Exhibit 4.8
EXECUTION COPY
SECOND AMENDMENT TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO LOAN AND
SECURITY AGREEMENT (“Second Amendment”) is made as of
the 24th day of August, 2004 by and among AAR CORP., a Delaware
corporation, (“AAR”), AAR Distribution, Inc., an
Illinois corporation (“Distribution”), AAR Parts
Trading, Inc., an Illinois Corporation (“Parts
Trading”), AAR Manufacturing, Inc., an Illinois corporation
(“Manufacturing”), AAR Engine Services, Inc., an
Illinois corporation (“Engine Services”) and AAR Allen
Services, Inc., an Illinois corporation (“Allen
Service”) and together with AAR, Distribution, Parts Trading,
Manufacturing and Engine Services, individually a
“Borrow” and collectively “Borrowers”, the
financial institutions, party hereto, each as a
“Lender” and Merrill Lynch Capital a division of
Merrill Lynch Business Financial Services, Inc., individually as a
Lender and as Agent.
W I T N E S
S E T H :
WHEREAS, Borrowers, Agent and
Lenders entered into a certain Credit Agreement dated as of May 29,
2003 as amended by a certain First Amendment to Credit Agreement
dated as of January 23, 2004 by and among Borrowers, Agent and
Lenders (said Credit Agreement, as so amended, is hereinafter
referred to as the “Credit Agreement”); and
WHEREAS, Borrowers desire to amend
and modify certain provisions of the Credit Agreement and, subject
to the terms hereof, Agent and Lenders are willing to agree to such
amendments and modifications;
NOW THEREFORE, in consideration of
the premises, the mutual covenants and agreements herein contained,
and any extension of credit heretofore, now or hereafter made by
Agent and Lenders to Borrowers, the parties hereto hereby agree as
follows:
1.
Definitions
. All capitalized terms
used herein without definition shall have the meaning given to them
in the Loan Agreement.
2.
Additional and Amended
Definitions . The following definitions of
“AAR-GS 737 Classics Leasing LLC Joint Venture” and
“AAR-GS 737 Classics Leasing LLC Joint Venture Debt
Documents” are hereby inserted into Section 1.1 of the
Credit Agreement; the definition of “Borrowing Base”
contained in Section 1.1 of the Credit Agreement is hereby
deleted and the following is inserted in its stead.
“AAR-GS 737 Classics Leasing
LLC Joint Venture” means the joint venture relationship
pursuant to that certain Agreement of AAR-GS 737 Classics Leasing
LLC by and among AAR International Financial Services LLC and GS
737 Classics Leasing LLC, which Agreement shall be in substantially
the form delivered by AAR CORP. to Agent on August 24,
2004.
“AAR-GS 737 Classics Leasing
LLC Joint Venture Debt Documents” means any agreement,
instrument, note, schedules and exhibits to be executed and/or
delivered in
connection with any Debt incurred by
the AAR-GS 737 Classics Leasing LLC Joint Venture and all
amendments and/or modifications or any replacements (whether
effected upon termination or any time thereafter) and/or
refinancings to any of the foregoing (to the extent any such
amendment, modification, replacement or refinancing is permitted
hereunder).
“Borrowing Base” means,
as of any date of calculation, a dollar amount calculated pursuant
to the Borrowing Base Certificate most recently delivered to Agent
in accordance with the terms hereof, equal to the lesser of (x)
sixty percent (60%) of (i) the Net Orderly Liquidation Value
multiplied by (ii) the value of Eligible Inventory
calculated on the basis of the lower of cost or market on a
first-in, first-out basis minus the sum of $5,000,000
plus the amount of any Reserves established by Agent or (y)
ten percent (10%) of the Consolidated Adjusted Net Worth
minus $1,000,000.
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3.
Additional Debt
. The following Section (r) is
inserted into Section 5.1:
“Section 5.1
Debt
.
Borrowers will not, directly or
indirectly, create, incur, assume, guarantee or otherwise become or
remain directly or indirectly liable with respect to, any Debt, or
any contingent obligations which would be Debt hereunder if they
were non-contingent, except for:
*
*
*
(r)
Debt incurred by the AAR-GS 737
Classics Leasing LLC Joint Venture (or its Subsidiaries) pursuant
to the AAR-GS 737 Classics Leasing LLC Joint Venture Debt
Documents; provided that such Debt is non-recourse to any
Borrower.”
*
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4.
Purchase of Assets,
Investments . Section 5.7 of the Credit
Agreement is hereby deleted and the following is inserted in its
stead (new language is underscored):
“Section 5.7
Purchase of Assets,
Investments . No
Borrower will, and no Borrower will permit any Subsidiary to,
directly or indirectly acquire any assets other than (x) in the
ordinary course of business, (y) with respect to intercompany Debt
permitted hereunder or (z) to facilitate a transaction in which
such Borrower or Subsidiary will incur Permitted Mortgage Debt. No
Borrower will and no Borrower will not permit any Subsidiary to,
directly or indirectly make, acquire or own any Investment in any
Person other than (a) Investments set forth on the Information
Certificate; (b) Cash Equivalents; (c) Investments in Domestic
Subsidiaries, so long as any such Domestic Subsidiary has
Guaranteed the Obligations and secured such Guarantee by granting
in favor of Agent, for its benefit and the benefit of th
