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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10, 1997
AAR CORP.
(Exact name of registrant as specified in its charter)
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Delaware 1-6263 36-2334820
(State or other jurisdiction of (Commission file number) (I.R.S. employer
incorporation or organization) identification no.)
1100 North Wood Dale Road
Wood Dale, Illinois 60191
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, include area code: (630) 227-2000
Not Applicable
(Former name or former address, if changed since last year)
Exhibit Index is located on page 4.
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ITEM 5. OTHER EVENTS.
On December 10, 1997 AAR CORP. (the "Company") entered into an Amended
and Restated Underwriting Agreement with Goldman, Sachs & Co. and William
Blair & Company, L.L.C. and a Second Supplemental Indenture with First Trust
National Association in connection with a public offering of its 6.875% Notes
due 2007 under the Company's shelf Registration Statement on Form S-3
(Registration No. 33-42326).
Copies of said Amended and Restated Underwriting Agreement and
Second Supplemental Indenture are filed as Exhibits 1.1 and 4.1,
respectively, to this Report on Form 8-K and hereby are incorporated by
reference herein.
ITEM 7(c). EXHIBITS.
Exhibit 1.1 Amended and Restated Underwriting Agreement dated as of
December 10, 1997 among AAR CORP., Goldman, Sachs & Co. and
William Blair & Company, L.L.C.
Exhibit 4.1 Second Supplemental Indenture dated as of December 10, 1997
between AAR CORP. and First Trust National Association.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AAR CORP.
Dated: December 10, 1997 By: /s/ Timothy J. Romenesko
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Timothy J. Romenesko
Vice President, Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
Exhibit 1.1 Amended and Restated Underwriting Agreement dated as
of December 10, 1997 among AAR CORP., Goldman, Sachs & Co.
and William Blair & Company, L.L.C.
Exhibit 4.1 Second Supplemental Indenture dated as of
December 10, 1997 between AAR CORP. and First Trust National
Association.
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Exhibit 1.1
AAR CORP.
$60,000,000
OF 6.875% SENIOR NOTES DUE 2007
AMENDED AND RESTATED UNDERWRITING AGREEMENT
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December 10, 1997
Goldman, Sachs & Co.,
William Blair & Company, L.L.C.
As representatives of
the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
The Underwriting Agreement, dated October 12, 1993 between AAR CORP., a
Delaware corporation (the "Company") and you is hereby amended and restated in
its entirety to read as follows:
The Company proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of $60,000,000 principal amount of the 6.875%
Senior Notes Due 2007 of the Company (the "Securities") in the respective
principal amounts as set forth in Schedule I hereto.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(a) A registration statement on Form S-3 (File No. 33-42326) in
respect of the Securities has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered to
you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, have been
declared effective by the Commission in such form; no other document with
respect to such registration statement or document incorporated by
reference therein has heretofore been filed with the Commission other than
in accordance with the terms thereof or pursuant to Rule 424(b) under the
Act; and no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has been
initiated or, to the Company's knowledge, threatened by the Commission (any
preliminary prospectus included in such registration statement or filed
with the Commission pursuant to Rule 424(a) of the rules and
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regulations of the Commission under the Securities Act of 1933, as amended
(the "Act"), is hereinafter called a "Preliminary Prospectus"; the various
parts of such registration statement, including all exhibits thereto but
excluding Form T-1 and including (i) the information contained in the form
of final prospectus filed with the Commission pursuant to Rule 424(b) under
the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule
430A under the Act to be part of the registration statement at the time it
was declared effective and (ii) the documents incorporated by reference in
the prospectus contained in the registration statement at the time such
part of the registration statement became effective, each as amended at the
time such part of the registration statement became effective, are
hereinafter collectively called the "Registration Statement"; such final
prospectus, in the form filed pursuant to Rule 424(b) under the Act and as
amended and supplemented, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement;
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and regulations
of the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;
(c) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; PROVIDED, HOWEVER, that this representation and warranty
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shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;
(d) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable filing date as to the Prospectus and any amendment
or supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter through Goldman, Sachs & Co.
expressly for use therein; there is no material document of a character
required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required;
(e) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in the
Prospectus, which could reasonably be expected to have a material adverse
effect on the financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, considered as a whole; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in
the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries considered as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(f) The Company and its subsidiaries have good and marketable title
in fee simple to all real property owned by them, free and clear of all
liens, encumbrances and defects except such as are permitted to exist under
the terms of the Indenture; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property and buildings by the Company and its subsidiaries;
(g) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus, and has been duly
qualified as a foreign corporation for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns
or leases properties or conducts any business so as to require such
qualification, or is subject
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to no material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, or
is subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction;
(h) The Company has an authorized and outstanding capitalization as
set forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessable and conform to the description of the capital
stock contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and (except for
directors' qualifying shares and approximately 1% of the outstanding common
stock of ATR International, Inc.) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
(i) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company entitled to the benefits provided by the
indenture dated as of October 15, 1989 as supplemented on August 26, 1991
and on December 10, 1997 (the "Indenture") between the Company and First
Illinois, National Association (as successor in interest to Continental
Bank, National Association), as trustee (herein called the "Trustee"),
under which they are to be issued, which is substantially in the form filed
as an exhibit to the Registration Statement; the Indenture has been duly
authorized and duly qualified under the Trust Indenture Act and constitutes
a valid and legally binding instrument, enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and the
Securities and the Indenture will conform to the descriptions thereof in
the Prospectus;
(j) This Agreement has been duly authorized, executed and delivered
by the Company. The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the Indenture and
this Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions of
the Certificate of Incorporation or By-laws of the Company or its
subsidiaries or any statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties or affect the ability of the
Underwriters to receive good and valid title to the Securities being sold
hereunder; and no consent, approval, authorization, order, registration
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or qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except the registration under the Act of the Securities, such as
have been obtained under the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters;
(k) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party or
by which it or any of its properties may be bound;
(l) The statements set forth in the Prospectus under the caption
"Description of Notes", insofar as they purport to constitute a summary of
the terms of the Securities, and under the caption "Underwriting", insofar
as they purport to describe the provisions of the documents referred to
therein, are accurate and complete in all respects;
(m) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or any property of the Company or any of its
subsidiaries is the subject which, taking into account the likelihood of
the outcome, the damages or other relief sought and other factors, would
individually or in the aggregate reasonably be expected to have a material
adverse effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(n) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(o) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(p) To the knowledge of the Company, KPMG Peat Marwick, LLP, who have
certified certain financial statements of the Company and its subsidiaries,
are independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder; and
(q) Other than as set forth in the Prospectus, (A) the Company and
its subsidiaries are in compliance in all respects with applicable federal,
state, local and foreign laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances
or wastes, pollutants or contaminants, except where the failure to be in
compliance would not have a material adverse effect on the current or
future
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consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries taken as a whole; and (B)
the properties used, owned, managed or controlled by the Company and its
subsidiaries are free from contamination of hazardous materials including
contamination of the associated soil, ground water or surface water, except
where such contamination would not have a material adverse effect on the
current or future consolidated financial position, stockholders equity or
results of operations of the Company and its subsidiaries taken as a whole.
2. Subject to the terms and conditions herein set forth, the Company agrees
to issue and sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at a
purchase price of 99.800% of the principal amount thereof, plus accrued
interest, if any, from December 15, 1997 to the Time of Delivery hereunder,
the principal amount of Securities set forth opposite the name of such
Underwriter in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the several
Underwriters propose to offer the Securities for sale upon the terms and
conditions set forth in the Prospectus.
4. The Securities to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of the Company with The Depository Trust
Company ("DTC") or its designated custodian. The Company will deliver the
Securities to Goldman, Sachs & Co., for the account of each Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
certified or official bank check or checks, payable to the order of the Company
in Federal (same day) funds, by causing DTC to credit the Securities to the
account of Goldman, Sachs & Co. at DTC. The Company will cause the certificates
representing the Securities to be made available to Goldman, Sachs & Co. for
checking at least twenty-four hours prior to the Time of Delivery (as defined
below) at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:30 a.m.,
New York City time, on December 15, 1997 or such other time and date
as Goldman, Sachs & Co. and the Company may agree upon in writing. Such time
and date for delivery is herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf of
the parties hereto pursuant to Section 7 hereof, including the cross-receipt for
the Securities and any additional documents requested by the Underwriters
pursuant to Section 7(h) hereof, will be delivered at the offices of
Sonnenschein Nath & Rosenthal, 8000 Sears Tower, Chicago, Illinois 60606 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at such Time of Delivery. A meeting will be held at the Closing
Location at 4:00 p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York City are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file such
Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's
close of business on the second
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business day following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act; to make no further amendment or any supplement to the Registration
Statement or Prospectus prior to the Time of Delivery which shall be disapproved
by you promptly after reasonable notice thereof; to advise you, promptly after
it receives notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Securities; to advise
you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or Prospectus, of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such qualification, to
promptly use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws so as
to permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if the delivery
of a prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering or
sale of the Securities and if at such time any event shall have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act, the
Exchange Act or the Trust Indenture Act, to notify you and upon your request to
file such document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the Prospectus
which will correct such statement or omission or effect such compliance; and in
case any Underwriter is required to deliver a prospectus in connection with
sales of any of the Securities at any time nine months or more after the time of
issue of the Prospectus, upon your request but at the expense of such
Underwriter, to prepare and deliver to such Underwriter as many copies as you
may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as practicable,
but in any event not later than eighteen months after the effective date of the
Registration Statement (as defined
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in Rule 158(c)), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the option of
the Company, Rule 158);
(e) During the period beginning from the date hereof and continuing to and
including the later of the Time of Delivery and such earlier time as you may
notify the Company, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder any securities of the Company that are
substantially similar to the Securities;
(g) During the period from the effective date of the Prospectus to the Stated
Maturity of the Securities, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which the Securities or any class of securities of the Company is
listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission); and
(h) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Prospectus under the
caption "Use of Proceeds."
6. The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any Agreement
among Underwriters, this Agreement, the Indenture, closing documents (including
any compilations thereof) and any other documents in connection with the
offering, purchase, sale and delivery of the Securities; (iii) all expenses in
connection with the qualification of the Securities for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification; (iv) any fees charged by securities rating services for rating
the Securities; (v) the cost of preparing the Securities; (vi) the fees and
expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities; and (vii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
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(a) The Prospectus shall have been filed with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by the rules
and regulations under the Act and in accordance with Section 5(a) hereof; no
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Sonnenschein Nath & Rosenthal, counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to the matters covered in paragraphs (i), (ii), (vii) and (viii) of
subsection (c) below as well as such other related matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters;
(c)(i) Schiff Hardin & Waite, counsel for the Company, shall have furnished
to you their written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, substantially in the form of Annex I hereto, to the effect
that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth in the
Prospectus;
(iii) This Agreement has been duly authorized, executed and delivered
by the Company;
(iv) Assuming the Securities are authenticated in accordance with the
Company's directions to the Trustee, the Securities have been duly
authorized, executed, authenticated, issued and delivered and constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to our affecting creditors' rights and to general
equity principles; and the Securities and the Indenture conform to the
descriptions thereof in the Prospectus;
(v) The Indenture has been duly authorized, executed and delivered by
the parties thereto and constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and the Indenture has been duly qualified under the
Trust Indenture Act;
(vi) The issue and sale of the Securities being delivered at such Time
of Delivery by the Company and the compliance by the Company with all of
the provisions of the Securities, the Indenture and this Agreement and the
consummation of the transactions herein contemplated will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument filed as an exhibit to any of
the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q,
or other
9
<PAGE>
Exchange Act filings, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the Company or
any statute or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties;
(vii) No consent, approval, authorization, order, filing, registration
or qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this Agreement, except such
as have been obtained or made under the Act and the Trust Indenture Act and
such consents, approvals, authorizations, filings, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by the
Underwriters;
(viii) The statements set forth in the Prospectus under the caption
"Description of Notes", insofar as they purport to constitute a summary of
the terms of the Securities are accurate and complete in all material
respects;
(ix) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act;
(x) The documents incorporated by reference in the Prospectus or any
further amendment or supplement thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder; and
(xi) The Registration Statement and the Prospectus and any amendments
and supplements thereto made by the Company prior to such Time of Delivery
(other than the financial statements and related schedules therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the Trust Indenture
Act and the rules and regulations thereunder; although they do not assume
any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus,
except for those referred to in the opinion in subsection (vi) of this
Section 7(c)(i), they have no reason to believe that, as of its effective
date, the Registration Statement or any further amendment thereto made by
the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that, as of its date, the
Prospectus or any amendment or supplement thereto made by the Company prior
to such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the Prospectus
or any amendment or supplement thereto made by the Company prior to such
Time of Delivery (other than the financial statements and
10
<PAGE>
related schedules therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits to state
a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and they do
not know of any amendment to the Registration Statement required to be
filed or of any contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be described
in the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.
(ii) Howard A. Pulsifer, Esq., General Counsel of the Company, shall have
furnished to you his written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, substantially in the form of Annex II hereto, to
the effect that:
(i) The Company has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company, provided that
such counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(ii) The Company has an authorized and outstanding capitalization as
set forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued and are
fully paid and non-assessible;
(iii) Each subsidiary of the Company organized under the laws of
any state of the United States and required to be listed in Exhibit 22 to
the Company's most recent Annual Report on Form 10-K has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with corporate power
and authority to own its properties and conduct its business as described
in the Prospectus; and all of the issued shares of capital stock of each
such subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except for directors' qualifying shares and
approximately 1% of the outstanding common stock of ATR International,
Inc.) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local
counsel and in respect to matters of fact upon certificates of officers of
the Company or its subsidiaries, provided that such counsel shall state
that they believe that both you and they are justified in relying upon such
opinions and certificates);
(iv) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of
which any property of the Company or any of its subsidiaries is the subject
which, taking into account the likelihood of the outcome, the damages or
other relief sought and other relevant factors, would individually or in
the aggregate reasonably be expected to have a material adverse effect on
the current or future consolidated financial position, stockholders' equity
or results of operations of the Company and its subsidiaries; and, to the
best of such counsel's
11
<PAGE>
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) The documents incorporated by reference in the Prospectus or any
further amendment or supplement thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be,
complied as to form in all material respects with the requirements of the
Act or the Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder; and he has no reason to believe that any of such
documents, when such documents became effective or were so filed, as the
case may be, contained, in the case of a registration statement which
became effective under the Act, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or, in the case of other
documents which were filed under the Exchange Act with the Commission, an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so filed,
not misleading, it being understood that such counsel need express no
opinion as to the financial statements or other financial information
included in any of the documents mentioned in this Clause and that such
counsel may state that they have not independently verified factual
statements in any such documents; and
(vi) The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to such Time
of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) comply as to
form in all material respects with the requirements of the Act and the
Trust Indenture Act and the rules and regulations thereunder; although he
does not assume any responsibility for the accuracy, completeness or
fairness of statements contained in the Registration Statement or the
Prospectus, except for those referred to in the opinion in subsections (vi)
of Section 7(c)(i) hereof and he has no reason to believe that, as of its
effective date, the Registration Statement or any amendment thereto made by
the Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel need
express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that, as of its date, the
Prospectus or any amendment or supplement thereto made by the Company prior
to such Time of Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or that, as of
such Time of Delivery, either the Registration Statement or the Prospectus
or any amendment or supplement thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related schedules
therein, as to which such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and he does not know of any
amendment to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be
12
<PAGE>
filed as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be described
in the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.
(d) On the date of the Prospectus at a time prior to the execution of this
Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at the Time of Delivery, KPMG Peat Marwick, LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the effect set
forth in Annex III hereto;
(e) (i) Neither the Company nor any of its subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus which
could reasonably be expected to have a material adverse effect on the financial
position, stockholders' equity or result of operations of the Company and its
subsidiaries, considered as a whole, and (ii) since the respective dates as of
which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries the Company and its subsidiaries shall not have incurred any
material liabilities or obligations, direct or contingent, or entered into any
material transactions not in the ordinary course of business or there shall not
have occurred or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, considered as a whole, otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case described in Clause (i)
or (ii), is in the judgment of each Underwriter so material and adverse as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities on the terms and in the manner contemplated in the
Prospectus;
(f) On or after the date hereof (i) no downgrading shall have occurred in the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the New York Stock Exchange
; (iii) a general moratorium on commercial banking activities declared by either
Federal or New York or Illinois authorities; or (iv) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event specified
in this Clause (iv) in the judgment of the Underwriters makes it impracticable
or inadvisable to proceed with the public offering or the delivery of the
Securities on the terms and in the manner contemplated in the Prospectus; and
(i) The Company has obtained and delivered to the Underwriters executed copies
of an agreement from the executive officers and directors of the Company,
substantially to the effect set forth in Subsection 5(e) hereof in form and
substance satisfactory to you;
13
<PAGE>
(j) The Company shall have complied with the provisions of Section 5(c) hereof
with respect to the furnishing of Prospectuses on the New York Business Day next
succeeding the date of this Agreement; and
(h) The Company shall have furnished or caused to be furnished to you at the
Time of Delivery certificates of officers of the Company satisfactory to you as
to the accuracy of the representations and warranties of the Company herein at
and as of such Time of Delivery, as to the performance by the Company of all of
its obligations hereunder to be performed at or prior to such Time of Delivery,
as to the matters set forth in subsections (a) and (e) of this Section and as to
such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Goldman, Sachs & Co.
expressly for use therein; and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b)
above of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be
14
<PAGE>
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions (before
deducting expenses) received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (d) were determined by
PRO RATA allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and
15
<PAGE>
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in addition to
any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Underwriter
within the meaning of the Act; and the obligations of the Underwriters under
this Section 8 shall be in addition to any liability which the respective
Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Underwriter you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the principal
amount of Securities which such Underwriter agreed to purchase hereunder and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the principal amount of Securities which such Underwriter agreed
to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities to be purchased at such time of Delivery or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Securities of a defaulting Underwriter
or Underwriters, then this Agreement shall thereupon terminate, without
liability on the part of any
16
<PAGE>
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Securities.
Anything herein to the contrary notwithstanding, the indemnity agreement of
the Company in subsection (a) of Section 8 hereof, the representations and
warranties in subsections (b), (c) and (d) of Section 1 hereof and any
representation or warranty as to the accuracy of the Registration Statement or
the Prospectus contained in any certificate furnished by the Company pursuant to
Section 7 hereof, insofar as they may constitute a basis for indemnification for
liabilities (other than payment by the Company of expenses incurred or paid in
the successful defence of any action, suit or proceeding) arising under the Act,
shall not extend to the extent of any interest therein of a controlling person
or partner of an Underwriter who is a director, officer or controlling person of
the Company when the Registration Statement has become effective, except in each
case to the extent that an interest of such character shall have been determined
by a court of appropriate jurisdiction as not against public policy as expressed
in the Act. Unless in the opinion of counsel for the Company the matter has
been settled by controlling precedent, the Company will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question of whether such interest is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of the other
Underwriter, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of the Underwriters made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you in care of Goldman, Sachs & Co. at 85 Broad
Street, New York, New York 10004, Attention: Registration Department, facsimile
number (212) 902-3000; and if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such
17
<PAGE>
Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by you upon request. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Underwriters, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. All references herein to a "subsidiary" of a corporation shall mean each
corporation,limited liability company, partnership or other entity in which such
corporation beneficially owns, directly or indirectly, capital stock or other
equity interests representing in the aggregate 50% or more of the total combined
voting power of such entity.
15. Time shall be of the essence of this Agreement. As used herein, the term
"business day" shall mean any day when the Commission's office in Washington,
D.C. is open for business.
16. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
17. This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such respective counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Underwriters plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of
each of the Underwriters, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Underwriters and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Underwriters is pursuant to the authority set forth in a form of Agreement among
Underwriters, the form of which shall be submitted to the Company for
examination upon request, but without warranty on your part as to the authority
of the signers thereof.
Very truly yours,
AAR CORP.
By: /s/ Timothy J. Romenesko
-------------------------------
Name: Timothy J. Romenesko
Title: Vice President
Accepted as of the date hereof:
Goldman, Sachs & Co.
William Blair & Company, L.L.C.
By: /s/ Goldman, Sachs & Co.
---------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
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<PAGE>
SCHEDULE I
PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
PURCHASED
---------
Underwriter
- -----------
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . $55,000,000
William Blair & Company, L.L.C.. . . . . . . . . . . . 5,000,000
-------------
Total. . . . . . . . . . . . . . . . . . . . $60,000,000
19
<PAGE>
ANNEX I
December __, 1997
Goldman, Sachs & Co.
William Blair & Company, L.L.C.
As Representatives of the Underwriters
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
RE: AAR CORP.
---------
Ladies and Gentlemen:
We have acted as counsel to AAR CORP., a Delaware corporation (the
"COMPANY"), in connection with the transactions contemplated by the Amended and
Restated Underwriting Agreement dated as of December 10, 1997 by and
among each of you (the "UNDERWRITERS") and the Company (the "UNDERWRITING
AGREEMENT"), relating to the issuance and sale by the Company of an aggregate of
$60,000,000 principal amount of the 6.875% Senior Notes due 2007 of the Company
(the "SECURITIES"). This opinion is being delivered to you at the request of
the Company pursuant to Section 7(c)(i) of the Underwriting Agreement. All
capitalized terms used but not otherwise defined in this opinion shall have the
respective meanings given them in the Underwriting Agreement.
In connection with this opinion, we have examined originals or copies
of (a) the Underwriting Agreement; (b) the Registration Statement on Form S-3
(Registration No. 33-42326) as declared effective by the Commission; (c) the
Prospectus, dated December 10, 1997, as filed with the Commission pursuant to
Rule 424(b) under the Act; and (d) the Restated Certificate of Incorporation and
the By-laws of the Company (in each case as amended to date) and the record of
corporate action taken by the Company to authorize the issuance and sale of the
Securities. We have examined such other records, proceedings, documents,
statutes and certificates of officers and representatives of the Company and
made such other examinations as we have deemed necessary or appropriate for the
purposes of rendering this opinion. As to certain matters of fact, we have
relied upon certificates and statements of officers of the Company, and upon
certificates of public officials, and we believe that you and we are justified
in relying upon such certificates. In addition, we have assumed that all
documents submitted to us as originals are authentic, that all copies
<PAGE>
submitted to us conform to the originals thereof, that all documents submitted
to us as execution copies conform to the executed originals, that the signatures
on all documents examined by us are genuine, and that all natural persons have
the requisite legal capacity to execute such documents.
Based upon and subject to the foregoing, we are of the opinion that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus.
(ii) The Company has an authorized capitalization as set forth in
the Prospectus.
(iii) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(iv) Assuming the Securities are authenticated in accordance with
the Company's directions to the Trustee, the Securities have been duly
authorized, executed, authenticated, issued and delivered and
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights
and to general equity principles; and the Securities and the Indenture
conform to the descriptions thereof in the Prospectus.
(v) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a valid and legally
binding instrument, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles; and the Indenture has been
duly qualified under the Trust Indenture Act.
(vi) The issue and sale of the Securities being delivered on the
date hereof by the Company and the compliance by the Company
<PAGE>
with all of the provisions of the Securities, the Indenture and the
Underwriting Agreement and the consummation of the transactions
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument filed as an exhibit to any of the
Company's annual reports on Form 10-K for the fiscal year ended May
31, 1997 or any subsequent quarterly report on Form 10-Q, or other
Exchange Act filing made by the Company, nor will such action result
in any violation of the provisions of the Restated Certificate of
Incorporation or By-laws of the Company or any statute or any order,
rule or regulation known to us of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or any of their properties.
(vii) No consent, approval, authorization, order, filing,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by the Underwriting Agreement, except such as have been
obtained or made under the Act, and the Trust Indenture Act and such
consents, approvals, authorizations, filings, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Securities by the Underwriters.
(viii) The statements set forth in the Prospectus under the
caption "Description of Notes", insofar as they purport to constitute
a summary of the terms of the Securities are accurate and complete in
all material respects.
(ix) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act.
(x) The documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior
to the date hereof (other than the financial
<PAGE>
statements and related schedules therein, as to which we express no
view), when they became effective or were filed with the Commission,
as the case may be, complied as to form in all material respects with
the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder.
(xi) The Registration Statement and the Prospectus and any
amendments and supplements thereto made by the Company prior to the
date hereof (other than the financial statements and related schedules
therein, as to which we express no view) comply as to form in all
material respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations thereunder.
In addition, we have participated in conferences with officers and
other representatives of the Company, representatives of independent public
accountants for the Company and representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed. Although we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus, except for those referred to in paragraph (viii)
above, we have no reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the Company
prior to the date hereof (other than the financial statements and related
schedules therein, as to which we express no view) contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that, as
of its date, the Prospectus or any amendment or supplement thereto made by the
Company prior to the date hereof (other than the financial statements and
related schedules therein, as to which we express no view) contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or that, as of the date hereof, either the Registration
Statement or the Prospectus or any amendment or supplement thereto made by the
Company prior to the date hereof (other than the financial statements and
related schedules therein, as to which we express no view) contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and we do not know of any amendment to the Registration
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference in the Prospectus or required to be
described in the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.
<PAGE>
The opinions expressed herein are limited to the laws of the State of
Illinois, the Federal laws of the United States, and the General Corporation Law
of Delaware, and we express no opinion as to the laws of any other jurisdiction.
Furthermore, the opinions set forth above are expressed solely as of the date
hereof, and we assume no obligation to update such opinions. This opinion is
furnished to you solely for your benefit in connection with the Underwriting
Agreement and may not be disclosed to, or relied upon by, any other party
without our express written consent in advance.
Very truly yours,
SCHIFF HARDIN & WAITE
By:
--------------------------------------
<PAGE>
ANNEX II
December __, 1997
Goldman, Sachs & Co.
William Blair & Company, L.L.C.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
RE: AAR CORP. $60,000,000 IN PRINCIPAL AMOUNT OF 6.875% NOTES DUE
2007
Ladies and Gentlemen:
I am the General Counsel of AAR CORP., a Delaware corporation
("COMPANY"), and am familiar with the transactions contemplated by the Amended
and Restated Underwriting Agreement, dated as of December 10, 1997 (the
"UNDERWRITING AGREEMENT") among Goldman, Sachs & Co., William Blair & Company,
L.L.C. and the Company. This opinion is being given pursuant to Section
7(c)(ii) of the Underwriting Agreement. Unless otherwise defined, all
capitalized terms used herein have the respective meanings given them in the
Agreement.
In connection with such transaction, I have examined, to my
satisfaction, such agreements, records, documents, certificates and other
instruments as in my judgment are necessary or appropriate for purposes of this
opinion. As to matters of fact, I have relied upon certificates and statements
of officers of the Company and governmental agencies, and I believe that you and
I are justified in relying thereon.
Based on and subject to the foregoing, I am of the opinion as follows:
1. The Company has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification or is subject to no material liability or
disability by reason of failure to be so qualified in any such jurisdiction.
2. The Company has an authorized and outstanding capitalization as
set forth in the Prospectus, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable.
3. Each subsidiary of the Company organized under the laws of any
State of the United States and required to be listed in Exhibit 21 to the
Company's most recent Annual Report on Form 10-K has been duly incorporated and
is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own its
<PAGE>
properties and conduct its business as described in the Prospectus; and all of
the issued shares of capital stock of each such subsidiary have been duly and
validly authorized and issued, are fully paid and non-assessable, and (except
for directors' qualifying shares and approximately 1% of the outstanding common
stock of ATR International, Inc.) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims.
4. To the best of my knowledge and other than as set forth in the
Prospectus, there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, taking into account the
likelihood of the outcome, the damages or other relief sought and other relevant
factors, would individually or in the aggregate reasonably be expected to have a
material adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of my knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
5. The documents incorporated by reference in the Prospectus or any
further amendment or supplement thereto made by the Company prior to the date
hereof (other than the financial statements and related schedules therein, as to
which I express no opinion), when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material respects
with the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder; and I have no reason to
believe that any of such documents, when such documents became effective or were
so filed, as the case may be, contained, in the case of a registration statement
which became effective under the Act, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or, in the case of other documents
which were filed under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made when such documents were so filed, not misleading, it being understood that
I express no opinion as to the financial statements or other financial
information included in any of the documents mentioned in this paragraph and I
have not independently verified factual statements in any such documents.
6. The Registration Statement and the Prospectus and any further
amendments and supplements thereto made by the Company prior to the date hereof
(other than the financial statements and related schedules therein, as to which
I express no opinion) comply as to form in all material respects with the
requirements of the Act and the Trust Indenture Act and the rules and
regulations thereunder; although I do not assume any responsibility for the
accuracy, completeness or fairness of statements contained in the Registration
Statement or the Prospectus, except for those referred to in the opinion in
subsections (vi) of Section 7(c)(i) of the Underwriting Agreement and
<PAGE>
I have no reason to believe that, as of its effective date, the Registration
Statement or any amendment thereto made by the Company prior to the date hereof
(other than the financial statements and related schedules therein, as to which
I express no opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that, as of its date, the
Prospectus or any amendment or supplement thereto made by the Company prior to
the date hereof (other than the financial statements and related schedules
therein, as to which I express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading or that, as of the date hereof, either the Registration Statement
or the Prospectus or any amendment or supplement thereto made by the Company
prior to the date hereof (other than the financial statements and related
schedules therein, as to which I express no opinion) contains an untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and I do not know of any amendment to the Registration
Statement required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration Statement or
required to be incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.
This opinion is furnished in connection with and solely for the
purpose of the Underwriting Agreement and should not be relied on for any other
purpose or by any party other than you.
Very truly yours,
------------------------------------------
Howard A. Pulsifer
General Counsel
<PAGE>
ANNEX III
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants shall
furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, prospective
financial statements and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act or the Exchange Act, as
applicable, and the related published rules and regulations thereunder;
and, if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the consolidated interim financial statements, selected financial data, pro
forma financial information, prospective financial statements and/or
condensed financial statements derived from audited financial statements of
the Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been separately furnished to each of
Underwriters (the "Underwriters") and are attached hereto;
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statement of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or
included in the Company's quarterly report on Form 10-Q incorporated by
reference into the Prospectus as indicated in their reports thereon copies
of which have been separately furnished to each of the Underwriters are
attached hereto; and on the basis of specified procedures including
inquiries of officials of the Company who have responsibility for financial
and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in the related in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and the
related published rules and regulations, nothing came to their attention
that caused them to believe that the unaudited condensed consolidated
financial statements do not comply as to form in all material respects with
the applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus and
included or incorporated by reference in Item 6 of the Company's Annual
Report on Form 10-K for the most recent fiscal year agrees with the
corresponding amounts (after restatement where applicable) in the audited
consolidated financial statements for such five fiscal years which were
included or incorporated by reference in the Company's Annual Reports on
Form 10-K for such fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that
<PAGE>
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302, 402
and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included or incorporated by reference
in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or incorporated
by reference in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus do not comply as to form
in all material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and regulations,
or (ii) any material modifications should be made to the unaudited
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated
by reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not included
in the Prospectus but from which were derived the unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
financial statements included or incorporated by reference in the
Company's Annual Report on Form 10-K for the most recent fiscal year;
(D) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements;
2
<PAGE>
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest balance sheet
included or incorporated by reference in the Prospectus) or any
increase in the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current assets or
stockholders' equity or other items specified by the Underwriters, or
any increases in any items specified by the Underwriters, in each case
as compared with amounts shown in the latest balance sheet included or
incorporated by reference in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in Clause (E) there were any decreases
in consolidated net revenues or operating profit or the total or per
share amounts of consolidated net income or other items specified by
the Underwriters, or any increases in any items specified by the
Underwriters, in each case as compared with the comparable period of
the preceding year and with any other period of corresponding length
specified by the Underwriters, except in each case for increases or
decreases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and
other procedures referred to in paragraphs (iii) and (vi) above, they
have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the Underwriters which are derived from the general
accounting records of the Company and its subsidiaries, which appear
in the Prospectus (excluding documents incorporated by reference) or
in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriters or in documents incorporated
by reference in the Prospectus specified by the Underwriters, and have
compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
3
<PAGE>
Exhibit 4.1
SECOND SUPPLEMENTAL INDENTURE
This Second Supplemental Indenture, dated as of December 10, 1997, is
made between AAR CORP., a corporation duly organized and existing under the laws
of the State of Delaware (herein called the "Company") having its principal
office at 1100 North Wood Dale Road, Wood Dale, Illinois 60191 and First Trust
National Association, a national banking association duly organized and existing
under the laws of the United States of America, having its principal corporate
trust office at 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601, as
trustee (hereinafter called the "Trustee," as successor in interest to
Continental Bank, National Association, as trustee) under that certain Indenture
dated as of October 15, 1989 between the Company and the Trustee, as amended by
that certain First Supplemental Indenture dated as of August 26, 1991 between
the Company and the Trustee (the "Indenture").
RECITALS
A. The Company has heretofore executed and delivered to the Trustee
the Indenture pursuant to which one or more series of unsecured debentures,
notes or other evidences of indebtedness of the Company (the "Securities") may
be issued from time to time. All terms used in this Second Supplemental
Indenture which are not otherwise defined herein shall have the meanings
assigned to them in the Indenture.
B. The Company desires and has requested the Trustee to join with it
in the execution and delivery of this Second Supplemental Indenture for the
purpose of amending the Indenture (1) to permit the Company to elect that
Securities of any series issued on or after the date hereof to be, in whole or
in part, in book-entry form; and (2) to make certain other changes in the
Indenture with respect to Securities issued on or after the date hereof.
C. Section 901(5) of the Indenture provides that a supplemental
indenture may be entered into by the Company and the Trustee without the consent
of any Holders to change any of the provisions of the Indenture provided that no
such change becomes effective with respect to any Securities that are
Outstanding prior to making such change.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises set forth herein and for
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows with respect to
Securities of all series issued on or after the date hereof:
<PAGE>
ARTICLE ONE
SECTION 101. The provisions of this Second Supplemental Indenture
shall only apply and be effective with respect to the Company's 6.875% Senior
Notes Due December 15, 2007 and all other Securities issued on or after the
date hereof; provided, however, that the provisions of Section 112 hereof
shall only be effective with respect to the Company's 6.875% Senior Notes Due
2007.
SECTION 102. Section 101 of the Indenture is hereby amended to
include therein the following provisions:
(a) After the definition of Defaulted Interest:
"'Depositary' means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Global
Securities, a clearing agency registered under the Exchange Act, specified
for that purpose as contemplated by Section 301 or any successor clearing
agency registered under the Exchange Act as contemplated by Section 305,
and if at any time there is more than one such Person, "Depositary" as used
with respect to the Securities of any series shall mean the Depositary with
respect to the Securities of such series."
(b) After the definition of Event of Default:
"'Exchange Act' means the Securities Exchange Act of 1934, as
amended."
(c) After the definition of Funded Debt:
"'Global Security' means a security bearing the legend specified
in Section 206 evidencing all or part of a series of Securities, issued to
the Depositary for such series or its nominee, and registered in the name
of such Depositary or nominee."
SECTION 103. Section 104(a) of the Indenture is amended as follows:
The following paragraph is added to the end thereof:
"Notwithstanding the foregoing, with respect to any Global
Security, nothing herein shall prevent the Company, the Trustee, or any
agent of the Company or the Trustee, from giving effect to any request,
demand, authorization, direction, notice, consent, waiver or other action
provided in this Indenture to be given or taken by a Depositary or impair,
as between a Depositary and such holders of beneficial interests, the
operation of customary practices governing the exercise of the rights of
the Depositary (or its nominee) as Holder of any Security. Without
limiting the generality of the foregoing sentence, a Holder, including a
Depositary that is a Holder of a Global Security, may make, give or take,
by a proxy or proxies duly
-2-
<PAGE>
appointed in writing, any request, demand, authorization, direction,
notice, consent, waiver or other action provided in or pursuant to this
Indenture to be made, given or taken by Holders, and a Depositary that is
a Holder of a Global Security may give its proxy or proxies to the
Depositary's participants or the beneficial owners of interests in any such
Global Security, as the case may be, through such Depositary's standing
instructions and customary practices. The Trustee shall fix a record date
for the purpose of determining the Persons who are beneficial owners of
interests in any permanent Global Security held by a Depositary and who are
entitled under the procedures of such Depositary to make, give or take, by
a proxy or proxies duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other action provided
in or pursuant to this Indenture to be made, given or taken by Holders. If
such a record date is fixed, the Holders on such record date or their duly
appointed proxy or proxies, and only such Persons, shall be entitled to
make, give or take such request, demand, authorization, direction, notice,
consent, waiver or other action, whether or not such Holders remain Holders
after such record date. No such request, demand, authorization, direction,
notice, consent, waiver or other action shall be valid or effective if
made, given or taken more than 90 days after such record date."
SECTION 104. A new Section 205 shall be added to the Indenture to
read in its entirety as follows:
"Section 205. SECURITIES IN GLOBAL FORM.
If Securities of a series are issuable in global form, any such
Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series
(or such lesser amount as is permitted by the terms thereof) from time to
time endorsed thereon and may also provide that the aggregate amount of
Outstanding Securities represented thereby may from time to time be
increased or reduced to reflect exchanges. Any endorsement of any Security
in global form to reflect the amount, or any increase or decrease in the
amount, or changes in the rights of Holders, of Outstanding Securities
represented thereby shall be made in such manner and by such Person or
Persons as shall be specified therein or in the Company Order to be
delivered pursuant to Sections 303 or 304 with respect thereto. Subject to
the provisions of Section 303 and, if applicable, Section 304, the Trustee
shall deliver and redeliver any Security in permanent global form in the
manner and upon instructions given by the Person or Persons specified
therein or in the applicable Company Order. If the Company Order pursuant
to Sections 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to a Security in global form shall
be in writing but need not be accompanied by or contained in an Officers'
Certificate and need not be accompanied by an Opinion of Counsel."
-3-
<PAGE>
SECTION 105. A new Section 206 shall be added to the Indenture to
read in its entirety as follows:
"Section 206. FORM OF LEGEND FOR GLOBAL SECURITIES.
Any Global Security authenticated and delivered hereunder shall
bear a legend in substantially the following form, or in such other form
that is acceptable to the Depositary and the Trustee:
"Unless and until it is exchanged in whole or in part for
Securities in definitive registered form, this Security may not be
transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
SECTION 106. Section 301 of the Indenture is hereby amended as set
forth:
Section 301(10) is amended to read in its entirety as follows:
"any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture) including, without
limitation, terms as to whether any Securities of the series are to be
issuable in whole or in part in the form of one or more Global Securities
and, if so, (a) the Depositary with respect to such Global Security or
Securities and (b) the circumstances under which any such Global Security
may be exchanged for Securities registered in the name of, and any transfer
of such Global Security may be registered to, a Person other than such
Depositary or its nominee, if other than as set forth in Section 305."
SECTION 107. Section 303 of the Indenture is amended as follows:
The following paragraph is added to the end thereof:
"If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in whole or in part in the form of
one or more Global Securities, then the Company shall execute and the
Trustee shall, in accordance with this Section and the Company Order with
respect to such series, authenticate and deliver one or more Global
Securities in permanent form that (i) shall represent and shall be
denominated in an amount equal to the aggregate principal amount of the
Outstanding Securities of such series to be represented by such Global
Security or Securities, (ii) shall be registered in the name of the
Depositary for such Global Security or Securities or the nominee of such
Depositary, (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instruction and (iv) shall bear a legend as
required by Section 206."
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<PAGE>
SECTION 108. Section 305 of the Indenture is amended as follows:
The following paragraph is added to the end thereof:
"Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any Global Security shall be exchangeable
pursuant to this Section 305 or Sections 304, 306, 906 or 1107 for
Securities registered in the name of, and a transfer of a Global Security
of any series may be registered to, any Person other than the Depositary
for such Security or its nominee only if (i) such Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such
Global Security or if at any time such Depositary ceases to be a clearing
agency registered under the Exchange Act, and a successor depositary is not
appointed by the Company within 90 days, (ii) the Company executes and
delivers to the Trustee a written order of the Company, that such Global
Security shall be so exchangeable and the transfer thereof so registrable,
or (iii) there shall have occurred and be continuing an Event of Default or
an event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default with respect to the Securities of such
series. Upon the occurrence in respect of any Global Security of any
series of any one or more of the conditions specified in clauses (i), (ii)
or (iii) of the preceding sentence or such other conditions as may be
specified as contemplated by Section 301 for such series, then without
unnecessary delay but in any event not later than the earliest date on
which such interests may be so exchanged, the Company shall deliver to the
Trustee definitive Securities of that series in aggregate principal amounts
equal to the principal amount of such Global Security, executed by the
Company. On or after the earliest date on which such interests may be so
exchanged, such Global Securities shall be surrendered from time to time by
the Depositary and in accordance with instructions given to the Trustee and
the Depositary, as shall be specified in the Company Order with respect
thereto to the Trustee (provided, however, that upon the occurrence of one
or more of the conditions specified in clause (iii) of the second preceding
sentence no such Company Order shall be required, and such instructions
shall be delivered by the Depositary to the Trustee), as the Company's
agent for such purpose, to be exchanged, in whole or in part, for
definitive Securities of the same series without charge. The Trustee shall
authenticate and make available for delivery, in exchange for each portion
of such surrendered Global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such Global Security to be exchanged which
shall be in the form of registered Securities registered in the name of the
beneficial owner thereof; provided, however, that no such exchanges may
occur during a period beginning at the opening of business 15 days before
any selection of Securities of that series to be redeemed and ending on the
relevant Redemption Date. Promptly following any such exchange in part,
such Global Security shall be returned by the Trustee to the Depositary in
accordance with the instructions of the Company
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<PAGE>
referred to above. If a registered Security is issued in exchange for any
portion of a Global Security after the close of business at the office or
agency where such exchange occurs on (i) any Regular Record Date and before
the opening of business at such office or agency on the relevant Interest
Payment Date, or (ii) any Special Record Date and before the opening of
business at such office or agency on the related proposed date for payment
of interest or Defaulted Interest, as the case may be, interest will not be
payable on such Interest Payment Date or proposed date for payment, as the
case may be, in respect of such registered Security, but will be payable on
such Interest Payment Date or proposed date for payment, as the case may
be, only to the Person to whom interest in respect of such portion of such
Global Security is payable in accordance with the provisions of this
Indenture."
SECTION 109. Section 308 of the Indenture is amended as follows:
The following sentence is added to the end thereof:
"No holder of any beneficial interest in any Global Security held
on its behalf by a Depositary (or its nominee) shall have any rights under
this Indenture with respect to such Global Security or any Security
represented thereby, and such Depositary may be treated by the Company, the
Trustee, and any agent of the Company or the Trustee as the owner of such
Global Security or any Security represented thereby for all purposes
whatsoever."
SECTION 110. Section 501 of the Indenture is hereby amended as set
forth:
Section 501(5) is amended to read in its entirety as follows:
"(5) a default under any bond, debenture, note or other evidence
of indebtedness for money borrowed by the Company (including a default with
respect to Securities of any series other than that series) in an aggregate
principal amount exceeding $10,000,000 or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed by the Company (including
this Indenture) in an aggregate principal amount exceeding $10,000,000,
whether such indebtedness now exists or shall hereafter be created, which
default (i) shall constitute a failure to pay any portion of the principal
of such indebtedness when due and payable after the expiration of any
applicable grace period with respect thereto or (ii) shall have resulted in
such indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 10 days after there shall have
been given, by registered or certified mail, to the Company by the Trustee
or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series a
written notice specifying such default and requiring the Company to cause
such
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<PAGE>
indebtedness to be discharged or cause such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder,
or"
SECTION 111. Section 1007 of the Indenture is amended by deleting
the phrase "5% of the Consolidated Tangible Net Assets" in the first paragraph
thereof and inserting in lieu of such deleted phrase the following: "10% of the
Consolidated Tangible Net Assets."
SECTION 112. Subject to Section 101 above, Article 10 of the
Indenture is amended by adding a new Section 1011 thereto as follows:
"Section 1011. Limitation on Certain Debt.
The Company will not permit the aggregate principal amount of
Debt of all consolidated Restricted Subsidiaries outstanding at any one time
(other than secured Debt referenced in Section 1007) to exceed 15% of the
Consolidated Net Tangible Assets."
SECTION 113. Section 1107 of the Indenture is amended as follows:
The following sentence is added at the end thereof:
"Except as otherwise specified as contemplated by Section 301, if
a Global Security is so surrendered, the Company shall execute, and the
Trustee shall authorize and deliver to the Depositary in global form,
without service charge, a new Global Security in a denomination equal to
the unredeemed portion of the principal of the Global Security so
surrendered."
ARTICLE TWO
SECTION 201. This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
SECTION 202. This instrument shall be governed by and construed in
accordance with the laws of the State of Illinois.
SECTION 203. Except as specifically modified by this Supplemental
Indenture, the terms and conditions of the Indenture shall continue in full
force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
AAR CORP.
By: /s/ Timothy J. Romenesko
-----------------------------------
Name: Timothy J. Romenesko
---------------------------------
Title: Vice President
--------------------------------
ATTEST:
By: /s/ Howard A. Puslifer
---------------------------
Name: Howard A. Puslifer
-------------------------
Title: Vice President, General Counsel
and Secretary
------------------------
FIRST TRUST NATIONAL ASSOCIATION,
as Trustee
By: /s/ Lawrence Kusch
-----------------------------------
Name: Lawrence Kusch
---------------------------------
Title: Assistant Vice President
--------------------------------
ATTEST:
By: /s/ H. H. Hall Jr.
---------------------------
Name: H. H. Hall Jr.
-------------------------
Title: Vice President
------------------------
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