Document:

Exhibit
10.1

EXECUTION
COPY

CREDIT
AGREEMENT

DATED AS
OF AUGUST 31, 2006

among

AAR CORP.,

as the
Company

THE VARIOUS FINANCIAL
INSTITUTIONS PARTY HERETO,

as
Lenders,

and

LASALLE BANK NATIONAL
ASSOCIATION,

as
Administrative Agent

 

LASALLE BANK NATIONAL ASSOCIATION,

as
Arranger

 

 

 

Table of Contents

	
  SECTION 1   DEFINITIONS.

  	
   

  
	
  1.1   Definitions

  	
   

  
	
  1.2   Other Interpretive Provisions

  	
   

  
	
  1.3   Delivery of Pro Forma Calculations

  	
   

  
	
  SECTION 2   COMMITMENTS OF THE LENDERS;
  BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.

  	
   

  
	
  2.1   Commitments

  	
   

  
	
  2.1.1   Revolving Loan Commitment

  	
   

  
	
  2.1.2
    L/C Commitment

  	
   

  
	
  2.2
    Loan Procedures.

  	
   

  
	
  2.2.1   Various Types of Loans

  	
   

  
	
  2.2.2   Borrowing Procedures

  	
   

  
	
  2.2.3   Conversion and Continuation
  Procedures

  	
   

  
	
  2.2.4   Swing Line Facility

  	
   

  
	
  2.3   Letter of Credit Procedures

  	
   

  
	
  2.3.1
    L/C Applications

  	
   

  
	
  2.3.2   Participations in Letters of Credit

  	
   

  
	
  2.3.3   Reimbursement Obligations

  	
   

  
	
  2.3.4   Funding by Lenders to Issuing Lender

  	
   

  
	
  2.3.5   Existing Letters of Credit

  	
   

  
	
  2.4   Commitments Several

  	
   

  
	
  2.5   Certain Conditions

  	
   

  
	
  2.6   Increase of Revolving Commitment

  	
   

  
	
  SECTION 3   EVIDENCING OF LOANS

  	
   

  
	
  3.1   Notes

  	
   

  
	
  3.2   Recordkeeping

  	
   

  
	
  SECTION 4   INTEREST.

  	
   

  
	
  4.1   Interest Rates

  	
   

  
	
  4.2   Interest Payment Dates

  	
   

  
	
  4.3   Setting and Notice of LIBOR Rates

  	
   

  
	
  4.4   Computation of Interest

  	
   

  
	
  SECTION 5   FEES

  	
   

  
	
  5.1   Non-Use Fee

  	
   

  
	
  5.2   Letter of Credit Fees

  	
   

  
	
  SECTION 6   REDUCTION OR TERMINATION OF THE
  REVOLVING COMMITMENT; PREPAYMENTS

  	
   

  
	
  6.1   Reduction or Termination of the
  Revolving Commitment

  	
   

  
	
  6.1.1   Voluntary Reduction or Termination
  of the Revolving Commitment

  	
   

  
	
  6.1.2   All Reductions of the Revolving
  Commitment

  	
   

  
	
  6.2   Prepayments

  	
   

  
	
  6.2.1   Voluntary Prepayments

  	
   

  
	
  6.2.2   Mandatory Prepayments

  	
   

  
	
  6.3   Manner of Prepayments.

  	
   

  
	
  6.3.1   All Prepayments

  	
   

  

 

 i
 

 

 

	
  6.4   Repayments

  	
   

  
	
  6.4.1   Revolving Loans

  	
   

  
	
  SECTION 7   MAKING AND PRORATION OF
  PAYMENTS; SETOFF; TAXES.

  	
   

  
	
  7.1   Making of Payments

  	
   

  
	
  7.2   Application of Certain Payments

  	
   

  
	
  7.3   Due Date Extension

  	
   

  
	
  7.4   Setoff

  	
   

  
	
  7.5   Proration of Payments

  	
   

  
	
  7.6   Taxes.

  	
   

  
	
  SECTION 8   INCREASED COSTS; SPECIAL
  PROVISIONS FOR LIBOR LOANS

  	
   

  
	
  8.1   Increased Costs

  	
   

  
	
  8.2   Basis for Determining Interest Rate
  Inadequate or Unfair

  	
   

  
	
  8.3   Changes in Law Rendering LIBOR Loans
  Unlawful

  	
   

  
	
  8.4   Funding Losses

  	
   

  
	
  8.5   Right of Lenders to Fund through Other
  Offices

  	
   

  
	
  8.6   Discretion of Lenders as to Manner of
  Funding

  	
   

  
	
  8.7   Mitigation of Circumstances;
  Replacement of Lenders

  	
   

  
	
  8.8   Conclusiveness of Statements; Survival
  of Provisions

  	
   

  
	
  SECTION 9   REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  9.1   Organization

  	
   

  
	
  9.2   Authorization; No Conflict

  	
   

  
	
  9.3   Validity and Binding Nature

  	
   

  
	
  9.4   Financial Condition

  	
   

  
	
  9.5   No Material Adverse Change

  	
   

  
	
  9.6   Litigation and Contingent Liabilities

  	
   

  
	
  9.7   Ownership of Properties; Liens

  	
   

  
	
  9.8   Equity Ownership; Subsidiaries

  	
   

  
	
  9.9   Pension Plans

  	
   

  
	
  9.10   Investment Company Act

  	
   

  
	
  9.11   [Intentionally Omitted]

  	
   

  
	
  9.12   Regulation U

  	
   

  
	
  9.13   Taxes

  	
   

  
	
  9.14   Solvency,
  etc.

  	
   

  
	
  9.15   Environmental Matters

  	
   

  
	
  9.16   Insurance

  	
   

  
	
  9.17   Information

  	
   

  
	
  9.18   Intellectual Property

  	
   

  
	
  9.19   No Default

  	
   

  
	
  SECTION 10   AFFIRMATIVE COVENANTS

  	
   

  
	
  10.1   Reports, Certificates and Other
  Information

  	
   

  
	
  10.1.1   Annual Report

  	
   

  
	
  10.1.2   Interim Reports

  	
   

  
	
  10.1.3   Compliance Certificates

  	
   

  
	
  10.1.4   Reports to the SEC and to Shareholders

  	
   

  

 

 ii
 

 

 

	
  10.1.5   Notice of
  Default, Litigation and ERISA Matters

  	
   

  
	
  10.1.6   Projections

  	
   

  
	
  10.1.7   Other Information

  	
   

  
	
  10.2   Books, Records and Inspections

  	
   

  
	
  10.3   Maintenance of Property; Insurance

  	
   

  
	
  10.4   Compliance with Laws; Payment of
  Taxes and Liabilities

  	
   

  
	
  10.5   Maintenance of Existence, etc

  	
   

  
	
  10.6   Use of Proceeds

  	
   

  
	
  SECTION 11   NEGATIVE COVENANTS

  	
   

  
	
  11.1   Debt

  	
   

  
	
  11.2   Liens

  	
   

  
	
  11.3   Restricted Payments

  	
   

  
	
  11.4   Mergers and Consolidations

  	
   

  
	
  11.5   Sale of Assets, etc

  	
   

  
	
  11.6   Acquisitions

  	
   

  
	
  11.7   Modification of Organizational
  Documents

  	
   

  
	
  11.8   Transactions with Affiliates

  	
   

  
	
  11.9   Inconsistent Agreements

  	
   

  
	
  11.10   Business Activities; Issuance of
  Equity

  	
   

  
	
  11.11   Investments

  	
   

  
	
  11.12   Fiscal Year

  	
   

  
	
  11.13   Financial Covenants

  	
   

  
	
  11.13.1   Fixed Charge Coverage Ratio

  	
   

  
	
  11.13.2   Minimum Tangible Net Worth

  	
   

  
	
  11.13.3   Adjusted Total Debt to EBITDA
  Ratio

  	
   

  
	
  SECTION 12   EFFECTIVENESS; CONDITIONS OF
  LENDING, ETC.

  	
   

  
	
  12.1   Conditions to Effectiveness

  	
   

  
	
  12.1.1   Notes

  	
   

  
	
  12.1.2   Authorization Documents

  	
   

  
	
  12.1.3   Consents, etc.

  	
   

  
	
  12.1.4   Opinions of Counsel

  	
   

  
	
  12.1.5   Payment of Fees

  	
   

  
	
  12.1.6   Search Results; Lien Terminations

  	
   

  
	
  12.1.7   Closing Certificate, Consents and
  Permits

  	
   

  
	
  12.1.8   Other

  	
   

  
	
  12.2   Conditions to Credit Extensions

  	
   

  
	
  12.2.1   Compliance with Warranties, No
  Default, etc.

  	
   

  
	
  12.2.2   Confirmatory Certificate

  	
   

  
	
  SECTION 13   EVENTS OF DEFAULT AND THEIR
  EFFECT

  	
   

  
	
  13.1   Events of Default

  	
   

  
	
  13.1.1   Non-Payment of the Loans, etc.

  	
   

  
	
  13.1.2   Non-Payment of Other Debt

  	
   

  
	
  13.1.3   Bankruptcy, Insolvency, etc.

  	
   

  
	
  13.1.4   Non-Compliance with Loan Documents

  	
   

  

 

 iii
 

 

 

	
  13.1.5   Representations;
  Warranties

  	
   

  
	
  13.1.6   Pension Plans

  	
   

  
	
  13.1.7   Judgments

  	
   

  
	
  13.1.8   Invalidity of Loan Documents

  	
   

  
	
  13.1.9   Invalidity of Subordination
  Provisions, etc.

  	
   

  
	
  13.1.10   Change of Control

  	
   

  
	
  13.2   Effect of Event of Default

  	
   

  
	
  SECTION
  14   THE AGENT

  	
   

  
	
  14.1   Appointment and Authorization

  	
   

  
	
  14.2   Issuing Lender

  	
   

  
	
  14.3   Delegation of Duties

  	
   

  
	
  14.4   Exculpation of Administrative Agent

  	
   

  
	
  14.5   Reliance by Administrative Agent

  	
   

  
	
  14.6   Notice of Default

  	
   

  
	
  14.7   Credit Decision

  	
   

  
	
  14.8   Indemnification

  	
   

  
	
  14.9   Administrative Agent in Individual
  Capacity

  	
   

  
	
  14.10   Successor Administrative Agent

  	
   

  
	
  14.11   Administrative Agent May File Proofs
  of Claim

  	
   

  
	
  14.12   Other Agents; Arrangers and Managers

  	
   

  
	
  SECTION 15   GENERAL

  	
   

  
	
  15.1   Waiver; Amendments

  	
   

  
	
  15.2   Confirmations

  	
   

  
	
  15.3   Notices

  	
   

  
	
  15.4   Computations

  	
   

  
	
  15.5   Costs, Expenses and Taxes

  	
   

  
	
  15.6   Assignments; Participations

  	
   

  
	
  15.6.1   Assignments

  	
   

  
	
  15.6.2   Participations

  	
   

  
	
  15.7   Register

  	
   

  
	
  15.8   GOVERNING LAW

  	
   

  
	
  15.9   Confidentiality

  	
   

  
	
  15.10   Severability

  	
   

  
	
  15.11   Nature of Remedies

  	
   

  
	
  15.12   Entire Agreement

  	
   

  
	
  15.13   Counterparts

  	
   

  
	
  15.14   Successors and Assigns

  	
   

  
	
  15.15   Captions

  	
   

  
	
  15.16   Customer Identification—USA Patriot
  Act Notice

  	
   

  
	
  15.17   INDEMNIFICATION BY THE COMPANY

  	
   

  
	
  15.18   Nonliability of Lenders

  	
   

  
	
  15.19   FORUM SELECTION AND CONSENT TO
  JURISDICTION

  	
   

  
	
  15.20   WAIVER OF JURY TRIAL

  	
   

  

 

 iv
 

 

 

	
  ANNEXES

  
	
   

  
	
  ANNEX A

  	
  Lenders and Pro Rata Shares

  
	
  ANNEX B

  	
  Addresses for Notices

  
	
   

  
	
   

  
	
  SCHEDULES

  
	
   

  
	
  SCHEDULE 2.3.5

  	
  Existing Letters of Credit

  
	
  SCHEDULE 9.6

  	
  Litigation and Contingent Liabilities

  
	
  SCHEDULE 9.8

  	
  Restricted Subsidiaries and Unrestricted
  Subsidiaries

  
	
  SCHEDULE 11.1

  	
  Existing Debt

  
	
  SCHEDULE 11.11

  	
  Investments

  
	
  SCHEDULE 12.1

  	
  Debt to be Repaid

  
	
   

  	
   

  
	
   

  
	
  EXHIBITS

  
	
   

  
	
  EXHIBIT A

  	
  Form of Note (Section 3.1)

  
	
  EXHIBIT B

  	
  Form of Compliance Certificate (Section 10.1.3)

  
	
  EXHIBIT C

  	
  Form of Assignment Agreement (Section 15.6.1)

  
	
  EXHIBIT D

  	
  Form of Notice of Borrowing (Section 2.2.2)

  
	
  EXHIBIT E

  	
  Form of Notice of Conversion/Continuation (Section
  2.2.3)

  
	
  EXHIBIT F

  	
  Form of L/C Application (Definitions)

  

 

 v

CREDIT
AGREEMENT

THIS CREDIT AGREEMENT dated as of August 31, 2006
(this “Agreement”) is entered into among AAR CORP. (the “Company”),
the financial institutions that are or may from time to time become parties
hereto (together with their respective successors and assigns, the “Lenders”)
and LASALLE BANK NATIONAL ASSOCIATION (in its individual capacity, “LaSalle”),
as administrative agent for the Lenders.

The Lenders have agreed to make available to the
Company a revolving credit facility (which includes letters of credit) upon the
terms and conditions set forth herein.

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

SECTION 1 
DEFINITIONS.

1.1           Definitions.  When used herein the following terms shall
have the following meanings:

Acquired Debt means Debt of a Person
existing at the time such Person became a Restricted Subsidiary or assumed by
the Company or a Restricted Subsidiary of the Company 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 Capital Securities 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).

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 Domestic Cash as of such day to (b)
EBITDA for the Computation Period ending on such day.

Administrative Agent means LaSalle
in its capacity as administrative agent for the Lenders hereunder and any
successor thereto in such capacity.

Affected Loan—see Section 8.3.

Affiliate of any Person means (a)
any other Person which, directly or indirectly, controls or is controlled by or
is under common control with such Person, (b) any officer or director of such
Person and (c) with respect to any Lender, any entity administered or managed
by such Lender or an Affiliate or investment advisor thereof and which is
engaged in making, purchasing, holding or otherwise investing in commercial
loans.  A Person shall be deemed to be 

 1
 

 

 

“controlled by” any other Person if such Person
possesses, directly or indirectly, power to vote 10% or more of the securities
(on a fully diluted basis) having ordinary voting power for the election of
directors or managers or power to direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.  Unless expressly stated otherwise herein,
neither the Administrative Agent nor any Lender shall be deemed an Affiliate of
the Company or any of its Subsidiaries.

Agent Fee Letter means the Fee
letter dated as of [Date of Fee Letter] between the Company and the
Administrative Agent.

Agreement—see the Preamble.

Applicable Margin means, for any
day, the rate per annum set forth below opposite the level (the “Level”)
then in effect, it being understood that the Applicable Margin for (i) LIBOR
Loans shall be the percentage set forth under the column “LIBOR Margin”,
(ii) Base Rate Loans shall be the percentage set forth under the column “Base
Rate Margin”, (iii) the Non-Use Fee Rate shall be the percentage set forth
under the column “Non-Use Fee Rate” and (iv) the L/C Fee shall be the
percentage set forth under the column “L/C Fee Rate”:

	
  Level

  	
   

  	
  Adjusted Total Debt
to EBITDA Ratio

  	
   

  	
  LIBOR
Margin

  	
   

  	
  Base Rate
Margin

  	
   

  	
  Non-Use
Fee Rate

  	
   

  	
  L/C Fee
Rate

  
	
  I

  	
   

  	
  Greater than or equal to 3.00 to
  1.00

  	
   

  	
  2.00%

  	
   

  	
  0.25%

  	
   

  	
  0.375%

  	
   

  	
  2.00%

  
	
  II

  	
   

  	
  Greater than or equal to 2.50 to
  1.00 but less than 3.00 to 1.00

  	
   

  	
  1.75%

  	
   

  	
  0%

  	
   

  	
  0.30%

  	
   

  	
  1.75%

  
	
  III

  	
   

  	
  Greater than or equal to 2.00 to
  1.00 but less than 2.50 to 1.00

  	
   

  	
  1.50%

  	
   

  	
  0%

  	
   

  	
  0.25%

  	
   

  	
  1.50%

  
	
  IV

  	
   

  	
  Less than 2.00 to 1.00

  	
   

  	
  1.25%

  	
   

  	
  0%

  	
   

  	
  0.25%

  	
   

  	
  1.25%

  

 

The LIBOR Margin, the Base Rate Margin, the Non-Use
Fee Rate and the L/C Fee Rate shall be adjusted, to the extent applicable, on
the fifth (5th) Business Day after the Company provides or is required to
provide the annual and quarterly financial statements and other information
pursuant to Sections 10.1.1 or 10.1.2, as applicable, and the
related Compliance Certificate, pursuant to Section 10.1.3.  Notwithstanding anything contained in this
paragraph to the contrary, (a) if the Company fails to deliver the financial
statements and Compliance Certificate in accordance with the provisions of
Sections 10.1.1, 10.1.2 and 10.1.3, the LIBOR Margin, the
Base Rate Margin, the Non-Use Fee Rate and the L/C Fee Rate shall be based upon
Level I above beginning on the date such financial statements and Compliance
Certificate were required to be delivered until the fifth (5th) Business Day
after such financial statements and Compliance Certificate are actually
delivered, whereupon the Applicable Margin shall be determined by the then
current Level; (b)  no reduction to any
Applicable Margin shall become effective at any time when an Event of Default
or Unmatured Event of Default has occurred and is continuing; and (c) the
initial Applicable Margin on the Closing Date shall be based on Level

 2
 

 

 

II until the date on which the financial statements
and Compliance Certificate are required to be delivered for the Fiscal Quarter
ending February 28, 2007.

Asset Disposition means any Transfer except:

(a)           any

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

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

(iii)          Transfer
from the Company 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 Company 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 Company 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 Unmatured
Event of 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 Company or
any of its Restricted Subsidiaries or that is obsolete.

Assignee—see Section 15.6.1.

Assignment Agreement—see Section
15.6.1.

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.

Bank Product Agreements means those
certain cash management service agreements entered into from time to time
between the Company 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 Company 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 

 3
 

 

such amounts that the
Company 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 the Bank Products provided to the Company or any
Restricted Subsidiary pursuant to the Bank Product Agreements.

Bank Products means any service or
facility extended to the Company 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.

Base Rate means at any time the
greater of (a) the Federal Funds Rate plus 0.5% and (b) the Prime Rate.

Base Rate Loan means any Loan which
bears interest at or by reference to the Base Rate.

Base Rate Margin—see the definition
of Applicable Margin.

BSA—see Section 10.4.

Business Day means any day on which
LaSalle is open for commercial banking business in Chicago, Illinois and, in
the case of a Business Day which relates to a LIBOR Loan, on which dealings are
carried on in the London interbank eurodollar market.

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 Company,
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.

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.

Capital Securities means, with
respect to any Person, all shares, interests, participations or other
equivalents (however designated, whether voting or non-voting) of such Person’s
capital, whether now outstanding or issued or acquired after the Closing Date,
including common shares, preferred shares, membership interests in a limited
liability company, limited or general partnership interests in a partnership,
interests in a trust, interests in other unincorporated organizations or any other
equivalent of such ownership interest.

Cash Collateralize means to deliver
cash collateral to the Administrative Agent, to be held as cash collateral for
outstanding Letters of Credit, pursuant to documentation 

 4
 

 

 

satisfactory to the
Administrative Agent.  Derivatives of
such term have corresponding meanings.

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
and (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 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 Company entitled to vote for the election of directors; or (b)
either (x) a merger or consolidation or other business combination of the
Company with one or more other corporations as a result of which the beneficial
owners of the outstanding voting stock of the Company 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 Company 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 Company other than
to an entity of which the Company owns at least 80% of the voting stock; or (c)
the election, over any period of time, to the Board of Directors of the Company
without the recommendation or approval of the incumbent Board of Directors of
the Company, of the lesser of (x) three directors, or (y) directors
constituting a majority of the number of directors of the Company then in
office.

Clearwater IRB Documents means that
certain Loan Agreement between Pinellas County Industrial Council and ATR
International, Inc. (which has been merged into AAR Manufacturing, Inc.) dated
as of November 1, 1995 and that certain Letter of Credit Reimbursement
Agreement by and between ATR International, Inc. (which has been merged into
AAR Manufacturing, Inc.) and First Union National Bank of Florida dated as of
November 1, 1995, each as amended, restated or otherwise modified from time to
time.

 5
 

 

Closing Date—see Section 12.1.

Code means the Internal Revenue Code
of 1986.

Commitment means, as to any Lender,
such Lender’s commitment to make Loans, and to issue or participate in Letters
of Credit, under this Agreement.  The
initial amount of each Lender’s commitment to make Loans is set forth on Annex
A.

Company—see the Preamble.

Compliance Certificate means a
Compliance Certificate in substantially the form of Exhibit B.

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

Consolidated Assets means, at any time, the total assets of the Company and its
Restricted Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company 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 Company and its Restricted Subsidiaries for any period, the net
income (or loss) of the Company 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 Company and its
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and its Restricted Subsidiaries in accordance with GAAP.

Consolidated Total Capitalization means, at any time, the sum of the remainder of Tangible
Net Worth and Debt minus Subordinated Debt at such time.

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

Contingent Liability 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 (without limitation) 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 

 6
 

 

 

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.

Controlled Group means all members
of a controlled group of corporations, all members of a controlled group of
trades or businesses (whether or not incorporated) under common control and all
members of an affiliated service group which, together with the Company or any
of its Subsidiaries, are treated as a single employer under Section 414 of the
Code or Section 4001 of ERISA.

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, without
limitation, all liabilities created or arising under any 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 Company 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 Company and its Subsidiaries in respect of intercompany expenses,
billings and other charges between and among the Company 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 Company 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 Company (other than (i)
Subordinated Debt and (ii) Debt owing to the Company, any of its Subsidiaries
or any Affiliate).

Debt to be Repaid means Debt listed
on Schedule 12.1.  [AAR to include
Merrill Lynch financing and LaSalle L/C financing on such schedule]

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
Company, and

 7
 

 

 

(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 connection with such conversion) determined at the time
of the disposition thereof, in good faith by the Company.

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

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 and the prepayment of any other
facilities within 90 days of the Closing Date, extraordinary losses (less
extraordinary gains), write-offs or write-downs of certain aged inventory of
the AAR Parts Trading Inc. business unit (with the aggregate amount of such
write-offs and write-downs not exceeding $36,000,000 at any time for purposes
of this calculation) and write-offs or write-downs of aircraft purchased, or
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 $41,100,000 at any time for purposes of this calculation), and
charges and other expenses incurred in connection with certain environmental
remediation activities at the Company’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), in each case, for such period.

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

Environmental Claims 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 all present
or future federal, state or local laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all administrative or judicial
orders, consent agreements, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any governmental authority, in each case
relating to any matter arising out of or relating to public health and safety,
or pollution or protection of the environment or workplace, including any of
the foregoing relating to the presence, use, production, generation, handling,
transport, treatment, storage, disposal, distribution, discharge, emission,
release, threatened release, control or cleanup of any Hazardous Substance.

ERISA means the Employee Retirement
Income Security Act of 1974.

Event of Default means any of the
events described in Section 13.1.

 8
 

 

 

Exchange Act means
the Securities Exchange Act of 1934, as amended.

Excluded Taxes means taxes based
upon, or measured by, the Lender’s or Administrative Agent’s (or a branch of
the Lender’s or Administrative Agent’s) overall net income, overall net
receipts, or overall net profits (including franchise taxes imposed in lieu of
such taxes), but only to the extent such taxes are imposed by a taxing
authority (a) in a jurisdiction in which such Lender or Administrative Agent is
organized, (b) in a jurisdiction which the Lender’s or Administrative Agent’s
principal office is located, or (c) in a jurisdiction in which such Lender’s or
Administrative Agent’s lending office (or branch) in respect of which payments
under this Agreement are made is located.

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).

Federal Funds Rate means, for any
day, a fluctuating interest rate equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by the
Administrative Agent.  The Administrative
Agent’s determination of such rate shall be binding and conclusive absent
manifest error.

Fiscal Quarter means a fiscal
quarter of a Fiscal Year.

Fiscal Year means the fiscal year of
the Company 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 2006”) 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 Company and its Restricted Subsidiaries minus the sum of
income taxes paid in cash by the Company and its Restricted Subsidiaries and
all Capital Expenditures incurred by the Company and its Restricted
Subsidiaries to (b) the sum for such period of (i) cash Interest Expense
paid by the Company and its Restricted Subsidiaries plus (ii) required
payments of principal of Funded Debt for the Company and its Restricted
Subsidiaries (excluding (A) the Revolving Loans, (B) required principal
payments under the Company’s notes due December 15, 2007, the aggregate initial
principal amount of which is $60,000,000, and (C) required principal payments
under the Company’s notes due May 15, 2008, the aggregate initial principal
amount of which is $20,000,000) plus (iii) Consolidated Rentals paid by
the Company and its Restricted Subsidiaries plus (iv) Restricted Payments paid
by the Company during such Computation Period.

 9
 

 

FRB means the Board of Governors of
the Federal Reserve System or any successor thereto.

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 set forth from time to time 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 agencies with similar functions of comparable
stature and authority within the U.S. accounting profession) and the Securities
and Exchange Commission, which are applicable to the circumstances as of the
date of determination.

Group—see Section 2.2.1.

Hazardous Substances means
(a) any petroleum or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation,
dielectric fluid containing levels of polychlorinated biphenyls, radon gas and
mold; (b) any chemicals, materials, pollutant or substances defined as or
included in the definition of “hazardous substances”, “hazardous waste”, “hazardous
materials”, “extremely hazardous substances”, “restricted hazardous waste”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of
similar import, under any applicable Environmental Law; and (c) any other
chemical, material or substance, the exposure to, or release of which is
prohibited, limited or regulated by any governmental authority or for which any
duty or standard of care is imposed 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.

Indemnified Liabilities—see Section
15.16.

Intangible Assets means, at any
time, the sum of (a) the net book value of all assets, after deducting any
reserves applicable thereto, which would be treated as intangible assets of the
Company and its Restricted Subsidiaries under GAAP, including, without
limitation, goodwill, trademarks, trade names, service marks, brand names,
copyrights, patents and unamortized debt discount and expense, organizational
expenses and the excess of the equity in any Restricted Subsidiary over the
cost of the investment in such Restricted Subsidiary plus (b) any
increase in the amount of Net Worth attributable to a write-up in the book
value of any assets on the books of the Company and its Restricted Subsidiaries
resulting from a revaluation thereof subsequent to the Closing Date (other than
write-ups resulting from foreign currency translations and write-ups of assets of
a going concern business made within 12 months after the acquisition of such
business).

 10
 

 

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

Interest Period means, as to any
LIBOR Loan, the period commencing on the date such Loan is borrowed or
continued as, or converted into, a LIBOR Loan and ending on the date one, two,
three or six months thereafter as selected by the Company pursuant to Section
2.2.2 or 2.2.3, as the case may be; provided that:

(a)           if any Interest Period would
otherwise end on a day that is not a Business Day, such Interest Period shall
be extended to the following Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business Day;

(b)           any Interest Period that begins on a
day for which there is no numerically 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

(c)           the Company may not select any
Interest Period for a Revolving  Loan
which would extend beyond the scheduled Termination Date.

Investment means, with respect to
any Person, any investment in another Person, whether by acquisition of any
debt or Capital Security, by making any loan or advance, by becoming obligated
with respect to a Contingent Liability in respect of obligations of such other
Person (other than travel and similar advances to employees in the ordinary
course of business) or by making an Acquisition.

Issuing Lender means LaSalle, in its
capacity as the issuer of Letters of Credit hereunder, or any Affiliate of
LaSalle that may from time to time issue Letters of Credit, and their
successors and assigns in such capacity.

LaSalle—see the Preamble.

L/C Application means, with respect
to any request for the issuance of a Letter of Credit, the letter of credit
application in the form attached hereto as Exhibit F.

L/C Fee Rate—see the definition of
Applicable Margin.

Lender—see the Preamble.  References to the “Lenders” shall include the
Issuing Lender; for purposes of clarification only, to the extent that LaSalle
(or any successor Issuing Lender) may have any rights or obligations in
addition to those of the other Lenders due to its status as Issuing Lender, its
status as such will be specifically referenced. 
In addition, the term “Lender” shall include Affiliates of a Lender
providing a Bank Product.

Lender Party—see Section 15.17.

Letter of Credit—see Section
2.1.2.

 11
 

 

LIBOR Loan means any Loan which
bears interest at a rate determined by reference to the LIBOR Rate.

LIBOR Margin—see the definition of
Applicable Margin.

LIBOR Office means with respect to
any Lender the office or offices of such Lender which shall be making or
maintaining the LIBOR Loans of such Lender hereunder.  A LIBOR Office of any Lender may be, at the
option of such Lender, either a domestic or foreign office.

LIBOR Rate means a rate of interest
equal to (a) the per annum rate of interest at which United States dollar
deposits in an amount comparable to the amount of the relevant LIBOR Loan and
for a period equal to the relevant Interest Period are offered in the London
Interbank Eurodollar market at 11:00 A.M. (London time) two (2) Business Days
prior to the commencement of such Interest Period (or three (3) Business Days
prior to the commencement of such Interest Period if banks in London, England
were not open and dealing in offshore United States dollars on such second
preceding Business Day), as displayed in the Bloomberg
Financial Markets system (or other authoritative source selected by
the Administrative Agent in its sole discretion) or, if the Bloomberg Financial Markets system or another authoritative
source is not available, as the LIBOR Rate is otherwise determined by the
Administrative Agent in its sole and absolute discretion, divided by (b) a
number determined by subtracting from 1.00 the then stated maximum reserve
percentage for determining reserves to be maintained by member banks of the
Federal Reserve System for Eurocurrency funding or liabilities as defined in
Regulation D (or any successor category of liabilities under Regulation D),
such rate to remain fixed for such Interest Period.  The Administrative Agent’s determination of
the LIBOR Rate shall be conclusive, absent manifest error.

Lien means, with respect to any
Person, any interest granted by such Person in any real or personal property,
asset or other right owned or being purchased or acquired by such Person
(including an interest in respect of a Capital Lease) which secures payment or
performance of any obligation and shall include any mortgage, lien,
encumbrance, title retention lien, charge or other security interest of any
kind, whether arising by contract, as a matter of law, by judicial process or
otherwise.

Loan Documents means this Agreement,
the Notes, the Letters of Credit, the Master Letter of Credit Agreement, the
L/C Applications, the Agent Fee Letter, and all documents, instruments and
agreements delivered in connection with the foregoing.

Loan or Loans means, as the context
may require, Revolving Loans, and/or Swing Line Loans.

Margin Stock means any “margin stock”
as defined in Regulation U.

Master Letter of Credit Agreement
means, with respect to the issuance of Letters of Credit, the master letter of
credit agreement or reimbursement agreement between the Company and the Issuing
Lender.

 12
 

 

 

Material means material in relation to the business, operations,
affairs, financial condition, assets, properties or prospects of the Company
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 Company and its
Restricted Subsidiaries taken as a whole, (b) a material impairment of the
ability of the Company to perform any of the Obligations under any Loan
Document or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Company of any Loan Document.

Moody’s means Moody’s Investors Service, Inc.

Multiemployer Pension Plan means a
multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the
Company or any other member of the Controlled Group may have any liability.

Net Cash Proceeds means, with
respect to any issuance of Capital Securities by the Company, the aggregate
cash proceeds received by the Company 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 Company and
its Restricted Subsidiaries plus (ii) the amount of the paid-in capital
and retained earnings of the Company and its Restricted Subsidiaries, in each
case as such amounts would be shown on a consolidated balance sheet of the
Company 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 (to the extent the aggregate amount of such write-offs and write-downs
does not exceed $36,000,000) and write-offs or write-downs of aircraft
purchased, or for which commitments to purchase were entered into, prior to
September 11, 2001 (to the extent the aggregate amount of such write-offs and
write-downs does not exceed $41,100,000)

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.

Non-U.S. Participant—see Section
7.6(d).

 13
 

 

Non-Use Fee Rate—see the definition
of Applicable Margin.

Note means a promissory note
substantially in the form of Exhibit A.

Notice of Borrowing—see Section
2.2.2.

Notice of Conversion/Continuation—see
Section 2.2.3.

Obligations means all obligations
(monetary (including post-petition interest, allowed or not) or otherwise) of
the Company under this Agreement and any other Loan Document including Attorney
Costs and any reimbursement obligations of the Company 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.

OFAC—see Section 10.4.

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

PBGC means the Pension Benefit
Guaranty Corporation and any entity succeeding to any or all of its functions
under ERISA.

Participant—see Section 15.6.2.

Pension Plan means a “pension plan”,
as such term is defined in Section 3(2) of ERISA, which is subject to Title IV
of ERISA or the minimum funding standards of ERISA (other than a Multiemployer
Pension Plan), and as to which the Company or any member of the Controlled
Group may have any liability, including any liability by reason of having been
a substantial employer within the meaning of Section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.

Permitted Lien means a Lien
expressly permitted hereunder pursuant to Section 11.2.

Permitted Receivables Transaction
means any sale of notes or accounts receivable by the Company or a Restricted
Subsidiary so long as such sale constitutes a “true sale” under GAAP and
recourse to the Company 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, partnership, trust, limited liability company, association,
governmental authority or unit, or any other entity, whether acting in an
individual, fiduciary or other capacity.

 14
 

 

Prime Rate means, for any day, the
rate of interest in effect for such day as publicly announced from time to time
by the Administrative Agent as its prime rate (whether or not such rate is
actually charged by the Administrative Agent), which is not intended to be the
Administrative Agent’s lowest or most favorable rate of interest at any one
time.  Any change in the Prime Rate
announced by the Administrative Agent shall take effect at the opening of
business on the day specified in the public announcement of such change; provided
that the Administrative Agent shall not be obligated to give notice of any
change in the Prime Rate.

Priority Debt means without duplication the sum of (a) all Debt of the
Company and/or the Restricted Subsidiaries secured by Liens other than those
permitted by paragraphs (a) through (m), both inclusive, of Section 11.2,
and (b) all other Debt of Restricted Subsidiaries other than (i) Debt owed to
the Company or other Restricted Subsidiaries and (ii) Debt outstanding at the
time such Person became a Subsidiary.

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 Company’s or Restricted
Subsidiaries’ business.

Pro Rata Share means with respect to
a Lender’s obligation to make Revolving Loans, participate in Letters of
Credit, reimburse the Issuing Lender, receive payments of principal, interest,
fees, costs, and expenses with respect thereto, and with respect to all other
matters as to a particular Lender (x) prior to the Revolving Commitment
being terminated or reduced to zero, the percentage obtained by dividing (i)
such Lender’s Revolving Commitment, by (ii) the aggregate Revolving Commitment
of all Lenders and (y) from and after the time the Revolving Commitment has
been terminated or reduced to zero, the percentage obtained by dividing (i) the
aggregate unpaid principal amount of such Lender’s Revolving Outstandings
(after settlement and repayment of all Swing Line Loans by the Lenders) by (ii)
the aggregate unpaid principal amount of all Revolving Outstandings.

Recourse Debt of a Person means all Debt of such Person other than
Nonrecourse Debt.

Refunded Swing Line Loan—see Section
2.2.4(c).

Regulation D means Regulation D
of the FRB.

Regulation U means Regulation U of
the FRB.

Replacement Lender—see Section
8.7(b).

Reportable Event means a reportable
event as defined in Section 4043 of ERISA and the regulations issued thereunder
as to which the PBGC has not waived the notification requirement  of Section 4043(a), or the failure of a
Pension Plan to meet the minimum funding standards of Section 412 of the Code
(without regard to whether the Pension Plan is a plan described in Section
4021(a)(2) of ERISA) or under Section 302 of ERISA.

 

 15

 

Required Lenders means, at any time,
Lenders whose Pro Rata Shares exceed 662¤3%.

Restricted Payment means any payment
in connection with (a) any dividend payment in cash or otherwise to any holders
of the Capital Securities of the Company, and (b) any purchase or redemption of
any of the Capital Securities of the Company.

Restricted Subsidiary means each
Subsidiary of the Company other than an Unrestricted Subsidiary.

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

Revolving Commitment means
$140,000,000, as reduced from time to time pursuant to Section 6.1, or
as may be increased pursuant to Section 2.6.

Revolving Loan—see Section 2.1.1.

Revolving Outstandings means, at any
time, the sum of (a) the aggregate principal amount of all outstanding
Revolving Loans, plus (b) the Stated Amount of all Letters of Credit.

S&P
means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc.

SEC means the Securities and
Exchange Commission or any other governmental authority succeeding to any of
the principal functions thereof.

SEC Filings means, as at any date,
the Company’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 Company’s Quarterly Reports on Forms 10-Q and/or other reports,
including without limitation, 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.

Senior Officer means, with respect
to the Company, any of the chief executive officer, the chief financial
officer, the chief operating officer or the treasurer of the Company.

Significant
Subsidiary means at any
time any Restricted Subsidiary which accounts for more than (i) 10% of the
Consolidated Assets of the Company and its Restricted Subsidiaries or (ii) 10%
of the consolidated revenue of the Company 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 Company and its
Restricted Subsidiaries, then the Company 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
Company and all of the Restricted Subsidiaries.

 16
 

 

Stated Amount means, with respect to
any Letter of Credit at any date of determination, (a) the maximum aggregate
amount available for drawing thereunder under any and all circumstances plus
(b) the aggregate amount of all unreimbursed payments and disbursements under
such Letter of Credit.

Subordinated Debt means any Debt of the
Company 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 means, with respect to
any Person, a corporation, partnership, limited liability company or other entity
of which such Person owns, directly or indirectly, such number of outstanding
Capital Securities as have more than 50% of the ordinary voting power for the
election of directors or other managers of such corporation, partnership,
limited liability company or other entity. 
Unless the context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Company.

Swing Line Availability means the
lesser of (a) the Swing Line Commitment Amount and (b) the Revolving Commitment
(less Revolving Outstandings at such time).

Swing Line Commitment Amount means
$10,000,000, as reduced from time to time pursuant to Section 6.1, which
commitment constitutes a subfacility of the Revolving Commitment of the Swing
Line Lender.

Swing Line Lender means LaSalle.

Swing Line Loan—see Section 2.2.4.

Tangible Net Worth means for the
Company and both its Restricted Subsidiaries and Unrestricted Subsidiaries on a
consolidated basis an amount equal to: (a) Net Worth of such Person plus
(b) the aggregate principal amount of such Person’s Subordinated Debt; less
(c) Intangible Assets of such Person; less (d) the excess of the
aggregate of the Company’s and the Restricted Subsidiaries’ Investments under
clause (l) of Section 11.11 over an amount equal to 20% of Net Worth as
reported by the Company in accordance with the terms hereof for the Fiscal
Quarter immediately preceding the Fiscal Quarter in which such determination is
being made.

Taxes means any and all present and
future taxes, duties, levies, imposts, deductions, assessments, charges or
withholdings, and any and all liabilities (including interest and penalties and
other additions to taxes) with respect to the foregoing, but excluding Excluded
Taxes.

Termination Date means the earlier
to occur of (a) August 31, 2010 or (b) such other date on which the Commitments
terminate pursuant to Section 6 or Section 13.

Termination Event means, with
respect to a Pension Plan that is subject to Title IV of ERISA, (a) a
Reportable Event, (b) the withdrawal of Company or any other member of

 17
 

 

the Controlled Group from
such Pension Plan during a plan year in which Company or any other member of
the Controlled Group was a “substantial employer” as defined in Section
4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA, (c) the
termination of such Pension Plan, the filing of a notice of intent to terminate
the Pension Plan or the treatment of an amendment of such Pension Plan as a
termination under Section 4041 of ERISA, (d) the institution by the PBGC of
proceedings to terminate such Pension Plan or (e) any event or condition that
might constitute grounds under Section 4042 of ERISA for the termination of, or
appointment of a trustee to administer, such Pension Plan.

Total Debt means all Debt (other
than Nonrecourse Debt) of the Company and its Restricted Subsidiaries,
determined on a consolidated basis, excluding (a) contingent obligations in
respect of Contingent Liabilities (except to the extent constituting Contingent
Liabilities in respect of Debt of a Person other than the Company or any
Restricted Subsidiary), (b) Hedging Obligations, and (c) Debt of the Company to
Restricted Subsidiaries and Debt of Restricted Subsidiaries to the Company or
to other Restricted Subsidiaries (including, without limitation, all offsetting
debits and credits between the Company and the Restricted Subsidiaries and all
other items required to be eliminated in the course of preparing consolidated
financial statements for the Company and the Restricted Subsidiaries in
accordance with GAAP).

Total Plan Liability means, at any
time, the present value of all vested and unvested accrued benefits under all
Pension Plans, determined as of the then most recent valuation date for each
Pension Plan, using PBGC actuarial assumptions for single employer plan
terminations.

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, without limitation, Restricted Subsidiary Stock.  For purposes of determining the application
of the Net Proceeds Amount in respect of any Transfer, the Company 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—see Section 2.2.1.

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, using PBGC actuarial assumptions for a single employer plan
on an on-going basis.

Unmatured Event of Default means any
event that, if it continues uncured, will, with lapse of time or notice or both,
constitute an Event of Default.

Unrestricted Domestic Cash means, on
any date, that portion of the Company’s and its Restricted Subsidiaries’ that
are organized under the laws of the United States of America or any political
subdivision thereof cash and Cash Equivalent Investments in excess of 

 18
 

 

$10,000,000 that is not
encumbered by or subject to any Lien (including, without limitation, 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, AAR International Financial Services, L.L.C., each Subsidiary thereof,
and each other Subsidiary of the Company designated as such in a written notice
to the Administrative Agent and the Lenders by the Company; 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 an Unmatured Event of 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 Company and the Restricted Subsidiaries, on a
consolidated basis, would be reduced by more than 10% of consolidated EBITDA
for the Company and the Restricted Subsidiaries for the four Fiscal Quarter
period immediately preceding the Fiscal Quarter in which such designation is
made.

Withholding Certificate—see Section
7.6(d).

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

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.

1.2           Other
Interpretive Provisions.  (a) The
meanings of defined terms are equally applicable to the singular and plural forms of the defined
terms.

(b)           Section,
Annex, Schedule and Exhibit references are to this Agreement unless otherwise
specified.

(c)           The
term “including” is not limiting and means “including without limitation.”

(d)           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.”

(e)           Unless
otherwise expressly provided herein, (i) references to agreements
(including this Agreement and the other Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
supplements and other

 19
 

 

modifications thereto,
but only to the extent such amendments, restatements, supplements and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation shall be construed as
including all statutory and regulatory provisions amending, replacing,
supplementing or interpreting such statute or regulation.

(f)            This
Agreement and the other Loan Documents may use several different limitations,
tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements
are cumulative and each shall be performed in accordance with its terms.

(g)           This
Agreement and the other Loan Documents are the result of negotiations among and
have been reviewed by counsel to the Administrative Agent, the Company, the
Lenders and the other parties thereto and are the products of all parties.  Accordingly, they shall not be construed
against the Administrative Agent or the Lenders merely because of the Administrative
Agent’s or Lenders’ involvement in their preparation.

1.3           Delivery of Pro Forma Calculations.  For purposes of determining whether or not an
Unmatured Event of Default
or Event of Default would result upon the consummation or completion of the
actions or designations, or the delivery of the items, described in or governed
by the following, the Company shall provide the Administrative Agent with
written calculations demonstrating pro forma compliance with the financial
covenants and other relevant covenants and requirements set forth in this
Agreement (including the requirements set forth in the following provisions),
which pro forma compliance shall be determined (after giving effect to the
applicable action, designation or delivery) based on the most recent four
Fiscal Quarter period immediately preceding the Fiscal Quarter in which such
action, designation or delivery is to occur: (i) the definition of “Asset
Disposition”, (ii) the definition of “Unrestricted Subsidiary”, and
(iii) Section 11.6.

SECTION 2           COMMITMENTS OF THE
LENDERS; BORROWING, CONVERSION AND LETTER OF CREDIT PROCEDURES.

2.1           Commitments. 
On and subject to the terms and conditions of this Agreement, each of
the Lenders, severally and for itself
alone, agrees to make loans to, and to issue or participate in letters of credit
for the account of, the Company as follows:

2.1.1        Revolving Loan Commitment.  Each Lender with a Revolving Loan Commitment
agrees to make loans on a
revolving basis (“Revolving Loans”) from time to time until the
Termination Date in such Lender’s Pro Rata Share of such aggregate amounts as
the Company may request from all Lenders; provided that the Revolving
Outstandings will not at any time exceed the Revolving Commitment (less the
amount of any Swing Line Loans outstanding at such time).

2.1.2        L/C Commitment. 
Subject to Section 2.3.1, the Issuing Lender agrees to issue
letters of credit, in each case containing
such terms and conditions as are permitted by this Agreement and are reasonably
satisfactory to the Issuing Lender (each, a “Letter of Credit”), at the
request of and for the account of the Company from time to time before the
scheduled Termination Date and, as more fully set forth in Section 2.3.2,
each Lender agrees to purchase a participation in each such Letter of Credit; provided
that (a) the aggregate Stated Amount of all 

 20
 

 

Letters of Credit shall not at any time
exceed $20,000,000 and (b) the Revolving Outstandings shall not at any
time exceed the Revolving Commitment (less the amount of any Swing Line Loans
outstanding at such time).

2.2           Loan Procedures.

2.2.1        Various Types of Loans.  Each Revolving Loan shall be, either a Base
Rate Loan or a LIBOR Loan (each a “type”
of Loan), as the Company shall specify in the related notice of borrowing or
conversion pursuant to Section 2.2.2 or 2.2.3.  LIBOR Loans having the same Interest Period
which expire on the same day are sometimes called a “Group” or
collectively “Groups”.  Base Rate
Loans and LIBOR Loans may be outstanding at the same time, provided that
not more than five (5) different Groups of LIBOR Loans shall be outstanding at
any one time.  All borrowings,
conversions and repayments of Revolving Loans shall be effected so that each
Lender will have a ratable share (according to its Pro Rata Share) of all types
and Groups of Loans.

2.2.2        Borrowing Procedures. 
The Company shall give written notice (each such written notice, a “Notice
of Borrowing”) substantially
in the form of Exhibit D or telephonic notice (followed immediately by a
Notice of Borrowing) to the Administrative Agent of each proposed borrowing not
later than (a) in the case of a Base Rate borrowing, 11:00 A.M.,
Chicago time, on the proposed date of such borrowing, and (b) in the case
of a LIBOR borrowing, 11:00 A.M., Chicago time, at least three Business
Days prior to the proposed date of such borrowing.  Each such notice shall be effective upon
receipt by the Administrative Agent, shall be irrevocable, and shall specify
the date, amount and type of borrowing and, in the case of a LIBOR borrowing,
the initial Interest Period therefor. 
Promptly upon receipt of such notice, the Administrative Agent shall
advise each Lender thereof.  Not later
than 1:00 P.M., Chicago time, on the date of a proposed borrowing, each Lender
shall provide the Administrative Agent at the office specified by the
Administrative Agent with immediately available funds covering such Lender’s
Pro Rata Share of such borrowing and, so long as the Administrative Agent has
not received written notice that the conditions precedent set forth in Section 11
with respect to such borrowing have not been satisfied, the Administrative
Agent shall pay over the funds received by the Administrative Agent to the
Company on the requested borrowing date. 
Each borrowing shall be on a Business Day.  Each Base Rate borrowing shall be in an
aggregate amount of at least $2,000,000 and an integral multiple of $1,000,000,
and each LIBOR borrowing shall be in an aggregate amount of at least $5,000,000
and an integral multiple of at least $1,000,000.

2.2.3        Conversion and Continuation Procedures.  (a) 
Subject to Section 2.2.1, the Company may, upon irrevocable written notice
to the Administrative Agent in accordance with clause (b) below:

(A)          elect, as of any Business Day, to convert any Loans (or any
part thereof in an aggregate amount not less than $5,000,000 a higher integral
multiple of $1,000,000) into Loans of the other type; or

(B)           elect, as of the last day of the applicable Interest
Period, to continue any LIBOR Loans having Interest Periods expiring on such
day (or any part thereof in an aggregate amount 

 21
 

 

not less than $5,000,000 or a higher integral
multiple of $1,000,000) for a new Interest Period; provided that after
giving effect to any prepayment, conversion or continuation, the aggregate
principal amount of each Group of LIBOR Loans shall be at least $5,000,000 and
an integral multiple of $1,000,000.

(b)           The Company shall give written notice
(each such written notice, a “Notice of Conversion/Continuation”)
substantially in the form of Exhibit E or telephonic notice (followed
immediately by a Notice of Conversion/Continuation) to the Administrative Agent
of each proposed conversion or continuation not later than (i) in the case of
conversion into Base Rate Loans, 11:00 A.M., Chicago time, on the proposed date
of such conversion and (ii) in the case of conversion into or continuation of
LIBOR Loans, 11:00 A.M., Chicago time, at least three Business Days prior to
the proposed date of such conversion or continuation, specifying in each case:

(A)          the proposed date of conversion or
continuation;

(B)           the aggregate amount of Loans to be
converted or continued;

(C)           the type of Loans resulting from the
proposed conversion or continuation; and

(D)          in the case of conversion into, or
continuation of, LIBOR Loans, the duration of the requested Interest Period
therefor.

(c)           If upon the expiration of any
Interest Period applicable to LIBOR Loans, the Company has failed to select
timely a new Interest Period to be applicable to such LIBOR Loans, the Company
shall be deemed to have elected to convert such LIBOR Loans into Base Rate
Loans effective on the last day of such Interest Period.

(d)           The Administrative Agent will
promptly notify each Lender of its receipt of a notice of conversion or
continuation pursuant to this Section 2.2.3 or, if no timely notice is
provided by the Company, of the details of any automatic conversion.

(e)           Any conversion of a LIBOR Loan on a
day other than the last day of an Interest Period therefor shall be subject to Section
8.4.

2.2.4        Swing Line Facility.

(a)           The
Administrative Agent shall notify the Swing Line Lender upon the Administrative
Agent’s receipt of any Notice of Borrowing for a Swing Line Loan.  Subject to the terms and conditions hereof,
the Swing Line Lender may, in its sole discretion, make available from time to
time until the Termination Date advances (each, a “Swing Line Loan”) in
accordance with any such notice, notwithstanding that after making a requested
Swing Line Loan, the sum of the Swing Line Lender’s Pro Rata Share of the
Revolving Outstanding and all outstanding Swing Line Loans, may exceed the
Swing Line Lender’s Pro Rata Share of the Revolving Commitment.  The provisions of this Section 2.2.4
shall not relieve Lenders of their obligations to make Revolving Loans under Section
2.1.1; provided that if the Swing Line Lender makes a Swing Line
Loan pursuant to any such notice, such Swing Line Loan shall be in 

 22
 

 

lieu of any Revolving Loan that otherwise may be made by the Lenders
pursuant to such notice provided such notice contained a request for a Swing
Line Loan.  The aggregate amount of Swing
Line Loans outstanding shall not exceed at any time Swing Line
Availability.  Until the Termination
Date, the Company may from time to time borrow, repay and reborrow under this Section
2.2.4.  Each Swing Line Loan shall be
made pursuant to a Notice of Borrowing delivered by the Company to the
Administrative Agent in accordance with Section 2.2.2.  Any such notice must be given no later than
2:00 P.M., Chicago time, on the Business Day of the proposed Swing Line
Loan.  Unless the Swing Line Lender has
received at least one Business Day’s prior written notice from the Required
Lenders instructing it not to make a Swing Line Loan, the Swing Line Lender
shall, notwithstanding the failure of any condition precedent set forth in Section
12.2, be entitled to fund that Swing Line Loan, and the Swing Line Lender
shall have each other Lender make Revolving Loans in accordance with Section
2.2.4(c) or purchase participating interests in accordance with Section
2.2.4(d) with respect to each Swing Line Loan.   Notwithstanding any other provision of this
Agreement or the other Loan Documents, each Swing Line Loan shall constitute a
Base Rate Loan.  The Company shall repay
the aggregate outstanding principal amount of each Swing Line Loan upon demand
therefor by the Administrative Agent.

(b)        The
entire unpaid balance of each Swing Line Loan and all other noncontingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Termination Date if not sooner paid in full.

(c)         The
Swing Line Lender, at any time and from time to time no less frequently than
once weekly, shall on behalf of the Company (and the Company hereby irrevocably
authorizes the Swing Line Lender to so act on its behalf) request each Lender
with a Revolving Commitment (including the Swing Line Lender) to make a
Revolving Loan to the Company (which shall be a Base Rate Loan) in an amount
equal to that Lender’s Pro Rata Share of the principal amount of all Swing Line
Loans (the “Refunded Swing Line Loan”) outstanding on the date such
notice is given.  Unless any of the
events described in Section 13.1.3 has occurred (in which event the
procedures of Section 2.2.4(d) shall apply) and regardless of whether
the conditions precedent set forth in this Agreement to the making of a
Revolving Loan are then satisfied, each Lender shall disburse directly to the
Administrative Agent, its Pro Rata Share on behalf of the Swing Line Lender,
prior to 2:00 P.M., Chicago time, in immediately available funds on the date
that notice is given (provided that such notice is given by 12:00 p.m.,
Chicago time, on such date).  The
proceeds of those Revolving Loans shall be immediately paid to the Swing Line
Lender and applied to repay the Refunded Swing Line Loan.

(d)           If,
prior to refunding a Swing Line Loan with a Revolving Loan pursuant to Section
2.2.4(c), one of the events described in Section 13.1.3 has
occurred, then, subject to the provisions of Section 2.2.4(e) below,
each Lender shall, on the date such Revolving Loan was to have been made for
the benefit of the Company, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan in an amount equal to its Pro
Rata Share of such Swing Line Loan.  Upon
request, each Lender shall promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation interest.

(e)           Each
Lender’s obligation to make Revolving Loans in accordance with Section
2.2.4(c) and to purchase participation interests in accordance with Section
2.2.4(d) shall be 

 23
 

 

absolute and unconditional and shall not be affected by any
circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Lender may have against the Swing Line Lender, the
Company or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of any Unmatured Event of Default or Event of Default; (iii) any
inability of the Company to satisfy the conditions precedent to borrowing set
forth in this Agreement at any time or (iv) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.  If and to the extent any Lender shall not
have made such amount available to the Administrative Agent or the Swing Line
Lender, as applicable, by 2:00 P.M., Chicago time, the amount required pursuant
to Sections 2.2.4(c) or 2.2.4(d), as the case may be, on the Business
Day on which such Lender receives notice from the Administrative Agent of such
payment or disbursement (it being understood that any such notice received
after noon, Chicago time, on any Business Day shall be deemed to have been
received on the next following Business Day), such Lender agrees to pay
interest on such amount to the Administrative Agent for the Swing Line Lender’s
account forthwith on demand, for each day from the date such amount was to have
been delivered to the Administrative Agent to the date such amount is paid, at
a rate per annum equal to (a) for the first three days after demand, the
Federal Funds Rate from time to time in effect and (b) thereafter, the Base
Rate from time to time in effect.

2.3           Letter of Credit Procedures.

2.3.1        L/C Applications. 
The Company shall execute and deliver to the Issuing Lender the Master
Letter of Credit Agreement.  The Company shall give notice to the
Administrative Agent and the Issuing Lender of the proposed issuance of each
Letter of Credit on a Business Day which is at least three Business Days (or
such lesser number of days as the Administrative Agent and the Issuing Lender
shall agree in any particular instance in their sole discretion) prior to the
proposed date of issuance of such Letter of Credit.  Each such notice shall be accompanied by an
L/C Application, duly executed by the Company and in all respects satisfactory
to the Administrative Agent and the Issuing Lender, together with such other
documentation as the Administrative Agent or the Issuing Lender may request in
support thereof, it being understood that each L/C Application shall specify,
among other things, the date on which the proposed Letter of Credit is to be
issued, the expiration date of such Letter of Credit (which shall not be later
than the scheduled Termination Date; provided, however, that the
expiration date of such Letter of Credit may extend up to 6 months after the
Termination Date if such Letter of Credit is Cash Collateralized on the
issuance date therefor in an amount equal to 105% of the stated face amount
thereof and such Letter of Credit remains Cash Collateralized in such fashion
until the termination or expiration of such Letter of Credit and the full
repayment of all amounts owing under or in connection therewith) and whether
such Letter of Credit is to be transferable in whole or in part.  Any Letter of Credit outstanding after the
scheduled Termination Date which is Cash Collateralized for the benefit of the
Issuing Lender shall be the sole responsibility of the Issuing Lender.  So long as the Issuing Lender has not
received written notice that the conditions precedent set forth in Section
12 with respect to the issuance of such Letter of Credit have not been
satisfied, the Issuing Lender shall issue such Letter of Credit on the
requested issuance date.  The Issuing
Lender shall promptly advise the Administrative Agent of the issuance of each
Letter of Credit and of any amendment thereto, extension thereof or event or
circumstance changing the amount available for drawing thereunder.  In the event of any inconsistency 

 24
 

 

between the terms of the Master Letter of
Credit Agreement, any L/C Application and the terms of this Agreement, the
terms of this Agreement shall control.

2.3.2        Participations in Letters of Credit.  Concurrently with the issuance of each Letter
of Credit, the Issuing Lender
shall be deemed to have sold and transferred to each Lender with a Revolving
Loan Commitment, and each such Lender shall be deemed irrevocably and
unconditionally to have purchased and received from the Issuing Lender, without
recourse or warranty, an undivided interest and participation, to the extent of
such Lender’s Pro Rata Share, in such Letter of Credit and the Company’s
reimbursement obligations with respect thereto. 
If the Company does not pay any reimbursement obligation when due, the
Company shall be deemed to have immediately requested that the Lenders make a
Revolving Loan which is a Base Rate Loan in a principal amount equal to such
reimbursement obligations.  The
Administrative Agent shall promptly notify such Lenders of such deemed request
and, without the necessity of compliance with the requirements of Section
2.2.2, Section 12.2 or otherwise such Lender shall make available to
the Administrative Agent its Pro Rata Share of such Loan.  The proceeds of such Loan shall be paid over
by the Administrative Agent to the Issuing Lender for the account of the
Company in satisfaction of such reimbursement obligations.  For the purposes of this Agreement, the
unparticipated portion of each Letter of Credit shall be deemed to be the
Issuing Lender’s “participation” therein. 
The Issuing Lender hereby agrees, upon request of the Administrative
Agent or any Lender, to deliver to the Administrative Agent or such Lender a
list of all outstanding Letters of Credit issued by the Issuing Lender,
together with such information related thereto as the Administrative Agent or
such Lender may reasonably request.

2.3.3        Reimbursement Obligations.  (a) The Company hereby unconditionally and
irrevocably agrees to reimburse the
Issuing Lender for each payment or disbursement made by the Issuing Lender
under any Letter of Credit honoring any demand for payment made by the
beneficiary thereunder, in each case on the date that such payment or
disbursement is made.  Any amount not
reimbursed on the date of such payment or disbursement shall bear interest from
the date of such payment or disbursement to the date that the Issuing Lender is
reimbursed by the Company therefor, payable on demand, at a rate per annum
equal to the Base Rate from time to time in effect plus the Base Rate
Margin from time to time in effect plus, beginning on the third Business
Day after receipt of notice from the Issuing Lender of such payment or
disbursement, 2%.  The Issuing Lender
shall notify the Company and the Administrative Agent whenever any demand for
payment is made under any Letter of Credit by the beneficiary thereunder; provided
that the failure of the Issuing Lender to so notify the Company or the
Administrative Agent shall not affect the rights of the Issuing Lender or the
Lenders in any manner whatsoever.

(b)           The Company’s reimbursement
obligations hereunder shall be irrevocable and unconditional under all
circumstances, including (a) any lack of validity or enforceability of any
Letter of Credit, this Agreement or any other Loan Document, (b) the existence
of any claim, set-off, defense or other right which the Company may have at any
time against a beneficiary named in a Letter of Credit, any transferee of any
Letter of Credit (or any Person for whom any such transferee may be acting),
the Administrative Agent, the Issuing Lender, any Lender or any other Person,
whether in connection with any Letter of Credit, this Agreement, any other Loan
Document, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the Company and the beneficiary
named in any Letter of Credit), 

 25
 

 

(c) the validity,
sufficiency or genuineness of any document which the Issuing Lender has
determined complies on its face with the terms of the applicable Letter of
Credit, even if such document should later prove to have been forged,
fraudulent, invalid or insufficient in any respect or any statement therein
shall have been untrue or inaccurate in any respect, or (d) the surrender or
impairment of any security for the performance or observance of any of the
terms hereof.  Without limiting the
foregoing, no action or omission whatsoever by the Administrative Agent or any
Lender (excluding any Lender in its capacity as the Issuing Lender) under or in
connection with any Letter of Credit or any related matters shall result in any
liability of the Administrative Agent or any Lender to the Company, or relieve
the Company of any of its obligations hereunder to any such Person.

2.3.4        Funding by Lenders to Issuing Lender.  If the Issuing Lender makes any payment or disbursement
under any Letter of
Credit and (a) the Company has not reimbursed the Issuing Lender in full for
such payment or disbursement by 11:00 A.M., Chicago time, on the date of such
payment or disbursement, (b) a Revolving Loan may not be made in accordance
with Section 2.3.2 or (c) any reimbursement received by the Issuing
Lender from the Company is or must be returned or rescinded upon or during any
bankruptcy or reorganization of the Company or otherwise, each other Lender
with a Revolving Loan Commitment shall be obligated to pay to the
Administrative Agent for the account of the Issuing Lender, in full or partial
payment of the purchase price of its participation in such Letter of Credit,
its Pro Rata Share of such payment or disbursement (but no such payment shall
diminish the obligations of the Company under Section 2.3.3), and,
upon notice from the Issuing Lender, the Administrative Agent shall promptly
notify each other Lender thereof.  Each
other Lender irrevocably and unconditionally agrees to so pay to the
Administrative Agent in immediately available funds for the Issuing Lender’s
account the amount of such other Lender’s Pro Rata Share of such payment or
disbursement.  If and to the extent any
Lender shall not have made such amount available to the Administrative Agent by
2:00 P.M., Chicago time, on the Business Day on which such Lender receives
notice from the Administrative Agent of such payment or disbursement (it being
understood that any such notice received after noon, Chicago time, on any
Business Day shall be deemed to have been received on the next following
Business Day), such Lender agrees to pay interest on such amount to the
Administrative Agent for the Issuing Lender’s account forthwith on demand, for
each day from the date such amount was to have been delivered to the
Administrative Agent to the date such amount is paid, at a rate per annum equal
to (a) for the first three days after demand, the Federal Funds Rate from time
to time in effect and (b) thereafter, the Base Rate from time to time in
effect.  Any Lender’s failure to make
available to the Administrative Agent its Pro Rata Share of any such payment or
disbursement shall not relieve any other Lender of its obligation hereunder to
make available to the Administrative Agent such other Lender’s Pro Rata Share
of such payment, but no Lender shall be responsible for the failure of any
other Lender to make available to the Administrative Agent such other Lender’s
Pro Rata Share of any such payment or disbursement.

2.3.5        Existing
Letters of Credit.  The Company, the
Lenders and the Administrative Agent agree that those letters of credit set forth on Schedule
2.3.5 hereto (the “Existing Letters of Credit”)1 shall be deemed to have been issued pursuant
to the terms and conditions hereof and shall constitute Letters of Credit
hereunder.  The Existing Letters of
Credit shall be included under the aggregate Stated Amount of all Letters of
Credit issued under the L/C Commitment.

1 Company to schedule L/Cs, if applicable, from the existing LaSalle
L/C facility.

 26
 

 

 

2.4           Commitments Several.  The failure of any Lender to make a requested
Loan on any date shall not relieve any other Lender of its
obligation (if any) to make a Loan on such date, but no Lender shall be
responsible for the failure of any other Lender to make any Loan to be made by
such other Lender.

2.5           Certain Conditions. 
Except as otherwise provided in Sections 2.2.4 and 2.3.4 of this
Agreement, no Lender shall
have an obligation to make any Loan, or to permit the continuation of or any
conversion into any LIBOR Loan, and the Issuing Lender shall not have any
obligation to issue any Letter of Credit, if an Event of Default or Unmatured
Event of Default exists.

2.6           Increase of Revolving Commitment.  The Company may request that the Revolving
Commitment be increased
by an aggregate amount of up to $35,000,000, once as of the Closing Date and
three times thereafter during the term of this Agreement.  No such request shall be made or honored
during the continuance of an Event of Default or an Unmatured Event of
Default.  No such request or
corresponding increase shall result in the Revolving Commitment exceeding
$175,000,000 minus the aggregate amount of all reductions in the Revolving
Commitment made prior to the requested date of such increase.  The Company shall deliver such a request, if
at all, in writing to the Administrative Agent and the Lenders no more than
thirty (30) days and no fewer than ten (10) days before the date on which the Company
wishes such increase to take effect.  The
Administrative Agent shall use reasonable efforts to seek out financial
institutions to provide the additional amount of the requested increase and all
such financial institutions must be in form and substance acceptable to the
Company and the Administrative Agent.  If
existing Lenders and, if applicable, new financial institutions, are willing to
provide additional Commitments in the amount of up to $35,000,000, then such
increase shall be given effect as of the date designated by the Administrative
Agent upon the Administrative Agent’s receipt from the Company, the Lenders and
such new financial institutions of those agreements, documents and instruments
reasonably required by the Administrative Agent (with each such agreement,
document and instrument being in form and substance acceptable to the
Administrative Agent) to consummate such increase, including, without
limitation, amendments, joinder documents, affirmations, legal opinion letters,
and promissory notes.  No such increase
shall be given effect if an Event of Default or Unmatured Event of Default is
outstanding on the proposed effective date for such increase.  No Lender shall have any duty or obligation
to agree to increase its Commitment hereunder upon the Company’s request for
such an increase.

SECTION 3  EVIDENCING OF LOANS.

3.1           Notes.  The
Loans of each Lender shall be evidenced by a Note, with appropriate insertions,
payable to the order of
such Lender in a face principal amount equal to the sum of such Lender’s
Revolving Loan Commitment.

3.2           Recordkeeping. 
The Administrative Agent, on behalf of each Lender, shall record in its
records, the date and
amount of each Loan made by each Lender, each repayment or 

 27
 

 

conversion thereof and, in the case of each
LIBOR Loan, the dates on which each Interest Period for such Loan shall begin
and end.  The aggregate unpaid principal
amount so recorded shall be rebuttably presumptive evidence of the principal
amount of the Loans owing and unpaid. 
The failure to so record any such amount or any error in so recording
any such amount shall not, however, limit or otherwise affect the Obligations
of the Company hereunder or under any Note to repay the principal amount of the
Loans hereunder, together with all interest accruing thereon.

SECTION 4  INTEREST.

4.1           Interest Rates. 
The Company promises to pay interest on the unpaid principal amount of
each Loan for the period
commencing on the date of such Loan until such Loan is paid in full as follows:

(a)           at
all times while such Loan is a Base Rate Loan, at a rate per annum equal to the
sum of the Base Rate from time to time in effect plus the Base Rate Margin from
time to time in effect; and

(b)           at
all times while such Loan is a LIBOR Loan, at a rate per annum equal to the sum
of the LIBOR Rate applicable to each Interest Period for such Loan plus the
LIBOR Margin from time to time in effect;

provided
that at any time an Event of Default exists, at the election of the Required
Lenders, the interest rate applicable to each Loan shall be increased by 2%
(and, in the case of Obligations not bearing interest, such Obligations shall
bear interest at the Base Rate applicable to Revolving Loans plus 2%), provided
further that such increase may thereafter be rescinded by the Required
Lenders, notwithstanding Section 15.1. 
Notwithstanding the foregoing, upon the occurrence of an Event of
Default under Sections 13.1.1 or 13.1.3, such increase shall
occur automatically.

4.2           Interest Payment Dates.  Accrued interest on each Base Rate Loan shall
be payable in arrears on the last day of each calendar month
and at maturity.  Accrued interest on
each LIBOR Loan shall be payable on the last day of each Interest Period
relating to such Loan (and, in the case of a LIBOR Loan with an Interest Period
in excess of three months, on the three-month anniversary of the first day of
such Interest Period), upon a prepayment of such Loan, and at maturity.  After maturity, and at any time an Event of
Default exists, accrued interest on all Loans shall be payable on demand.

4.3           Setting and Notice of LIBOR Rates.  The applicable LIBOR Rate for each Interest
Period shall be determined
by the Administrative Agent, and notice thereof shall be given by the
Administrative Agent promptly to the Company and each Lender.  Each determination of the applicable LIBOR
Rate by the Administrative Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error.  The Administrative Agent shall, upon written
request of the Company or any Lender, deliver to the Company or such Lender a
statement showing the computations used by the Administrative Agent in
determining any applicable LIBOR Rate hereunder.

4.4           Computation of Interest.  Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days; provided,
that calculations of interest on Base Rate 

 28
 

 

Loans will be made on the basis of a 365/366
day year and actual days elapsed.  The
applicable interest rate for each Base Rate Loan shall change simultaneously
with each change in the Base Rate.

SECTION 5  FEES.

5.1           Non-Use Fee. 
The Company agrees to pay to the Administrative Agent for the account of
each Lender a non-use
fee, for the period from the Closing Date to the Termination Date, at the
Non-Use Fee Rate in effect from time to time of such Lender’s Pro Rata Share
(as adjusted from time to time) of the unused amount of the Revolving
Commitment.  For purposes of calculating
usage under this Section, the Revolving Commitment shall be deemed used to the
extent of Revolving Outstandings (and in no case shall include outstanding
Swing Line Loans as part of usage).  Such
non-use fee shall be payable in arrears on the last day of each calendar
quarter and on the Termination Date for any period then ending for which such
non-use fee shall not have previously been paid.  The non-use fee shall be computed for the
actual number of days elapsed on the basis of a year of 360 days.

5.2           Letter of Credit Fees.  (a) 
The Company agrees to pay to the Administrative Agent for the account of
each Lender a letter of
credit fee for each Letter of Credit equal to the L/C Fee Rate in effect from
time to time of such Lender’s Pro Rata Share (as adjusted from time to time) of
the Stated Amount of such Letter of Credit (computed for the actual number of
days elapsed on the basis of a year of 360 days); provided that, at the
election of the Required Lenders, the rate applicable to each Letter of Credit
shall be increased by 2% at any time that an Event of Default exists.  Such letter of credit fee shall be payable in
arrears on the last day of each calendar quarter and on the Termination Date
(or such later date on which such Letter of Credit expires or is terminated)
for the period from the date of the issuance of each Letter of Credit (or the
last day on which the letter of credit fee was paid with respect thereto) to
the date such payment is due or, if earlier, the date on which such Letter of
Credit expired or was terminated.

(b)           In addition, with respect to each
Letter of Credit, the Company agrees to pay to the Issuing Lender, for its own
account, (i) such fees and expenses as the Issuing Lender customarily requires
in connection with the issuance, negotiation, processing and/or administration
of letters of credit in similar situations and (ii) a letter of credit fronting
fee in the amount and at the times agreed to by the Company and the Issuing
Lender.

5.3           Administrative Agent’s Fees.  The Company agrees to pay to the
Administrative Agent the fees set forth in the Agent Fee Letter.

SECTION 6                         REDUCTION
OR TERMINATION OF THE REVOLVING COMMITMENT; PREPAYMENTS.

6.1           Reduction or Termination of the Revolving Commitment.

6.1.1        Voluntary Reduction or Termination of the Revolving
Commitment.  The Company may from
time to time on at least
five Business Days’ prior written notice received by the Administrative Agent
(which shall promptly advise each Lender thereof) permanently reduce 

 29
 

 

the Revolving Commitment to an amount not
less than the Revolving Outstandings plus the outstanding amount of all
Swing Line Loans.  Any such reduction
shall be in an amount not less than $2,000,000 or a higher integral multiple of
$1,000,000.  Concurrently with any
reduction of the Revolving Commitment to zero, the Company shall pay all
interest on the Revolving Loans, all non-use fees and all letter of credit fees
and shall Cash Collateralize in full all obligations arising with respect to
the Letters of Credit.

6.1.2        All Reductions of the Revolving Commitment.  All reductions of the Revolving Commitment
shall reduce the
Commitments ratably among the Lenders according to their respective Pro Rata
Shares.

6.2           Prepayments.

6.2.1        Voluntary Prepayments. 
The Company may from time to time prepay the Loans in whole or in part; provided that the
Company shall give the Administrative Agent (which shall promptly advise each
Lender) notice thereof not later than 11:00 A.M., Chicago time, on the day of
such prepayment (which shall be a Business Day), specifying the Loans to be
prepaid and the date and amount of prepayment. 
Any such partial prepayment of LIBOR Rate Loans shall be in an amount
equal to $2,000,000 or a higher
integral multiple of $1,000,000.

6.2.2        Mandatory
Prepayments.  If on any day the sum
of the Revolving Outstandings plus the outstanding amount of the Swing Line
Loan exceeds the Revolving Commitment, the Company shall immediately prepay
Revolving Loans and/or Cash Collateralize the outstanding Letters of Credit, or
do a combination of the foregoing, in an amount sufficient to eliminate such
excess.

6.3           Manner
of Prepayments.

6.3.1        All
Prepayments.  Each voluntary partial
prepayment shall be in a principal amount of $2,000,000 or a higher integral multiple
of $1,000,000.  Any partial prepayment of
a Group of LIBOR Loans shall be subject to the proviso to Section 2.2.3(a).  Any prepayment of a LIBOR Loan on a day other
than the last day of an Interest Period therefor shall include interest on the
principal amount being repaid and shall be subject to Section 8.4.  Except as otherwise provided by this
Agreement, all principal payments in respect of the Loans (other than the Swing
Line Loans) shall be applied first, to repay outstanding Base Rate Loans and
then to repay outstanding LIBOR Rate Loans in direct order of Interest Period
maturities.

6.4           Repayments.

6.4.1        Revolving
Loans.  The Revolving Loans of each
Lender shall be paid in full and the Revolving Commitment shall terminate
on the Termination Date.

SECTION 7 
MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.

 

 30

 

 

7.1           Making
of Payments.  All payments of
principal or interest on the Notes, and of all fees, shall be made by the Company to the
Administrative Agent in immediately available funds at the office specified by
the Administrative Agent not later than noon, Chicago time, on the date due;
and funds received after that hour shall be deemed to have been received by the
Administrative Agent on the following Business Day.  The Administrative Agent shall promptly remit
to each Lender its share of all such payments received in collected funds by
the Administrative Agent for the account of such Lender.  All payments under Section 8.1 shall be made
by the Company directly to the Lender entitled thereto without setoff,
counterclaim or other defense.

7.2           Application
of Certain Payments.  So long as no
Unmatured Event of Default  or Event of
Default has occurred and
is continuing, (a) payments matching specific scheduled payments then due shall
be applied to those scheduled payments and (b) voluntary and mandatory prepayments
shall be applied as set forth in Sections 6.2 and 6.3.  After the occurrence and during the
continuance of an Unmatured Event of Default or Event of Default, all amounts
received by the Administrative Agent or any Lender in respect of the
Obligations shall be applied as the Administrative Agent shall determine in its
discretion.  Concurrently with each
remittance to any Lender of its share of any such payment, the Administrative
Agent shall advise such Lender as to the application of such payment.

7.3           Due
Date Extension.  If any payment of
principal or interest with respect to any of the Loans, or of any fees, falls due on a day
which is not a Business Day, then such due date shall be extended to the
immediately following Business Day (unless, in the case of a LIBOR Loan, such
immediately following Business Day is the first Business Day of a calendar
month, in which case such due date shall be the immediately preceding Business
Day) and, in the case of principal, additional interest shall accrue and be payable
for the period of any such extension.

7.4           Setoff.  The Company agrees that the Administrative
Agent and each Lender have all rights of set-off and bankers’ lien provided by
applicable law, and in addition thereto, the Company agrees that at any time any
Event of Default exists, the Administrative Agent and each Lender may apply to
the payment of any Obligations of the Company hereunder, when due, any and all
balances, credits, deposits, accounts or moneys of the Company then or
thereafter with the Administrative Agent or such Lender.

7.5           Proration
of Payments.  If any Lender shall
obtain any payment or other recovery whether voluntary, involuntary, by
application of offset or otherwise, on account of (a) principal of or interest
on any Loan, but excluding (i) any payment pursuant to Section 8.7 or 15.6
and (ii) payments of interest on any Affected Loan or (b) its participation in
any Letter of Credit, in excess of its applicable Pro Rata Share of payments
and other recoveries obtained by all Lenders on account of principal of and
interest on the Loans (or such participation) then held by them, then such
Lender shall purchase from the other Lenders such participations in the Loans
(or sub-participations in Letters of Credit) held by them as shall be necessary
to cause such purchasing Lender to share the excess payment or other recovery
ratably with each of them; provided that if all or any portion of the
excess payment or other recovery is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to the
extent of such recovery.

 31
 

 

 

7.6           Taxes.

(a)           All payments made by
the Company hereunder or under any Loan Documents shall be made without setoff,
counterclaim, or other defense.  To the
extent permitted by applicable law, all payments hereunder or under the Loan
Documents (including any payment of principal, interest, or fees) to, or for
the benefit, of any person shall be made by the Company free and clear of and
without deduction or withholding for, or account of, any Taxes now or
hereinafter imposed by any taxing authority.

(b)           If the Company makes
any payment hereunder or under any Loan Document in respect of which it is
required by applicable law to deduct or withhold any Taxes, the Company shall
increase the payment hereunder or under any such Loan Document such that after
the reduction for the amount of Taxes withheld (and any taxes withheld or
imposed with respect to the additional payments required under this Section
7.6(b)), the amount paid to the Lenders or the Administrative Agent equals
the amount that was payable hereunder or under any such Loan Document without
regard to this Section 7.6(b).  To
the extent the Company withholds any Taxes on payments hereunder or under any
Loan Document, the Company shall pay the full amount deducted to the relevant
taxing authority within the time allowed for payment under applicable law and
shall deliver to the Administrative Agent within 30 days after it has made
payment to such authority a receipt issued by such authority (or other evidence
satisfactory to the Administrative Agent) evidencing the payment of all amounts
so required to be deducted or withheld from such payment.

(c)           If any Lender or the
Administrative Agent is required by law to make any payments of any Taxes on or
in relation to any amounts received or receivable hereunder or under any other
Loan Document, or any Tax is assessed against a Lender or the Administrative
Agent with respect to amounts received or receivable hereunder or under any other
Loan Document, the Company will indemnify such person against (i) such Tax (and
any reasonable counsel fees and expenses associated with such Tax) and (ii) any
taxes imposed as a result of the receipt of the payment under this Section
7.6(c).  A certificate prepared in
good faith as to the amount of such payment by such Lender or the
Administrative Agent shall, absent manifest error, be final, conclusive, and
binding on all parties.

(d)           (i)            To the extent permitted by
applicable law, each Lender that is not a United States person within the
meaning of Code Section 7701(a)(30) (a “Non-U.S. Participant”) shall
deliver to the Company and the Administrative Agent on or prior to the Closing
Date (or in the case of a Lender that is an Assignee, on the date of such
assignment to such Lender) two accurate and complete original signed copies of
IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable form
prescribed by the IRS) certifying to such Lender’s entitlement to a complete
exemption from, or a reduced rate in, United States withholding tax on interest
payments to be made hereunder or any Loan. 
If a Lender that is a Non-U.S. Participant is claiming a complete
exemption from withholding on interest pursuant to Code Sections 871(h) or
881(c), the Lender shall deliver (along with two accurate and complete original
signed copies of IRS Form W-8BEN) a certificate in form and substance
reasonably acceptable to 

 32
 

 

 

Administrative
Agent (any such certificate, a “Withholding Certificate”).  In addition, each Lender that is a Non-U.S.
Participant  agrees that from time to
time after the Closing Date, (or in the case of a Lender that is an Assignee,
after the date of the assignment to such Lender), when a lapse in time (or
change in circumstances occurs) renders the prior certificates hereunder
obsolete or inaccurate in any material respect, such Lender shall, to the
extent permitted under applicable law, deliver to the Company and the
Administrative Agent two new and accurate and complete original signed copies
of an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor or other applicable
forms prescribed by the IRS), and if applicable, a new Withholding Certificate,
to confirm or establish the entitlement of such Lender or the Administrative
Agent to an exemption from, or reduction in, United States withholding tax on
interest payments to be made hereunder or any Loan.

(ii)           Each Lender that is not a Non-U.S.
Participant (other than any such Lender which is taxed as a corporation for
U.S. federal income tax purposes) shall provide two properly completed and duly
executed copies of IRS Form W-9 (or any successor or other applicable form) to
the Company and the Administrative Agent certifying that such Lender is exempt
from United States backup withholding tax. 
To the extent that a form provided pursuant to this Section
7.6(d)(ii) is rendered obsolete or inaccurate in any material respects as
result of change in circumstances with respect to the status of a Lender, such
Lender shall, to the extent permitted by applicable law, deliver to the Company
and the Administrative Agent revised forms necessary to confirm or establish
the entitlement to such Lender’s or Agent’s exemption from United States backup
withholding tax.

(iii)          The Company shall not be required to
pay additional amounts to a Lender, or indemnify any Lender, under this Section
7.6 to the extent that such obligations would not have arisen but for the
failure of such Lender to comply with Section 7.6(d).  Each Lender agrees to indemnify the Company
and hold the Company harmless for any amounts paid by the Company to the
Administrative Agent or to or on behalf of any other Lender pursuant to this
Section 7.6 to the extent that such amounts would not have been required to be
paid but for the failure of such Lender to comply with Section 7.6(d).  This indemnification shall be made within 30
days of the date the Company makes demand therefor.

(iv)          Each Lender agrees to indemnify the
Administrative Agent and hold the Administrative Agent harmless for the full amount
of any and all present or future Taxes and related liabilities (including
penalties, interest, additions to tax and expenses, and any Taxes imposed by
any jurisdiction on amounts payable to the Administrative Agent under this Section
7.6) which are imposed on or with respect to principal, interest or fees
payable to such Lender hereunder and which are not paid by the Company pursuant
to this Section 7.6, whether or not such Taxes or related liabilities
were correctly or legally asserted.  This
indemnification shall be made within 30 days from the date the Administrative
Agent makes written demand therefor.

SECTION 8 
INCREASED COSTS; SPECIAL PROVISIONS FOR LIBOR LOANS.

8.1           Increased
Costs.  (a)  If, after the date hereof, the adoption of,
or any change in, any applicable law, rule or regulation, or any change
in the interpretation or administration of any applicable law, rule or
regulation by any governmental authority, central bank or comparable 

 33
 

 

 

agency charged with the interpretation or administration thereof, or
compliance by any Lender with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable
agency:  (i) shall impose, modify or deem
applicable any reserve (including any reserve imposed by the FRB, but excluding
any reserve included in the determination of the LIBOR Rate pursuant to Section
4), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by any Lender; or (ii) shall impose
on any Lender any other condition affecting its LIBOR Loans, its Note or its
obligation to make LIBOR Loans; and the result of anything described in clauses
(i) and (ii) above is to increase the cost to (or to impose a cost on) such
Lender (or any LIBOR Office of such Lender) of making or maintaining any LIBOR
Loan, or to reduce the amount of any sum received or receivable by such Lender
(or its LIBOR Office) under this Agreement or under its Note with respect
thereto, then upon demand by such Lender (which demand shall be accompanied by
a statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail, a copy of which shall be furnished to the
Administrative Agent), the Company shall pay directly to such Lender such
additional amount as will compensate such Lender for such increased cost or
such reduction, so long as such amounts have accrued on or after the day which
is 180 days prior to the date on which such Lender first made demand therefor.

(b)           If any Lender shall reasonably
determine that any change in, or the adoption or phase-in of, any applicable
law, rule or regulation regarding capital adequacy, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or the compliance by any Lender or any Person controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or would have the effect of reducing the rate of return on such Lender’s or
such controlling Person’s capital as a consequence of such Lender’s obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such controlling Person could have achieved but for such change, adoption,
phase-in or compliance (taking into consideration such Lender’s or such
controlling Person’s policies with respect to capital adequacy) by an amount
deemed by such Lender or such controlling Person to be material, then from time
to time, upon demand by such Lender (which demand shall be accompanied by a
statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail, a copy of which shall be furnished to the
Administrative Agent), the Company shall pay to such Lender such additional
amount as will compensate such Lender or such controlling Person for such
reduction so long as such amounts have accrued on or after the day which is 180
days prior to the date on which such Lender first made demand therefor.

8.2           Basis
for Determining Interest Rate Inadequate or Unfair.  If:

(a)           the Administrative
Agent reasonably determines (which determination shall be binding and
conclusive on the Company) that by reason of circumstances affecting the
interbank LIBOR market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate; or

(b)           the Required Lenders
advise the Administrative Agent that the LIBOR Rate as determined by the
Administrative Agent will not adequately and fairly reflect the cost to such 

 34
 

 

 

Lenders of
maintaining or funding LIBOR Loans for such Interest Period (taking into
account any amount to which such Lenders may be entitled under Section 8.1)
or that the making or funding of LIBOR Loans has become impracticable as a
result of an event occurring after the date of this Agreement which in the
opinion of such Lenders materially affects such Loans; then the
Administrative Agent shall promptly notify the other parties thereof and, so
long as such circumstances shall continue, (i) no Lender shall be under any
obligation to make or convert any Base Rate Loans into LIBOR Loans and (ii) on
the last day of the current Interest Period for each LIBOR Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate Loan.

8.3           Changes
in Law Rendering LIBOR Loans Unlawful. 
If any change in, or the adoption of any new, law or regulation, or any change
in the interpretation of any applicable law or regulation by any governmental
or other regulatory body charged with the administration thereof, should make
it (or in the good faith judgment of any Lender cause a substantial question as
to whether it is) unlawful for any Lender to make, maintain or fund LIBOR
Loans, then such Lender shall promptly notify each of the other parties hereto
and, so long as such circumstances shall continue, (a) such Lender shall have
no obligation to make or convert any Base Rate Loan into a LIBOR Loan (but
shall make Base Rate Loans concurrently with the making of or conversion of
Base Rate Loans into LIBOR Loans by the Lenders which are not so affected, in
each case in an amount equal to the amount of LIBOR Loans which would be made
or converted into by such Lender at such time in the absence of such
circumstances) and (b) on the last day of the current Interest Period for each
LIBOR Loan of such Lender (or, in any event, 
on such earlier date as may be required by the relevant law, regulation
or interpretation), such LIBOR Loan shall, unless then repaid in full,
automatically convert to a Base Rate Loan. 
Each Base Rate Loan made by a Lender which, but for the circumstances
described in the foregoing sentence, would be a LIBOR Loan (an “Affected
Loan”) shall remain outstanding for the period corresponding to the Group
of LIBOR Loans of which such Affected Loan would be a part absent such
circumstances.

8.4           Funding
Losses.  The Company hereby agrees
that upon demand by any Lender (which demand shall be accompanied by a statement
setting forth the basis for the amount being claimed, a copy of which shall be
furnished to the Administrative Agent), the Company will indemnify such Lender
against any net loss or expense which such Lender may sustain or incur
(including any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain any LIBOR Loan), as reasonably determined by such Lender, as a result
of (a) any payment, prepayment or conversion of any LIBOR Loan of such Lender
on a date other than the last day of an Interest Period for such Loan
(including any conversion pursuant to Section 8.3) or (b) any failure of
the Company to borrow, convert or continue any Loan on a date specified
therefor in a notice of borrowing, conversion or continuation pursuant to this
Agreement.  For this purpose, all notices
to the Administrative Agent pursuant to this Agreement shall be deemed to be
irrevocable.

8.5           Right
of Lenders to Fund through Other Offices. 
Each Lender may, if it so elects, fulfill its commitment as to any LIBOR Loan by
causing a foreign branch or Affiliate of such Lender to make such Loan; provided
that in such event for the purposes of this Agreement such Loan shall be deemed
to have been made by such Lender and the obligation of the Company to repay
such Loan shall nevertheless be to such Lender and shall be deemed held by it,
to the 

 35
 

 

extent of such Loan, for the account of such branch or Affiliate.

8.6           Discretion
of Lenders as to Manner of Funding. 
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Loans in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder shall be made as if
such Lender had actually funded and maintained each LIBOR Loan during each
Interest Period for such Loan through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest rate
equal to the LIBOR Rate for such Interest Period.

8.7           Mitigation
of Circumstances; Replacement of Lenders. 
(a)  Each Lender shall promptly
notify the Company and
the Administrative Agent of any event of which it has knowledge which will
result in, and will use reasonable commercial efforts available to it (and not,
in such Lender’s sole judgment, otherwise disadvantageous to such Lender) to
mitigate or avoid, (i) any obligation by the Company to pay any amount pursuant
to Sections 7.6 or 8.1 or (ii) the occurrence of any
circumstances described in Sections 8.2 or 8.3 (and, if any
Lender has given notice of any such event described in clause (i) or (ii) above
and thereafter such event ceases to exist, such Lender shall promptly so notify
the Company and the Administrative Agent). 
Without limiting the foregoing, each Lender will designate a different
funding office if such designation will avoid (or reduce the cost to the
Company of) any event described in clause (i) or (ii) above and such
designation will not, in such Lender’s sole judgment, be otherwise
disadvantageous to such Lender.

(b)           If the Company becomes obligated to
pay additional amounts to any Lender pursuant to Sections 7.6 or 8.1,
or any Lender gives notice of the occurrence of any circumstances described in Sections
8.2 or 8.3, the Company may designate another bank which is
acceptable to the Administrative Agent and the Issuing Lender in their
reasonable discretion (such other bank being called a “Replacement Lender”)
to purchase the Loans of such Lender and such Lender’s rights hereunder,
without recourse to or warranty by, or expense to, such Lender, for a purchase
price equal to the outstanding principal amount of the Loans payable to such
Lender plus any accrued but unpaid interest on such Loans and all accrued but
unpaid fees owed to such Lender and any other amounts payable to such Lender
under this Agreement, and to assume all the obligations of such Lender
hereunder, and, upon such purchase and assumption (pursuant to an Assignment
Agreement), such Lender shall no longer be a party hereto or have any rights
hereunder (other than rights with respect to indemnities and similar rights
applicable to such Lender prior to the date of such purchase and assumption)
and shall be relieved from all obligations to the Company hereunder, and the
Replacement Lender shall succeed to the rights and obligations of such Lender
hereunder.

8.8           Conclusiveness
of Statements; Survival of Provisions. 
Determinations and statements of any Lender pursuant to Sections
8.1, 8.2, 8.3 or 8.4 shall be conclusive absent
demonstrable error.  Lenders may use
reasonable averaging and attribution methods in determining compensation under Sections
8.1 and 8.4, and the provisions of such Sections shall survive
repayment of the Obligations, cancellation of any Notes, expiration or
termination of the Letters of Credit and termination of this Agreement.

 36
 

 

 

SECTION 9 
REPRESENTATIONS AND WARRANTIES.

To induce the
Administrative Agent and the Lenders to enter into this Agreement and to induce
the Lenders to make Loans and issue and participate in Letters of Credit
hereunder, the Company represents and warrants to the Administrative Agent and
the Lenders that:

9.1           Organization.  Each of the Company and each Restricted
Subsidiary is validly existing and in good standing under the laws of
its jurisdiction of organization; and each of the Company 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.

9.2           Authorization;
No Conflict.  The Company is duly
authorized to execute and deliver each Loan Document, the Company is duly
authorized to borrow monies hereunder and perform its Obligations under each
Loan Document.  The execution, delivery
and performance by the Company of each Loan Document, and the borrowings by the
Company 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 charter, by-laws or other
material agreements disclosed in the Company’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 Company
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 Company or any Restricted Subsidiary (other than Liens, if any, in favor of
the Administrative Agent created pursuant to the Loan Documents).

9.3           Validity
and Binding Nature.  Each of this
Agreement and each other Loan Document is the legal, valid and binding obligation of
the Company, enforceable against the Company 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.

9.4           Financial
Condition.  The audited consolidated
financial statements of the Company and its Subsidiaries as at May 31, 2006,  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 Company and its Subsidiaries as at such dates and the results of their
operations for the periods then ended.

9.5           No
Material Adverse Change.  Since May
31, 2006, there has been no material adverse change in the financial condition,
operations, assets, business or properties of the Company and the Restricted
Subsidiaries, taken as a whole.

9.6           Litigation
and Contingent Liabilities.  No
litigation (including derivative actions), arbitration proceeding or governmental investigation
or proceeding is pending or, to the Company’s knowledge, threatened against the
Company or any Restricted Subsidiary which 

 37
 

 

 

could reasonably be expected to have a Material Adverse Effect, except
as set forth in Schedule 9.6. 
Other than any liability incident to such litigation or proceedings,
neither the Company nor any Restricted Subsidiary has any material contingent
liabilities not listed on Schedule 9.6 or permitted by Section 11.1.

9.7           Ownership
of Properties; Liens.  Each of the
Company 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 11.2.

9.8           Equity
Ownership; Subsidiaries.  All issued
and outstanding Capital Securities of the Company 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 9.8 sets forth the authorized
Capital Securities of each Restricted Subsidiary and each Unrestricted
Subsidiary as of the Closing Date and identifies each owner of such Capital
Securities and their percentage of the total Capital Securities which each
owner owns.  Each Restricted Subsidiary
is a Wholly-Owned Subsidiary  except as
set forth on Schedule 9.8.  As of
the Closing Date, except as set forth on Schedule 9.8, 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 Capital Securities of the Company or any Restricted Subsidiary.  The Company shall update Schedule 9.8
promptly after (a) the creation or acquisition by the Company 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.

9.9           Pension
Plans.  (a) The Unfunded
Liability of all Pension Plans does not in the aggregate exceed twenty percent of the Total Plan
Liability for all such Pension Plans except to the extent the Company will
reduce such Unfunded Liability to less than or equal to twenty percent of Total
Plan Liability within 30 days after the Company obtains knowledge of the
Unfunded Liability.  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 Company, threatened, claims, actions, investigations or lawsuits
against any Pension Plan, any fiduciary of any Pension Plan, or Company or
other any member of the Controlled Group with respect to a Pension Plan or a
Multiemployer Pension Plan which could reasonably be expected to have a
Material Adverse Effect.  Neither the
Company nor any other member of the Controlled Group has engaged in any
prohibited transaction (as defined in Section 4975 of the Code or Section 406
of 

 38
 

 

 

ERISA) in connection with any Pension Plan or Multiemployer Pension
Plan which would subject that Person to any material liability.  Within the past five years, neither the
Company nor any other member of the Controlled Group has engaged in a
transaction which resulted in a Pension Plan with an Unfunded Liability being
transferred out of the Controlled Group, which could reasonably be expected to
have a Material Adverse Effect.  No
Termination 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 Pension Plan that are required to be made by the
Company or any other member of the Controlled Group under the terms of the plan
or of any collective bargaining agreement or by applicable law; neither the
Company nor any other member of the Controlled Group has withdrawn or partially
withdrawn from any Multiemployer Pension 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 Company nor any other
member of the Controlled Group has received any notice that any Multiemployer
Pension 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.

9.10         Investment
Company Act.  Neither the Company 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.

9.11         [Intentionally
Omitted].

9.12         Regulation
U.  The Company 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.

9.13         Taxes.  Each of the Company 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 Company 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 Company 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).

 39
 

 

 

9.14         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 proceeds thereof, with respect to the Company 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.

9.15         Environmental
Matters.  As of the Closing Date,
except as disclosed in the most recent SEC Filings, neither the Company 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 Company 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 Company 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 Company nor any of its
Restricted Subsidiaries has stored any Hazardous Substances on real properties
now or formerly owned, leased or operated by any of them or has disposed of any
Hazardous Substances 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 Company 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.

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

 40
 

 

 

businesses and owning similar properties in localities where the
Company and the Restricted Subsidiaries operate.

9.17         Information.  All information heretofore or
contemporaneously herewith furnished in writing by the Company 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 Company 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 Company are based on good faith
estimates and assumptions believed by the Company 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).

9.18         Intellectual
Property.  Each of the Company 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 Company 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.

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

SECTION 10 
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 Company agrees that, unless at any time the Required Lenders shall
otherwise expressly consent in writing, it will:

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

10.1.1      Annual
Report.  (a) 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 Company and its Subsidiaries for such Fiscal Year,
including therein consolidated balance sheets and statements of earnings and
cash flows of the Company 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 Company and
reasonably acceptable 

 41
 

 

 

to the Administrative Agent; provided that
the availability on EDGAR or the internet within the time period specified
above of the Company’s Annual Report on Form 10-K for such Fiscal Year
(together with the Company’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 10.1.1(a), and (b) promptly when available
and in any event within 100 days after the close of each Fiscal Year, a written
statement from the Company’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 Company was not in compliance with any provision of Sections 11.1, 11.3,
11.4 or 11.13 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 Company was not in compliance with any such provision,
describing such non-compliance in reasonable detail.  The Company 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 Company 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 Company’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 Company and
its Restricted Subsidiaries and the financial statements for the Company’s
Unrestricted Subsidiaries, to the absence of footnotes and other deviations
from GAAP that are to be listed or itemized by the Company upon submission of
such financial statements).

10.1.2      Interim
Reports.  (a)  Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter, consolidated
balance sheets of the Company 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 Senior Officer
of the Company; provided, that the availability
on EDGAR or the internet within the time period specified above of copies of
the Company’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 10.1.2. 
The Company 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 Company 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 Company’s Unrestricted Subsidiaries as of
the end of such Fiscal Quarter, together with a consolidated statement of
earnings and cash flow 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 Company and its
Restricted Subsidiaries and the financial statements for the Company’s
Unrestricted Subsidiaries, to the absence of footnotes and other deviations from
GAAP that are to be listed or itemized by the Company upon submission of such
financial statements).

 42
 

 

 

10.1.3      Compliance
Certificates.  Within 10 Business
Days of the furnishing of a copy of or the making available on EDGAR or the internet
of, as the case may be, of each annual audit report of Form 10-K, as the case
may be, pursuant to Section 10.1.1 and each set of quarterly statements
or Form 10-Q, as the case may be, pursuant to Section 10.1.2, a duly
completed compliance certificate in the form of Exhibit B, with
appropriate insertions, dated the date of such annual report or such quarterly
statements and signed by a Senior Officer of the Company, containing a
computation of each of the financial ratios and restrictions set forth in Section
11.13 and to the effect that such Senior Officer has not become aware of
any Event of Default or Unmatured Event of 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.

10.1.4      Reports
to the SEC and to Shareholders. 
Promptly upon the filing or sending thereof, copies of all regular, periodic or special
reports of the Company filed with the SEC; copies of all registration
statements of the Company 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 10.1.4 with respect such
report, statement or communication.

10.1.5      Notice
of Default, Litigation and ERISA Matters. 
Promptly upon any Senior Officer becoming aware of any of the following,
written notice describing the same and the steps being taken by the Company or
the Subsidiary affected thereby with respect thereto:

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

(b)           any litigation,
arbitration or governmental investigation or proceeding not previously
disclosed by the Company 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 Company, is threatened against
the Company 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;

(c)           the institution of
any steps by any member of the Controlled Group or any other Person to
terminate any Pension Plan, or the failure of any member of the Controlled
Group 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 Pension Plan, or the taking of any action with respect to a
Pension Plan which could result in the requirement that the Company 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 Pension Plan which
could result in the incurrence by any member of the Controlled Group of any
material liability, fine or penalty (including any claim or demand for
withdrawal liability or partial withdrawal from any Multiemployer Pension
Plan), or any material increase in the contingent liability of the Company with
respect to any post-retirement welfare benefit plan or other employee benefit
plan of the Company or another member of the Controlled Group, or any notice
that any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a 

 43
 

 

 

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

(d)           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.

10.1.6      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
Company for such Fiscal Year, the financial projections of the Company 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 Company.

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

10.2         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 other Restricted Subsidiary to
permit, any Lender or the Administrative Agent or any representative thereof to
inspect the properties and operations of the Company or any Restricted
Subsidiary; and permit, and cause each other 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
Company 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 Company 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 Unmatured Event of Default exists, the
Company shall not be required to reimburse the Lenders for any inspections or
audits.

10.3         Maintenance
of Property; Insurance.  (a)  Keep, and cause each other Restricted
Subsidiary to keep, all
property useful and necessary in the business of the Company 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 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.

 44
 

 

 

10.4         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, rules, regulations, decrees,
orders, judgments, licenses and permits (including, without limitation,
Environmental Laws and requirements of laws and regulations applicable to
Pension Plans and Multiemployer Pension 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 (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.

10.5         Maintenance
of Existence, etc.  Maintain and
preserve, and (subject to a merger permitted under Section 11.4) 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 Company 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).

10.6         Use
of Proceeds.  Use the proceeds of the
Loans, and the Letters of Credit, solely for working capital purposes, for Acquisitions
permitted by Section 11.5 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, except to
the extent such purchase or carrying would not cause a violation of any law by
the Company or any Lender.

SECTION 11 
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 Company
agrees that, unless at any time the Required Lenders shall otherwise expressly
consent in writing, it will:

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

 

 45

 

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

(b)           Nonrecourse Debt
secured by Liens permitted by Section 11.2(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 Company to any domestic
Restricted Subsidiary or Debt of any domestic Restricted Subsidiary of which
the Company owns, directly or indirectly, not less than 80% of the Capital
Securities of such Subsidiary to the Company 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 Company hereunder in a manner reasonably satisfactory to the Administrative
Agent;

(d)           Subordinated Debt;

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

(f)            Debt described on Schedule
11.1 and any extension, renewal or refinancing thereof so long as the
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
11.5;

(h)           up to $50,000,000 of
Acquired Debt assumed in Acquisitions permitted under Section 11.6
provided that any such Debt of any Subsidiary is without any recourse to the
Company or any other Subsidiary;

(i)            Debt of the Company
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 $50,000,000 at any time outstanding;

(j)            other secured Debt
existing on the Closing Date evidenced by the Clearwater IRB Documents and Wood
Dale Mortgage Documents;

(k)           other secured Debt
secured by any Lien permitted under clauses (k), (l) and (n) of Section 11.2;
and

(l)            other unsecured
Debt incurred by the Company.

11.2         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 10.4;

 46
 

 

(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 Company or any Restricted Subsidiary
(or any Person in which the Company 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 Company or a Restricted Subsidiary;

(e)           any
attachment or judgment Lien, unless the judgment it secures shall not, within
60 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall not 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 Company or any of its Restricted Subsidiaries
securing Debt owing to the Company or to another Restricted Subsidiary;

(g)           Liens
existing on the date of this Agreement and securing the Debt of the Company and
its Restricted Subsidiaries evidenced by the Clearwater IRB Documents and Wood
Dale Mortgage Documents;

(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 Company 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 Company 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 Company or a Restricted Subsidiary or its
becoming a Restricted Subsidiary, or any Lien existing on any property acquired
by the Company 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 

 47
 

 

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 Company 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 Company 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 Senior Officer
of the Company) 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 book value, net of applicable reserves, of all inventory of the
Company 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 11.2, 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 Unmatured Event of Default or
Event of Default would exist;

(m)          Liens
on notes or accounts receivable sold by the Company or any Restricted
Subsidiary, provided that (i) such sale constitutes
a “true sale” under GAAP, (ii) recourse to the Company 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
$50,000,000 at any time outstanding; and

 48
 

 

(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 $10,000,000 at any time and the aggregate book value
of the assets subject to such Liens shall not exceed $20,000,000 at any time.

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

11.4         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 Company 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 Company or another Restricted Subsidiary of the
Company 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 11.5), provided
that the foregoing restriction does not apply to the consolidation or merger of
the Company with, or the conveyance, transfer or lease of substantially all of
the assets of the Company 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 Company as an entirety, as the
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, and (ii) immediately
after giving effect to such transaction no Unmatured Event of Default or Event
of Default would exist.  No such
conveyance, transfer or lease of substantially all of the assets of the Company
shall have the effect of releasing the Company or any Successor Corporation
from its liability under this Agreement or the Loan Documents.

11.5         Sale
of Assets, etc.  Except as permitted
under Section 11.4 or in connection with an Acquisition not prohibited by Section
11.6, not, and not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless:

(a)           in the good faith
opinion of the Company, 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 Company or such Restricted Subsidiary;

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

 49
 

 

(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 Company would not exceed 10% of Consolidated Assets as of
the end of the then most recently ended Fiscal Year of the Company.

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 11.1, the aggregate
net book value of the receivables subject to such sale shall not at any time
exceed $75,000,000 in the aggregate.

11.6         Acquisitions.  Not, and not permit any Restricted Subsidiary
to,  acquire all or substantially all of
the assets or any
Capital Securities of any class of, or any partnership or joint venture
interest in, any other Person, except for any Acquisition by the Company 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
Company 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 Company and its Restricted
Subsidiaries, taken as a whole, are engaged on or immediately prior to the
Closing Date;

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

(c) the aggregate
consideration to be paid by the Company or any Restricted Subsidiary (including
any Debt assumed or issued in connection therewith, the amount thereof to be
calculated in accordance with GAAP) in connection with such Acquisition (or any
series of related Acquisitions), when taken together with the aggregate
consideration paid for all other Acquisitions made by the Company and its
Restricted Subsidiaries during the preceding twelve months, is less than EBITDA
for the Company and its Restricted Subsidiaries as reported on a consolidated
basis in accordance with the terms hereof for the four Fiscal Quarter period
immediately preceding the Fiscal Quarter in which such Acquisition is to occur;

(d) immediately
after giving effect to such Acquisition, the Company is in pro forma compliance
with all the financial ratios and restrictions set forth in Section 11.13;
provided, that (x) the Company shall calculate such pro forma compliance
based upon the most-recent trailing twelve month historical financial
statements for the Company and the target to be acquired, (y) all such
information for the Company 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 

 50
 

 

determining such
Consolidated Net Income, Interest Expense, income and franchise tax expense, depreciation
and amortization; and

(e) 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;

(f) 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;

(g) to the extent
available, not less than ten Business Days prior to such Acquisition, the
Administrative Agent shall have received 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
Company’s calculation of pro forma EBITDA relating thereto; and

(h) if the
Acquisition is structured as a merger, the Company or a Restricted Subsidiary
is the surviving entity.

11.7         Modification of Organizational Documents.  Not permit the charter, by-laws or other
organizational documents
of the Company 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.

11.8         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 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.

11.9         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 Company hereunder or by the
performance by the Company of any of its Obligations hereunder or under any
other Loan Document, (b) prohibit the Company 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 11.2(k), Acquired Debt, Nonrecourse Debt or
Permitted Receivables Transactions that prohibits the Company 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 

 51
 

 

Company or any Wholly-Owned Subsidiary, or
pay any Debt owed to the Company or any other Restricted Subsidiary, (ii) make
loans or advances to the Company or any Restricted Subsidiary or (iii) transfer
any of its assets or properties to the Company 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 11.2(k), Acquired 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.

11.10       Business Activities; Issuance of Equity.  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
Company 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 Company and its Restricted Subsidiaries, taken as a whole, are
engaged on the Closing Date.

11.11       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 Company to the capital of any Wholly-Owned Subsidiary, or by any
Subsidiary to the capital of any other domestic Wholly-Owned Subsidiary;

(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 Company and
its Restricted Subsidiaries;

(d)           Investments
constituting Debt permitted by Section 11.1;

(e)           Contingent
Liabilities constituting Debt permitted by Section 11.1 or Liens
permitted by Section 11.2;

(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
to consummate Acquisitions permitted by Section 11.6;

 52
 

 

(j)            Investments
listed on Schedule 11.11 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 Company is in compliance with Section
11.13.2.

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 Unmatured Event of
Default exists.

11.12       Fiscal Year.  Not
change its Fiscal Year.

11.13       Financial Covenants.

11.13.1    Fixed Charge Coverage Ratio.  Not permit the Fixed Charge Coverage Ratio
for any Computation Period to
be less than 1.50 to 1.00.

11.13.2    Minimum Tangible Net Worth.  Not permit Tangible Net Worth at any time to
be less than the sum of (a) $388,000,000
plus (b) 50% of Consolidated Net Income earned in each Fiscal Quarter
(if positive) beginning with the quarter ending August 31, 2006 plus (c)
50% of the Net Cash Proceeds resulting subsequent to the Closing Date from the
issuance of any Capital Securities or the conversion of any instrument
evidencing Debt into a Capital Security.

11.13.3    Adjusted Total Debt to EBITDA Ratio.  Not permit the Adjusted Total Debt to EBITDA
Ratio as of the last day
of any Computation Period to exceed the applicable ratio set forth below for
such Computation Period:

 

	
  Computation

  Period Ending

  	
   

  	
  Adjusted Total Debt to

  EBITDA Ratio

  
	
  Closing Date,
  August 31, 2006 and November 30, 2006

  	
   

  	
  3.50 to 1.00

  
	
  February 28,
  2007 and May 31, 2007

  	
   

  	
  3.25 to 1.00

  
	
  August 31, 2007
  and November 30, 2007

  	
   

  	
  3.00 to 1.00

  
	
  February 28,
  2008 and thereafter

  	
   

  	
  2.75 to 1.00

  

 

SECTION 12  EFFECTIVENESS; CONDITIONS OF LENDING, ETC.

The obligation of
each Lender to make its Loans and of the Issuing Lender to issue Letters of
Credit is subject to the following conditions precedent:

 53
 

 

12.1         Conditions to Effectiveness.  The effectiveness of this Agreement is
subject to the conditions precedent (provided that the making
of any Loan hereunder shall also be subject to the conditions precedent
specified in Section 12.2) that (a) all Debt to be Repaid has been (or
concurrently with the initial borrowing will be) paid in full, and that all
agreements and instruments governing the Debt to be Repaid and that all Liens
securing such Debt to be Repaid have been (or concurrently with the initial
borrowing will be) terminated and (b) the Administrative Agent shall have
received all of the following, each duly executed and dated the Closing Date
(or such earlier date as shall be satisfactory to the Administrative Agent), in
form and substance satisfactory to the Administrative Agent (and the date on
which all such conditions precedent have been satisfied or waived in writing by
the Administrative Agent and the Lenders is called the “Closing Date”):

12.1.1      Notes.  A Note for
each Lender.

12.1.2      Authorization Documents. 
(a) The Company’s charter (or similar formation document), certified by
the appropriate
governmental authority; (b) the Company’s and each Restricted Subsidiaries’
good standing certificates in its state of incorporation (or formation) and in
each other state requested by the Administrative Agent; (c) the Company’s
bylaws (or similar governing document); (d) the Company’s resolutions of its
board of directors (or similar governing body) approving and authorizing such
Person’s execution, delivery and performance of the Loan Documents and the
transactions contemplated thereby; and (e) the Company’s signature and
incumbency certificates of its officers executing any of the Loan Documents (it
being understood that the Administrative Agent and each Lender may conclusively
rely on each such certificate until formally advised by a like certificate of
any changes therein), all certified by its secretary or an assistant secretary
(or similar officer) as being in full force and effect without modification.

12.1.3      Consents, etc. 
Certified copies of all documents evidencing any necessary
corporate or partnership action, consents and governmental
approvals (if any) required for the execution, delivery and performance by the
Company of the documents referred to in this Section 12.

12.1.4      Opinions of Counsel. 
Opinions of counsel for the Company, including local counsel reasonably
requested by the
Administrative Agent.

12.1.5      Payment of Fees. 
Evidence of payment by the Company of all accrued and unpaid fees, costs
and expenses to the
extent then due and payable on the Closing Date, together with all Attorney
Costs of the Administrative Agent to the extent invoiced prior to the Closing
Date, plus such additional amounts of Attorney Costs as shall constitute
the Administrative Agent’s reasonable estimate of Attorney Costs incurred or to
be incurred by the Administrative Agent through the closing proceedings (provided
that such estimate shall not thereafter preclude final settling of accounts
between the Company and the Administrative Agent).

12.1.6      Search Results; Lien Terminations.  Certified copies of Uniform Commercial Code
search reports dated a date
reasonably near to the Closing Date, listing all effective financing statements
which name the Company or any Restricted Subsidiary (under their present 

 54
 

 

names and any previous names) as debtors,
together with (a) copies of such financing statements, (b) payoff letters
evidencing repayment in full of all Debt to be Repaid, the termination of all
agreements relating thereto and the release of all Liens granted in connection
therewith, with Uniform Commercial Code or other appropriate termination
statements and documents effective to evidence the foregoing (other than Liens
permitted by Section 11.2) and (c) such other Uniform Commercial Code
termination statements as the Administrative Agent may reasonably request.

12.1.7      Closing Certificate, Consents and Permits.  A certificate executed by an officer of the
Company on behalf of the
Company certifying the matters set forth in Section 12.2.1 as of the
Closing Date.

12.1.8      Other.  Such other
documents as the Administrative Agent or any Lender may reasonably request.

12.2         Conditions to Credit Extensions.  The obligation (a) of each Lender to
make each Loan and (b) of the Issuing Lender to issue
each Letter of Credit is subject to the following further conditions precedent
that:

12.2.1      Compliance with Warranties, No Default, etc.  Both before and after giving effect to any
borrowing and the issuance
of any Letter of Credit, the following statements shall be true and correct:

(a)           the
representations and warranties of the Company set forth in this Agreement
(other than, with respect to any borrowing or the issuance of any Letter of
Credit subsequent to the Closing Date, the representations and warranties set
forth in Sections 9.5, 9.6, 9.15 and 9.18) and the other Loan Documents shall
be true and correct in all material respects with the same effect as if then
made (except to the extent stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct as of
such earlier date); and

(b)           no
Event of Default or Unmatured Event of Default shall have then occurred and be
continuing.

12.2.2      Confirmatory Certificate.  If requested by the Administrative Agent or
any Lender, the Administrative Agent shall
have received (in sufficient counterparts to provide one to each Lender) a
certificate dated the date of such requested Loan or Letter of Credit and
signed by a duly authorized representative of the Company as to the matters set
out in Section 12.2.1 (it being understood that each request by the
Company for the making of a Loan or the issuance of a Letter of Credit shall be
deemed to constitute a representation and warranty by the Company that the
conditions precedent set forth in Section 12.2.1 will be satisfied at
the time of the making of such Loan or the issuance of such Letter of Credit),
together with such other documents as the Administrative Agent or any Lender
may reasonably request in support thereof.

SECTION 13  EVENTS OF DEFAULT AND THEIR EFFECT.

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13.1         Events of Default. 
Each of the following shall constitute an Event of Default under
this Agreement:

13.1.1      Non-Payment of the Loans, etc.  Default in the payment when due of the
principal of any Loan; or default, and continuance thereof for
five Business Days, in the payment when due of any interest, fee, reimbursement
obligation with respect to any Letter of Credit or other amount payable by the
Company hereunder or under any other Loan Document.

13.1.2      Non-Payment of Other Debt.  Any default shall occur under the terms
applicable to any Debt of any the Company 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 $10,000,000 and such
default shall (a) consist of the failure to pay such Debt when due, whether by
acceleration or otherwise, or (b) 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
Company or any Restricted Subsidiary to purchase or redeem such Debt or post
cash collateral in respect thereof) prior to its expressed maturity.

13.1.3      Bankruptcy, Insolvency, etc.  The Company or any Significant
Subsidiary  becomes insolvent or
generally fails to pay,
or admits in writing its inability or refusal to pay, debts as they become due;
or the Company or any Significant Subsidiary applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or other custodian for the
Company or such Significant Subsidiary or any property thereof, or makes a
general assignment for the benefit of creditors; or, in the absence of such
application, consent or acquiescence, a trustee, receiver or other custodian is
appointed for the Company or such Significant Subsidiary or for a substantial
part of the property of any thereof and is not discharged within 60 days; or any
bankruptcy, reorganization, debt arrangement, or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution or liquidation proceeding,
is commenced in respect of the Company or such Significant Subsidiary, and if
such case or proceeding is not commenced by the Company or such Significant
Subsidiary, it is consented to or acquiesced in by the Company or such
Significant Subsidiary, or remains for 60 days undismissed; or the Company or
any Significant Subsidiary takes any action to authorize, or in furtherance of,
any of the foregoing.

13.1.4      Non-Compliance with Loan Documents.  (a) Failure by the Company to comply with or
to perform any covenant
set forth in Sections 10.1.5, 10.5, 11.1, 11.2, 11.3, 11.4, 11.5, 11.6, and
11.13; or (b) failure by the Company to comply with or to perform any
other provision of this Agreement or any other Loan Document (and not
constituting an Event of Default under any other provision of this Section
13) and continuance of such failure described in this clause (b) for
30 days.

13.1.5      Representations; Warranties.  Any representation or warranty made by the
Company herein or any other Loan
Document is breached or is false or misleading in any material respect, or any
schedule, certificate, financial statement, report, notice or other writing
furnished by the Company to the Administrative Agent or any Lender in
connection herewith is false or misleading in any material respect on the date
as of which the facts therein set forth are 

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stated or certified.

13.1.6      Pension Plans. 
(a) Any Pension Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code
for any plan year or part thereof or a waiver of such standards or extension of
any amortization period is sought or granted under Section 412 of the Code,
(ii) a notice of intent to terminate any Pension Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under Section 4042 of ERISA to terminate or appoint a trustee to
administer any Pension Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Pension Plan may become a subject of any such
proceedings, (iii) the aggregate “amount of unfunded benefit liabilities”
(within the meaning of Section 4001(a)(18) of ERISA) under all Pension Plans,
determined in accordance with Title IV of ERISA, shall equal or exceed an
amount equal to 5% of Net Worth, (iv) the Company or any ERISA Affiliate shall
have incurred or is reasonably expected to incur any liability pursuant to
Title I or IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or any Subsidiary
establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a
Material Adverse Effect.

As used in this Section
13.1.6, the terms “employee benefit plan” and “employee welfare benefit
plan” shall have the respective meanings assigned to such terms in Section 3 of
ERISA.

13.1.7      Judgments.  Final
judgments which exceed an aggregate of $10,000,000 shall be rendered against
the Company or any
Significant Subsidiary and shall not have been paid, discharged or vacated or
had execution thereof stayed pending appeal within 60 days after entry or
filing of such judgments.

13.1.8      Invalidity of Loan Documents.  Any material provision of any Loan Document
shall cease to be in full force
and effect; or the Company (or any Person by, through or on behalf of the
Company) shall contest in any manner the validity, binding nature or
enforceability of any material provision of any Loan Document.

13.1.9      Invalidity of Subordination Provisions, etc.  Any subordination provision in any document
or instrument governing
Subordinated Debt, shall cease to be in full force and effect, or the Company,
any Subsidiary party thereto or any holder of any applicable Subordinated Debt
shall contest in any manner the validity, binding nature or enforceability of any
such provision.

13.1.10    Change of Control. 
A Change of Control shall occur.

13.2         Effect of Event of Default.  If any Event of Default described in Section
13.1.3 shall occur in respect of the Company, the Commitments
shall immediately terminate and the Loans and all other Obligations hereunder
shall become immediately due and payable and the Company shall become
immediately obligated to Cash Collateralize all Letters of Credit, all without
presentment, demand, protest or notice of any kind; and, if any other Event of
Default 

 57
 

 

shall occur and be continuing, the
Administrative Agent may (and, upon the written request of the Required Lenders
shall) declare the Commitments to be terminated in whole or in part and/or
declare all or any part of the Loans and all other Obligations hereunder to be
due and payable and/or demand that the Company immediately Cash Collateralize
all or any Letters of Credit, whereupon the Commitments shall immediately
terminate (or be reduced, as applicable) and/or the Loans and other Obligations
hereunder shall become immediately due and payable (in whole or in part, as
applicable) and/or the Company shall immediately become obligated to Cash
Collateralize the Letters of Credit (all or any, as applicable), all without
presentment, demand, protest or notice of any kind.  The Administrative Agent shall promptly
advise the Company of any such declaration, but failure to do so shall not
impair the effect of such declaration. 
Any cash collateral delivered hereunder shall be held by the Administrative
Agent (without liability for interest thereon) and applied to the Obligations
arising in connection with any drawing under a Letter of Credit.  After the expiration or termination of all
Letters of Credit, such cash collateral shall be applied by the Administrative
Agent to any remaining Obligations hereunder and any excess shall be delivered
to the Company or as a court of competent jurisdiction may elect.

SECTION 14  THE AGENT.

14.1         Appointment and Authorization.  Each Lender hereby irrevocably (subject to Section
14.10) appoints, designates
and authorizes the Administrative Agent to take such action on its behalf under
the provisions of this Agreement and each other Loan Document and to exercise
such powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or any other Loan Document, together with such powers
as are reasonably incidental thereto. 
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Administrative Agent shall not
have any duty or responsibility except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.  Without limiting
the generality of the foregoing sentence, the use of the term “agent” herein
and in other Loan Documents with reference to the Administrative Agent is not
intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

14.2         Issuing Lender. 
The Issuing Lender shall act on behalf of the Lenders (according to
their Pro Rata Shares) with
respect to any Letters of Credit issued by it and the documents associated
therewith.  The Issuing Lender shall have
all of the benefits and immunities (a) provided to the Administrative Agent in
this Section 14 with respect to any acts taken or omissions suffered by
the Issuing Lender in connection with Letters of Credit issued by it or
proposed to be issued by it and the applications and agreements for letters of
credit pertaining to such Letters of Credit as fully as if the term “Administrative
Agent”, as used in this Section 14, included the Issuing Lender with
respect to such acts or omissions and (b) as additionally provided in this
Agreement with respect to the Issuing Lender.

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14.3         Delegation of Duties. 
The Administrative Agent may execute any of its duties under this
Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact
and shall be entitled to advice of counsel and other consultants or experts
concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects in the absence of gross negligence or willful misconduct.

14.4         Exculpation of Administrative Agent.  None of the Administrative Agent nor any of
its directors, officers, employees
or agents shall (a) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document or the transactions contemplated hereby (except to the extent
resulting from its own gross negligence or willful misconduct in connection
with its duties expressly set forth herein as determined by a final,
nonappealable judgment by a court of competent jurisdiction), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by the Company or Affiliate of the
Company, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document (or the creation, perfection or priority
of any Lien or security interest therein), or for any failure of the Company or
any other party to any Loan Document to perform its Obligations hereunder or
thereunder.  The Administrative Agent
shall not be under any obligation to any Lender to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company’s
Subsidiaries or Affiliates.

14.5         Reliance by Administrative Agent.  The Administrative Agent shall be entitled to
rely, and shall be fully protected
in relying, upon any writing, communication, signature, resolution,
representation, notice, consent, certificate, electronic mail message,
affidavit, letter, telegram, facsimile, telex or telephone message, statement
or other document or conversation believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and upon
advice and statements of legal counsel (including counsel to the Company),
independent accountants and other experts selected by the Administrative
Agent.  The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, confirmation from the Lenders of their obligation to indemnify the
Administrative Agent against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Lender.  For purposes of determining compliance with
the conditions specified in Section 12, 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 written notice from such Lender 

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prior to the proposed Closing Date specifying
its objection thereto.

14.6         Notice of Default. 
The Administrative Agent shall not be deemed to have knowledge or notice
of the occurrence of any
Event of Default or Unmatured Event of Default except with respect to defaults
in the payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Event of Default or Unmatured Event of
Default and stating that such notice is a “notice of default”.  The Administrative Agent will notify the
Lenders of its receipt of any such notice. 
The Administrative Agent shall take such action with respect to such
Event of Default or Unmatured Event of Default as may be requested by the
Required Lenders in accordance with Section 13; provided that
unless and until the Administrative Agent has received any such request, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest
of the Lenders.

14.7         Credit Decision. 
Each Lender acknowledges that the Administrative Agent has not made any representation or warranty
to it, and that no act by the Administrative Agent hereafter taken, including
any consent and acceptance of any assignment or review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender as to any matter, including whether the
Administrative Agent has disclosed material information in its possession.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company, and made its own decision to enter into this Agreement and to extend
credit to the Company hereunder.  Each
Lender also represents that it will, independently and without reliance upon
the Administrative Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company.  Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the
Administrative Agent, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial or other
condition or creditworthiness of the Company which may come into the possession
of the Administrative Agent.

14.8         Indemnification. 
Whether or not the transactions contemplated hereby are consummated,
each Lender shall indemnify
upon demand the Administrative Agent and its directors, officers, employees and
agents (to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), according to its applicable
Pro Rata Share, from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that no Lender shall be liable for any
payment to any such Person of any portion of the Indemnified Liabilities to the
extent determined by a final, nonappealable 

 60
 

 

judgment by a court of competent jurisdiction
to have resulted from the applicable Person’s own gross negligence or willful
misconduct.  No action taken in
accordance with the directions of the Required Lenders shall be deemed to
constitute gross negligence or willful misconduct for purposes of this Section.  Without limitation of the foregoing, each
Lender shall reimburse the Administrative Agent upon demand for its ratable
share of any costs or out-of-pocket expenses (including Attorney
Costs and Taxes) incurred by the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Administrative Agent is not reimbursed for such expenses
by or on behalf of the Company.  The
undertaking in this Section shall survive repayment of the Loans, cancellation
of the Notes, expiration or termination of the Letters of Credit, termination
of this Agreement and the resignation or replacement of the Administrative
Agent.

14.9         Administrative Agent in Individual Capacity.  LaSalle and its Affiliates may make loans to,
issue letters of credit
for the account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and Affiliates as though
LaSalle were not the Administrative Agent hereunder and without notice to or
consent of any Lender.  Each Lender
acknowledges that, pursuant to such activities, LaSalle or its Affiliates may
receive information regarding the Company or its Affiliates (including information
that may be subject to confidentiality obligations in favor of the Company or
such Affiliate) and acknowledge that the Administrative Agent shall be under no
obligation to provide such information to them. 
With respect to their Loans (if any), 
LaSalle and its Affiliates shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though LaSalle
were not the Administrative Agent, and the terms “Lender” and “Lenders” include
LaSalle and its Affiliates, to the extent applicable, in their individual
capacities.

14.10       Successor Administrative Agent.  The Administrative Agent may resign as
Administrative Agent upon 30 days’
notice to the Lenders.  If the
Administrative Agent resigns under this Agreement, the Required Lenders shall,
with (so long as no Event of Default exists) the consent of the Company (which
shall not be unreasonably withheld or delayed), appoint from among the Lenders
a successor agent for the Lenders.  If no
successor agent is appointed prior to the effective date of the resignation of
the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Company, a successor agent from among the
Lenders.  Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Administrative Agent and the
term “Administrative Agent” shall mean such successor agent, and the retiring
Administrative Agent’s appointment, powers and duties as Administrative Agent shall
be terminated. After any retiring Administrative Agent’s resignation hereunder
as Administrative Agent, the provisions of this Section 14 and Sections
15.5 and 15.16 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.  If no successor agent has
accepted appointment as Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective and the 

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Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above.

14.11       Administrative Agent May File Proofs of Claim.  In case of the pendency of any receivership,
insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, the Administrative Agent (irrespective
of whether the principal of any Loan 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 Company) 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, 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 and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent
under Sections 5, 15.5 and 15.17) allowed in such judicial
proceedings; 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 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, 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 5, 15.5 and 15.17.

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 any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

14.12       Other Agents; Arrangers and Managers.  None of the Lenders or other Persons
identified on the facing page or
signature pages of this Agreement as a “syndication agent,” “documentation
agent,” “co-agent,” “book manager,” “lead manager,” “arranger,” “lead arranger”
or “co-arranger”, if any, shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than, in the case of such
Lenders, those applicable to all Lenders as such.  Without limiting the foregoing, none of the
Lenders or other Persons so identified shall have or be deemed to have any
fiduciary relationship with any Lender. 
Each Lender acknowledges that it has not relied, and will not rely, on
any of the Lenders or other Persons so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.

 

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SECTION 15 
GENERAL.

15.1         Waiver;
Amendments.  No delay on the part of
the Administrative Agent or any Lender in the exercise of any right, power or remedy
shall operate as a waiver thereof, nor shall any single or partial exercise by
any of them of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy.  No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or the other Loan
Documents shall in any event be effective unless the same shall be in writing
and acknowledged by Lenders having an aggregate Pro Rata Shares of not less
than the aggregate Pro Rata Shares expressly designated herein with respect
thereto or, in the absence of such designation as to any provision of this
Agreement, by the Required Lenders, and then any such amendment, modification,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  No
amendment, modification, waiver or consent shall (a) extend or increase the
Commitment of any Lender without the written consent of such Lender, (b) extend
the date scheduled for payment of any principal (excluding mandatory
prepayments) of or interest on the Loans or any fees payable hereunder without
the written consent of each Lender directly affected thereby, (c) reduce the
principal amount of any Loan, the rate of interest thereon or any fees payable
hereunder, without the consent of each Lender directly affected thereby (except
for periodic adjustments of interest rates and fees resulting from a change in
the Applicable Margin as provided for in this Agreement); or (d) change the
definition of Required Lenders, any provision of this Section 15.1 or
reduce the aggregate Pro Rata Share required to effect an amendment,
modification, waiver or consent, without, in each case, the written consent of
all Lenders.  No provision of Section
14 or other provision of this Agreement affecting the Administrative Agent
in its capacity as such shall be amended, modified or waived without the
consent of the Administrative Agent.  No
provision of this Agreement relating to the rights or duties of the Issuing
Lender in its capacity as such shall be amended, modified or waived without the
consent of the Issuing Lender.  No
provision of this Agreement relating to the rights or duties of the Swing Line
Lender in its capacity as such shall be amended, modified or waived without the
consent of the Swing Line Lender.

15.2         Confirmations.  The Company and each holder of a Note agree
from time to time, upon written request received by it from the
other, to confirm to the other in writing (with a copy of each such
confirmation to the Administrative Agent) the aggregate unpaid principal amount
of the Loans then outstanding under such Note.

15.3         Notices.  Except as otherwise provided in Sections 2.2.2
and 2.2.3, all notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address shown on
Annex B or at such other address as such party may, by written notice
received by the other parties, have designated as its address for such
purpose.  Notices sent by facsimile
transmission shall be deemed to have been given when sent; notices sent by mail
shall be deemed to have been given three Business Days after the date when sent
by registered or certified mail, postage prepaid; and notices sent by hand
delivery or overnight courier service shall be deemed to have been given when
received.  For purposes of Sections
2.2.2 and 2.2.3, the Administrative Agent shall be entitled to rely
on telephonic instructions from any person that the Administrative Agent in
good faith believes is an authorized officer or employee of the Company, and
the Company shall hold the Administrative Agent and each other 

 63
 

Lender harmless from any loss, cost or expense resulting from any such
reliance.

15.4         Computations.  Where the character or amount of any
asset or liability or item of income or expense is required to be determined,
or any consolidation or other accounting computation is required to be made,
for the purpose of this Agreement, such determination or calculation shall, to
the extent applicable and except as otherwise specified in this Agreement, be
made in accordance with GAAP, consistently applied; provided that if the
Company notifies the Administrative Agent that the Company wishes to amend any
covenant in Sections 10 or 11.13 (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 Company
that the Required Lenders wish to amend Sections 10 or 11.13 (or
any related definition) for such purpose), then the Company’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 Company and the Required Lenders.

15.5         Costs,
Expenses and Taxes.  The Company
agrees to pay on demand all reasonable out-of-pocket costs and expenses of the
Administrative Agent (including Attorney Costs and any Taxes) in connection
with the preparation, execution, syndication, delivery and administration
(including the costs of Intralinks (or other similar service), if applicable)
of this Agreement, the other Loan Documents and all other documents provided
for herein or delivered or to be delivered hereunder or in connection herewith
(including any amendment, supplement or waiver to any Loan Document), whether
or not the transactions contemplated hereby or thereby shall be consummated,
and all reasonable out-of-pocket costs and expenses (including Attorney Costs
and any Taxes) incurred by the Administrative Agent and each Lender after an
Event of Default in connection with the collection of the Obligations or the
enforcement of this Agreement the other Loan Documents or any such other
documents or during any workout, restructuring or negotiations in respect
thereof.  In addition, the Company agrees
to pay, and to save the Administrative Agent and the Lenders harmless from all
liability for, any fees of the Company’s auditors in connection with any
reasonable exercise by the Administrative Agent and the Lenders of their rights
pursuant to Section 10.2.  All
Obligations provided for in this Section 15.5 shall survive repayment of
the Loans, cancellation of the Notes, expiration or termination of the Letters
of Credit and termination of this Agreement.

15.6         Assignments;
Participations.

15.6.1      Assignments.  (a) 
Any Lender may at any time assign to one or more Persons (any such
Person, an “Assignee”)
all or any portion of such Lender’s Loans and Commitments, with the prior
written consent of the Administrative Agent, the Issuing Lender (for an
assignment of the Revolving Loans and the Revolving Commitment) and, so long as
no Event of Default exists, the Company (which consents shall not be
unreasonably withheld or delayed and shall not be required for an assignment by
a Lender to a Lender or an Affiliate of a Lender).  Except as the Administrative Agent may
otherwise agree, any such assignment shall be in a minimum aggregate amount
equal to $5,000,000 or, if less, the remaining Commitment and Loans held by the
assigning Lender.  The Company and the
Administrative Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned to an 

 64
 

Assignee until the Administrative Agent shall have received and
accepted an effective assignment agreement in substantially the form of Exhibit
C hereto (an “Assignment Agreement”) executed, delivered and fully
completed by the applicable parties thereto and a processing fee of
$3,500.  No assignment may be made to any
Person if at the time of such assignment the Company would be obligated to pay
any greater amount under Sections 7.6 or 8 to the Assignee than
the Company is then obligated to pay to the assigning Lender under such
Sections (and if any assignment is made in violation of the foregoing, the
Company will not be required to pay such greater amounts).  Any attempted assignment not made in
accordance with this Section 15.6.1 shall be treated as the sale of a
participation under Section 15.6.2. 
The Company shall be deemed to have granted its consent to any
assignment requiring its consent hereunder unless the Company has expressly
objected to such assignment within three Business Days after notice thereof.

(b)           From
and after the date on which the conditions described above have been met, (i)
such Assignee shall be deemed automatically to have become a party hereto and,
to the extent that rights and obligations hereunder have been assigned to such
Assignee pursuant to such Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and (ii) the assigning Lender, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment Agreement, shall be released from its rights (other than its
indemnification rights) and obligations hereunder.  Upon the request of the Assignee (and, as
applicable, the assigning Lender) pursuant to an effective Assignment
Agreement, the Company shall execute and deliver to the Administrative Agent
for delivery to the Assignee (and, as applicable, the assigning Lender) a Note
in the principal amount of the Assignee’s Pro Rata Share of the Revolving
Commitment (and, as applicable, a Note in the principal amount of the Pro Rata
Share of the Revolving Commitment retained by the assigning Lender).  Each such Note shall be dated the effective
date of such assignment.  Upon receipt by
the assigning Lender of such Note, the assigning Lender shall return to the
Company any prior Note held by it.

(c)           Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a
security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

15.6.2      Participations.  Any Lender may at any time sell to one or
more Persons participating interests in its Loans, Commitments or other
interests hereunder (any such Person, a “Participant”).  In the event of a sale by a Lender of a
participating interest to a Participant, (a) such Lender’s obligations
hereunder shall remain unchanged for all purposes, (b) the Company and the
Administrative Agent shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations hereunder and
(c) all amounts payable by the Company shall be determined as if such
Lender had not sold such participation and shall be paid directly to such
Lender.  No Participant shall have any
direct or indirect voting rights hereunder except with respect to any event
described in Section 15.1 expressly requiring the unanimous vote of
all Lenders or, as applicable, all affected Lenders.  Each Lender agrees to incorporate the
requirements of the preceding sentence into each participation agreement which
such Lender enters into with any Participant. 
The Company agrees that if amounts outstanding 

 65
 

under this Agreement are due and payable (as a result of acceleration
or otherwise), each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement and
with respect to any Letter of Credit to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement; provided that such right of set-off shall be subject to the
obligation of each Participant to share with the Lenders, and the Lenders agree
to share with each Participant, as provided in Section 7.5.  The Company also agrees that each Participant
shall be entitled to the benefits of Section 7.6 or 8 as if it
were a Lender (provided that on the date of the participation no
Participant shall be entitled to any greater compensation pursuant to Section
7.6 or 8 than would have been paid to the participating Lender on
such date if no participation had been sold and that each Participant complies
with Section 7.6(d) as if it were an Assignee).

15.7         Register.  The Administrative Agent shall maintain a
copy of each Assignment Agreement delivered and accepted by it and
register (the “Register”) for the recordation of names and addresses of
the Lenders and the Commitment of each Lender from time to time and whether
such Lender is the original Lender or the Assignee.  No assignment shall be effective unless and
until the Assignment Agreement is accepted and registered in the Register. All
records of transfer of a Lender’s interest in the Register shall be conclusive,
absent manifest error, as to the ownership of the interests in the Loans. The
Administrative Agent shall not incur any liability of any kind with respect to
any Lender with respect to the maintenance of the Register.

15.8         GOVERNING
LAW.  THIS AGREEMENT AND EACH NOTE
SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES.

15.9         Confidentiality.  As required by federal law and the
Administrative Agent’s policies and practices, the Administrative Agent may
need to obtain, verify, and record certain
customer identification information and documentation in connection with
opening or maintaining accounts, or establishing or continuing to provide
services.  The Administrative Agent and
each Lender agree to use commercially reasonable efforts (equivalent to the
efforts the Administrative Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as
confidential all information provided to them by the Company and designated as
confidential, except that the Administrative Agent and each Lender may disclose
such information (a) to Persons employed or engaged by the Administrative Agent
or such Lender in evaluating, approving, structuring or administering the Loans
and the Commitments; (b) to any assignee or participant or potential assignee
or participant that has agreed to comply with the covenant contained in this Section
15.9 (and any such assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by
them as described in clause (a) above); (c) as required or requested by any
federal or state regulatory authority or examiner, or any insurance industry
association, or as reasonably believed by the Administrative Agent or such
Lender to be compelled by any court decree, subpoena or legal or administrative
order or process; (d) as, on the advice of the Administrative Agent’s or such
Lender’s counsel, is required by law; (e) in connection with the 

 66
 

exercise of any right or remedy under the Loan Documents or in
connection with any litigation to which the Administrative Agent or such Lender
is a party; (f) to any nationally recognized rating agency that requires access
to information about a Lender’s investment portfolio in connection with ratings
issued with respect to such Lender; (g) to any Affiliate of the Administrative
Agent, the Issuing Lender or any other Lender who may provide Bank Products to
the Company or any Restricted Subsidiary; or (h) that ceases to be confidential
through no fault of the Administrative Agent or any Lender.  Notwithstanding the foregoing, the Company
consents to the publication by the Administrative Agent or any Lender of a
tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement, and the Administrative Agent
reserves the right to provide to industry trade organizations information
necessary and customary for inclusion in league table measurements.

15.10       Severability.  Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.  All obligations of the
Company and rights of the Administrative Agent and the Lenders expressed herein
or in any other Loan Document shall be in addition to and not in limitation of
those provided by applicable law.

15.11       Nature
of Remedies.  All Obligations of the
Company and rights of the Administrative Agent and the Lenders expressed herein
or in any other Loan Document shall be in addition to and not in limitation of
those provided by applicable law.  No
failure to exercise and no delay in exercising, on the part of the
Administrative Agent or any Lender, 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.

15.12       Entire
Agreement.  This Agreement, together
with the other Loan Documents, embodies the entire agreement and
understanding among the parties hereto and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof (except as relates
to the fees described in Section 5.3) and any prior arrangements made
with respect to the payment by the Company of (or any indemnification for) any
fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf
of the Administrative Agent or the Lenders.

15.13       Counterparts.  This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
Agreement.  Receipt of an executed
signature page to this Agreement by facsimile or other electronic transmission
shall constitute effective delivery thereof. 
Electronic records of executed Loan Documents maintained by the Lenders
shall deemed to be originals.

15.14       Successors
and Assigns.  This Agreement shall
be binding upon the Company, the Lenders and the Administrative Agent and
their respective successors and assigns, and shall inure to the benefit of the
Company, the Lenders and the Administrative Agent and the 

 67
 

successors and assigns of the Lenders and the Administrative
Agent.  No other Person shall be a direct
or indirect legal beneficiary of, or have any direct or indirect cause of
action or claim in connection with, this Agreement or any of the other Loan
Documents.  The Company may not assign or
transfer any of its rights or Obligations under this Agreement without the
prior written consent of the Administrative Agent and each Lender.

15.15       Captions.  Section captions used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.

15.16       Customer
Identification—USA Patriot Act Notice. 
Each
Lender and LaSalle (for itself and not on behalf of any other party) hereby
notifies the Company 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
Company and its Subsidiaries, which information includes the name and address
of the Company and its Subsidiaries and other information that will allow such
Lender or LaSalle, as applicable, to identify the Company and its Subsidiaries
in accordance with the Act.

15.17       INDEMNIFICATION BY THE COMPANY.  IN CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT
BY THE ADMINISTRATIVE AGENT AND THE LENDERS AND THE AGREEMENT TO EXTEND THE
COMMITMENTS PROVIDED HEREUNDER, THE COMPANY HEREBY AGREES TO INDEMNIFY,
EXONERATE AND HOLD THE ADMINISTRATIVE AGENT, EACH LENDER AND EACH OF THE
OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND AGENTS OF THE ADMINISTRATIVE
AGENT AND EACH LENDER (EACH A “LENDER PARTY”) FREE AND HARMLESS FROM AND
AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES,
DAMAGES AND EXPENSES, INCLUDING REASONABLE ATTORNEY COSTS (COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”), INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR
ARISING OUT OF, OR RELATING TO (A) ANY TENDER OFFER, MERGER, PURCHASE OF
CAPITAL SECURITIES, PURCHASE OF ASSETS OR OTHER SIMILAR TRANSACTION FINANCED OR
PROPOSED TO BE FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE
PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE, EMISSION,
DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCE AT ANY PROPERTY OWNED OR LEASED BY THE COMPANY OR ANY RESTRICTED
SUBSIDIARY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH RESPECT TO
CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY THE COMPANY OR ANY RESTRICTED
SUBSIDIARY OR THE OPERATIONS CONDUCTED THEREON, (D) THE INVESTIGATION, CLEANUP
OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH THE COMPANY OR ANY RESTRICTED
SUBSIDIARY OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR
INDIRECTLY DISPOSED OF HAZARDOUS SUBSTANCES OR (E) THE EXECUTION,
DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR 

 68
 

ANY SUCH INDEMNIFIED LIABILITIES ARISING ON
ACCOUNT OF THE APPLICABLE LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
AS DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION.  IF AND TO THE EXTENT THAT
THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, THE COMPANY
HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION
OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS PERMISSIBLE UNDER APPLICABLE
LAW.  ALL OBLIGATIONS PROVIDED FOR IN THIS
SECTION 15.17 SHALL SURVIVE REPAYMENT OF THE LOANS, CANCELLATION OF THE
NOTES, EXPIRATION OR TERMINATION OF THE LETTERS OF CREDIT, AND TERMINATION OF
THIS AGREEMENT.

15.18       Nonliability
of Lenders.  The relationship between
the Company on the one hand and the Lenders and the Administrative Agent on
the other hand shall be solely that of borrower and lender.  Neither the Administrative Agent nor any
Lender has any fiduciary relationship with or duty to the Company arising out
of or in connection with this Agreement or any of the other Loan Documents, and
the relationship between the Company, on the one hand, and the Administrative
Agent and the Lenders, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor. 
Neither the Administrative Agent nor any Lender undertakes any
responsibility to the Company to review or inform the Company of any matter in
connection with any phase of the Company’s business or operations.  The Company agrees that neither the
Administrative Agent nor any Lender shall have liability to the Company
(whether sounding in tort, contract or otherwise) for losses suffered by the
Company in connection with, arising out of, or in any way related to the
transactions contemplated and the relationship established by the Loan
Documents, or any act, omission or event occurring in connection therewith,
unless it is determined in a final non-appealable judgment by a court of
competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought.  NO LENDER
PARTY SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY OTHERS OF ANY
INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR
INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL
ANY LENDER PARTY HAVE ANY LIABILITY WITH RESPECT TO, AND THE COMPANY HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE FOR ANY SPECIAL, PUNITIVE, EXEMPLARY,
INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH
(WHETHER BEFORE OR AFTER THE CLOSING DATE).  The Company acknowledges that it has been
advised by counsel in the negotiation, execution and delivery of this Agreement
and the other Loan Documents to which it is a party.  No joint venture is created hereby or by the
other Loan Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Company and the Lenders.

15.19       FORUM SELECTION AND CONSENT TO JURISDICTION.  ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, 

 69
 

SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY
IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE ADMINISTRATIVE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  THE COMPANY FURTHER IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

15.20       WAIVER OF JURY TRIAL.  EACH OF THE COMPANY, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND
ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.

[signature pages
follow]

 70

 

The parties hereto have
caused this Agreement to be duly executed and delivered by their duly
authorized officers as of the date first set forth above.

	
  

  	
  AAR CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy J. Romenesko

  
	
   

  	
  Title:

  	
  Vice President and Chief Financial Officer

  

 

 

 

	
  

  	
  LASALLE BANK, NATIONAL ASSOCIATION, as
  Administrative Agent, as Issuing Lender and as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Scott M. Carbon

  
	
   

  	
  Title:

  	
  First Vice President

  

 

 

 

	
  

  	
  WELLS FARGO BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Andrew Cavallari

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
  

  	
  NATIONAL CITY BANK

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Stephanie A. Kline

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
  

  	
  MERRILL LYNCH CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Nancy E. Meadows

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
  

  	
  ASSOCIATED BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Daniel Holzhauer

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

 

	
  

  	
  U.S. BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Kathleen D. Schurr

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

ANNEX A

LENDERS AND PRO RATA SHARES

 

	
  Lender

  	
   

  	
  Revolving

  Commitment

  Amount

  	
   

  	
  

  Pro Rata

  Share

  
	
  LaSalle Bank, National Association

  	
   

  	
  $40,000,000*

  	
   

  	
  28.571428571%

  
	
  Wells Fargo Bank, N.A.

  	
   

  	
  $20,000,000

  	
   

  	
  14.285714286%

  
	
  National City Bank

  	
   

  	
  $20,000,000

  	
   

  	
  14.285714286%

  
	
  Merrill Lynch Capital
  Corporation

  	
   

  	
  $20,000,000

  	
   

  	
  14.285714286%

  
	
  Associated Bank, N.A.

  	
   

  	
  $20,000,000

  	
   

  	
  14.285714286%

  
	
  U.S. Bank, National
  Association

  	
   

  	
  $20,000,000

  	
   

  	
  14.285714286%

  
	
  TOTALS

  	
   

  	
  $140,000,000

  	
   

  	
  100%

  

 

*              Includes
Swing Line Commitment Amount of $10,000,000.

 

 

ANNEX B

ADDRESSES FOR
NOTICES

AAR CORP.

1100 N. Wood Dale Road

Wood Dale, Illinois  60191

Attention:   Timothy Romenesko, Chief
Financial Officer

Telephone: __________________

Facsimile: ___________________

LASALLE BANK NATIONAL
ASSOCIATION, as Administrative Agent, Issuing Lender and a
Lender

Notices
of Borrowing, Conversion, Continuation and Letter of Credit Issuance

135 South LaSalle Street

Chicago, Illinois 60603

Attention:
_________________

Telephone:
(312)____________

Facsimile:  (312) ___________

All Other Notices

135 South LaSalle Street

Chicago, Illinois 60603

Attention:
__________________

Telephone: (312)
____________

Facsimile:  (312) ____________

[OTHER LENDERS]

 

 

EXHIBIT A

FORM OF NOTE

_______,_______

$__________________                                                                                                                                       Chicago,
Illinois

The undersigned,
for value received, promises to pay to the order of ______________ (the “Lender”)
at the principal office of LaSalle Bank National Association (the “Administrative
Agent”) in Chicago, Illinois the aggregate unpaid amount of all Loans made
to the undersigned by the Lender pursuant to the Credit Agreement referred to
below (as shown on the schedule attached hereto (and any continuation thereof)
or in the records of the Lender), such principal amount to be payable on the
dates set forth in the Credit Agreement.

The undersigned
further promises to pay interest on the unpaid principal amount of each Loan
from the date of such Loan until such Loan is paid in full, payable at the
rate(s) and at the time(s) set forth in the Credit Agreement.  Payments of both principal and interest are
to be made in lawful money of the United States of America.

This Note
evidences indebtedness incurred under, and is subject to the terms and provisions
of, the Credit Agreement, dated as of [Date of Agreement] (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”; terms not otherwise defined herein are used herein as defined
in the Credit Agreement), among the undersigned, certain financial institutions
(including the Lender) and the Administrative Agent, to which Credit Agreement
reference is hereby made for a statement of the terms and provisions under
which this Note may or must be paid prior to its due date or its due date
accelerated.

This Note is made
under and governed by the laws of the State of Illinois applicable to contracts
made and to be performed entirely within such State.

	
  

  	
   

  	
  AAR CORP.

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

 

EXHIBIT B

FORM OF COMPLIANCE
CERTIFICATE

To:          LaSalle Bank National Association, as
Administrative Agent

Please refer to
the Credit Agreement dated as of [Date of Agreement] (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”)
among AAR CORP. (the “Company”), various financial institutions and
LaSalle Bank National Association, as Administrative Agent.  Terms used but not otherwise defined herein
are used herein as defined in the Credit Agreement.

I.                                         Reports.  Enclosed herewith is a copy of the [annual audited/quarterly/monthly] report of the Company as
at _____________, ____ (the “Computation Date”), which report fairly
presents in all material respects the financial condition and results of
operations [(subject to the absence of footnotes and to
normal year-end adjustments)] of the Company as of the Computation
Date and has been prepared in accordance with GAAP consistently applied.

II.                                     Financial
Tests.  The Company hereby certifies
and warrants to you that the following is a true and correct computation as at
the Computation Date of the following ratios and/or financial restrictions
contained in the Credit Agreement:

	
  A.

  	
   

  	
  Section 11.13.1—Minimum Fixed Charge Coverage
  Ratio

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  EBITDAR

  	
   

  	
  $

  
	
   

  	
   

  	
  2.

  	
   

  	
  Income taxes paid

  	
   

  	
  $

  
	
   

  	
   

  	
  3.

  	
   

  	
  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 Revolving Loans, required principal
  payments under the Company’s notes due December 15, 2007, the aggregate
  [initial] principal amount of which is $[47,380,000], and required principal
  payments under the Company’s notes due May 15, 2008, the aggregate initial
  principal amount of which is $20,000,000)

  	
   

  	
  $

  

 

 

 

	
  

  	
   

  	
  8.

  	
   

  	
  Consolidated Rentals

  	
   

  	
  $

  
	
   

  	
   

  	
  9.

  	
   

  	
  Restricted Payments by
  the Company

  	
   

  	
  $

  
	
   

  	
   

  	
  10.

  	
   

  	
  Sum of (6) through (9)

  	
   

  	
  $

  
	
   

  	
   

  	
  11.

  	
   

  	
  Ratio of (5) to (10)

  	
   

  	
        
  to 1

  
	
   

  	
   

  	
  12.

  	
   

  	
  Minimum Required

  	
   

  	
  1.50 to 1

  
	
  B.

  	
   

  	
  Section 11.13.2—Minimum
  Tangible Net Worth(2)

  	
   

  	
   

  
	
   

  	
   

  	
  1.

  	
   

  	
  $388,000,000

  	
   

  	
  $

  
	
   

  	
   

  	
  2.

  	
   

  	
  50% of Consolidated Net
  Income beginning 8/31/06

  	
   

  	
  $

  
	
   

  	
   

  	
  3.

  	
   

  	
  50% of Net Cash
  Proceeds from Capital Securities offerings

  	
   

  	
  $

  
	
   

  	
   

  	
  4.

  	
   

  	
  Minimum Required (sum
  of (1) through (3))

  	
   

  	
  $

  
	
  C.

  	
   

  	
  Section 11.13.3—Maximum
  Adjusted Total Debt to EBITDA Ratio

  
	
   

  	
   

  	
  1.

  	
   

  	
  Adjusted Total Debt

  	
   

  	
  $

  
	
   

  	
   

  	
  2.

  	
   

  	
  EBITDA

  	
   

  	
  $

  
	
   

  	
   

  	
  3.

  	
   

  	
  Ratio of (1) to (2)

  	
   

  	
        
  to 1

  
	
   

  	
   

  	
  4.

  	
   

  	
  Maximum allowed

  	
   

  	
         to
  1

  
								

 

The Company
further certifies to you that no Event of Default or Unmatured Event of Default
has occurred and is continuing.

The Company has
caused this Certificate to be executed and delivered by its duly authorized
officer on       ,
        .

	
  

  	
  AAR CORP.

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

(2)             Company
to give effect to deductions of certain amounts as appropriate and contemplated
by the definition of Tangible Net Worth.

 

EXHIBIT C

FORM OF

ASSIGNMENT AGREEMENT

Date:_________________

	
  To:

  	
   

  	
  AAR CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
      and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LaSalle Bank National Association, as Administrative
  Agent

  
	
   

  	
   

  	
   

  
	
  Re:

  	
   

  	
  Assignment under the Credit Agreement referred to
  below

  

 

Gentlemen and Ladies:

Please refer to Section 15.6.1 of the Credit Agreement
dated as of [Date of Agreement] (as amended or otherwise modified from time to
time, the “Credit Agreement”) among AAR CORP. (the “Company”),
various financial institutions and LaSalle Bank National Association, as
administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein or the
context otherwise requires, terms used herein have the meanings provided in the
Credit Agreement.

                          (the
“Assignor”) hereby sells and assigns, without recourse, to                 
(the “Assignee”), and the Assignee hereby purchases and assumes from
the Assignor, that interest in and to the Assignor’s rights and obligations
under the Credit Agreement as of the date hereof equal to        
% of all of the Loans, of the participation interests in the Letters of
Credit and of the Commitments, such sale, purchase, assignment and assumption
to be effective as of               ,
         , or such later date on
which the Company and the Administrative Agent shall have consented hereto (the
“Effective Date”).  After giving
effect to such sale, purchase, assignment and assumption, the Assignee’s and
the Assignor’s respective Percentages for purposes of the Credit Agreement will
be as set forth opposite their names on the signature pages hereof.

The Assignor hereby instructs the Administrative Agent
to make all payments from and after the Effective Date in respect of the
interest assigned hereby directly to the Assignee.  The Assignor and the Assignee agree that all
interest and fees accrued up to, but not including, the Effective Date are the
property of the Assignor, and not the Assignee. 
The Assignee agrees that, upon receipt of any such interest or fees, the
Assignee will promptly remit the same to the Assignor.

 

 

The Assignor represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim.

The Assignee represents and warrants to the Company
and the Administrative Agent that, as of the date hereof, the Company will not
be obligated to pay any greater amount under Section 7.6 or 8 of the Credit
Agreement than the Company is obligated to pay to the Assignor under such
Section.  [The Assignee has delivered, or
is delivering concurrently herewith, to the Company and the Administrative
Agent the forms required by Section 7.6 of the Credit Agreement.] [INSERT IF ASSIGNEE
IS ORGANIZED UNDER THE LAWS OF A JURISDICTION OTHER THAN THE UNITED STATES OF
AMERICA OR A STATE THEREOF.]  The
[Assignee/Assignor] [Company] shall pay the fee payable to the Administrative
Agent pursuant to Section 15.6.1.

The Assignee hereby confirms that it has received a
copy of the Credit Agreement.  Except as
otherwise provided in the Credit Agreement, effective as of the Effective Date:

 (a)          the Assignee (i) shall be deemed
automatically to have become a party to the Credit Agreement and to have all
the rights and obligations of a “Lender” under the Credit Agreement as if it
were an original signatory thereto to the extent specified in the second
paragraph hereof; and (ii) agrees to be bound by the terms and conditions set
forth in the Credit Agreement as if it were an original signatory thereto; and

(b)           the
Assignor shall be released from its obligations under the Credit Agreement to
the extent specified in the second paragraph hereof.

The Assignee hereby advises each of you of the
following administrative details with respect to the assigned Loans and
Commitment:

	
  

  	
  (A)

  	
  Institution
  Name:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Facsimile:

  
	
   

  	
   

  	
   

  
	
   

  	
  (B)

  	
  Payment
  Instructions:

  

 

This Assignment shall be governed by and construed in
accordance with the laws of the State of Illinois.

Please evidence your receipt hereof and your consent
to the sale, assignment, purchase and assumption set forth herein by signing
and returning counterparts hereof to the Assignor and the Assignee.

 

 

	
  Percentage =            
  %

  	
  [ASSIGNEE]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Adjusted Percentage =          
  %

  	
  [ASSIGNOR]

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

ACKNOWLEDGED AND
CONSENTED TO

this               
day of                ,
             

LASALLE BANK NATIONAL ASSOCIATION,
as Administrative Agent

	
  By:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

[ACKNOWLEDGED AND
CONSENTED TO

this               
day of                ,

 AAR CORP.

	
  By:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
  ]3

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                                         

3 Include if applicable.

 

EXHIBIT D

FORM OF NOTICE OF
BORROWING

To:                          LaSalle Bank National
Association, as Administrative Agent

Please refer to the Credit Agreement dated as of [Date
of Agreement] (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”) among AAR CORP. (the “Company”),
various financial institutions and LaSalle Bank National Association, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.

The undersigned hereby gives irrevocable notice,
pursuant to Section 2.2.2 of the Credit Agreement, of a request
hereby for a borrowing as follows:

(i)            The
requested borrowing date for the proposed borrowing (which is a Business Day)
is ________, ____.

(ii)           The
aggregate amount of the proposed borrowing is $______________.

(iii)          The
type of Revolving Loans comprising the proposed borrowing are [Base Rate]
[LIBOR] Loans.

(iv)          The
duration of the Interest Period for each LIBOR Loan made as part of the
proposed borrowing, if applicable, is ___________ months (which shall be 1, 2,
3 or 6 months).

The undersigned hereby certifies that on the date
hereof and on the date of borrowing set forth above, and immediately after
giving effect to the borrowing requested hereby: (i) there exists and there
shall exist no Unmatured Event of Default or Event of Default under the Credit
Agreement; and (ii) each of the representations and warranties contained in the
Credit Agreement (other than the representations and warranties set forth in Section
9.5 thereof) and the other Loan Documents 
is true and correct as of the date hereof, except to the extent that
such representation or warranty expressly relates to another date and except
for changes therein expressly permitted or expressly contemplated by the Credit
Agreement.

The Company has caused this Notice of Borrowing to be
executed and delivered by its officer thereunto duly authorized on ___________,
______.

	
  

  	
  AAR CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT E

FORM OF NOTICE OF
CONVERSION/CONTINUATION

To:                          LaSalle Bank National
Association, as Administrative Agent

Please refer to the Credit Agreement dated as of [Date
of Agreement] (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”) among AAR CORP. (the “Company”),
various financial institutions and LaSalle Bank National Association, as
Administrative Agent.  Terms used but not
otherwise defined herein are used herein as defined in the Credit Agreement.

The undersigned hereby gives irrevocable notice,
pursuant to Section 2.2.3 of the Credit Agreement, of its request to:

(a)           on
[    date    ] convert $[________]of the aggregate
outstanding principal amount of the [_______] Loan, bearing interest at the
[________] Rate, into a(n) [________] Loan [and, in the case of a LIBOR Loan,
having an Interest Period of [_____] month(s)];

[(b)          on [   
date    ] continue $[________]of
the aggregate outstanding principal amount of the [_______] Loan, bearing
interest at the LIBOR Rate, as a LIBOR Loan having an Interest Period of
[_____] month(s)].

The undersigned
hereby represents and warrants that all of the conditions contained in Section
12.2 of the Credit Agreement have been satisfied on and as of the date
hereof, and will continue to be satisfied on and as of the date of the
conversion/continuation requested hereby, before and after giving effect
thereto.

The Company has
caused this Notice of Conversion/Continuation to be executed and delivered by
its officer thereunto duly authorized on ___________, ______.

	
  

  	
  AAR CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:EXHIBIT 4.1

THIRD AMENDMENT TO MASTER
INDENTURE

This THIRD AMENDMENT TO
MASTER INDENTURE, dated as of August 31, 2006 (this “Amendment”), is
entered into between:  (i) GE Capital
Credit Card Master Note Trust, a Delaware statutory trust (the “Issuer”);
and (ii) Deutsche Bank Trust Company Americas, as indenture trustee under the
Indenture referred to below (in such capacity, the “Indenture Trustee”).

BACKGROUND

1.             The
Indenture Trustee and the Issuer are parties to the Master Indenture, dated as
of September 25, 2003, and as amended by the Omnibus Amendment No. 1 to
Securitization Documents, dated as of February 9, 2004, among the Indenture
Trustee, the Issuer and certain other parties, and the Second Amendment to
Master Indenture, dated as of June 17, 2004, between the Issuer and the
Indenture Trustee (the “Indenture”).

2.             The
Indenture Trustee and the Issuer desire to amend the Indenture as set forth
herein.

AMENDMENTS

The parties hereto agree as follows:

SECTION 1.  DEFINITIONS.  As used herein, (a) capitalized terms which
are defined in the preamble hereto shall have the meanings as so defined and
(b) capitalized terms not so defined shall have the meanings set forth in the
Indenture as amended hereby.

SECTION 2.  AMENDMENTS
TO INDENTURE.  The Indenture shall be
amended as set forth below:

(a)           Section 8.4(a) is amended by deleting
the reference to “Transfer Date” where it appears at the end of the first
sentence of the second paragraph of Section 8.4(a), and substituting therefor a
reference to “Payment Date”.

(b)           Article VI of the Indenture is hereby
amended by adding the following new section at the end thereof:

“SECTION
6.17.  Information to Be Provided by
the Indenture Trustee.

(a)           It is agreed and acknowledged that the purpose of this Section 6.17
is to facilitate compliance by the Transferor and the Issuer with the
provisions of Regulation AB under the Securities Act and the Securities
Exchange Act (“Regulation AB”) and related rules and regulations of the
Commission.  Neither the Transferor nor
the Issuer shall exercise its right to request delivery of information or other
performance under this Section 6.17 other than in good faith, or for
purposes other than the Issuer’s or the Transferor’s compliance with the
Securities Act, the Securities Exchange Act and the rules and regulations of
the 

 

Commission
thereunder (or to provide disclosure related to a private offering comparable
to that required under the Securities Act). 
The Indenture Trustee agrees to cooperate in good faith with any
reasonable request by the Transferor or the Issuer for information regarding
the Indenture Trustee, including but not limited to, information which is
required in order to enable the Transferor and the Issuer to comply with Items
1109(a), 1109(b), 1117, 1118, 1119 and 1122 of Regulation AB as it relates to
the Indenture Trustee or to the Indenture Trustee’s obligations under the
Indenture or any Indenture Supplement.

(b)           The Indenture Trustee shall be deemed to represent to the Transferor
and the Issuer, as of the date on which information is provided to Transferor
pursuant to this Section 6.17, except as disclosed in writing to the
Transferor prior to such date that: 
(i) none of the execution or the delivery by the Indenture Trustee
of this Indenture or any Indenture Supplement, the performance by the Indenture
Trustee of its obligations under this Indenture or any Indenture Supplement nor
the consummation of any of the transactions by the Indenture Trustee
contemplated thereby, cause the Indenture Trustee to be in violation of (x) any
indenture, mortgage, bank credit agreement, note or bond purchase agreement,
long-term lease, license or other agreement or instrument to which the
Indenture Trustee is a party or by which it is bound, which violation would
have a material adverse effect on the Indenture Trustee’s ability to perform
its obligations under this Indenture or any Indenture Supplement, or (y) of any
judgment or order applicable to the Indenture Trustee; and (ii) there are
no proceedings pending or threatened against the Indenture Trustee in any court
or before any governmental authority, agency or arbitration board or tribunal
which, individually or in the aggregate, would have a material adverse effect
on the Noteholders of any Series or the right, power and authority of the
Indenture Trustee to enter into this Indenture or any Indenture Supplement or
to perform its obligations under this Indenture or any Indenture Supplement.

(c)           For so long as the Issuer is required
to report under the Securities Exchange Act, the Indenture Trustee shall: (i)
on or before the fifth Business Day of each month, provide to the Issuer, in
writing, such information regarding the Indenture Trustee as is requested in
writing by the Issuer for the purpose of compliance with Item 1117 of Regulation
AB; provided, however, that the Indenture Trustee shall not be
required to provide such information in the event that there has been no change
to the information previously provided by the Indenture Trustee to the Issuer,
and (ii) as promptly as practicable following notice to or discovery by a
Responsible Officer of the Indenture Trustee of any changes to such
information, provide to the Transferor, in writing, such updated information.

(d)           As soon as available but no later
than March 15 of each calendar year for so long as the Issuer is required to
report under the Securities Exchange Act, commencing in 2007, the Indenture
Trustee shall (if requested in writing by the Transferor in order to comply
with Item 1122 of Regulation AB) deliver to the Transferor reports regarding
the assessment by the Indenture 

 2
 

 

Trustee (if so requested
by the Transferor) of compliance to servicing criteria specified in paragraph
(d) of Item 1122 of Regulation AB during the immediately preceding
calendar year, as required under paragraph (b) of Rule 13a-18 and Rule 15d-18
of the Securities Exchange Act and Item 1122 of Regulation AB.  Such reports shall be signed by an authorized
officer of the Indenture Trustee and shall address each of the servicing
criteria specified in Exhibit B or such criteria as mutually agreed upon
by the Transferor and the Indenture Trustee.

(e)           As soon as available but no later
than March 15 of each calendar year for so long as the Issuer is required to
report under the Securities Exchange Act, commencing in 2007, the Indenture
Trustee shall (if requested in writing by the Transferor in order to comply
with Item 1122 of Regulation AB) deliver to the Transferor a report of a
registered public accounting firm that attests to, and reports on, the assessment
of compliance made by the Indenture Trustee and delivered pursuant to the
preceding paragraph.  Such attestation
shall be made in accordance with standards for attestation engagements issued
or adopted by the Public Company Accounting Oversight Board and in accordance
with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act
and the Securities Exchange Act.

(f)            As soon as available but no later
than March 15 of each calendar year for so long as the Issuer is required to
report under the Securities Exchange Act, commencing in 2007, the Indenture
Trustee shall (if requested in writing by the Transferor in order to comply
with Item 1122 of Regulation AB) deliver to the Transferor and any other Person
that will be responsible for signing the certification required by Rules
13a-14(d) and 15d-14(d) under the Securities Exchange Act (pursuant to Section
302 of the Sarbanes-Oxley Act of 2002) (a “Sarbanes Certification”) on
behalf of the Issuer or the Transferor a certification substantially in the
form attached hereto as Exhibit C or such form as mutually agreed upon
by the Transferor and the Indenture Trustee. 
The Indenture Trustee acknowledges that the parties identified in this Section 6.17(f)
may rely on the certification provided by the Indenture Trustee hereunder in
signing a Sarbanes Certification and filing such with the Commission.”

(c)           The Indenture is hereby amended by
adding a new Exhibit B thereto in the form set forth in Exhibit B
hereto.

(d)           The Indenture is hereby amended by
adding a new Exhibit C thereto in the form set forth in Exhibit C
hereto.

SECTION 3.  EFFECTIVENESS.  This Amendment shall become effective as of
the date first written above; provided that (i) each of the Indenture
Trustee and the Issuer shall have executed a counterpart of this Amendment,
(ii) the Rating Agency Condition shall have been satisfied, and (iii) the
Issuer shall have delivered to the Indenture Trustee (x) an Officer’s
Certificate to the effect that all requirements for such Amendment contained in
the Indenture have been met and the Issuer reasonably believes that such action
will not result in an Adverse Effect and (y) a Tax Opinion.

 3
 

 

SECTION 4.  BINDING EFFECT; RATIFICATION.  (a)                On and after the execution and
delivery hereof, (i) this Amendment shall be a
part of the Indenture and (ii) each reference
in the Indenture to “this Agreement”, “this Indenture”, “hereof”, “hereunder”
or words of like import, and each reference in any other Related Document to
the Indenture, shall mean and be a reference to such Indenture as amended
hereby.

(b)           Except as expressly amended hereby,
the Indenture shall remain in full force and effect and are hereby ratified and
confirmed by the parties hereto.

SECTION 5.  MISCELLANEOUS.  (a) THIS AMENDMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY, AND PERFORMANCE, BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARDING
TO THE CONFLICT OF LAWS PROVISIONS THEREOF) AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.

(b)           Headings used herein are for
convenience of reference only and shall not affect the meaning of this
Amendment.

(c)           This Amendment may be executed in any
number of counterparts, and by the parties hereto on separate counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same agreement. 
Executed counterparts may be delivered electronically.

*     *    
*     *     *     *

 

 4

 

IN WITNESS WHEREOF,
the parties have executed this Amendment by their respective officers thereunto
duly authorized as of the date first above written.

	
  

  	
  GE CAPITAL CREDIT CARD MASTER NOTE TRUST

  
	
   

  	
   

  
	
   

  	
  By: The Bank of New York (Delaware), not in its
  individual 

  
	
   

  	
  capacity but solely on behalf of the Issuer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kristine K. Gullo

  	
   

  
	
   

  	
   

  
	
   

  	
  Name: Kristine K. Gullo

  
	
   

  	
   

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  

 

 

	
  

  	
  DEUTSCHE BANK TRUST COMPANY AMERICAS, 

  
	
   

  	
  as Indenture Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michele H.Y. Voon

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  Michele
  H.Y. Voon

  
	
   

  	
   

  
	
   

  	
  Title: 
  Assistant Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Louis Bodi

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  Louis
  Bodi

  
	
   

  	
   

  
	
   

  	
  Title:  Vice
  President

  
	
   

  	
   

  

 

 

 

EXHIBIT B

SERVICING CRITERIA TO BE

ADDRESSED IN ASSESSMENT OF COMPLIANCE

The assessment of compliance to be delivered by the
Indenture Trustee shall address, at a minimum, the criteria identified as below
as “Applicable Servicing Criteria”:

	
  

  	
   

  	
  Applicable Servicing 

  
	
  Servicing Criteria

  	
   

  	
  Criteria

  
	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
   

  	
   

  	
  General Servicing Considerations

  	
   

  	
   

  
	
  1122(d)(1)(i)

  	
   

  	
  Policies and procedures are instituted to monitor
  any performance or other triggers and events of default in accordance with
  the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(1)(ii)

  	
   

  	
  If any material servicing activities are outsourced
  to third parties, policies and procedures are instituted to monitor the third
  party’s performance and compliance with such servicing activities.

  	
   

  	
   

  
	
  1122(d)(1)(iii)

  	
   

  	
  Any requirements in the transaction agreements to
  maintain a back-up servicer for the pool assets are maintained.

  	
   

  	
   

  
	
  1122(d)(1)(iv)

  	
   

  	
  A fidelity bond and errors and omissions policy is
  in effect on the party participating in the servicing function throughout the
  reporting period in the amount of coverage required by and otherwise in
  accordance with the terms of the transaction agreements.

  	
   

  	
   

  
	
   

  	
   

  	
  Cash Collection and Administration

  	
   

  	
   

  
	
  1122(d)(2)(i)

  	
   

  	
  Payments on pool assets are deposited into the
  appropriate custodial bank accounts and related bank clearing accounts no
  more than two business days following receipt, or such other number of days
  specified in the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(2)(ii)

  	
   

  	
  Disbursements made via wire transfer on behalf of an
  obligor or to an investor are made only by authorized personnel.

  	
   

  	
  ü

  
	
  1122(d)(2)(iii)

  	
   

  	
  Advances of funds or guarantees regarding
  collections, cash flows or distributions, and any interest or other fees
  charged for such advances, are made, reviewed and approved as specified in
  the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(2)(iv)

  	
   

  	
  The related accounts for the transaction, such as
  cash reserve accounts or accounts established as a form of
  overcollateralization, are separately maintained (e.g., with respect to
  commingling of cash) as set forth in the transaction agreements.

  	
   

  	
  ü

  
	
  1122(d)(2)(v)

  	
   

  	
  Each custodial account is maintained at a federally
  insured depository institution as set forth in the transaction agreements.
  For purposes of this criterion, “federally insured depository institution”
  with respect to a foreign financial institution means a foreign financial
  institution that meets the requirements of Rule 13k-1(b)(1) of the Securities
  Exchange Act.

  	
   

  	
   

  
	
  1122(d)(2)(vi)

  	
   

  	
  Unissued checks are safeguarded so as to prevent
  unauthorized access.

  	
   

  	
   

  
	
  1122(d)(2)(vii)

  	
   

  	
  Reconciliations are prepared on a monthly basis for
  all asset-backed securities related bank accounts, including custodial
  accounts and related bank clearing accounts. These reconciliations are (A)
  mathematically accurate; (B) prepared within 30 calendar days after the bank
  statement cutoff date, or such other number of days specified in the
  transaction agreements; (C) reviewed and approved by someone other than the
  person who prepared the reconciliation; and (D) contain explanations for
  reconciling items. These reconciling items are resolved within 90 calendar
  days of their original identification, or such other number of days specified
  in the transaction agreements.

  	
   

  	
   

  

 

 

 

	
  Servicing Criteria

  	
   

  	
  Applicable Servicing

  Criteria

  
	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
   

  	
   

  	
  Investor Remittances and Reporting

  	
   

  	
   

  
	
  1122(d)(3)(i)

  	
   

  	
  Reports to investors, including those to be filed
  with the Commission, are maintained in accordance with the transaction
  agreements and applicable Commission requirements. Specifically, such reports
  (A) are prepared in accordance with timeframes and other terms set forth in
  the transaction agreements; (B) provide information calculated in accordance
  with the terms specified in the transaction agreements; (C) are filed with
  the Commission as required by its rules and regulations; and (D) agree with
  investors’ or the trustee’s records as to the total unpaid principal balance
  and number of pool assets serviced by the Servicer.

  	
   

  	
   

  
	
  1122(d)(3)(ii)

  	
   

  	
  Amounts due to investors are allocated and remitted
  in accordance with timeframes, distribution priority and other terms set
  forth in the transaction agreements.

  	
   

  	
  ü

  
	
  1122(d)(3)(iii)

  	
   

  	
  Disbursements made to an investor are posted within
  two business days to the Servicer’s investor records, or such other number of
  days specified in the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(3)(iv)

  	
   

  	
  Amounts remitted to investors per the investor
  reports agree with cancelled checks, or other form of payment, or custodial
  bank statements.

  	
   

  	
   

  
	
   

  	
   

  	
  Pool Asset Administration

  	
   

  	
   

  
	
  1122(d)(4)(i)

  	
   

  	
  Collateral or security on pool assets is maintained
  as required by the transaction agreements or related asset pool documents.

  	
   

  	
   

  
	
  1122(d)(4)(ii)

  	
   

  	
  Pool assets and related documents are safeguarded as
  required by the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(4)(iii)

  	
   

  	
  Any additions, removals or substitutions to the
  asset pool are made, reviewed and approved in accordance with any conditions
  or requirements in the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(4)(iv)

  	
   

  	
  Payments on pool assets, including any payoffs, made
  in accordance with the related pool asset documents are posted to the
  Servicer’s obligor records maintained no more than two business days after
  receipt, or such other number of days specified in the transaction
  agreements, and allocated to principal, interest or other items (e.g.,
  escrow) in accordance with the related asset pool documents.

  	
   

  	
   

  
	
  1122(d)(4)(v)

  	
   

  	
  The Servicer’s records regarding the pool assets
  agree with the Servicer’s records with respect to an obligor’s unpaid
  principal balance.

  	
   

  	
   

  
	
  1122(d)(4)(vi)

  	
   

  	
  Changes with respect to the terms or status of an
  obligor’s account (e.g., loan modifications or re-agings) are made, reviewed
  and approved by authorized personnel in accordance with the transaction agreements
  and related pool asset documents.

  	
   

  	
   

  
	
  1122(d)(4)(vii)

  	
   

  	
  Loss mitigation or recovery actions (e.g.,
  forbearance plans, modifications and deeds in lieu of foreclosure,
  foreclosures and repossessions, as applicable) are initiated, conducted and
  concluded in accordance with the timeframes or other requirements established
  by the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(4)(viii)

  	
   

  	
  Records documenting collection efforts are
  maintained during the period a pool asset is delinquent in accordance with
  the transaction agreements. Such records are maintained on at least a monthly
  basis, or such other period specified in the transaction agreements, and
  describe the entity’s activities in monitoring delinquent pool assets
  including, for example, phone calls, letters and payment rescheduling plans
  in cases where delinquency is deemed temporary (e.g., illness or
  unemployment).

  	
   

  	
   

  
	
  1122(d)(4)(ix)

  	
   

  	
  Adjustments to interest rates or rates of return for
  pool assets with variable rates are computed based on the related pool asset documents.

  	
   

  	
   

  

 

 

 

	
  Servicing Criteria

  	
   

  	
  Applicable Servicing

  Criteria

  
	
  Reference

  	
   

  	
  Criteria

  	
   

  	
   

  
	
  1122(d)(4)(x)

  	
   

  	
  Regarding any funds held in trust for an obligor
  (such as escrow accounts): (A) such funds are analyzed, in accordance with the
  obligor’s pool asset documents, on at least an annual basis, or such other
  period specified in the transaction agreements; (B) interest on such funds is
  paid, or credited, to obligors in accordance with applicable pool asset
  documents and state laws; and (C) such funds are returned to the obligor
  within 30 calendar days of full repayment of the related pool assets, or such
  other number of days specified in the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(4)(xi)

  	
   

  	
  Payments made on behalf of an obligor (such as tax or
  insurance payments) are made on or before the related penalty or expiration
  dates, as indicated on the appropriate bills or notices for such payments,
  provided that such support has been received by the servicer at least 30
  calendar days prior to these dates, or such other number of days specified in
  the transaction agreements.

  	
   

  	
   

  
	
  1122(d)(4)(xii)

  	
   

  	
  Any late payment penalties in connection with any
  payment to be made on behalf of an obligor are paid from the servicer’s funds
  and not charged to the obligor, unless the late payment was due to the
  obligor’s error or omission.

  	
   

  	
   

  
	
  1122(d)(4)(xiii)

  	
   

  	
  Disbursements made on behalf of an obligor are
  posted within two business days to the obligor’s records maintained by the
  servicer, or such other number of days specified in the transaction
  agreements.

  	
   

  	
   

  
	
  1122(d)(4)(xiv)

  	
   

  	
  Delinquencies, charge-offs and uncollectible
  accounts are recognized and recorded in accordance with the transaction
  agreements.

  	
   

  	
   

  
	
  1122(d)(4)(xv)

  	
   

  	
  Any external enhancement or other support,
  identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is
  maintained as set forth in the transaction agreements.

  	
   

  	
   

  

 

 

EXHIBIT C

FORM OF ANNUAL CERTIFICATION OF 

THE INDENTURE TRUSTEE

Re:                               GE CAPITAL CREDIT CARD MASTER NOTE TRUST

Dated:___________________

Deutsche Bank Trust
Company Americas, not in its individual capacity but solely as indenture
trustee (the “Indenture Trustee”), certifies to RFS Holding, L.L.C. (the
“Transferor”), its officers  and
GE Capital Credit Card Master Note Trust (the “Issuer”), with the
knowledge and intent that they will rely upon this certification, that:

(1)           It has reviewed the
report on assessment of the Indenture Trustee’s compliance provided in
accordance with Rules 13a-18 and 15d-18 under the Securities Exchange Act of
1934, as amended (the “Securities Exchange Act”) and Item 1122 of
Regulation AB (the “Servicing Assessment”), and the registered public
accounting firm’s attestation report provided in accordance with Rules 13a-18
and 15d-18 under the Securities Exchange Act and Section 1122(b) of
Regulation AB (the “Attestation Report”) that were delivered by the
Indenture Trustee to the Transferor pursuant to the Master Indenture dated as
of September 25, 2003 (as amended, supplemented or otherwise modified from
time to time, the “Master Indenture”), by and between the Issuer and the
Indenture Trustee (collectively, the “Indenture Trustee Information”)
(in making such statement, the Indenture Trustee makes no representation or
warranty as to any information prepared or provided to it by a third person and
upon which it relied in preparing our information);

(2)           To the best of its
knowledge, the Indenture Trustee Information, taken as a whole, does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in the light of the circumstances
under which such statements were made, not misleading with respect to the
period of time covered by the Indenture Trustee Information; and

(3)           To the best of its
knowledge, all of the Indenture Trustee Information required to be provided by
the Indenture Trustee under the Master Indenture has been provided to the
Transferor.

 

 

	
  

  	
  DEUTSCHE
  BANK TRUST COMPANY AMERICAS, as Indenture Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

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