Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________________________
AAR CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 36-2334820
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
ONE AAR PLACE
1100 NORTH WOOD DALE ROAD
WOOD DALE, ILLINOIS 60191
(630) 227-2000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive office)
HOWARD A. PULSIFER, ESQ.
ONE AAR PLACE
1100 NORTH WOOD DALE ROAD
WOOD DALE, ILLINOIS 60191
(630) 227-2040
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
STUART L. GOODMAN, ESQ.
SCHIFF HARDIN & WAITE
7200 SEARS TOWER
CHICAGO, ILLINOIS 60606
(312) 876-1000<PAGE>
Approximate Date of Commencement of Proposed Sale to the Public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on the Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. [ X ]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum
Title of each class of securities to to be Offering Price Aggregate Amount of
be registered registered Per Unit Offering Price(1) Registration Fee
------------------------------------ ---------- -------------- ------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, Par Value $1.00 per
Share(2) . . . . . . . . . . . . . .
Preferred Stock, Par Value $1.00 per
Share . . . . . . . . . . . . . . .
Depositary Shares(3) . . . . . . . .
Debt Securities . . . . . . . . . .
Warrants . . . . . . . . . . . . . .
TOTAL $200,000,000 $200,000,000 $59,000<PAGE>
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).
(2) Each share of Common Stock includes a right to a Common Stock Purchase Right. The Common Stock Purchase
Rights currently are not evidenced by separate certificates and may not be transferred except upon transfer
of the related shares of Common Stock. The value attributable to the Common Stock Purchase Rights is
reflected in the market price of the Common Stock.
(3) The Depositary Shares will be evidenced by Depositary Receipts issued pursuant to a Deposit Agreement. If
the Registrant elects to offer to the public fractional interests in shares of Preferred Stock, Depositary
Receipts will be distributed to those persons purchasing such fractional interests, and the underlying shares
of Preferred Stock will be issued to the Depositary under the Deposit Agreement.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE
AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE.<PAGE>
Information contained herein is subject to completion or
amendment. A Registration Statement relating to these
securities has been filed with the Securities and Exchange
Commission. These securities may not be sold nor may offers
to buy be accepted prior to the time the Registration
Statement becomes effective. This Prospectus shall not
constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in
any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state.
____________________
PROSPECTUS SUBJECT TO COMPLETION, DATED MAY 15, 1998
AAR CORP.
$200,000,000
Common Stock, Preferred Stock,
Depositary Shares, Debt Securities and Warrants
AAR CORP. ("the Company") may offer from time to time (i) common
stock, par value $1.00 per share ("Common Stock"), (ii) one or more
series of Preferred Stock, par value $1.00 per share ("Preferred
Stock"), which may be evidenced by Depositary Shares (as defined
herein), (iii) one or more series of debt securities ("Debt
Securities"), consisting of debentures, notes and/or other unsecured
evidences of indebtedness, and (iv) warrants to purchase Debt
Securities, Preferred Stock, Common Stock or Depositary Shares
("Warrants", and together with the Common Stock, Preferred Stock,
Depositary Shares and Debt Securities, "Securities"), at an aggregate
initial offering price not to exceed $200,000,000 (or its equivalent
in another currency or currency unit based on the exchange rate at the
time of sale) in amounts, at prices and on terms to be determined at
the time of offering. Securities may be offered, separately or
together, in separate series, in amounts, at prices and on terms to be
set forth in one or more supplements to this Prospectus (each a
"Prospectus Supplement").
The specific terms of the Securities in respect to which this
Prospectus is being delivered will be set forth in the applicable
Prospectus Supplement and will include, where applicable (i) in the
case of Common Stock, the number of shares; (ii) in the case of
Preferred Stock, the specific serial designation, the number of
shares, any dividend, redemption, liquidation, conversion, exchange,
sinking fund, voting and other rights, if any, and whether interests
in such Preferred Stock will be evidenced by Depositary Shares and, if
so, the identity of the Depositary; (iii) in the case of Debt
Securities, whether they are Senior or Subordinated Debt Securities
and subordination terms, if any, the specific designation, aggregate
principal amount, the currency or currency unit in which payments are<PAGE>
to be made, denominations, maturity, premium, if any, rate (which may
be fixed or variable) and time of payment of interest, if any, terms
for redemption at the option of the Company or the holder, if any,
terms for sinking fund payments, if any, conversion or exchange
rights, if any; and (iv) in the case of Warrants, the duration,
offering price, exercise price and detachability of such Warrants, as
well as a description of the Common Stock, Preferred Stock, Depositary
Shares or Debt Securities issuable upon such exercise. Unless
otherwise specified in the applicable Prospectus Supplement,
Securities other than Common Stock will be issued in permanent global
form and Common Stock will be issued through the Company's transfer
agent and registrar.
The Common Stock is listed on the New York Stock Exchange, Inc.
(the "NYSE") and the Chicago Stock Exchange under the symbol "AIR".
Any Common Stock offered will be listed, subject to notice of
issuance, on such exchanges. The applicable Prospectus Supplement
will also contain information, where applicable, as to any other
listing on a securities exchange of Securities covered by such
Prospectus Supplement.
The Company may sell Securities to or through one or more
underwriters, and also may sell Securities directly to other
purchasers or through agents. The applicable Prospectus Supplement
will set forth the names of any underwriters or agents involved in the
sale of the Securities in respect of which this Prospectus is being
delivered, the number or principal amounts, if any, to be purchased by
underwriters and the compensation, if any, of such underwriters or
agents. See "Plan of Distribution." No Securities may be sold
without delivery of the applicable Prospectus Supplement describing
the method and terms of the offering of such series of Securities.
______________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
_______________________________
The date of this Prospectus is __________, 1998.
2<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (together with the rules
and regulations thereunder, the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission). Reports,
proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's Regional Offices in New York (7 World Trade
Center, 13th Floor, New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661)
and copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such material is also available from the
Commission through the internet at http://www.sec.gov. The Common
Stock is listed on the NYSE and the Chicago Stock Exchange. Reports,
proxy statements and other information relating to the Company can
also be inspected and copied at the offices of the NYSE, 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a registration
statement on Form S-3 (the "Registration Statement") (of which this
Prospectus is a part) under the Securities Act of 1933, as amended
(together with the rules and regulations thereunder, the "Securities
Act") with respect to the Securities. This Prospectus does not
contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by
the rules and regulations of the Commission. Statements contained in
this Prospectus as to the contents of any contract or other documents
are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto.
For further information regarding the Company and the Securities,
reference is hereby made to the Registration Statement and such
exhibits and schedules which may be obtained from the Commission at
its principal office in Washington, D.C. upon payment of the fees
prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
(File No. 1-6263) pursuant to the Exchange Act are hereby incorporated
by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1997;
3<PAGE>
2. The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended August 31, 1997, November 30, 1997 and February 28,
1998;
3. The Company's Current Reports on Form 8-K dated July 8, 1997,
December 4, 1997, December 10, 1997, and December 11, 1997; and
4. The descriptions of the Common Stock and the Common Stock
Purchase Rights included in the Company's Registration Statements on
Form 8-A filed July 29, 1987 and July 8, 1998, respectively, and filed
with the Commission pursuant to Section 12(d) of the Exchange Act,
including any amendments or reports filed for the purpose of updating
such descriptions.
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof
and prior to the termination of the offering of any Securities are
hereby incorporated by reference into this Prospectus and shall be
deemed a part hereof from the date of filing of such documents.
Any statement contained herein, in any supplement hereto or in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that a
statement contained herein, in any supplement hereto or in any
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of
the Registration Statement, this Prospectus or any supplement hereto.
Copies of all documents which are incorporated herein by
reference (not including the exhibits to such documents, unless such
exhibits are specifically incorporated by reference in such documents)
will be provided without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered upon written or
oral request. Requests should be directed to AAR CORP., 1100 North
Wood Dale Road, Wood Dale, Illinois 60191, (630) 227-2000, Attn:
Corporate Secretary.
THE COMPANY
General
The Company is a worldwide leader in supplying aftermarket
products and services to the global aerospace/aviation industry. It
provides aircraft, engines and engine parts; airframe and accessories
products; overhaul, repair and maintenance services and
Company-manufactured products to customers in all segments of this
4<PAGE>
industry, including the world's largest commercial airlines, air
cargo, business, and general aviation operators, original equipment
manufacturers, domestic and foreign military and government agencies,
aircraft leasing companies, and maintenance service providers. The
Company's principal executive offices are located at 1100 N. Wood Dale
Road, Wood Dale, Illinois 60191, and the Company's telephone number is
630/227-2000.
The Company reports its activities in one business segment:
Aviation Services. The following table sets forth net sales and the
Company's classes of similar products and services within this segment
for the last three fiscal years:
Net Sales Year Ended May 31
-----------------
(000's omitted)
1997 1996 1995
---- ---- ----
Aircraft and $263,074 $182,229 $171,181
Engines
Airframe and 221,433 202,883 166,830
Accessories
Manufacturing 104,821 119,878 113,384
-------- -------- --------
$589,328 $504,990 $451,395
AIRCRAFT AND ENGINES
The Company's Aircraft and Engines activities include (i) the
purchase, sale, lease and lease financing of new and used commercial
jet aircraft, (ii) the purchase, sale and lease of a wide variety of
new, overhauled and repaired engines and engine parts for the aviation
aftermarket, and (iii) the overhaul, repair and exchange of a wide
range of engine parts and components and other engine support services
for its commercial and military customers. The Company provides
customized inventory supply and management programs for certain engine
parts and components in support of customer maintenance activities.
The Company's primary sources of engine parts for its Aircraft and
Engine activities are domestic and foreign airlines, independent
aviation service companies, aircraft leasing companies and original
equipment manufacturers.
5<PAGE>
AIRFRAME AND ACCESSORIES
The Company's Airframe and Accessories activities consist of (i)
the purchase, sale and lease of new, overhauled and repaired airframe
parts and accessories for the aviation aftermarket, and (ii) a wide
variety of airframe and accessory parts and components overhaul,
repair and exchange services for its commercial, military and general
aviation customers. The Company provides customized inventory supply
and management programs for certain airframe parts and components in
support of customer maintenance activities. The Company's primary
sources of airframe parts for its Airframe and Accessories activities
are domestic and foreign airlines, independent aviation service
companies and aircraft leasing companies; the Company is also an
authorized distributor for leading aerospace/aviation product
manufacturers.
MANUFACTURING
The Company's Manufacturing activities include (i) the
manufacture and repair of a wide array of containers, pallets and
shelters in support of military and humanitarian rapid development
activities, (ii) the design, manufacture and installation of in-plane
cargo loading and handling systems for commercial and military
aircraft and helicopters, (iii) the design and manufacture of a line
of specialized protective transport cases that are used to transport
sensitive and calibrated tools and instruments, and a variety of
vacuum storage containers that protect machinery and equipment during
long-term storage, (iv) the design and manufacture of advanced
composite materials for commercial, business and military aircraft and
(v) the design and manufacture of a complete line of self-propelled
floor sweepers and scrubbers for a variety of industrial and
commercial uses, including both ride-on and walk-behind lines, powered
by gasoline, diesel fuel or battery.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus
Supplement, the Company intends to use the net proceeds from the sale
of Securities for general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following is the Company's ratio of earnings to fixed charges
for the periods indicated:
6<PAGE>
Nine Months
Ended
February 28, Year Ended May 31,
------------ ------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
Ratio of earnings
to fixed charges 4.3:1 3.4:1 3.5:1 2.8:1 2.1:1 2.1:1 0.8:1
For the purposes of calculating the ratio of earnings to fixed
charges, earnings consist of income before income taxes, adjusted for
fixed charges. Fixed charges consist of interest, whether expensed or
capitalized, amortization of debt expense and one-third of minimum
rental payments under operating leases (estimated by management to be
the interest factor of such rentals). In 1993, earnings, as defined,
were inadequate to cover fixed charges by $1,917,000.
DESCRIPTION OF COMMON STOCK
GENERAL
The following is a description of certain terms of the Common
Stock. This description does not purport to be complete and is
subject to and qualified in its entirety by reference to the
provisions of the Company's Restated Certificate of Incorporation
relating to the Common Stock.
The authorized common stock of the Company consists of 80,000,000
shares of Common Stock, $1.00 par value per share. As of March 31,
1998, there were 27,688,317 shares of Common Stock outstanding.
Holders of Common Stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not
have cumulative voting rights. Holders of a majority of the shares of
Common Stock entitled to vote in any election of directors may elect
all of the directors standing for election. Upon the liquidation,
dissolution or winding up of the Company, the holders of Common Stock
are entitled to receive ratably the net assets of the Company
available after the payment of all debts and other liabilities.
Holders of Common Stock have no preemptive, subscription, redemption
or conversion rights. The outstanding shares of Common Stock are
fully paid and non-assessable.
The rights, preferences and privileges of holders of Common Stock
are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock which the Company
may designate and issue in the future.
7<PAGE>
DIVIDENDS
Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors
applicable to Common Stock out of funds legally available therefor.
Declaration of future dividends by the Board of Directors will depend
on general business conditions encountered by the Company, earnings,
financial condition and capital requirements of the Company and such
other factors as the Board of Directors may deem relevant.
Certain of the Company's debt agreements contain provisions
restricting the payment of dividends or repurchase of its shares.
Under the most restrictive of these provisions, the Company may not
pay dividends (other than stock dividends) or acquire its capital
stock if after giving effect thereto the aggregate amounts paid on or
after June 1, 1995 exceed the sum of (i) $20,000,000 plus (ii) 50% of
consolidated net income of the Company after June 1, 1994. Certain
restrictions on the declaration or payment of dividends on Common
Stock and the repurchase of Common Stock shares by the Company apply
if there are any shares of preferred stock outstanding.
CERTAIN CHARTER AND BY-LAW PROVISIONS
GENERAL. The Company has implemented certain measures designed
to enhance the Board of Directors' ability to protect stockholders
against, among other things, unsolicited attempts to acquire a
significant interest in the Company or to influence the Company's
management (whether through open market purchases, tender offers or
otherwise) that do not offer an adequate price to all stockholders or
that the Board of Directors otherwise considers not in the best
interests of the Company and its stockholders.
Certain provisions in the Restated Certificate of Incorporation
of the Company may have a significant impact on the stockholders'
ability to change the composition of the incumbent Board of Directors
or the ability of a substantial holder of the Common Stock to acquire
control of, or to remove, the incumbent Board of Directors, and might
discourage certain types of transactions that involve an actual or
threatened change of control of the Company.
The provisions of the Restated Certificate of Incorporation are
intended to encourage persons seeking to acquire control of the
Company to initiate such an acquisition through arm's-length
negotiations with the Company's management and Board of Directors.
These provisions could have the effect of discouraging a third party
from making a tender offer to or otherwise attempting to obtain
control of the Company, even though such an attempt might be
beneficial to the Company and its stockholders. At the same time,
these provisions help ensure that the Board of Directors, if
confronted by an unsolicited proposal from a third party who has
recently acquired a block of Common Stock, will have sufficient time
to review the proposal and alternatives to it and to seek better
8<PAGE>
proposals for its stockholders, employees, suppliers, customers and
others. These provisions are discussed below.
INDEMNIFICATION. Pursuant to the provisions of the Delaware
General Corporation Law (the "Delaware GCL"), the Company has adopted
provisions in its Restated Certificate of Incorporation which require
the Company to indemnify its officers and directors to the fullest
extent permitted by law, and eliminate the personal liability of its
directors to the Company or its stockholders for monetary damages for
breach of their duty of due care except (i) for any breach of the duty
of loyalty; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of law; (iii) for
liability under Section 174 of the Delaware GCL (relating to certain
unlawful dividends, stock repurchases or stock redemptions); or (iv)
for any transaction from which the director derived any improper
personal benefit. These provisions do not eliminate a director's duty
of care. Moreover, the provisions do not apply to claims against a
director for violation of certain laws, including Federal securities
laws. The Company believes that these provisions assist the Company
in attracting and retaining qualified individuals to serve as
directors and officers.
PREFERRED STOCK. The Company's Restated Certificate of
Incorporation includes a provision which allows the Board of
Directors, without stockholder approval, to issue up to 250,000 shares
of preferred stock with voting, liquidation and conversion rights that
could be superior to and adversely affect the voting power of holders
of Common Stock. The issuance of preferred stock could have the
effect of delaying, deferring or preventing a change in control of the
Company.
CLASSIFIED BOARD OF DIRECTORS. The Company's Restated
Certificate of Incorporation provides that the Board of Directors of
the Company shall be divided into three classes of directors serving
staggered three-year terms. The classification of directors has the
effect of making it more difficult for stockholders to change the
composition of the Board of Directors in a relatively short period of
time.
VOTING RESTRICTION ON CERTAIN BUSINESS COMBINATIONS. An
affirmative vote of the holders of at least 80% of the outstanding
shares of capital stock of the Company entitled to vote generally in
the election of directors is required with respect to the adoption or
approval of certain business combinations, including mergers,
consolidations, asset and securities sales, plans of liquidation or
dissolution and certain reclassifications, involving any related party
(as defined below).
A related party is defined in the Company's Restated Certificate
of Incorporation to mean the beneficial owner, directly or indirectly,
of not less than 10% of the voting stock of the Company.
9<PAGE>
The 80% affirmative voting requirement is not applicable to
business combinations approved by (i) a majority of the Board of
Directors of the Company prior to the acquisition by the related party
of 10% of the then outstanding voting stock or (ii) a majority of
those members of the Board of Directors who are not related party
directors.
SPECIAL STOCKHOLDERS' MEETINGS. The Restated Certificate of
Incorporation and By-Laws allow only the Chairman of the Board of
Directors or majority of the Board of Directors then in office to call
a special meeting of the stockholders.
NO ACTION BY STOCKHOLDER CONSENT. The Company's Restated
Certificate of Incorporation prohibits action that is required or
permitted to be taken at any annual or special meeting of stockholders
of the Company from being taken by the written consent of stockholders
without a meeting.
SUPERMAJORITY VOTING. The classified Board, special meeting and
stockholder consent, as well as certain other provisions, of the
Restated Certificate of Incorporation may be altered, amended, or
repealed only if the holders of 80% or more of the outstanding shares
of voting stock entitled to vote in the election of directors vote in
favor of such action. The By-Laws of the Company may be amended,
altered, changed or replaced by the affirmative vote of the holders of
at least 80% or more of the outstanding shares of voting stock
entitled to vote in the election of directors or by a majority of
Board of Directors then in office.
DELAWARE ANTI-TAKEOVER LAW
The Company is a Delaware corporation that is subject to Section
203 of the Delaware GCL ("Section 203"). Under Section 203 certain
"business combinations" between a Delaware corporation, whose stock
generally is publicly traded or held of record by more than 2,000
stockholders, and an "interested stockholder" are prohibited for a
three-year period following the date that such stockholder became an
interested stockholder, unless (i) the corporation has elected in its
certificate of incorporation not to be governed by Section 203 (the
Company has not made such election), (ii) the business combination was
approved by the board of directors of the corporation before the other
party to the business combination became an interested stockholder,
(iii) upon consummation of the transaction that made it an interested
stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the commencement of the
transaction (excluding voting stock owned by directors who are also
officers or held in employee benefit plans in which the employees do
not have a confidential right to tender or vote stock held by the
plan) or (iv) the business combination is approved by the board of
directors of the corporation and ratified by two-thirds of the voting
stock which the interested stockholder did not own. The three-year
prohibition also does not apply to certain business combinations
10<PAGE>
proposed by an interested stockholder following the announcement or
notification of certain extraordinary transactions involving the
corporation and a person who had not been an interested stockholder
during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's
directors. The term "business combination" is defined generally to
include mergers or consolidations between a Delaware corporation and
an interested stockholder, transactions with an interested stockholder
involving the assets or stock of the corporation or its majority-owned
subsidiaries, and transactions which increase an interested
stockholder's percentage ownership of stock. The term "interested
stockholder" is defined generally as those stockholders who become
beneficial owners of 15% or more of a Delaware corporation's voting
stock, together with the affiliates or associates of that stockholder.
RIGHTS AGREEMENT
Pursuant to a Rights Agreement adopted in 1997, each outstanding
share of the Company's Common Stock carries with it a right to
purchase one additional share at a price of $83.33 (subject to
anti-dilution adjustments). The rights become exercisable (and
separate from the shares) when certain specified events occur,
including the acquisition of 15% or more of the Common Stock by a
person or group (an "Acquiring Person") or the commencement of a
tender or exchange offer for 15% or more of the Common Stock. The
rights replace Common Stock purchase rights initially distributed to
holders of the Company's Common Stock in 1987 and which expired by
their own terms in 1997.
In the event that an Acquiring Person acquires 15% or more of the
Common Stock, or if the Company is the surviving corporation in a
merger involving an Acquiring Person, or if the Acquiring Person
engages in certain types of self-dealing transactions, each right
entitles the holder to purchase for the then current exercise price
that number of shares of Common Stock having a market value of two
times the exercise price, subject to certain exceptions. Similarly,
if the Company is acquired in a merger or other business combination
or 50% of more of its assets or earning power is sold, each right
entitles the holder to purchase at the then current exercise price
that number of shares of common stock of the surviving corporation
having a market value of two times the exercise price. The rights,
which do not entitle the holder thereof to vote or to receive
dividends, expire on August 6, 2007 and may be redeemed by the Company
for $.01 per right under certain circumstances.
DESCRIPTION OF PREFERRED STOCK
GENERAL
The following is a description of certain general terms and
provisions applicable to Preferred Stock as a class. The particular
11<PAGE>
terms of any series of Preferred Stock will be described in the
applicable Prospectus Supplement. This description does not purport
to be complete and is subject to and qualified in its entirety by the
provisions of the Company's Restated Certificate of Incorporation and
a certificate of designation relating to each series of Preferred
Stock (each, a "Certificate of Designation"), which will be filed as
an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time
of issuance of such series of Preferred Stock.
The Company's Restated Certificate of Incorporation authorizes
the issuance of 250,000 shares of Preferred Stock, par value $1.00 per
share. No shares of Preferred Stock are currently outstanding.
Under the Company's Restated Certificate of Incorporation, the
Preferred Stock may be issued from time to time in one or more series
with such serial designation and (i) may have such voting powers, full
or limited, or may be without voting powers; (ii) may be subject to
redemption at such time or times and such prices; (iii) may be
entitled to receive dividends (which may be cumulative or
noncumulative) at such rates, on such conditions, and at such times,
and payable in preference to, or in such relation to, the dividends
payable on any other class or classes of stock; (iv) may be entitled
to such rights upon the dissolution of, or upon any distribution of
the assets of, the Company; (v) may be made convertible into, or
exchangeable for, shares of any other class or classes of stock of the
Company at such price or prices or at such other rates of exchange and
with such adjustments; and (vi) shall have such other preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, all as stated in
a Certificate of Designation adopted by the Board of Directors of the
Company.
The Prospectus Supplement relating to the particular Preferred
Stock offered thereby (the "Offered Preferred Stock") will describe
the following terms of the Offered Preferred Stock: (i) the
designation and stated value per share of the Offered Preferred Stock
and the number of shares offered; (ii) the amount of liquidation
preference per share of the Offered Preferred Stock; (iii) the initial
public offering price at which the Offered Preferred Stock will be
issued; (iv) the dividend rate (or method of calculation), the dates
on which dividends shall be payable and the dates from which dividends
shall commence to cumulate, if any; (v) any redemption or sinking fund
provisions; (vi) any conversion or exchange rights; (vii) whether the
Company has elected to offer Depositary Shares as described below
under "Description of Depositary Shares"; and (viii) any additional
voting, dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions.
The Preferred Stock will have the dividend, liquidation,
redemption and voting rights set forth below unless otherwise provided
in the applicable Prospectus Supplement.
12<PAGE>
The Preferred Stock will be, upon issuance against full payment
therefor, fully paid and nonassessable. The holders of Preferred
Stock will not have any preemptive rights. The applicable Prospectus
Supplement will contain a description of certain United States Federal
income tax consequences relating to the purchase and ownership of the
Offered Preferred Stock.
RANK
With respect to dividend rights and rights upon the liquidation,
dissolution or winding up of the Company, each share of Preferred
Stock will rank on a parity with each other share of Preferred Stock,
irrespective of series, and will rank prior to the Common Stock and
any other class or series of capital stock of the Company hereafter
authorized over which the Preferred Stock has preference or priority
in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Company.
The Preferred Stock will be junior to all outstanding debt of the
Company. Each series of Preferred Stock will be subject to creation
of preferred stock ranking senior to, on a parity with or junior to
such Preferred Stock to the extent not expressly prohibited by the
Company's Restated Certificate of Incorporation.
DIVIDENDS
Holders of shares of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors out of funds of the
Company legally available for payment, cash dividends, payable at such
dates and at such rates per share per annum as set forth in the
applicable Prospectus Supplement. Such rate may be fixed or variable
or both. Each declared dividend will be payable to holders of record
as they appear at the close of business on the stock books of the
Company (or, if applicable, on the records of the Depositary (as
hereinafter defined) referred to below under "Description of
Depositary Shares") on such record dates, not more than 60 calendar
days preceding the payment dates thereof, as are determined by the
Board of Directors (each of such dates, a "Record Date").
Such dividends may be cumulative or noncumulative, as provided in
the applicable Prospectus Supplement. If dividends on a series of
Preferred Stock are noncumulative and if the Board of Directors fails
to declare a dividend in respect of a dividend period with respect to
such series, then holders of such Preferred Stock will have no right
to receive a dividend in respect of such dividend period, and the
Company will have no obligation to pay the dividend for such period,
whether or not dividends are declared payable on any future dividend
payment date.
No full dividend will be declared or paid or set apart for
payment on the Preferred Stock of any series for any dividend period
unless full cumulative dividends have been or contemporaneously are
13<PAGE>
declared and paid or declared and a sum sufficient for the payment
thereof set apart for such payment on all the outstanding shares of
Preferred Stock for all dividend periods terminating on or prior to
the end of such dividend period. When dividends are not paid in full
as aforesaid on all shares of Preferred Stock, as the case may be, any
dividend payments (including accruals, if any) on the Preferred Stock
will be paid to the holders of the shares of the Preferred Stock
ratably in proportion to the respective sums which such holders would
receive if all dividends thereon accrued to the date of payment were
declared and paid in full. Accruals of dividends will not bear
interest. So long as any shares of Preferred Stock are outstanding,
in no event will any dividends, whatsoever, whether in cash or
property, be paid or declared, nor will any distribution be made, on
any class of stock ranking subordinate to the Preferred Stock nor will
any shares of stock ranking subordinate to the Preferred Stock be
purchased, redeemed or otherwise acquired for consideration by the
Company or any subsidiary of the Company, unless all dividends on the
Preferred Stock for all past quarterly dividend periods will have been
paid or declared and a sum sufficient for the payment thereof set
apart. The foregoing provisions will not, however, apply to a
dividend payable solely in shares of any stock ranking subordinate to
the Preferred Stock or to the acquisition of shares of any stock
ranking subordinate to the Preferred Stock in exchange solely for
shares of any other stock ranking subordinate to the Preferred Stock.
LIQUIDATION
In the event of a liquidation, dissolution or winding up of the
Company, the holders of the Offered Preferred Stock will be entitled,
subject to the rights of creditors, but before any distribution or
payment to the holders of Common Stock or any other security ranking
junior to the Offered Preferred Stock, to receive an amount per share
determined by the Board of Directors and set forth in the applicable
Prospectus Supplement plus accrued and unpaid dividends to the
distribution or payment date (whether or not earned or declared).
However, neither the merger, nor the sale, lease or conveyance of all
or substantially all of the assets of the Company will be deemed a
liquidation, dissolution or winding up of the Company for purposes of
this provision. In the event that the assets available for
distribution with respect to the Preferred Stock are not sufficient to
satisfy the full liquidation rights of all the outstanding Preferred
Stock, then such assets will be distributed to the holders of such
Preferred Stock ratably in proportion to the full amounts to which
they would otherwise be respectively entitled. After payment of the
full amount of the liquidation preference, the holders of Preferred
Stock will not be entitled to any further participation in any
distribution of assets by the Company.
VOTING RIGHTS
Except as required by law, the Preferred Stock will not be
entitled to any voting rights unless provided for in the applicable
14<PAGE>
Certificate of Designations and set forth in the applicable Prospectus
Supplement. As more fully described under "Description of Depositary
Shares" below, if the Company elects to issue Depositary Shares, each
representing a fraction of a share of a series of the Preferred Stock,
each such Depositary Share will, in effect, be entitled to such
fraction of a vote per Depositary Share.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or
other special rights except as set forth above or in the applicable
Prospectus Supplement, the Restated Certificate of Incorporation and
the applicable Certificate of Designation or as otherwise required by
law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Offered Preferred Stock
will be described in the applicable Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
The following is a description of certain general terms and
provisions of the Depositary Shares. The particular terms of any
series of Depositary Shares will be described in the applicable
Prospectus Supplement. If so indicated in a Prospectus Supplement,
the terms of any such series may differ from the terms set forth
below. The summary of terms of the Deposit Agreement (as defined
below) and of the Depositary Shares and Depositary Receipts (as
defined below) contained in this Prospectus does not purport to be
complete and is subject to, and qualified in its entirety by,
reference to the forms of the Deposit Agreement and Depositary
Receipts which will be filed with the Commission at or prior to the
time of the offering of such Depositary Shares.
GENERAL
The Company may, at its option, elect to offer fractional
interests in shares of Preferred Stock rather than shares of Preferred
Stock. In the event such option is exercised, the Company will
provide for the issuance by a Depositary to the public of receipts for
Depositary Shares ("Depositary Receipts"), each of which will
represent a fractional interest.
The shares of any series of the Preferred Stock underlying the
Depositary Shares will be deposited under a separate Deposit Agreement
(the "Deposit Agreement") between the Company and a bank or trust
company selected by the Company having its principal office in the
United States and having a combined capital and surplus of at least
$50,000,000 (the "Depositary"). The Prospectus Supplement relating to
15<PAGE>
a series of Depositary Shares will set forth the name and address of
the Depositary. Subject to the terms of the Deposit Agreement, each
owner of a Depositary Share will be entitled, in proportion to the
applicable fractional interest in a share of Preferred Stock
underlying such Depositary Shares, to all the rights and preferences
of the Preferred Stock underlying such Depositary Share (including
dividend, voting, redemption, conversion and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts
issued pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary
Receipts, the Depositary may, upon the written order of the Company,
issue temporary Depositary Receipts substantially identical to (and
entitling the holders thereof to all the rights pertaining to) the
definitive Depositary Receipts but not in definitive form. Definitive
Depositary Receipts will be prepared thereafter without unreasonable
delay, and temporary Depositary Receipts will be exchangeable for
definitive Depositary Receipts at the Company's expense.
Upon surrender of Depositary Receipts at the office of the
Depositary and upon payment of the charges provided in the Deposit
Agreement and subject to the terms thereof, a holder of Depositary
Shares is entitled to have the Depositary deliver to such holder the
whole shares of Preferred Stock underlying the Depositary Shares
evidenced by the surrendered Depositary Receipts.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the applicable Preferred Stock to
the record holders of Depositary Shares relating to such Preferred
Stock in proportion to the numbers of such Depositary Shares owned by
such holders on the relevant record date. The Depositary shall
distribute only such amount, however, as can be distributed without
attributing to any holder of Depositary Shares a fraction of one cent,
and any balance not so distributed shall be added to and treated as
part of the next sum received by the Depositary for distribution to
record holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary
will distribute property received by it to the record holders of
Depositary Shares entitled thereto, unless the Depositary determines
that it is not feasible to make such distribution, in which case the
Depositary may, with the approval of the Company, sell such property
and distribute the net proceeds from such sale to such holders.
The Deposit Agreement will also contain provisions relating to
the manner in which any subscription or similar rights offered by the
Company to holders of the Preferred Stock shall be made available to
holders of Depositary Shares.
16<PAGE>
REDEMPTION OF DEPOSITARY SHARES
If a series of the Preferred Stock underlying the Depositary
Shares is subject to redemption, the Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from
the redemption, in whole or in part, of such series of the Preferred
Stock held by the Depositary. The Depositary shall mail notice of
redemption not less than 30 and not more than 60 days prior to the
date fixed for redemption to the record holders of the Depositary
Shares to be so redeemed at their respective addresses appearing in
the Depositary's books. The redemption price per Depositary Share
will be equal to the applicable fraction of the redemption price per
share payable with respect to such series of the Preferred Stock.
Whenever the Company redeems shares of Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date
the number of Depositary Shares relating to shares of Preferred Stock
so redeemed. If less than all of the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected by lot
or pro rata as may be determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so
called for redemption will no longer be deemed to be outstanding and
all rights of the holders of the Depositary Shares will cease, except
the right to receive the moneys payable upon such redemption and any
money or other property to which the holders of such Depositary Shares
were entitled upon such redemption upon surrender to the Depositary of
the Depositary Receipts evidencing such Depositary Shares.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the
Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders
of the Depositary Shares relating to such Preferred Stock. Each
record holder of such Depositary Shares on the record date (which will
be the same date as the record date for such Preferred Stock) will be
entitled to instruct the Depositary as to the exercise of the voting
rights pertaining to the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such
instructions, and the Company will agree to take all action which may
be deemed necessary by the Depositary in order to enable the
Depositary to do so. The Depositary will abstain from voting shares
of Preferred Stock to the extent it does not receive specific
instructions from the holders of Depositary Shares relating to such
Preferred Stock.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares
and any provision of the Deposit Agreement may at any time be amended
by agreement between the Company and the Depositary. However, any
amendment which materially and adversely alters the rights of the
17<PAGE>
existing holders of Depositary Shares will not be effective unless
such amendment has been approved by the record holders of at least a
majority of the Depositary Shares then outstanding. The Deposit
Agreement may be terminated by the Company or the Depositary only if
(i) all outstanding Depositary Shares relating thereto have been
redeemed or (ii) there has been a final distribution in respect of the
Preferred Stock of the relevant series in connection with any
liquidation, dissolution or winding up of the Company and such
distribution has been distributed to the holders of the related
Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and
governmental charges arising solely from the existence of the
depositary arrangements. The Company will pay charges of the
Depositary in connection with the initial deposit of the Preferred
Stock and any redemption of the Preferred Stock. Holders of
Depositary Shares will pay other transfer and other taxes and
governmental charges and such other charges as are expressly provided
in the Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares
all reports and communications from the Company which are delivered to
the Depositary and which the Company is required to furnish to the
holders of the applicable Preferred Stock.
Neither the Depositary nor the Company will be liable if it is
prevented or delayed by law or any circumstance beyond its control in
performing its obligations under the Deposit Agreement. The
obligations of the Company and the Depositary under the Deposit
Agreement will be limited to performance in good faith of their duties
thereunder and they will not be obligated to prosecute or defend any
legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon
written advice of counsel or accountants, or information provided by
persons presenting Preferred Stock for deposit, holders of Depositary
Shares or other persons believed to be competent and on documents
believed to be genuine.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to the
Company notice of its election to do so, and the Company may at any
time remove the Depositary, any such resignation or removal to take
effect upon the appointment of a successor Depositary and its
acceptance of such appointment. Such successor Depositary must be
appointed within 60 days after delivery of the notice of resignation
or removal and must be a bank or trust company having its principal
18<PAGE>
office in the United States and having a combined capital and surplus
of at least $50,000,000.
DESCRIPTION OF DEBT SECURITIES
The following description of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the
Debt Securities offered by any Prospectus Supplement (the "Debt
Securities") will be described in the Prospectus Supplement relating
to such Debt Securities.
Senior Debt Securities ("Senior Debt Securities") are to be
issued under an indenture dated as of October 15, 1989 between the
Company and U.S. Bank Trust National Association (formerly known as
First Trust, National Association, as successor in interest to
Continental Bank, National Association), as Trustee, as supplemented
and amended by the First Supplemental Indenture dated as of August 26,
1991, and the Second Supplemental Indenture dated as of December 10,
1997 (collectively, the "Indenture"). Subordinated Debt Securities
("Subordinated Debt Securities," and together with the Senior Debt
Securities, "Debt Securities") are to be issued under a new indenture
or a supplement to the Indenture ("Subordinated Indenture"). A copy
of the Indenture has been included as an exhibit to the Registration
Statement. The following summary of certain provisions of the Debt
Securities and the Indentures does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the
provisions of the Indenture, which are incorporated by reference
herein. Capitalized terms used herein have the respective meanings
set forth in the Indenture, and references to sections are to sections
of the Indenture.
As of the date of this Prospectus, the Company has outstanding
under the Indenture $65,000,000 aggregate principal amount of its
9.50% Notes due November 1, 2001, $50,000,000 aggregate principal
amount of its 7.25% Notes due October 15, 2003 and $60,000,000
aggregate principal amount of its 6.875% Notes due December 15, 2007.
GENERAL
The Indenture provides that Debt Securities may be issued
thereunder, without limit as to aggregate principal amount, in one or
more series by the Company from time to time upon satisfaction of
certain conditions precedent. The Company may, from time to time, fix
the terms of such Debt Securities, including: (i) the title of the
Debt Securities; (ii) any limit upon the aggregate principal amount of
the Debt Securities; (iii) the date or dates on which the principal of
the Debt Securities is payable; (iv) the rate or rates (which may be
fixed or variable) per annum at which the Debt Securities will bear
interest, if any, the date or dates from which such interest will
accrue, the Interest Payment Dates on which such interest will be
19<PAGE>
payable and the Regular Record Date for the interest payable on any
Interest Payment Date; (v) the place or places where the principal of
and premium, if any, and interest on the Debt Securities will be
payable; (vi) the period or periods within which, the price or prices
at which and the terms and conditions upon which the Debt Securities
will, pursuant to any mandatory sinking fund provisions, or may,
pursuant to any optional sinking fund provisions, be redeemed in whole
or in part by the Company; (vii) the period or periods within which,
the price or prices at which and the terms and conditions upon which
the Debt Securities may be repaid, in whole or in part, at the option
of the Holder thereof; (viii) if other than denominations of $1,000
and any integral multiple thereof, the denominations in which the Debt
Securities may be repaid, in whole or in part, at the option of the
Holder thereof; (viii) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which the Debt
Securities shall be issuable; (ix) if the Debt Securities are Original
Issue Document Securities, the portion of principal of such Debt
Securities that shall be payable upon declaration of acceleration of
the Maturity thereof; and (x) any other terms of the Debt Securities.
Reference is made to the Prospectus Supplement for the terms of the
Offered Debt Securities being offered thereby. (Section 301)
The Debt Securities will be issued only in fully registered form
without coupons, in denominations set forth in the Prospectus
Supplement. No service charge will be made for any registration of
transfer or exchange of such Debt Securities, but the Company may
require payment of a sum sufficient to cover any tax or other
governmental charges that may be imposed in connection therewith.
Any principal, premium and interest will be payable, the transfer
of the Debt Securities will be registrable, and Debt Securities will
be exchangeable at the office or agency designated for such purpose in
the Prospectus Supplement. Payment of interest may be made at the
option of the Company by check mailed to the address of the person
entitled thereto as shown on the Security Register.
The Debt Securities will be unsecured and will rank pari passu
with all other unsecured and unsubordinated indebtedness of the
Company, except Subordinated Debt Securities will, to the extent set
forth in the Subordinated Indenture, be subordinated in right of
payment to the prior payment in full of all Senior Debt Securities.
Debt Securities may be issued under the Indenture as Original
Issue Discount Securities to be offered and sold at a substantial
discount from the principal amount thereof. If the Offered Debt
Securities are Original Issue Discount Securities, special federal
income tax, accounting and other considerations applicable thereto
will be described in the Prospectus Supplement relating thereto.
"Original Issue Discount Security" means any Debt Security which
provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration of Maturity thereof
20<PAGE>
upon the occurrence of an Event of Default and the continuation
thereof.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part
in the form of one or more global securities that will be deposited
with, or on behalf of, a Depositary ("Global Security Depositary") or
its nominee identified in the applicable Prospectus Supplement. In
such a case, one or more global securities will be issued in a
denomination or aggregate denominations equal to the portion of the
aggregate principal amount of outstanding Debt Securities of the
series to be represented by such global security or securities.
Unless and until it is exchanged in whole or in part for Debt
Securities in registered form, a global security may not be registered
for transfer or exchange except as a whole by the Global Security
Depositary for such global security to a nominee of such Depositary or
by a nominee of such Depositary to such Depositary or another nominee
of such Depositary or by such Depositary or any nominee to a successor
Depositary or a nominee of such successor Depositary and except in the
circumstances described in the applicable Prospectus Supplement.
The specific terms of the depositary arrangement with respect to
any portion of a series of Debt Securities to be represented by a
global security will be described in the applicable Prospectus
Supplement. However, the Company expects that the following
provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus
Supplement, Debt Securities which are to be represented by a global
security to be deposited with or on behalf of a Global Security
Depositary will be represented by a global security registered in the
name of such Depositary or its nominee. Upon the issuance of such
global security, and the deposit of such global security with or on
behalf of the Global Security Depositary for such global security,
such Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Debt
Securities represented by such global security to the accounts of
institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by
the underwriters or agents of such Debt Securities or by the Company,
if such Debt Securities are offered and sold directly by the Company.
Ownership of beneficial interests in such global security will be
limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests by participants in
such global security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained
by the Global Security Depositary or its nominee for such global
security. Ownership of beneficial interests in such global security
by persons that hold through participants will be shown on, and the
transfer of that ownership interest within such participant will be
effected only through, records maintained by such participant. The
21<PAGE>
laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated
form. The foregoing limitations and such laws may impair the ability
to transfer beneficial interests in such global securities.
So long as the Global Security Depositary for a global security,
or its nominee, is the registered owner of such global security, such
Depositary or such nominee, as the case may be, will be considered the
sole owner or Holder of the Debt Securities represented by such global
security for all purposes under the Indenture. Unless otherwise
specified in the applicable Prospectus Supplement, owners of
beneficial interests in such global security will not be entitled to
have Debt Securities of the series represented by such global security
registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated
form and will not be considered the Holders thereof for any purposes
under the Indenture. Accordingly, each person owning a beneficial
interest in such global security must rely on the procedures of the
Global Security Depositary and, if such person is not a participant,
on the procedures of the participant through which such person owns
its interest, to exercise any rights of a Holder under the Indenture.
The Company understands that under existing industry practices, if the
Company requests any action of holders or an owner of a beneficial
interest in such global security desires to give any notice or take
any action a Holder is entitled to give or take under the Indenture,
the Global Security Depositary would authorize the participants to
give such notice or take such action, and participants would authorize
beneficial owners owning through such participants to give such notice
or take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Principal of and any premium and interest on a global security
will be payable in the manner described in the applicable Prospectus
Supplement.
CERTAIN DEFINITIONS
The term "Subsidiary" is defined as a corporation a majority of
the outstanding voting stock of which is owned, directly or
indirectly, by the Company and/or one or more Subsidiaries of the
Company. The term "Restricted Subsidiary" is defined as any
Subsidiary of the Company except (a) a Subsidiary which neither
transacts any substantial portion of its business nor regularly
maintains any substantial portion of its fixed assets within the
United States and/or Canada, or which is engaged primarily in
financing the operations of the Company or its Subsidiaries outside
the United States and Canada and (b) AAR Financial Services Corp. and
any Subsidiary of the Company created or acquired after the date of
the Indenture the primary business of which consists of financing
operations in connection with leasing and conditional sales
transactions on behalf of the Company and the Subsidiaries of the
Company, or which is otherwise primarily engaged in the business of a
22<PAGE>
finance company. The term "Principal Property" is defined to include
any single manufacturing, production, distribution or service
facility, plant or warehouse owned or leased by the Company or any
Restricted Subsidiary (excluding all related land but including
fixtures, machinery and equipment) which is located within the United
States or Canada and the gross book value (without deduction of any
depreciation reserves) of which on the date as of which the
determination is being made exceeds 1% of Consolidated Net Tangible
Assets, other than any such facility, plant or warehouse or portion
thereof which, in the opinion of the Board of Directors, is not of
material importance to the total business conducted by the Company and
its subsidiaries as an entirety. As of the date hereof, approximately
ten of the Company's properties would be Principal Properties. The
term "Attributable Debt" is defined to mean the total net amount of
rent required to be paid during the remaining term of certain leases,
discounted at the weighted average rate per annum borne by the Debt
Securities compounded semi-annually. The term "Consolidated Net
Tangible Assets" is defined as the aggregate amount of assets (less
applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any thereof
constituting Funded Debt by reason of their being renewable or
extendible) and (b) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, all
as set forth on the most recent consolidated balance sheet of the
Company and its consolidated and computed in accordance with generally
accepted accounting principles. (Section 101)
RESTRICTIONS ON SECURED DEBT
If the Company or any Restricted Subsidiary shall incur, issue,
assume or guarantee any Debt secured by a Mortgage on any Principal
Property or by a Mortgage on any shares of stock or Debt of any
Restricted Subsidiary, the Company will secure or cause such
Restricted Subsidiary to secure the Debt Securities, equally and
ratably with (or prior to) such Secured Debt, unless after giving
effect thereto the aggregate amount of all such Debt so secured,
together with all Attributable Debt in respect of sale and leaseback
transactions involving Principal Properties (see "Restrictions on
Sales and Leasebacks" below), would not exceed 10% of Consolidated Net
Tangible Assets. This restriction will not apply to, and there will
be excluded from secured Debt in any computation under such
restriction, Debt secured by (a) Mortgages on property of, or on any
shares of stock or Debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary, (b) Mortgages on
property, shares of stock or Debt existing at the time of acquisition
thereof (including acquisition through merger or consolidation), (c)
Mortgages on property, shares of stock or Debt hereafter acquired (or,
in the case of property, constructed) by the Company or any Restricted
Subsidiary and created prior to, at the time of, or within 120 days
after acquisition (or, in the case of property, the completion of
construction and commencement of commercial operation, whichever is
later) to secure or provide for the purchase price (or, in the case of
23<PAGE>
property, construction price) thereof, (d) Mortgages in favor of the
Company or a Restricted Subsidiary, (e) Mortgages in favor of the
United States or any State thereof, or Canada or any Province thereof,
or any instrumentality of any thereof to secure progress, advance or
other payments pursuant to any contract or provision of any statute,
and (f) any extension, renewal or replacement of any Mortgage referred
to in the foregoing clauses (a) through (e), inclusive. (Section
1007)
RESTRICTIONS ON CERTAIN UNSECURED DEBT
The Debt (other than Secured Debt referenced under "Restrictions
on Secured Debt" above) of all consolidated Restricted Subsidiaries
may not exceed 15% of the Consolidated Net Tangible Assets of the
Company. (Section 1011)
MERGER AND CONSOLIDATION
The Company may not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, or permit any Person to
consolidate with or merge into the Company or convey, transfer or
lease its properties and assets substantially as an entirety to the
Company, unless (i) either the Company shall be the continuing
corporation or the successor or purchasing Person shall be a domestic
corporation and shall expressly assume the payment of the principal of
and premium, if any, and interest, if any, on the Debt Securities and
the performance of every covenant of the Indenture binding upon the
Company, (ii) immediately after such transaction no Event of Default,
and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing,
(iii) if, as a result of the transaction, properties or assets of the
Company would become subject to an encumbrance not permitted by the
Indenture, the Company or such successor corporation or Person shall
take steps necessary to secure the Debt Securities equally and ratably
with (or prior to) all indebtedness secured by such encumbrance and
(iv) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel stating that such transaction complies with
the Indenture. (Section 801)
RESTRICTIONS ON SALES AND LEASEBACKS
Neither the Company nor any Restricted Subsidiary may enter into
any sale and leaseback transaction involving any Principal Property,
completion of construction and commencement of commercial operation of
which has occurred more than 120 days prior thereto, unless (a) the
Company or such Restricted Subsidiary could mortgage such property
pursuant to the restrictions on secured Debt described above in an
amount equal to the Attributable Debt with respect to the sale and
leaseback transaction without equally and ratably securing the Debt
Securities or (b) the Company, within 120 days, applies to the
retirement of its Funded Debt an amount equal to the greater of (i)
24<PAGE>
the net proceeds of the sale of the Principal Property so leased
pursuant to such arrangement or (ii) the fair value of the Principal
Property so leased (subject to credits for certain voluntary
retirements of Funded Debt and Debt Securities). This restriction
will not apply to any sale and lease-back transaction (a) between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries
or (b) involving a lease for a period of less than three years.
(Section 1008)
MODIFICATION AND WAIVER
Modification and amendment of the Indenture may be effected by
the Company and the Trustee with the consent of the Holders of not
less than 66 % in principal amount of the Outstanding Debt Securities
of each series affected thereby, provided that no such modification or
amendment may, without the consent of the Holder of each Outstanding
Security affected thereby, (a) change the Stated Maturity of any
installment of principal of, or interest on, any Debt Security or
change the redemption price; (b) reduce the principal amount of, or
interest on, any Debt Security; (c) change the place or currency of
any payment of principal or interest on any Debt Security; (d) impair
the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security; (e) reduce the percentage in
principal amount of Outstanding Debt Securities of any series, the
consent of whose Holders is required to modify or amend the Indenture;
or (f) modify the foregoing requirements or reduce to less than a
majority the percentage of Outstanding Debt Securities necessary to
waive any past default. Except with respect to certain fundamental
provisions, the Holders of not less than a majority in principal
amount of Outstanding Debt Securities of any series may, with respect
to such series, waive past defaults under the Indenture and waive
compliance by the Company with certain provisions of the Indenture.
(Sections 902, 513)
EVENTS OF DEFAULT
Under the Indenture, the following will be Events of Default with
respect to any series of Debt Securities: (a) default in the payment
of any interest upon any Debt Security of that series when due,
continued for 30 days; (b) default in the payment of any principal or
premium, if any, on any Debt Security of that series when due; (c)
default in the deposit of any sinking fund payment, when due, in
respect of any Debt Security of that series; (d) default in the
performance, or breach, of any other covenant or warranty of the
Company contained in the Indenture or in the Debt Securities of such
series, continued for 60 days after written notice as provided in the
Indenture; (e) acceleration of any indebtedness for money borrowed in
an aggregate principal amount exceeding $10,000,000 by the Company
under the terms of the instrument under which such indebtedness is
issued or secured, if such acceleration is not annulled, or such
indebtedness is not discharged, within 10 days after written notice as
provided in the Indenture; (f) certain events in bankruptcy,
25<PAGE>
insolvency or reorganization; and (g) any other Event of Default with
respect to Debt Securities of that series. The Trustee or the Holders
of 25% in principal amount of the Outstanding Debt Securities of that
series may declare the principal amount of all Outstanding Debt
Securities of that series due and payable immediately if any Event of
Default with respect to Debt Securities of such series shall occur and
be continuing at the time of declaration. At any time after
declaration of acceleration has been made with respect to Debt
Securities of any series but before a judgment or decree for payment
of money due has been obtained by the Trustee, the Holders of a
majority in principal amount of Outstanding Debt Securities of that
series may rescind any declaration of acceleration and its
consequences, if all payments due (other than those due as a result of
acceleration) have been made and all Events of Default have been cured
or waived. Any Event of Default with respect to Debt Securities of
any series may be waived by the Holders of a majority in principal
amount of all Outstanding Debt Securities of that series, except a
default (i) in the payment of principal or premium, if any, or
interest on any Debt Security of that series or (ii) in respect of a
covenant or provision which cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of such series
affected. (Sections 501, 502, 513)
The Holders of a majority in principal amount of the Outstanding
Debt Securities of a series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to
Debt Securities of such series, provided that such direction shall not
be in conflict with any rule of law or the Indenture. Before
proceeding to exercise any right or power under the Indenture at the
direction of such Holders, the Trustee shall be entitled to receive
from such Holders reasonable indemnity against the costs, expenses and
liabilities which might be incurred by it in complying with any such
direction. (Sections 512, 507)
The Company is required to furnish to the Trustee annually a
statement as to the fulfillment by the Company of all of its
obligations under the Indenture.
REGARDING THE TRUSTEE
U.S. Bank Trust National Association (formerly known as First
Trust, National Association, as successor in interest to Continental
Bank, National Association) is currently the trustee with respect to
the Company's 9.50% Notes due November 1, 2001, 7.25% Notes due
October 15, 2003, and 6.875% Notes due December 15, 2007 outstanding
under the Indenture.
26<PAGE>
DESCRIPTION OF WARRANTS
GENERAL
The Company may issue Warrants, including Warrants to purchase
Debt Securities ("Debt Warrants"), as well as other types of Warrants
("Other Warrants"). Warrants may be issued independently or together
with any securities and may be attached to or separate from such
Securities. Each series of Warrants will be issued under a separate
warrant agreement (each a "Warrant Agreement") to be entered into
between the Company and a warrant agent ("Warrant Agent"). The
Warrant Agent will act solely as an agent of the Company in connection
with the Warrants of such series and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial
owners of Warrants. The summary of terms of the Debt Warrants and the
Other Warrants contained in this Prospectus does not purport to be
complete and is subject to, and qualified in its entirety by reference
to, the form of the Warrant Agreement which has been or will be filed
with the Commission at or prior to the time of the offering of such
Warrants.
DEBT WARRANTS
The Prospectus Supplement relating to particular Debt Warrants
offered thereby will describe the following terms of such Debt
Warrants: (i) the title of such Debt Warrants; (ii) the aggregate
number of such Debt Warrants; (iii) the price or prices at which such
Debt Warrants will be issued; (iv) the currency or currencies,
including composite currencies, in which the price of such Debt
Warrants may be payable; (v) the designation, aggregate principal
amount and term of the Debt Securities purchasable upon exercise of
such Debt Warrants; (vi) if applicable, the designation and terms of
the Debt Securities with which such Debt Warrants are issued and the
number of such Debt Warrants issued with each such Debt Security;
(vii) the currency or currencies, including composite currencies, in
which the principal of or any premium or interest on the Debt
Securities purchasable upon exercise of such Debt Warrant will be
payable; (viii) if applicable, the date on and after which such Debt
Warrants and the related Debt Securities will be separately
transferable; (ix) the price at which and currency or currencies,
including composite currencies, in which the Debt Securities
purchasable upon exercise of such Debt Warrants may be purchased; (x)
the date on which the right to exercise such Debt Warrants shall
commence and the date on which such right shall expire; (xi) if
applicable, the minimum or maximum amount of such Debt Warrants which
may be exercised at any one time; (xii) information with respect to
book-entry procedures, if any; (xiii) if applicable, a discussion of
certain United States Federal income tax considerations; and (xiv) any
other terms of such Debt Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Debt
Warrants.
27<PAGE>
OTHER WARRANTS
The Prospectus Supplement relating to particular Other Warrants
offered thereby will describe the following terms of such Other
Warrants: (i) the title of such Other Warrants; (ii) the securities
(which may include Preferred Stock, Depositary Shares or Common Stock)
for which such Other Warrants are exercisable; (iii) the price or
prices at which such Other Warrants will be issued; (iv) the currency
or currencies, including composite currencies, in which the price of
such Other Warrants may be payable; (v) if applicable, the designation
and terms of the Debt Securities, Preferred Stock or Depositary Shares
with which such Other Warrants are issued and the number of such Other
Warrants issued with each such Debt Security, share of Preferred Stock
or Depositary Share; (vi) if applicable, the date on and after which
such Other Warrants and the related Debt Securities, Preferred Stock
or Depositary Shares will be separately transferable; (vii) if
applicable, a discussion of certain United States Federal income tax
considerations; and (viii) any other terms of such Other Warrants,
including terms, procedures and limitations relating to the exchange
and exercise of such Other Warrants.
PLAN OF DISTRIBUTION
The Company may sell Securities to or through underwriters and
also may sell Securities directly to other purchasers or through
agents. Any such underwriter(s) or agent(s) included in the offer and
sale of Securities will be named in the applicable Prospectus
Supplement.
The distribution of the Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may
be changed, or at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated
prices.
In connection with the sale of Securities, underwriters may
receive compensation from the Company or from purchasers of Securities
for whom they act as agents in the form of discounts, concessions or
commissions. Underwriters may sell Securities to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Underwriters,
dealers and agents that participate in the distribution of Securities
may be deemed to be underwriters, and any discounts or commissions
received by them from the Company and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and
commissions, under the Securities Act.
A Prospectus Supplement will set forth the terms of Securities
offered hereby, including the name or names of any underwriters, the
purchase price of Securities, and proceeds to the Company from the
28<PAGE>
sale, any underwriting discounts and other items constituting
underwriters' compensation, any public offering price, any discounts
or concessions allowed or reallowed or paid to dealers, and any
securities exchange or market on which Securities may be listed. Only
underwriters so named in such Prospectus Supplement are deemed to be
underwriters in connection with Securities offered thereby.
Under agreements which may be entered into by the Company,
underwriters and agents who participate in the distribution of
Securities may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, the Company will
authorize underwriters or other persons acting as the Company's agents
to solicit offers by certain institutions to purchase Securities from
the Company pursuant to contracts providing for payment and delivery
on a future date. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions
and others, but in all cases such institutions must be approved by the
Company. The obligations of any purchaser under any such contract
will be subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and
such other agents will not have any responsibility in respect of the
validity or performance of such contracts.
LEGAL OPINIONS
The validity of any Securities will be passed upon for the
Company by Schiff Hardin & Waite, Chicago, Illinois, and for the
Underwriters by counsel selected by the Underwriters and acceptable to
the Company.
EXPERTS
The consolidated financial statements of the Company incorporated
by reference in this Prospectus, and elsewhere in the registration
statement, have been audited by KPMG Peat Marwick LLP, independent
certified public accountants, as indicated in their reports with
respect thereto and are included or incorporated by reference herein
in reliance on the authority of such firm as experts in auditing and
accounting.
29<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of
Securities being registered are estimated as follows:
Securities and Exchange Commission registration fee . . $59,000*
Accounting fees and expenses . . . . . . . . . . . . . 25,000
Legal fees and expenses . . . . . . . . . . . . . . . . 50,000
Printing expenses . . . . . . . . . . . . . . . . . . . 50,000
Trustee's fees and expenses . . . . . . . . . . . . . . 50,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . 6,000
-------
Total . . . . . . . . . . . . . . . . . . . . . . . 240,000
-------
__________
* Actual. All other expenses are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Fourteenth of the Registrant's Restated Certificate of
Incorporation provides that no director of the Registrant shall have
personal liability to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, but this provision
does not eliminate or limit the liability of a director (a) for any
breach of the director's duty of loyalty to the Registrant or its
stockholders, (b) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (c)
under section 174 of the General Corporation Law of the State of
Delaware (the "GCL") or (d) for any transaction from which the
director derived an improper personal benefit.
Reference is made to Section 145 of the GCL, which provides for
indemnification of directors and officers in certain circumstances.
Article Fifteenth of the Registrant's Restated Certificate of
Incorporation provides for indemnification of the Registrant's
officers and directors (and those serving in such capacity with
another corporation at the request of the Registrant) to the fullest
extent provided by the GCL and other applicable laws as currently in
effect and as they may be amended in the future.
The Registrant has directors' and officers' liability insurance
which provides, subject to certain policy limits, deductible amounts
and exclusions, coverage for all persons who have been, are or may in
the future be, directors or officers of the Registrant against amounts
which such persons must pay resulting from claims made against them by
reason of their being such directors or officers during the policy
II-1<PAGE>
period for certain breaches of duty, omissions or other acts done or
wrongfully attempted or alleged.
The Registrant has entered into Indemnification Agreements with
each of its directors and executive officers containing, among other
things, provisions similar to those in the Registrant's Restated
Certificate of Incorporation, including provisions requiring
indemnification to the full extent permitted by the GCL and the prompt
advancement of expenses under certain circumstances. In addition, the
Indemnification Agreements required the Registrant to maintain
directors' and officers' liability insurance at specified levels,
subject to certain exceptions, and, if such coverage is not
maintained, to indemnify the directors and executive officers to the
full extent of such coverage.
The Underwriting Agreement to be filed as an exhibit hereto will
provide for the indemnification of directors and officers of the
Registrant by the Underwriters under certain circumstances.
ITEM 16. EXHIBITS
The Exhibits filed herewith are set forth on the Exhibit Index
filed as part of this Registration Statement.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
II-2<PAGE>
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement is on
Form S-3, Form S-8 or Form F-3, and the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such directors, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
II-3<PAGE>
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-4<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wood Dale,
State of Illinois, on the 13th day of May, 1998.
AAR CORP.
(Registrant)
By /s/ DAVID P. STORCH
-------------------------------
David P. Storch
President and Chief Executive
Officer<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned,
being a director or officer, or both, of AAR CORP., a Delaware
corporation, hereby constitutes and appoints David P. Storch and
Howard A. Pulsifer, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments (including
post-effective amendments and including any filings pursuant to Rule
462(b) under the Securities Act of 1933, as amended) to this
Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite,
necessary or advisable to be done, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them,
or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ IRA A. EICHNER Chairman of the Board and Founder, May 13, 1998
------------------------------ Director
Ira A. Eichner
/s/ DAVID P. STORCH President and Chief Executive May 13, 1998
------------------------------ Director (Principal
David P. Storch Officer, Executive Officer)
/s/ TIMOTHY J. ROMENESKO Vice President and Chief Financial May 13, 1998
------------------------------ Officer (Principal Financial and
Timothy J. Romenesko Accounting Officer)
/s/ A. ROBERT ABBOUD Director May 13, 1998
------------------------------
A. Robert Abboud
/s/ HOWARD B. BERNICK Director May 13, 1998
------------------------------
Howard B. Bernick
/s/ EDGAR D. JANNOTTA Director
------------------------------
Edgar D. Jannotta<PAGE>
Signature Title Date
--------- ----- ----
/s/ ROBERT D. JUDSON Director May 13, 1998
------------------------------
Robert D. Judson
ERWIN E. SCHULZE Director
------------------------------
Erwin E. Schulze
/s/ JOEL D. SPUNGIN Director May 13, 1998
------------------------------
Joel D. Spungin
/s/ LEE B. STERN Director May 13, 1998
------------------------------
Lee B. Stern
/s/ RICHARD D. TABERY Director May 13, 1998
------------------------------
Richard D. Tabery<PAGE>
</TABLE>
EXHIBIT INDEX
Exhibit Description
------- -----------
1. Underwriting 1.1 Form of Debt Underwriting
Agreement Agreement.
1.2 Form of Equity Underwriting
Agreement.
3. Articles of 3.1 Restated Certificate of
Incorporation and Incorporation;(1) Amendments
By-Laws thereto dated November 3,
1987(2) and (2) October 19,
1988(2)
3.2 By-Laws as amended.(2)
Amendment thereto dated April
12, 1994.(5)
4. Instruments defining 4.1 Restated Certificate of
the rights of Incorporation and Amendments
security holders (see Exhibit 3.1).
4.2 By-Laws, as amended. (See
Exhibit 3.2).
4.3 Credit Agreement dated September
9, 1996 between the Registrant
and Bank of America,
Illinois.(6)
4.4 Rights Agreement between the
Registrant and the First
National Bank of Chicago dated
July 8, 1997.(10)
4.5 Indenture dated October 15, 1989
between the Registrant and U.S.
Bank Trust National Association
(formerly known as First Trust,
National Association, as
successor in interest to
Continental Bank, National
Association), as Trustee,
relating to debt securities (3);
First Supplemental Indenture
thereto dated August 26,
1991;(4) Second Supplemental
Indenture dated December 10,
1997.(7)<PAGE>
4.6 Officers' Certificates Relating
to Debt Securities dated October
24, 1989 and October 12, 1993.
(9)
4.7 Second Amended and Restated
Credit Agreement dated February
10, 1998 between the Registrant
and The First National Bank of
Chicago.(8)
4.8 Credit Agreement dated November
1, 1997 between the Registrant
and The Northern Trust Company.
4.9 Form of Deposit Agreement.
4.10 Form of Warrant Agreement.
5. Opinion regarding 5.1 Opinion of Schiff Hardin &
legality Waite.
12. Statement re 12.1 Statement of computation of
Computation of ratio of earnings to fixed
Ratios charges.
23. Consents of experts 23.1 Consent of Schiff Hardin & Waite
and counsel (included in its opinion filed
as Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick
LLP.
24. Power of attorney 24.1 Powers of attorney are granted
by the persons executing this
Registration Statement as set
forth on the signature page.
25. Statement of 25.1 Form T-1 Statement of
eligibility of Eligibility under the Trust
Trustee Indenture Act of U.S. Bank Trust
National Association (formerly
known as First Trust, National
Association, as successor in
interest to Continental Bank,
National Association).
_______________
Notes:
(1) Incorporated by reference to Exhibits to the Registrant's Annual
Report on Form 10-K for the fiscal year ended May 31, 1997.<PAGE>
(2) Incorporated by reference to Exhibits to the Registrant's Annual
Report on Form 10-K for the fiscal year ended May 31, 1989.
(3) Incorporated by reference to Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1989.
(4) Incorporated by reference to Exhibits to the Registrant's
Registration Statement on Form S-3 filed August 27, 1991.
(5) Incorporated by reference to Exhibits to the Registrant's Annual
Report on Form 10-K for the fiscal year ended May 31, 1994.
(6) Incorporated by reference to Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended November 30,
1996.
(7) Incorporated by reference to Exhibits to the Registrant's
Registration Statement on Form S-3 filed December 10, 1997.
(8) Incorporated by reference to Exhibits to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended February 28,
1998.
(9) Incorporated by reference to Exhibits to the Registrant's Current
Reports on Form 8-K dated October 24, 1989 and October 12, 1993,
respectively.
(10) Incorporated by reference to Exhibits to the Registrant's Current
Report on Form 8-K dated August 4, 1997.<PAGE>
EXHIBIT 1.1
AAR CORP.
DEBT SECURITIES
UNDERWRITING AGREEMENT
_____________________, ______
[Underwriters]
Ladies and Gentlemen:
AAR CORP., a Delaware corporation (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 $____________ principal amount of the Debt Securities 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.
333-_______) 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
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<PAGE>
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 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
2<PAGE>
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 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 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;
3<PAGE>
(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 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 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 U.S. Bank Trust National
Association (formerly known as First Trust, 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;
4<PAGE>
(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 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, insofar as
they purport to constitute a summary of the terms of the Securities,
and 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
5<PAGE>
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 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 _____% of the principal
amount thereof, plus accrued interest, if any, from _________________
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
6<PAGE>
with The Depository Trust Company ("DTC") or its designated custodian.
The Company will deliver the Securities to ________________, 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 ________________ at DTC. The Company will cause the
certificates representing the Securities to be made available to
________________ for checking at least ______________ 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 ________________, on _____________
or such other time and date as ________________ 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 ________________________
(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 ________________ time, on
__________________, 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.
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 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
7<PAGE>
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 ______________ 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 _______________ 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 security holders as
soon as practicable, but in any event not later than ______________
after the effective date of the Registration Statement (as defined in
Rule 158(c)), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
8<PAGE>
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;
(f) 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
(g) 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.
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
9<PAGE>
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:
(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) ____________________, 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, 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,
10<PAGE>
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 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,
insofar as they purport to constitute a summary of the terms
of the Securities, are accurate and complete in all material
respects;
11<PAGE>
(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 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
12<PAGE>
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,
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-assessable;
(iii) 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 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 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);
13<PAGE>
(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 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
14<PAGE>
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
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 ________________, 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;
(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
15<PAGE>
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;
(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
16<PAGE>
this Section and as to such other matters as you may reasonably
request; and
(i) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of Prospectuses on
________________.
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
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 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.
17<PAGE>
(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 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
18<PAGE>
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 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
19<PAGE>
within _______ 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 _______ 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 _________, 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 __________ 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 ________ 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
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
20<PAGE>
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 defense 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 ________________ 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
________________ at ________________________; and if to the Company
21<PAGE>
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 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 ______________.
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
22<PAGE>
examination upon request, but without warranty on your part as to the
authority of the signers thereof.
Very truly yours,
AAR CORP.
By:
__________________________________
Name:
Title:
Accepted as of the date hereof:
[Underwriters]
By:
_____________________________________
On behalf of each of the Underwriters
23<PAGE>
SCHEDULE I
PRINCIPAL AMOUNT OF SECURITIES TO BE PURCHASED
_________________________
Underwriter
-----------
. . . . . . . . . . . . . . . . . . $_________
. . . . . . . . . . . . . . . . . . __________
Total . . . . . . . . . . . . . . . $_________
24<PAGE>
EXHIBIT 1.2
AAR CORP.
EQUITY UNDERWRITING AGREEMENT
________________, _____
[Underwriters]
Ladies and Gentlemen:
AAR CORP., a Delaware corporation (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 _____________ shares (the "Firm Shares") and, at the
election of the Underwriters, up to ____________ additional shares
(the "Optional Shares") of Common Stock, par value $1.00, Preferred
Stock, par value $1.00, and/or Depositary Shares (referred to herein
individually or collectively as "Stock") of the Company (the Firm
Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof being collectively called the "Shares").
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.
333-______) (the "Initial Registration Statement") in respect of the
Shares has been filed with the Securities and Exchange Commission (the
"Commission"); the Initial 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, to you for each of the other Underwriters, have been declared
effective by the Commission in such form (other than a registration
statement, if any, increasing the size of the offering (a "Rule 462(b)
Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective
upon filing), no other document with respect to the Initial
Registration Statement or document incorporated by reference therein
has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of the Initial Registration Statement,
any post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, 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 the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act is
hereinafter called a "Preliminary Prospectus"; the various parts of
the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto 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<PAGE>
with Section 5(a) hereof and deemed by virtue of Rule 430A under the
Act to be part of the Initial Registration Statement at the time it
was declared effective and (ii) the documents incorporated by
reference in the prospectus contained in the Initial 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 or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; such
final prospectus, in the form first filed pursuant to Rule 424(b)
under the Act, 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 Initial 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 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 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
2<PAGE>
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 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 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 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 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
(as defined in Section 14) has sustained since the date of the latest
audited financial statements included or incorporated by reference in
the Prospectus any material 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; 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, the Company and its
subsidiaries have not incurred any material liabilities or
obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business and there has not
been 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 described in the Prospectus or such as do not materially affect
3<PAGE>
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; 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 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, are fully paid and non-assessable and conform
to the description of the 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 are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims;
(i) The unissued Shares to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus; the Company has not agreed, orally or in
writing, to issue or sell any shares of its capital stock to any
person, other than pursuant to this Agreement or as set forth in the
Prospectus;
4<PAGE>
(j) This Agreement has been duly authorized, executed
and delivered by the Company. The issue and sale of the Shares by the
Company and the compliance by the Company with all of the provisions
of 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 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 Shares being sold
hereunder; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act
of the Shares 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 Shares 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 insofar
as they purport to constitute a summary of the terms of the Stock and
insofar as they purport to describe the provisions of the documents
referred to therein, are accurate and complete in all respects;
(m) Neither the Company nor any of its subsidiaries
has taken or will take, direct or indirectly, any action designed to,
or that might reasonably be expected to, cause or result in the
stabilization or manipulation in the price of the Stock;
(n) 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
5<PAGE>
the current or future consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries;
to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(o) The Company is not and, after giving effect to the
offering and sale of the Shares, 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");
(p) 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;
(q) 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
(r) 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 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,
(a) 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 per share of
$_______________, the number of Shares set forth opposite the name of
such Underwriter in Schedule I hereto and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, 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 the
purchase price per share set forth in clause (a) of this Section 2,
that portion of the number of Optional Shares as to which such
6<PAGE>
election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction, the numerator of which is the maximum
number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in
Schedule I hereto and the denominator of which is the maximum number
of Optional Shares that all of the Underwriters are entitled to
purchase hereunder.
The Company hereby grants to the Underwriters the right to
purchase at their election up to ___________ Optional Shares, at the
purchase price per share set forth in the paragraph above, for the
sole purpose of covering overallotments in the sale of the Firm
Shares. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Company, given within
a period of 30 calendar days after the date of this Agreement, setting
forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined
by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise
agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the
Firm Shares, the several Underwriters propose to offer the Firm Shares
for sale upon the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations
and registered in such names as _______________________ may request
upon at least ___________ prior notice to the Company shall be
delivered by or on behalf of the Company to _______________________,
through the facilities of the Depository Trust Company ("DTC"), for
the account of such 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. The Company will cause the certificates
representing the Shares to be made available for checking and
packaging at least _______________________ prior to the Time of
Delivery (as defined below) with respect thereto at the office of DTC
or its designated custodian (the "Designated Office"). The time and
date of such delivery and payment shall be, with respect to the Firm
Shares,_______________________, on _____________________ or such other
time and date as the Underwriter(s) and the Company may agree upon in
writing, and, with respect to the Optional Shares, _________________,
on the date specified by the Underwriter(s) in the written notice
given by the Underwriter(s) of the Underwriters' election to purchase
such Optional Shares, or such other time and date as the
Underwriter(s) and the Company may agree upon in writing. Such time
and date for delivery of the Firm Shares is herein called the "First
Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the
7<PAGE>
"Second Time of Delivery", and each such time and date for delivery is
herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of
Delivery by or on behalf of the parties hereto pursuant to Section 7
hereof, including the cross receipt for the Shares and any additional
documents requested by the Underwriters pursuant to Section 7(k)
hereof, will be delivered at the offices of
______________________________________________ (the "Closing
Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery. A meeting will be held at the Closing
Location at __________________________, on __________________________,
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.
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
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
last 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 Shares; 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 Shares 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, promptly to 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 Shares for offering and sale
under the securities laws of such jurisdictions as you may request and
8<PAGE>
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 Shares, 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) Prior to _________________, on ___________________
and from time to time, to furnish the Underwriters with copies of the
Prospectus in ______________ in such quantities as you may reasonably
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of _______________________ after the time of
issue of the Prospectus in connection with the offering or sale of the
Shares 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 the 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 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 or the Exchange 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 Shares at any time
_________________ 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 ____________
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Act), 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 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 date ___________ after the date of
the Prospectus, not to (i) offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder any securities of the Company
that are substantially similar to the Shares, including but not
limited to any securities that are convertible into or exchangeable
for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee
stock option plans existing on the date of this Agreement or up to
_______ shares in connection with the acquisition of other businesses
9<PAGE>
by the Company) or (ii) file any registration statement under the Act
with respect to Stock, securities convertible into or exchangeable for
Stock, rights or warrants to acquire Stock, or any other securities
substantially similar to Stock (other than with respect to the
aforementioned employee stock plans and acquisitions), in each case
without the prior written consent of the Representatives;
(f) To furnish to its stockholders as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and make available to its
stockholders, as soon as practicable after the end of each of the
first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the effective date of the Registration
Statement), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(g) During a period of ________ from the effective
date of the Registration Statement, 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 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);
(h) To use the net proceeds received by it from the
sale of the Shares pursuant to this Agreement in the manner specified
in the Prospectus;
(i) To use its best efforts to list, subject to notice
of issuance, the Shares on the New York Stock Exchange (the
"Exchange"); and
(j) If the Company elects to rely upon Rule 462(b),
the Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by _______________________,
on the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
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
Shares under the Act and all other expenses in connection with the
10<PAGE>
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, closing
documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the
Shares; (iii) all expenses in connection with the qualification of the
Shares 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) all fees and expenses in connection with listing the Shares on
the Exchange; (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with,
securing any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost of
preparing stock certificates; (vii) the cost and charges of any
transfer agent or registrar; and (viii) 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, stock
transfer taxes on resale of any of the Shares by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to
the Shares to be delivered at each Time of Delivery, 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 such 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:
(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; if the Company has elected
to rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have become effective by ____________________, on the date of this
Agreement; 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) ____________________________, counsel for the
Underwriters, shall have furnished to you such opinion or opinions,
dated such Time of Delivery, with respect to the incorporation of the
Company, the validity of the Shares being delivered at such Time of
Delivery, the Registration Statement, the Prospectus and such other
11<PAGE>
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, 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 and outstanding
capitalization as set forth in the Prospectus, and all of
the issued shares of capital stock of the Company (including
the Shares being delivered at such Time of Delivery) have
been duly and validly authorized and issued and are fully
paid and non-assessable; and the Shares conform to the
description of the Stock contained in the Prospectus;
(iii) This Agreement has been duly authorized,
executed and delivered by the Company;
(iv) The issue and sale of the Shares being delivered
at such Time of Delivery by the Company and the compliance
by the Company with all of the provisions of 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 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;
(v) 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 Shares or the consummation by the
Company of the transactions contemplated by this Agreement,
except the registration under the Act of the Shares, and
such consents, approvals, authorizations, filings,
registrations or qualifications as may be required under
12<PAGE>
state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters;
(vi) The statements set forth in the Prospectus
insofar as they purport to constitute a summary of the terms
of the Stock and insofar as they purport to describe the
provisions of the documents referred to therein, are
accurate and complete in all material respects;
(vii) 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;
(viii) 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
(ix) 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
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
13<PAGE>
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 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, 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) 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 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 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);
14<PAGE>
(iii) 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
knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(iv) 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
(v) 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 rules and regulations thereunder; although they
do not assume any responsibility for the accuracy,
15<PAGE>
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 Section
7(c)(i) hereof, they have 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 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 ______________________, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each 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;
(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, and (ii) since the respective dates as of which
16<PAGE>
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 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 the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery 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 Exchange; (ii) a suspension
or material limitation in trading in the Company's securities on the
Exchange; (iii) a general moratorium on commercial banking activities
declared by either Federal, 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 Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Shares being delivered at such Time of Delivery on the terms and in
the manner contemplated in the Prospectus;
(h) The Shares to be sold at such Time of Delivery
shall have been duly listed, subject to notice of issuance, on the
Exchange;
(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;
17<PAGE>
(j) The Company shall have complied with the
provisions of Section 5(c) hereof with respect to the furnishing of
prospectuses on ______________________; and
(k) The Company shall have furnished or caused to be
furnished to you at such 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
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
18<PAGE>
furnished to the Company by such Underwriter 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 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 Shares. 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
19<PAGE>
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 Shares underwritten
by it and 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
20<PAGE>
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 Shares which it has agreed to purchase
hereunder at a Time of Delivery, you may in your discretion arrange
for you or another party or other parties to purchase such Shares on
the terms contained herein. If within ______________________ after
such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
______________________ within which to procure another party or other
parties reasonably satisfactory to you to purchase such Shares 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 Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right
to postpone such Time of Delivery for a period of not more than
______________________, 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 Shares.
(b) If, after giving effect to any arrangements for
the purchase of the Shares of a defaulting Underwriter or Underwriters
by you and the Company as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased does not
exceed ______________________ of the aggregate number of all the
Shares to be purchased at such Time of Delivery, then the Company
shall have the right to require each non-defaulting Underwriter to
purchase the number of shares which such Underwriter agreed to
purchase hereunder at such Time of Delivery and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share
(based on the number of Shares which such Underwriter agreed to
purchase hereunder) of the Shares 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 Shares of a defaulting Underwriter or Underwriters
by you and the Company as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased exceeds
_______________ of the aggregate number of all the Shares 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 Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to
21<PAGE>
the Second Time of Delivery, the obligations of the Underwriters to
purchase and of the Company to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any
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 Shares.
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 defense 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, any Shares 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 Shares not so delivered, but the
Company shall then be under no further liability to any Underwriter
except as provided in Sections 6 and 8 hereof.
22<PAGE>
12. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to
act and rely upon any statement, request, notice or agreement on
behalf of any Underwriter made or given by you jointly or by
___________________ on behalf of you as the representatives.
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 as the representatives
in care of ____________________________________; and if to the Company
shall be delivered or sent by mail 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 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
Shares 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 _____________.
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 counterparts shall together
constitute one and the same instrument.
If the foregoing is in accordance with your understanding, please
sign and return to us five counterparts hereof, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this
23<PAGE>
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:_______________________________
Name:
Title:
Accepted as of the date hereof:
[Underwriters]
By:_____________________________________
On behalf of each of the Underwriters
24<PAGE>
SCHEDULE I
NUMBER OF OPTIONAL
SHARES TO BE
PURCHASED IF
EXERCISED
TOTAL NUMBER OF
FIRM SHARES MAXIMUM OPTION
UNDERWRITER TO BE PURCHASED
----------- ---------------
____________ ____________
Total. . . . . . . . . . . . ____________ ____________
____________ ____________
____________ ____________
25<PAGE>
EXHIBIT 4.8
-----------
======================================================================
CREDIT AGREEMENT
BETWEEN
AAR CORP.
AND
THE NORTHERN TRUST COMPANY
DATED AS OF NOVEMBER 1, 1997
======================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
THE CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1. The Advances . . . . . . . . . . . . . . . . . . . . 11
2.2. Extension of Revolving Credit Termination Date . . . 12
2.3. Mandatory Payments . . . . . . . . . . . . . . . . . 12
2.4. Fees . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5. Optional Reductions in Commitment . . . . . . . . . 13
2.6. [Intentionally Omitted] . . . . . . . . . . . . . . 13
2.7. Types of Advances . . . . . . . . . . . . . . . . . 13
2.8. Minimum Amount of Each Advance . . . . . . . . . . . 13
2.9. Optional Principal Payments . . . . . . . . . . . . . . . 13
2.10. Method of Selecting Types and Interest Periods for
New Advances . . . . . . . . . . . . . . . . . . . . 14
2.11. [Intentionally Omitted]. . . . . . . . . . . . . . . 14
2.12. [Intentionally Omitted] . . . . . . . . . . . . . . 14
2.13. Conversion and Continuation of Outstanding Advances. 14
2.14. Restrictions on Interest Periods . . . . . . . . . . 15
2.15. Changes in Interest Rate, etc . . . . . . . . . . . 15
2.16. Rates Applicable After Default . . . . . . . . . . . 15
2.17. Method of Payment . . . . . . . . . . . . . . . . . 15
2.18. [Intentionally Omitted]. . . . . . . . . . . . . . . 16
2.19. [Intentionally Omitted]. . . . . . . . . . . . . . . 16
2.20. Note; Telephonic Notices . . . . . . . . . . . . . . 16
2.21. Interest Payment Dates; Interest and Fee Basis . . . 16
2.22. [Intentionally Omitted] . . . . . . . . . . . . . . 17
2.23. [Intentionally Omitted]. . . . . . . . . . . . . . . 17
2.24. [Intentionally Omitted] . . . . . . . . . . . . . . 17
2.25. Letters of Credit . . . . . . . . . . . . . . . . . 17
2.26. Manner of Issuance . . . . . . . . . . . . . . . . . 17
2.27. Term . . . . . . . . . . . . . . . . . . . . . . . . 18
2.28. Letter of Credit Fees . . . . . . . . . . . . . . . 18
2.29. Reimbursement Obligation . . . . . . . . . . . . . . 18
ARTICLE III
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . 20
3.1. Yield Protection . . . . . . . . . . . . . . . . . . 20
3.2. Changes in Capital Adequacy Regulations . . . . . . 20
3.3. Availability of Eurodollar Advances . . . . . . . . 21
3.4. Funding Indemnification . . . . . . . . . . . . . . 21
3.5. Lender Statements; Survival of Indemnity . . . . . . 21
3.6. Refund to Borrower . . . . . . . . . . . . . . . . . 22<PAGE>
TABLE OF CONTENTS
-----------------
(continued)
Page
----
ARTICLE IV
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 22
4.1. Conditions Precedent to the Effective Date . . . . . 22
4.2. Each Advance . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 23
5.1. Corporate Existence and Standing . . . . . . . . . . 24
5.2. Authorization and Validity . . . . . . . . . . . . . 24
5.3. No Conflict; Government Consent . . . . . . . . . . 24
5.4. Financial Statements . . . . . . . . . . . . . . . . 24
5.5. Material Adverse Change . . . . . . . . . . . . . . 24
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 25
5.7. Litigation and Contingent Obligations . . . . . . . 25
5.8. Subsidiaries . . . . . . . . . . . . . . . . . . . . 25
5.9. ERISA . . . . . . . . . . . . . . . . . . . . . . . 25
5.10. Accuracy of Information . . . . . . . . . . . . . . 26
5.11. Regulation U . . . . . . . . . . . . . . . . . . . . 26
5.12. Compliance With Laws . . . . . . . . . . . . . . . . 26
5.13. Investment Company Act . . . . . . . . . . . . . . . 26
ARTICLE VI
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.1. Financial Reporting . . . . . . . . . . . . . . . . 26
6.2. Use of Proceeds . . . . . . . . . . . . . . . . . . 28
6.3. Notice of Default . . . . . . . . . . . . . . . . . 29
6.4. Conduct of Business . . . . . . . . . . . . . . . . 29
6.5. Taxes . . . . . . . . . . . . . . . . . . . . . . . 29
6.6. Insurance . . . . . . . . . . . . . . . . . . . . . 29
6.7. Compliance with Laws . . . . . . . . . . . . . . . . 29
6.8. Maintenance of Properties . . . . . . . . . . . . . 29
6.9. Inspection . . . . . . . . . . . . . . . . . . . . . 29
6.10. Restricted Payments . . . . . . . . . . . . . . . . 30
6.11. Merger . . . . . . . . . . . . . . . . . . . . . . . 30
6.12. Sale of Assets . . . . . . . . . . . . . . . . . . . 30
6.13. Sale of Accounts . . . . . . . . . . . . . . . . . . 31
6.14. Investments and Acquisitions . . . . . . . . . . . . 32
6.15. Contingent Obligations . . . . . . . . . . . . . . . 33
6.16. Liens . . . . . . . . . . . . . . . . . . . . . . . 33
6.17. Rentals . . . . . . . . . . . . . . . . . . . . . . 35
6.18. Retirement and Modification of Subordinated
Indebtedness . . . . . . . . . . . . . . . . . . . . . . 35
6.19. Affiliates . . . . . . . . . . . . . . . . . . . . . 35
6.20. Working Capital . . . . . . . . . . . . . . . . . . 35
ii<PAGE>
TABLE OF CONTENTS
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(continued)
Page
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6.21. Consolidated Tangible Net Worth . . . . . . . . . . 35
6.22. Ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth. . . . . . . . . . . . . . . . . . . . 36
6.23. Consolidated Secured Liabilities . . . . . . . . . . 36
6.24. Limitation on Funded Debt . . . . . . . . . . . . . 36
6.25. Fixed Charge Coverage Ratio . . . . . . . . . . . . 36
ARTICLE VII
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES . . . . . . . . 40
8.1. Acceleration . . . . . . . . . . . . . . . . . . . . 40
8.2. Amendments . . . . . . . . . . . . . . . . . . . . 40
8.3. Preservation of Rights; Waivers, etc . . . . . . . . 40
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 41
9.1. Survival of Representations . . . . . . . . . . . . 41
9.2. Governmental Regulation . . . . . . . . . . . . . . 41
9.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . 41
9.4. Headings . . . . . . . . . . . . . . . . . . . . . . 41
9.5. Entire Agreement . . . . . . . . . . . . . . . . . . 41
9.6. Benefits of this Agreement . . . . . . . . . . . . . 41
9.7. Expenses; Indemnification . . . . . . . . . . . . . 41
9.8. [Intentionally Omitted] . . . . . . . . . . . . . . 42
9.9. Accounting . . . . . . . . . . . . . . . . . . . . . 42
9.10. Severability of Provisions . . . . . . . . . . . . . 42
9.11. Nonliability of the Lender . . . . . . . . . . . . . 42
9.12. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . 42
9.13. CONSENT TO JURISDICTION . . . . . . . . . . . . . . 42
9.14. Confidentiality . . . . . . . . . . . . . . . . . . 43
9.15. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 43
ARTICLE X
[Intentionally Omitted] . . . . . . . . . . . . . . . . . . . 43
ARTICLE XI
SETOFF; RATABLE PAYMENTS . . . . . . . . . . . . . . . . . . . 43
11.1. Setoff . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS . . . . . . 43
12.1. Successors and Assigns . . . . . . . . . . . . . . . 43
iii<PAGE>
TABLE OF CONTENTS
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(continued)
Page
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12.2. Participations . . . . . . . . . . . . . . . . . . . 44
12.2.1. Permitted Participants; Effect . . . . . . . . 44
12.2.2. Voting Rights . . . . . . . . . . . . . . . . . 44
12.2.3. Benefit of Setoff . . . . . . . . . . . . . . . 45
12.3. Assignments . . . . . . . . . . . . . . . . . . . . 45
12.3.1. Permitted Assignments . . . . . . . . . . . . . 45
12.3.2. [Intentionally Omitted] . . . . . . . . . . . . 45
12.4. Dissemination of Information . . . . . . . . . . . . 45
ARTICLE XIII
NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.1. Giving Notice . . . . . . . . . . . . . . . . . . . 45
13.2. Change of Address . . . . . . . . . . . . . . . . . 45
ARTICLE XIV
COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . 46
iv<PAGE>
SCHEDULES AND EXHIBITS
Schedule "1" - Other Investments
Schedule "2" - Liens
Exhibit "A" - Note
Exhibit "B" - Extension Letter
Exhibit "C" - Borrowing Notice
Exhibit "D" - Letter of Credit Application
Exhibit "E" - Opinion
Exhibit "F" - Transfer Instructions
Exhibit "G" - Compliance Certificate
v<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of November 1, 1997, between AAR
CORP., a Delaware corporation (the "Borrower"), and THE NORTHERN TRUST
COMPANY, an Illinois banking corporation (the "Lender").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower has requested the Lender to make available
to the Borrower a revolving line of credit for loans in an aggregate
amount not to exceed $10,000,000 which extensions of credit the
Borrower will use for its working capital needs and general business
purposes;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
As used in this Agreement:
"Accounts" has the meaning provided in Section 6.13.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by
which the Borrower or any of its Subsidiaries (i) acquires any going
business or all or substantially all of the assets of any firm,
corporation or division thereof, whether through purchase of assets,
merger or otherwise or (ii) directly or indirectly acquires (in one
transaction or as the most recent transaction in a series of
transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the
election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding partnership interests of a
partnership.
"Advance" means a borrowing hereunder consisting of the aggregate
amount of advances made by the Lender to the Borrower pursuant to
Section 2.1 which are (a) of the same Type and (b) in the case of
Eurodollar Advances, for the same Interest Period.
"Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if
the controlling Person owns 10% or more of any class of voting
securities (or other ownership interests) of the controlled Person or
possesses, directly or indirectly, the power to direct or cause the<PAGE>
direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.
"Agreement" means this credit agreement, as it may be amended or
modified and in effect from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, applied in a
manner consistent with that used in preparing the financial statements
referred to in Section 5.4.
"Alternate Base Rate" means, for any day, a rate of interest per
annum equal to the higher of (i) the Prime Rate for such day and (ii)
the sum of Federal Funds Effective Rate for such day plus 1/2% per
annum.
"Application" is defined in Section 2.26, as amended, modified or
supplemented from time to time.
"Authorized Officer" means any of the Chairman of the Board,
Chief Executive Officer, President, Chief Operations Officer, Vice
President-Finance or Treasurer of the Borrower.
"Borrower" means AAR Corp., a Delaware corporation, and its
successors and assigns.
"Borrowing Date" means a date on which an Advance is made or a
Letter of Credit is issued hereunder.
"Borrowing Notice" is defined in Section 2.10.
"Business Day" means (i) with respect to any borrowing, payment
or rate selection of Eurodollar Advances, a day (other than a Saturday
or Sunday) on which banks are open for business in Chicago and on
which dealings in U.S. Dollars may be carried on by the Lender in the
interbank Eurodollar market and (ii) for all other purposes, a day
(other than a Saturday or Sunday) on which banks are open for business
in Chicago.
"Capitalized Lease" of a Person means any lease of property by
such Person as lessee which would be capitalized on a balance sheet of
such Person prepared in accordance with Agreement Accounting
Principles.
"Capitalized Lease Obligations" of a Person means the amount of
the obligations of such Person under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in
accordance with Agreement Accounting Principles.
"Change in Control" means (i) the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission
-2-<PAGE>
under the Securities Exchange Act of 1934) of 20% or more of the
outstanding shares of voting stock of the Borrower or (ii) a majority
of the Directors on the Borrower's Board of Directors shall cease to
be Directors of the Borrower during any twelve-month period.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means $10,000,000 as such amount may be modified
from time to time pursuant to the terms hereof.
"Consolidated Assets" means the total consolidated assets of the
Borrower and its Subsidiaries determined in accordance with Agreement
Accounting Principles.
"Consolidated Current Assets" means the total consolidated
current assets of the Borrower and its Subsidiaries determined in
accordance with Agreement Accounting Principles.
"Consolidated Current Liabilities" means the total consolidated
current liabilities of the Borrower and its Subsidiaries determined in
accordance with Agreement Accounting Principles.
"Consolidated Funded Debt" means all Indebtedness having a final
maturity of more than one year. Funded Debt shall not include
payments due within one year from the date as of which a calculation
of Funded Debt is made.
"Consolidated Liabilities" means the total consolidated
liabilities of the Borrower and its Subsidiaries determined in
accordance with Agreement Accounting Principles.
"Consolidated Net Income" shall mean, for any period, the net
income (or loss) of the Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined in accordance with Agreement Accounting Principles;
PROVIDED, that there shall be excluded (i) the income (or loss) of any
Affiliate of the Borrower or other Person (other than a Subsidiary of
the Borrower) in which any Person (other than the Borrower or any of
its Subsidiaries) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to the
Borrower, or any of its Subsidiaries by such Affiliate or other Person
during such period, (ii) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of the Borrower or is merged
into or consolidated with the Borrower or any of its Subsidiaries or
that Person's assets are acquired by the Borrower or any of its
Subsidiaries, and (iii) the income of any Subsidiary of the Borrower
to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary.
-3-<PAGE>
"Consolidated Secured Liabilities" means the aggregate amount of
Consolidated Liabilities which are secured by any Lien (other than
Liens permitted pursuant to any of clauses (a), (d), (e), (f) and (h)
of Section
6.16) on any property of the Borrower or any of its Subsidiaries.
"Consolidated Tangible Net Worth" means, as of any date of
determination, the sum of (a) the consolidated stockholders' equity of
the Borrower and its Subsidiaries determined in accordance with
Agreement Accounting Principles, less their consolidated Intangible
Assets, plus (b) Subordinated Debt. For purposes of this definition
"Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made
within twelve months after the acquisition of such business)
subsequent to May 31, 1991 in the book value of any asset owned by the
Borrower or a Consolidated Subsidiary, (ii) all investments in
unconsolidated Subsidiaries and all equity investments in Persons
which are not Subsidiaries and (iii) all unamortized debt discount and
expense, unamortized deferred charges, goodwill, patents, trademarks,
service marks, trade names, copyrights, organization or developmental
expenses and other intangible items, for purposes of this clause
(iii), in each case, to the extent such items are disclosed as
separate line items on the Borrower's financial statements required
under Section 6.1.
"Consolidated Total Capitalization" means Consolidated Net Worth
plus Consolidated Funded Debt. For purposes of this definition,
"Consolidated Net Worth" means the aggregate amount of capital stock
(other than treasury stock), retained earnings and surplus of the
Company and its Subsidiaries (exclusive of any surplus arising by
virtue of any reappraisal or revaluation of any assets) less the
amount of: goodwill, patents, copyrights, trademarks, experimental or
organization expense and other like intangibles, in each case, to the
extent such items are disclosed as separate line items on the
Borrower's financial statements required under Section 6.1.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes, guarantees,
endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability of any other Person, or agrees to maintain the
net worth or working capital or other financial condition of any other
Person, or otherwise assures any creditor of such other Person against
loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit
or similar instrument.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower
-4-<PAGE>
or any of its Subsidiaries, are treated as a single employer under
Section 414 of the Code.
"Default" means an event described in Article VII.
"Domestic Subsidiary" means any Subsidiary of the Borrower
organized under the laws of any State of the United States of America
or the District of Columbia, all or substantially all of whose assets
are located, and whose business is conducted, in one or more of any
such States or District.
"Effective Date" has the meaning provided in Section 4.1.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Advance" means an Advance which bears interest at a
Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar
Advance for the relevant Interest Period, the rate determined by the
Lender to be the rate at which deposits in U.S. dollars are offered to
the Lender by major banks in the interbank Eurodollar market at
approximately 11 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the amount of the relevant
Eurodollar Advance and having a maturity equal to such Interest
Period.
"Eurodollar Conversion Notice" is defined in Section 2.13.
"Eurodollar Rate" means, with respect to a Eurodollar Advance for
the relevant Interest Period, the sum of (i) the quotient of (a) the
Eurodollar Base Rate applicable to such Interest Period, divided by
(b) one minus the Reserve Requirement (expressed as a decimal)
applicable to such Interest Period, plus (ii) the Applicable Margin.
As used in this definition, "Applicable Margin" means (A) .75% at all
times prior to the Revolving Credit Termination Date when the Borrower
has an Investment Grade Rating and there has been no HLT
Classification, and (B) 1.25% at all times after the Revolving Credit
Termination Date when the Borrower has an Investment Grade Rating and
there has been no HLT Classification. The Applicable Margin shall be
increased by (x) .75% at all times when the Borrower does not have an
Investment Grade Rating and there has been no HLT Classification and
(y) 1.75% at all times when there has been an HLT Classification. The
Eurodollar Rate shall be rounded to the next higher multiple of 1/16
of 1% if the rate is not such a multiple.
"Facility Termination Date" means the twentieth (20th) Payment
Date following the Revolving Credit Termination Date.
"Federal Funds Effective Rate" means, for any day, an interest
rate per annum equal to the weighted average of the rates on overnight
-5-<PAGE>
Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers on such day, as published for such
day (or, if such day is not a Business Day, for the immediately
preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day,
the average of the quotations at approximately 10 a.m. (Chicago time)
on such day on such transactions received by the Lender from three
Federal funds brokers of recognized standing selected by the Lender in
its sole discretion.
"Floating Rate" means, for any day, a rate per annum equal to (a)
the Alternate Base Rate for such day plus (b) the Applicable Margin,
changing when and as the Alternate Base Rate changes. As used in this
definition, "Applicable Margin" means (i) at all times prior to the
Revolving Credit Termination Date (x) zero % at all times when the
Borrower has an Investment Grade Rating and there has been no HLT
Classification, (y) .50% at all times when the Borrower does not have
an Investment Grade Rating and there has been no HLT Classification
and (z) 1.50% at all times when there has been an HLT Classification
and (ii) at all times on or after the Revolving Credit Termination
Date (x) .50% at all times when the Borrower has an Investment Grade
Rating and there has been no HLT Classification, (y) 1.00% at all
times when the Borrower does not have an Investment Grade Rating and
there has been no HLT Classification and (z) 2.00% at all times when
there has been an HLT Classification.
"Floating Rate Advance" means an Advance which bears interest at
the Floating Rate.
"Foreign Accounts" means Accounts with respect to which the
obligor is a Person which is (i) organized under the laws of a
jurisdiction other than the United States of America, any State of the
United States of America or the District of Columbia, in the case of a
Person which is not a natural person, or (ii) a citizen of a country
other than the United States of America, in the case of a natural
person.
"Foreign Subsidiary" means any Subsidiary of the Borrower which
is not a Domestic Subsidiary.
"HLT Classification" means, in the context of there having been
an HLT Classification, that either (i) the Lender has received notice
from any governmental or quasi-governmental authority, central bank or
comparable agency having jurisdiction over the Lender that the
Advances or the Commitment hereunder are classifiable as being part of
a "highly leveraged transaction" or (ii) the Lender has otherwise
determined that compliance with any law or any governmental or
quasi-governmental rule, regulation, order, policy, guideline or
directive (whether or not having the force of law) requires that the
Advances or Commitment hereunder be classified as part of a "highly
leveraged transaction". The effective date of an "HLT Classification"
for all purposes of this Agreement shall be the date of receipt by the
-6-<PAGE>
Lender of the notice referred to in clause (i) or the date of the
determination by the Lender referred to in clause (ii), as the case
may be, provided that in either case the Lender does in fact promptly
classify either its Advances or its Commitment hereunder as being part
of a "highly leveraged transaction" to the extent required by the
source of such required classification.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred
purchase price of property or services (other than accounts payable
arising in the ordinary course of such Person's business payable on
terms customary in the trade), (iii) obligations, whether or not
assumed, secured by Liens (other than Liens permitted pursuant to any
of clauses (a), (d), (e), (f) and (h) of Section 6.16) or payable out
of the proceeds or production from property now or hereafter owned or
acquired by such Person, (iv) obligations which are evidenced by
notes, acceptances, or other instruments, (v) Capitalized Lease
Obligations and (vi) net liabilities under currency or interest rate
swap, exchange or cap agreements.
"Interest Period" means, with respect to a Eurodollar Advance, a
period of one, two, three or six months commencing on a Business Day
selected by the Borrower pursuant to this Agreement. Such Interest
Period shall end on (but exclude) the day which corresponds
numerically to such date one, two, three or six months thereafter,
provided, however, that if there is no such numerically corresponding
day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next,
second, third or sixth succeeding month. If a Interest Period would
otherwise end on a day which is not a Business Day, such Interest
Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately
preceding Business Day. No Interest Period may end after the
Revolving Credit Termination Date.
"Investment" of a Person means any loan, advance (other than
commission, travel and similar advances to its officers, employees,
agents and representatives made in the ordinary course of business),
extension of credit (other than accounts receivable arising in the
ordinary course of business on terms customary in the trade), deposit
account or contribution of capital by such Person to any other Person
or any investment in, or purchase or other acquisition of, the stock,
partnership interests, notes, debentures or other securities of any
other Person made by such Person.
"Investment Grade Rating" means, in the context of the Borrower
having an Investment Grade Rating, that the Borrower's senior
unsecured long term debt is rated both (a) BBB- or better by Standard
& Poor's Corporation and (b) Baa3 or better by Moody's Investor
Service, Inc.
-7-<PAGE>
"Letter of Credit" means a standby letter of credit as amended,
modified or supplemented from time to time issued for the account of
Borrower pursuant to Section 2.25.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional
sale, Capitalized Lease or other title retention agreement).
"Loan Documents" means this Agreement, the Note, the Letters of
Credit and the Applications.
"Material Adverse Effect" means a material adverse effect on (i)
the business, properties, condition (financial or otherwise), results
of operations, or prospects of the Borrower and its Subsidiaries taken
as a whole, (ii) the ability of the Borrower to perform its
obligations under the Loan Documents, or (iii) the validity or
enforceability of any of the Loan Documents or the rights or remedies
of the Lender thereunder.
"Multiemployer Plan" means a Plan maintained pursuant to a
collective bargaining agreement or any other arrangement to which the
Borrower or any member of the Controlled Group is a party to which
more than one employer is obligated to make contributions.
"Note" means a promissory note, in substantially the form of
Exhibit "A" hereto, duly executed by the Borrower and payable to the
order of the Lender in the amount of the Commitment, including any
amendment, modification, renewal or replacement of such promissory
note.
"Notice of Assignment" is defined in Section 12.3.2.
"Obligations" means all unpaid principal of and accrued and
unpaid interest on the Note, all the Borrower's obligations with
respect to any Letter of Credit issued hereunder or any Application
therefor, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to
the Lender or any indemnified party hereunder arising under the Loan
Documents.
"Participants" is defined in Section 12.2.1.
"Payment Date" means the last day of each March, June, September
and December.
"Payment Notes" has the meaning provided in Section 6.12.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
-8-<PAGE>
"Person" means any natural person, corporation, firm, joint
venture, partnership, association, enterprise, trust or other entity
or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" means an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code as to which the Borrower or any member of the
Controlled Group may have any liability.
"Purchasers" is defined in Section 12.3.1.
"Prime Rate" means that rate of interest per year announced from
time to time by the Lender called its prime rate, which may not at any
time be the lowest rate of interest charged by the Lender.
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor thereto or other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any
successor or other regulation or official interpretation of said Board
of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member
banks of the Federal Reserve System.
"Rentals" of a Person means the aggregate fixed amounts payable
by such Person under any lease of real or personal property having an
original term (including any required renewals or any renewals at the
option of the lessor or lessee) of one year or more, but does not
include any amounts payable under Capitalized Leases of such Person.
"Reportable Event" means a reportable event as defined in Section
4043 of ERISA and the regulations issued under such section, with
respect to a Plan, excluding, however, such events as to which the
PBGC by regulation waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event,
provided, however, that a failure to meet the minimum funding standard
of Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA
or Section 412(d) of the Code.
"Required Lenders" means Lenders in the aggregate having at least
66-2/3% of the Aggregate Commitment or, if the Aggregate Commitment
has been terminated, Lenders in the aggregate holding at least 66-2/3%
of the aggregate unpaid principal amount of the outstanding Advances.
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"Reserve Requirement" means, with respect to a Interest Period,
the maximum aggregate reserve requirement (including all basic,
supplemental, marginal and other reserves) which is imposed under
Regulation D on Eurocurrency liabilities.
"Restricted Payments" means collectively, all dividends (cash,
stock, asset or otherwise) and all payments on any class of securities
(specifically including all Subordinated Debt, but excluding any other
debt securities) issued by the Borrower or any Subsidiary, whether
such securities are now, or may hereafter be, authorized or
outstanding and any payment by the Borrower or any Subsidiary on
account of the purchase, redemption or retirement of any class of
securities (specifically including all Subordinated Debt, but
excluding all other debt securities) issued by it, and any
distribution in respect to any of the foregoing, whether directly or
indirectly.
"Revolving Credit Termination Balance" means the aggregate
principal amount of Advances outstanding plus the aggregate Stated
Amount of all issued and outstanding Letters of Credit at the close of
business on the Revolving Credit Termination Date after giving effect
to any Advances made or repaid on such date.
"Revolving Credit Termination Date" means August 31, 1999 or such
later date to which the Revolving Credit Termination Date may be
extended pursuant to Section 2.2.
"Section" means a numbered section of this Agreement, unless
another document is specifically referenced.
"Single Employer Plan" means a Plan maintained by the Borrower or
any member of the Controlled Group for employees of the Borrower or
any member of the Controlled Group.
"Stated Amount" of each Letter of Credit shall mean the maximum
amount available to be drawn thereunder, determined without regard to
whether any conditions to drawing could then be met.
"Subordinated Debt" means indebtedness of the Borrower or any
Subsidiary evidenced by instruments containing provisions by which the
payment of such indebtedness is postponed and subordinated to the
payment of the Notes, which subordination provisions and the
provisions for payment shall be in form and substance satisfactory to
the Required Lenders as evidenced by their prior written consent
thereto.
"Subsidiary" of a Person means (i) any corporation more than 50%
of the outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly, by
such Person or by one or more of its Subsidiaries or by such Person
and one or more of its Subsidiaries, or (ii) any partnership,
association, joint venture or similar business organization more than
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50% of the ownership interests having ordinary voting power of which
shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean
a Subsidiary of the Borrower.
"Transferee" is defined in Section 12.4.
"Type" means with respect to any Advance, its nature as a
Floating Rate Advance or Eurodollar Advance.
"Unfunded Liabilities" means the aggregate unfunded value of
accumulated benefits under all Single Employer Plans, all determined
in accordance with Agreement Accounting Principles as of the then most
recent valuation date for such Plans.
"Unmatured Default" means an event which but for the lapse of
time or the giving of notice, or both, would constitute a Default.
"U.S. Dollars" means the lawful currency of the United States of
America.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary
all of the outstanding voting securities of which shall at the time be
owned or controlled, directly or indirectly, by such Person or one or
more Wholly-Owned Subsidiaries of such Person, or by such Person and
one or more Wholly-Owned Subsidiaries of such Person, or (ii) any
partnership, association, joint venture or similar business
organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE II
THE CREDIT
----------
2.1. THE ADVANCES. Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow Advances at any time prior to
or on the Revolving Credit Termination Date. No Advances may be
requested or made subsequent to the Revolving Credit Termination Date.
Principal payments made after the Revolving Credit Termination Date
may not be reborrowed.
(a) COMMITMENTS TO MAKE ADVANCES. From and including the
date of this Agreement and to and including the Revolving Credit
Termination Date, the Lender agrees, on the terms and conditions
set forth in this Agreement, to make Advances to the Borrower
from time to time in amounts such that, upon giving effect to
each such Advance, the sum of the aggregate unpaid principal
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amount of all Advances then outstanding plus the aggregate Stated
Amount of all outstanding Letters of Credit shall not exceed the
Commitment then in effect. The foregoing commitment to make
Advances shall expire at the close of business on the Revolving
Credit Termination Date.
(b) [Intentionally Omitted].
2.2. EXTENSION OF REVOLVING CREDIT TERMINATION DATE. The initial
Revolving Credit Termination Date shall be August 31, 1999. The
Borrower may, not earlier than 180 days and not later than 60 days
prior to each anniversary of the Effective Date execute and deliver to
the Lender an Extension Letter in substantially the form of Exhibit
"B" hereto, with appropriate insertions, requesting that the Revolving
Credit Termination Date be extended for one year. Such request for an
extension of the Revolving Credit Termination Date shall become
effective if, and only if, the Lender shall, in its sole and absolute
discretion, execute such Extension Letter and return a copy thereof to
the Borrower prior to each such applicable anniversary of the
Effective Date.
2.3. MANDATORY PAYMENTS. The Borrower shall make the following
mandatory payments on the Advances:
(a) [Intentionally Omitted].
(b) Each Advance outstanding on the Revolving Credit
Termination Date shall be repaid in full on the Revolving Credit
Termination Date (it being understood and agreed that, subject to
the terms and conditions of this Agreement, the Borrower shall be
entitled to make a final borrowing of one or more Advances
pursuant to Section 2.1(a) on the Revolving Credit Termination
Date).
(c) If on the last day of any calendar month, it is
determined by the Lender that the sum of the aggregate amount of
all outstanding Advances plus the aggregate Stated Amount of all
issued and outstanding Letters of Credit exceeds the Commitment
then in effect, the Borrower shall, immediately upon the first to
occur of the Borrower becoming aware of such excess or notice
thereof by the Lender, make a repayment (in U.S. Dollars) of the
outstanding Advances in an amount which is at least sufficient to
eliminate such excess.
(d) The Revolving Credit Termination Balance shall be
payable in twenty (20) equal, consecutive quarterly installments,
commencing on the first Payment Date following the Revolving
Credit Termination Date.
(e) Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Facility
Termination Date.
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2.4. FEES. The Borrower further agrees to pay to the Lender a
commitment fee of .30% (or if the Borrower no longer has an Investment
Grade Classification .425%) per annum for the period from the date
hereof to and including the Revolving Credit Termination Date on the
average daily principal amount of the Commitment less the average
daily principal amount of outstanding Advances. All of the fees
referred to in this Section 2.4 shall be payable quarterly in arrears
within 15 days after receipt of a statement therefor from the Lender
for such quarter, commencing with the calendar quarter ending December
31, 1997. The obligations of the Borrower under this Section 2.4
shall survive the payment of the Advances and the termination of this
Agreement. In addition upon any HLT Classification, the Borrower
agrees to pay the Lender upon demand, an HLT Classification fee equal
to .125% of the Commitment in effect at the time of such HLT
Classification.
2.5. OPTIONAL REDUCTIONS IN COMMITMENT. The Borrower may
permanently reduce the Commitment in whole, or in part in integral
multiples of $1,000,000, upon at least ten days' written notice to the
Lender, which notice shall specify the amount of any such reduction;
PROVIDED, HOWEVER, that the amount of the Commitment may not be
reduced below the sum of the aggregate principal amount of the
outstanding Advances plus the aggregate Stated Amount of all issued
and outstanding Letters of Credit. All accrued commitment fees shall
be payable on the effective date of any termination of the obligations
of the Lender to make Advances hereunder.
2.6. [Intentionally Omitted].
2.7. TYPES OF ADVANCES. The Advances may be Floating Rate
Advances or Eurodollar Advances, or a combination thereof, selected by
the Borrower in accordance with Sections 2.10 and 2.13.
2.8. MINIMUM AMOUNT OF EACH ADVANCE. Each Eurodollar Advance
shall be in the minimum amount of $1,000,000 (and in multiples of
$100,000 if in excess thereof), and each Floating Rate Advance shall
be in the minimum amount of $500,000 (and in multiples of $100,000 if
in excess thereof); PROVIDED, HOWEVER, that any Floating Rate Advance
may be in the amount of the Commitment.
2.9. OPTIONAL PRINCIPAL PAYMENTS. The Borrower may from time to
time pay, without penalty or premium, all outstanding Floating Rate
Advances, or, in a minimum aggregate amount of $1,000,000 or any
integral multiple of $100,000 in excess thereof, any portion of the
outstanding Floating Rate Advances upon 5 days' prior notice to the
Lender. Eurodollar Advances may be paid in full prior to the last day
of the applicable Interest Period, subject to compliance with Section
3.4. Principal payments made after the Revolving Credit Termination
Date shall be applied to the principal installments payable under
Section 2.3(d) in the inverse order of maturity.
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2.10. METHOD OF SELECTING TYPES AND INTEREST PERIODS FOR NEW
ADVANCES. The Borrower shall select the Type and, in the case of each
Eurodollar Advance, the Interest Period applicable to each new Advance
from time to time. The Borrower shall give the Lender irrevocable
notice in substantially the form of Exhibit "C" hereto with
appropriate insertions (a "Borrowing Notice") not later than 10:00
a.m. (Chicago time) at least (a) one Business Day before the Borrowing
Date of each Floating Rate Advance and (b) three Business Days before
the Borrowing Date for each Eurodollar Advance, in each case
specifying:
(i) the Borrowing Date of such Advance, which shall be
a Business Day, prior to or on the Revolving
Credit Termination Date,
(ii) the aggregate amount of such Advance,
(iii) the Type of Advance selected, and
(iv) in the case of each Eurodollar Advance, the
Interest Period applicable thereto.
2.11. [Intentionally Omitted].
2.12. [Intentionally Omitted].
2.13. CONVERSION AND CONTINUATION OF OUTSTANDING ADVANCES.
Outstanding Advances may be continued or converted into Advances of
another Type as provided below in this Section 2.13.
Each Floating Rate Advance shall continue as Floating Rate
Advance unless and until such Floating Rate Advance is repaid pursuant
to Section 2.9 or converted into a Eurodollar Advance pursuant to this
Section 2.13. Each Eurodollar Advance shall continue as a Eurodollar
Advance until the end of its respective Interest Period, at which time
such Eurodollar Advance shall be automatically converted into a
Floating Rate Advance unless the Borrower shall have given the Lender
a Eurodollar Conversion Notice requesting that, at the end of such
Interest Period, such Eurodollar Advance be converted into a new
Eurodollar Advance for a new Interest Period. Subject to the terms of
Section 2.8, the Borrower may from time to time elect to convert all
or any part of any Floating Rate Advance into a Eurodollar Advance, or
to convert all or any part of any Eurodollar Advance into a new
Eurodollar Advance for a new Interest Period; PROVIDED, that any
conversion of any existing Eurodollar Advance shall be made on, and
only on, the last day of its respective Interest Period. The Borrower
shall give the Lender irrevocable notice (a "Eurodollar Conversion
Notice") of each conversion of an outstanding Advance into a
Eurodollar Advance not later than 10:00 a.m. (Chicago time) at least
three Business Days prior to the date of the requested conversion,
specifying:
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(i) the requested date of such conversion, which date
shall be a Business Day;
(ii) the aggregate amount and Type of the Advance which
is to be converted or continued; and
(iii) the amount and Interest Period applicable to each
Eurodollar Advance into which such Advance is to
be converted.
Notwithstanding anything to the contrary contained in this Section
2.13, no Advance may be converted into or continued as a Eurodollar
Advance (a) at any time within 30 days of the Facility Termination
Date or (b) when any Default or Unmatured Default has occurred and is
continuing.
2.14. RESTRICTIONS ON INTEREST PERIODS. No Interest Period
may extend beyond a Payment Date on which principal of the Advances
shall be payable unless outstanding principal of Floating Rate
Advances and Eurodollar Advances with Interest Periods ending prior to
said Payment Date and unused Commitment shall be at least equal to the
amount so payable. No Interest Period shall extend beyond the
Facility Termination Date. No more than ten (10) Interest Periods may
be in effect at any one time.
2.15. CHANGES IN INTEREST RATE, ETC. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate
Advance will take effect simultaneously with each change in the
Alternate Base Rate and each change in the Applicable Margin referred
to in the definition "Floating Rate". Each Eurodollar Advance shall
bear interest from and including the first day of the Interest Period
applicable thereto to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such
Eurodollar Advance, provided that the rate of interest on each
Eurodollar Advance will change simultaneously with each change, during
the applicable Interest Period, of the Applicable Margin referred to
in the definition of "Eurodollar Rate".
2.16. RATES APPLICABLE AFTER DEFAULT. During the continuance
of a Default the Lender may, at its option, by notice to the Borrower,
declare that (i) each Eurodollar Advance shall bear interest for the
remainder of the applicable Interest Period at the rate otherwise
applicable to such Interest Period plus 2% per annum and (ii) each
Floating Rate Advance shall bear interest at a rate per annum equal to
the Floating Rate otherwise applicable to the Floating Rate Advance
plus 2%.
2.17. METHOD OF PAYMENT. (a) All payments of principal,
interest and fees to be made by the Borrower hereunder or under the
Note shall be made in U.S. Dollars, without setoff, deduction, or
counterclaim, in immediately available funds to the Lender at the
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Lender's address specified pursuant to Article XIII by noon (local
time) on the date when due and shall be applied by the Lender.
(b) [Intentionally Omitted].
(c) On or before the time a principal payment is made on any of
the Advances, the Borrower shall inform the Lender as to the
proportionate application of such payment among the Floating Rate
Advances and the Eurodollar Advances. In the absence of such
instructions, the Lender shall apply such payment first to the
outstanding Floating Rate Advances and then apply any remainder to the
outstanding Eurodollar Advances; PROVIDED, that as between Eurodollar
Advances, the Lender shall endeavor to make such application (not
otherwise disadvantageous to the Lender) as will mitigate the
Borrower's liability to the Lender under Section 3.4 as a consequence
of such application.
2.18. [Intentionally Omitted].
2.19. [Intentionally Omitted].
2.20. NOTE; TELEPHONIC NOTICES. The Lender shall, and is
hereby authorized to, record the principal amount of the Advances and
each repayment on the schedule attached to the Note (or to otherwise
record the same in its usual practice); PROVIDED, HOWEVER, that the
failure so to record shall not affect the Borrower's obligations in
respect of such Advances. The Borrower hereby authorizes the Lender
to extend, convert or continue Advances and to transfer funds based on
telephonic notices made by any person or persons the Lender in good
faith believes to be acting on behalf of the Borrower. The Borrower
agrees to deliver promptly to the Lender a written confirmation, if
such confirmation is requested by the Lender, of each telephonic
notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Lender,
the record of the Lender shall govern absent manifest error.
2.21. INTEREST PAYMENT DATES; INTEREST AND FEE BASIS.
Interest accrued on each Floating Rate Advance shall be payable on
each Payment Date, commencing with the first such date to occur after
the date hereof, on any date on which the Floating Rate Advance is
prepaid, whether due to acceleration or otherwise, and at maturity.
Interest accrued on that portion of the outstanding principal amount
of any Floating Rate Advance converted into a Eurodollar Advance on a
day other than a Payment Date shall be payable on the date of
conversion. Interest accrued on each Eurodollar Advance shall be
payable on the last day of its applicable Interest Period, on any date
on which the Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity. Interest accrued on each Eurodollar
Advance having an Interest Period longer than three months shall also
be payable on the last day of each three-month interval during such
Interest Period. Interest and fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest shall be
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payable for the day an Advance is made but not for the day of any
payment on the amount paid if payment is received prior to noon (local
time) at the place of payment. If any payment of principal of or
interest on an Advance shall become due on a day which is not a
Business Day, such payment shall be made on the next succeeding
Business Day (unless, in the case of any interest payment, such
Business Day would be in the following month, in which case, such
interest shall be paid on the last Business Day in the month when such
interest payment is due) and, in the case of a principal payment, such
extension of time shall be included in computing interest in
connection with such payment. After maturity of any installment,
interest shall be payable on demand.
2.22. [Intentionally Omitted].
2.23. [Intentionally Omitted].
2.24. [Intentionally Omitted].
2.25. LETTERS OF CREDIT. Subject to the terms and conditions
of this Agreement (including, without limitation, the last sentence of
SECTION 2.27) the Lender agrees to issue Letters of Credit for the
account of the Borrower from the Effective Date to but not including
the Revolving Credit Termination Date at such times as the Borrower
may request; provided, however, that the Lender shall not be obligated
to issue any Letter of Credit to the extent that (a) the sum of (i)
the aggregate principal amount of all Advances, plus (ii) the
aggregate Stated Amount of all outstanding Letters of Credit, would
exceed the Commitment or (b) the aggregate Stated Amount of all
outstanding Letters of Credit would exceed $5,000,000.
2.26. MANNER OF ISSUANCE.
(a) APPLICATIONS. The Borrower shall deliver to the Lender
(i) prior to 11:00 a.m., Chicago time, on the Borrowing Date of
any Letter of Credit or the amendment effective date with respect
to any amendment of an outstanding Letter of Credit, the Lender's
standard Application and Agreement for Irrevocable Letter of
Credit ("APPLICATION"), the current form of which is attached
hereto as Exhibit "D" (with blanks filled in accordingly), or an
application for amendment in a form acceptable to the Lender.
(b) AUTHORIZED OFFICERS. Each Authorized Officer may
execute and deliver an Application, and request a Letter of
Credit or an amendment thereto (as applicable) on behalf of the
Borrower. The Lender shall be entitled to rely conclusively on
each such Authorized Officer's authority to take the action
referred to in the immediately preceding sentence until the
Lender receives written notice from the Borrower to the contrary.
The Lender shall not have a duty to verify the authenticity of
the signature appearing on any Application and the Lender shall
have no duty to verify the identity of any Person representing
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himself as one of the Authorized Officers entitled to take the
aforesaid actions on behalf of the Borrower.
(c) NO LIABILITY. The Lender shall not incur any liability
to the Borrower in acting upon any request referred to above
which the Lender believes in good faith to have been given by an
Authorized Officer or for otherwise acting in accordance with
this SECTION 2.26.
(d) APPLICATIONS IRREVOCABLE. Each Application submitted
pursuant to this SECTION 2.26 shall be irrevocable.
(e) ISSUANCE. Subject to the terms and conditions set
forth in SECTION 2.25, the Lender will issue the Letter of Credit
for the account of the Borrower on the applicable Borrowing Date.
2.27. TERM. Letters of Credit shall be stated to expire no
more than one year from the date of issuance and may be renewed if so
requested by the Borrower in the manner required by the Lender (but in
any event such request shall be in writing, shall reasonably describe
the Letter of Credit requested to be renewed and the requested renewal
term and shall be given by an Authorized Officer to the Lender not
less than 30 days prior to expiration of such Letter of Credit);
PROVIDED, that no Letter of Credit shall be stated to expire on a date
after the Revolving Credit Termination Date. No such renewal shall be
for more than one year.
2.28. LETTER OF CREDIT FEES. The Borrower agrees to pay the
Lender, on demand, the Lender's standard issuance, administrative,
operating and other fees and charges in effect from time to time for
issuing and administering any Letters of Credit. It is acknowledged
by the Lender that as of the date of this Agreement, the Lender shall
charge the Borrower $200 as an issuance fee and $100 as an amendment
or renewal fee. The Lender may change such fees at such times, in its
sole discretion. The Borrower further agrees to pay the Lender a
commission on the undrawn amount of each Letter of Credit and on each
draft drawn on the Lender pursuant to a Letter of Credit and accepted
by the Lender in such amount(s) as may from time to time be
established by the Lender. It is acknowledged by the Lender that as
of the date of this Agreement such commission shall be equal to 0.50%
per annum (or at all times when the Borrower does not have an
Investment Grade Rating, 1.00%). The Lender may change such
commissions at such times, in its sole discretion. Such commissions
shall be paid at such frequency as the Lender shall determine. The
Lender may provide for the payment of any fees, charges or commission
due, if not paid by the Borrower when due, by advancing the amount
thereof to the Borrower as an Advance.
2.29. REIMBURSEMENT OBLIGATION.
(a) REIMBURSEMENT. In the event that any amount is drawn
under a Letter of Credit by the beneficiary thereof and the
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Borrower shall not have reimbursed the Lender for such amount
drawn immediately when due in accordance with the Application,
the amount so paid shall be deemed to be an Advance.
(b) IRREVOCABLE OBLIGATION. The obligation of the Borrower
to make payment to the Lender with respect to Letters of Credit
shall be unconditional and irrevocable and shall not be subject
to any qualification or exception whatsoever and shall be made
under all circumstances, including without limitation any of the
following circumstances:
(i) Any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) The existence of any claim, setoff, defense or
other right which the Borrower may have at any
time against a beneficiary named in a Letter of
Credit or any transferee of any Letter of Credit
(or any Person for whom any such transferee may be
acting), the Lender or any other Person, whether
in connection with this Agreement, any other Loan
Document, the transactions contemplated herein or
any unrelated transactions (including any
underlying transactions between the Borrower and
the beneficiary named in any Letter of Credit);
(iii) Any draft, certificate or any other document
presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any
respect or in any statement therein being untrue
or inaccurate in any respect;
(iv) The surrender or impairment of any security for
the performance or observance of any of the terms
of any of the Loan Documents;
(v) The occurrence of any Default or Unmatured
Default, or termination of the Commitment or this
Agreement;
(vi) Any amendment, modification, waiver, consent or
any substitution, exchange or release of or
failure to perfect any interest in collateral
security, with respect to any Letter of Credit;
(vii) Any failure, omission, delay or lack on the part
of the Lender or any party to any of the Letters
of Credit to enforce, assert or exercise any
right, power or remedy conferred upon the Lender
or any such party under this Agreement or any
Letter of Credit, or any other acts or omissions
on the part of the Lender or any other party; and
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(viii) Any other event or circumstance that would, in the
absence of this clause, result in the release or
discharge by operation of law or otherwise of the
Borrower from the performance or observance of any
obligation, covenant or agreement contained in
this Section 2.29.
ARTICLE III
CHANGE IN CIRCUMSTANCES
-----------------------
3.1. YIELD PROTECTION. If any law or any governmental or quasi-
governmental treaty, statute, rule, regulation, policy, guideline or
directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of any Lender therewith,
(i) subjects the Lender to any tax, duty, charge or
withholding on or from payments due from the Borrower (excluding
federal taxation of the overall net income of the Lender), or
changes the time of payment of such taxes or other amounts or the
basis of taxation of payments to the Lender in respect of its
Advances or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account
of, or credit extended by, the Lender (other than reserves and
assessments taken into account in determining the interest rate
applicable to Eurodollar Advances), or
(iii) imposes any other condition the result of which is
to increase the cost to the Lender of making, funding or
maintaining loans or reduces any amount receivable by the Lender
in connection with loans, or requires the Lender to make any
payment calculated by reference to the amount of loans held or
interest received by it, by an amount deemed material by the
Lender,
then, within 15 days of demand by the Lender, the Borrower shall pay
the Lender that portion of the increased expense incurred or reduction
in an amount received which the Lender determines is attributable to
making, funding and maintaining the Advances and Commitment.
3.2. CHANGES IN CAPITAL ADEQUACY REGULATIONS. If the Lender
determines the amount of capital required or expected to be maintained
by the Lender or any corporation controlling the Lender is increased
as a result of a Change, then, within 15 days of demand by the Lender,
the Borrower shall pay the Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such
increased capital which the Lender determines is attributable to this
Agreement, the Advances or its obligation to make Advances hereunder
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(after taking into account the Lender's policies as to capital
adequacy). "Change" means (i) any change after the date of this
Agreement in the Risk-Based Capital Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether
or not having the force of law) after the date of this Agreement which
affects the amount of capital required or expected to be maintained by
the Lender or any corporation controlling any Lender. "Risk-Based
Capital Guidelines" means (i) the risk-based capital guidelines in
effect in the United States on the date of this Agreement, including
transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States
implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled "International
Convergence of Capital Measurements and Capital Standards," including
transition rules, and any amendments to such regulations adopted prior
to the date of this Agreement.
3.3. AVAILABILITY OF EURODOLLAR ADVANCES. If (i) the Lender
determines that maintenance of its Eurodollar Advances would violate
any applicable treaty, law, rule, regulation, or directive, whether or
not having the force of law, (ii) the Lender determines that deposits
of a type and maturity appropriate to match fund Eurodollar Advances
are not available, (iii) the Lender determines that the interest rate
applicable to a Eurodollar Advance does not accurately reflect the
cost of making or maintaining such Eurodollar Advance or (iv)
reasonable means do not exist for the Lender to determine the
Eurodollar Rate for the amount and maturity requested, then the Lender
shall suspend the availability of any new Eurodollar Advances (whether
pursuant to Section 2.10 or Section 2.13).
3.4. FUNDING INDEMNIFICATION. If any payment of a Eurodollar
Advance occurs on a date prior to the last day of the applicable
Interest Period, whether because of acceleration, prepayment or
otherwise, or a Eurodollar Advance is not made on the date specified
by the Borrower in its Borrowing Notice or Eurodollar Conversion
Notice, as the case may be, as a consequence of any condition
precedent to such Advance under Section 2.1 or Article IV not being
satisfied, as a consequence of any failure by the Borrower to borrow
such Advance when the same has been made available to it pursuant to
Section 2.12 or as a consequence of a prohibition on making,
maintaining or repaying the principal of a Eurodollar Advance, the
Borrower will indemnify the Lender for any loss or cost in liquidating
or employing deposits acquired to fund or maintain the Eurodollar
Advance and, provided that the Lender has taken such reasonable
action, if any, not disadvantageous to it, to mitigate the same, any
other loss or cost incurred by the Lender resulting therefrom.
3.5. LENDER STATEMENTS; SURVIVAL OF INDEMNITY. The Lender shall
deliver a written statement of the Lender as to the amount due, if
any, under Section 2.18, 3.1, 3.2 or 3.4. Such written statement
shall set forth in reasonable detail (and in accordance with Agreement
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Accounting Principles, where applicable) the calculations upon which
the Lender determined such amount and shall be final, conclusive and
binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection
with a Eurodollar Advance shall be calculated as though the Lender
funded its Eurodollar Advance through the purchase of a deposit of the
type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Eurodollar Advance,
whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be payable
on demand after receipt by the Borrower of the written statement. The
obligations of the Borrower under Sections 2.18, 3.1, 3.2 and 3.4
shall survive payment of the obligations and termination of this
Agreement.
3.6. REFUND TO BORROWER. If, and to the extent that, the Lender
shall actually receive a credit against its United States federal
income tax liability or otherwise receive any rebate or refund from
any government or governmental agency in respect of any amount paid by
the Borrower pursuant to Section 3.1 or Section 3.2, the Lender agrees
to promptly notify the Borrower thereof and make reimbursement of
credit, rebate or refund to the Borrower, provided that if the Lender
reasonably believes that such credit, rebate or refund may be subject
to challenge, then the Lender shall thereupon enter into negotiations
in good faith with the Borrower to determine when reimbursement of
such credit, rebate or refund can be made to the Borrower.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.1. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE. This Agreement
shall become effective on the date (the "Effective Date") which is the
date on which the Borrower shall have furnished to the Lender:
(i) A copy, certified by the Secretary or Assistant
Secretary of the Borrower, of its Board of Directors'
resolutions (and resolutions of other bodies, if any
are deemed necessary by counsel for the Lender)
authorizing the execution of the Loan Documents.
(ii) An incumbency certificate, executed by the Secretary or
Assistant Secretary of the Borrower, which shall
identify by name and title and bear the signature of
the officers of the Borrower authorized to sign the
Loan Documents and to make borrowings hereunder, upon
which certificate the Lenders shall be entitled to rely
until informed of any change in writing by the
Borrower.
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(iii) A certificate, signed by the chief financial officer of
the Borrower stating that on the Effective Date no
Default or Unmatured Default has occurred and is
continuing.
(iv) A written opinion of the Borrower's counsel, addressed
to the Lender in substantially the form of Exhibit "E"
hereto.
(iv) Note payable to the order of the Lender.
(v) Such other documents as the Lender or its counsel may
have reasonably requested.
4.2. EACH ADVANCE. The Lender shall not be required to make any
Advance or issue any Letter of Credit, unless on the applicable
Borrowing Date:
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in Article
V are true and correct as of such Borrowing Date except
for changes in the Schedules hereto reflecting
transactions permitted by this Agreement.
(iii) The Lender shall have received a duly completed
Borrowing Notice from the Borrower pursuant to Section
2.10 or Application pursuant to Section 2.25.
(iv) [Intentionally Omitted].
(v) All legal matters incident to the making of such
Advance shall be in accordance with this Agreement in
the reasonable judgment of the Lender and its counsel.
Each Borrowing Notice with respect to each such Advance and each
Application shall constitute a representation and warranty by the
Borrower that the conditions contained in Sections 4.2(i) and (ii)
have been satisfied. The Lender may require a duly completed
compliance certificate in substantially the form of Exhibit "G" hereto
as a condition to making an Advance or an issuance of a Letter of
Credit.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
The Borrower represents and warrants to the Lender that:
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5.1. CORPORATE EXISTENCE AND STANDING. Each of the Borrower and
its Subsidiaries is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation and has all requisite authority to conduct its business
in each jurisdiction in which its business is conducted.
5.2. AUTHORIZATION AND VALIDITY. The Borrower has the corporate
power and authority and legal right to execute and deliver the Loan
Documents and to perform its obligations thereunder. The execution
and delivery by the Borrower of the Loan Documents and the performance
of its obligations thereunder have been duly authorized by proper
corporate proceedings, and the Loan Documents constitute legal, valid
and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors, rights generally.
5.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and
delivery by the Borrower of the Loan Documents, nor the consummation
of the transactions therein contemplated, nor compliance with the
provisions thereof will violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on the Borrower or
any of its Subsidiaries or the Borrower's or any Subsidiary's articles
of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which the Borrower or any of its
Subsidiaries is a party or is subject, or by which it, or its
property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien in, of
or on the property of the Borrower or a Subsidiary pursuant to the
terms of any such indenture, instrument or agreement. No order,
consent, approval, license, authorization, or validation of, or
filing, recording or registration with, or exemption by, any
governmental or public body or authority, or any subdivision thereof,
is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity,
binding effect or enforceability of, any of the Loan Documents.
5.4. FINANCIAL STATEMENTS. The August 31, 1997 consolidated
financial statements of the Borrower and its Subsidiaries heretofore
delivered to the Lenders were prepared in accordance with generally
accepted accounting principles in effect on the date such statements
were prepared and fairly present the consolidated financial condition
and operations of the Borrower and its Subsidiaries at such date and
the consolidated results of their operations for the period then
ended.
5.5. MATERIAL ADVERSE CHANGE. Since August 31, 1997, there has
been no change in the business, properties, prospects, condition
(financial or otherwise) or results of operations of the Borrower and
its Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
-24-<PAGE>
5.6. TAXES. The Borrower and its Subsidiaries have filed all
United States federal tax returns and all other tax returns which are
required to be filed and have paid all taxes due pursuant to said
returns or pursuant to any assessment received by the Borrower or any
of its Subsidiaries, except for the filing of such returns and the
payment of such taxes, if any, as (a) are being contested in good
faith and as to which adequate reserves have been provided or (b) do
not in the aggregate exceed $4,000,000 and the failure to file or pay
for which could not reasonably be expected to have a Material Adverse
Effect. As of the date hereof, the United States income tax returns
of the Borrower and its Subsidiaries have been audited by the Internal
Revenue Service through the fiscal year ended 1997. No tax liens have
been filed other than those permitted pursuant to Section 6.16(a).
The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of any taxes or other governmental charges
are adequate.
5.7. LITIGATION AND CONTINGENT OBLIGATIONS. Except as set forth
in the Borrower's Form 10-K filed with the Securities and Exchange
Commission for its fiscal year ended May 31, 1997, there is no
litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material
Adverse Effect. Other than any liability incident to such litigation,
arbitration or proceedings, the Borrower has no material contingent
obligations not provided for or disclosed in the Borrower's Form 10-K
filed with the Securities and Exchange Commission for its fiscal year
ended May 31, 1997.
5.8. SUBSIDIARIES. As of the date hereof, Borrower's Form 10-K
filed with the Securities and Exchange Commission for its fiscal year
ended May 31, 1997 contains an accurate description of all of the
Borrower's presently existing Significant Subsidiaries (as defined in
Regulation S-X of the Securities and Exchange Commission). All of the
issued and outstanding shares of capital stock of all of the
Borrower's Subsidiaries have been duly authorized and issued and are
fully paid and non-assessable.
5.9. ERISA. The Unfunded Liabilities of all Single Employer
Plans do not in the aggregate exceed $10,000,000. Neither the
Borrower nor any other member of the Controlled Group has incurred, or
is reasonably expected to incur any withdrawal liability to
Multiemployer Plans in an aggregate amount which, when added to the
aggregate Unfunded Liabilities of all Single Employer Plans, would
exceed of $10,000,000. Each Plan complies in all material respects
with all applicable requirements of law and regulations and no
Reportable Event has occurred with respect to any Plan. Neither the
Borrower nor any other member of the Controlled Group has withdrawn
from any Plan or initiated steps to do so, and no steps have been
taken to reorganize or terminate any Plan.
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5.10. ACCURACY OF INFORMATION. No information, exhibit or
report furnished by the Borrower or any of its Subsidiaries to the
Lender in connection with the negotiation of, or compliance with, the
Loan Documents contained any material misstatement of fact or omitted
to state a material fact or any fact necessary to make the statements
contained therein not misleading.
5.11. REGULATION U. Margin stock (as defined in Regulation
U) constitutes less than 25% of those assets of the Borrower and its
Subsidiaries which are subject to any limitation on sale, pledge, or
other restriction hereunder.
5.12. COMPLIANCE WITH LAWS. The Borrower and its
Subsidiaries have complied in all respects with all applicable
statutes, rules, regulations, orders and restrictions of any domestic
or foreign government or any instrumentality or agency thereof, having
jurisdiction over the conduct of their respective businesses or the
ownership of their respective properties, except where failure to
comply would not reasonably be expected to have a Material Adverse
Effect. Neither the Borrower nor any Subsidiary has received any
notice to the effect that its operations are not in material
compliance with any of the requirements of applicable federal, state
and local environmental, health and safety statutes and regulations or
the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which
non-compliance or remedial action could reasonably be expected to have
a Material Adverse Effect.
5.13. INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary thereof is an "investment company" or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
ARTICLE VI
COVENANTS
---------
During the term of this Agreement, unless the Lender shall
otherwise consent in writing:
6.1. FINANCIAL REPORTING. The Borrower will maintain, for itself
and each Subsidiary, a system of accounting established and
administered in accordance with generally accepted accounting
principles and furnish to the Lenders:
(i) Within 90 days after the close of each of its fiscal
years, an unqualified audit report certified by
independent certified public accountants, acceptable to
the Lender, prepared in accordance with generally
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accepted accounting principles on a consolidated basis
for itself and the Subsidiaries, including balance
sheets as of the end of such period, related profit and
loss and reconciliation of surplus statements, and a
statement of cash flows, accompanied by (a) any
management letter prepared by said accountants, at the
request of the Lender, and (b) a certificate of said
accountants that, in the course of their examination
necessary for their certification of the foregoing,
they have obtained no knowledge of any Default or
Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall
exist, stating the nature and status thereof.
(ii) At the request of the Lender, within 90 days after the
close of each fiscal year of the Borrower, for each
active Subsidiary, an unaudited balance sheet as at the
close of such fiscal year and an unaudited profit and
loss statement for such fiscal year, all certified by
the Borrower's chief financial officer or Treasurer.
(iii) Within 60 days after the close of the first three
quarterly periods of each of its fiscal years, for
itself and the Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and
consolidated profit and loss and reconciliation of
surplus statements and a statement of cash flows for
the period from the beginning of such fiscal year to
the end of such quarter, all certified by the
Borrower's chief financial officer or Treasurer.
(iv) At the request of the Lender, within 60 days after the
close of the first three quarterly periods of each of
its fiscal years, for each active Subsidiary, an
unaudited balance sheet as at the close of each such
period and an unaudited profit and loss statement for
the period from the beginning of such fiscal year to
the end of such quarter, all certified by the
Borrower's chief financial officer or Treasurer.
(v) Together with the financial statements required
hereunder, a compliance certificate in substantially
the form of Exhibit "G" hereto signed by the Borrower's
chief financial officer or Treasurer showing the
calculations necessary to determine compliance with
this Agreement and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default
exists, stating the nature and status thereof.
(vi) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single
Employer Plan, certified as correct by an actuary
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enrolled under ERISA, except that the Borrower shall
not be required to deliver such statement for any such
fiscal year to the extent that such information is
specifically set forth in the audit report for such
fiscal year delivered to the Lender pursuant to clause
(i) of this Section 6.1.
(vii) As soon as possible and in any event within 10 days
after the Borrower knows that any Reportable Event has
occurred with respect to any Plan, a statement, signed
by the chief financial officer or Treasurer of the
Borrower, describing said Reportable Event and the
action which the Borrower proposes to take with respect
thereto.
(viii) As soon as possible and in any event within 10 days
after receipt by the Borrower, a copy of (a) any notice
or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a
result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, and
(b) any notice alleging any violation of any federal,
state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries
which, in the case of either clause (a) or clause (b),
could reasonably be expected to have a Material Adverse
Effect.
(ix) Promptly upon the furnishing thereof to the
shareholders of the Borrower, copies of all financial
statements, reports and proxy statements so furnished.
(x) Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly
or other regular reports which the Borrower or any of
its Subsidiaries files with the Securities and Exchange
Commission.
(xi) Such other information (including non-financial
information) as the Lender may from time to time
reasonably request.
6.2. USE OF PROCEEDS. The Borrower will use the proceeds of the
Advances for the general corporate needs of the Borrower and to repay
outstanding Advances. The Borrower will not use any of the proceeds
of the Advances to (i) purchase or carry any "margin stock" (as
defined in Regulation U), (ii) acquire any security in any transaction
which is subject to Sections 13 and 14 of the Securities Exchange Act
of 1934 or (iii) make any unfriendly Acquisition.
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6.3. NOTICE OF DEFAULT. The Borrower will, and will cause each
Subsidiary to, give prompt notice in writing to the Lender of (i) the
occurrence of any Default or Unmatured Default and of any other
development, financial or otherwise, which would have a Material
Adverse Effect, or (ii) any threatened or pending litigation or
governmental proceeding or labor controversy against the Borrower or
any Subsidiary which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect.
6.4. CONDUCT OF BUSINESS. The Borrower will, and will cause each
Subsidiary to, carry on and conduct its business in substantially the
same manner and in substantially the same fields of enterprise as it
is presently conducted and to do all things necessary to remain duly
incorporated, validly existing and in good standing as a domestic or
foreign corporation, as the case may be, in its jurisdiction of
incorporation and maintain all requisite authority to conduct its
business in each jurisdiction in which its business is conducted;
PROVIDED, that nothing contained in this Section 6.4 shall prohibit
(a) any Subsidiary from entering into a merger or consolidation
otherwise permitted by Section 6.11 or (b) the liquidation of any
Subsidiary substantially all of whose assets have been transferred to
the Borrower or another Subsidiary in compliance with Section 6.12.
6.5. TAXES. The Borrower will, and will cause each Subsidiary
to, pay when due all taxes, assessments and governmental charges and
levies upon it or its income, profits or property, except those which
(a) are being contested in good faith and as to which adequate
reserves have been provided or (b) do not in the aggregate exceed
$4,000,000 and the failure to pay which could not reasonably be
expected to have a Material Adverse Effect.
6.6. INSURANCE. The Borrower will, and will cause each
Subsidiary to, maintain with financially sound and reputable insurance
companies insurance on all their property in such amounts and covering
such risks as is consistent with sound business practice, and the
Borrower will furnish to any Lender upon request full information as
to the insurance carried.
6.7. COMPLIANCE WITH LAWS. The Borrower will, and will cause
each Subsidiary to, comply in all material respects with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or
awards to which it may be subject.
6.8. MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its properties in good repair, working
order and condition, and make all necessary and proper repairs,
renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times.
6.9. INSPECTION. The Borrower will, and will cause each
Subsidiary to, permit the Lender, by its representatives and agents,
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to inspect any of the properties, corporate books and financial
records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the
Borrower and each Subsidiary, and to discuss the affairs, finances and
accounts of the Borrower and each Subsidiary with, and to be advised
as to the same by, their respective officers at such reasonable times
and intervals as the Lender may designate.
6.10. RESTRICTED PAYMENTS. The Borrower will not, nor will
it permit any Subsidiary to, declare or make any Restricted Payments,
which together with all Restricted Payments made on or after May 31,
1995 would exceed an amount equal to the sum of (i) $20,000,000 plus
(ii) 50% of Consolidated Net Income for the period commencing June 1,
1994 and extending to and including the last day of the fiscal year of
the Borrower immediately preceding the date on which such Restricted
Payment was made, said period to be taken as one accounting period,
except that:
(a) The Borrower may declare and pay dividends payable
solely in stock of the Borrower of the same class as that on
which such dividend is paid.
(b) The Borrower may purchase, redeem or otherwise acquire
or retire any class of its stock out of the proceeds of, or in
exchange for, a substantially concurrent issue and sale of the
same class of such stock in addition to that now issued and
outstanding.
(c) Any Subsidiary may declare and pay dividends to the
Borrower.
6.11. MERGER. The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person,
except that:
(a) Any Domestic Subsidiary may merge or consolidate with
the Borrower (providing the Borrower shall be the continuing or
surviving corporation).
(b) Any Domestic Subsidiary may merge or consolidate with
any other Domestic Subsidiary which is a Wholly-Owned Subsidiary.
(c) Any Foreign Subsidiary may merge or consolidate with
any other Subsidiary which is a Wholly-Owned Subsidiary (provided
that if a Domestic Subsidiary is involved, such Domestic
Subsidiary shall be the continuing or surviving corporation).
6.12. SALE OF ASSETS. The Borrower will not, nor will it
permit any Subsidiary to, sell, lease, transfer, assign or otherwise
dispose of (including, for the avoidance of doubt, in connection with
a sale leaseback transaction), any of its assets (including, for the
avoidance of doubt, the capital stock of Subsidiaries, but excluding
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(i) inventory sold in the ordinary course of the Borrower's or any
Subsidiary's business, (ii) property formerly used in the Borrower's
or any Subsidiary's business which is worn out or obsolete, (iii)
assets of any Domestic Subsidiary transferred to the Borrower or to
another Domestic Subsidiary which is a Wholly-Owned Subsidiary, (iv)
assets of any Foreign Subsidiary transferred to the Borrower or to
another Subsidiary which is a Wholly-Owned Subsidiary, (v) assets
permitted to be sold or otherwise transferred pursuant to Section 6.13
and (vi) promissory note ("Payment Note") received as partial or full
payment for assets sold) if, after giving effect thereto, the sum of
all such assets transferred, assigned or otherwise disposed of during
the twelve-month period ending with (and including) the month of such
disposition either (a) represents more than 10% of Consolidated Assets
determined as of the date of (and after giving effect to) such
disposition or (b) were responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the
Borrower and its Subsidiaries during such twelve-month period.
6.13. SALE OF ACCOUNTS. Anything in Section 6.12 to the
contrary notwithstanding, the Borrower will not, nor will it permit
any Subsidiary to, sell, with or without recourse, transfer, assign,
encumber or otherwise dispose of any of its note or accounts
receivable, leases or chattel paper (collectively referred to in this
Section as "Accounts") to any Person, except that:
(a) The Borrower or any Subsidiary may sell or otherwise
dispose of any of its Accounts to the Borrower or any Subsidiary
on terms and conditions which are in compliance with Section
6.20.
(b) The Borrower or any Subsidiary may enter into any
arrangement with another Person pursuant to which such Person
collects the Accounts of the Borrower or such Subsidiary on
behalf of the Borrower or such Subsidiary, so long as such
arrangement does not provide for any transfer of title to, or any
other interest in, such Accounts to such Person.
(c) The Borrower or any Subsidiary may sell or otherwise
dispose of its Foreign Accounts to any Person for the purposes of
collection, provided that the aggregate face amount of all such
Foreign Accounts so transferred by the Borrower and its
Subsidiaries during any fiscal year of the Borrower shall not
exceed an amount equal to 15% of the gross Accounts of the
Borrower and its Subsidiaries as of the last day of the
Borrower's immediately preceding fiscal year and determined from
the Borrower's consolidated balance sheet delivered pursuant to
Section 6.1(i).
(d) The Borrower or any Subsidiary may sell or otherwise
dispose of its Accounts which arise from the sale of machinery
and equipment and have payment terms longer than 90 days and
payable in installments.
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(e) The Borrower or any Subsidiary may sell or otherwise
dispose of Payment Note as permitted under Section 6.12.
6.14. INVESTMENTS AND ACQUISITIONS. The Borrower will not,
nor will it permit any Subsidiary to, make or suffer to exist any
Investments (including without limitation, loans and advances to, and
other Investments in, Subsidiaries), or commitments therefor, or to
create any Subsidiary or to become or remain a partner in any
partnership or joint venture, or to make any Acquisition of any
Person, except:
(a) Short-term obligations of, or fully guaranteed by, the
United States of America.
(b) Commercial paper rated A-1 or better by Standard
and Poor's Corporation or P-1 or better by Moody's Investors
Service, Inc.
(c) Demand deposit accounts maintained in the ordinary
course of business.
(d) Certificates of deposit issued by and time
deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000.
(e) Existing Investments in Subsidiaries and other
Investments in existence on the date hereof and described in
Schedule "1" hereto.
(f) Loans by the Borrower to its Domestic
Subsidiaries.
(g) Equity Investments by AAR Financial Services Corp.
in leveraged leases of aircraft, aircraft engines and
related products.
(h) Loans by the Borrower and its Subsidiaries to
their respective officers and key employees in an aggregate
amount not to exceed $4,000,000 at any one time outstanding.
(i) Investments in the unrated Goldman Sachs Money
Market Trust Institution Liquid Asset Fund in an amount not
to exceed $15,000,000 in the aggregate, provided, that if at
any time such Fund changes its investment strategy or risk
profile or is credit rated, it is reasonably acceptable to
the Lender.
(j) Investments evidenced by Payment Note.
(k) Acquisitions by the Borrower and all Subsidiaries
during the term of this Agreement not in excess of an
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aggregate amount equal to 25% of Consolidated Tangible Net
Worth as of the last day of the Borrower's fiscal year
immediately preceding the date on which such Acquisition is
made.
(l) Investments in addition to those permitted under
clauses (a) through (k) of this Section, provided that after
giving effect thereto the aggregate amount of all such
Investments for the Borrower and all Subsidiaries during the
term of this Agreement shall not exceed the greater of (i)
$6,000,000 or (ii) 20% of Consolidated Tangible Net Worth as
of the last day of the Borrower's fiscal year immediately
preceding the date on which any such Investment is made.
In determining the amount of Investments permitted under this
Section, Investments shall always be taken at the original cost
thereof, regardless of any subsequent appreciation or depreciation
therein, and loans and advances shall be taken at the principal amount
thereof then remaining unpaid from time to time.
6.15. CONTINGENT OBLIGATIONS. The Borrower will not, nor
will it permit any Subsidiary to, make or suffer to exist any
Contingent Obligation (including, without limitation, any Contingent
Obligation with respect to the obligations of a Subsidiary), except:
(a) Contingent Obligations resulting from endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of the Borrower's and each
Subsidiary's business.
(b) Contingent Obligations by the Borrower of any
Subsidiary's Indebtedness (including, for the avoidance of doubt,
obligations arising out of overdraft and similar cash management
facilities) permitted to exist pursuant to this Agreement and any
Subsidiary's obligations for Rentals permitted by Section 6.17.
(c) Contingent Obligations by the Borrower or any
Subsidiary (other than those referred to in clause (a)
above) so long as (both before and after giving effect
thereto) the sum of (i) Consolidated Funded Debt plus (ii)
the aggregate amount of Contingent Obligations of the
Borrower and its Subsidiaries does not exceed 50% of
Consolidated Total Capitalization.
6.16. LIENS. The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of or on
the property of the Borrower or any of its Subsidiaries, except:
(a) Liens for taxes, assessments or governmental charges or
levies on its property if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings and
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for which adequate reserves in accordance with generally accepted
principles of accounting shall have been set aside on its books.
(b) Deposits or pledges to secure performance of bids,
tenders, contracts (other than contracts for the repayment of
Indebtedness), leases, public or statutory obligations, surety or
appeal bonds, or other deposits or pledges for purposes of like
general nature in the ordinary course of the Borrower's business
or any Subsidiary's business.
(c) Liens incurred by the Borrower or any Subsidiary in
connection with the acquisition of property provided such Liens
shall attach only to the property acquired in the transactions in
which such Liens were created or assumed and shall secure only
Indebtedness incurred to finance the cost of acquiring such
property.
(d) Liens arising out of pledges or deposits under workers'
compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar
legislation.
(e) Liens imposed by law, such as carriers', warehousemen's
and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations
not more than 60 days past due or which are being contested in
good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.
(f) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature
generally existing with respect to properties of a similar
character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in
the business of the Borrower or the Subsidiaries.
(g) Liens existing on the date hereof and described in
Schedule "2" hereto.
(h) Liens which secure only Indebtedness of any Domestic
Subsidiary to the Borrower.
(i) Subject to Section 6.15(c), Liens on property the
purchase of which is being financed by the Borrower or any
Domestic Subsidiary, as the case may be, by letters of credit (or
similar instruments) issued for the account of the Borrower or
any Domestic Subsidiary, as the case may be, provided such Liens
secure only the letter of credit (or similar instrument) which is
being used to finance the purchase of such property and provided
further such Liens attach only to such property.
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(j) Liens incurred by the Borrower in connection with
the real estate located in Wooddale, Illinois, known as the
Corporate Headquarters of the Borrower.
6.17. RENTALS. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any obligation for
Rentals if, as a consequence thereof, obligations for Rentals created,
incurred or suffered to exist in any one fiscal year shall be in an
aggregate consolidated amount for the Borrower and its Subsidiaries in
excess of 5% of Consolidated Revenues as at the end of the Borrower's
fiscal year immediately preceding the date on which such obligation is
entered into, on a non-cumulative basis from year to year. It is
expressly agreed and understood that, for the purposes of this
Section, any contract between the Borrower or any Domestic Subsidiary
and the vendor of aircraft fuel shall not be considered a lease and
any payments made under any such contract by the Borrower or any
Domestic Subsidiary to such vendor shall not be considered a lease
payment.
6.18. RETIREMENT AND MODIFICATION OF SUBORDINATED
INDEBTEDNESS. The Borrower will not, nor will it permit any
Subsidiary to, purchase, acquire, redeem or retire, or make any
payment on account of principal of, any Subordinated Debt except at
the stated maturity thereof or as required by mandatory prepayment
provisions or sinking fund provisions relating thereto. The Borrower
will not, nor will it permit any Subsidiary to, alter, amend, modify,
rescind, terminate or waive, or permit any breach or event of default
to exist under, any note or note evidencing such Subordinated Debt.
6.19. AFFILIATES. The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without
limitation, the purchase or sale of any property or service) with, or
make any payment or transfer to, any Affiliate except in the ordinary
course of business and pursuant to the reasonable requirements of the
Borrower's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than the
Borrower or such Subsidiary would obtain in a comparable arms-length
transaction.
6.20. WORKING CAPITAL. The Borrower will maintain at all
times a ratio of Consolidated Current Assets to Consolidated Current
Liabilities of at least 1.50 to 1.00.
6.21. CONSOLIDATED TANGIBLE NET WORTH. The Borrower will
maintain at all times Consolidated Tangible Net Worth in an amount not
less than the sum of (a) $160,000,000 plus (b) the net cash proceeds
received by the Borrower from the sale of any of its capital stock on
or after May 31, 1996 plus (c) an amount equal to the aggregate of
one-third of Consolidated Net Income earned during each of its fiscal
years beginning with its fiscal year commencing June 1, 1996, said
fiscal years to be taken as one accounting period minus (d) amounts
(not to exceed $10,000,000 in the aggregate for the purposes of this
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covenant) either used for the purchase or retirement of the Borrower's
capital stock or representing the after tax write-down of assets and
associated costs on or after May 31, 1996.
6.22. RATIO OF CONSOLIDATED LIABILITIES TO CONSOLIDATED
TANGIBLE NET WORTH. The Borrower will maintain at all times
Consolidated Liabilities not in excess of 200% of Consolidated
Tangible Net Worth.
6.23. CONSOLIDATED SECURED LIABILITIES. The Borrower will
maintain at all times Consolidated Secured Liabilities in an amount
not in excess of $20,000,000. For purposes of calculating
Consolidated Secured Liabilities hereunder the obligations of the
Borrower not in excess of $10,000,000, secured by the real estate
located in Wooddale, Illinois, known as the Corporate Headquarters of
the Borrower, shall not be included.
6.24. LIMITATION ON FUNDED DEBT. The Borrower will not
permit the sum of (i) Consolidated Funded Debt plus (ii) the aggregate
amount of Contingent Obligations of the Borrower and its Subsidiaries
to exceed 50% of Consolidated Total Capitalization.
6.25. FIXED CHARGE COVERAGE RATIO. The Borrower will
maintain a Fixed Charge Coverage Ratio of not less than 1.20:1:00 as
of the last day of each fiscal quarter of the Borrower commencing on
the date immediately preceding the Revolving Credit Termination Date
and thereafter. The Fixed Charge Coverage Ratio shall be determined
based on four (4) of the previous five (5) fiscal quarters of the
Borrower that occurred immediately prior to the calculation date, at
the Borrower's option.
As used herein the following terms have the following meanings:
"Fixed Charge Coverage Ratio" means, for any period, the
ratio of (a) Consolidated Earnings Available for Fixed
Charges to (b) Consolidated Fixed Charges for such period.
"Consolidated Earnings Available for Fixed Charges" means,
for any period, the sum of (i) Consolidated Net Income
(excluding gains and losses from the sale of assets other
than in the ordinary course of business and income or losses
derived from discontinued operations), PLUS to the extent
deducted in determining Consolidated Net Income (ii) all
provisions for any federal, state, or other income taxes
made by the Borrower and its Subsidiaries during such
period, PLUS (iii) Consolidated Fixed Charges during such
period, and PLUS (v) deferred financing costs for such
period.
"Consolidated Fixed Charges" means, without duplication, for
any period, the sum of (i) current maturities for such
period, (ii) interest expense on indebtedness (excluding
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capitalized leases) for such period, PLUS (iii) total rental
expense under all leases other than capitalized leases, and
PLUS (iv) imputed interest expense under capitalized leases
for the Borrower and its Subsidiaries for such period.
ARTICLE VII
DEFAULTS
--------
The occurrence of any one or more of the following events shall
constitute a Default:
7.1. Any representation or warranty made (or deemed made pursuant
to Section 4.2) by or on behalf of the Borrower or any of its
Subsidiaries to the Lender under or in connection with this Agreement,
any Advance, any Letter of Credit, any Application or any certificate
or information delivered in connection with this Agreement or any
other Loan Document shall be materially false on the date as of which
made.
7.2. Nonpayment of principal of the Note when due, or nonpayment
of interest upon the Note or of any commitment fee or other
obligations under any of the Loan Documents within five Borrowing Days
after the same becomes due.
7.3. The breach by the Borrower of any of the terms or provisions
of Section 6.2, 6.3, 6.10 or 6.19; or the breach by the Borrower of
any of the terms or provisions of Section 6.11, 6.12, 6.13, 6.14,
6.15, 6.16, 6.17, 6.18 or 6.20 which is not remedied within 10 days
after written notice from the Lender.
7.4. The breach by the Borrower (other than a breach which
constitutes a Default under Section 7.1, 7.2 or 7.3) of any of the
terms or provisions of this Agreement which is not remedied within 30
days after written notice from the Lender.
7.5. Failure of the Borrower or any of its Subsidiaries to pay
any Indebtedness (other than the Obligations) in an aggregate
principal amount exceeding $2,000,000 when due; or the default by the
Borrower or any of its Subsidiaries in the performance of any term,
provision or condition contained in any agreement or agreements under
which any Indebtedness (other than the Obligations) in an aggregate
principal amount exceeding $2,000,000 was created or is governed, or
any other event shall occur or condition exist, the effect of which is
to cause, or to permit the holder or holders of such Indebtedness to
cause, such Indebtedness to become due prior to its stated maturity;
or any Indebtedness of the Borrower or any of its Subsidiaries (other
than the Obligations) in an aggregate principal amount exceeding
$2,000,000 shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the
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stated maturity thereof; or the Borrower or any of its Subsidiaries
shall not pay, or admit in writing its inability to pay, its debts
generally as they become due.
7.6. The Borrower or any of its Domestic Subsidiaries shall (i)
have an order for relief entered with respect to it under the Federal
bankruptcy laws as now or hereafter in effect, (ii) make an assignment
for the benefit of creditors, (iii) apply for, seek, consent to, or
acquiesce in, the appointment of a receiver, custodian, trustee,
examiner, liquidator or similar official for it or any substantial
part of its property, (iv) institute any proceeding seeking an order
for relief under the Federal bankruptcy laws as now or hereafter in
effect or seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail
to file an answer or other pleading denying the material allegations
of any such proceeding filed against it, (v) take any corporate action
to authorize or effect any of the foregoing actions set forth in this
Section 7.6 or (vi) fail to contest in good faith any appointment or
proceeding described in Section 7.7.
7.7. Without the application, approval or consent of the Borrower
or any of its Domestic Subsidiaries, a receiver, trustee, examiner,
liquidator or similar official shall be appointed for the Borrower or
any of its Domestic Subsidiaries or any substantial part of its
property, or a proceeding described in Section 7.6(iv) shall be
instituted against the Borrower or any of its Domestic Subsidiaries
and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 30 consecutive days.
7.8. Any Foreign Subsidiary shall have taken or instituted or
permitted to be taken or instituted any action or proceeding, or any
such action or proceeding is instituted against such Foreign
Subsidiary, whereby a substantial amount of its property shall or may
be assigned or in any manner transferred or delivered to any receiver,
assignee, liquidator or other Person, whether appointed by such
Foreign Subsidiary or by a court or by any governmental authority or
any law, whereby such property shall or may be distributed among the
creditors of such Foreign Subsidiary, provided the aggregate claims of
all such creditors against such Foreign Subsidiary or against all such
Foreign Subsidiaries shall exceed $1,000,000 and such action or
proceeding remains undismissed or unstayed on appeal for a period of
90 days; or any governmental authority having jurisdiction shall have
taken or instituted any action or proceeding for the dissolution or
disestablishment of any Foreign Subsidiary or for the suspension of
its operations, provided the assets of any such Foreign Subsidiary or
the aggregate assets of all such Foreign Subsidiaries shall exceed
$500,000 and such action or proceeding remains undismissed or unstayed
on appeal for a period of 90 days; or all of the property of any
Foreign Subsidiary shall have been condemned, seized or appropriated,
provided the net assets of any such Foreign Subsidiary or the
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aggregate net assets of all such Foreign Subsidiaries shall exceed
$1,000,000; or the total of all claims against any Foreign Subsidiary
or all Foreign Subsidiaries resulting from any action or proceeding
described in this Section 7.8 and the amount of assets or net assets,
as the case may be, of any Foreign Subsidiary or all Foreign
Subsidiaries which are subject to any action, proceeding,
condemnation, seizure or appropriation described in this Section 7.8
shall exceed $1,000,000.
7.9. Any court, government or governmental agency shall condemn,
seize or otherwise appropriate, or take custody or control of all or
any substantial portion of the property of the Borrower or any of its
Subsidiaries.
7.10. The Borrower or any of its Subsidiaries shall fail
within 30 days to pay, bond or otherwise discharge any judgment or
order for the payment of money in excess of $1,000,000, which is not
stayed on appeal or otherwise being appropriately contested in good
faith.
7.11. The Unfunded Liabilities of all Single Employer Plans
shall exceed in the aggregate $10,000,000; or any Reportable Event
shall occur in connection with any Plan; or the Borrower or any other
member of the Controlled Group shall have been notified by the sponsor
of a Multiemployer Plan that it has incurred withdrawal liability to
such Multiemployer Plan in an amount which, when aggregated with all
Unfunded Liabilities of all Single Employer Plans and all other
amounts required to be paid to Multiemployer Plans by the Borrower or
any other member of the Controlled Group as withdrawal liability,
exceeds $10,000,000.
7.12. Any court, government or governmental agency shall find
or hold, or formally notify the Borrower or any Subsidiary, that the
Borrower or any Subsidiary (i) has violated any federal, state or
local environmental, health or safety law or regulation, or (ii) bears
responsibility for any removal or remedial or similar action in
connection with the release by the Borrower or any other Person of any
toxic or hazardous waste or substance into the environment, or is
otherwise liable in any manner in connection with any such release;
and such finding, holding or notification could reasonably be expected
(taking into account the expected outcome of any legal appeals
available to the Borrower or such Subsidiary, as well as the
likelihood and extent of contribution from any other Persons who may
be jointly and severally liable with the Borrower or such Subsidiary)
to have a material adverse effect on the ability of the Borrower to
perform its obligations under the Loan Documents.
7.13. Any Change in Control shall occur.
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ARTICLE VIII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
----------------------------------------------
8.1. ACCELERATION. If any Default described in Section 7.6 or
7.7 occurs with respect to the Borrower, the obligations of the Lender
to make Advances and to issue Letters of Credit hereunder shall
automatically terminate and the Obligations shall immediately become
due and payable without any election or action on the part of the
Lender. If any other Default occurs, the Lender may terminate or
suspend the obligations of the Lender to make Advances and to issue
Letters of Credit hereunder, or by written notice to the Borrower
declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of
which the Borrower hereby expressly waives. The Lender agrees to give
the Borrower prompt subsequent notice of any termination or suspension
of the obligations of the Lender to make Advances and to issue Letters
of Credit hereunder; PROVIDED, that the giving of such notice shall
not be a condition to the effectiveness of any such termination or
suspension.
8.2. AMENDMENTS. The provisions of this Agreement and of each
other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and
consented to by the Borrower and the Lender.
8.3. PRESERVATION OF RIGHTS; WAIVERS, ETC. No delay or omission
of the Lender to exercise any right under the Loan Documents shall
impair such right or be construed to be a waiver of any Default or an
acquiescence therein, and the making of an Advance or issuance of a
Letter of Credit notwithstanding the existence of a Default or the
inability of the Borrower to satisfy the conditions precedent to such
Advance or issuance of a Letter of Credit shall not constitute any
waiver or acquiescence. Any single or partial exercise of any such
right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lender, and
then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be
cumulative and all shall be available to the Lender until the
Obligations have been paid in full.
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ARTICLE IX
GENERAL PROVISIONS
------------------
9.1. SURVIVAL OF REPRESENTATIONS. All representations and
warranties of the Borrower contained in this Agreement shall survive
delivery of the Note, the making of the Advances and the issuance of
the Letters of Credit herein contemplated.
9.2. GOVERNMENTAL REGULATION. Anything contained in this
Agreement to the contrary notwithstanding, the Lender shall not be
obligated to extend credit to the Borrower in violation of any
limitation or prohibition provided by any applicable statute or
regulation.
9.3. TAXES. Any taxes (excluding federal income taxes on the
overall net income of any Lender) or other similar assessments or
charges payable or ruled payable by any governmental authority in
respect of the Loan Documents shall be paid by the Borrower, together
with interest and penalties, if any.
9.4. HEADINGS. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation
of any of the provisions of the Loan Documents.
9.5. ENTIRE AGREEMENT. The Loan Documents embody the entire
agreement and understanding between the Borrower and the Lender and
supersede all prior agreements and understandings between the Borrower
and the Lender relating to the subject matter thereof.
9.6. BENEFITS OF THIS AGREEMENT. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other
than the parties to this Agreement and their respective successors and
assigns.
9.7. EXPENSES; INDEMNIFICATION. The Borrower shall reimburse the
Lender for any and all reasonable costs and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for the
Lender, which attorneys may be employees of the Lender) paid or
incurred by the Lender in connection with the preparation,
negotiation, execution, delivery, review, amendment, modification, and
administration of the Loan Documents. The Borrower also agrees to
reimburse the Lender for any and all reasonable costs and
out-of-pocket expenses (including attorneys' fees and time charges of
attorneys for the Lender, which attorneys may be employees of the
Lender) paid or incurred by the Lender in connection with the
collection and enforcement of the Loan Documents. The Borrower
further agrees to indemnify the Lender, its directors, officers and
employees against all losses, claims, damages, penalties, judgments,
liabilities and expenses (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Lender is a
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party thereto) which any of them may pay or incur arising out of any
term or condition contained in this Agreement or the other Loan
Documents, or the direct or indirect application or proposed
application of the proceeds of any Advance or Letter of Credit
hereunder, except to the extent any of the foregoing arises solely
from the gross negligence or wilful misconduct of the party requesting
indemnification. The obligations of the Borrower under this Section
shall survive the termination of this Agreement.
9.8. [Intentionally Omitted].
9.9. ACCOUNTING. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement
Accounting Principles.
9.10. SEVERABILITY OF PROVISIONS. Any provision in any Loan
Document
that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions
in that jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
9.11. NONLIABILITY OF THE LENDER. The relationship between
the Borrower and the Lender shall be solely that of borrower and
lender. The Lender shall not have any fiduciary responsibilities to
the Borrower. The Lender does not undertake any responsibility to the
Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower's business or operations.
9.12. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
9.13. CONSENT TO JURISDICTION. THE BORROWER AND THE LENDER
EACH HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN CHICAGO
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN
DOCUMENTS AND THE BORROWER AND THE LENDER EACH HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
BORROWER TO BRING PROCEEDINGS AGAINST THE LENDER, OR THE RIGHT OF THE
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER, IN THE COURTS OF ANY
OTHER JURISDICTION.
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9.14. CONFIDENTIALITY. The Lender agrees to use any
confidential information which it may receive from the Borrower
pursuant to this Agreement solely for the purposes of administering
and monitoring this Agreement and to hold such confidential
information in confidence, except for disclosure (i) to its
Affiliates, (ii) to legal counsel, accountants, and other professional
advisors to the Lender who are advised of and agree to be bound by
this Section 9.14, (iii) to regulatory officials, (iv) as requested
pursuant to or as required by law, regulation, or legal process, (v)
in connection with any legal proceeding to which the Lender is a
party, and (vi) permitted by Section 12.4; PROVIDED that in the case
of each of the preceding clauses (iv) and (v), such Lender agrees, to
the extent reasonably possible and to the extent that it is legally
permitted to do so, to give the Borrower prior notice of such
disclosure and not resist any efforts by the Borrower to obtain
confidential treatment therefor.
9.15. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT
OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
ARTICLE X
[Intentionally Omitted]
ARTICLE XI
SETOFF; RATABLE PAYMENTS
------------------------
11.1. SETOFF. In addition to, and without limitation of, any
rights of the Lender under applicable law, so long as any Default has
occurred and is continuing, any indebtedness from the Lender to the
Borrower (including all account balances, whether provisional or final
and whether or not collected or available) may be offset and applied
toward the payment of the Obligations then due and owing to the
Lender.
ARTICLE XII
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
-------------------------------------------------
12.1. SUCCESSORS AND ASSIGNS. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit of
the Borrower and the Lender and their respective successors and
-43-<PAGE>
assigns, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents and (ii) any
assignment by the Lender must be made in compliance with Section 12.3.
Notwithstanding clause (ii) of this Section, the Lender may at any
time, without the consent of the Borrower, assign all or any portion
of its rights under this Agreement and the Note to a Federal Reserve
Bank; provided, however, that no such assignment shall release the
transferor Lender from its obligations hereunder. Any assignee or
transferee of the Note agrees by acceptance thereof to be bound by all
the terms and provisions of the Loan Documents. Any request,
authority or consent of any Person, who at the time of making such
request or giving such authority or consent is the holder of the Note,
shall be conclusive and binding on any subsequent holder, transferee
or assignee of the Note or of any Note or Notes issued in exchange
therefor.
12.2. PARTICIPATIONS.
12.2.1. PERMITTED PARTICIPANTS; EFFECT. The Lender may,
in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Advance,
any Letter of Credit, the Note, the Commitment or any other
interest of the Lender under the Loan Documents. The Lender
selling such participating interests to a Participant agrees to
promptly notify the Borrower of such sale and the identity of
such Participant. In the event of any such sale by the Lender of
participating interests to a Participant, the Lender's
obligations under the Loan Documents shall remain unchanged, the
Lender shall remain solely responsible for the performance of
such obligations, the Lender shall remain the holder of the Note
for all purposes under the Loan Documents, and the Borrower shall
continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under the
Loan Documents.
12.2.2. VOTING RIGHTS. The Lender shall retain the sole
right to approve, without the consent of any Participant, any
amendment, modification or waiver of any provision of the Loan
Documents other than any amendment, modification or waiver with
respect to any Advance, Letter of Credit or Commitment in which
such Participant has an interest which forgives principal,
interest or fees or reduces the interest rate or fees payable
with respect to any such Advance, Letter of Credit or Commitment,
postpones any date fixed for any regularly-scheduled payment of
principal of, or interest or fees on, any such Advance, Letter of
Credit or Commitment, releases any guarantor of any such Advance
or Letter of Credit or releases any substantial portion of
collateral, if any, securing any such Advance or Letter of
Credit.
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12.2.3. BENEFIT OF SETOFF. The Borrower agrees that each
Participant shall be deemed to have the right of setoff provided
in Section 11.1 in respect of its participating interest in
amounts owing under the Loan Documents to the same extent as if
the amount of its participating interest were owing directly to
it as the Lender under the Loan Documents.
12.3. ASSIGNMENTS.
12.3.1. PERMITTED ASSIGNMENTS. The Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations
under the Loan Documents. Unless a Default has occurred and is
continuing, the consent of the Borrower shall be required prior
to an assignment becoming effective with respect to a Purchaser
which is not an Affiliate of the Lender.
12.3.2. [Intentionally Omitted].
12.4. DISSEMINATION OF INFORMATION. The Borrower authorizes
the Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation of law
(each a "Transferee") and any prospective Transferee any and all
information in the Lender's possession concerning the creditworthiness
of the Borrower and its Subsidiaries; provided that each Transferee
and prospective Transferee agrees in writing for the benefit of the
Borrower to be bound by Section 9.14.
ARTICLE XIII
NOTICES
-------
13.1. GIVING NOTICE. Except as otherwise permitted by
Section 2.20 with respect to Borrowing Notices and Eurodollar
Conversion Notices, all notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall
be in writing or by facsimile and addressed or delivered to such party
at its address set forth below its signature hereto or at such other
address as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage
prepaid, shall be deemed given when received; any notice, if
transmitted by facsimile, shall be deemed given when transmitted.
13.2. CHANGE OF ADDRESS. The Borrower and the Lender may
each change the address for service of notice upon it by a notice in
writing to the other party hereto.
-45-<PAGE>
ARTICLE XIV
COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such
counterpart.
IN WITNESS WHEREOF, the Borrower and the Lender have executed
this Agreement as of the date first above written.
AAR CORP.
By:___________________________________
Title:________________________________
1100 North Wood Dale Road
Wood Dale, Illinois 60191
Attn: Timothy J. Romanesko
Vice President-Chief
Financial Officer and
Treasurer
THE NORTHERN TRUST COMPANY
By:___________________________________
Title:________________________________
50 South LaSalle Street
Chicago, Illinois 60675
Attn: Michelle Teteak
Vice President
-46-<PAGE>
SCHEDULE "l"
OTHER INVESTMENTS
(See Section 6.14)
Investment Investment Amount of
In By Investment
---------- ---------- ----------
NONE<PAGE>
SCHEDULE "2"
LIENS
(See Section 6.16)
Mortgage lien on facilities located in Frankfort, New York to secure
indebtedness of Subsidiary AAR Engine Component Services, Inc. to
Norstar Bank in connection with Industrial Revenue Bond financing of
such facilities.
Mortgage lien on facilities located in Aberdeen, North Carolina to
secure indebtedness of Subsidiary AAR Brooks and Perkins Corp. to
North Carolina National Bank in connection with Industrial Revenue
Bond financing of such facilities.
Security interest in aircraft and related equipment to secure
indebtedness of AAR Financial Services Corp. in connection with
ownership of such aircraft and related equipment.<PAGE>
EXHIBIT "A"
NOTE
$10,000,000 Chicago, Illinois
November 1, 1997
For value received, AAR CORP., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of THE NORTHERN TRUST
COMPANY (the "Lender") in lawful money of the United States of America
in immediately available funds, at the office of the Lender, 50 South
La Salle Street, Chicago, Illinois 60675 the principal sum of TEN
MILLION AND NO/100 DOLLARS ($10,000,000) or, if less, the aggregate
unpaid principal amount of all Advances made by the Lender to the
Borrower pursuant to the Credit Agreement referred to below on the
dates set forth in the Credit Agreement. The Borrower shall pay the
principal of the Advances in full on the Facility Termination Date and
shall make such other mandatory payments as are required to be made
pursuant to the Credit Agreement.
Borrower also promises to pay interest to the Lender on the
unpaid principal amount owing hereunder from time to time in like
money at said office from the date hereof until paid in full at the
rates and the times provided in the Agreement. Interest also shall be
payable on any overdue payment of principal and (tho the extent
permitted by law) interest as provided in the Agreement.
This Note is issued pursuant to, and is entitled to the benefits
of, the Credit Agreement, dated as of November 1, 1997, as it may be
amended, supplemented, extended or otherwise modified from time to
time, between the Borrower and the Lender (the "Credit Agreement").
Reference is hereby made to the Credit Agreement for a statement of
the terms and conditions governing this Note, including the terms and
conditions under which this Note may be prepaid or its maturity date
accelerated. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Credit
Agreement.
This Note may, subject to the terms of the Agreement, be declared
(without demand, notice or legal process of any kind other than as
expressly specified in the Agreement) and thereupon immediately shall
become due and payable. The Borrower hereby waives presentment,
demand, protest, notice of protest, notice of demand and notice of
non-payment hereof.
If, as a result of any circumstance whatsoever, the fulfillment
of any payment obligation under this Note would result in a violation
of any applicable usury statute or any other similar law, then the
payment obligation to be fulfilled will be reduced to the limit
provided in such statute or law, so that in no event shall any payment
of or requirement to pay interest under this Note be in excess of the
limit established by any such statute or law. In no event shall the<PAGE>
Borrower be bound to pay interest in any amount in excess of the legal
limit for the use, forbearance or detention of money.
The validity, construction and enforcement of this Note and the
rights and obligations of the holder and the Borrower hereunder, shall
be governed by and construed in accordance with the substantive laws
of the State of Illinois (without regard to conflicts of law
principles).
The Borrower irrevocably consents to the service or process in
any action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Borrower, such
service to be effective ten (10) days after such mailing. The
Borrower absolutely and irrevocably consents and submits to the
jurisdiction of the courts of the State of Illinois and of any Federal
court located in such State in connection with any action or
proceeding brought against the Borrower by the Lender arising out of
or relating to this Note. Nothing herein shall affect the right of
the Lender to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the Borrower
in any other jurisdiction.
THE BORROWER ABSOLUTELY AND IRREVOCABLY WAIVES TRIAL BY JURY AND
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
THE BORROWER MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING, INCLUDING WITH RESPECT TO ANY MATTER WHICH MIGHT
BE ASSERTED AGAINST THE BORROWER, IN ANY SUCH ACTION OR PROCEEDING.
AAR CORP.
By:_______________________________
Title:____________________________
-2-<PAGE>
EXHIBIT "B"
EXTENSION LETTER
____________, 19__
To: The Northern Trust Company
Re: Proposed Extension of the Revolving Credit Termination Date
-----------------------------------------------------------
DATE
Ladies/Gentlemen:
We make reference to that certain Credit Agreement dated as of
November 1, 1997, between AAR Corp. and The Northern Trust Company, as
it may from time to time be amended, modified, renewed or extended
(the "Credit Agreement"). All capitalized terms used herein shall have
the meanings attributed to them in the Credit Agreement.
The Revolving Credit Termination Date currently in effect under
the Credit Agreement is __________, 19__.
The Borrower desires to extend the Revolving Credit Termination
Date by one year and accordingly requests hereby that the Lenders
agree to extend the Revolving Credit Termination Date to __________,
19__.
If the foregoing proposed extension of the Revolving Credit
Termination Date meets with your approval, please so indicate by
executing and returning to the Borrower the accompanying copy of this
letter. Upon receipt by the Borrower of this letter executed by the
Lender, the Revolving Credit Termination Date under the Credit
Agreement shall henceforth be __________, 19__.
Sincerely yours,
AAR CORP.
By:________________________________
Title:_____________________________
ACCEPTED AND AGREED TO:
THE NORTHERN TRUST COMPANY
By:____________________________
Title:_________________________<PAGE>
EXHIBIT "C"
BORROWING NOTICE
_______________, 19__
To: The Northern Trust Company
Re: Borrowing Notice
----------------
Ladies/Gentlemen:
We make reference to that certain Credit Agreement dated as of
November 1, 1997, between AAR Corp. and The Northern Trust Company, as
it may from time to time be amended, modified, renewed or extended
(the "Credit Agreement"). All capitalized terms used herein shall have
the meanings attributed to them in the Credit Agreement.
The Borrower hereby gives irrevocable notice pursuant to Section
2.10 of the Credit Agreement for the following Advance(s):
Borrowing Date: ______________, 19__1
Principal Amount2 Type of Advance3 Interest Period4
---------------- --------------- ---------------
Sincerely yours,
AAR CORP.
By:________________________________
Title:_____________________________
1 Borrowing Date must be a Business Day prior to or on the
Revolving Credit Termination Date.
2 Subject to the minimum amount requirements set forth in Section
2.8.
3 Specify Floating Rate Advance or Eurodollar Advance.
4 Applicable to Eurodollar Advances only. See definition of
Interest Period and Section 2.14 (Restrictions on Interest
Periods).<PAGE>
EXHIBIT "D"
FORM OF LETTER OF CREDIT APPLICATION<PAGE>
EXHIBIT "E"
November __, 1997
The Northern Trust Company
50 S. LaSalle Street
Chicago, Illinois 60675
Gentlemen/Ladies:
We are counsel for AAR Corp., a Delaware corporation (the
"Borrower"), and have represented the Borrower in connection with its
execution and delivery of a Credit Agreement dated as of November 1,
1997 between the Borrower and The Northern Trust Company (the
"Lender"), providing for Advances in an aggregate principal amount not
exceeding $10,000,000 at any one time outstanding (the "Agreement").
All capitalized terms used in this opinion and not otherwise defined
shall have the meanings attributed to them in the Agreement.
We have examined the Borrower's articles of incorporation,
by-laws, resolutions, the Loan Documents and such other matters of
fact and law which we deem necessary in order to render this opinion.
Based upon the foregoing, it is our opinion that:
1. The Borrower and each Subsidiary are corporations duly
incorporated, validly existing and in good standing under the laws of
their states of incorporation and have all requisite authority to
conduct their business in each jurisdiction in which their business is
conducted.
2. The execution and delivery of the Loan Documents by the
Borrower and the performance by the Borrower of the Obligations have
been duly authorized by all necessary corporate action and proceedings
on the part of the Borrower and will not:
(a) require any consent of the Borrower's shareholders;
(b) violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on the Borrower or
any of its Subsidiaries or the Borrower's or any Subsidiary's
articles of incorporation or by-laws or any indenture, instrument
or agreement binding upon the Borrower or any of its
Subsidiaries; or
(c) result in, or require, the creation or imposition of
any Lien pursuant to the provisions of any indenture, instrument
or agreement binding upon the Borrower or any of its
Subsidiaries.
3. The Loan Documents have been duly executed and delivered by
the Borrower and constitute legal, valid and binding obligations of<PAGE>
the Borrower enforceable in accordance with their terms except to the
extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors,
rights generally and subject also to the availability of equitable
remedies if equitable remedies are sought.
4. Except as set forth in the Borrower's Form 10-K filed with
the Securities and Exchange Commission for its fiscal year ended May
31, 1997, there is no litigation or proceeding against the Borrower or
any of its Subsidiaries which, if adversely determined, could have a
Material Adverse Effect.
5. No approval, authorization, consent, adjudication or order
of any governmental authority, which has not been obtained by the
Borrower or any of its Subsidiaries, is required to be obtained by the
Borrower or any of its Subsidiaries in connection with the execution
and delivery of the Loan Documents, the borrowings under the Agreement
or in connection with the payment by the Borrower of the Obligations.
This opinion may be relied upon by the Lender and its
participants, assignees and other transferees.
Very truly yours,
___________________________________
-2-<PAGE>
EXHIBIT "F"
LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
To: The Northern Trust Company
50 S. LaSalle Street
Chicago, Illinois 60675
Re: Credit Agreement, dated as of November 1, 1997 (as the same may
be amended or modified, the "Credit Agreement"), between AAR
Corp. and The Northern Trust Company.
Terms used herein and not otherwise defined shall have the
meanings assigned thereto in the Credit Agreement.
The Lender is specifically authorized and directed to act upon
the following standing money transfer instructions with respect to the
proceeds of Advances or other extensions of credit from time to time
until receipt by the Lender of a specific written revocation of such
instructions by the Borrower, provided, however, that the Lender may
otherwise transfer funds as hereafter directed in writing by the
Borrower in accordance with Section 13.1 of the Credit Agreement or
based on any telephonic notice made in accordance with Section 2.20 of
the Credit Agreement.
Facility Identification Number(s) ____________________________________
Customer/Account Name ________________________________________________
Transfer Funds To ____________________________________________________
____________________________________________________
____________________________________________________
For Account No. ____________________________________________________
Reference/Attention To _______________________________________________
Authorized Officer (Customer
Representative) Date _________________________
_________________________________ ________________________________
(Please Print) Signature
Bank Officer Name Date Date _________________________
_________________________________ ________________________________
(Please Print) Signature<PAGE>
(Deliver Completed Form to Credit Support Staff For Immediate
Processing)
-2-<PAGE>
EXHIBIT "G"
COMPLIANCE CERTIFICATE
To: The Northern Trust Company
50 S. LaSalle Street
Chicago, Illinois 60675
This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of November 1, 1997 (as amended, modified,
renewed or extended from time to time, the "Agreement") between AAR
Corp. and The Northern Trust Company. Unless otherwise defined
herein, capitalized terms used in this Compliance Certificate have the
meanings ascribed thereto in the Agreement.
THE UNDERSIGNED HEREBY CERTIFY THAT:
1. I am the duly elected ___________________ of the Borrower;
2. I have reviewed the terms of the Agreement and I have made,
or have caused to be made under my supervision, a detailed review of
the transactions and conditions of the Borrower and its Subsidiaries
during the accounting period covered by the attached financial
statements;
3. The examinations described in paragraph 2 did not disclose,
and I have no knowledge of, the existence of any condition or event
which constitutes a Default or Unmatured Default during or at the end
of the accounting period covered by the attached financial statements
or as of the date of this Certificate, except as set forth below; and
4. Schedule I attached hereto sets forth financial data and
computations evidencing the Borrower's compliance with certain
covenants of the Agreement, all of which data and computations are
true, complete and correct.
Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period
during which it has existed and the action which the Borrower has
taken, is taking, or proposes to take with respect to each such
condition or event:
______________________________________________________
______________________________________________________
______________________________________________________
The foregoing certifications, together with the computations set
forth in Schedule I hereto and the financial statements delivered with<PAGE>
this Certificate in support hereof, are made and delivered this _____
day of _______________, 19__.
__________________________________
-2-<PAGE>
[SAMPLE]
SCHEDULE I TO COMPLIANCE CERTIFICATE
Schedule Of Compliance as of __________, 19__ with Provisions
of Sections 6.21, 6.22, 6.23, 6.24, 6.25 and 6.26 of the Agreement<PAGE>
EXHIBIT 4.9
DEPOSIT AGREEMENT
dated as of ________ __, ____
between
AAR CORP.
[NAME OF DEPOSITARY]
and
THE HOLDERS FROM TIME TO TIME OF THE DEPOSITARY SHARES
DESCRIBED HEREIN<PAGE>
DEPOSIT AGREEMENT
WHEREAS it is desired to provide, as hereinafter set forth in
this Deposit Agreement, for the deposit of shares of _____% Series ___
Preferred Stock, par value $1.00 per share, of AAR CORP. with the
Depositary (as hereinafter defined) for the purposes set forth in this
Deposit Agreement and for the issuance hereunder of Receipts (as
hereinafter defined) evidencing Depositary Shares (as hereinafter
defined) in respect of the Stock (as hereinafter defined) so
deposited;
NOW, THEREFORE, in consideration of the premises contained herein
and such other good and valuable consideration, receipt of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following definitions shall for all purposes, unless
otherwise indicated, apply to the respective terms used in this
Deposit Agreement and the Receipts:
"Certificate" shall mean the certificate of designations filed
with the Secretary of State of Delaware establishing the Stock as a
series of preferred stock of the Company.
"Company" shall mean AAR CORP., a Delaware corporation, and its
successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended
or supplemented from time to time.
"Depositary" shall mean __________, a _____________, and any
successor as Depositary hereunder.
"Depositary Shares" shall mean Depositary Shares, each
representing a ______ interest in a share of the Stock and evidenced
by a Receipt.
"Depositary's Agent" shall mean an agent appointed by the
Depositary pursuant to Section 7.05.
"Depositary's Office" shall mean the office of the Depositary at
____________________, ____________________, ____________________, at
which at any particular time its depositary receipt business shall be
administered.
"Receipt" shall mean one of the depositary receipts issued
hereunder, whether in definitive or temporary form.
"Record Holder" as applied with respect to a Depositary Share
shall mean the person in whose name a Receipt evidencing such<PAGE>
Depositary Share is registered on the books of the Depositary
maintained for such purpose.
"Registrar" shall mean any bank or trust company which shall be
appointed to register ownership and transfers of Receipts as herein
provided.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Stock" shall mean shares of the Company's _____% Series ___
Preferred Stock, par value $1.00 per share.
ARTICLE II
FORM OF RECEIPTS; DEPOSIT OF STOCK;
EXECUTION AND DELIVERY, TRANSFER,
SURRENDER AND REDEMPTION OF RECEIPTS
SECTION 2.01. Form and Transfer of Receipts. Definitive
Receipts shall be printed, lithographed, typewritten, mimeographed or
engraved or otherwise reproduced in any manner and shall be
substantially in the form set forth in Exhibit A annexed to this
Deposit Agreement, with appropriate insertions, omissions,
substitutions and other variations as are required or permitted by
this Agreement. As set forth in Section 2.09, all or a portion of the
Definitive Receipts may be represented by one or more book-entry
receipts (each, a "Book-Entry Receipt"). Pending the preparation of
definitive Receipts, the Depositary, upon the written order of the
Company delivered in compliance with Section 2.02, shall execute and
deliver temporary Receipts which are printed, lithographed,
typewritten, mimeographed or otherwise substantially of the tenor of
the definitive Receipts in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations
as the persons executing such Receipts may determine, as evidenced by
their execution of such Receipts. If temporary Receipts are issued,
the Company and the Depositary will cause definitive Receipts to be
prepared without unreasonable delay. After the preparation of
definitive Receipts, the temporary Receipts shall be exchangeable for
definitive Receipts upon surrender of the temporary Receipts at an
office described in the third paragraph of Section 2.02, without
charge to the holder. Upon surrender for cancellation of any one or
more temporary Receipts, the Depositary shall execute and deliver in
exchange therefor definitive Receipts representing the same number of
Depositary Shares as represented by the surrendered temporary Receipt
or Receipts. Such exchange shall be made at the Company's expense and
without any charge therefor. Until so exchanged, the temporary
Receipts shall in all respects be entitled to the same benefits under
this Deposit Agreement, and with respect to the Stock, as definitive
Receipts.
2<PAGE>
Receipts shall be executed by the Depositary by the manual
signature of a duly authorized officer of the Depositary; provided,
that such signature may be a facsimile if a Registrar for the Receipts
(other than the Depositary) shall have been appointed and such
Receipts are countersigned by manual signature of a duly authorized
officer of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or obligatory for
any purpose unless it shall have been executed manually by a duly
authorized officer of the Depositary or, if a Registrar for the
Receipts (other than the Depositary) shall have been appointed, by
facsimile signature of a duly authorized officer of the Depositary and
countersigned manually by a duly authorized officer of such Registrar.
The Depositary shall record on its books each Receipt so signed and
delivered as hereinafter provided.
Receipts may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the
provisions of this Deposit Agreement as may be required by the Company
or the Depositary or required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any
securities exchange upon which the Stock, the Depositary Shares or the
Receipts may be listed or to conform with any usage with respect
thereto, or to indicate any special limitations or restrictions to
which any particular Receipts are subject.
Subject to any limitations set forth in a Receipt or in this
Deposit Agreement title to Depositary Shares evidenced by a Receipt
which is properly endorsed or accompanied by a properly executed
instrument of transfer shall be transferable by delivery with the same
effect as in the case of a negotiable instrument; provided, however,
that until transfer of a Depositary Share shall be registered on the
books of the Depositary as provided in Section 2.04, the Depositary
may, notwithstanding any notice to the contrary, treat the Record
Holder thereof at such time as the absolute owner thereof for the
purpose of determining the person entitled to distributions of
dividends or other distributions with respect to the Stock or to any
notice provided for in this Deposit Agreement and for all other
purposes.
The Depositary shall not lend any Stock deposited hereunder.
SECTION 2.02. Deposit of Stock; Execution and Delivery of
Receipts in Respect Thereof. Subject to the terms and conditions of
this Deposit Agreement, the Company may from time to time deposit
shares of Stock under this Deposit Agreement by delivery to the
Depositary of a certificate or certificates representing the Stock to
be deposited. Such certificate or certificates representing the Stock
shall be properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement,
in form satisfactory to the Depositary, together with all such
certifications as may be required by the Depositary in accordance with
the provisions of this Deposit Agreement, and together with a written
3<PAGE>
order of the Company directing the Depositary to execute and deliver
to, or upon the written order of, the person or persons stated in such
order a Receipt or Receipts for the number of Depositary Shares
relating to such deposited Stock.
All Stock deposited by the Company with the Depositary shall be
held by the Depositary at the Depositary's Office or at such other
place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates
representing the Stock deposited in accordance with the provisions of
this Section, together with the other documents required as above
specified, and upon recordation of the Stock so deposited on the books
of the Company in the name of the Depositary or its nominee, the
Depositary, subject to the terms and conditions of this Deposit
Agreement, shall execute and deliver, to or upon the order of the
person or persons named in the written order delivered to the
Depositary referred to in the first paragraph of this Section, a
Receipt or Receipts for the number of Depositary Shares relating to
the Stock so deposited and registered in such name or names as may be
requested by such person or persons. The Depositary shall execute and
deliver such Receipt or Receipts at the Depositary's Office or such
other offices, if any, as the Depositary may designate. Delivery at
other offices shall be at the risk and expense of the person
requesting such delivery.
Other than in the case of splits, combinations or other
reclassifications affecting the Stock, or in the case of dividends or
other distributions of Stock, if any, there shall be deposited
hereunder not more than ______ shares of Stock.
SECTION 2.03. Redemption of Stock. Whenever the Company shall
elect to redeem shares of Stock in accordance with the provisions of
the Certificate, it shall (unless otherwise agreed in writing with the
Depositary) mail notice to the Depositary of such proposed redemption,
by first class mail, postage prepaid, not less than 40 or more than 70
days prior to the date fixed for redemption of Stock in accordance
with Section 3(b) of the Certificate. On the date of such redemption,
provided that the Company shall then have paid in full to the
Depositary the redemption price of the Stock to be redeemed, plus any
accrued and unpaid dividends thereon, the Depositary shall redeem the
Depositary Shares relating to such Stock. The Depositary shall mail
notice of such redemption and the proposed simultaneous redemption of
the number of Depositary Shares relating to the Stock to be redeemed,
by first-class mail, postage prepaid, not less than 30 and not more
than 60 days prior to the date fixed for redemption of such Stock and
Depositary Shares (the "Redemption Date"), to the Record Holders of
the Depositary Shares to be so redeemed, at the addresses of such
holders as they appear on the records of the Depositary; provided,
however, neither failure to mail any such notice to one or more such
holders nor any defect in any notice to one or more such holders shall
affect the sufficiency of the proceedings for redemption as to other
4<PAGE>
holders. Each such notice shall state: (i) the Redemption Date; (ii)
the place or places where Receipts evidencing Depositary Shares are to
be surrendered for payment of the redemption price; (iii) the
redemption price; (iv) that dividends in respect of the Stock
underlying the Depositary Shares to be redeemed will cease to accrue
and accumulate at the close of business on such Redemption Date; (v)
the number of Depositary Shares to be redeemed and, if less than all
the Depositary Shares held by any such holder are to be redeemed, the
number of such Depositary Shares held by such holder to be so
redeemed; and (vi) if a date other than the Redemption Date, the date
from and after which the Stock and Depositary Shares shall no longer
be deemed to be outstanding. In case less than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be so
redeemed shall be selected by lot, pro rata or such other method as
may be determined by the Depositary to be equitable.
Notice having been mailed by the Depositary as aforesaid, from
and after the Redemption Date (unless the Company shall have failed to
redeem the shares of Stock to be redeemed by it as set forth in the
Company's notice provided for in the preceding paragraph) all
dividends in respect of the Depositary Shares so called for redemption
shall cease to accrue and accumulate, the Depositary Shares being
redeemed from such proceeds shall be deemed to be no longer
outstanding, all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the redemption price)
shall, to the extent of such Depositary Shares, cease and terminate
and, upon surrender in accordance with such notice of the Receipts
evidencing any such Depositary Shares (properly endorsed or assigned
for transfer, if the Depositary shall so require), such Depositary
Shares shall be redeemed by the Depositary at a redemption price per
Depositary Share equal to the proportionate part of the redemption
price per share paid in respect of the shares of Stock plus all money
and other property, if any, paid with respect to such Depositary
Shares, including all amounts paid by the Company in respect of
dividends which on the Redemption Date have accumulated on the shares
of Stock to be so redeemed and have not theretofore been paid.
If less than all the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of
such Receipt upon its surrender to the Depositary, together with the
redemption payment, a new Receipt evidencing the Depositary Shares
evidenced by such prior Receipt and not called for redemption;
provided, however, that such Replacement Receipt shall be issued only
in denominations of whole Depositary Shares and cash will be payable
in respect of fractional interests.
SECTION 2.04. Registration of Transfer of Receipts. Subject to
the terms and conditions of this Deposit Agreement, the Depositary
shall register on its books from time to time transfers of Depositary
Shares upon any surrender of the Receipt or Receipts evidencing such
Depositary Shares by the holder in person or by duly authorized
attorney, properly endorsed or accompanied by a properly executed
5<PAGE>
instrument of transfer; provided, however, that except as otherwise
provided herein or in any Book-Entry Receipt, each Book-Entry Receipt
may be transferred only in whole and only to the Depositary, to
another nominee of the Depositary, to a successor depository, or to a
nominee of a successor depository. Thereupon the Depositary shall
execute a new Receipt or Receipts evidencing the same aggregate number
of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the
order of the person entitled thereto.
SECTION 2.05. Split-ups and Combinations of Receipts; Surrender
of Depositary Shares and Withdrawal of Stock. Upon surrender of a
Receipt or Receipts at the Depositary's Office or at such other
offices as it may designate for the purpose of effecting a split-up or
combination of such Receipt or Receipts, and subject to the terms and
conditions of this Deposit Agreement, the Depositary shall execute and
deliver a new Receipt or Receipts in the denominations requested,
evidencing the aggregate number of Depositary Shares evidenced by the
Receipt or Receipts surrendered. The Depositary shall give prompt
notice of such action and the certificate numbers to the Registrar for
the purposes of recording such split-up or consolidation.
Unless the Depositary Shares have previously been called for
redemption, any holder of Depositary Shares may withdraw the number of
whole shares of Stock underlying such Depositary Shares and all money
and other property, if any, underlying such Depositary Shares by
surrendering Receipts evidencing such Depositary Shares at the
Depositary's Office or at such other offices as the Depositary may
designate for such withdrawals. Thereafter, without unreasonable
delay, the Depositary shall deliver to such holder, or to the person
or persons designated by such holder as hereinafter provided, the
number of whole shares of Stock and all money and other property, if
any, underlying the Depositary Shares so surrendered for withdrawal,
but holders of such whole shares of Stock will not thereafter be
entitled to deposit such Stock hereunder or to receive Receipts
evidencing Depositary Shares therefor. If a Receipt or Receipts
delivered by a holder to the Depositary in connection with such
withdrawal shall evidence in the aggregate a number of Depositary
Shares in excess of the number of Depositary Shares representing the
number of whole shares of Stock to be so withdrawn, the Depositary
shall at the same time, in addition to such number of whole shares of
Stock and such money and other property, if any, to be so withdrawn,
deliver to such holder, or (subject to Sections 2.04 and 3.02) upon
his order, a new Receipt evidencing such excess number of Depositary
Shares. Delivery of the Stock and money and other property being
withdrawn may be made by delivery of such certificates, documents of
title and other instruments as the Depositary may deem appropriate.
Stock delivered pursuant to the preceding paragraph may be
endorsed with or have incorporated in the text thereof such legend or
recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to
6<PAGE>
comply with any applicable law or any regulation thereunder or with
the rules and regulations of any securities exchange upon which the
Stock may be listed or to conform with any usage with respect thereto,
or to indicate any special limitations or restrictions to which any
particular shares of Stock are subject.
If the Stock and the money and other property being withdrawn are
to be delivered to a person or persons other than the Record Holder of
the Depositary Shares evidenced by the Receipts being surrendered for
withdrawal of Stock, such holder shall execute and deliver to the
Depositary a written order so directing the Depositary and the
Depositary may require that the Receipt or Receipts surrendered by
such holder for withdrawal of such shares of Stock be properly
endorsed in blank or accompanied by a properly executed instrument of
transfer in blank.
Delivery of the Stock and money and other property, if any,
underlying the Depositary Shares surrendered for withdrawal shall be
made by the Depositary at the Depositary's Office, except that, at the
request, risk and expense of the holder surrendering such Depositary
Shares and for the account of such holder, such delivery may be made
at such other place as may be designated by such holder.
SECTION 2.06. Limitations on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts. As a condition precedent to the
execution and delivery, registration of transfer, split-up,
combination, surrender or exchange of any Receipt, the Depositary, any
of the Depositary's Agents or the Company may require payment to it of
a sum sufficient for the payment (or, in the event that the Depositary
or the Company shall have made such payment, the reimbursement to it)
of any charges or expenses payable by the holder of a Receipt pursuant
to Section 5.07, may require the production of evidence satisfactory
to it as to the identity and genuineness of any signature and may also
require compliance with the rules and regulations of any governmental
body, the New York Stock Exchange, any applicable self regulatory body
or such regulations, if any, as the Depositary or the Company may
establish consistent with the provisions of this Deposit Agreement.
The delivery of Receipts against Stock may be suspended, the
registration of transfer of Depositary Shares may be refused and the
registration of transfer, surrender or exchange of outstanding
Depositary Shares may be suspended (i) during any period when the
register of stockholders of the Company is closed or (ii) if any such
action is deemed necessary or advisable by the Depositary, any of the
Depositary's Agents or the Company at any time or from time to time
because of any requirement of law or of any government or governmental
body or commission, New York Stock Exchange or under any provision of
this Deposit Agreement.
SECTION 2.07. Lost Receipts, etc. In case any Receipt shall be
mutilated, destroyed, lost or stolen, the Depositary in its discretion
may execute and deliver a Receipt of like form and tenor in exchange
7<PAGE>
and substitution for such mutilated Receipt or in lieu of and in
substitution for such destroyed, lost or stolen Receipt, upon (i) the
filing by the holder thereof with the Depositary of evidence
satisfactory to the Depositary of such destruction or loss or theft of
such Receipt, of the authenticity thereof and of his or her ownership
thereof and (ii) the holder's furnishing of the Depositary with
reasonable indemnification satisfactory to such Depositary and the
Company.
SECTION 2.08. Cancellation and Destruction of Surrendered
Receipts. All Receipts surrendered to the Depositary or any
Depositary's Agent shall be canceled by the Depositary. Except as
prohibited by applicable law or regulation, the Depositary is
authorized to destroy all Receipts so canceled.
SECTION 2.09. Book-Entry Receipts. (a) All or a portion of the
Receipts may be represented by one or more Book-Entry Receipts
deposited with [the Depository Trust Company] (the "Depository") and
registered in the name of [Cede & Co.], a nominee of the Depository.
Each Book-Entry Receipt shall bear such legend or legends as may be
required by the Depository in order for it to accept the Depositary
Shares for its book-entry settlement system. Except as provided for
in Section 2.09(b) hereof, no person acquiring Receipts with book-
entry settlement through the Depository shall receive or be entitled
to receive definitive Receipts. Ownership of beneficial interests in
the Depositary Shares shall be shown on, and the transfer of such
ownership shall be affected through, records maintained by (i) the
Depository or its nominee for each Book-Entry Receipt, or (ii)
institutions that have accounts with the Depository (such institution,
with respect to a Depositary Share in its account, a "Participant").
(b) If the Depository subsequently ceases to make its book-entry
system available for the Depositary Shares, the Company may instruct
the Depository regarding making other arrangements for book-entry
settlement. In the event that the Depositary Shares are not eligible
for, or it is no longer necessary to have the Depositary Shares
available in, book-entry form, the Depositary shall provide written
instructions to the Depository to deliver to the Depositary for
cancellation each Book-Entry Receipt, and the Company shall instruct
the Depository to deliver to the Depositary definitive Receipts in
physical form evidencing such Depositary Shares. Such definitive
Receipts shall be in the form amended hereto as Exhibit A with
appropriate insertions, modification and omissions, as provided above.
ARTICLE III
CERTAIN OBLIGATIONS OF THE HOLDERS
OF RECEIPTS AND THE COMPANY
SECTION 3.01. Filing Proofs, Certificates and Other Information.
Any holder of a Depositary Share may be required from time to time to
file such proof of residence, or other matters or other information,
8<PAGE>
to obtain such guarantees of signature, to execute such certificates
and to make such representations and warranties as the Depositary or
the Company may deem reasonably necessary or proper. The Depositary
or the Company may withhold the delivery, or delay the registration of
transfer, redemption or exchange, of any Depositary Share or the
withdrawal of any Stock underlying Depositary Shares or the
distribution of any dividend or other distribution or the sale of any
rights or of the proceeds thereof until such proof or other
information is filed or such certificates are executed or such
representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other Governmental Charges.
Holders of Depositary Shares shall be obligated to make payments to
the Depositary of certain charges and expenses as provided in Section
5.07. Registration of transfer of any Depositary Share or any
withdrawal of Stock and delivery of all money or other property, if
any, underlying such Depositary Share may be refused until any such
payment due is made, and any dividends or other distributions may be
withheld or all or any part of the Stock or other property relating to
such Depositary Shares and not theretofore sold may be sold for the
account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale), and such dividends or other
distributions or the proceeds of any such sale may be applied to any
payment of such charges or expenses, the holder of such Depositary
Share remaining liable for any deficiency.
SECTION 3.03. Warranty as to Stock. The Company hereby
represents and warrants to the Depositary that the Stock, when issued,
will be validly issued, fully paid and nonassessable. Such
representation and warranty shall survive the deposit of the Stock and
the issuance of the Receipts.
SECTION 3.04. Warranty as to Receipts. The Depositary hereby
represents and warrants that the Receipts, when issued, will be legal,
valid and binding obligations of the Depositary, enforceable against
the Depositary in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. Such
representation and warranty shall survive the deposit of the Stock and
the issuance of the Receipts.
ARTICLE IV
THE DEPOSITED SECURITIES; NOTICES
SECTION 4.01. Cash Distributions. Whenever the Depositary shall
receive any cash dividend or other cash distribution on the Stock, the
Depositary shall, subject to Sections 3.01 and 3.02, distribute to the
Record Holders of Depositary Shares on the record date fixed pursuant
to Section 4.04 such amounts of such dividend or distribution as are,
as nearly as practicable, in proportion to the respective numbers of
9<PAGE>
Depositary Shares held by such holders; provided, however, that in
case the Company or the Depositary shall be required to withhold and
shall withhold from any cash dividend or other cash distribution in
respect of the Stock an amount on account of taxes, the amount made
available for distribution or distributed in respect of Depositary
Shares shall be reduced accordingly. The Depositary shall distribute
or make available for distribution, as the case may be, only such
amount, however, as can be distributed without attributing to any
holder of Depositary Shares a fraction of one cent, and any balance
not so distributable shall be held by the Depositary (without
liability for interest thereon) and shall be added to and be treated
as part of the next succeeding distribution to record holders of
Receipts.
SECTION 4.02. Distributions Other than Cash. Whenever the
Depositary shall receive any distribution other than cash with respect
to the Stock, the Depositary shall, subject to Sections 3.01 and 3.02,
distribute to the Record Holders of Depositary Shares on the record
date fixed pursuant to Section 4.04 such amounts of the securities or
property received by it as are, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares held by such
holders, in any manner that the Depositary may deem equitable and
practicable for accomplishing such distribution. If in the opinion of
the Depositary such distribution cannot be made proportionately among
such Record Holders, or if for any other reason (including any
requirement that the Company or the Depositary withhold an amount on
account of taxes or governmental charges) the Depositary deems, after
consultation with the Company, such distribution not to be feasible,
the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the purpose of
effecting such distribution, including the sale (at public or private)
of the securities or property thus received, or any part thereof, at
such place or places and upon such terms as it may deem proper. The
net proceeds of any such sale shall, subject to Sections 3.01 and
3.02, be distributed or made available for distribution, as the case
may be, by the Depositary to the Record Holders of Depositary Shares
entitled thereto as provided by Section 4.01 in the case of a
distribution received in cash. The Company shall not make any
distribution of such securities unless the Company shall have provided
an opinion of counsel to the effect that such securities have been
registered under the Securities Act or do not need to be registered.
SECTION 4.03. Subscription Rights, Preferences or Privileges.
If the Company shall at any time offer or cause to be offered to the
persons in whose names Stock is recorded on the books of the Company
any rights, preferences or privileges to subscribe for or to purchase
any securities or any rights, preferences or privileges of any other
nature, such rights, preferences or privileges shall in each such
instance be made available by the Depositary to the Record Holders of
Depositary Shares in such manner as the Depositary may determine,
either by the issue to such Record Holders of warrants representing
such rights, preferences or privileges or by such other method as may
10<PAGE>
be approved by the Depositary in its discretion with the approval of
the Company; provided, however, that (i) if at the time of issue or
offer of any such rights, preferences or privileges the Depositary
determines that it is not lawful or (after consultation with the
Company) not feasible to make such rights, preferences or privileges
available to holders of Depositary Shares by the issue of warrants or
otherwise, or (ii) if and to the extent so instructed by holders of
Depositary Shares who do not desire to exercise such rights,
preferences or privileges, then the Depositary, in its discretion
(with the approval of the Company, in any case where the Depositary
has determined that it is not feasible to make such rights,
preferences or privileges available), may, if applicable laws or the
terms of such rights, preferences or privileges permit such transfer,
sell such rights, preferences or privileges at public or private sale,
at such place or places and upon such terms as it may deem proper.
The net proceeds of any such sale shall, subject to Sections 3.01 and
3.02, be distributed by the Depositary to the Record Holders of
Depositary Shares entitled thereto as provided by Section 4.01 in the
case of a distribution received in cash. The Company shall not make
any distribution of such rights, preferences or privileges unless the
Company shall have provided an opinion of counsel to the effect that
such rights, preferences or privileges have been registered under the
Securities Act or do not need to be registered.
If registration under the Securities Act of the securities to
which any rights, preferences or privileges relate is required in
order for holders of Depositary Shares to be offered or sold the
securities to which such rights, preferences or privileges relate, the
Company agrees with the Depositary that it will file promptly a
registration statement pursuant to such Act with respect to such
rights, preferences or privileges and securities and use its best
efforts and take all steps available to it to cause such registration
statement to become effective sufficiently in advance of the
expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges. In no
event shall the Depositary make available to the holders of Depositary
Shares any right, preference or privilege to subscribe for or to
purchase any securities unless and until such a registration statement
shall have become effective, or unless the offering and sale of such
securities to such holders are exempt from registration under the
provision of such Act.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is
required in order for such rights, preferences or privileges to be
made available to the holders of Depositary Shares, the Company agrees
with the Depositary that the Company will use its best efforts to take
such action or obtain such authorization, consent or permit
sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights,
preferences or privileges.
11<PAGE>
SECTION 4.04. Notice of Dividends, etc.; Fixing of Record Date
for Holders of Depositary Shares. (i) Whenever any cash dividend or
other cash distribution shall become payable or any distribution other
than cash shall be made, (ii) if rights, preferences or privileges
shall at any time be offered, with respect to the Stock, (iii)
whenever the Depositary shall receive notice of (a) any meeting at
which holders of Stock are entitled to vote or of which holders of
Stock are entitled to notice, or (b) any election by the Company to
redeem any shares of Stock, or (iv) whenever the Depositary and the
Company shall decide it is appropriate) the Depositary shall in each
such instance fix a record date (which shall be the same date as the
record date fixed by the Company with respect to the Stock) for the
determination of the holders of Depositary Shares who shall be
entitled to receive a distribution in respect of such dividend,
distribution, rights, preferences or privileges or the net proceeds of
the sale thereof, or to give instructions for the exercise of voting
rights at any such meeting, or who shall be entitled to receive notice
of such meeting.
SECTION 4.05. Voting Rights. Upon receipt of notice of any
meeting at which the holders of the Stock are entitled to vote, the
Depositary shall, as soon as practicable thereafter, mail to the
Record Holders of Depositary Shares a notice which shall contain (i)
such information as is contained in such notice of meeting and (ii) a
statement informing holders of Depositary Shares that they may
instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of Stock underlying their respective
Depositary Shares and a brief statement as to the manner in which such
instructions may be given. Upon the written request of the holders of
Depositary Shares on the record date established in accordance with
Section 4.04, the Depositary shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set
forth in such requests, the maximum number of whole shares of Stock
underlying the Depositary Shares as to which any particular voting or
consent instructions are received. The Company hereby agrees to take
all action which may be deemed necessary by the Depositary in order to
enable the Depositary to vote such Stock or cause such Stock to be
voted. In the absence of specific instructions from the holder of a
Depositary Share, the Depositary will abstain from voting (but, at its
discretion, not from appearing at any meeting held with respect to
such Stock unless directed to the contrary by the holders of all the
Depositary Shares) to the extent of the Stock underlying the
Depositary Shares evidenced by such Receipt.
SECTION 4.06. Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par or
liquidation value, split-up, combination or other reclassification of
the Stock, or upon any recapitalization, reorganization, merger,
amalgamation or consolidation affecting the Company or to which it is
a party, the Depositary may in its discretion, with the approval of,
and shall upon the instructions of, the Company, and (in either case)
in such manner as the Depositary may deem equitable, (i) make such
12<PAGE>
adjustments in (a) the fraction of an interest in one share of Stock
underlying one Depositary Share and (b) the ratio of the redemption
price per Depositary Share to the redemption price of a share of the
Stock, in each case as may be necessary to reflect fully the effects
of such change in par or liquidation value, split-up, combination or
other reclassification of the Stock, or of such recapitalization,
reorganization, merger, amalgamation or consolidation and (ii) treat
any securities which shall be received by the Depositary in exchange
for or upon conversion of or in respect of the Stock as new deposited
securities so received in exchange for or upon conversion of or in
respect of such Stock. In any such case the Depositary may in its
discretion, with the approval of the Company, execute and deliver
additional Receipts, or may call for the surrender of all outstanding
Receipts to be exchanged for new Receipts specifically describing such
new deposited securities.
Anything to the contrary herein or in the Receipt
notwithstanding, holders of Receipts shall have the right from and
after the effective date or any such change in par or stated value,
split-up, combination or other reclassification of the Stock or any
such recapitalization, reorganization, merger, amalgamation,
consolidation or sale, to the extent that holders of Stock had the
right, prior to or on the applicable effective date, to convert,
exchange or surrender shares of Stock into or for other stock,
securities, property or cash, to surrender such Receipts to the
Depositary with instructions to convert, exchange or surrender the
Stock represented thereby only into or for, as the case may be, the
kind and amount of shares of stock and other securities and property
and cash into which the Stock represented by such Receipts has been
converted or for which such Stock might have been exchanged or
surrendered immediately prior to the effective date of such
transaction.
SECTION 4.07. Delivery of Reports. The Depositary will forward
to Record Holders of Receipts, at their respective addresses appearing
in the Depositary's books, all notices, reports and communications
received from the Company which are delivered to the Depositary and
which the Company is required to furnish to the holders of Stock or
Receipts.
SECTION 4.08. List of Holders. Promptly upon request from time
to time by the Company, the Depositary shall furnish to it a list, as
of a recent date, of the names, addresses and holdings of Depositary
Shares of all persons in whose names Depositary Shares are registered
on the books of the Depositary or Registrar, as the case may be.
13<PAGE>
ARTICLE V
THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY
SECTION 5.01. Maintenance of Offices, Agencies and Transfer
Books by the Depositary; Registrar. Upon execution of this Deposit
Agreement, the Depositary shall maintain at the Depositary's Offices
or at any Registrar's Office, facilities for the execution and
delivery, surrender and exchange of Receipts and the registration and
registration of transfer of Depositary Shares and at the offices of
the Depositary's Agents, if any, facilities for the delivery,
surrender and exchange of Receipts and the registration of transfer of
Depositary Shares, all in accordance with the provisions of this
Deposit Agreement. The Depositary shall have complete access to all
books and records maintained on the Company's behalf at such
Depositary's Offices or at such Registrar's Offices.
The Depositary shall keep books at the Depositary's Office for
the registration and registration of transfer of Depositary Shares,
which books at all reasonable times shall be open for inspection by
the Record Holders of Depositary Shares; provided, that any such
holder requesting to exercise such right shall certify to the
Depositary that such inspection shall be for a proper purpose
reasonably related to such person's interest as an owner of Depositary
Shares.
The Depositary may close such books, at any time or from time to
time, when deemed expedient by it in connection with the performance
of its duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or the
Stock underlying such Depositary Shares shall be listed on the New
York Stock Exchange, the Depositary may, with the approval of the
Company, appoint a Registrar for registration of such Receipts or
Depositary Shares in accordance with any requirements of such
Exchange. Such Registrar (which may be the Depositary if so permitted
by the requirements of such Exchange) may be removed and a substitute
registrar appointed by the Depositary upon the request or with the
approval of the Company. If such Receipts, such Depositary Shares or
such Stock are listed on one or more other stock exchanges, the
Depositary will, at the request of the Company, arrange such
facilities for the delivery, registration, registration of transfer,
surrender and exchange of such Receipts, such Depositary Shares or
such Stock as may be required by law or applicable stock exchange
regulation.
SECTION 5.02. Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents, any Registrar or the Company.
Neither the Depositary nor any of the Depositary's Agent nor any
Registrar nor the Company shall incur any liability to any holder of
any Depositary Share if by reason of any provision of any present or
14<PAGE>
future law, or regulation thereunder, of the United States of America
or of any other governmental authority or, in the case of the
Depositary, any Depositary's Agent or any Registrar, by reason of any
provision, present or future, of the Company's Certificate of
Incorporation (including the Certificate) or by reason of any act of
God or war or other circumstance beyond the control of the relevant
party, the Depositary, any Depositary's Agent, any Registrar or the
Company shall be prevented or forbidden from doing or performing any
act or thing which the terms of this Deposit Agreement provide shall
be done or performed; nor shall the Depositary, any Depositary's
Agent, any Registrar or the Company incur any liability to any holder
of a Depositary Share (i) by reason of any nonperformance or delay,
caused as aforesaid, in the performance of any act or thing which the
terms of this Deposit Agreement provide shall or may be done or
performed, or (ii) by reason of any exercise of, or failure to
exercise, any discretion provided for in this Deposit Agreement
except, in the case of any such exercise or failure to exercise
discretion not caused as aforesaid, if caused by the gross negligence
or willful misconduct of the party charged with such exercise or
failure to exercise.
SECTION 5.03. Obligations of the Depositary, the Depositary's
Agents, any Registrar and the Company. Neither the Depositary nor any
Depositary's Agent nor any Registrar nor the Company assumes any
obligation or shall be subject to any liability under this Deposit
Agreement to holders of Depositary Shares other than for its
negligence or willful misconduct.
Neither the Depositary nor any Depositary's Agent nor any
Registrar nor the Company shall be under any obligation to appear in,
prosecute or defend any action, suit or other proceeding in respect of
the Stock, the Depositary Shares or the Receipts which in its opinion
may involve it in expense or liability unless indemnity satisfactory
to it against all expense and liability be furnished as often as may
be required.
Neither the Depositary nor any Depositary's Agent nor any
Registrar nor the Company shall be liable for any action or any
failure to act by it in reliance upon the written advice of legal
counsel or accountants, or information from any person presenting
Stock for deposit, any holder of a Depositary Share or any other
person believed by it in good faith to be competent to give such
information. The Depositary, any Depositary's Agent, any Registrar
and the Company may each rely and shall each be protected in acting
upon any written notice, request, direction or other document believed
by it to be genuine and to have been signed or presented by the proper
party or parties.
The Depositary shall not be responsible for any failure to carry
out any instruction to vote any of the shares of Stock or for the
manner or effect of any such vote, as long as any such action or non-
action is in good faith. The Depositary undertakes and shall cause any
15<PAGE>
Registrar to undertake, to perform such duties and only such duties as
are specifically set forth in this Deposit Agreement using its
reasonable best efforts and in good faith. The parties hereto
acknowledge that no implied covenants or obligations shall be read
into this Deposit Agreement against the Depositary or any Registrar.
The Depositary will indemnify the Company against any liability which
may arise out of acts performed or omitted by the Depositary or its
agents due to its or their gross negligence or bad faith. The
Depositary, any Depositary's Agents, any Registrar and the Company may
own and deal in any class of securities of the Company and its
affiliates and in Depositary Shares. The Depositary may also act as
transfer agent or registrar of any of the securities of the Company
and its affiliates.
SECTION 5.04. Resignation and Removal of the Depositary;
Appointment of Successor Depositary. The Depositary may at any time
resign as Depositary hereunder by notice of its election so to do
delivered to the Company, such resignation to take effect upon the
appointment of a successor Depositary and its acceptance of such
appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by
notice of such removal delivered to the Depositary, such removal to
take effect upon the appointment of a successor Depositary and its
acceptance of such appointment as hereinafter provided.
In case the Depositary acting hereunder shall at any time resign
or be removed, the Company shall, within 60 days after the delivery of
the notice of resignation or removal, as the case may be, appoint a
successor Depositary, which shall be a bank or trust company having
its principal office in the United States of America and having a
combined capital and surplus of at least $50,000,000. If no successor
Depositary shall have been so appointed within 60 days after delivery
of such notice, the resigning or removed Depositary may petition any
court of competent jurisdiction for the appointment of a successor
Depositary. Every successor Depositary shall execute and deliver to
its predecessor and to the Company an instrument in writing accepting
its appointment hereunder, and thereupon such successor Depositary,
without any further act or deed, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor and for
all purposes shall be the Depositary under this Deposit Agreement, and
such predecessor, upon payment of all sums due it and on the written
request of the Company, shall execute and deliver an instrument
transferring to such successor all rights and powers of such
predecessor hereunder, shall duly assign, transfer and deliver all
right, title and interest in the Stock and any moneys or property held
hereunder to such successor and shall deliver to such successor a list
of the Record Holders of all outstanding Depositary Shares. Any
successor Depositary shall promptly mail notice of its appointment to
the Record Holders of Depositary Shares.
16<PAGE>
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary
without the execution or filing of any document or any further act.
Such successor Depositary may authenticate the Receipts in the name of
the predecessor Depositary or in the name of the successor Depositary.
SECTION 5.05. Corporate Notices and Reports. The Company agrees
that it will deliver to the Depositary and the Depositary will,
promptly after receipt thereof, transmit to the Record Holder of
Depositary Shares, in each case at the address furnished to it
pursuant to Section 4.08, all notices, reports and communications
(including without limitation financial statements) required by law,
the rules of any national securities exchange upon which the Stock,
the Depositary Shares or the Receipts are listed or by the Company's
Certificate of Incorporation (including the Certificate) to be
furnished by the Company to holders of the Stock. Such transmission
will be at the Company's expense and the Company will provide the
Depositary with such number of copies of such documents as the
Depositary may reasonably request.
SECTION 5.06. Indemnification by the Company. The Company shall
indemnify the Depositary, any Depositary's Agent and any Registrar
against, and hold each of them harmless from, any loss, liability or
expense (including the costs and expenses of defending itself) which
may arise out of (i) acts performed or omitted in connection with this
Deposit Agreement and the Depositary Shares (a) by the Depositary, any
Registrar or any of their respective agents (including any
Depositary's Agent), except for any liability arising out of
negligence, willful misconduct or bad faith on the respective parts of
any such person or persons, or (b) by the Company or any of its
agents, or (ii) the offer, sale or registration of the Depositary
Shares or the Stock pursuant to the provisions hereof. The
obligations of the Company set forth in this Section 5.06 shall
survive any succession of any Depositary, Registrar or Depositary's
Agent.
SECTION 5.07. Charges and Expenses. The Company shall pay all
transfer and other taxes and governmental charges arising solely from
the existence of the depositary arrangements. The Company shall pay
all charges of the Depositary in connection with the initial deposit
of the Stock and the initial issuance of the Receipts, any redemption
of the Stock at the option of the Company and any withdrawals of Stock
by holders of Depositary Shares. All other transfer and other taxes
and governmental charges shall be at the expense of holders of
Depositary Shares. The Depositary may refuse to effect any transfer
of a Receipt or any withdrawal of Stock evidenced hereby until all
such taxes and charges with respect to such receipt or stock are paid
by the holders thereof. If, at the request of a holder of a
Depositary Share, the Depositary incurs charges or expenses for which
it is not otherwise liable hereunder, such holder will be liable for
such charges and expenses. All other charges and expenses of the
Depositary, any Depositary's Agent hereunder and any Registrar
17<PAGE>
(including, in each case, fees and expenses of counsel) incident to
the performance of their respective obligations hereunder will be paid
upon consultation and agreement between the Depositary and the Company
as to the amount and nature of such charges and expenses. The
Depositary shall present its statement for charges and expenses to the
Company once every three months or at such other intervals as the
Company and the Depositary may agree.
ARTICLE VI
AMENDMENT AND TERMINATION
SECTION 6.01. Amendment. The form of the Receipts and any
provisions of this Deposit Agreement may at any time and from time to
time be amended by agreement between the Company and the Depositary in
any respect which they may deem necessary or desirable; provided,
however, that no such amendment which shall materially and adversely
alter the rights of the existing holders of Depositary Shares shall be
effective unless such amendment shall have been approved by the
holders of at least a majority of the Depositary Shares then
outstanding. Every holder of an outstanding Depositary Share at the
time any such amendment becomes effective shall be deemed, by
continuing to hold such Depositary Share, to consent and agree to such
amendment and to be bound by this Deposit Agreement as amended
thereby. In no event shall any amendment impair the right, subject to
the provisions of Sections 2.05 and 2.06 hereof, of any owner of any
Depositary Shares to surrender any Receipt evidencing such Depositary
Shares to the Depositary with instructions to deliver to the holder
the Stock and all money and other property, if any, represented
thereby, except in order to comply with mandatory provisions of
applicable law or the rules and regulations of any governmental body,
agency or commission, the depository for any Book-Entry Receipts, the
New York Stock Exchange or any applicable stock exchange.
SECTION 6.02. Termination. This Deposit Agreement may be
terminated by the Company or the Depositary only after (i) all
outstanding Depositary Shares shall have been redeemed and any
accumulated and unpaid dividends on the Stock represented by the
Depositary Shares, together with all other moneys and property, if
any, to which holders of the related Receipts are entitled under the
terms of such Receipts or this Deposit Agreement, have been paid or
distributed as provided in this Deposit Agreement or provision
therefor has been duly made pursuant to Section 2.03, (ii) all the
Stock has been withdrawn pursuant to Section 2.05 or (iii) there shall
have been made a final distribution in respect of the Stock in
connection with any liquidation, dissolution or winding up of the
Company and such distribution shall have been distributed to the
holders of Receipts pursuant to Section 4.01 or 4.02, as applicable.
Whenever the Deposit Agreement has been terminated pursuant to (iii)
above, the Depositary will mail notice of such termination to the
record holders of all Depositary Shares then outstanding at least 30
days prior to the date fixed in that notice for termination of the
18<PAGE>
Deposit Agreement. If any Depositary Shares remain outstanding after
the date of termination, the Depositary thereafter will discontinue
the transfer of Depositary Shares, will suspend the distribution of
dividends to the owners thereof, and will not give any further notices
(other than notice of such termination) or perform any further acts
under this Deposit Agreement, except that the Depositary will continue
(i) to collect dividends on the Stock and any other distributions with
respect thereto and (ii) to deliver or cause to be delivered shares of
Stock, together with such dividends and distributions, or principal
and interest, and the net proceeds of any sales of rights,
preferences, privileges or other property (other than real property)
in exchange for Depositary Shares surrendered. At any time after the
expiration of three years from the date of termination, the Depositary
may sell the Stock then held by it at a public or private sale, at
such place or places and upon such terms as it deems proper and may
thereafter hold the net proceeds of such sale, without liability for
interest, for the pro rata benefit of the owners of the Depositary
Shares which have not theretofore been surrendered. Subject to
applicable escheat laws, any monies set aside by the Company in
respect of any payment with respect to the Stock represented by the
Depositary Shares, or dividends thereon, and unclaimed at the end of
three years from the date upon which such payment is due and payable
shall revert to the general funds of the Company, after which
reversion the holders of such Depositary Shares shall look only to the
general funds of the Company for payment thereof.
Upon the termination of this Deposit Agreement, the parties
hereto shall be discharged from all obligations under this Deposit
Agreement except for their respective obligations under Sections 5.03,
5.06 and 5.07.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Counterparts. This Deposit Agreement may be
executed in any number of counterparts and by each of the parties
hereto on separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed an original, but all such
counterparts taken together shall constitute one and the same
instrument.
SECTION 7.02. Exclusive Benefit of Parties. This Deposit
Agreement is for the exclusive benefit of the parties hereto and their
respective successors hereunder and shall not be deemed to give any
legal or equitable right, remedy or claim to any other person
whatsoever.
SECTION 7.03. Invalidity of Provisions. In case any one or more
of the provisions contained in this Deposit Agreement or in the
Receipts should be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
19<PAGE>
provisions contained herein or therein shall in no way be affected,
prejudiced or disturbed thereby.
SECTION 7.04. Notices. Any and all notices to be given to the
Company hereunder or under the Receipts shall be in writing and shall
be deemed to have been duly given if personally delivered or sent by
mail or telegram or telex confirmed by letter, addressed to the
Company at 1100 N. Wood Dale Road, Wood Dale, Illinois 60191;
telephone (630) 227-2040, facsimile (630) 227-2059 Attention:
____________, or at any other address of which the Company shall have
notified the Depositary in writing.
Any and all notices to be given to the Depositary hereunder or
under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail or by
telegram, telecopy or telex confirmed by letter, addressed to the
Depositary at the Depositary's Office,
at________________________________, telephone (___) _____-_________,
facsimile (___) _____-_________, Attention: ___________, or at any
other address and to the attention of any other person of which the
Depositary shall have notified the Company in writing.
Any and all notices to be given to any Record Holder of a Receipt
hereunder or under the Receipts shall be in writing and shall be
deemed to have been duly given if personally delivered or sent by
mail, telegram or telex (and confirmed by letter in the case of a
telegram or telex), to such Record Holder at the address of such
Record Holder as such address appears on the books of the Depositary
or if such holder shall have filed with the Depositary a written
request that notices intended for such holder be mailed to some other
address, at the address designated in such request.
Delivery of a notice sent by mail or by telegram or telex shall
be deemed to be effected at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a
telegram or telex message) is deposited, postage prepaid, in a post
office letter box. The Depositary or the Company may, however, act
upon any telegram or telex message received by it from the other or
from any holder of a Depositary Share, notwithstanding that such
telegram or telex message shall not subsequently be confirmed by
letter or as aforesaid.
SECTION 7.05. Depositary's Agents. The Depositary may from time
to time, with the prior approval of the Company, appoint Depositary's
Agents to act in any respect for the Depositary for the purposes of
this Deposit Agreement and may at any time appoint additional
Depositary's Agents and vary or terminate the appointment of such
Depositary's Agents. The Depositary will notify the Company of any
such action.
SECTION 7.06. Holders of Receipts Are Parties. The holders of
Depositary Shares from time to time shall be parties to this Deposit
20<PAGE>
Agreement and shall be bound by all of the terms and conditions hereof
and of the Receipts evidencing such Depositary Shares by acceptance of
delivery thereof.
SECTION 7.07. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND EACH
RECEIPT AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF
AND THEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ILLINOIS (WITHOUT REFERENCE TO APPLICABLE
CONFLICTS OF LAW PROVISIONS).
SECTION 7.08. Inspection of Deposit Agreement. Copies of this
Deposit Agreement shall be filed with the Depositary and the
Depositary's Agents and shall be open to inspection during business
hours at the Depositary's Office and the respective offices of the
Depositary's Agents, if any, by any holder of a Depository Share.
SECTION 7.09. Headings. The headings of articles and sections
in this Deposit Agreement and in the form of Receipt set forth in
Exhibit A hereto have been inserted for convenience only and are not
to be regarded as part of this Deposit Agreement or the Receipts or as
having any bearing upon the meaning or interpretation of any provision
contained herein or in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly
executed this Deposit Agreement as of the day and year first above set
forth, and all holders of Depositary Shares shall become parties
hereto by and upon acceptance by them of delivery of Receipts
evidencing such Depositary Shares and issued in accordance with the
terms hereof.
AAR CORP.
By____________________________
[Name and Title]
____________________________
As Depositary
By ___________________________
Authorized Officer
21<PAGE>
EXHIBIT A
FORM OF DEPOSITARY RECEIPT
FOR DEPOSITARY SHARES
[GENERAL FORM OF FACE OF RECEIPT]
NUMBER DEPOSITARY SHARES
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES,
REPRESENTING __% SERIES ____ PREFERRED STOCK
AAR CORP.
Incorporated under the laws of the State of Delaware
This Depositary Receipt is transferable
in New York, New York
______________________________, as Depositary, (the
"Depositary"), hereby certifies that ______________________________ is
the registered owner of ____________________ Depositary Shares
("Depositary Shares"), each Depositary Share representing an interest
in one share of ____% Series ____ Preferred Stock, par value $1.00 per
share (the "Stock"), of AAR CORP., a Delaware corporation (the
"Company"), on deposit with the Depositary, subject to the terms and
entitled to the benefits of the Deposit Agreement dated as of
____________________, 199_ (the "Deposit Agreement"), between the
Company, the Depositary and all holders from time to time of
Depositary Receipts. By accepting this Depositary Receipt the holder
hereof becomes a party to and agrees to be bound by all the terms and
conditions of the Deposit Agreement. This Depositary Receipt shall not
be valid or obligatory for any purpose or entitled to any benefits
under the Deposit Agreement unless it shall have been executed by the
Depositary by the manual signature of a duly authorized officer or, if
executed in facsimile by the Depositary, countersigned by a Registrar
in respect of the Depositary Receipts by the manual signature of a
duly authorize officer thereof.
Dated: ______________
Depositary
By ________________________________
Authorized Officer
Registrar
By ________________________________
Authorized Officer
A-1<PAGE>
[GENERAL FORM OF REVERSE OF RECEIPT]
AAR CORP.
AAR CORP. WILL FURNISH WITHOUT CHARGE TO EACH RECEIPT HOLDER WHO SO
REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A COPY OR SUMMARY OF THE
PORTIONS OF THE CERTIFICATE OF INCORPORATION ESTABLISHING THE POWERS,
DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL OR
OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF WHICH
AAR CORP. IS AUTHORIZED TO ISSUE AND THE QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS OF SUCH CLASS. ANY
SUCH REQUEST IS TO BE ADDRESSED TO AAR CORP., ONE AAR PLACE, 1100
NORTH WOOD DALE ROAD, WOOD DALE, ILLINOIS 60191, ATTENTION:
______________.
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - _______________ Custodian ________________
(Cust) (Minor)
under the Uniform Gifts to Minors Act ___________________
(State)
Additional abbreviations may also be used though not in the above
list. For value received, _______________ hereby sell(s), assign(s)
and transfer(s) unto _______________.
(Please insert social security or other identifying number of
assignee)
----------------------------------------------------------------------
Please print or typewrite name and address including postal zip code
of assignee __________
Depositary Shares represented by the within receipt and all rights
thereunder, and do hereby irrevocably constitute and appoint _________
Attorney to transfer said Depositary Shares on the books of the
within-named Depositary with full power of substitution in the
premises.
A-2<PAGE>
Dated: ____________________
___________________________________
NOTICE. The signature(s) to this
assignment must correspond with the
name(s) as written upon the face of
this instrument in every particular,
without alteration or enlargement
or any change whatever.
A-3<PAGE>
EXHIBIT 4.10
------------
[DEBT SECURITIES] [[SERIES __ PREFERRED STOCK] [COMMON STOCK]
[DEPOSITARY SHARES] WARRANT AGREEMENT
dated as of ________ __, ____
between
AAR CORP.
and
[NAME OF WARRANT AGENT], as Warrant Agent
[Debt Securities] [[Series __ Preferred Stock] [Common Stock]
[Depositary Share]
Warrants
Expiring ________ __, ____<PAGE>
TABLE OF CONTENTS
ARTICLE I - ISSUANCE OF WARRANTS AND FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES . . . . . . . . . . . . . 2
SECTION 1.01. Issuance of Warrants . . . . . . . . . . . . . 2
SECTION 1.02. Form, Execution and Delivery of Warrant
Certificates . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Transfer of Warrants . . . . . . . . . . . . . 4
SECTION 1.04. Lost, Stolen, Mutilated or Destroyed Warrant
Certificates . . . . . . . . . . . . . . . . . 6
SECTION 1.05. Cancellation of Warrant Certificates . . . . . 6
SECTION 1.06. Treatment of Holders . . . . . . . . . . . . . 6
ARTICLE II - EXERCISE PRICE, DURATION AND EXERCISE OF WARRANTS . . 7
SECTION 2.01. Exercise Price . . . . . . . . . . . . . . . . 7
SECTION 2.02. Duration of Warrants . . . . . . . . . . . . . 7
SECTION 2.03. Exercise of Warrants . . . . . . . . . . . . . 8
SECTION 2.04. Adjustment Under Certain Circumstances . . . . 10
ARTICLE III - OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS
[If Warrants are to be issued in Book-Entry Form:
AND BENEFICIAL OWNERS] OF WARRANTS . . . . . . . . . . . . . . 10
SECTION 3.01. No Rights as Holders of Warrant Securities
Conferred by Warrants or Warrant Certificates . 10
SECTION 3.02. Holder [If Warrants are to be issued in
Book-Entry form: and Beneficial Owner] of Warrant
May Enforce Rights . . . . . . . . . . . . . . 10
ARTICLE IV - CONCERNING THE WARRANT AGENT . . . . . . . . . . . . . 11
SECTION 4.01. Warrant Agent . . . . . . . . . . . . . . . . . 11
SECTION 4.02. Limitations on Warrant Agent's Obligations . . 11
SECTION 4.03. Compliance With Applicable Laws . . . . . . . . 13
SECTION 4.04. Resignation and Appointment of Successor . . . 13
ARTICLE V - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.01. Amendments . . . . . . . . . . . . . . . . . . 15
SECTION 5.02. Merger, Consolidation, Sale, Transfer or
Conveyance . . . . . . . . . . . . . . . . . . 15
SECTION 5.03. Notices and Demands to the Company and Warrant
Agent . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.04. Addresses . . . . . . . . . . . . . . . . . . . 16
SECTION 5.05. Governing Law . . . . . . . . . . . . . . . . . 17
SECTION 5.06. Delivery of Prospectus . . . . . . . . . . . . 17
SECTION 5.07. Obtaining of Governmental Approvals . . . . . . 17
SECTION 5.08. Payment of Taxes . . . . . . . . . . . . . . . 17
SECTION 5.09. Benefits of Warrant Agreement . . . . . . . . . 17
SECTION 5.10. Headings . . . . . . . . . . . . . . . . . . . 17
SECTION 5.11. Severability . . . . . . . . . . . . . . . . . 18
SECTION 5.12. Counterparts . . . . . . . . . . . . . . . . . 18
SECTION 5.13. Inspection of Agreement . . . . . . . . . . . . 18<PAGE>
EXHIBIT A [FORM OF WARRANT CERTIFICATE] . . . . . . . . . . . . . A-1
[REVERSE] Instructions for Exercise of Warrant . . . . . . . . . A-6<PAGE>
[DEBT SECURITIES] [[SERIES __ PREFERRED STOCK] [COMMON STOCK]
[DEPOSITARY SHARES] WARRANT AGREEMENT
[DEBT SECURITIES] [[SERIES __ PREFERRED STOCK] [COMMON STOCK]
[DEPOSITARY SHARES] WARRANT AGREEMENT, dated as of ________ __, ____
(as modified, amended or supplemented, this "Agreement"), between AAR
CORP., a Delaware corporation (the "Company") and [NAME OF WARRANT
AGENT], a _________________, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
[If offer consists of Debt Securities with Warrants AND/OR
Warrants to Purchase Debt Securities: WHEREAS, the Company has entered
into an indenture (the "[Senior] [Subordinated] Indenture") dated as
of ______________ between the Company and [Name of trustee], as
trustee (the "[Senior] [Subordinated] Trustee"), providing for the
issuance from time to time of its unsecured [senior] [subordinated]
debentures, notes or other evidences of indebtedness (the "[Senior]
[Subordinated] Debt Securities"), to be issued in one or more series
as provided in the [Senior] [Subordinated] Indenture; [if Warrant
Securities are not under same Indenture as Debt Securities to which
they are attached and an Indenture (the "[Senior] [Subordinated]
Indenture," the Senior -and Subordinated Indentures being referred to
collectively as the "Indentures") dated as of _________________
between the Company and _______________, as trustee (the "[Senior]
[Subordinated] Trustee," (the Senior and Subordinated Trustees being
referred to collectively, as the "Trustees"), providing for the
issuance from time to time of its [senior] [subordinated] debentures,
notes or other evidences of indebtedness (the "[Senior] [Subordinated]
Debt Securities," the Senior and Subordinated Debt Securities being
referred to collectively as the "Debt Securities"), to be issued in
one or more series as provided in the [Senior] [Subordinated]
Indenture]; and
[If Securities and Warrants are to be offered together: WHEREAS, the
Company proposes to sell [title of Securities being offered] (the
"Securities") together with warrants (each, a "Warrant") representing
the right to purchase [title of Securities purchasable upon exercise
of Warrants] [If Warrants for Depositary Shares are to be offered:
each representing a 1/__th interest in a share of [title of securities
represented by Depositary Shares]] (the "Warrant Securities" [If
Warrants for Depositary Shares are to be offered: , which term shall
also refer, as appropriate, to such [title of securities represented
by Depositary Shares]), such warrant certificates and other warrant
certificates issued pursuant to this Agreement being herein called the
"Warrant Certificates"; and]
[If Warrants are to be offered separately: WHEREAS, the Company
proposes to sell warrants (each, a "Warrant") representing the right
to purchase [title of Securities purchasable upon exercise of
Warrants] [If Warrants for Depositary Shares are to be offered: , each
representing a 1/__th interest in a share of [title of securities
represented by the Depositary Shares]] (the "Warrant Securities" [If<PAGE>
Warrants for Depositary Shares are to be offered: which term shall
also refer, as appropriate, to such [title of securities represented
by the Depositary Shares]), such warrant certificates and other
warrant certificates issued pursuant to this Agreement being herein
called the "Warrant Certificates"; and]
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection
with the issuance, transfer, exchange, exercise and cancellation of
the Warrants, and the Company wishes to set forth in this Agreement,
among other things, the provisions of the Warrants, the form of the
Warrant Certificates evidencing the Warrants and the terms and
conditions upon which the Warrants may be issued, transferred,
exchanged, exercised and canceled;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
ISSUANCE OF WARRANTS AND FORM, EXECUTION,
DELIVERY AND REGISTRATION OF WARRANT CERTIFICATES
SECTION 1.01. Issuance of Warrants. Each Warrant shall
represent the right, subject to the provisions contained herein and
therein, to purchase [________] Warrant Securities [in the aggregate
principal amount of $_____] at the Exercise Price set forth in Section
2.01. [If Securities and Warrants are to be offered together:
Warrants shall be issued in units with the Securities [If Warrants are
not immediately detachable: and shall not be separately -transferable
[Unless Warrants are not detachable: before ________ __, ____ (the
"Detachment Date")]].] [If Warrants are to be offered separately:
Warrants shall be issued as a separate security and shall be
transferable from and after the date of issuance.] [If Warrants are
to be offered in Book-Entry form: [All] [A portion] of the Warrants
shall initially be represented by one or more Book-Entry certificates
(each, a "Book-Entry Warrant Certificate").] [If Securities and
Warrants are to be offered together and in definitive form: Each
Warrant Certificate included in such a unit shall evidence [_______]
Warrants for each [$_____ principal amount of] [_______] Securities
included in such unit.] [If Warrants are to be offered separately and
in definitive form: Each Warrant Certificate shall evidence [_______]
Warrants.]
SECTION 1.02. Form, Execution and Delivery of Warrant
Certificates.
(a) One or more Warrant Certificates evidencing Warrants to
purchase not more than [____] [$_______ in aggregate principal amount
of] Warrant Securities (except as provided in Sections 1.03, 1.04 and
2.03(e)) may be executed by the Company and delivered to the Warrant
2<PAGE>
Agent upon the execution of this Warrant Agreement or from time to
time thereafter.
(b) Each Warrant Certificate, whenever issued, shall be in
registered form substantially in the form set forth in Exhibit A
hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement. [If
Warrants are issued in Book-Entry form: Each Book-Entry Warrant
Certificate shall bear such legend or legends as may be required by
the Depository in order for it to accept the Warrants for its book-
entry settlement system.] Each Warrant Certificate shall be printed,
lithographed, typewritten, mimeographed or engraved or otherwise
reproduced in any other manner as may be approved by the officers
executing the same (such execution to be conclusive evidence of such
approval) and may have such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the officers of the
Company executing the same may approve (such execution to be
conclusive evidence of such approval) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with
any law or with any rule or regulation made pursuant thereto, or with
any regulation of any stock exchange on which the Warrants [If
Securities and Warrants are to be offered together: the Securities] or
the Warrant Securities may be listed, or to conform to usage. Each
Warrant Certificate shall be signed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer or any Vice President. The signature of any such
officer on any Warrant Certificate may be manual or facsimile. Each
Warrant Certificate, when so signed on behalf of the Company, shall be
delivered to the Warrant Agent together with an order for the
countersignature and delivery of such Warrants.
(c) The Warrant Agent shall, upon receipt of any Warrant
Certificate duly executed on behalf of the Company, countersign such
Warrant Certificate and deliver such Warrant Certificate to or upon
the order of the Company. Each Warrant Certificate shall be dated the
date of its countersignature.
(d) No Warrant Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose, and no
Warrant evidenced thereby may be exercised, unless such Warrant
Certificate has been countersigned by the manual signature of the
Warrant Agent. Such signature by the Warrant Agent upon any Warrant
Certificate executed by the Company shall be conclusive evidence that
such Warrant Certificate has been duly issued under the terms of this
Agreement.
(e) If any officer of the Company who has signed any Warrant
Certificate either manually or by facsimile signature shall cease to
be such officer before such Warrant Certificate shall have been
countersigned and delivered by the Warrant Agent, such Warrant
Certificate nevertheless may be countersigned and delivered as though
3<PAGE>
the person who signed such Warrant Certificate had not ceased to be
such officer of the Company; and any Warrant Certificate may be signed
on behalf of the Company by such persons as, at the actual date of the
execution of such Warrant Certificate, shall be the proper officers of
the Company as specified in this Section 1.02, regardless of whether
at the date of the execution of this Agreement any such person was
such officer.
(f) The Holders shall [If Warrants are to be issued in Book-
Entry form: , except as stated below with respect to Warrants
evidenced by a Book-Entry Warrant Certificate,] be entitled to receive
Warrants in physical, certificated form. [If Warrants are to be
issued in Book-Entry form:
(g) A Book-Entry Warrant Certificate may be exchanged for a new
Book-Entry Warrant Certificate, or one or more new Book-Entry Warrant
Certificates may be issued, to reflect the issuance by the Company of
additional Warrants. To effect such an exchange, the Company shall
deliver to the Warrant Agent one or more new Book-Entry Warrant
Certificates duly executed on behalf of the Company as provided in
Section 1.02. The Warrant Agent shall authenticate each new Book-Entry
Warrant Certificate as provided in Section 1.02 and shall deliver each
new Book-Entry Warrant Certificate to the Depository. The Warrant
Agent shall cancel each Book-Entry Warrant Certificate delivered to it
by the Depository in exchange therefor, if any.]
SECTION 1.03. Transfer of Warrants. [If Warrants are to be
issued in Book-Entry form:
(a) [All] [A portion] of the Warrants shall initially be
represented by one or more Book-Entry Warrant Certificates deposited
with [the Depository Trust Company] (the "Depository") and registered
in the name of [Cede & Co.], a nominee of the Depository. Except as
provided for in Section 1.03(b) hereof, no person acquiring Warrants
with book-entry settlement through the Depository shall receive or be
entitled to receive physical delivery of definitive Warrant
Certificates evidencing such Warrants. Ownership of beneficial
interests in the Warrants shall be shown on, and the transfer of such
ownership shall be effected through, records maintained by (i) the
Depository or its nominee for each Book-Entry Warrant Certificate, or
(ii) institutions that have accounts with the Depository (such
institution, with respect to a Warrant in its account, a
"Participant").] [If Warrants are to be issued in Book-Entry form:
(b) If the Depository subsequently ceases to make its book-entry
settlement system available for the Warrants, the Company may instruct
the Warrant Agent regarding making other arrangements for book-entry
settlement. In the event that the Warrants are not eligible for, or
it is no longer necessary to have the Warrants available in, book-
entry form, the Warrant Agent shall provide written instructions to
the Depository to deliver to the Warrant Agent for cancellation each
Book-Entry Warrant Certificate, and the Company shall instruct the
4<PAGE>
Warrant Agent to deliver to the Depository definitive Warrant
Certificates in physical form evidencing such Warrants. Such
definitive Warrant Certificates shall be in the form annexed hereto as
Exhibit A with appropriate insertions, modifications and omissions, as
provided above.] [If Securities and Warrants are to be offered
together:
(c) [If Warrants are not immediately detachable: Prior to the
Detachment Date,] Warrants may be -transferred or exchanged only
together with the Security to which such Warrant is attached, and only
for the purpose of effecting, or in conjunction with, a transfer or
exchange of such Security. Furthermore, [If Warrants are not
immediately detachable: on or prior to the Detachment Date,] each
transfer of a Security on the register relating to such Securities
shall operate also to transfer the Warrants to which such Security was
initially attached. [If Warrants are not immediately detachable: From
and after the Detachment Date, the above provisions shall be of no
further force and effect.]
(d) A Warrant Certificate may be transferred at the option of
the Holder thereof upon surrender of such Warrant Certificate at the
corporate trust office of the Warrant Agent, properly endorsed or
accompanied by appropriate instruments of transfer and written
instructions for transfer, all in form satisfactory to the Company and
the Warrant Agent [If Warrants are to be issued in Book-Entry form:
provided, however, that except as otherwise provided herein or in any
Book-Entry Warrant Certificate, each Book-Entry Warrant Certificate
may be transferred only in whole and only to the Depository, to
another nominee of the Depository, to a successor depository, or to a
nominee of a successor depository]. Upon any such registration of
transfer, the Company shall execute, and the Warrant Agent shall
countersign and deliver, as provided in Section 1.02, in the name of
the designated transferee a new Warrant Certificate or Warrant
Certificates of any authorized denomination evidencing in the
aggregate a like number of unexercised Warrants.
(e) [If Warrants are not immediately detachable: After the
Detachment Date,] Upon surrender at the corporate office of the
Warrant Agent, properly endorsed or accompanied by appropriate
instruments of transfer and written instructions for such exchange,
all in form satisfactory to the Company and the Warrant Agent, one or
more Warrant Certificates may be exchanged for one or more Warrant
Certificates in any other authorized denominations; provided that such
new Warrant Certificate(s) evidence the same aggregate number of
Warrants as the Warrant Certificate(s) so surrendered. Upon any such
surrender for exchange, the Company shall execute, and the Warrant
Agent shall countersign and deliver, as provided in Section 1.02, in
the name of the Holder of such Warrant Certificates, the new Warrant
Certificates.
(f) The Warrant Agent shall keep, at its corporate trust office,
books in which, subject to such reasonable regulations as it may
5<PAGE>
prescribe, it shall register Warrant Certificates in accordance with
Section 1.02 and transfers, exchanges, exercises and cancellations of
outstanding Warrant Certificates. Whenever any Warrant Certificates
are surrendered for transfer or exchange in accordance with this
Section 1.03, an authorized officer of the Warrant Agent shall
manually countersign and deliver the Warrant Certificates which the
Holder making the transfer or exchange is entitled to receive.
(g) No service charge shall be made for any transfer or exchange
of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental
charge that may be imposed in connection with any such transfer or
exchange.
SECTION 1.04. Lost, Stolen, Mutilated or Destroyed Warrant
Certificates. Upon receipt by the Company and the Warrant Agent of
evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and of indemnity
satisfactory to them and, in the case of mutilation, upon surrender of
such Warrant Certificate to the Warrant Agent for cancellation, then,
in the absence of notice to the Company or the Warrant Agent that such
Warrant Certificate has been acquired by a bona fide purchaser, the
Company shall execute, and an authorized officer of the Warrant Agent
shall manually countersign and deliver, in exchange for or in lieu of
the lost, stolen, destroyed or mutilated Warrant Certificate, a new
Warrant Certificate of the same tenor and for a like number of
Warrants. No service charge shall be made for any replacement of
Warrant Certificates, but the Company may require the payment of a sum
sufficient to cover any stamp or other tax or other governmental
charge that may be imposed in connection with any such exchange. To
the extent permitted under applicable law, the provisions of this
Section 1.04 are exclusive with respect to the replacement of
mutilated, lost, stolen or destroyed Warrant Certificates and shall
preclude any and all other rights or remedies.
SECTION 1.05. Cancellation of Warrant Certificates. Any Warrant
Certificate surrendered to the Warrant Agent for transfer, exchange or
exercise of the Warrants evidenced thereby shall be promptly canceled
by the Warrant Agent and shall not be reissued and, except as
expressly permitted by this Agreement, no Warrant Certificate shall be
issued hereunder in lieu thereof. The Warrant Agent shall deliver to
the Company from time to time or otherwise dispose of canceled Warrant
Certificates in a manner satisfactory to the Company. Any Warrant
Certificate surrendered to the Company for transfer, exchange or
exercise of the Warrants evidenced thereby shall be promptly delivered
to the Warrant Agent and such transfer, exchange or exercise shall not
be effective until such Warrant Certificate has been received by the
Warrant Agent.
SECTION 1.06. Treatment of Holders [If Warrants are to be issued
in Book-Entry form: and Beneficial Owners] of Warrant Certificates.
6<PAGE>
(a) The term"Holder", as used herein, shall mean any person in
whose name at the time any Warrant Certificate shall be registered
upon the books to be maintained by the Warrant Agent for that purpose
[If Warrants are not immediately detachable: or, prior to the
Detachment Date, the person in whose name the Security to which such
Warrant Certificate was initially attached is registered upon the
register relating to such Securities. At all times prior to the
Detachment Date, the Company will, or will cause the registrar of the
Securities to, make available to the Warrant Agent such information as
to holders of the Securities as may be necessary to keep the Warrant
Agent's records current]. [If Warrants are to be issued in - Book-
Entry form: The Holder of each Book-Entry Warrant Certificate shall -
initially be [___________], a nominee of the Depository.] [If
Warrants are to be issued in Book-Entry Form:
(b) The term "Beneficial Owner" as used herein shall mean any
person in whose name ownership of beneficial interests in Warrants
evidenced by a Book-Entry Warrant Certificate is recorded in the
records maintained by the Depository or its nominee, or by a
Participant [If Warrants are not immediately detachable: or, prior to
the Detachment Date, the person in whose name the Security to which
such Warrant Certificate was initially attached is registered upon the
register relating to such Securities].]
( ) Every Holder [If Warrants are to be issued in Book-Entry form:
and every Beneficial Owner] consents and agrees with the Company, the
Warrant Agent and with every subsequent Holder [If Warrants are to be
issued in Book-Entry form: and Beneficial Owner] that until the
Warrant Certificate is transferred on the books of the Warrant Agent,
the Company and the Warrant Agent may treat the registered Holder of
such Warrant Certificate as the absolute owner of the Warrants
evidenced thereby for any purpose and as the person entitled to
exercise the rights attaching to the Warrants evidenced thereby, any
notice to the contrary notwithstanding.
ARTICLE II
EXERCISE PRICE, DURATION AND EXERCISE OF WARRANTS
SECTION 2.01. Exercise Price. The exercise price of each
Warrant shall be $________ (the "Exercise Price") [modify as
appropriate to reflect terms of offered Warrants].
SECTION 2.02. Duration of Warrants. [Subject to the limitations
set forth herein,] Each Warrant may be exercised in whole but not in
part [Unless Warrants may be exercised on only one date: on any
Business Day (as defined below) - occurring during the period (the
"Exercise Period") commencing on [its date of issuance] [_________ __,
____] and ending at 5:00 P.M., New York time,] on __________ __, ____
(the "Expiration Date"). Each Warrant remaining unexercised after
5:00 P.M., New York time, on the Expiration Date shall become void,
and all rights of the Holder under this Agreement shall cease.
7<PAGE>
As used herein, the term "Business Day" means any day which is
not a Saturday or Sunday and is not a legal holiday or a day on which
banking institutions generally are authorized or obligated by law or
regulation to close in New York and California.
SECTION 2.03. Exercise of Warrants.
(a) A Holder may exercise a Warrant by delivering, not later
than 5:00 P.M., New York time, on [Unless Warrants may be exercised on
only one date: any Business Day during the Exercise Period (the
"Exercise Date")] [If Warrants may be exercised on only one date: the
Expiration Date] to the Warrant Agent at its corporate trust
department (i) the Warrant Certificate evidencing the Warrants to be
exercised, [If Warrants are to be issued in Book-Entry form: and, in
the case of a Book-Entry Warrant Certificate, the Warrants to be
exercised (the "Book-Entry Warrants") free on the records of the
Depository to an account of the Warrant Agent at the Depository
designated for such purpose in writing by the Warrant Agent to the
Depository from time to time,] (ii) an election to purchase the
Warrant Securities ("Election to Purchase"), [For definitive Warrant
Certificates: properly completed and executed by the Holder on the
reverse of the Warrant Certificate] [If Warrants are to be issued in
Book-Entry form: or, in the case of a Book-Entry Warrant Certificate,
properly executed by the Participant and substantially in the form
included on the reverse of each Warrant Certificate,] and (iii) the
Exercise Price for each Warrant to be exercised in lawful money of the
United States of America by certified or official bank check or by
bank wire transfer in immediately available funds. If any of (a) the
Warrant Certificate [If Warrants are to be issued in Book-Entry form:
or the Book-Entry Warrants,] (b) the Election to Purchase, or (c) the
Exercise Price therefor, is received by the Warrant Agent after 5:00
P.M., New York time, on [Unless Warrants may be exercised on only one
date: the specified Exercise Date, the Warrants will be deemed to be
received and exercised on the Business Day next succeeding the
Exercise Date. If the date specified as the Exercise Date is not a
Business Day, the Warrants will be deemed to be received and exercised
on the next succeeding day which is a Business Day. If the Warrants
are received or deemed to be received after] the Expiration Date, the
exercise thereof will be null and void and any funds delivered to the
Warrant Agent will be returned to the Holder [If Warrants are to be
issued in Book-Entry form: or Participant, as the case may be,] as
soon as practicable. In no event will interest accrue on funds
deposited with the Warrant Agent in respect of an exercise or
attempted exercise of Warrants. The validity of any exercise of
Warrants will be determined by the Warrant Agent in its sole
discretion and such determination will be final and binding upon the
Holder and the Company. Neither the Company nor the Warrant Agent
shall have any obligation to inform a Holder of the invalidity of any
exercise of Warrants. The Warrant Agent shall deposit all funds
received by it in payment of the Exercise Price in the account of the
Company maintained with the Warrant Agent for such purpose and shall
advise the Company by telephone at the end of each day on which funds
8<PAGE>
for the exercise of the Warrants are received of the amount so
deposited to its account. The Warrant Agent shall promptly confirm
such telephonic advice to the Company in writing.
(b) The Warrant Agent shall, by 11:00 A.M. on the Business Day
following the [Unless Warrants may be exercised on only one date:
Exercise Date of any Warrant] [If Warrants may be exercised on only
one date: Expiration Date], advise the Company and the [Trustee under
the Indenture applicable to] [the transfer agent and registrar in
respect of] the Warrant Securities issuable upon such exercise as to
the number of Warrants exercised in accordance with the terms and
conditions of this Agreement, the instructions of each Holder [If
Warrants are to be issued in Book-Entry form: or Participant, as the
case maybe,] with respect to delivery of the Warrant Securities
issuable upon such exercise, and the delivery of definitive Warrant
Certificates [If Warrants are to be issued in Book-Entry form: or one
or more Book-Entry Warrant Certificates, --as appropriate,] evidencing
the balance, if any, of the Warrants remaining after such exercise,
and such other information as the Company or such [Trustee] [transfer
agent and registrar] shall reasonably require.
(c) The Company shall, by 5:00 P.M., New York time, on the third
Business Day next succeeding the [Unless Warrants may be exercised on
only one date: Exercise Date of any Warrant] [If Warrants may be
exercised on only one date: Expiration Date], execute, issue and
deliver to the Warrant Agent, [pursuant to the Indenture applicable to
the Warrant Securities, the Warrant Securities, duly authenticated by
the Trustee of such Indenture and in authorized denominations] [the
Warrant Securities] to which such Holder is entitled, in fully
registered form, registered in such name or names as may be directed
by such Holder [If Warrants are to be issued in Book-Entry form: or
the Participant, as the case may be]. Upon receipt of such Warrant
Securities, the Warrant Agent shall, by 5:00 P.M., New York time, on
the fifth Business Day next succeeding [Unless Warrants may be
exercised on only one date: such Exercise Date] [If Warrants may be
exercised on only one date: the Expiration Date], transmit such
Warrant Securities, to or upon the order of the Holder [If Warrants
are to be issued in Book-Entry form: or Participant, as the case may
be,] together with, or preceded by the prospectus referred to in
Section 5.06 hereof. The Company agrees that it will provide such
information and documents to the Warrant Agent as may be necessary for
the Warrant Agent to fulfill its obligations hereunder.
(d) The accrual of [interest] [dividends], if any, on the
Warrant Securities issued upon the valid exercise of any Warrant will
be governed by the terms of the applicable [Indenture] [certificate of
designations] and such Warrant Securities. From and after the
issuance of such Warrant Securities, the former Holder of the Warrants
exercised will be entitled to the benefits of the [Indenture]
[certificate of designations] under which such Warrant Securities are
issued and such former Holder's right to receive payments of
[principal of (and premium, if any) and interest, if any, on]
9<PAGE>
[dividends and any other amounts payable in respect of] the Warrant
Securities shall be governed by, and shall be subject to, the terms
and provisions of such [Indenture] [certificate of designations] and
the Warrant Securities.
(e) Warrants may be exercised only in whole numbers of Warrants.
[Unless Warrants may be exercised on only one date: If fewer than all
of the Warrants evidenced by a Warrant Certificate are exercised, a
new Warrant Certificate for the number of Warrants remaining
unexercised shall be executed by the Company and countersigned by the
Warrant Agent as provided in Section 1.02 hereof, and delivered to the
Holder at the address specified on the books of the Warrant Agent or
as otherwise specified by such Holder.]
(f) The Company shall not be required to pay any stamp or other
tax or other governmental charge required to be paid in connection
with any transfer involved in the issue of the Warrant Securities; and
in the event that any such transfer is involved, the Company shall not
be required to issue or deliver any Warrant Securities until such tax
or other charge shall have been paid or it has been established to the
Company's satisfaction that no such tax or other charge is due.
[If Warrants for Common Stock are offered:
SECTION 2.04. Adjustment Under Certain Circumstances. The
Exercise Price and the number of Warrant Securities purchasable upon
the exercise of each Warrant shall be subject to adjustment [as shall
be determined by the Warrant Agent, which determination shall be final
and binding upon the Holders and the Company.] [as follows:]]
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS
[If Warrants are to be issued in Book-Entry Form:
AND BENEFICIAL OWNERS] OF WARRANTS
SECTION 3.01. No Rights as Holders of Warrant Securities
Conferred by Warrants or Warrant Certificates. No Warrant Certificate
or Warrant evidenced thereby shall entitle the Holder thereof to any
of the rights of a holder of any Warrant Securities, including,
without limitation, [the right to receive the payments of principal of
(and premium, if any) and interest, if any, on Debt Securities
purchasable upon such exercise or to enforce any of the covenants in
the Indenture] [the right to receive dividends, if any, or payments
upon the liquidation, dissolution or winding up of the Company or to
exercise voting rights, if any].
SECTION 3.02. Holder [If Warrants are to be issued in Book-Entry
form: and Beneficial Owner] of Warrant May Enforce Rights.
Notwithstanding any of the provisions of this Agreement, any Holder
[If Warrants are to be issued in Book-Entry form: and any Beneficial
Owner] of any Warrant, without the consent of the Warrant Agent or the
10<PAGE>
Holder of any Warrant, may, on such Holder's [If Warrants are to be
issued in Book-Entry form: or Beneficial Owner's] own behalf and for
his own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise in
respect of, such Holder's [If Warrants are to be issued in Book-Entry
form: or Beneficial Owner's] right to exercise the Warrants evidenced
by any Warrant Certificate in the manner provided in this Agreement
and such Warrant Certificate.
ARTICLE IV
CONCERNING THE WARRANT AGENT
SECTION 4.01. Warrant Agent. The Company hereby appoints [Name
of Warrant Agent] as Warrant Agent of the Company in respect of the
Warrants upon the terms and subject to the conditions herein set
forth, and [Name of Warrant Agent] hereby accepts such appointment.
The Warrant Agent shall have the powers and authority granted to and
conferred upon it hereby and such further powers and authority to act
on behalf of the Company as the Company may hereafter grant to or
confer upon it.
SECTION 4.02. Limitations on Warrant Agent's Obligations. The
Warrant Agent accepts its obligations herein set forth upon the terms
and conditions hereof, including the following, to all of which the
Company agrees and to all of which the rights hereunder of the Holders
from time to time shall be subject:
(a) Compensation and Indemnification. The Company agrees to pay
the Warrant Agent compensation to be agreed upon with the Company for
all services rendered by the Warrant Agent and to reimburse the
Warrant Agent for all reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred by the Warrant Agent in connection
with the services rendered by it hereunder. The Company also agrees
to indemnify the Warrant Agent for, and to hold it harmless against,
any loss, liability or expense incurred without negligence, bad faith
or breach of this Agreement on the part of the Warrant Agent, arising
out of or in connection with its acting as Warrant Agent hereunder.
(b) Agent for the Company. In acting in the capacity of Warrant
Agent under this Agreement, the Warrant Agent is acting solely as
agent of the Company and does not assume any obligation or
relationship of agency or trust with any of the owners or holders of
the Warrants except as expressly set forth herein.
(c) Counsel. The Warrant Agent may consult with counsel
satisfactory to it (which may be counsel to the Company), and the
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the advice of such
counsel.
11<PAGE>
(d) Documents. The Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken or thing
suffered by it in reliance upon any notice, direction, consent,
certificate, affidavit, statement or other paper or document
reasonably believed by it to be genuine and to have been presented or
signed by the proper parties.
(e) Certain Transactions. The Warrant Agent, and its officers,
directors and employees, may become the owner of, or acquire any
interest in, any Warrant, with the same rights that it or they would
have were it not the Warrant Agent hereunder, and, to the extent
permitted by applicable law, it or they may engage or be interested
in any financial or other transaction with the Company and may act on,
or as a depositary, trustee or agent for, any committee or body of
holders of Warrants [If Securities and Warrants are to be offered
together: Securities] or Warrant Securities, or other securities or
obligations of the Company as freely as if it were not the Warrant
Agent hereunder. Nothing in this Agreement shall be deemed to prevent
the Warrant Agent from acting as trustee under either Indenture.
(f) No Liability for Interest. The Warrant Agent shall not be
under any liability for interest on any monies at any time received by
it pursuant to any of the provisions of this Agreement.
(g) No Liability for Invalidity. The Warrant Agent shall not be
under any responsibility with respect to the validity or sufficiency
of this Agreement or the execution and delivery hereof (except the due
execution and delivery hereof by the Warrant Agent) or with respect to
the validity or execution of the Warrant Certificates (except its
countersignature thereon).
(h) No Responsibility for Recitals. The recitals contained
herein and in the Warrant Certificates (except as to the Warrant
Agent's countersignature thereon) shall be taken as the statements of
the Company and the Warrant Agent assumes no responsibility hereby for
the correctness of the same.
(i) No Implied Obligations. The Warrant Agent shall be
obligated to perform such duties as are specifically set forth herein
and no implied duties or obligations shall be read into this Agreement
against the Warrant Agent. The Warrant Agent shall not be under any
obligation to take any action hereunder which may tend to involve it
in any expense or liability, the payment of which within a reasonable
time is not, in its opinion, assured to it. The Warrant Agent shall
not be accountable or under any duty or responsibility for the use by
the Company of any Warrant Certificate authenticated by the Warrant
Agent and delivered by it to the Company pursuant to this Agreement or
for the application by the Company of the proceeds of the issue and
sale, or exercise, of the Warrants. The Warrant Agent shall have no
duty or responsibility in case of any default by the Company in the
performance of its covenants or agreements contained herein or in any
Warrant Certificate or in the case of the receipt of any written
12<PAGE>
demand from a Holder with respect to such default, including, without
limiting the generality of the foregoing, any duty or responsibility
to initiate or attempt to initiate any proceedings at law or otherwise
or, except as provided in Section 5.03 hereof, to make any demand upon
the Company.
SECTION 4.03. Compliance With Applicable Laws. The Warrant Agent
agrees to comply with all applicable federal and state laws imposing
obligations on it in respect of the services rendered by it under this
Agreement and in connection with the Warrants, including (but not
limited to) the provisions of United States federal income tax laws
regarding information reporting and backup withholding. The Warrant
Agent expressly assumes all liability for its failure to comply with
any such laws imposing obligations on it, including (but not limited
to) any liability for its failure to comply with any applicable
provisions of United States federal income tax laws regarding
information reporting and backup withholding.
SECTION 4.04. Resignation and Appointment of Successor.
(a) The Company agrees, for the benefit of the Holders from time
to time, that there shall at all times be a Warrant Agent hereunder
until all the Warrants issued hereunder have been exercised or have
expired in accordance with their terms, which Warrant Agent shall be a
bank or trust company organized under the laws of the United States of
America or one of the states thereof, which is authorized under the
laws of the jurisdiction of its organization to exercise corporate
trust powers, has a combined capital and surplus of at least
$50,000,000 and has an office or an agent's office in the United
States of America.
(b) The Warrant Agent may at any time resign as such agent by
giving written notice to the Company of such intention on its part,
specifying the date on which it desires such resignation to become
effective; provided that such date shall not be less than three months
after the date on which such notice is given, unless the Company
agrees to accept such notice less than three months prior to such date
of effectiveness. The Company may remove the Warrant Agent at any
time by giving written notice to the Warrant Agent of such removal,
specifying the date on which it desires such removal to become
effective. Such resignation or removal shall take effect upon the
appointment by the Company, as hereinafter provided, of a successor
Warrant Agent (which shall be a bank or trust company qualified as set
forth in Section 4.04(a)) and the acceptance of such appointment by
such successor Warrant Agent. The obligation of the Company under
Section 4.02(a) shall continue to the extent set forth therein
notwithstanding the resignation or removal of the Warrant Agent.
(c) If at any time the Warrant Agent shall resign, or shall
cease to be qualified as set forth in Section 4.04(a), or shall be
removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall file a petition seeking relief under
13<PAGE>
any applicable Federal or State bankruptcy or insolvency law or
similar law, or make an assignment for the benefit of its creditors or
consent to the appointment of a receiver, conservator or custodian of
all or any substantial part of its property, or shall admit in writing
its inability to pay or to meet its debts as they mature, or if a
receiver or custodian of it or of all or any substantial part of its
property shall be appointed, or if an order of any court shall be
entered for relief against it under the provisions of any applicable
Federal or State bankruptcy or similar law, or if any public officer
shall have taken charge or control of the Warrant Agent or of its
property or affairs, for the purpose of rehabilitation, conservation
or liquidation, a successor Warrant Agent, qualified as set forth in
Section 4.04(a), shall be appointed by the Company by an instrument in
writing, filed with the successor Warrant Agent. Upon the appointment
as herein provided of a successor Warrant Agent and acceptance by the
latter of such appointment, the Warrant Agent so superseded shall
cease to be Warrant Agent under this Agreement.
(d) Any successor Warrant Agent appointed under this Agreement
shall execute, acknowledge and deliver to its predecessor and to the
Company an instrument accepting such appointment, and thereupon such
successor Warrant Agent, without any further act, deed or conveyance,
shall become vested with all the authority, rights, powers, trusts,
immunities, duties and obligations of such predecessor with like
effect as if originally named as Warrant Agent under this Agreement,
and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and
pay over, and such successor Warrant Agent shall be entitled to
receive, all monies, securities and other property on deposit with or
held by such predecessor, as Warrant Agent under this Agreement.
(e) Any corporation into which the Warrant Agent may be merged
or converted or any corporation with which the Warrant Agent may be
consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise
transfer all or substantially all the assets and business of the
Warrant Agent, in each case provided that it shall be qualified as set
forth in Section 4.04(a), shall be the successor Warrant Agent under
this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties to this Agreement,
including, without limitation, any successor to the Warrant Agent
first named above.
14<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Amendments.
(a) This Agreement and any Warrant Certificate may be amended by
the parties hereto by executing a supplemental warrant agreement (a
"Supplemental Agreement"), without the consent of the Holder of any
Warrant, for the purpose of (i) curing any ambiguity, or curing,
correcting or supplementing any defective provision contained herein,
or making any other provisions with respect to matters or questions
arising under this Agreement that is not inconsistent with the
provisions of this Agreement or the Warrant Certificates, (ii)
evidencing the succession of another corporation to the Company and
the assumption by any such successor of the covenants of the Company
contained in this Warrant Agreement and the Warrants, (iii) evidencing
and providing for the acceptance of appointment by a successor Warrant
Agent with respect to the Warrants, [If Warrants are to be issued in
Book-Entry form: (iv) evidencing and providing for the acceptance of
appointment by a successor Depository with respect to each Book-Entry
Warrant Certificate, (v) issuing definitive Warrant Certificates in
accordance with paragraph (b) of Section 1.03,] (vi) adding to the
covenants of the Company for the benefit of the Holders or
surrendering any right or power conferred upon the Company under this
Agreement, (vii) appointing a successor Warrant Agent, or (viii)
amending this Agreement and the Warrants in any manner that the
Company may deem to be necessary or desirable and that will not
adversely affect the interests of the Holders in any material respect.
(b) The Company and the Warrant Agent may amend this Agreement
and the Warrants by executing a Supplemental Agreement with the
consent of the Holders of not fewer than a majority of the unexercised
Warrants affected by such amendment, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights
of the Holders under this Agreement; provided, however, that, without
the consent of each Holder of Warrants affected thereby, no such
amendment may be made that (i) changes the Warrants so as to reduce
the [principal amount] [number] of Warrant Securities purchasable upon
exercise of the Warrants or so as to increase the exercise price [If
Warrants for Common Stock are offered: (other than as provided by
Section 2.03)], (ii) shortens the period of time during which the
Warrants may be exercised, (iii) otherwise adversely affects the
exercise rights of the Holders in any material respect, or (iv)
reduces the number of unexercised Warrants the consent of the Holders
of which is required for amendment of this Agreement or the Warrants.
SECTION 5.02. Merger, Consolidation, Sale, Transfer or
Conveyance. The Company may consolidate or merge with or into any
other corporation or sell, lease, transfer or convey all or
substantially all of its assets to any other corporation, provided
15<PAGE>
that (i) either (x) the Company is the continuing corporation or (y)
the corporation (if other than the Company) that is formed by or
results from any such consolidation or merger or that receives such
assets is a corporation organized and existing under the laws of the
United States of America or a state thereof and such corporation
assumes the obligations of the Company with respect to the performance
and observance of all of the covenants and conditions of this
Agreement to be performed or observed by the Company and (ii) the
Company or such successor corporation, as the case may be, must not
immediately be in default under this Agreement. If at any time there
shall be any consolidation or merger or any sale, lease, transfer,
conveyance or other disposition of all or substantially all of the
assets of the Company, then in any such event the successor or
assuming corporation shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein and in
the Warrant Certificates as the Company; the Company shall thereupon
be relieved of any further obligation hereunder or under the Warrants,
and, in the event of any such sale, lease, transfer, conveyance (other
than by way of lease) or other disposition, the Company as the
predecessor corporation may thereupon or at any time thereafter be
dissolved, wound up or liquidated. Such successor or assuming
corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of the Company, Warrant Certificates
evidencing the Warrants not theretofore exercised, in exchange and
substitution for the Warrant Certificates theretofore issued. Such
Warrant Certificates shall in all respects have the same legal rank
and benefit under this Agreement as the Warrant Certificates
evidencing the Warrants theretofore issued in accordance with the
terms of this Agreement as though such new Warrant Certificates had
been issued at the date of the execution hereof. In any case of any
such merger or consolidation or sale, lease, transfer, conveyance or
other disposition of all or substantially all of the assets of the
Company, such changes in phraseology and form (but not in substance)
may be made in the new Warrant Certificates, as may be appropriate.
SECTION 5.03. Notices and Demands to the Company and Warrant
Agent. If the Warrant Agent shall receive any notice or demand
addressed to the Company by the Holder [If Warrants are to be issued
in Book-Entry form: or a Participant, as the case may be], the Warrant
Agent shall promptly forward such notice or demand to the Company.
SECTION 5.04. Addresses. Any communications from the Company to
the Warrant Agent with respect to this Agreement shall be addressed to
____________________ Attention: ________________________, and any
communications from the Warrant Agent to the Company with respect to
this Agreement shall be addressed to AAR CORP., 1100 N. Wood Dale
Road, Wood Dale, Illinois 60191 Attention: _____________ (or such
other address as shall be specified in writing by the Warrant Agent or
by the Company, as the case may be). The Company or the Warrant Agent
shall give notice to the Holders of Warrants by mailing written notice
by first class mail, postage prepaid, to such Holders as their names
16<PAGE>
and addresses appear in the books and records of the Warrant Agent
[or, prior to the Detachment Date, on the register of the Securities].
SECTION 5.05. Governing Law. THIS AGREEMENT AND EACH WARRANT
CERTIFICATE AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS
HEREOF AND THEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ILLINOIS (WITHOUT REFERENCE TO
APPLICABLE CONFLICTS OF LAW PROVISIONS).
SECTION 5.06. Delivery of Prospectus. The Company shall furnish
to the Warrant Agent sufficient copies of a prospectus relating to the
Warrant Securities deliverable upon exercise of Warrants and complying
in all material respects with the Securities Act of 1933, as amended
(the "Prospectus"), and the Warrant Agent agrees that upon the
exercise of any Warrant, the Warrant Agent shall deliver a Prospectus
to the Holder of such Warrant, prior to or concurrently with the
delivery of the Warrant Securities issued upon such exercise.
SECTION 5.07. Obtaining of Governmental Approvals. The Company
shall from time to time take all action which may be necessary to
obtain and keep effective any and all permits, consents and approvals
of governmental agencies and authorities and securities acts filings
under United States Federal and state laws, which the Company may deem
necessary or appropriate in connection with the issuance, sale,
transfer and delivery of the Warrants, the exercise of the Warrants,
the issuance, sale, transfer and delivery of the Warrant Securities to
be issued upon exercise of Warrants or upon the expiration of the
period during which the Warrants are exercisable.
SECTION 5.08. Payment of Taxes. The Company will pay all stamp
and other duties, if any, to which, under the laws of the United
States of America, this Agreement or the original issuance of the
Warrants may be subject.
SECTION 5.09. Benefits of Warrant Agreement. Nothing in this
Agreement or any Warrant Certificate expressed or implied and nothing
that may be inferred from any of the provisions hereof or thereof is
intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company, the Warrant Agent and
their respective successors and assigns, [If Warrants are to be issued
in Book-Entry form: the Beneficial Owners] and the Holders any --
right, remedy or claim under or by reason of this Agreement or any
Warrant Certificate or of any covenant, condition, stipulation,
promise or agreement hereof or thereof; and all covenants, conditions,
stipulations, promises and agreements contained in this Agreement or
any Warrant Certificate shall be for the sole and exclusive benefit of
the Company and the Warrant Agent and their respective successors and
assigns and of the [If Warrants are to be issued in Book-Entry form:
Beneficial Owners and] Holders.
SECTION 5.10. Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience
17<PAGE>
only and shall not control or affect the meaning or construction of
any of the provisions hereof.
SECTION 5.11. Severability. If any provision in this Agreement
or in any Warrant Certificate shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions, or of such provisions in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 5.12. Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed
to be an original; but such counterparts shall together constitute but
one and the same instrument.
SECTION 5.13. Inspection of Agreement. A copy of this Agreement
shall be available at all reasonable times at the principal corporate
trust office of the Warrant Agent and at the office of the Company at
1100 N. Wood Dale Road, Wood Dale, Illinois 60191, for inspection by
any Holder. The Warrant Agent may require any such Holder to submit
satisfactory proof of ownership for inspection by it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
AAR CORP.
By: _________________________
Authorized Officer
[WARRANT AGENT]
By: _________________________
Authorized Officer
18<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[Form of legend if Securities with Warrants that are not immediately
detachable - or Warrants that are not immediately exercisable are
offered: [PRIOR TO _______________,] THIS WARRANT CERTIFICATE [(i)
CANNOT BE TRANSFERRED OR EXCHANGED UNLESS ATTACHED TO A [TITLE OF
SECURITY] AND (II)] CANNOT BE EXERCISED IN WHOLE OR IN PART.]
EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED
HEREIN.
Warrant Certificate evidencing Warrants to Purchase [Title of Warrant
Securities] as described herein.
AAR CORP.
No. ___________ CUSIP No. _____________
VOID AFTER [5:00 P.M.], NEW YORK TIME, ON _______ __, ___
This certifies that ________________________ or registered assigns is
the registered holder of [insert number initially issued] warrants to
purchase certain securities (the "Warrants"). Each Warrant entitles
the holder thereof, subject to the provisions contained herein and in
the Warrant Agreement referred to below, to purchase from AAR CORP., a
Delaware corporation (the "Company"), [$_________ principal amount]
[______] of the Company's [title of Securities purchasable upon
exercise of Warrants] [If Warrants for Depositary Shares are to be
offered: each representing a 1/__th interest in a share of [title of
securities represented by the Depositary Shares]] (the "Warrant
Securities" [If Warrants for Depositary Shares are to be offered:
which term shall also refer, as appropriate, to such [title of
securities represented by the Depositary Shares]), [issued or to be
issued under the Indenture (as hereinafter defined)], at the Exercise
Price set forth below. The exercise price of each Warrant (the
"Exercise Price") shall be [modify as appropriate to reflect the terms
of the offered Warrants].
Subject to the terms of the Warrant Agreement, each Warrant evidenced
hereby may be exercised in whole but not in part at any time, as
specified herein, [Unless Warrants may be exercised on only one date:
on any Business Day (as defined below) occurring during the period
(the "Exercise Period") commencing on [the date of issuance thereof]
[________________ __, ____] and ending at 5:00 P.M., New York time,]
on ____________ __, ____ (the "Expiration Date"). Each Warrant
remaining unexercised after 5:00 P.M., New York time, on the
Expiration Date shall become void, and all rights of the holder of
this Warrant Certificate evidencing such Warrant shall cease.
A-1<PAGE>
The holder of the Warrants represented by this Warrant Certificate may
exercise any Warrant evidenced hereby by delivering, not later than
5:00 P.M., New York time, on [Unless Warrants may be exercised on only
one date: any Business Day during the Exercise Period (the "Exercise
Date")] [If Warrants may be exercised on only one date: the Expiration
Date] to [name of Warrant Agent] (the "Warrant Agent", which term
includes any successor warrant agent under the Warrant Agreement
described below) at its corporate trust department at
___________________, (i) this Warrant Certificate [For Book-Entry
Warrant -- Certificate: and the Warrants to be exercised (the "Book-
Entry Warrants") free on the records of [The Depository Trust Company]
(the "Depository") to an account of the Warrant Agent at the
Depository designated for such purpose in writing by the Warrant Agent
to the Depository], (ii) an election to purchase ("Election to
Purchase"), [For definitive Warrant Certificates: properly executed by
the holder hereof on the reverse of this Warrant Certificate] [For
Book-Entry Warrant Certificates: properly executed by the institution
in whose account the Warrant is recorded on the records of the
Depository (the "Participant"), and substantially in the form included
on the reverse of hereof] and (iii) the Exercise Price for each
Warrant to be exercised in lawful money of the United States of
America by certified or official bank check or by bank wire transfer
in immediately available funds. If any of (a) this Warrant
Certificate [For Book-Entry Warrant Certificates: or the Book-Entry
Warrants], (b) the Election to Purchase, or (c) the Exercise Price
therefor, is received by the Warrant Agent after 5:00 P.M., New York
time, on [Unless Warrants may be exercised on only one date: the
specified Exercise Date, the Warrants will be to be received and
exercised on the Business Day next succeeding the Exercise Date. If
the date specified as the Exercise Date is not a Business Day, the
Warrants will be deemed to be received and exercised on the next
succeeding day which is a Business Day. If the Warrants to be
exercised are received or deemed to be received after] the Expiration
Date, the exercise thereof will be null and void and any funds
delivered to the Warrant Agent will be returned to the holder as soon
as practicable. In no event will interest accrue on funds deposited
with the Warrant Agent in respect of an exercise or attempted exercise
of Warrants. The validity of any exercise of Warrants will be
determined by the Warrant Agent in its sole discretion and such
determination will be final and binding upon the holder of the
Warrants and the Company. Neither the Warrant Agent nor the Company
shall have any obligation to inform a holder of Warrants of the
invalidity of any exercise of Warrants. As used herein, the term
"Business Day" means any day which is not a Saturday or Sunday and is
not a legal holiday or a day on which banking institutions generally
are authorized or obligated by law or regulation to close in New York
or California.
Warrants may be exercised only in whole numbers of Warrants. [Unless
Warrants may be exercised on only one date: If fewer than all of the
Warrants evidenced by this Warrant Certificate are exercised, a new
Warrant Certificate for the number of Warrants remaining unexercised
A-2<PAGE>
shall be executed by the Company and countersigned by the Warrant
Agent as provided in Section 1.02 of the Warrant Agreement, and
delivered to the holder of this Warrant Certificate at the address
specified on the books of the Warrant Agent or as otherwise specified
by such registered holder.]
This Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of ___________ __, ____ (the "Warrant
Agreement"), between the Company and the Warrant Agent and is subject
to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the holder of this Warrant Certificate
[For Book-Entry Warrant Certificate: and the beneficial owners of the
Warrants represented by this Warrant Certificate] consent[s] by
acceptance hereof. Copies of the Warrant Agreement are on file and
can be inspected at the above-mentioned office of the Warrant Agent
and at the office of the Company at 1100 N. Wood Dale Road, Wood Dale,
Illinois 60191.
[If the Warrant Securities are Debt Securities: The Warrant Securities
to be issued and delivered upon the exercise of the Warrants evidenced
by this Warrant Certificate will be issued under and in accordance
with the Indenture, dated as of _________ __, ____ (the "Indenture"),
between the Company and [name of trustee], as trustee (together with
any successor or successors as such trustee, the "Trustee"), and will
be subject to the terms and provisions contained in the Warrant
Securities and in the Indenture.] The accrual of [interest]
[dividends], if any, on the Warrant Securities issued upon the valid
exercise of any Warrant will be governed by the terms of the
applicable [Indenture] [certificate of designations] and such Warrant
Securities. From and after the issuance of such Warrant Securities,
the former holder of the Warrants exercised will be entitled to the
benefits of the [Indenture] [certificate of designations] under which
such Warrant Securities are issued and such former holder's right to
receive payments of [principal of (and premium, if any) and interest,
if any, on] [dividends and any other amounts payable in respect of]
the Warrant Securities shall be governed by, and shall be subject to,
the terms and provisions of such [Indenture] [certificate of
designations] and the Warrant Securities. Copies of the [Indenture,
including the form of the Warrant Securities,] [certificate of
designations] are on file at the corporate trust office of the
Trustee.]
[If Warrants for Common Stock are offered: The Exercise Price and the
number of Warrant Securities purchasable upon the exercise of each
Warrant shall be subject to adjustment [as shall be determined by the
Warrant Agent, which determination shall be final and binding upon the
holders of the Warrants and the Company][as provided pursuant to
Section 2.04 of the Warrant Agreement].
[If Securities and Warrants are to be offered together: [If Warrants
are not immediately detachable: Prior to the Detachment Date,] The
Warrants - represented by this Warrant Certificate may be exchanged or
A-3<PAGE>
transferred only together with the [title of Security] (the
"Security") to which the Warrants are attached, and only for the
purpose of effecting, or in conjunction with, an exchange or transfer
of such Security. Additionally, [If Warrants are not immediately
detachable: on or prior to the Detachment Date,] each transfer of such
Security on the register of the Securities shall operate also to
transfer the Warrants to which such Securities was initially attached.
[If Warrants are not immediately detachable: From and after the
Detachment Date, the above --provisions shall be of no further force
and effect.]] Upon due presentment for registration of transfer or
exchange of this Warrant Certificate at the corporate trust office of
the Warrant Agent, the Company shall execute, and the Warrant Agent
shall countersign and deliver, as provided in Section 1.02 of the
Warrant Agreement, in the name of the designated transferee one or
more new Warrant Certificates of any authorized denomination
evidencing in the aggregate a like number of unexercised Warrants,
subject to the limitations provided in the Warrant Agreement.
Neither this Warrant Certificate nor the Warrants evidenced hereby
shall entitle the holder hereof or thereof to any of the rights of a
holder of the Warrant Securities, including, without limitation, [the
right to receive the payments of principal of (and premium, if any),
and interest, if any, on Debt Securities purchasable upon such
exercise or to enforce any of the covenants in the applicable
Indenture] [the right to receive dividends, if any, or payments upon
the liquidation, dissolution or winding up of the Company or to
exercise voting rights, if any].
The Warrant Agreement and this Warrant Certificate may be amended as
provided in the Warrant Agreement including, under certain
circumstances described therein, without the consent of the holder of
this Warrant Certificate or the Warrants evidenced thereby.
THIS WARRANT CERTIFICATE AND ALL RIGHTS HEREUNDER AND UNDER THE
WARRANT AGREEMENT AND PROVISIONS HEREOF AND THEREOF SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
ILLINOIS (WITHOUT REFERENCE TO APPLICABLE CONFLICTS OF LAW
PROVISIONS).
This Warrant Certificate shall not be entitled to any benefit under
the Warrant Agreement or be valid or obligatory for any purpose, and
no Warrant evidenced hereby may be exercised, unless this Warrant
Certificate has been countersigned by the manual signature of the
Warrant Agent.
A-4<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated as of ________ __, ____
AAR CORP.
By: ________________________
Authorized Officer
[NAME OF WARRANT AGENT],
as Warrant Agent
By: ________________________
Authorized Officer
A-5<PAGE>
[REVERSE]
Instructions for Exercise of Warrant
To exercise the Warrants evidenced hereby, the holder [For Book-Entry
Warrant Certificate: or Participant] must, by 5:00 P.M., New York
time, on the specified Exercise Date, deliver to the Warrant Agent at
its corporate trust department, a certified or official bank check or
a wire transfer in immediately available funds, in each case payable
to the Warrant Agent at Account No. ____, in an amount equal to the
Exercise Price in full for the Warrants exercised. In addition, the
Warrant holder [For Book-Entry Warrant Certificates: or Participant]
must provide the information required below and deliver this Warrant
Certificate to the Warrant Agent at the address set forth below [For
Book-Entry Warrant Certificates: and the Book-Entry Warrants to the
Warrant --Agent in its account with the Depository designated for such
purpose]. This Warrant Certificate and the Election to Purchase must
be received by the Warrant Agent by 5:00 P.M., New York time, on the
specified Exercise Date.
ELECTION TO PURCHASE TO BE EXECUTED IF WARRANT HOLDER DESIRES TO
EXERCISE THE WARRANTS EVIDENCED HEREBY.
The undersigned hereby irrevocably elects to exercise, on __________,
____ (the "Exercise Date"), _____________ Warrants, evidenced by this
Warrant Certificate, to purchase, [$_____________ principal amount]
[_________________] of the [title of Securities purchasable upon
exercise of Warrants] [If Warrants for Depositary Shares are to be
offered: , each representing a 1/__th interest in a share of [title of
securities represented by the Depositary Shares]] (the "Warrant
Securities") of AAR CORP., a Delaware corporation (the "Company"), and
represents that on or before the Exercise Date such holder has
tendered payment for such Warrant Securities by certified or official
bank check or bank wire transfer in immediately available funds to the
order of the Company c/o [Name and address of Warrant Agent], in the
amount of $_____________ in accordance with the terms hereof. The
undersigned requests that said [principal amount of] [number of]
Warrant Securities be in fully registered form, in the authorized
denominations, registered in such names and delivered, all as
specified in accordance with the instructions set forth below.
[Unless Warrants may be exercised on only one date: If said [principal
amount] [number] of Warrant Securities is less than all of the Warrant
Securities purchasable hereunder, the undersigned requests that a new
Warrant Certificate evidencing the remaining balance of the Warrants
A-6<PAGE>
evidenced hereby be issued and delivered to the holder of the Warrant
Certificate unless otherwise specified in the instructions below.]
Dated: ______________ __, ____
Name __________________________ _________________________
(Please Print)
/ / / /- / / /- / / / / /
(Insert Social Security or Other Identifying Number of Holder)
Address _______________________
_______________________
Signature _____________________
This Warrant may only be exercised by presentation to the Warrant
Agent at one of the following locations:
By hand at
By mail at
The method of delivery of this Warrant Certificate is at the option
and risk of - the exercising holder and the delivery of this Warrant
Certificate will be - deemed to be made only when actually received by
the Warrant Agent. If delivery is by mail, registered mail with
return receipt requested, properly insured, is - recommended. In all
cases, sufficient time should be allowed to assure timely delivery.
(Instructions as to form and delivery of Warrant Securities and/or
Warrant Certificates)
Name in which Warrant Securities are to be registered if other than
in the name of the registered holder of this Warrant Certificate:
______________________________
Address to which Warrant Securities are to be mailed if other than to
the address of the registered holder of this Warrant Certificate as
shown on the books of the Warrant Agent:
______________________________
(Street Address)
______________________________
(City and State) (Zip Code)
A-7<PAGE>
[Except for Book-Entry Warrant Certificate: Name in which Warrant
Certificate evidencing unexercised Warrants, if any, are to be
registered if other than in the name of the registered holder of this
Warrant Certificate:
_____________________________
Address to which certificate representing unexercised Warrants, if
any, are to be mailed if other than to the address of the registered
holder of this Warrant Certificate as shown on the books of
the Warrant Agent:
______________________________
(Street Address)
______________________________
(City and State) (Zip Code)]
Dated:
______________________________
Signature
([Except for Book-Entry Warrant Certificate: Signature must conform in
all respects to the name of the holder as specified on the face of
this Warrant Certificate.] If Warrant Securities, or a Warrant
Certificate evidencing unexercised Warrants, are to be issued in a
name other than that of the registered holder hereof or are to be
delivered to an address other than the address of such holder as shown
on the books of the Warrant Agent, the above signature must be
guaranteed by a member firm of a registered national stock exchange, a
member of the National Association of Securities Dealers, Inc., a
participant in the Security Transfer Agents Medallion Program or the
Stock Exchange Medallion Program, or by a commercial bank or trust
company having an office or correspondent in the United States.)
SIGNATURE GUARANTEE
Name of Firm _____________________
Address __________________________
Area Code
and Number _______________________
Authorized
Signature ________________________
Name _____________________________
Title ____________________________
Dated: _____________________, 19__
A-8<PAGE>
ASSIGNMENT
(FORM OF ASSIGNMENT TO BE EXECUTED IF WARRANT HOLDER DESIRES TO
TRANSFER WARRANTS EVIDENCED HEREBY) FOR VALUE RECEIVED, _________
hereby sell(s), assign(s) and transfer(s) unto
__________________________________________________________________
(Please print name and address (Please insert social security or
including zip code of assignee) other identifying number of assignee)
the rights represented by the within Warrant Certificate and does
hereby irrevocably constitute and appoint ___________ Attorney to
transfer said Warrant Certificate on the books of the Warrant Agent
with full power of substitution in the premises.
Dated:
___________________________
Signature
(Signature must conform in all respects to the name of the holder as
specified on the face of this Warrant Certificate and must bear a
signature guarantee by a member firm of a registered national
securities exchange, a member of the National Association of
Securities Dealers, Inc., a participant in the Security Transfer
Agents Medallion Program or the Stock Exchange Medallion Program, or
by a commercial bank or trust company having an office or
correspondent in the United States)
SIGNATURE GUARANTEE
Name of Firm _____________
Address___________________
Area Code
and Number________________
Authorized
Signature_________________
Name______________________
Title_____________________
Dated:______________, 19__
A-9<PAGE>
EXHIBIT 5.1
[SCHIFF HARDIN & WAITE LETTERHEAD]
May 13, 1998
AAR CORP.
One AAR Place
1100 North Wood Dale Road
Wood Dale, Illinois 60191
Ladies and Gentlemen:
We have acted as counsel to AAR CORP., a Delaware corporation
(the "Company"), and are rendering this opinion in connection with the
Registration Statement on Form S-3 (the "Registration Statement")
being filed by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Company's: (i) Common Stock, par value $1.00 per
share (the "Common Stock"); (ii) Preferred Stock, par value $1.00 per
share (the "Preferred Stock"); (iii) Depositary Shares representing
shares of the Preferred Stock (the "Depositary Shares"); (iv) Debt
Securities (the "Debt Securities"); and (v) Warrants to purchase
Common Stock, Preferred Stock, Debt Securities, or Depositary Shares
(the "Warrants"), all of which may be issued from time to time on a
delayed or continuous basis pursuant to Rule 415 under the Securities
Act at an aggregate initial offering price not to exceed $200,000,000.
The Debt Securities may be issued pursuant to an Indenture
between the Company and U.S. Bank Trust National Association (formerly
known as First Trust, National Association, as successor in interest
to Continental Bank, National Association), as Trustee, as
supplemented (collectively, the "Indenture"). The Depositary Shares
will be deposited under a Deposit Agreement between the Company and a
bank or trust company as Depositary and evidenced by Depositary
Receipts. The Warrants will be issued either independently or
together with Common Stock, Preferred Stock, Depositary Shares, or
Debt Securities and will be issued pursuant to a Warrant Agreement
between the Company and a Warrant Agent.
In connection with our opinion, we have examined the Registration
Statement, including the exhibits thereto, and such other documents,
corporate records, and instruments and have examined such laws and
regulations as we have deemed necessary for the purposes of this
opinion. Based upon such examination, we are of the following
opinions:
1. The Company has been duly incorporated and is a validly
existing corporation under the laws of the State of Delaware.
2. The Common Stock has been duly authorized and will be
validly issued, fully paid, and nonassessable at such time as: (i)
the Registration Statement has become effective under the Securities<PAGE>
Act, (ii) the terms of the issuance and sale of the Common Stock have
been duly established in conformity with resolutions of the Board of
Directors of the Company and the Company's Restated Certificate of
Incorporation and By-laws, and (iii) the Common Stock has been duly
issued and sold as contemplated by the Registration Statement and the
Company's Restated Certificate of Incorporation and By-laws.
3. The Preferred Stock has been duly authorized and will be
validly issued, fully paid, and nonassessable at such time as: (i)
the Registration Statement has become effective under the Securities
Act, (ii) an appropriate Certificate or Certificates of Designations
relating to a class or series of the Preferred Stock to be sold under
the Registration Statement have been duly authorized and adopted and
filed with the Secretary of State of the State of Delaware, (iii) the
terms of the issuance and sale of shares of such class or series of
Preferred Stock have been duly established in conformity with
resolutions of the Board of Directors of the Company and the Company's
Restated Certificate of Incorporation (including the Certificate or
Certificates of Designation) and By-laws, and (iv) the shares of such
class or series of Preferred Stock have been duly issued and sold as
contemplated by the Registration Statement and the Company's Restated
Certificate of Incorporation (including the Certificate or
Certificates of Designation) and By-laws.
4. The Depositary Shares will be validly issued and the
Depositary Receipts will entitle the holders thereof to the rights
specified in the Depositary Shares and the Deposit Agreement, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles at such
time as: (i) the Registration Statement has become effective under
the Securities Act, (ii) the Deposit Agreement relating to the
Depositary Shares has been duly authorized, executed and delivered,
(iii) the terms of the Depositary Shares and of their issuance and
sale have been duly established in conformity with resolutions of the
Board of Directors of the Company and the Deposit Agreement, (iv) the
class or series of Preferred Stock that is represented by the
Depositary Shares has been duly authorized, validly issued and
delivered to the Depositary, (v) the Depositary Receipts evidencing
the Depositary Shares have been duly executed, countersigned and
issued against deposit of the class or series of Preferred Stock in
accordance with the Deposit Agreement, and (vi) the Depositary Shares
have been duly issued and sold as contemplated by the Registration
Statement and the Deposit Agreement.
5. The Debt Securities will be valid and legally binding
obligations of the Company, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles at such time as: (i) the Registration
Statement has become effective under the Securities Act, (ii) the
terms of the Debt Securities and of their issuance and sale have been
duly established in conformity with resolutions of the Board of
Directors of the Company and the Indenture, (iii) the Debt Securities<PAGE>
have been duly executed and authenticated in accordance with the
Indenture, and (iv) the Debt Securities have been duly issued and sold
as contemplated by the Registration Statement and the Indenture.
6. The Warrants will be valid and legally binding obligations
of the Company, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles at such time as: (i) the Registration
Statement has become effective under the Securities Act, (ii) the
Warrant Agreement relating to the Warrants has been duly authorized,
executed, and delivered, (iii) the terms of the Warrants and of their
issuance and sale have been duly established in conformity with
resolutions of the Board of Directors of the Company and the Warrant
Agreement, (iv) the Warrants have been duly executed and countersigned
in accordance with the Warrant Agreement and, (v) the Warrants have
been duly issued and sold as contemplated by the Registration
Statement and the Warrant Agreement.
We express opinions herein with respect to the applicability of
the laws of the State of Illinois, the United States Federal laws and
the General Corporation Law of Delaware, and we express no opinion as
to the laws of any other jurisdiction.
We have relied as to certain matters on information obtained from
public officials, officers of the Company, and other sources believed
by us to be responsible, and we have assumed that the Deposit
Agreement will be duly authorized, executed, and delivered by the
Depositary thereunder, and that the Warrant Agreement will be duly
authorized, executed, and delivered by the Warrant Agent thereunder,
assumptions which we have not independently verified.
We hereby consent to the use of this opinion for filing with the
Registration Statement as Exhibit 5.1 thereto and the reference to us
under the caption Legal Opinions in the Prospectus contained in the
Registration Statement.
Very truly yours,
SCHIFF HARDIN & WAITE
By: /s/ ROBERT J. REGAN
-----------------------------
Robert J. Regan<PAGE>
EXHIBIT 12.1
<TABLE>
<CAPTION>
AAR CORP.
RATIO OF EARNINGS TO FIXED CHARGES
9 Months Ended
February 28 Year Ended May 31
--------------- -----------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(000's omitted except ratio data)
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings Available for Fixed Charges
------------------------------------
Earnings before income taxes . . . $35,869 $22,807 $32,975 $22,782 $14,713 $13,684 ($1,917)
Add:
Interest expense . . . . . . . . 9,742 8,038 10,642 10,472 10,716 9,442 8,025
Amortization of capitalized
interest . . . . . . . . . . . -0- -0- 357 -0- -0- -0- -0-
Amortization of debt expense . . 119 108 144 144 184 122 82
One-third of rent expense under
operating leases (estimated by
management to be the interest
factor of such rent expense) . 1,100 1,260 2,200 2,280 2,180 1,610 1,770
----- ----- ----- ----- ----- ----- -----
Earnings available for fixed
charges . . . . . . . . . . $46,830 $32,213 $46,318 $35,678 $27,793 $24,858 $ 7,960
======= ======= ======= ======= ======= ======= =======
Fixed Charges:
-------------
Interest expense . . . . . . . . . $ 9,742 $ 8,038 $10,642 $10,472 $10,716 $ 9,442 $ 8,025
Capitalized interest . . . . . . . -0- -0- 357 -0- -- -0- --
Amortization of debt expense . . . 119 108 144 144 184 122 82
One-third of rent expense under
operating leases (estimated by
management to be the interest
factor of such rent expense) . . 1,100 1,260 2,200 2,280 2,180 1,610 1,770
----- ----- ----- ----- ----- ----- -----
Total fixed charges . . . . . . $10,961 $ 9,406 $13,343 $12,896 $13,080 $11,174 $ 9,877
======= ======= ======= ======= ======= ======= =======
Ratio of earnings to fixed
charges . . . . . . . . . . . 4.3:1 3.4:1 3.5:1 2.8:1 2.1:1 2.2:1 0.8:1
===== ===== ===== ===== ===== ===== =====<PAGE>
</TABLE>
EXHIBIT 23.2
Consent of KPMG Peat Marwick LLP
--------------------------------
The Board of Directors
AAR CORP.:
We consent to incorporation by reference in the Registration Statement
on Form S-3 of AAR CORP. of our report dated June 24, 1997, relating
to the consolidated balance sheets of AAR CORP. as of May 31, 1997 and
1996, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the years in the three-year period
ended May 31, 1997, which report appears in the May 31, 1997 annual
report on Form 10-K of AAR CORP., and to the reference to our firm
under the heading "Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
-------------------------------
KPMG Peat Marwick LLP
Chicago, Illinois
May 6, 1998<PAGE>
EXHIBIT 25.1
======================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER
THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of
a Trustee Pursuant to Section 305(b)(2)___
_____________________________________________________
U.S. BANK TRUST NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
111 EAST WACKER DRIVE, SUITE 3000 60601 36-4046888
CHICAGO, ILLINOIS (Zip Code) I.R.S. Employer
(Address of principal executive Identification
offices) No.
Larry Kusch
111 East Wacker Drive, Suite 3000
Chicago, Illinois 60601
Telephone (312) 228-9446
(Name, address and telephone number of agent for service)
AAR CORP.
(Exact name of obligor as specified in its charter)
DELAWARE 75-1743247
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE AAR PLACE
1100 NORTH WOOD DALE ROAD
WOOD DALE, ILLINOIS 60191
(Address of Principal Executive Offices) (Zip Code)
DEBT SECURITIES
(Title of the Indenture Securities)
======================================================================<PAGE>
FORM T-1
--------
ITEM 1. GENERAL INFORMATION. Furnish the following information as
to the Trustee.
a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.
Comptroller of the Currency
Washington, D.C.
b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes
ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE
OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION.
None
ITEMS 3-15 There is not nor has there been a default with respect
to the securities under this Indenture. The Trustee is
a Trustee under other Indentures under which securities
issued by the obligor are outstanding. There is not
and there has not been a default with respect to the
securities outstanding under such other Indentures.
ITEM 16. LIST OF EXHIBITS: LIST BELOW ALL EXHIBITS FILED AS A PART
OF THIS STATEMENT OF ELIGIBILITY AND QUALIFICATION.
1. A copy of the Articles of Association of the Trustee
now in effect, incorporated herein by reference to
Exhibit 1 of Form T-1, Registration No. 333-18235.
2. A copy of the certificate of authority of the Trustee
to commence business, incorporated herein by reference
to Exhibit 2 of Form T-1, Registration No. 333-18235.
3. A copy of the certificate of authority of the Trustee
to exercise corporate trust powers, incorporated herein
by reference to Exhibit 3 of Form T-1, Registration No.
333-18235.
4. A copy of the existing bylaws of the Trustee, as now in
effect, incorporated herein by reference to Exhibit 4
of Form T-1, Registration No. 333-18235.
5. Not applicable.
6. The consent of the Trustee required by Section 321(b)
of the Trust Indenture Act of 1939, incorporated herein
by reference to Exhibit 6 of Form T-1, Registration No.
333-18235.<PAGE>
7. A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority, filed herewith.
8. Not applicable.
9. Not applicable.<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, U.S. BANK TRUST NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the
United States of America, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago,
State of Illinois on the 13th day of May, 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
By: /s/ Larry Kusch
-----------------------------
Larry Kusch
Assistant Vice President and
Assistant Secretary<PAGE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Bank for December 31, 1997
All schedules are to be reported in thousands of dollars. Unless
otherwise indicated, report the amount outstanding as of the last
business day of the quarter.
<TABLE>
<CAPTION>
Schedule RC - Balance Sheet
C200 <-
Dollar Amounts in Thousands
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balance due from depository institutions (from Schedule RC-A):__ RCON
----
a. Noninterest-bearing balances and currency and coin (1)_______________ 0081. . 55,536 1.a
b. Interest-bearing balances (2)________________________________________ 0071. . 0 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)___________ 1754. . 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D)_________ 1773. . 3,216 2.b
3. Federal funds sold and securities purchased under agreements to resell___ 1350. . 0 .3.
4. Loans and Lease financing receivables:
RCON
a. Loans and Leases, net of unearned ----
income (from Schedule RC-C)__________ 2122 . . 0.00 4.a
b. LESS: Allowance for Loan and Lease
Losses_______________________________ 3123 . . 0.00 4.b
c. LESS: Allocated transfer risk reserve 3128 . . 0.00 4.c
d. Loans and Leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b and 4.c) 2125. . 0 4.d
5. Trading assets___________________________________________________________ 3545. . 0 5.
6. Premises and fixed assets (including capitalized leases)_________________ 2145. . 95 6.
7. Other real estate owned (from Schedule RC-M)_____________________________ 2150. . 0 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M)___________________________________________________________ 2130. . 0 8.
9. Customers' liability to this bank on acceptance outstanding______________ 2155. . 0 9.
10. Intangible assets (from Schedule RC-M)___________________________________ 2143. . 48,072 10.
11. Other assets (from Schedule RC-F)________________________________________ 2160. . 2,435 11.
12. Total assets (sum of items 1 through 11)_________________________________ 2170. . 109,354 12.
----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
1<PAGE>
Schedule RC - Continued
Dollar Amounts in Thousands
-------------------------------------------------------------------------------------------------------------------
LIABILITIES
13. Deposits: RCON
----
a. In domestic offices (sum of totals of columns A and C from 2200. . 0.00 13.a
Schedule RC-E
RCON
----
(1) Noninterest-bearing(1)_______ 6631. . 0 13.a.1
(2) Interest-bearing_____________ 6636. . 0 13.a.2
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs___
(1) Noninterest-bearing_____________________________________
(2) Interest-bearing________________________________________
14. Federal funds purchased and securities sold under agreements to 2800. . 0 14.
repurchase_______________________________________________________________
15. a. Demand notes issued to the U.S. Treasury________________________ 2840. . 0 15.a
b. Trading liabilities_____________________________________________ 3548. . 0 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less___________________ 2332. . 0 16.a
b. With a remaining maturity of more than one year through three A547. . 0 16.b
years___________________________________________________________
c. With a remaining maturity of more than three years______________ A548. . 0 16.c
17. Not applicable
18. Bank's liability on acceptances executed and outstanding_________________ 2920. . 0 18.
19. Subordinated notes and debentures (2)____________________________________ 3200. . 0 19.
20. Other liabilities (from Schedule RC-G)___________________________________ 2930. . 2,072 20.
21. Total liabilities (sum of items 13 through 20)___________________________ 2948. . 2,072 21.
22. Not applicable
____________________
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
(2) Includes limited life preferred stock and related surplus.
EQUITY CAPITAL
23. Perpetual preferred stock and relates surplus____________________________ 3838. . 0 23.
24. Common stock_____________________________________________________________ 3230. . 1,000 24.
25. Surplus (exclude all surplus related to preferred stock)_________________ 3839. . 106,712 25.
26. a. Undivided profits and capital reserves__________________________ 3632. . (430) 26.a
b. Net unrealized holding gains (losses) on available-for-sale 8434. . 0 26.b
securities______________________________________________________
27. Cumulative foreign currency translation adjustments______________________
28. Total equity capital (sum of items 23 through 27)________________________ 3210. . 107,282 28.
29. Total liabilities and equity capital (sum of items 21 and 28)____________ 3300. . 109,354 29.
2<PAGE>
MEMORANDUM
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed for
the bank by independent external auditors as of any date during
1996_____________________________________________________________________ 6724. . N/A M1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted
auditing standards by a certified public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Director's examination of the bank conducted in accordance with generally accepted auditing standards by a
certified public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
3<PAGE>
Schedule RC-A - Cash and Balances From Depository Institutions
Exclude assets held for trading.
C205 <-
Dollar Amounts in Thousands
--------------------------------------------------------------------------------------------------------------------
ASSETS
1. Cash items in process of collection, unposted debits, and currency and RCON
coin: ----
a. Cash items in process of collection and unposted debits_________ 0020. . 0 1.a
b. Currency and coin_______________________________________________ 0080. . 0 1.b
2. Balances due from depository institutions in the U.S.:
a. U.S. branches and agencies of foreign banks_____________________ 0083. . 0 2.a
b. Other commercial banks in the U.S. and other depository 0085. . 55,536 2.b
institutions in the U.S.________________________________________
3. Balances due from banks in foreign countries and foreign central banks:__
a. Foreign branches of other U.S. banks____________________________ 0073. . 0 3.a
b. Other banks in foreign countries and foreign central banks______ 0074. . 0 3.b
4. Balances due from Federal Reserve Banks__________________________________ 0090. . 0 4.
5. Total (sum of items 1 through 4) (must equal Schedule RC, sum of items 1.a 0010. . 55,536 5.
and 1.b)_____________________________________________________________
MEMORANDUM Dollar Amounts in
Thousands
--------------------------------------------------------------------------------------------------------------------
RCON
1. Noninterest-bearing balances due from commercial banks in the U.S. ----
(included in items 2.1 and 2.b above)____________________________________ 0050. . 55,536 M.1
</TABLE>
4<PAGE>
