have not been so designated account, on an a combined basis, for less than 10% of Consolidated Assets and consolidated revenue for the Borrower and all of the Restricted Subsidiaries.

 

“Subordinated Debt” means any Debt of the Borrower that is (i) junior and subordinate in right of payment to the Loans and other Obligations pursuant to subordination provisions that have been approved in writing by the Required Lenders and (ii) has a final maturity no earlier than any of the Loans and a weighted average life to maturity (determined in accordance with standard financial practice) that is no shorter than any of the Loans.

 

“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person.  Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.05.

 

“Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning specified in Section 2.05(a).

 

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.05(b), which, if in writing, shall be substantially in the form of Exhibit C.

 

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“Swing Line Sublimit” means an amount equal to the lesser of (a) $20,000,000 and (b) the Aggregate Commitments.  The Swing Line Sublimit is part of, and not in addition to, the Aggregate Commitments.

 

“Tangible Net Worth” means for the Borrower and both its Restricted Subsidiaries and Unrestricted Subsidiaries on a consolidated basis an amount equal to: (a) Net Worth; plus (b) the aggregate principal amount of Subordinated Debt; less (c) Intangible Assets; less (d) the excess of the aggregate of the Borrower’s and the Restricted Subsidiaries’ Investments under clause (l) of Section 7.11 over an amount equal to 30% of Net Worth as reported by the Borrower in accordance with the terms hereof for the Fiscal Quarter immediately preceding the Fiscal Quarter in which such determination is being made.

 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

 

“Total Debt” means all Debt (other than Nonrecourse Debt) of the Borrower and its Restricted Subsidiaries, determined on a consolidated basis, excluding (a) Contingent Liabilities in respect of Debt of the Borrower or any Restricted Subsidiary, (b) Hedging Obligations, and (c) Debt of the Borrower to Restricted Subsidiaries and Debt of Restricted Subsidiaries to the Borrower or to other Restricted Subsidiaries (including all offsetting debits and credits between the Borrower and the Restricted Subsidiaries and all other items required to be eliminated in the course of preparing consolidated financial statements for the Borrower and the Restricted Subsidiaries in accordance with GAAP).

 

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

 

“Transfer” means, with respect to any Person, any transaction in which such Person sells, conveys, transfers or leases (as lessor) any of its property, including Restricted Subsidiary Stock.  For purposes of determining the application of the Net Proceeds Amount in respect of any Transfer, the Borrower may designate any Transfer as one or more separate Transfers each yielding a separate Net Proceeds Amount.  In any such case, the Disposition Value of any property subject to each such separate Transfer shall be determined by ratably allocating the aggregate Disposition Value of all property subject to all such separate Transfers to each such separate Transfer on a proportionate basis.

 

“Type” means with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.

 

“Unfunded Liability” means the amount (if any) by which the present value of all vested and unvested accrued benefits under all Pension Plans exceeds the fair market value of all assets allocable to those benefits, all determined as of the then most recent valuation date for each Pension Plan, based on the actuarial assumptions currently being used for funding each Pension Plan on an on-going basis.

 

“United States” and “U.S.” mean the United States of America.

 

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“Unreimbursed Amount” has the meaning specified in Section 2.04(c)(i).

 

“Unrestricted Cash” means, on any date, that portion of the Borrower’s and its domestic Restricted Subsidiaries’ cash and Cash Equivalent Investments held with any Lender in excess of $10,000,000 that is not encumbered by or subject to any Lien (including Liens permitted hereunder), setoff (other than ordinary course setoff rights of a depository bank arising under a bank depository agreement for customary fees, charges and other account-related expenses due to such depository bank thereunder), counterclaim, recoupment, defense or other right in favor of any Person.

 

“Unrestricted Subsidiary” means each of AAR Aircraft & Engine Sales & Leasing, Inc., each Subsidiary thereof (the “AAR AESL Group”), AAR International Financial Services, L.L.C., each Subsidiary thereof (the “AAR IFS Group”), and each other Subsidiary of the Borrower designated as such in a written notice to the Administrative Agent and the Lenders by the Borrower; provided, however, that (i) no such designation shall take effect until the receipt of such notice by the Administrative Agent and the Lenders, (ii) no such designation shall be made if a Default or Event of Default would result therefrom, and (iii) no such designation shall be made without the Required Lenders’ prior written consent if, after giving effect to such designation on a pro forma basis, EBITDA for the Borrower and the Restricted Subsidiaries, on a consolidated basis, would be reduced by more than 10% of consolidated EBITDA for the Borrower and the Restricted Subsidiaries for the four Fiscal Quarter period immediately preceding the Fiscal Quarter in which such designation is made.  If at any time a Subsidiary that is designated as an Unrestricted Subsidiary represents (i) more that 10% of the consolidated assets of the Borrower and its Subsidiaries or (ii) more than 10% of the consolidated revenue of the Borrower and its Subsidiaries, such Unrestricted Subsidiary shall automatically be redesignated as a Restricted Subsidiary; provided, however, that this sentence shall not apply to any Subsidiary that is a part of the AAR AESL Group or the AAR IFS Group.

 

“Wholly-Owned Subsidiary” means, as to any Person, a Subsidiary all of the Equity Interests of which (except directors’ qualifying Equity Interests) are at the time directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such Person.

 

“Wholly-Owned Restricted Subsidiary” means a Restricted Subsidiary of the Borrower that is a Wholly Owned Subsidiary.

 

“Wood Dale Mortgage Documents” means (i) that certain  Loan Agreement between AAR Wood Dale LLC and Principal Commercial Funding dated as of July 15, 2005, (ii) that certain Guaranty by AAR CORP. in favor of Principal Commercial Funding dated as of July 15, 2005 and (iii) that certain Lease Agreement between AAR CORP. and AAR Wood Dale LLC dated as of July 1, 2003, each as amended, restated or otherwise modified from time to time.

 

1.02        Other Interpretive Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

 

(a)           The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and

 

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“including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

 

(b)           In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

 

(c)           Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

 

1.03        Accounting Terms.

 

(a)           Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

 

(b)           Changes in GAAP.  If the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Section 6 or Section 7.11 (or any related definition) to eliminate or to take into account the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Section 6 or Section 7.13 (or any related definition) for such purpose), then the Borrower’s compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant (or related definition) is amended in a manner satisfactory to the Borrower and the Required Lenders.

 

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1.04        Rounding.  Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to three places more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

 

1.05        Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable).

 

1.06        Letter of Credit Amounts.  Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

 

ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS

 

2.01        Committed Loans.  Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Committed Loan”) to the Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender’s Commitment; provided, however, that after giving effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment.  Within the limits of each Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.01, prepay under Section 2.06, and reborrow under this Section 2.01.  Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.

 

2.02        Borrowings, Conversions and Continuations of Committed Loans.

 

(a)           Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurodollar Rate Committed Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Administrative Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Committed Loans or of any conversion of Eurodollar Rate Committed Loans to Base Rate Committed Loans, and (ii) on the requested date of any Borrowing of Base Rate Committed Loans.  Each telephonic notice by the Borrower pursuant to this Section 2.02(a) must be confirmed promptly by delivery to the Administrative Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower.  Each Borrowing of, conversion to or continuation of Eurodollar Rate Committed Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess

 

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thereof.  Except as provided in Sections 2.04(c) and 2.05(c), each Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $2,000,000 or a whole multiple of $1,000,000 in excess thereof.  Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurodollar Rate Committed Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto.  If the Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Committed Loans.  If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Committed Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

 

(b)           Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection.  In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of the Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Borrower; provided, however, that if, on the date the Committed Loan Notice with respect to such Borrowing is given by the Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and second, shall be made available to the Borrower as provided above.

 

(c)           Except as otherwise provided herein, a Eurodollar Rate Committed Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Committed Loan.  During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Committed Loans without the consent of the Required Lenders.

 

(d)           The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Committed Loans upon determination of such interest rate.  At any time that Base Rate Loans are outstanding, the Administrative Agent shall notify the Borrower and the Lenders of any change in Bank of

 

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America’s prime rate used in determining the Base Rate promptly following the public announcement of such change.

 

(e)           After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Committed Loans.

 

2.03        [Reserved].

 

2.04        Letters of Credit.

 

(a)           The Letter of Credit Commitment.

 

(i)            Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.04, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of the Borrower or its Subsidiaries, and to amend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of the Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit.  Each request by the Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence.  Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.  All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.

 

(ii)           The L/C Issuer shall not issue any Letter of Credit, if:

 

(A)          the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance, unless the Required Lenders have approved such expiry date; or

 

(B)           the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the Lenders have approved such expiry date.

 

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(iii)          The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:

 

(A)          any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

 

(B)           the issuance of the Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;

 

(C)           except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit is in an initial stated amount less than $10,000;

 

(D)          the Letter of Credit is to be denominated in a currency other than Dollars, euros, British pounds sterling or UAE dirhams;

 

(E)           any Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Borrower or such Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.18(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or

 

(F)           the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.

 

(iv)          The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.

 

(v)           The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.

 

(vi)          The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer

 

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shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

 

(b)           Procedures for Issuance and Amendment of Letters of Credit.

 

(i)            Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Borrower delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Borrower.  Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be.  In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer:  (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require.  In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require.  Additionally, the Borrower shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.

 

(ii)           Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Borrower and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written notice from any Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices.  Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and

 

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unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Letter of Credit.  In the event that the L/C Issuer issues a Letter of Credit denominated in a currency other than Dollars, euros, British pounds sterling or UAE dirhams (or amends such a Letter of Credit to increase the stated amount) the L/C Issuer shall promptly notify each Lender of such issuance or amendment.

 

(iii)          Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.

 

(c)           Drawings and Reimbursements; Funding of Participations.

 

(i)            Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit together with, in the case of a commercial Letter of Credit, a sight draft from the beneficiary, the L/C Issuer shall notify the Borrower and the Administrative Agent thereof.  Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the Borrower shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing as determined by the L/C Issuer.  If the Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof.  In such event, the Borrower shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice) as determined by the Administrative Agent.  Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.04(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

(ii)           Each Lender shall upon any notice pursuant to Section 2.04(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer at the Administrative Agent’s Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.04(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Borrower in such amount.  The Administrative Agent shall remit the funds so received to the L/C Issuer.

 

(iii)          With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in

 

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Section 4.02 cannot be satisfied or for any other reason, the Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate.  In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.04.

 

(iv)          Until each Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.04(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

 

(v)           Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.04(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Borrower of a Committed Loan Notice).  No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

 

(vi)          If any Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be.  A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

 

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(d)           Repayment of Participations.

 

(i)            At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.04(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Borrower or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Administrative Agent.

 

(ii)           If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.04(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)           Obligations Absolute.  The obligation of the Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

 

(i)            any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

 

(ii)           the existence of any claim, counterclaim, setoff, defense or other right that the Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

 

(iii)          any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

 

(iv)          any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any

 

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beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

 

(v)           any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or any Subsidiary.

 

The Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Borrower’s instructions or other irregularity, the Borrower will immediately notify the L/C Issuer.  The Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

 

(f)            Role of L/C Issuer.  Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document.  None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document.  The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement.  None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.04(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit.  In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.  Each L/C Issuer shall provide to the Administrative Agent a list of outstanding Letters of Credit (together with amounts) issued by it on a monthly basis; the Administrative Agent shall provide a copy of such list to any Lender upon request.

 

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(g)           Applicability of ISP and UCP.  Unless otherwise expressly agreed by the L/C Issuer and the Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i)  the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each commercial Letter of Credit.

 

(h)           Letter of Credit Fees.  The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage a Letter of Credit fee (the “Letter of Credit Fee”)  for each Letter of Credit equal to the Applicable Rate times the daily amount available to be drawn under such Letter of Credit; provided, however, any Letter of Credit Fees otherwise payable for the account of a Defaulting Lender with respect to any Letter of Credit as to which such Defaulting Lender has not provided Cash Collateral satisfactory to the L/C Issuer pursuant to this Section 2.04 shall be payable, to the maximum extent permitted by applicable Law, to the other Lenders in accordance with the upward adjustments in their respective Applicable Percentages allocable to such Letter of Credit pursuant to Section 2.18(a)(iv), with the balance of such fee, if any, payable to the L/C Issuer for its own account.  For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each Fiscal Quarter, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears.  If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each standby Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.

 

(i)            Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.  The Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate of 0.125% per annum, computed on the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears.  Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand.  For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, the Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect.  Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

 

(j)            Conflict with Issuer Documents.  In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

 

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(k)           Letters of Credit Issued for Subsidiaries.  Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit.  The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefit from the businesses of such Subsidiaries.

 

2.05        Swing Line Loans.

 

(a)           The Swing Line.  Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.05, may in its sole discretion make loans (each such loan, a “Swing Line Loan”) to the Borrower from time to time on any Business Day during the Availability Period in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Commitment; provided, however, that after giving effect to any Swing Line Loan, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, plus such Lender’s Applicable Percentage of the Outstanding Amount of all L/C Obligations, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s Commitment, and provided, further, that the Borrower shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan.  Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.05, prepay under Section 2.06, and reborrow under this Section 2.05.  Each Swing Line Loan shall be a Base Rate Loan.  Immediately upon the making of a Swing Line Loan, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan.

 

(b)           Borrowing Procedures.  Each Swing Line Borrowing shall be made upon the Borrower’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by telephone.  Each such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000, and (ii) the requested borrowing date, which shall be a Business Day.  Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Borrower.  Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent (by telephone or in writing) of the contents thereof.  Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any Lender) prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first

 

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proviso to the first sentence of Section 2.05(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Borrower.

 

(c)           Refinancing of Swing Line Loans.

 

(i)            The Swing Line Lender at any time in its sole discretion may request, on behalf of the Borrower (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each Lender make a Base Rate Committed Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding.  Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02.  The Swing Line Lender shall furnish the Borrower with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent.  Each Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in immediately available funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.05(c)(ii), each Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Borrower in such amount.  The Administrative Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)           If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.05(c)(i), the request for Base Rate Committed Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the Lenders fund its risk participation in the relevant Swing Line Loan and each Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such participation.

 

(iii)          If any Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.05(c) by the time specified in Section 2.05(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender

 

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in connection with the foregoing.  If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or funded participation in the relevant Swing Line Loan, as the case may be.  A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

 

(iv)          Each Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.05(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrower or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Committed Loans pursuant to this Section 2.05(c) is subject to the conditions set forth in Section 4.02.  No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to repay Swing Line Loans, together with interest as provided herein.

 

(d)           Repayment of Participations.

 

(i)            At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.

 

(ii)           If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate.  The Administrative Agent will make such demand upon the request of the Swing Line Lender.  The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

 

(e)           Interest for Account of Swing Line Lender.  The Swing Line Lender shall be responsible for invoicing the Borrower for interest on the Swing Line Loans.  Until each Lender funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.05 to refinance such Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

 

(f)            Payments Directly to Swing Line Lender.  The Borrower shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.

 

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2.06        Prepayments.

 

(a)           The Borrower may, upon notice to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Committed Loans and (B) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate Committed Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding.  Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid and, if Eurodollar Rate Committed Loans are to be prepaid, the Interest Period(s) of such Loans.  The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05.  Subject to Section 2.18, each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.

 

(b)           [Reserved].

 

(c)           The Borrower may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000.  Each such notice shall specify the date and amount of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

 

(d)           If for any reason the Total Outstandings at any time exceed the Aggregate Commitments then in effect, the Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided, however, that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.06(d) unless after the prepayment in full of the Committed Loans and Swing Line Loans the Total Outstandings exceed the Aggregate Commitments then in effect.

 

2.07        Termination or Reduction of Commitments.  The Borrower may, upon notice to the Administrative Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $2,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any

 

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concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any reduction of the Aggregate Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess.  The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments.  Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage.  All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.

 

2.08        Repayment of Loans.

 

(a)           The Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.

 

(b)           The Borrower shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.

 

2.09        Interest.

 

(a)           Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Committed Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period plus the Applicable Rate; (ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.

 

(b)           (i)            If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(ii)           If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

(iii)          Upon the request of the Required Lenders, while any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

 

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(iv)          Accrued and unpaid interest on past due amounts (including interest on past due interest to the extent permitted by applicable Law) shall be due and payable upon demand.

 

(c)           Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein.  Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

 

2.10        Fees.  In addition to certain fees described in subsections (h) and (i) of Section 2.04:

 

(a)           Commitment Fee.  The Borrower shall pay to the Administrative Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate times the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.18.  The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each Fiscal Quarter, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period.  The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.

 

(b)           Other Fees.  (i) The Borrower shall pay to the Arranger and the Administrative Agent for their own respective accounts fees in the amounts and at the times specified in the Fee Letter.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

(ii)           The Borrower shall pay to the Lenders such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

 

2.11        Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.

 

(a)           All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year).  Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.13(a),

 

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bear interest for one day.  Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

 

(b)           If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Adjusted Total Debt to EBITDA Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Adjusted Total Debt to EBITDA Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders or the L/C Issuer, as the case may be, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent, any Lender or the L/C Issuer), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period.  This paragraph shall not limit the rights of the Administrative Agent, any Lender or the L/C Issuer, as the case may be, under Section 2.04(c)(iii), 2.04(h) or 2.09(b) or under Article VIII.  The Borrower’s obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.

 

2.12        Evidence of Debt.

 

(a)           The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business.  The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrower and the interest and payments thereon.  Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.

 

(b)           In addition to the accounts and records referred to in subsection (a), each Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans.  In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.

 

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2.13        Payments Generally; Administrative Agent’s Clawback.

 

(a)           General.  All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.  Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.  The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

 

(b)           (i) Funding by Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans.  If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing.  Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

 

(ii)           Payments by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders

 

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or the L/C Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

A notice of the Administrative Agent to any Lender or the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.

 

(c)           Failure to Satisfy Conditions Precedent.  If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.

 

(d)           Obligations of Lenders Several.  The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint.  The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c).

 

(e)           Funding Source.  Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

 

2.14        Sharing of Payments by Lenders.  If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so

 

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that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that:

 

(i)            if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

 

(ii)           the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), (y) the application of Cash Collateral provided for in Section 2.17, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Borrower or any Affiliate thereof (as to which the provisions of this Section shall apply).

 

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

 

2.15        [Reserved].

 

2.16        Increase in Commitments.

 

(a)           Request for Increase.  Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Borrower may from time to time, request an increase in the Aggregate Commitments by an amount (for all such requests) not exceeding $50,000,000; provided that (i) any such request for an increase shall be in a minimum amount of $5,000,000.  At the time of sending such notice, the Borrower (in consultation with the Administrative Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).

 

(b)           Lender Elections to Increase.  Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase.  Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

 

(c)           Notification by Administrative Agent; Additional Lenders.  The Administrative Agent shall notify the Borrower and each Lender of the Lenders’ responses to each request made hereunder.  To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the L/C Issuer and the Swing Line Lender (which approvals shall not be

 

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unreasonably withheld), the Borrower may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to the Administrative Agent and its counsel.

 

(d)           Effective Date and Allocations.  If the Aggregate Commitments are increased in accordance with this Section, the Administrative Agent and the Borrower shall determine the effective date (the “Increase Effective Date”) and the final allocation of such increase.  The Administrative Agent shall promptly notify the Borrower and the Lenders of the final allocation of such increase and the Increase Effective Date.

 

(e)           Conditions to Effectiveness of Increase.  As a condition precedent to such increase, the Borrower shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Borrower, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.16, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01, and (B) no Default exists.  The Borrower shall prepay any Committed Loans outstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding Committed Loans ratable with any revised Applicable Percentages arising from any nonratable increase in the Commitments under this Section.

 

(f)            Conflicting Provisions.  This Section shall supersede any provisions in Section 2.14 or 10.01 to the contrary.

 

2.17        Cash Collateral.

 

(a)           Certain Credit Support Events.  Upon the request of the Administrative Agent or the L/C Issuer (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, the Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations.  At any time that there shall exist a Defaulting Lender, immediately upon the request of the Administrative Agent, the L/C Issuer or the Swing Line Lender, the Borrower shall deliver to the Administrative Agent Cash Collateral in an amount sufficient to cover all Fronting Exposure (after giving effect to Section 2.18(a)(iv) and any Cash Collateral provided by the Defaulting Lender).

 

(b)           Grant of Security Interest.  All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in blocked, interest bearing deposit accounts at the L/C Issuer.  The Borrower, and to the extent provided by any Lender, such Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit

 

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of the Administrative Agent, the L/C Issuer and the Lenders (including the Swing Line Lender), and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.17(c).  If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent as herein provided, or that the total amount of such Cash Collateral is less than the applicable Fronting Exposure and other obligations secured thereby, the Borrower or the relevant Defaulting Lender will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency.

 

(c)           Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.17 or Sections 2.04, 2.05, 2.06, 2.18 or 8.02 in respect of Letters of Credit or Swing Line Loans shall be held and applied to the satisfaction of the specific L/C Obligations, Swing Line Loans, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

 

(d)           Release.  Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi))) or (ii) the Administrative Agent’s good faith determination that there exists excess Cash Collateral; provided, however, (x) that Cash Collateral furnished by or on behalf of a Loan Party shall not be released during the continuance of a Default or Event of Default (and following application as provided in this Section 2.17 may be otherwise applied in accordance with Section 8.03), and (y) the Person providing Cash Collateral and the L/C Issuer or Swing Line Lender, as applicable, may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.

 

2.18        Defaulting Lenders.

 

(a)           Adjustments.  Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:

 

(i)            Waivers and Amendments.  That Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in Section 10.01.

 

(ii)           Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise, and including any amounts made available to the Administrative Agent by that

 

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Defaulting Lender pursuant to Section 10.08), shall be applied at such time or times as may be determined by the Administrative Agent as follows:  first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third, if so determined by the Administrative Agent or requested by the L/C Issuer or Swing Line Lender, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Swing Line Loan or Letter of Credit; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or Swing Line Lender against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or L/C Borrowings in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or L/C Borrowings were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and L/C Borrowings owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or L/C Borrowings owed to, that Defaulting Lender.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.18(a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

 

(iii)          Certain Fees.  That Defaulting Lender (x) shall not be entitled to receive any commitment fee pursuant to Section 2.10(a) (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender) for any period during which that Lender is a Defaulting Lender and (y) shall be limited in its right to receive Letter of Credit Fees as provided in Section 2.04(h).

 

(iv)          Reallocation of Applicable Percentages to Reduce Fronting Exposure.  During any period in which there is a Defaulting Lender, for purposes of computing the amount of the obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit or Swing Line Loans pursuant to Sections 2.04 and 2.05, the “Applicable Percentage” of each non-Defaulting Lender shall be computed without giving effect to the Commitment of that Defaulting Lender; provided, that, (i) each such reallocation shall be given effect only if, at the date the applicable Lender

 

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becomes a Defaulting Lender, no Default or Event of Default exists; and (ii) the aggregate obligation of each non-Defaulting Lender to acquire, refinance or fund participations in Letters of Credit and Swing Line Loans shall not exceed the positive difference, if any, of (1) the Commitment of that non-Defaulting Lender minus (2) the aggregate Outstanding Amount of the Committed Loans of that Lender.

 

(b)           Defaulting Lender Cure.  If the Borrower, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Committed Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders in accordance with their Applicable Percentages (without giving effect to Section 2.18(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

 

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY

 

3.01        Taxes.

 

(a)           Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes.  (i) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall to the extent permitted by applicable Laws be made free and clear of and without reduction or withholding for any Taxes.  If, however, applicable Laws require the Borrower or the Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by the Borrower or the Administrative Agent, as the case may be, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.

 

(ii)           If the Borrower or the Administrative Agent shall be required by the Code to withhold or  deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Administrative Agent shall withhold or make such deductions as are determined by the Administrative Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Administrative Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this

 

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Section) the Administrative Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such withholding or deduction been made.

 

(b)           Payment of Other Taxes by the Borrower.  Without limiting the provisions of subsection (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Laws.

 

(c)           Tax Indemnifications.  (i) Without limiting the provisions of subsection (a) or (b) above, the Borrower shall, and does hereby, indemnify the Administrative Agent, each Lender and the L/C Issuer, and shall make payment in respect thereof within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) withheld or deducted by the Borrower or the Administrative Agent or paid by the Administrative Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  The Borrower shall also, and does hereby, indemnify the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, for any amount which a Lender or the L/C Issuer for any reason fails to pay indefeasibly to the Administrative Agent as required by clause (ii) of this subsection.  A certificate as to the amount of any such payment or liability delivered to the Borrower by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.

 

(ii)           Without limiting the provisions of subsection (a) or (b) above, each Lender and the L/C Issuer shall, and does hereby, indemnify the Borrower and the Administrative Agent, and shall make payment in respect thereof within 10 days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Borrower or  the Administrative Agent) incurred by or asserted against the Borrower or the Administrative Agent by any Governmental Authority as a result of the failure by such Lender or the L/C Issuer, as the case may be, to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by such Lender or the L/C Issuer, as the case may be, to the Borrower or the Administrative Agent pursuant to subsection (e).  Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).  The agreements in this clause (ii) shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all other Obligations.

 

(d)           Evidence of Payments.  Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by the Borrower or by the Administrative

 

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Agent to a Governmental Authority as provided in this Section 3.01, the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

 

(e)           Status of Lenders; Tax Documentation.  (i) Each Lender shall deliver to the Borrower and to the Administrative Agent, at the time or times prescribed by applicable Laws or when reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable Laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of all payments to be made to such Lender by the Borrower pursuant to this Agreement or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction.

 

(ii)           Without limiting the generality of the foregoing, if the Borrower is resident for tax purposes in the United States,

 

(A)          any Lender that is a “United States person” within the meaning of Section 7701(a)(30) of the Code shall deliver to the Borrower and the Administrative Agent executed originals of Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable Laws or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent, as the case may be, to determine whether or not such Lender is subject to backup withholding or information reporting requirements; and

 

(B)           each Foreign Lender that is entitled under the Code or any applicable treaty to an exemption from or reduction of withholding tax with respect to payments hereunder or under any other Loan Document shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

 

(I)            executed originals of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

 

(II)           executed originals of Internal Revenue Service Form W-8ECI,

 

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(III)         executed originals of Internal Revenue Service Form W-8IMY and all required supporting documentation,

 

(IV)         in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) executed originals of Internal Revenue Service Form W-8BEN, or

 

(V)           executed originals of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in United States Federal withholding tax together with such supplementary documentation as may be prescribed by applicable Laws to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made.

 

(iii)          Each Lender shall promptly (A) notify the Borrower and the Administrative Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction, and (B) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re-designation of its Lending Office) to avoid any requirement of applicable Laws of any jurisdiction that the Borrower or the Administrative Agent make any withholding or deduction for taxes from amounts payable to such Lender.

 

(f)            Treatment of Certain Refunds.  Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be.  If the Administrative Agent, any Lender or the L/C Issuer determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by the Administrative Agent, such Lender or the L/C Issuer, as the case may be, 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 Administrative Agent, such Lender or the L/C Issuer, 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 Administrative Agent, such Lender or the L/C Issuer in the event the Administrative Agent, such Lender or the L/C Issuer is required to repay such refund to such Governmental Authority.  This subsection shall not be construed to require the Administrative

 

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Agent, any Lender or the L/C Issuer 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.

 

3.02        Illegality.  If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to the Eurodollar Rate, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (i) any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to Eurodollar Rate Committed Loans shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurodollar Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, (x) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurodollar Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurodollar Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurodollar Rate component thereof until the Administrative is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurodollar Rate.  Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.

 

3.03        Inability to Determine Rates.  If the Required Lenders determine that for any reason in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Committed Loan or in connection with an existing or proposed Base Rate Loan, or (c) the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Committed Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, (x) the obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be suspended, and (y) in the event of a determination described in the preceding sentence with respect to the Eurodollar Rate component of the Base Rate, the utilization of the Eurodollar Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (upon the instruction

 

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of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Committed Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.

 

3.04        Increased Costs; Reserves on Eurodollar Rate Loans.

 

(a)           Increased Costs Generally.  If any Change in Law shall:

 

(i)            impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e)) or the L/C Issuer;

 

(ii)           subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or

 

(iii)          impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;

 

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan the interest on which is determined by reference to the Eurodollar Rate (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

 

(b)           Capital Requirements.  If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Borrower will pay

 

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to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.

 

(c)           Certificates for Reimbursement.  A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

 

(d)           Delay in Requests.  Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’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).

 

(e)           Reserves on Eurodollar Rate Loans.  The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.

 

3.05        Compensation for Losses.  Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

 

(a)           any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

 

(b)           any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or

 

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(c)           any assignment of a Eurodollar Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.13;

 

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained.  The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

 

For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Committed Loan made by it at the Eurodollar Rate  for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Committed Loan was in fact so funded.

 

3.06        Mitigation Obligations; Replacement of Lenders.

 

(a)           Designation of a Different Lending Office.  If any Lender requests compensation under Section 3.04, or the Borrower is required to pay any additional amount to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then such Lender or the L/C Issuer shall, as applicable, 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 such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.

 

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with Section 10.13.

 

3.07        Survival.  All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.

 

ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

 

4.01        Conditions of Initial Credit Extension.  The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

 

(a)           The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly

 

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executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Administrative Agent and each of the Lenders:

 

(i)            executed counterparts of this Agreement and the Guaranty, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

 

(ii)           a Note executed by the Borrower in favor of each Lender requesting a Note;

 

(iii)          such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

 

(iv)          such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each of the Borrower and Loan Parties is validly existing, in good standing and qualified to engage in business in its state of incorporation (or formation) and in each other state requested by the Administrative Agent;

 

(v)           a favorable opinion of Schiff Hardin LLP, counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, substantially in the form attached hereto as Exhibit H;

 

(vi)          a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

 

(vii)         a certificate signed by a Responsible Officer of the Borrower certifying (A) that the conditions specified in Sections 4.02(a) and (b) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect;

 

(viii)        evidence that all insurance required to be maintained pursuant to the Loan Documents has been obtained and is in effect;

 

(ix)           evidence that the Existing Credit Agreement has been or concurrently with the Closing Date is being terminated and all Liens securing obligations under the Existing Credit Agreement have been or concurrently with the Closing Date are being released; and

 

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(x)            such other assurances, certificates, documents, consents or opinions as the Administrative Agent, the L/C Issuer, the Swing Line Lender or the Required Lenders reasonably may require.

 

(b)           Any fees required to be paid on or before the Closing Date shall have been paid.

 

(c)           Unless waived by the Administrative Agent, the Borrower shall have paid all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

 

(d)           The Closing Date shall have occurred on or before April 12, 2011

 

Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

 

4.02        Conditions to all Credit Extensions.  The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of Eurodollar Rate Committed Loans) is subject to the following conditions precedent:

 

(a)           The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01.

 

(b)           No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

 

(c)           The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

 

Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Eurodollar Rate Committed Loans) submitted by the Borrower shall be deemed to be a representation and

 

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warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V. REPRESENTATIONS AND WARRANTIES

 

The Borrower represents and warrants to the Administrative Agent and the Lenders that:

 

5.01        Organization.  Each of the Borrower and each Restricted Subsidiary is validly existing and in good standing under the laws of its jurisdiction of organization; and each of the Borrower and each Restricted Subsidiary is duly qualified to do business in each jurisdiction where, because of the nature of its activities or properties, such qualification is required, except for such jurisdictions where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect.

 

5.02        Authorization; No Conflict.  The Borrower and each Restricted Subsidiary 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 Restricted Subsidiary of each Loan Document to which such Person is a party, and the borrowings 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 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 Restricted Subsidiary 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 Restricted Subsidiary (other than Liens, if any, in favor of the Administrative Agent created pursuant to the Loan Documents).

 

5.03        Validity and Binding Nature.  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.

 

5.04        Financial Condition; No Material Adverse Effect.

 

(a)           The Audited Financial Statements, copies of which have been delivered to each 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 Borrower and its Subsidiaries as at such dates and the results of their operations for the periods then ended.

 

(b)           Since the date of the Audited Financial Statements, there has been no change in the financial condition, operations, assets, business or properties of the Borrower and the

 

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Restricted Subsidiaries, taken as a whole that has had or could reasonably be expected to have a Material Adverse Effect.

 

5.05        Litigation and Contingent Liabilities.  Except as set forth on Schedule 5.05, 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 Restricted Subsidiary which could reasonably be expected to have a Material Adverse Effect.  Other than any liability incident to such litigation or proceedings, neither the Borrower nor any Restricted Subsidiary has any material contingent liabilities not listed on Schedule 5.05 or permitted by Section 7.01.

 

5.06        Ownership of Properties; Liens.  Each of the Borrower and each of its Restricted Subsidiaries owns good and, in the case of real property,  sufficient title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights) that individually or in the aggregate are Material, free and clear of all Liens, charges and claims (including infringement claims with respect to patents, trademarks, service marks, copyrights and the like) except as permitted by Section 7.02.

 

5.07        Equity Ownership; Subsidiaries.  All issued and outstanding Equity Interests of the Borrower and each Restricted Subsidiary are duly authorized and validly issued, fully paid, non-assessable, and free and clear of all Liens other than those in favor of the Administrative Agent (if any), and such securities were issued in compliance with all applicable state and federal laws concerning the issuance of securities.  Schedule 5.07 sets forth the authorized Equity Interests of each Restricted Subsidiary and each Unrestricted Subsidiary as of the Closing Date and identifies each owner of such Equity Interests and their percentage of the total Equity Interests which each owner owns.  Each Restricted Subsidiary is a Wholly-Owned Subsidiary except as set forth on Schedule 5.07.  As of the Closing Date, except as set forth on Schedule 5.07, there are no pre-emptive or other outstanding rights, options, warrants, conversion rights or other similar agreements or understandings for the purchase or acquisition of any Equity Interests of the Borrower or any Restricted Subsidiary.  The Borrower shall update Schedule 5.07 promptly after (a) the creation or acquisition by the Borrower or a Subsidiary thereof of a new Subsidiary, (b) any change in the ownership structure of any Wholly-Owned Restricted Subsidiary that results in such Restricted Subsidiary no longer being a Wholly-Owned Subsidiary or (c) any change in a Subsidiary’s designation as an Unrestricted Subsidiary or a Restricted Subsidiary; provided, such update in and of itself shall not cause such action to be permitted hereunder if such action is otherwise prohibited hereunder.

 

5.08        Pension Plans.

 

(a)           Each Pension Plan complies in all material respects with all applicable requirements of law and regulations.  No contribution failure under Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan has occurred with respect to any Pension Plan, sufficient to give rise to a Lien under Section 302(f) of ERISA, or otherwise to have a Material Adverse Effect.  There are no pending or, to the knowledge of the Borrower, threatened, claims, actions, investigations or lawsuits against any Pension Plan, any fiduciary of any Pension Plan, the Borrower or any ERISA Affiliate with respect to a Pension Plan or a Multiemployer

 

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Plan which could reasonably be expected to have a Material Adverse Effect.  Neither the Borrower nor any ERISA Affiliate has engaged in any prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Pension Plan or Multiemployer Plan which would subject that Person to any material liability.  Within the past five years, neither the Borrower nor any ERISA Affiliate has engaged in a transaction which resulted in a Pension Plan with an Unfunded Liability being transferred out of the group of ERISA Affiliates, which could reasonably be expected to have a Material Adverse Effect.  No ERISA Event has occurred or is reasonably expected to occur with respect to any Pension Plan, which could reasonably be expected to have a Material Adverse Effect.

 

(b)           All contributions (if any) have been made to any Multiemployer Plan that are required to be made by the Borrower or any ERISA Affiliate under the terms of the plan or of any collective bargaining agreement or by applicable law; neither the Borrower nor any ERISA Affiliate has withdrawn or partially withdrawn from any Multiemployer Plan, incurred any withdrawal liability with respect to any such plan or received notice of any claim or demand for withdrawal liability or partial withdrawal liability from any such plan, and no condition has occurred which, if continued, could result in a withdrawal or partial withdrawal from any such plan; and neither the Borrower nor any ERISA Affiliate has received any notice that any Multiemployer Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of any excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent.

 

5.09        Investment Company Act.  Neither the Borrower nor any Restricted Subsidiary is an “investment company” or a company “controlled” by an “investment company” or a “subsidiary” of an “investment company,” within the meaning of the Investment Company Act of 1940.

 

5.10        Regulation U.  The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying “margin stock” as defined in Regulation U of the FRB.

 

5.11        Taxes.  Each of the Borrower and each Restricted Subsidiary has timely filed all tax returns and reports required by law to have been filed by it and has paid all taxes and governmental charges due and payable with respect to such return, except any such taxes or charges (a) which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books or (b) the filing or amount of which is not individually or in the aggregate Material.  The Borrower and the Restricted Subsidiaries have made adequate reserves on their books and records in accordance with GAAP for all taxes that have accrued but which are not yet due and payable.  Neither the Borrower nor any Restricted Subsidiary has participated in any transaction that relates to a year of the taxpayer (which is still open under the applicable statute of limitations) which is a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(2) (irrespective of the date when the transaction was entered into).

 

5.12        Solvency; Etc..  On the Closing Date, and immediately prior to and after giving effect to the issuance of each Letter of Credit and each borrowing hereunder and the use of the

 

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proceeds thereof, with respect to the Borrower and the Restricted Subsidiaries, taken as a whole, (a) the fair value of their assets is greater than the amount of their liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated in accordance with GAAP, (b) the present fair saleable value of their assets is not less than the amount that will be required to pay the probable liability on their debts as they become absolute and matured, (c) they are able to realize upon their assets and pay their debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business, (d) they do not intend to, and do not believe that they will, incur debts or liabilities beyond their ability to pay as such debts and liabilities mature and (e) they are not engaged in business or a transaction, and are not about to engage in business or a transaction, for which their property would constitute unreasonably small capital.

 

5.13        Environmental Matters.  As of the Closing Date, except as disclosed in the most recent SEC Filings, neither the Borrower nor any Restricted Subsidiary has knowledge of any liability or has received any notice of any liability, and no proceeding has been instituted raising any liability against the Borrower or any of its Restricted Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect individually or in the aggregate.  As of the Closing Date, except as disclosed in the most recent SEC Filings, and except as otherwise disclosed in writing:

 

(a)           neither the Borrower nor any Restricted Subsidiary has knowledge of any facts which would give rise to any liability, public or private, for violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect;

 

(b)           neither the Borrower nor any of its Restricted Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and

 

(c)           all buildings on all real properties now owned, leased or operated by the Borrower or any of its Restricted Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

 

5.14        Insurance.  The Borrower and each Restricted Subsidiary and their respective properties are insured with financially sound and reputable insurance companies which are not Affiliates of the Borrower and the Restricted Subsidiaries, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower and the Restricted Subsidiaries operate.

 

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5.15        Information.  All information heretofore or contemporaneously herewith furnished in writing by the Borrower to the Administrative Agent or any Lender for purposes of or in connection with this Agreement and the transactions contemplated hereby is, and all written information hereafter furnished by or on behalf of the Borrower to the Administrative Agent or any Lender pursuant hereto or in connection herewith 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 Administrative Agent and the Lenders that any projections and forecasts provided by the Borrower are based on good faith estimates and assumptions believed by the Borrower 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).

 

5.16        Intellectual Property.  Each of the Borrower and each Restricted Subsidiary owns and possesses or has a license or other right to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, service marks, service mark rights, and copyrights as are necessary for the conduct of the businesses of the Borrower or such Restricted Subsidiary, as applicable, except to the extent the lack of such rights could not reasonably be expected to have a Material Adverse Effect, without any infringement upon rights of others which could reasonably be expected to have a Material Adverse Effect.

 

5.17        No Default.  No Event of Default or Default exists or would result from the incurrence by the Borrower or any Restricted Subsidiary of any Debt hereunder or under any other Loan Document.

 

5.18        Taxpayer Identification Number.  The Borrower’s true and correct U.S. taxpayer identification number is set forth on Schedule 10.02.

 

ARTICLE VI. AFFIRMATIVE COVENANTS

 

Until the expiration or termination of the Commitments and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full (other than contingent or indemnification obligations which survive the termination of this Agreement) and all Letters of Credit have been terminated, the Borrower agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:

 

6.01        Reports, Certificates and Other Information.  Furnish to the Administrative Agent and each Lender:

 

(a)           Annual Report.  (i) Promptly when available and in any event within 90 days after the close of each Fiscal Year, a copy of the annual audit report of the Borrower and its Subsidiaries for such Fiscal Year, including therein consolidated balance sheets and statements of earnings and cash flows of the Borrower and its Subsidiaries as at the end of such Fiscal Year,  together with a Report of Independent Registered Public Accounting Firm thereon without adverse reference to going concern value and without qualification by KPMG LLP or such other independent auditors of recognized standing selected by the Borrower and reasonably acceptable

 

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to the Administrative Agent; provided that the availability on EDGAR or the internet within the time period specified above of the Borrower’s Annual Report on Form 10-K for such Fiscal Year (together with the Borrower’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 6.01(a)(i), and (ii) promptly when available and in any event within 100 days after the close of each Fiscal Year, a written statement from the Borrower’s accountants to the effect that in making the examination necessary for the signing of such annual audit report by such accountants, nothing came to their attention that caused them to believe that the Borrower was not in compliance with any provision of Sections 7.01, 7.03, 7.04 or 7.13 of this Agreement insofar as such provision relates to accounting matters or, if something has come to their attention that caused them to believe that the Borrower was not in compliance with any such provision, describing such non-compliance in reasonable detail.  The Borrower shall also furnish to the Administrative Agent and each Lender promptly when available and in any event within 90 days after the close of each Fiscal Year consolidated balance sheets and statements of earnings and cash flows of the Borrower and all Restricted Subsidiaries as at the end of such Fiscal Year prepared in accordance with GAAP and a consolidated balance sheet and statement of earnings and cash flows of all of the Borrower’s Unrestricted Subsidiaries as at the end of such Fiscal Year prepared in accordance with GAAP, together with information on elimination entries (subject, in the case of the financial statements for the Borrower and its Restricted Subsidiaries and the financial statements for the Borrower’s Unrestricted Subsidiaries, to the absence of footnotes and other deviations from GAAP that are to be listed or itemized by the Borrower upon submission of such financial statements).

 

(b)           Interim Reports.  Promptly when available and in any event within 45 days after the end of each Fiscal Quarter, consolidated balance sheets of the Borrower and its Subsidiaries as of the end of such Fiscal Quarter, together with consolidated statements of earnings and cash flows for such Fiscal Quarter and for the period beginning with the first day of such Fiscal Year and ending on the last day of such Fiscal Quarter,  together with a comparison with the corresponding period of the previous Fiscal Year certified by a Responsible Officer of the Borrower; provided, that the availability on EDGAR or the internet within the time period specified above of copies of the Borrower’s Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 6.01(b).  The Borrower shall also furnish to the Administrative Agent and each Lender promptly when available and in any event within 45 days after the close of each Fiscal Quarter consolidated balance sheets of the Borrower and its Restricted Subsidiaries as of the end of such Fiscal Quarter, together with consolidated statements of earnings and cash flows for such Fiscal Quarter, and consolidated balance sheets of the Borrower’s Unrestricted Subsidiaries as of the end of such Fiscal Quarter, together with a consolidated statement of earnings and cash flows and information on elimination entries reasonably satisfactory to the Administrative Agent.  All deliveries under this Section shall be prepared in accordance with GAAP (subject, in the case of the financial statements for the Borrower and its Restricted Subsidiaries and the financial statements for the Borrower’s Unrestricted Subsidiaries, to the absence of footnotes and other deviations from GAAP that are to be listed or itemized by the Borrower upon submission of such financial statements).

 

(c)           Compliance Certificates.  Within 20 Business Days of the furnishing of a copy of or the making available on EDGAR or the internet of, as the case may be, each annual audit

 

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report of Form 10-K pursuant to Section 6.01(a) and each set of quarterly statements or Form 10-Q pursuant to Section 6.01(b), a duly completed Compliance Certificate in the form of Exhibit E, with appropriate insertions, dated the date of such annual report or such quarterly statements and signed by a Responsible Officer of the Borrower, containing a computation of each of the financial ratios and restrictions set forth in Section 7.13 and to the effect that such Responsible Officer has not become aware of any Event of Default or Default that has occurred and is continuing or, if there is any such event, describing it and the steps, if any, being taken to cure it.  As a schedule to any Compliance Certificate delivered pursuant to Section 6.01(a), the Borrower shall also provide a listing of each of its Subsidiaries (excluding AAR International, Inc., the AAR AESL Group and the AAR IFS Group) that represents 5% or more of the Borrower’s consolidated revenues for the Fiscal Year then ended and/or 5% or more of the Borrower’s Consolidated Assets as of the last day of such Fiscal Year.  Such schedule shall set forth the Dollar amount of each such Subsidiary’s assets and revenues and the percentage of the Borrower’s Consolidated Assets and consolidated revenues represented by such Subsidiary’s assets and revenues.

 

(d)           Reports to the SEC and to Shareholders.  Promptly upon the filing or sending thereof, copies of all regular, periodic or special reports of the Borrower filed with the SEC; copies of all registration statements of the Borrower filed with the SEC (other than on Form S-8); and copies of all proxy statements or other communications made to security holders generally, provided that the availability on EDGAR or the internet of any such report, statement or communication shall be deemed to satisfy the requirements of this Section 6.01(d) with respect to such report, statement or communication.

 

(e)           Notice of Default, Litigation and ERISA Matters.  Promptly upon any Responsible Officer becoming aware of any of the following, written notice describing the same and the steps being taken by the Borrower or the Subsidiary affected thereby with respect to:

 

(i)            the occurrence of an Event of Default or a Default;

 

(ii)           any litigation, arbitration or governmental investigation or proceeding not previously disclosed by the Borrower to the Lenders and which will not be disclosed in the next applicable SEC Filings in accordance with the requirements thereof, which has been instituted or, to the knowledge of the Borrower, is threatened against the Borrower or any Restricted Subsidiary or to which any of the properties of any thereof is subject which might reasonably be expected to have a Material Adverse Effect;

 

(iii)          the institution of any steps by any ERISA Affiliate or any other Person to terminate any Pension Plan, or the failure of any ERISA Affiliate to make a required contribution to any Pension Plan (if such failure is sufficient to give rise to a Lien under Section 302(f) of ERISA) or to any Multiemployer Plan, or the taking of any action with respect to a Pension Plan which could result in the requirement that the Borrower furnish a bond or other security to the PBGC or such Pension Plan, or the occurrence of any event with respect to any Pension Plan or Multiemployer Plan which could result in the incurrence by any ERISA Affiliate of any material liability, fine or penalty (including any claim or demand for withdrawal liability or partial withdrawal from any Multiemployer Plan), or any material increase in the contingent liability of the Borrower with respect to

 

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any post-retirement welfare benefit plan or other employee benefit plan of the Borrower or another ERISA Affiliate, or any notice that any Multiemployer Plan is in reorganization, that increased contributions may be required to avoid a reduction in plan benefits or the imposition of an excise tax, that any such plan is or has been funded at a rate less than that required under Section 412 of the Code, that any such plan is or may be terminated, or that any such plan is or may become insolvent; or

 

(iv)          any other event (including (i) any violation of any Environmental Law or the assertion of any Environmental Claim or (ii) the enactment or effectiveness of any law, rule or regulation) which might reasonably be expected to have a Material Adverse Effect and which will not be disclosed in the next applicable SEC Filings in accordance with the requirements thereof.

 

(f)            Projections.  As soon as reasonably practicable but no later than 60 days after the beginning of a Fiscal Year, provided that financial projections have been approved by the board of directors of the Borrower for such Fiscal Year, the financial projections of the Borrower and its Restricted Subsidiaries 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 Borrower.

 

(g)           Other Information.  Promptly from time to time, such other information concerning the Borrower and the Restricted Subsidiaries as any Lender or the Administrative Agent may reasonably request.

 

6.02        Books, Records and Inspections.  Keep, and cause each Restricted Subsidiary to keep, its books and records in accordance with sound business practices sufficient to allow the preparation of financial statements in accordance with GAAP; permit, and cause each Restricted Subsidiary to permit, any Lender or the Administrative Agent or any representative thereof to inspect the properties and operations of the Borrower or any Restricted Subsidiary; and permit, and cause each Restricted Subsidiary to permit, at any reasonable time and with reasonable notice (or at any time without notice if an Event of Default exists), any Lender or the Administrative Agent or any representative thereof to visit any or all of its offices, to discuss its financial matters with its officers and its independent auditors (and the Borrower hereby authorizes such independent auditors to discuss such financial matters with any Lender or the Administrative Agent or any representative thereof), and to examine (and, at the expense of the Borrower and the Restricted Subsidiaries, photocopy extracts from) any of its books or other records.  All such inspections or audits by the Administrative Agent shall be at the Lenders’ ratable expense, provided that so long as no Event of Default or Default exists, the Borrower shall not be required to reimburse the Lenders for any inspections or audits.

 

6.03        Maintenance of Property; Insurance.

 

(a)           Keep, and cause each Restricted Subsidiary to keep, all property useful and necessary in the business of the Borrower and the Restricted Subsidiaries in good working order and condition, ordinary wear and tear excepted.

 

(b)           Maintain, and cause each Restricted Subsidiary to maintain, with responsible insurance companies, such insurance coverage as may be required by any law or governmental

 

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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.

 

6.04        Compliance with Laws; Payment of Taxes and Liabilities.  (a)  Comply, and cause each Restricted Subsidiary to comply, in all material respects with all applicable Laws (including Environmental Laws and requirements of laws and regulations applicable to Pension Plans and Multiemployer Plans), except where failure to comply could not reasonably be expected to have a Material Adverse Effect; (b) without limiting clause (a) above, ensure, and cause each Restricted Subsidiary to ensure, that no Person who owns a controlling interest in or otherwise controls a Restricted Subsidiary is or shall be (i) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute, Executive Order or regulation or (ii) a person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar Executive Orders, (c) without limiting clause (a) above, comply, and cause each Restricted Subsidiary to comply, with all applicable Bank Secrecy Act (“BSA”) and anti-money laundering laws and regulations and (d) pay, and cause each Restricted Subsidiary to pay, prior to delinquency, all taxes and other governmental charges against it, other than those (i) which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books or (ii) the filing or amount of which is not individually or in the aggregate Material.

 

6.05        Maintenance of Existence, Etc.  Maintain and preserve, and (subject to a merger permitted under Section 7.04) cause each Restricted Subsidiary to maintain and preserve (a) its existence and good standing in the jurisdiction of its organization, except in connection with a merger of any Restricted Subsidiary into the Borrower or a Wholly-Owned Restricted Subsidiary and (b) its qualification to do business and good standing in each jurisdiction where the nature of its business makes such qualification necessary (other than such jurisdictions in which the failure to be qualified or in good standing could not reasonably be expected to have a Material Adverse Effect).

 

6.06        Use of Proceeds.  Use the proceeds of the Loans, and the Letters of Credit, solely for working capital purposes, for Acquisitions permitted by Section 7.05 and for other general business purposes and other legal purposes; and not use or permit any proceeds of any Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of “purchasing or carrying” any margin stock (within the meaning of Regulation U issued by the FRB), except to the extent such purchase or carrying would not cause a violation of any Law by the Borrower or any Lender.

 

6.07        Additional Guarantors.  Notify the Administrative Agent at the time that any Person becomes a Significant Subsidiary, and promptly thereafter (and in any event within 15 days), cause such Person to (a) become a Guarantor by executing and delivering to the Administrative Agent a counterpart of the Guaranty or such other document as the Administrative Agent shall deem appropriate for such purpose, and (b) deliver to the Administrative Agent documents of the types referred to in clauses (iii) and (iv) of Section 4.01(a) and favorable opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation

 

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referred to in clause (a)), all in form, content and scope reasonably satisfactory to the Administrative Agent.

 

ARTICLE VII. NEGATIVE COVENANTS

 

Until the expiration or termination of the Commitments and thereafter until all Obligations hereunder and under the other Loan Documents are paid in full (other than contingent or indemnification obligations which survive the termination of this Agreement) and all Letters of Credit have been terminated, the Borrower agrees that, unless at any time the Required Lenders shall otherwise expressly consent in writing, it will:

 

7.01        Debt.  Not, and not permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any Debt, except:

 

(a)           Obligations under this Agreement and the other Loan Documents;

 

(b)           Nonrecourse Debt secured by Liens permitted by Section 7.02(d), and extensions, renewals and refinancings thereof; provided that the aggregate amount of all such Nonrecourse Debt at any time outstanding shall not exceed $100,000,000;

 

(c)           Debt of the Borrower to any domestic Restricted Subsidiary or Debt of any domestic Restricted Subsidiary of which the Borrower owns, directly or indirectly, not less than 80% of the Equity Interests of such Subsidiary to the Borrower or another domestic Restricted Subsidiary; provided that such Debt shall be evidenced by a demand note and the obligations under such demand note shall be subordinated to the Obligations of the Borrower hereunder in a manner reasonably satisfactory to the Administrative Agent;

 

(d)           Subordinated Debt provided, that immediately before and immediately after the incurrence of such Subordinated Debt, no Event of Default or Default exists;

 

(e)           Hedging Obligations incurred for bona fide hedging purposes and not for speculation;

 

(f)            Debt described on Schedule 7.01 and any extension, renewal or refinancing thereof so long as the aggregate principal amount thereof is not increased;

 

(g)           Contingent Liabilities arising with respect to customary indemnification obligations in favor of purchasers in connection with dispositions permitted under Section 7.05;

 

(h)           Except as provided in Section 7.01(i) below, up to $75,000,000 of Acquired Debt assumed in Acquisitions permitted under Section 7.06 provided that any such Debt of any Subsidiary is without any recourse to the Borrower or any other Subsidiary (including any other Guarantor);

 

(i)            Acquired Debt arising under Acquisitions permitted under Section 7.06 where the primary obligor thereof is a Guarantor so long as (i) such Acquired Debt is unsecured, and (ii) such Acquired Debt is without recourse to the Borrower or any other Subsidiary (including any other Guarantor);

 

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(j)            Debt of the Borrower or a Subsidiary incurred pursuant to Permitted Receivables Transactions; provided, that the unpaid principal or equivalent amount thereunder shall not exceed an aggregate amount of $100,000,000 at any time outstanding;

 

(k)           secured Debt existing on the Closing Date evidenced by the Wood Dale Mortgage Documents and the Debt evidenced by the Avborne IRB Documents;

 

(l)            other secured Debt secured by any Lien permitted under clauses (k), (l) and (n) of Section 7.02; and

 

(m)          other unsecured Debt incurred by the Borrower provided, that immediately before and immediately after the incurrence of such Debt, no Event of Default or Default exists.

 

7.02        Liens.  Not, and not permit any Restricted Subsidiary to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:

 

(a)           Liens for taxes, assessments or other governmental charges which are not yet due and payable or the payment of which is not at the time required by Section 6.04;

 

(b)           statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case incurred in the ordinary course of business and not in connection with borrowed money, for sums not yet due and payable or the payment of which is being contested in good faith by appropriate proceedings;

 

(c)           Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers’ compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds, bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property;

 

(d)           Liens securing Nonrecourse Debt incurred by the Borrower or any Restricted Subsidiary (or any Person in which the Borrower or any Restricted Subsidiary shall be the beneficial owner), provided that such Lien is restricted to aircraft and engines and the lease thereof to a Person other than the Borrower or a Restricted Subsidiary;

 

(e)           any attachment or judgment Lien; provided, that the judgment it secures shall, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall have been discharged within 60 days after the expiration of any such stay, or could not reasonably be expected to have a Material Adverse Effect;

 

(f)            Liens on property or assets of the Borrower or any of its Restricted Subsidiaries securing Debt owing to the Borrower or to another Restricted Subsidiary;

 

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(g)           Liens existing on the date of this Agreement (i) securing the Debt of the Borrower and its Restricted Subsidiaries under the Wood Dale Mortgage Documents, (ii) securing the Avborne IRB Documents and (iii) securing the Huntington Debt;

 

(h)           leases or subleases (including aircraft or engine leases) granted to others, easements, rights-of-way, restrictions and other similar charges, encumbrances or survey exceptions, in each case incidental to, and not interfering with, the ordinary conduct of the business of the Borrower or any of its Restricted Subsidiaries, provided that such Liens do not, in the aggregate, Materially detract from the value of such property;

 

(i)            the interest of the lessor of any property subject to a lease (other than a Capital Lease) of such property under which the Borrower or any Restricted Subsidiary is lessee, whether or not such interest is protected by a precautionary filing;

 

(j)            any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Borrower or a Restricted Subsidiary or its becoming a Restricted Subsidiary, or any Lien existing on any property acquired by the Borrower or any Restricted Subsidiary at the time such property is so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (i) no such Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person’s becoming a Restricted Subsidiary or such acquisition of property, and (ii) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property;

 

(k)           any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of property (or any improvement thereon) acquired or constructed by the Borrower or a Restricted Subsidiary after the date of the Closing, provided that:

 

(i)            any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon),

 

(ii)           the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (A) the cost to the Borrower or such Restricted Subsidiary of the property (or improvement thereon) so acquired or constructed and (B) the fair market value (as determined in good faith by a Responsible Officer of the Borrower) of such property (or improvement thereon) at the time of such acquisition or construction,

 

(iii)          in the case of inventory, the net book value, net of applicable reserves, of all inventory subject to such Liens shall not at any time exceed 20% of the aggregate net

 

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book value, net of applicable reserves, of all inventory of the Borrower and its Restricted Subsidiaries, and

 

(iv)          any such Lien shall be created contemporaneously with, or within 365 days after, the acquisition or construction of such property;

 

(l)            any Lien renewing, extending or refunding any Lien permitted by paragraphs (g), (j) and (k) of this Section 7.02, provided that (i) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (ii) such Lien is not extended to any other property, and (iii) immediately after such extension, renewal or refunding no Default or Event of Default would exist;

 

(m)          Liens on notes or accounts receivable sold by the Borrower or any Restricted Subsidiary, provided that (i) such sale constitutes a “true sale” under GAAP, (ii) recourse to the Borrower and its Restricted Subsidiaries in connection with such sale shall be limited to the retained portion of the notes or accounts receivable and (iii) the unpaid principal amount of Debt or other obligations secured by such Liens shall not exceed $100,000,000 at any time outstanding; and

 

(n)           other Liens not otherwise permitted by paragraphs (a) through (m) of this Section, provided that the aggregate amount of Priority Debt secured thereby shall not exceed $15,000,000 at any time and the aggregate book value of the assets subject to such Liens shall not exceed $30,000,000 at any time.

 

7.03        Restricted Payments.  Not, and not permit any Restricted Subsidiary to, (a) make any distribution to any holders of its Equity Interests, (b) purchase or redeem any of its Equity Interests, or (c) set aside funds for any of the foregoing.  Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or make other distributions to, and purchase or redeem Equity Interests from, the Borrower or a domestic Wholly-Owned Subsidiary; (ii) any foreign Subsidiary may pay dividends or make other distributions to, and purchase or redeem Equity Interests from, the Borrower or any other Subsidiary; and (iii) so long as no Event of Default or Default exists or would result therefrom, the Borrower may pay dividends or make other distributions to, and purchase or redeem Equity Interests from, the holders of its Equity Interests.

 

7.04        Mergers and Consolidations.  Not, and not permit any Restricted Subsidiary to,  consolidate with or merge with any other corporation or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to any Person (except that a Restricted Subsidiary of the Borrower may (x) consolidate with or merge with, or convey, transfer or lease substantially all of its assets in a single transaction or series of transactions to, the Borrower or another Restricted Subsidiary of the Borrower or any other Person that will, after giving effect to the consummation of such transaction or series of transactions, constitute a Restricted Subsidiary and (y) convey, transfer or lease all of its assets in compliance with the provisions of Section 7.05), provided that the foregoing restriction does not apply to the consolidation or merger of the Borrower with, or the conveyance, transfer or lease of substantially all of the assets of the Borrower in a single transaction or series of transactions to, any Person so long as (i) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer or lease substantially all of the assets of the Borrower, as the

 

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case may be (the “Successor Corporation”), shall be a solvent corporation, limited liability company or other limited liability entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, (ii) the Successor Corporation (if not the Borrower) agrees in writing to assume all of the obligations of the Borrower under this Agreement and each other Loan Document to which the Borrower is a party, and (iii) immediately after giving effect to such transaction no Default or Event of Default would exist.  No such conveyance, transfer or lease of substantially all of the assets of the Borrower shall have the effect of releasing the Borrower or any Successor Corporation from its liability under this Agreement or the Loan Documents.

 

7.05        Sale of Assets, Etc..  Except as permitted under Section 7.04 or in connection with an Acquisition not prohibited by Section 7.06, not, and not permit any of its Restricted Subsidiaries to, make any Asset Dispositions unless:

 

(a)           in the good faith opinion of the Borrower, the Asset Disposition is in exchange for consideration having a Fair Market Value at least equal to that of the property exchanged and is in the best interest of the Borrower or such Restricted Subsidiary;

 

(b)           immediately after giving effect to the Asset Disposition, no Default or Event of Default would exist; and

 

(c)           immediately after giving effect to the Asset Disposition, the Disposition Value of all property that was the subject of any Asset Disposition occurring in the then current Fiscal Year of the Borrower would not exceed 10% of Consolidated Assets as of the end of the then most recently ended Fiscal Year of the Borrower.

 

If the Net Proceeds Amount for any Transfer is applied to a Debt Prepayment Application or a Property Reinvestment Application within 365 days after such Transfer, then such Transfer, only for the purpose of determining compliance with subsection (c) of this Section as of a date on or after the Net Proceeds Amount is so applied, shall be deemed not to be an Asset Disposition.

 

Notwithstanding the foregoing, if such Asset Disposition constitutes a Permitted Receivables Transaction permitted under Section 7.01, the aggregate net book value of the receivables subject to such sale shall not at any time exceed $100,000,000 in the aggregate.

 

7.06        Acquisitions.  Not, and not permit any Restricted Subsidiary to,  acquire all or substantially all of the assets or any Equity Interests of any class of, or any partnership or joint venture interest in, any other Person, except for any Acquisition by the Borrower or any domestic Wholly-Owned Subsidiary that is a Restricted Subsidiary where:

 

(a)           the business or division acquired are for use, or the Person acquired is engaged, in a business which would not cause the general nature of the business in which the Borrower and its Restricted Subsidiaries, taken as a whole, are engaged immediately after giving effect to such Acquisition to be substantially changed from the general nature of the business in which the Borrower and its Restricted Subsidiaries, taken as a whole, are engaged on or immediately prior to the Closing Date;

 

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(b)           immediately before and after giving effect to such Acquisition, no Event of Default or Default shall exist;

 

(c)           immediately after giving effect to such Acquisition, the Borrower is in pro forma compliance with all the financial ratios and restrictions set forth in Section 7.13; provided, that (x) the Borrower shall calculate such pro forma compliance based upon the most-recent trailing twelve month historical financial statements for the Borrower and the target to be acquired, (y) all such information for the Borrower and the target shall be used and shall comply with the defined terms (such as, for example, Consolidated Net Income) used in this Agreement to calculate, among other things, financial covenants, and (z) the following formula shall be used to determine the target’s EBITDA: Consolidated Net Income plus, to the extent deducted in determining such Consolidated Net Income, Interest Expense, income and franchise tax expense, depreciation and amortization; and

 

(d)           in the case of the Acquisition of any Person, the board of directors or similar governing body of such Person has approved such Acquisition prior to the occurrence thereof;

 

(e)           to the extent available, reasonably prior to such Acquisition, the Administrative Agent shall have received complete executed or conformed copies of each material document, instrument and agreement to be executed in connection with such Acquisition together with all lien search reports and lien release letters and other documents as the Administrative Agent may require to evidence the termination of Liens on the assets or business to be acquired (except to the extent the Borrower or a Restricted Subsidiary is assuming such Liens pursuant to the Acquisition);

 

(f)            to the extent available, Borrower shall use reasonable efforts prior to such Acquisition to provide the Administrative Agent an acquisition summary with respect to the Person and/or business or division to be acquired, such summary to include a reasonably detailed description thereof (including financial information) and operating results (including financial statements for the most recent 12 month period for which they are available and as otherwise available), the terms and conditions, including economic terms, of the proposed Acquisition, and the Borrower’s calculation of pro forma EBITDA relating thereto; and

 

(g)           if the Acquisition is structured as a merger, the Borrower or a Restricted Subsidiary is the surviving entity (including a surviving entity that becomes a Restricted Subsidiary);

 

provided, that clauses (e) and (f) shall apply only if the consideration paid in connection with the Acquisition is greater than $25,000,000.

 

7.07        Modification of Organizational Documents.  Not permit the charter, by-laws or other Organizational Documents of the Borrower or any Restricted Subsidiary to be amended or modified in any way which could reasonably be expected to materially adversely affect the interests of the Lenders; not change, or allow any Restricted Subsidiary to change, its state of formation or its organizational form.

 

7.08        Transactions with Affiliates.  Not, and not permit any Restricted Subsidiary to, enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of

 

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its Affiliates (other than its Subsidiaries) which is on terms which are materially less favorable than are obtainable from any Person which is not one of its Affiliates.

 

7.09        Inconsistent Agreements.  Not, and not permit any Restricted Subsidiary to, enter into any agreement, document or instrument after the Closing Date containing any provision which would (a) be violated or breached by any borrowing by the Borrower hereunder or by the performance by the Borrower of any of its Obligations hereunder or under any other Loan Document, (b) prohibit the Borrower or any Restricted Subsidiary from granting to the Administrative Agent and the Lenders, a Lien on any of its assets (other than any provision in any agreement relating to Debt secured by Liens permitted under Section 7.02(k), Acquired Debt, the Huntington Debt, Nonrecourse Debt or Permitted Receivables Transactions that prohibits the Borrower or such Restricted Subsidiary from granting a Lien to the Administrative Agent and the Lenders upon the asset or assets which secure such Debt or otherwise directly corresponding with such financing), or (c) create or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to (i) pay dividends or make other distributions to the Borrower or any Wholly-Owned Subsidiary, or pay any Debt owed to the Borrower or any other Restricted Subsidiary, (ii) make loans or advances to the Borrower or any Restricted Subsidiary or (iii) transfer any of its assets or properties to the Borrower or any Restricted Subsidiary, other than (A) customary restrictions and conditions contained in agreements relating to the sale of all or a substantial part of the assets of any Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary to be sold and such sale is permitted hereunder, (B) restrictions or conditions, other than those prohibited by clause (b), imposed by any agreement relating to Debt secured by Liens permitted under Section 7.02(k), Acquired Debt, the Huntington Debt, Nonrecourse Debt, Permitted Receivables Transactions and other secured Debt permitted by this Agreement and (C) customary provisions in leases and other contracts restricting the assignment thereof.

 

7.10        Business Activities.  Not, and not permit any of its Restricted Subsidiaries to, engage in any business if, as a result, the general nature of the business in which the Borrower and its Restricted Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Borrower and its Restricted Subsidiaries, taken as a whole, are engaged on the Closing Date.

 

7.11        Investments.  Not, and not permit any Restricted Subsidiary to, make or permit to exist any Investment in any other Person, except the following:

 

(a)           contributions by the Borrower to the capital of any Wholly-Owned Subsidiary, or by any Subsidiary to the capital of any other domestic Wholly-Owned Subsidiary; provided, however, that neither the Borrower nor any Restricted Subsidiary shall make an Investment in an Unrestricted Subsidiary to finance in whole or in part an Acquisition;

 

(b)           Investments in any Person that concurrently with such Investment becomes a Restricted Subsidiary;

 

(c)           Investments in property to be used in the ordinary course of business of the Borrower and its Restricted Subsidiaries;

 

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(d)           Investments constituting Debt permitted by Section 7.01;

 

(e)           Contingent Liabilities constituting Debt permitted by Section 7.01 or Liens permitted by Section 7.02;

 

(f)            Cash Equivalent Investments;

 

(g)           bank deposits in the ordinary course of business;

 

(h)           Investments in securities of account debtors received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such account debtors;

 

(i)            Investments in a Restricted Subsidiary to permit the Restricted Subsidiary to consummate Acquisitions permitted by Section 7.06;

 

(j)            Investments listed on Schedule 7.11 as of the Closing Date;

 

(k)           treasury stock; and

 

(l)            Investments in Unrestricted Subsidiaries and other Investments, provided that immediately after giving effect to any such Investment the Borrower is in compliance with Section 7.13(b);

 

provided that (x) any Investment which when made complies with the requirements of the definition of the term “Cash Equivalent Investment” may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; (y) no Investment otherwise permitted by clause (d), (e), or (i) shall be permitted to be made if, immediately before or after giving effect thereto, any Event of Default or Default exists.

 

7.12        Fiscal Year.  Not change its Fiscal Year.

 

7.13        Financial Covenants.

 

(a)           Minimum Fixed Charge Coverage Ratio.  Not permit the Fixed Charge Coverage Ratio for any Computation Period to be less than 1.50 to 1.00.

 

(b)           Minimum Tangible Net Worth.  Not permit Tangible Net Worth at any time to be less than the sum of (i) $600,000,000 plus (ii) 50% of Consolidated Net Income earned in each Fiscal Quarter (if positive) beginning with the quarter ending August 31, 2011 plus (iii) 50% of Net Cash Proceeds resulting subsequent to the Closing Date from the issuance of any Equity Interests or the conversion of any instrument evidencing Debt into an Equity Interest.

 

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(c)           Maximum Adjusted Total Debt to EBITDA Ratio.  Not permit the Adjusted Total Debt to EBITDA Ratio for any Computation Period to be greater than 3.50 to 1.00.

 

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES

 

8.01        Events of Default.  Any of the following shall constitute an Event of Default:

 

(a)           Non-Payment.  The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein or under the Guaranty, any amount of principal of any Loan, any L/C Obligation or any payment due under the Guaranty, or (ii) within five days after the same becomes due and the Borrower or any other Loan Party shall have received notice of the amount due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

 

(b)           Non-Payment of Other Debt.  Any default shall occur under the terms applicable to any Debt of the Borrower or any Significant Subsidiary in an aggregate amount (for all such Debt so affected and including undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement) exceeding $20,000,000 and such default shall (i) consist of the failure to pay such Debt when due, whether by acceleration or otherwise, or (ii) accelerate the maturity of such Debt or permit the holder or holders thereof, or any trustee or agent for such holder or holders, to cause such Debt to become due and payable (or require the Borrower or any Restricted Subsidiary to purchase or redeem such Debt or post cash collateral in respect thereof) prior to its expressed maturity; or

 

(c)           Specific Covenants.  The Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01(e), 6.05, 7.01, 7.02, 7.03, 7.04, 7.05, 7.06 or 7.13; or

 

(d)           Other Defaults.  Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (c) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

 

(e)           Hedging Agreements.  There occurs under any Hedging Agreement an early termination date resulting from (A) any event of default under such Hedging Agreement as to which the Borrower or any Subsidiary is the defaulting party or (B) any termination event under such Hedging Agreement as to which the Borrower or any Subsidiary is an affected party and, in either event, the Hedging Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the $15,000,000; or

 

(f)            Representations and Warranties.  Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading in any material respect when made or deemed made; or

 

(g)           Insolvency Proceedings, Etc.  The Borrower or any of its Significant Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes

 

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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 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

 

(h)           Inability to Pay Debts; Attachment.  (i) The Borrower or any Significant Subsidiary 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; or

 

(i)            Judgments.  There is entered against the Borrower or any Significant Subsidiary one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding $20,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) and (i) enforcement proceedings are commenced by any creditor upon such judgment or order, or (ii) there is a period of 60 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

 

(j)            ERISA.  (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or PBGC in an aggregate amount in excess of $20,000,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $20,000,000; or

 

(k)           Invalidity of Loan Documents; Effectiveness of Guaranty.  (i) Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any material provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any material provision of any Loan Document, or (ii) the Guaranty fails to become effective on May 16, 2011; or

 

(l)            Change of Control.  There occurs any Change of Control.

 

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8.02        Remedies Upon Event of Default.  If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:

 

(a)           declare the Commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such Commitments and obligation shall be terminated;

 

(b)           declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower;

 

(c)           require that the Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and

 

(d)           exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;

 

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.

 

8.03        Application of Funds.  After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.17 and 2.18, be applied by the Administrative Agent in the following order:

 

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

 

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;

 

Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably

 

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among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;

 

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, L/C Borrowings, Hedging Obligations and Bank Product Obligations, ratably among the Lenders or their Affiliates and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them;

 

Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Sections 2.04 and 2.17; and

 

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

 

Subject to Sections 2.04(c) and 2.17, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur.  If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

 

ARTICLE IX.        ADMINISTRATIVE AGENT

 

9.01        Appointment and Authority.  Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.  The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.

 

9.02        Rights as a Lender.  The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity.  Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

 

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9.03        Exculpatory Provisions.  The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, the Administrative Agent:

 

(a)           shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

 

(b)           shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and

 

(c)           shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

 

The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct.  The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or the L/C Issuer.

 

The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

 

9.04        Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In

 

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determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit.  The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

 

9.05        Delegation of Duties.  The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent.

 

9.06        Resignation of Administrative Agent.  The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section.  Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section).  The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

 

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9.07        Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

 

9.08        No Other Duties, Etc.  Anything herein to the contrary notwithstanding, no Arranger listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.

 

9.09        Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)           to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.04(h) and (i), 2.10 and 10.04) allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.10 and 10.04.

 

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of

 

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any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.

 

9.10        Guaranty Matters.  The Lenders and the L/C Issuer irrevocably authorize the Administrative Agent, at its option and in its discretion, to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Restricted Subsidiary as a result of a transaction permitted hereunder.  Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10.

 

9.11        Co-Syndication Agents; Documentation Agents.  None of the Lenders identified in this Agreement as a Co-Syndication Agent or Documentation Agent shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such.  Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender.  Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Agent in Section 9.07.

 

ARTICLE X. MISCELLANEOUS

 

10.01      Amendments, Etc.  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 Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

 

(a)           waive any condition set forth in Section 4.01(a) without the written consent of each Lender;

 

(b)           extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender;

 

(c)           postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;

 

(d)           reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;

 

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(e)           change Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;

 

(f)            change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or

 

(g)           except in accordance with Section 9.10, release all or substantially all of the value of the Guaranty without the written consent of each Lender;

 

and, provided  further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (iv) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely than other affected Lenders shall require the consent of such Defaulting Lender.

 

10.02      Notices; Effectiveness; Electronic Communication.

 

(a)           Notices Generally.  Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

 

(i)            if to the Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and

 

(ii)           if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its

 

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Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).

 

Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

 

(b)           Electronic Communications.  Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and internet or intranet websites including IntraLinks or another similar electronic system (the “Platform”)) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

 

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

 

(c)           The Platform.  THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s or

 

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the Administrative Agent’s transmission of Borrower Materials through the internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

 

(d)           Change of Address, Etc.  Each of the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto.  Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, the L/C Issuer and the Swing Line Lender.  In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

 

(e)           Reliance by Administrative Agent, L/C Issuer and Lenders.  The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The Borrower shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower.  All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

 

10.03      No Waiver; Cumulative Remedies; Enforcement.  No failure by any Lender, the L/C Issuer or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan

 

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Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.14), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.14, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

 

10.04      Expenses; Indemnity; Damage Waiver.

 

(a)           Costs and Expenses.  The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender or the L/C Issuer (including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender or the L/C Issuer, in connection with 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 or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

 

(b)           Indemnification by the Borrower.  The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) any Loan or

 

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Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

 

(c)           Reimbursement by Lenders.  To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in connection with such capacity.  The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.13(d).

 

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof.  No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

 

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(e)           Payments.  All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

 

(f)            Survival.  The agreements in this Section shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

 

10.05      Payments Set Aside.  To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.  The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

 

10.06      Successors and Assigns.

 

(a)           Successors and Assigns Generally.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

 

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b),

 

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participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

 

(i)            Minimum Amounts.

 

(A)          in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)           in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000  unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met.

 

(ii)           Proportionate Amounts.  Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to rights in respect of the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;

 

(iii)          Required Consents.  No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

 

(A)          the consent of the Borrower (such consent not to be unreasonably withheld) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof;

 

(B)           the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender;

 

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(C)           the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding); and

 

(D)          the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment.

 

(iv)          Assignment and Assumption.  The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment.  The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

 

(v)           No Assignment to Certain Persons.  No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or  Subsidiaries, or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), or (C) to a natural person.

 

(vi)          Certain Additional Payments.  In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage.  Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under

 

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this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.

 

(c)           Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  In addition, the Administrative Agent shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender.  The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d)           Participations.  Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant.  Subject to subsection (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such Participant agrees to be subject to Section 2.14 as though it were a Lender.

 

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(e)           Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04  than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent.  A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.01(e) as though it were a Lender.

 

(f)            Certain Pledges.  Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

 

(g)           Resignation as L/C Issuer or Swing Line Lender after Assignment.  Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Borrower, resign as Swing Line Lender.  In the event of any such resignation as L/C Issuer or Swing Line Lender, the Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be.  If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.04(c)).  If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.05(c).  Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.

 

10.07      Treatment of Certain Information; Confidentiality.  Each of the Administrative Agent, the Lenders and the L/C Issuer 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

 

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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, such as the National Association of Insurance Commissioners), (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 (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.16(c) or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower 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 Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.  For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary 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.

 

Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, 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, including United States Federal and state securities Laws.

 

10.08      Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the

 

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provisions of Section 2.18 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff.  The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have.  Each Lender and the L/C Issuer agrees to notify the Borrower and the Administrative Agent 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.

 

10.09      Interest Rate Limitation.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

 

10.10      Counterparts; Integration; Effectiveness.  This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

10.11      Survival of Representations and Warranties.  All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof.  Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

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10.12      Severability.  If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.

 

10.13      Replacement of Lenders.  If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

 

(a)           the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 10.06(b);

 

(b)           such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);

 

(c)           in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

 

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

 

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

 

10.14      Governing Law; Jurisdiction; Etc.

 

(a)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS.

 

98

 

(b)           SUBMISSION TO JURISDICTION.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS SITTING IN COOK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE NORTHERN DISTRICT OF ILLINOIS, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH ILLINOIS  STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT.

 

(c)           WAIVER OF VENUE.  THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)           SERVICE OF PROCESS.  EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02.  NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

10.15      Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

10.16      No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or

 

99

 

other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that:  (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent and the Arranger are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent and the Arranger, on the other hand, (B) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent and, the Arranger each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent nor the Arranger has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent and the Arranger and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent nor the Arranger has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates.  To the fullest extent permitted by law, each of the Borrower and the other Loan Parties hereby waives and releases any claims that it may have against the Administrative Agent and the Arranger with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

 

10.17      Electronic Execution of Assignments and Certain Other Documents.  The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

 

10.18      USA PATRIOT Act.  Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act.  The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

 

100

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

 

	
 
    	
 
    	
AAR   CORP.,
    
	
 
    	
 
    	
as   Borrower
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to

AAR Corp. Credit Agreement

 

 

	
 
    	
 
    	
BANK   OF AMERICA, N.A.,
    
	
 
    	
 
    	
as   Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to

AAR Corp. Credit Agreement

 

 

	
 
    	
 
    	
BANK   OF AMERICA, N.A.,
    
	
 
    	
 
    	
as   a Lender, a L/C Issuer and Swing Line Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to

AAR Corp. Credit Agreement

 

 

	
 
    	
 
    	
WELLS   FARGO BANK, N.A.,
    
	
 
    	
 
    	
as   a Lender and a L/C Issuer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to

AAR Corp. Credit Agreement

 

 

	
 
    	
 
    	
RBS   CITIZENS, N.A.,
    
	
 
    	
 
    	
as   a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to

AAR Corp. Credit Agreement

 

 

	
 
    	
U.S.   BANK NATIONAL ASSOCIATION, 
    
	
 
    	
as   a Lender 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:  
    

 

Signature Page to 
 AAR Corp. Credit Agreement

 

 

	
 
    	
PNC   BANK, NATIONAL ASSOCIATION, 
    
	
 
    	
as   a Lender 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:  
    

 

Signature Page to 
 AAR Corp. Credit Agreement

 

 

	
 
    	
THE   PRIVATEBANK AND TRUST COMPANY, 
    
	
 
    	
as   a Lender 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:  
    

 

Signature Page to 
 AAR Corp. Credit Agreement

 

 

	
 
    	
MORGAN   STANLEY BANK, N.A., 
    
	
 
    	
as   a Lender 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:  
    

 

Signature Page to 
 AAR Corp. Credit Agreement

 

 

	
 
    	
ASSOCIATED   BANK, N.A., 
    
	
 
    	
as   a Lender 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:   
    
	
 
    	
Title:  
    

 

Signature Page to 
 AAR Corp. Credit Agreement

 

 

Schedule 2.01 — Commitments and Applicable Percentages

 

	
Lender
    	
 
    	
Revolving Commitment
   Amount
    	
 
    	
Applicable Percentage
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bank of America,   N.A.
    	
 
    	
$
    	
80,000,000.00
    	
 
    	
20.00000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
RBS Citizens, N.A.
    	
 
    	
$
    	
80,000,000.00
    	
 
    	
20.00000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Wells Fargo Bank,   N.A.
    	
 
    	
$
    	
80,000,000.00
    	
 
    	
20.00000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
U.S. Bank National   Association
    	
 
    	
$
    	
45,000,000.00
    	
 
    	
11.25000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
PNC Bank, National   Association
    	
 
    	
$
    	
40,000,000.00
    	
 
    	
10.00000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
The PrivateBank   and Trust Company
    	
 
    	
$
    	
25,000,000.00
    	
 
    	
6.25000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Morgan Stanley   Bank, N.A.
    	
 
    	
$
    	
25,000,000.00
    	
 
    	
6.25000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Associated Bank,   N.A.
    	
 
    	
$
    	
25,000,000.00
    	
 
    	
6.25000000
    	
%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TOTALS
    	
 
    	
$
    	
400,000,000.00
    	
 
    	
100.000000000
    	
%
    

 

 

EXHIBIT A

 

FORM OF COMMITTED LOAN NOTICE

 

Date:             ,     

To:                              Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of April 12, 2011 (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., a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, an L/C Issuer and Swing Line Lender.

 

The undersigned hereby requests (select one):

 

	
o  A   Borrowing of Committed Loans
    	
 
    	
o  A   conversion or continuation of Loans
    

 

	
1.
    	
On                                                                         (a Business Day).
    
	
 
    	
 
    
	
2.
    	
In   the amount of   $                                           .
    
	
 
    	
 
    
	
3.
    	
Comprised   of                                                     .
    
	
 
    	
 
    	
[Type   of Committed Loan requested]
    
	
 
    	
 
    
	
4.
    	
For   Eurodollar Rate Loans:  with an   Interest Period of                       months.
    

 

The Committed Borrowing, if any, requested herein complies with the provisos to the first sentence of Section 2.01 of the Agreement.

 

	
 
    	
AAR   CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

EXHIBIT C

 

FORM OF SWING LINE LOAN NOTICE

 

Date:             ,      

 

To:                              Bank of America, N.A., as Swing Line Lender
 Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of April 12, 2011 (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., a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, a L/C Issuer and Swing Line Lender.

 

The undersigned hereby requests a Swing Line Loan:

 

1.             On                                                                              (a Business Day).

 

2.             In the amount of $                                                    .

 

The Swing Line Borrowing requested herein complies with the requirements of the provisos to the first sentence of Section 2.05(a) of the Agreement.

 

	
 
    	
AAR   Corp.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

EXHIBIT D

 

FORM OF NOTE

 

April 12, 2011

 

FOR VALUE RECEIVED, the undersigned (the “Borrower”), hereby promises to pay to [                     ] or registered assigns (the “Lender”), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to the Borrower under that certain Credit Agreement, dated as of April 12, 2011 (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 the Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, a L/C Issuer and Swing Line Lender.

 

The Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement.  Except as otherwise provided in Section 2.05(f) of the Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to the Administrative Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent’s Office.  If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.

 

This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein.  This Note is also entitled to the benefits of the Guaranty.  Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement.  Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.

 

The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.

 

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

 

	
 
    	
AAR   CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

 

LOANS AND PAYMENTS WITH RESPECT THERETO

 

	
Date
    	
 
    	
Type of
   Loan Made
    	
 
    	
Amount of
   Loan Made
    	
 
    	
End of
   Interest
   Period
    	
 
    	
Amount of
   Principal or
   Interest
   Paid This
   Date
    	
 
    	
Outstanding
   Principal
   Balance
   This Date
    	
 
    	
Notation
   Made By
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

 

EXHIBIT E

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:            ,

 

To:                              Bank of America, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of April 12. 2011 (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., a Delaware corporation (the “Borrower”), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, a L/C Issuer and Swing Line Lender.

 

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

 

[Use following paragraph 1 for Fiscal Year-end financial statements]

 

1.             The Borrower has delivered the year-end audited financial statements required by Section 6.01(a) of the Agreement for the Fiscal Year of the Borrower ended as of the above date, together with the report and opinion of an independent certified public accountant required by such section.

 

[Use following paragraph 1 for Fiscal Quarter-end financial statements]

 

1.             The Borrower has delivered the unaudited financial statements required by Section 6.01(b) of the Agreement for the Fiscal Quarter of the Borrower ended as of the above date.  Such financial statements fairly present the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries 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.

 

2.             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 Borrower during the accounting period covered by such financial statements.

 

3.             A review of the activities of the 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 Borrower performed and observed all its Obligations under the Loan Documents, and

 

[select one:]

 

 

[to the best knowledge of the undersigned, during such fiscal period the Borrower 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:]

 

4.             The representations and warranties of the Borrower contained in Article V of the Agreement, and any representations and warranties of any Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Compliance Certificate, the representations and warranties contained in Section 5.04 of the Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement, including the statements in connection with which this Compliance Certificate is delivered.

 

5.             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:
    	
 
    

 

 

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

 

SCHEDULE 1
  to the Compliance Certificate

 

	
I.
    	
Section 7.13(a) –   Minimum Fixed Charge Coverage Ratio.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
A.
    	
Fixed   Charge Coverage Ratio:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
1.
    	
 
    	
EBITDAR
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
2.
    	
 
    	
Income   taxes paid
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
3.
    	
 
    	
Covenant   Capital Expenditures
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
4.
    	
 
    	
Sum   of (2) and (3)
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
5.
    	
 
    	
Remainder   of (1) minus (4)
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
6.
    	
 
    	
Interest   Expense
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
7.
    	
 
    	
Required   payments of principal of Funded Debt (excluding Loans and revolving loans   under the Huntington Debt, required principal payments under the Borrower’s   notes due May 15, 2011, required principal payments under the Borrower’s   convertible notes due March 1, 2014 and March 1, 2016, required   repurchases of Borrower’s convertible notes due February 1, 2026, and   loans under the Wood Dale Mortgage Documents)
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
8.
    	
 
    	
Consolidated   Rentals
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
9.
    	
 
    	
Restricted   Payments by the Borrower
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
10.
    	
 
    	
Sum   of (6) through (9)
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
11.
    	
 
    	
Ratio   of (5) to (10)
    	
 
    	
       to   1.00
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
12.
    	
 
    	
Minimum   allowed
    	
 
    	
1.50   to 1.00
    

 

	
II.
    	
Section 7.13(b) –   Minimum Tangible Net Worth.
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
A.
    	
Tangible   Net Worth:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
1.
    	
 
    	
$600,000,000
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
2.
    	
 
    	
50%   of Consolidated Net Income beginning 8/31/11
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
3.
    	
 
    	
50%   of Net Cash Proceeds from Equity Interests offerings
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
4.
    	
 
    	
Minimum   Tangible Net Work Required (sum of (1) through (3))
    	
 
    	
$
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
5.
    	
 
    	
Actual   Tangible Net Worth
    	
 
    	
$
    

 

 

	
III.
    	
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
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
3.
    	
Maximum   allowed 
    	
 
    	
3.50   to 1.00
    

 

 

EXHIBIT F-1

 

ASSIGNMENT AND ASSUMPTION

 

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of the Effective Date set forth below and is entered into by and between the Assignor identified in item 1 below (the “Assignor”) and the Assignee identified in item 2 below (the “Assignee”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit and the Swing Line Loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by the Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest”).  Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

 

	
1.
    	
 
    	
Assignor:
    
	
 
    	
 
    	
 
    
	
2.
    	
 
    	
Assignee:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[indicate   [Affiliate][Approved Fund] of [identify Lender]]
    
	
 
    	
 
    	
 
    
	
3.
    	
 
    	
Borrower: 
    	
AAR   CORP.
    
	
 
    	
 
    	
 
    
	
4.
    	
 
    	
Administrative   Agent: Bank of America, N.A., as the administrative agent under the Credit   Agreement
    

 

 

	
5.
    	
 
    	
Credit Agreement:        Credit Agreement, dated as of April 12, 2011, among   AAR Corp., the Lenders from time to time party thereto, and Bank of America, N.A., as   Administrative Agent, aL/C Issuer, and Swing Line Lender
    
	
 
    	
 
    	
 
    
	
6.
    	
 
    	
Assigned   Interest:
    

 

	
Assignor
    	
 
    	
Assignee
    	
 
    	
Aggregate
   Amount of
   Commitment
   for all Lenders(1)
    	
 
    	
Amount of
   Commitment
   Assigned
    	
 
    	
Percentage
   Assigned of
   Commitment(2)
    	
 
    	
CUSIP
   Number
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
%
    	
 
    	
 
    

 

[7.            Trade Date:                             ](3)

 

Effective Date:                   , 20   [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

	
 
    	
ASSIGNOR
    
	
 
    	
[NAME   OF ASSIGNOR]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
ASSIGNEE
    
	
 
    	
[NAME   OF ASSIGNEE]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Title:
    

 

(1)  Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date.

 

(2)  Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

 

(3)  To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date.

 

 

	
[Consented   to and](4) Accepted:
    	
 
    
	
 
    	
 
    
	
BANK   OF AMERICA, N.A., as
    	
 
    
	
Administrative Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
[Consented   to:](5)
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

(4)  To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

 

(5)  To be added only if the consent of the Borrower and/or other parties (e.g. Swing Line Lender, L/C Issuer) is required by the terms of the Credit Agreement.

 

 

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

 

STANDARD TERMS AND CONDITIONS FOR

 

ASSIGNMENT AND ASSUMPTION

 

1.         Representations and Warranties.

 

1.1.      Assignor.  The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

 

1.2.      Assignee.  The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06(b)(iii) and (v) of the Credit Agreement (subject to such consents, if any, as may be required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (vii) if it is a Foreign Lender, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

 

 

2.         Payments.  From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

 

3.         General Provisions.  This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.  This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption.  This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Illinois.

 

 

EXHIBIT G

 

 

FORM OF GUARANTY

 

 

(attached)

 

 

EXECUTION COPY

 

GUARANTY

 

THIS GUARANTY (this “Guaranty”) is made as of April 12, 2011, by certain Subsidiaries of AAR CORP., a Delaware corporation (the “Borrower”), from time to time signatory hereto (whether as of the date hereof or pursuant to a supplement in the form of Exhibit A hereto; collectively, the “Guarantors”) in favor of BANK OF AMERICA, N.A., as administrative agent and contractual representative of the Lenders under the Credit Agreement referred to below (in such capacity, the “Administrative Agent”).  Capitalized terms used herein but not defined herein shall have the meaning set forth in the below defined Credit Agreement.

 

WITNESSETH

 

WHEREAS, the Borrower is party to that certain Credit Agreement, dated as of April 12, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders party thereto from time to time (the “Lenders”) and the Administrative Agent;

 

WHEREAS, reference is hereby made to that certain Note Purchase Agreement, dated as of May 1, 2001 (as amended, restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”), by and among the Borrower and the Purchasers listed in Schedule A attached thereto;

 

WHEREAS, it is a condition precedent to the extensions of credit by the Lenders under the Credit Agreement that each of the Guarantors execute and deliver this Guaranty whereby each of the Guarantors, without limitation and with full recourse, shall guarantee the payment and performance when due, of all Guaranteed Obligations (as hereinafter defined);

 

WHEREAS, this Guaranty shall become effective on the Effective Date (as herein defined);

 

NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Guaranty.  Each Guarantor hereby absolutely and unconditionally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all Obligations existing and future indebtedness and liabilities of every kind, nature and character, direct or indirect, absolute or contingent, liquidated or unliquidated, voluntary or involuntary and whether for principal, interest, premiums, fees, indemnities, damages, costs, expenses or otherwise, of the Borrower to the Lenders arising under the Credit Agreement and any instruments, agreements or other documents of any kind or nature now or hereafter executed in connection with the Credit Agreement and other Loan Documents (including all renewals, extensions, amendments, refinancings and other modifications thereof and all costs, attorneys’ fees and expenses incurred by the Lenders in connection with the collection or enforcement thereof), and whether recovery upon such indebtedness and liabilities may be or hereafter become unenforceable or shall be an allowed or disallowed claim under any proceeding or case commenced by or against such

 

 

Guarantor or the Borrower under the Bankruptcy Code (Title 11, United States Code), any successor statute or any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally (collectively, “Debtor Relief Laws”), and including interest that accrues after the commencement by or against the Borrower of any proceeding under any Debtor Relief Laws (collectively, the “Guaranteed Obligations”).  Absent manifest error, the Lenders’ books and records showing the amount of the Guaranteed Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon the Guarantors and conclusive for the purpose of establishing the amount of the Guaranteed Obligations.  This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Guaranteed Obligations or any instrument or agreement evidencing any Guaranteed Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Guaranteed Obligations which might otherwise constitute a defense to the obligations of any Guarantor under this Guaranty, and the Guarantors hereby irrevocably waive any defenses they may now have or hereafter acquire in any way relating to any or all of the foregoing.

 

2.             No Setoff or Deductions; Taxes; Payments.  Each Guarantor represents and warrants that it is organized and resident in the United States of America.  Each Guarantor shall make all payments hereunder without setoff or counterclaim and free and clear of and without deduction for any taxes, levies, imposts, duties, charges, fees, deductions, withholdings, compulsory loans, restrictions or conditions of any nature now or hereafter imposed or levied by any jurisdiction or any political subdivision thereof or taxing or other authority therein unless such Guarantor is compelled by law to make such deduction or withholding.  If any such obligation (other than one arising with respect to taxes based on or measured by the income or profits of any Lender) is imposed upon such Guarantor with respect to any amount payable by it hereunder, such Guarantor will pay to the Administrative Agent, on the date on which such amount is due and payable hereunder, such additional amount in U.S. dollars as shall be necessary to enable the applicable Lender to receive the same net amount which such Lender would have received on such due date had no such obligation been imposed upon such Guarantor.  Each Guarantor will deliver promptly to the Administrative Agent certificates or other valid vouchers for all taxes or other charges deducted from or paid with respect to payments made by such Guarantor hereunder.  The obligations of the Guarantors under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

3.             Rights of Administrative Agent.  Each Guarantor consents and agrees that the Administrative Agent and Lenders may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing effectiveness hereof:  (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Guaranteed Obligations or any part thereof in accordance with the terms of the Credit Agreement; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Guaranteed Obligations; (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent may determine; and (d) release or substitute one or more of any endorsers or other guarantors of any of the Guaranteed Obligations.  Without limiting the generality of the

 

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foregoing, each Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Guarantor.

 

4.             Certain Waivers.  Each Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever (including any act or omission of the Administrative Agent or any Lender) of the liability of the Borrower; (b) any defense based on any claim that such Guarantor’s obligations exceed or are more burdensome than those of the Borrower; (c) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder; (d) any right to require the Administrative Agent or any Lender to proceed against the Borrower, proceed against or exhaust any security for the Debt, or pursue any other remedy in the Administrative Agent’s or any Lender’s power whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by the Administrative Agent or any Lender; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable law limiting the liability of or exonerating guarantors or sureties.  Each Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Guaranteed Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Guaranteed Obligations.

 

5.             Obligations Independent.  The obligations of each Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Guaranteed Obligations and the obligations of any other guarantor, and a separate action may be brought against such Guarantor to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.

 

6.             Subrogation.  Each Guarantor shall not exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Guaranteed Obligations and any amounts payable under this Guaranty have been indefeasibly paid and performed in full and any commitments of the Lenders or facilities provided by the Lenders with respect to the Guaranteed Obligations are terminated.  If any amounts are paid to such Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Lenders and shall forthwith be paid to the Administrative Agent to reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

 

7.             Termination; Reinstatement.  This Guaranty is a continuing and irrevocable guaranty of all Guaranteed Obligations now or hereafter existing and shall remain in full force and effect until all Guaranteed Obligations and any other amounts payable under this Guaranty are indefeasibly paid in full in cash and any commitments of the Lenders or facilities provided by the Lenders with respect to the Guaranteed Obligations are terminated.  Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or any Guarantor is made, or the Administrative Agent or any Lender exercises their right of setoff, in respect of the Guaranteed Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated,

 

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declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or any Lender in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Administrative Agent or any Lender is in possession of or has released this Guaranty and regardless of any prior revocation, rescission, termination or reduction.  The obligations of each Guarantor under this paragraph shall survive termination of this Guaranty.

 

8.             Subordination.  Each Guarantor hereby subordinates the payment of all obligations and indebtedness of the Borrower owing to such Guarantor, whether now existing or hereafter arising, including but not limited to any obligation of the Borrower to such Guarantor as subrogee of the Administrative Agent or any Lender or resulting from such Guarantor’s performance under this Guaranty, to the indefeasible payment in full in cash of all Guaranteed Obligations.  If the Administrative Agent so requests, any such obligation or indebtedness of the Borrower to such Guarantor shall be enforced and performance received by such Guarantor as trustee for the Administrative Agent and Lenders and the proceeds thereof shall be paid over to the Administrative Agent on account of the Guaranteed Obligations, but without reducing or affecting in any manner the liability of any Guarantor under this Guaranty.

 

9.             Stay of Acceleration.  In the event that acceleration of the time for payment of any of the Guaranteed Obligations is stayed, in connection with any case commenced by or against any Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by the applicable Guarantor immediately upon demand by the Administrative Agent.

 

10.          Contribution With Respect to Guaranteed Obligations.  To the extent that any Guarantor shall make a payment under this Guaranty (a “Guarantor Payment”) which, taking into account all other Guarantor Payments then previously or concurrently made by any other Guarantor, exceeds the amount which otherwise would have been paid by or attributable to such Guarantor if each Guarantor had paid the aggregate Guaranteed Obligations satisfied by such Guarantor Payment in the same proportion as such Guarantor’s “Allocable Amount” (as defined below) (as determined immediately prior to such Guarantor Payment) bore to the aggregate Allocable Amounts of each of the Guarantors as determined immediately prior to the making of such Guarantor Payment, then, following indefeasible payment in full in cash of the Guarantor Payment and the Guaranteed Obligations (other than contingent indemnity obligations) and satisfaction of all other conditions to the termination of this Guaranty in accordance with the terms of Section 7 hereof, such Guarantor shall be entitled to receive contribution and indemnification payments from, and be reimbursed by, each other Guarantor for the amount of such excess, pro rata based upon their respective Allocable Amounts in effect immediately prior to such Guarantor Payment.  Notwithstanding any other provision of this Guaranty, the amount guaranteed by each Guarantor hereunder shall be limited to the extent, if any, required so that its obligations hereunder shall not be subject to avoidance under Section 548 of the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or common law.  In determining the limitations, if any, on the amount of any Guarantor’s obligations hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such

 

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Guarantor may have under this Guaranty, any other agreement or applicable law shall be taken into account.  As of any date of determination, the “Allocable Amount” of any Guarantor shall be equal to the excess of the fair saleable value of the property of such Guarantor over the total liabilities of such Guarantor (including the maximum amount reasonably expected to become due in respect of contingent liabilities, calculated, without duplication, assuming each other Guarantor that is also liable for such contingent liability pays its ratable share thereof), giving effect to all payments made by other Guarantors as of such date in a manner to maximize the amount of such contributions.  This Section 10 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay any amounts as and when the same shall become due and payable in accordance with the terms of this Guaranty.  The parties hereto acknowledge that the rights of contribution and indemnification hereunder shall constitute assets of the Guarantor or Guarantors to which such contribution and indemnification is owing.

 

11.          Expenses.  Each Guarantor shall pay on demand all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) in any way relating to the enforcement or protection of the Administrative Agent’s rights under this Guaranty or in respect of the Guaranteed Obligations, including any incurred during any “workout” or restructuring in respect of the Guaranteed Obligations and any incurred in the preservation, protection or enforcement of any rights of the Administrative Agent in any proceeding any Debtor Relief Laws.  The obligations of the Guarantors under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

12.          Miscellaneous.  Except as set forth in Section 19 hereof, no provision of this Guaranty may be waived, amended, supplemented or modified, except by a written instrument executed by the Administrative Agent and the Guarantors.  No failure by the Administrative Agent to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy or power hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law or in equity.  The unenforceability or invalidity of any provision of this Guaranty shall not affect the enforceability or validity of any other provision herein.  Unless otherwise agreed by the Administrative Agent and the Guarantors in writing, this Guaranty is not intended to supersede or otherwise affect any other guaranty now or hereafter given by any Guarantor for the benefit of the Administrative Agent or any term or provision thereof.

 

13.          Condition of Borrower.  Each Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor such information concerning the financial condition, business and operations of the Borrower and any such other guarantor as the Guarantor requires, and that the Administrative Agent has no duty, and the Guarantor is not relying on the Administrative Agent at any time, to disclose to the Guarantor any information relating to the business, operations or financial condition of the Borrower or any other guarantor (the guarantor waiving any duty on the part of the Administrative Agent to disclose such information and any defense relating to the failure to provide the same).

 

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14.          Setoff.  If and to the extent any payment is not made when due hereunder, the Administrative Agent may setoff and charge from time to time any amount so due against any or all of the Guarantor’s accounts or deposits with the Administrative Agent.

 

15.          Representations and Warranties.  The Guarantor represents and warrants that (a) it is duly organized and in good standing under the laws of the jurisdiction of its organization and has full capacity and right to make and perform this Guaranty, and all necessary authority has been obtained; (b) this Guaranty constitutes its legal, valid and binding obligation enforceable 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; (c) the making and performance of this Guaranty does not and will not violate the provisions of any applicable law, regulation or order, and does not and will not result in the breach of, or constitute a default or require any consent under, any material agreement, instrument, or document to which it is a party or by which it or any of its property may be bound or affected; and (d) all consents, approvals, licenses and authorizations of, and filings and registrations with, any governmental authority required under applicable law and regulations for the making and performance of this Guaranty have been obtained or made and are in full force and effect.

 

16.          Indemnification and Survival.  Without limitation on any other obligations of the Guarantors or remedies of the Administrative Agent or any Lender under this Guaranty, each Guarantor shall, to the fullest extent permitted by law, indemnify, defend and save and hold harmless the Administrative Agent and any Lender from and against, and shall pay on demand, any and all damages, losses, liabilities and expenses (including reasonable attorneys’ fees and expenses and the allocated cost and disbursements of internal legal counsel) that may be suffered or incurred by the Administrative Agent or such Lender in connection with or as a result of any failure of any Guaranteed Obligations to be the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their terms (subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity); provided that such indemnity shall not be available to the extent that such losses, claims, damages, liabilities or expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the Administrative Agent or any Lender or (y) result from a claim brought by any Guarantor against the Administrative Agent or any Lender for breach in bad faith of the Administrative Agent’s or such Lender’s obligations hereunder or under any other Loan Document, if such Guarantor has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  The obligations of the Guarantors under this paragraph shall survive the payment in full of the Guaranteed Obligations and termination of this Guaranty.

 

17.          GOVERNING LAW; Assignment; Jurisdiction; Notices.  THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS.  This Guaranty shall (a) bind each Guarantor and its successors and assigns, provided that such Guarantor may not assign its rights or obligations under this Guaranty without the prior written consent of the Administrative Agent (and any attempted assignment without such consent shall be void), and (b) inure to the benefit of the Administrative Agent and its successors and assigns and the Administrative Agent may, without notice to such Guarantor and without affecting such

 

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Guarantor’s obligations hereunder, assign, sell or grant participations in the Guaranteed Obligations and this Guaranty, in whole or in part.  Each Guarantor hereby irrevocably (i) submits to the exclusive jurisdiction of any United States Federal or State court sitting in Chicago, Illinois in any action or proceeding arising out of or relating to this Guaranty, and (ii) waives to the fullest extent permitted by law any defense asserting an inconvenient forum in connection therewith.  Service of process by the Administrative Agent or any Lender in connection with such action or proceeding shall be binding on the Guarantors if sent to the applicable Guarantor by registered or certified mail at its address specified below or such other address as from time to time notified by the applicable Guarantor.  Each Guarantor agrees that the Administrative Agent or any Lender may disclose to any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations of all or part of the Guaranteed Obligations any and all information in the Administrative Agent’s or Lender’s possession concerning such Guarantor, this Guaranty and any security for this Guaranty.  All notices and other communications to the Guarantors under this Guaranty shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier to the applicable Guarantor at its address set forth below or at such other address in the United States as may be specified by the applicable Guarantor in a written notice delivered to the Administrative Agent at such office as the Administrative Agent may designate for such purpose from time to time in a written notice to the Guarantors.

 

18.          WAIVER OF JURY TRIAL; FINAL AGREEMENT.  TO THE EXTENT ALLOWED BY APPLICABLE LAW, EACH GUARANTOR THE ADMINISTRATIVE AGENT AND EACH LENDER EACH IRREVOCABLY WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON, ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE GUARANTEED OBLIGATIONS.  THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

19.          Supplemental Guarantors.  Pursuant to Section 6.07 of the Credit Agreement, additional Significant Subsidiaries shall become obligated as Guarantors hereunder and other Subsidiaries may elect to become obligated as Guarantors hereunder (each as fully as though an original signatory hereto) by executing and delivering to the Administrative Agent a supplemental guaranty in the form of Exhibit A attached hereto (with blanks appropriately filled in, each a “Supplemental Guaranty”), together with such additional supporting documentation required pursuant to Section 6.07 of the Credit Agreement.

 

20.          Effectiveness.  This Guaranty shall become effective immediately on the date (the “Effective Date”) of payment in full of the Notes (as defined in the Note Purchase Agreement).  An immediate Event of Default shall exist under this Guaranty and under the Credit Agreement if (a) any such Note is outstanding after May 16, 2011, (b) any “Default” or “Event of Default” (both as defined in the Note Purchase Agreement) occurs under the Note Purchase Agreement, or (c) this Guaranty fails to become effective for any reason on the Effective Date.

 

[Signature Pages Follow]

 

7

 

IN WITNESS WHEREOF, each of the Guarantors has caused this Guaranty to be duly executed, under seal, by its authorized officer as of the day and year first above written.

 

 

	
 
    	
AAR   AIRCRAFT SERVICES, INC.
    	
 
    
	
 
    	
AAR   PARTS TRADING, INC.
    	
 
    
	
 
    	
AAR   ALLEN SERVICES, INC.
    	
 
    
	
 
    	
AAR   MANUFACTURING, INC.
    	
 
    
	
 
    	
EP   AVIATION, LLC  
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
Name:  
    	
 
    	
 
    
	
 
    	
Title:  
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
AAR   AIRLIFT GROUP, INC.  
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
Name:  
    	
 
    	
 
    
	
 
    	
Title:  
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Notice   Information:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
1100   N. Wood Dale Road
    	
 
    
	
 
    	
Wood   Dale, Illinois 60191
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Attention:   
    	
 
    
	
 
    	
Telephone:   (630) 227-2090
    	
 
    
	
 
    	
Facsimile:   (630) 227-2101
    	
 
    

 

 

Signature Page to
 Guaranty

 

 

	
 
    	
Accepted   and Agreed:
    
	
 
    	
 
    
	
 
    	
BANK   OF AMERICA, N.A., as Administrative Agent    
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:  
    	
 
    
	
 
    	
Title:  
    	
 
    

 

 

Signature Page to
 Guaranty

 

 

EXHIBIT A

 

SUPPLEMENTAL GUARANTY

 

[Date]

 

Bank of America, N.A.,

as Administrative Agent for the Lenders under

the below-described Credit Agreement

 

Ladies and Gentlemen:

 

Reference is hereby made to (i) that certain Credit Agreement, dated as of April 12, 2011, among AAR Corp., a Delaware corporation, the lenders from time to time parties thereto (the “Lenders”) and Bank of America, N.A., as administrative agent and contractual representative (the “Administrative Agent”) on behalf of itself and the other Lenders (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”) and (ii) that certain Guaranty, dated as of April 12, 2011, executed and delivered by the Guarantors parties thereto in favor of the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”).  Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the respective meanings provided therein.

 

In accordance with Section 6.07 of the Credit Agreement and Paragraph 18 of the Guaranty, the undersigned, [NEW GUARANTOR], a [corporation/limited liability company/partnership] organized under the laws of [               ], hereby elects to be a “Guarantor” and for all purposes of the Credit Agreement and the Guaranty, respectively, effective from the date hereof.

 

Without limiting the generality of the foregoing, the undersigned hereby agrees to perform all the obligations of a Guarantor under, and to be bound in all respects by the terms of, the Guaranty, to the same extent and with the same force and effect as if the undersigned were a direct signatory thereto.  By its execution below, the undersigned represents and warrants as to itself that all of the representations and warranties contained in Paragraph 14 of the Guaranty are true and correct as of the date hereof.

 

This Supplemental Guaranty shall be construed in accordance with the internal laws of the State of Illinois (including, without limitation, 735 ILCS Section 105/5-1 et seq., but otherwise without regard to the conflict of laws provisions), but giving effect to federal laws applicable to national banks.

 

[Signature page follows]

 

 

IN WITNESS WHEREOF, this Supplemental Guaranty has been duly executed by the undersigned as of the [    ] day of [          ], 201[    ].

 

 

	
 
    	
[NEW   GUARANTOR]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
Notice   Information:
    
	
 
    	
[                                      ]
    
	
 
    	
[                                      ]
    
	
 
    	
[                                      ]
    
	
 
    	
[                                      ]
    
	
 
    	
[                                      ]

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