<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-K
ANNUAL REPORT
------------------------------
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
December 31, 1994
For the fiscal year ended......................................................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ...................... to ......................
0-11350
Commission file number.........................................................
INTERNATIONAL LEASE FINANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 22-3059110
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S.
ORGANIZATION) EMPLOYER
IDENTIFICATION
NO.)
1999 AVENUE OF THE STARS, LOS ANGELES, CALIFORNIA 90067
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 788-1999
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K ((S) 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN,
AND WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN
DEFINITIVE PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART
III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [X]
AS OF FEBRUARY 28, 1995, THERE WERE 35,818,122 SHARES OF COMMON STOCK, NO
PAR VALUE, OUTSTANDING.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(A) AND
(B) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE
FORMAT.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION
1994 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
<TABLE>
<S> <C> <C>
Page
----
Item 1. Business................................................................ 1
Item 2. Properties.............................................................. 6
Item 3. Legal Proceedings....................................................... 8
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters........................................ 8
Item 6. Selected Financial Data................................................. 9
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................. 10
Item 8. Financial Statements and Supplementary Data............................. 12
Item 9. Changes in and Disagreements with Accountants on Accounting and Finan-
cial Disclosure........................................................ 12
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K................................................ 13
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
International Lease Finance Corporation (the "Company") is primarily engaged
in the acquisition of new and used commercial jet aircraft and the leasing and
sale of such aircraft to domestic and foreign airlines. The Company, in terms
of the number and value of transactions concluded, is a major owner-lessor of
commercial jet aircraft. In addition, the Company is engaged in the
remarketing of commercial jets for its own account, for airlines and for
financial institutions.
Since 1973, the Company has engaged in over 700 transactions involving the
lease or sale of commercial aircraft to more than 140 airlines. As of December
31, 1994, the Company owned 270 aircraft including aircraft owned in joint
ventures. See "Item 2. Properties--Flight Equipment." At December 31, 1994,
the Company had committed to purchase 236 aircraft deliverable through 2000 at
an estimated aggregate purchase price of $13.4 billion. It also had options to
purchase an additional 51 aircraft deliverable through 2001 at an estimated
aggregate purchase price of $2.8 billion. See "Item 2. Properties--
Commitments."
The Company maintains the mix of flight equipment to meet its customers'
needs by purchasing those models of new and used aircraft which it believes
will have the greatest airline demand and operational longevity and minimize
the time that its aircraft are not leased to customers.
The Company purchases, and finances the purchase of, aircraft on terms
intended to permit the Company to lease or resell such aircraft at a profit.
The Company typically finances the purchase of aircraft with borrowed funds
and internally generated cash flow. The Company accesses the capital markets
for such funds at times and on terms and conditions it considers appropriate.
The Company may, but does not necessarily, engage in financing transactions
for specific aircraft. The Company relies significantly on short- and medium-
term financing, and thereby attempts to manage interest rate exposure. To
date, the Company has been able to purchase aircraft on terms which have
permitted it to lease the aircraft at a profit and has not experienced any
difficulty in obtaining financing.
The Company's aircraft are usually leased on terms under which the Company
does not fully recover the acquisition cost of such aircraft. Thus, at the
termination of a lease, the Company bears the risk of selling or releasing the
aircraft on terms which will cover its remaining cost.
The airlines are in a cyclical, economically sensitive and highly
competitive business. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Company's revenue and
income may be affected by political instability abroad, changes in national
policy, competitive pressures on certain air carriers, fuel shortages, labor
stoppages, recessions, and other political or economic events adversely
affecting world or regional trading markets or impacting a particular
customer. The Company's continued success is partly dependent on management's
ability in the future to develop customer relationships for leasing, sales and
remarketing with those airlines best able to maintain their economic viability
and survive in a deregulated environment.
The Company is incorporated in the State of California and its principal
executive offices are located at 1999 Avenue of the Stars, Los Angeles,
California 90067. The Company's telephone, telecopier and telex numbers are
(310) 788-1999, (310) 788-1990 and 69-1400, respectively. The Company is a
wholly owned subsidiary of American International Group, Inc. ("AIG"). AIG is
a holding company which through its subsidiaries is primarily engaged in a
broad range of insurance
1
<PAGE>
and insurance-related activities in the United States and abroad. The Common
Stock of AIG is listed on, among others, the New York Stock Exchange.
AIRCRAFT LEASING
The initial term of the Company's current leases range in length from one
year to 15 years. See "Item 2. Properties--Flight Equipment" for information
regarding scheduled lease terminations. Most of the Company's leases are
operating leases under which the Company does not fully recover its aircraft
cost and retains the benefit and assumes the risk of the residual value of the
aircraft. The Company on occasion also enters into finance-type and sales-type
leases where the full cost of the aircraft is substantially recovered over the
term of the lease. At December 31, 1994, 262 of the Company's leases,
excluding aircraft in joint ventures, were accounted for as operating leases.
The aircraft under operating leases are included as assets on the Company's
balance sheet and depreciation is charged to income over the estimated useful
lives of the aircraft. In accordance with generally accepted accounting
principles, rentals are reported as revenue over the lease term as they become
due and are earned. The Company attempts to maintain a mix of short- and
medium-term leases to balance the benefits and risks associated with different
lease terms such as larger lease payments on shorter-term leases, changes in
prevailing market conditions at the time aircraft become eligible for re-lease
or sale and uncertainty associated with estimating residual value of the
aircraft at the termination of the lease.
All leases are on a "net" basis with the lessee responsible for all
operating expenses, which customarily include fuel, crews, airport and
navigation charges, taxes, licenses, registration and insurance. Normal
maintenance and repairs; airframe and engine overhauls; and compliance with
return conditions of flight equipment on lease are provided by and paid for by
the lessee. Under the provisions of most leases, for certain airframe and
engine overhauls, the lessee is reimbursed by the Company for costs incurred
up to but not exceeding contingent rentals paid to the Company by the lessee.
The Company provides a charge to operations for such reimbursements based
primarily upon the hours utilized during the period and the expected
reimbursement during the life of the lease. The leases contain specific
provisions regarding the condition of the aircraft upon redelivery to the
Company. The lessee is responsible for compliance with all applicable laws and
regulations with respect to the aircraft. The Company requires its lessees to
comply with the most restrictive standards of either the Federal Aviation
Administration (the "FAA") or its foreign equivalent. The Company makes
periodic inspections of the condition of its leased aircraft. Generally, the
Company requires a deposit which is security for the condition of aircraft
upon return to the Company, the rental payment by the lessee and the
performance of other obligations by the lessee under the lease. In addition,
the leases contain extensive provisions regarding the remedies and rights of
the Company in the event of a default thereunder by the lessee. The lessee is
required to continue lease payments under all circumstances, including periods
during which the aircraft is not in operation for maintenance, grounding or
any other reason whatsoever.
The Company obtains and reviews financial statements from all prospective
lessees and purchasers before entering into a lease or extending credit. Under
certain circumstances, the Company may require the lessee to obtain guarantees
or other financial support from an acceptable financial institution or other
third party.
FLIGHT EQUIPMENT MARKETING
The Company also regularly engages in transactions to buy and sell aircraft.
Generally, the Company makes a contractual commitment to purchase specific
aircraft for its own account for resale only after or concurrently with
obtaining a firm order from a customer. In some cases, the Company assists its
customers through consulting services and procurement of financing from third
parties.
2
<PAGE>
From time to time, the Company also disposes of its leased aircraft at or
before the expiration of their leases. Any gain or loss on disposition of
leased aircraft is reflected as revenues from flight equipment marketing.
In addition to its leasing and sales operations, the Company is engaged,
from time to time, as an agent for airlines in the disposition of their
surplus aircraft. The Company generally acts as an agent under an exclusive
remarketing contract whereby it agrees to sell aircraft on a "best efforts"
basis within a period of one year. Compensation to the Company is based upon a
percentage of the sales price or lease proceeds and is customarily 2% to 5%.
In addition, certain air travel expenses of the Company in connection with its
remarketing activities may be provided by the contracting or selling airline.
These activities generally augment the Company's primary activities and also
serve to promote relationships with prospective sellers and buyers of
aircraft.
Since 1973, the Company has acted as an agent in over 60 aircraft
transactions. The Company plans to continue its remarketing services on a
selected basis involving specific situations where these activities will not
conflict or compete with, but rather will be complementary to, its leasing and
selling activities.
The Company also has guaranteed the loans of certain buyers of aircraft,
which guarantees aggregate approximately $66,933,000. See Note J of Notes to
Consolidated Financial Statements.
FINANCING/SOURCE OF FUNDS
The Company purchases new aircraft directly from manufacturers and used
aircraft from airlines for lease or sale to other airlines. The Company
finances the purchase price of flight equipment from internally generated
funds, secured and unsecured commercial bank loans, issuance of commercial
paper, public and private debt and preferred stock. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations."
CUSTOMERS
At December 31, 1994, lessees of the Company included: (domestic) Alaska
Airlines, American Trans Air, Carnival Air Lines, Continental Airlines,
Federal Express, Leisure Air, North American Airlines, Southwest Airlines,
Trans World Airlines (TWA), USAir and World Airways; (foreign) Aer Lingus,
Aeromexico, Air 2000, Air Espana, Air Inter, Air Liberte, Air Madagascar, Air
Mauritius, Air New Zealand, Air Pacific, Air Seychelles, Air Transat, Air UK,
Asiana, Aviateca, Baikal Airlines, Braathens S.A.F.E., Britannia Airways,
British Airways, British Midland Airways, BWIA International, Canada 3000,
Cathay Pacific, Cayman Airways, China Hainan Airlines, China Southern
Airlines, China Southwest Airlines, COPA, EVA Airways, Garuda Indonesia,
Guyana Airways, Hong Kong Dragon Airlines (Dragonair), Kenya Airways, Korean
Airlines, LACSA, LAPSA-Lineas Aereas Paraguayas, Lloyd Aero Boliviano (LAB),
Ladeco S.A., LAN Chile, LTU Luftransport-Unternehmen, Lufthansa Cargo,
Linjeflyg AB (a wholly-owned subsidiary of SAS), Malev Hungarian Airlines,
Monarch Airways, National Jet Systems, NICA, Nordic East, ONUR Air, Pegasus
Hava Tasimaciligi, A.S., Polynesian Airways, QANTAS Airways, SAETA, Sahara
India Airlines, Societe D'Exploitation Aeropostale, Swissair, TACA
International Airlines, TAP Air Portugal, TAT, TEA Basel, THY, Transbrasil,
Translift Airways, Varig, Virgin Atlantic Airways, VIVA Airways and Wuhan
Airlines. No single customer accounted for more than 10% of total revenues in
any of the last three years.
Revenues include rentals of flight equipment to foreign airlines of
$798,619,000 (1994), $655,773,000 (1993) and $546,452,000 (1992) comprising
80.4%, 82.4% and 86.9%, respectively, of total rentals of flight equipment.
See Note I of Notes to Consolidated Financial Statements.
3
<PAGE>
The following table sets forth the dollar amount and percentage of total
rental revenues attributable to the indicated geographic areas for the years
indicated:
<TABLE>
<CAPTION>
1994 1993 1992
-------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
-------- ----- -------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe......................... $353,009 35.5% $261,523 32.9% $237,005 37.7%
Asia/Pacific................... 180,215 18.2 169,036 21.2 143,201 22.8
Central, South America and
Mexico........................ 199,041 20.0 171,577 21.6 117,891 18.8
United States and Canada....... 230,856 23.2 171,720 21.6 113,832 18.1
Africa......................... 30,475 3.1 21,581 2.7 16,671 2.6
-------- ----- -------- ----- -------- -----
$993,596 100.0% $795,437 100.0% $628,600 100.0%
======== ===== ======== ===== ======== =====
</TABLE>
Many foreign countries have currency and exchange laws regulating the
international transfer of currencies. The Company attempts to minimize its
currency and exchange risks by negotiating substantially all of its aircraft
leasing and sales transactions in U.S. dollars and all guarantees obtained to
support various lease agreements are denominated for payment in U.S. dollars.
The Company requires, as a condition to any foreign transaction, that the
lessee or purchaser in a foreign country first obtain, if required, written
approval of the appropriate government agency, finance ministry or central
bank for the remittance of all funds contractually owed to the Company in U.S.
dollars.
The Company has restructured leases with both foreign and domestic lessees.
Such restructurings have involved the voluntary termination of leases prior to
lease expiration, the replacement of leased aircraft with smaller, less
expensive leased aircraft, the arrangement of subleases from the primary
lessee to another airline and the rescheduling of lease payments. In eight
instances from January 1989 through December 1993, the Company has been
required to repossess aircraft. In one instance, the aircraft were leased to a
domestic airline which had filed for protection under Chapter 11 of the U. S.
Bankruptcy Code. In the other seven instances, the aircraft were on lease to
foreign airlines. No aircraft were repossessed in 1994. In January 1995, the
Company repossessed one A320 from a lessee. As of February 8, 1995, the
aircraft had been re-leased.
In some situations where the Company repossesses an aircraft, it may decide
to export the aircraft from the lessee's jurisdiction. To date, the Company
has been able to export all repossessed aircraft which it desired to export.
In addition, in connection with the repossession of an aircraft, the Company
may be required to pay outstanding mechanic's, airport and other operating
liens on the repossessed aircraft, which could include charges relating to
other aircraft operated by the lessee.
The Company's revenues and income may be affected by political instability
abroad, changes in national policy, competitive pressures on certain air
carriers, fuel shortages, labor stoppages, recessions and other political or
economic events adversely affecting world or regional trading markets or
impacting a particular customer.
COMPETITION
The leasing and sale of jet aircraft is highly competitive. Aircraft
manufacturers and the airlines sell new and used jet aircraft. Furthermore,
the Company faces competition in leasing aircraft from aircraft manufacturers,
banks, other financial institutions and leasing companies. There is also
competition with respect to its remarketing activities from many sources,
including, but not limited to, aircraft brokers.
GOVERNMENT REGULATION
The FAA, the Department of Transportation and the Department of State
exercise regulatory authority over the air transportation industry. The FAA
has regulatory jurisdiction over registration and flight operations of
aircraft operating in the United States, including equipment use, ground
facilities, maintenance, communications and other matters.
4
<PAGE>
The FAA can suspend or revoke the authority of air carriers or their
licensed personnel for failure to comply with its regulations and ground
aircraft if their airworthiness is in question. The Company believes it holds
all airworthiness and FAA registration certificates which are required for the
aircraft owned by the Company, although the certificates may be suspended or
revoked for cause.
The Department of State and the Department of Transportation, in general,
have jurisdiction over economic regulation of air transportation, but since
the Company does not itself operate its aircraft for public transportation of
passengers and property, it is not directly subject to their regulatory
jurisdiction.
To export aircraft from the U.S. to a foreign destination, the Company is
required to obtain an export license from the United States Department of
Commerce. To date, the Company has not experienced any difficulty in obtaining
required certificates either from the FAA, Department of Commerce or any other
regulatory agency or their foreign counterparts.
EMPLOYEES
The Company is in a capital intensive rather than a labor intensive
business. As of December 31, 1994, the Company had 61 full-time employees
which it considered adequate for its business operations. The Company will
expand its management and administrative personnel, as necessary, to meet
future growth. None of the Company's employees is covered by a collective
bargaining agreement and the Company believes that it has maintained excellent
employee relations. The Company provides certain employee benefits, including
retirement plans and health, life, disability and accident insurance.
INSURANCE
The Company requires its lessees to carry those types of insurance which are
customary in the air transportation industry, including comprehensive
liability insurance and aircraft hull insurance. In general, the Company is an
additional insured on liability policies carried by the lessees. All policies
contain a breach of warranty endorsement so that the interests of the Company
are not prejudiced by any act or omission of the operator-lessee.
Insurance premiums are prepaid by the lessee, with payment acknowledged by
the insurance carrier. The territorial coverage is, in each case, suitable for
its lessee's area of operations and the policies contain, among other
provisions, a "no co-insurance" clause and a provision prohibiting
cancellation or material change without at least 30 days advance written
notice to the Company. Furthermore, the insurance is primary and not
contributory and all insurance carriers are required to waive rights of
subrogation against the Company.
The stipulated loss value schedule under aircraft hull insurance policies is
on an agreed value basis acceptable to the Company, which usually exceeds the
book value of the aircraft. In cases where the Company believes that the
agreed value under the lease is not sufficient, the Company purchases
additional Total Loss Only coverage for the deficiency. Aircraft hull policies
contain standard clauses covering aircraft engines with deductibles required
to be paid by the lessee. Furthermore, the aircraft hull policies contain full
war risk endorsements, including, but not limited to, confiscation, seizure,
hijacking and similar forms of retention or terrorist acts. All losses under
such policies are payable in U.S. currency.
The comprehensive liability insurance policies include provisions for bodily
injury, property damage, passenger liability, cargo liability and such other
provisions reasonably necessary in commercial passenger and cargo airline
operations with minimal deductibles. Such policies generally have combined
comprehensive single liability limits of not less than $250 million and all
losses are payable in U.S. dollars, U.K. pounds or German marks.
5
<PAGE>
The Company also maintains other insurance covering the specific needs of
its business operations. Insurance policies are generally placed or reinsured
through AIG, with costs allocated back to the Company. The Company believes
that its insurance is adequate both as to coverage and amount.
ITEM 2. PROPERTIES
FLIGHT EQUIPMENT
The Company's management frequently reviews opportunities to acquire
suitable commercial jet aircraft based not only on market demand and customer
airline requirements, but also on the Company's fleet portfolio mix criteria
and planning strategies for leasing. Before committing to purchase specific
aircraft, the Company takes into consideration factors such as estimates of
future values, potential for remarketing, trends in supply and demand for the
particular type, make and model of aircraft and engines and anticipated
obsolescence. As a result, certain types and vintages of aircraft do not
necessarily fit the profile for inclusion in the Company's portfolio of
aircraft owned and used in its leasing operations.
At December 31, 1994, 93% of the aircraft, which represent 99% of the net
book value of the aircraft, were Stage III, which are aircraft that hold or
are capable of holding a noise certificate issued under Chapter 3 of Volume 1,
Part II of Annex 16 of the Chicago Convention or have been shown to comply
with the Stage III noise levels set out in Section 36.5 of Appendix C of Part
36 of the Federal Aviation Regulations of the United States. At December 31,
1994, the average age of the Company's flight equipment was 4.99 years and the
average age of the Stage III fleet was 4.03 years.
The following table shows the scheduled lease terminations (for the minimum
noncancelable period) by aircraft type for the Company's lease portfolio at
December 31, 1994:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TOTAL
- ------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-200 (a)....... 4 9 3 1 1 18
737-300........... 1 4 11 10 7 5 4 3 2 4 2 53
737-400 (a)....... 2 7 8 7 6 9 4 7 6 56
737-500........... 5 1 1 7
757-200........... 5 5 5 4 3 4 5 2 33
767-200........... 1 1 2 2 6
767-300........... 3 1 2 1 3 1 11
747-200........... 1 1 2
747-300........... 3 3
747-400........... 1 2 1 1 1 6
MD-82............. 2 2
MD-83............. 3 5 3 11
DC 10-10.......... 2 2
MD-11............. 1 2 1 4
F-100............. 2 5 7
A300-600R......... 1 1 2 4
A310-200.......... 5 5
A310-300.......... 1 1 1 1 1 1 6
A320.............. 1 5 10 3 3 22
A330.............. 2 1 3
A340.............. 1 1
L-1011............ 1 2 2 5
--- --- --- --- --- --- --- --- --- --- --- ---
Total............. 16 51 57 35 32 22 11 12 17 10 4 267
</TABLE>
- ------------
(a) As of March 1, 1995, of the 18 737-200 aircraft, six are committed for
sale in 1995. In addition, two of the 737-400 aircraft are committed for
sale, one in 1995 and one in 1996.
6
<PAGE>
In addition, at December 31, 1994, one BAC1-11, one A320 and one 757-200
were not on lease. Subsequent to December 31, 1994, and prior to March 1,
1995, all aircraft were committed for lease or sale.
COMMITMENTS
At December 31, 1994 the Company had committed to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $13.4 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1995 1996 1997 1998 1999 2000 TOTAL
- ------------- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
737-300/400/500*............................ 20 8 10 2 1 41
757-200..................................... 7 7 7 7 2 30
767-300..................................... 8 9 6 2 25
777-200..................................... 2 3 1 6
747-400..................................... 1 1 1 1 4
MD-11....................................... 2 2
A300-600R................................... 4 1 5
A310-200.................................... 4 6 10
A310-300.................................... 1 1
A319........................................ 2 3 3 4 2 14
A320-200.................................... 9 6 9 8 5 5 42
A321-100.................................... 3 6 7 6 6 5 33
A330........................................ 5 2 1 1 9
A340........................................ 3 2 2 2 2 11
F-70........................................ 1 2 3
--- --- --- --- --- --- ---
Total...................................... 68 52 47 35 22 12 236
</TABLE>
- --------
* The Company has the right to designate which model of 737 (737-300, 737-
400 or 737-500) will be delivered at specified dates prior to contractual
delivery. For 1995, the Company has designated for delivery eleven 737-
300, four 737-400 and five 737-500.
At December 31, 1994, the Company had options to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $2.8 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1996 1997 1998 1999 2000 2001 TOTAL
- ------------- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
737-300/400/500*............................ 1 1 9 10 21
757-200..................................... 2 6 8
767-300..................................... 4 5 9
777-200..................................... 2 2
A319........................................ 3 3
A320-200.................................... 4 4
A321-100.................................... 1 3 4
--- --- --- --- --- --- ---
Total...................................... 1 1 15 24 0 10 51
</TABLE>
- --------
* The Company has the right to designate which model of 737 (737-300, 737-
400 or 737-500) will be delivered at specified dates prior to contractual
delivery.
If all 287 aircraft were to be acquired, the estimated aggregate purchase
price (including adjustment for anticipated inflation) would be approximately
$16.2 billion. Management anticipates that a significant portion of such
aggregate purchase price will be funded by incurring additional debt. The
exact amount of the indebtedness to be incurred will depend upon the actual
purchase price of the aircraft, which can vary due to a number of factors,
including inflation, and the percentage of the purchase price of the aircraft
which must be financed.
7
<PAGE>
Most of the purchase commitments and options set forth above are based upon
master arrangements with each of The Boeing Company ("Boeing"), AVSA, S.A.R.L.,
the sales subsidiary of Airbus Industrie ("Airbus"), Fokker Aircraft USA Inc.
("Fokker") and McDonnell Douglas Corporation ("McDonnell Douglas").
The Boeing aircraft (models 737, 747, 757, 767 and 777), the Airbus aircraft
(models A300, A310, A319, A320, A321, A330 and A340), the Fokker aircraft
(model F-70) and the McDonnell Douglas aircraft (model MD-11) listed above are
either being purchased, or the options to purchase have been granted, pursuant
to purchase agreements executed by the Company and Boeing, Airbus, Fokker or
McDonnell Douglas, respectively. These agreements establish the pricing
formulas (which include certain price adjustments based upon inflation and
other factors) and various other terms with respect to the purchase of
aircraft. Under certain circumstances, the Company has the right to alter the
mix of aircraft type ultimately acquired. As of December 31, 1994, the Company
had made non-refundable deposits (exclusive of capitalized interest) with
respect to the aircraft which the Company has committed to purchase of
approximately $430,080,000, $330,595,000, $2,000,000 and $39,181,000 with
Boeing, Airbus, Fokker and McDonnell Douglas, respectively.
As of March 15, 1995, the Company had entered into contracts for 63 of the 68
aircraft to be delivered in 1995, 37 of the 52 aircraft to be delivered in
1996, 12 of the 47 aircraft to be delivered in 1997, 2 of the 35 aircraft to be
delivered in 1998 and 3 of the 34 aircraft to be delivered subsequent to 1998.
The Company will need to find customers for aircraft presently on order and any
new aircraft ordered and arrange financing for portions of the purchase price
of such equipment. Although the Company has been successful to date in placing
its new aircraft on lease or sales contracts, and has obtained adequate
financing in the past, there can be no assurance as to the future continued
availability of lessees or purchasers, or of sufficient amounts of financing on
terms acceptable to the Company.
FACILITIES
The Company's principal offices are located at 1999 Avenue of the Stars, Los
Angeles, California. The Company occupies space under leases which expire in
2000. The leases cover approximately 30,000 square feet of office space,
provide for annual rentals of approximately $1,513,000, and the rental payments
thereunder are subject to certain indexed escalation provisions.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company is wholly owned by AIG and the Company's Common Stock is not
listed on any national exchange or traded in any established market. During the
years ended December 31, 1992, 1993 and 1994, the Company paid cash dividends
to AIG of $10,330,000, $11,359,000 and $13,462,000, respectively. It is the
intent of the Company to pay AIG an annual dividend of 7% of net income. Under
the most restrictive provisions of the Company's borrowing arrangements,
consolidated retained earnings at December 31, 1994 in the amount of
$82,000,000 were unrestricted as to the payment of dividends.
8
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected consolidated financial data and
operating information of the Company. The selected consolidated financial data
should be read in conjunction with the Consolidated Financial Statements and
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this Form 10-K.
<TABLE>
<CAPTION>
13 MONTHS
ENDED YEARS ENDED DECEMBER 31,
DECEMBER 31, --------------------------------------------
1990 1991 1992 1993 1994
------------ ---------- ---------- ---------- ----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Rentals of flight equipment....... $ 367,649 $ 433,505 $ 628,600 $ 795,437 $ 993,596
Flight equipment marketing........ 45,408 38,238 46,845 53,680 76,193
Interest and other income......... 53,023 54,968 55,072 62,515 40,267
Total revenues.................... 466,080 526,711 730,517 911,632 1,110,056
Expenses.......................... 343,080 387,011 484,277 633,992 798,049
Income before income taxes........ 123,000 139,700 246,240 277,640 312,007
Net income(1)..................... 69,901 89,530 157,749 168,565 201,943
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS(2): 1.33x 1.44x 1.75x 1.68x 1.59x
BALANCE SHEET DATA:
Flight equipment under operating
leases (net of accumulated
depreciation).................... $2,633,627 $3,453,149 $4,759,899 $6,515,837 $8,851,079
Net investment in finance and
sales-type leases................ 260,396 247,936 242,445 290,269 92,233
Total assets...................... 3,523,626 4,563,622 6,079,765 8,139,821 10,353,132
Total debt........................ 2,497,074 3,242,010 4,242,288 5,819,481 7,583,006
Shareholders' equity.............. 632,323 815,208 1,156,195 1,409,181 1,640,772
OTHER DATA:
Aircraft owned at period end(3)... 106 132 176 230 270
Aircraft sold or remarketed during
the period....................... 13 8 7 9 24
</TABLE>
- ------------
(1) Includes an extraordinary loss of $7,035,000 in 1990.
(2) See Exhibit 12.
(3) See "Item 2. Properties--Flight Equipment".
9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
INDUSTRY CONDITION
In recent years, many airlines have experienced economic difficulties and
some have filed for bankruptcy or similar proceedings or have requested that
their leases be restructured. The Company has restructured leases with both
foreign and domestic lessees. Such restructurings have involved the voluntary
termination of leases prior to lease expiration, the replacement of leased
aircraft with smaller, less expensive leased aircraft, the arrangement of
subleases from the primary lessee to another airline and the rescheduling of
lease payments. In eight instances between January 1989 and December 31, 1993,
the Company has been required to repossess aircraft. Recently, however, the
Company has seen some stabilization and a small reversal in this trend which
resulted in only four lessees requesting lease restructurings and no
repossessions in 1994. In January 1995, the Company repossessed one A320
aircraft from an airline. As of February 8, 1995, the aircraft had been re-
leased.
FINANCIAL CONDITION
The Company borrows funds for the purchases of flight equipment, including
the making of progress payments during the construction phase, principally on
an unsecured basis from various sources. At December 31, 1994, 1993 and 1992,
the Company's debt financing was comprised of the following:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Public term debt with single
maturities........................... $2,950,000 $2,550,000 $1,800,000
Public medium-term notes with varying
maturities........................... 2,011,770 1,765,920 1,428,000
Capital lease obligations............. 305,400 -- --
Bank and other term debt.............. 43,503 68,778 76,879
---------- ---------- ----------
Total term debt.................... 5,310,673 4,384,698 3,304,879
Commercial paper...................... 1,972,361 1,444,977 944,451
Bank lines of credit and revolvers.... 319,000 -- --
Less: Deferred debt discount.......... (19,028) (10,194) (7,042)
---------- ---------- ----------
Debt financing....................... $7,583,006 $5,819,481 $4,242,288
========== ========== ==========
Composite interest rate............... 6.41% 5.89% 6.55%
Percentage of total debt at fixed
rate................................. 66.98% 74.77% 77.01%
Composite interest rate on fixed debt. 6.65% 6.70% 7.49%
Bank prime rate....................... 8.50% 6.00% 6.00%
</TABLE>
The interest on substantially all the public debt (exclusive of the
commercial paper) is fixed for the term of the note. As of December 31, 1994,
the Company had committed revolving loans and lines of credit with 29 banks
aggregating $1.226 billion and uncommitted lines of credit with two banks
aggregating $125 million. Bank debt principally provides for interest rates
that vary according to the pricing option then in effect and range from prime,
.25% to 3/8% over LIBOR or .375% to .425% over CD rates, at the Company's
option. Bank financings are subject to facility fees of up to .1875% of
amounts available.
On February 2, 1995, the Company replaced $1.121 billion of the committed
revolving loans and lines of credit with a new, expanded facility for $1.8
billion. The new facility is subject to a facility fee of up to .10% which is
lower than that for the original facility.
10
<PAGE>
The Company has an effective shelf registration with respect to $2.449
billion of debt securities, under which $300 million of notes were sold
through 1994. Additionally, a $1 billion Medium-Term Note program has been
implemented under the shelf registration, under which $535.6 million has been
sold through December 31, 1994.
As of December 31, 1994, the Company had entered into an Export Credit Lease
facility in the amount of $555 million for the acquisition of up to 10 Airbus
aircraft originally scheduled to be delivered in 1994. As of December 31,
1994, the Company had cancelled the options to finance four of the aircraft
aggregating $131 million. An additional $315 million was used to finance four
of the aircraft in 1994. The remaining $109 million will be used for aircraft
to be delivered in 1995. In addition, as of December 31, 1994, the Company
entered into a second Export Credit Lease facility in the amount of $1,375
million which is available for the acquisition of up to 21 Airbus aircraft to
be delivered in 1995. Both Export Credit Lease facilities provide ten year,
amortizing loans. The interest rate on 62.5% of the total financing available
is 6.55%, the interest rate on 22.5% of the financing available varies between
6.18% and 6.89%. The remaining 15% of the financing available provides for
LIBOR based pricing.
Since AIG's acquisition of the Company in 1990, through December 31, 1994,
AIG has contributed $250 million of additional capital to the Company.
In each of 1992, 1993 and February 1995, the Company sold $100 million of
Market Auction Preferred Stock.
The Company believes that it has sufficient financing sources available to
meet its capital requirements through fiscal 1995.
In the normal course of business, the Company employs a variety of off-
balance sheet financial instruments and other derivative products to manage
its exposure to interest rates and the resulting impact of changes in interest
rates on earnings, with the objective to lower its overall borrowing cost and
to maintain its optimal mix of variable and fixed rate interest obligations.
These derivative products include interest rate swap agreements, interest rate
spreadlocks and interest rate swap options ("swaptions").
The counterparties to the Company's derivative instruments are all
recognized U.S. derivative dealers. The counterparties to the majority of the
notional amounts of the Company's derivative instruments are AAA rated and all
have at least an A credit rating. The Company currently does not, although it
can in certain circumstances, require its counterparties to provide security
for its positions with the Company. Any failure of the instruments or
counterparties to perform under the derivative contracts would have an
immaterial impact on the Company's earnings.
RESULTS OF OPERATIONS
The increase in revenues from rentals of flight equipment from $628.6
million in 1992 to $795.4 million in 1993 to $993.6 million in 1994 is due to
the increase in both the size and relative cost of the fleet of leased flight
equipment subject to operating lease from 167 in 1992 to 223 in 1993 to 262 in
1994.
In addition to its leasing operations, the Company engages in the marketing
of flight equipment on a principal and commission basis as well as the
disposition of flight equipment at the end of the lease term. Revenue from
such flight equipment marketing increased from $46.8 million in 1992 to $53.7
million in 1993 to $76.2 million in 1994 as a result of the following number
of aircraft transactions in each period:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Sales of flight equipment.................................. 3 2 0
Commissions................................................ 10 8 6
Disposition of leased aircraft............................. 21 7 7
</TABLE>
11
<PAGE>
In addition, in 1994 the Company sold eight engines.
Interest and other income increased from $55.1 million in 1992 to $62.5
million in 1993 and decreased to $40.3 million in 1994. The increase in 1993
was due to an increase in notes receivable from $171.3 million (1992) to
$337.9 million (1993). Additionally, the Company had dividend income of $6.4
million (1992) and $2.4 million (1993) from its investment in Alaska Air Group
and realized $8.6 million (1992) and $16.3 million (1993) in deposit
forfeitures and fees principally on repossessed aircraft and early lease
terminations. The decrease in 1994 was due to the decline in dividend income
due to the disposition of the Alaska Air Group Stock in 1993. In addition, due
to the stabilization in the airline industry, the Company only realized $1.4
million (1994) in deposit forfeitures and fees on early lease terminations.
Expenses as a percentage of total revenues were 66.3% for 1992 compared to
70.0% for 1993 and 71.9% for 1994. Interest expense increased from $243.5
million in 1992 to $301.2 million in 1993 to $376.6 million in 1994, primarily
as a result of an increase in debt outstanding, excluding the effect of debt
discount, from $4,249.3 million in 1992 to $5,829.7 million in 1993 to
$7,602.0 million in 1994 to finance aircraft acquisitions, as affected by
changes in interest rates during the periods. These interest rate changes
caused the Company's composite borrowing rate to fluctuate as follows:
<TABLE>
<S> <C>
December 31, 1991........................... 7.66%
March 31, 1992.............................. 7.04
June 30, 1992............................... 6.70
September 30, 1992.......................... 6.60
December 31, 1992........................... 6.55
March 31, 1993.............................. 6.29
June 30, 1993............................... 6.11
September 30, 1993.......................... 6.05
December 31, 1993........................... 5.89
March 31, 1994.............................. 5.79
June 30, 1994............................... 5.87
September 30, 1994.......................... 6.09
December 31, 1994........................... 6.41
</TABLE>
The balance of the increase in expenses is primarily attributable to
increases in depreciation of flight equipment from $192.2 million in 1992 to
$268.2 million in 1993 to $334.6 million in 1994 due to the addition of
aircraft.
Provision for overhauls increased from $28.1 million in 1992 to $39.9
million in 1993 to$57.6 million in 1994 due to an increase in the number of
aircraft on which the Company collects overhaul reserves and therefore an
increase in the number of hours flown for which an overhaul reserve is
provided, partially offset by the reversal of reserves on aircraft which
either changed lessees or were sold during the year.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During the two fiscal periods prior to the date of the Company's most recent
financial statements, the Company has not reported a change in accountants nor
have there been any disagreements reported on any matter of accounting
principles or practices or financial statement disclosure.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2): Financial Statements and Financial Schedule: The response to
this portion of Item 14 is submitted as a separate section of this report
beginning on page 18.
(a)(3) and (c): Exhibits: The response to this portion of Item 14 is
submitted as a separate section of this report beginning on page 14.
(b) Reports on Form 8-K: Current Reports on Form 8-K, event dates October
12, 1994 andDecember 6, 1994.
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
FORM 10-K
ITEMS 8, 14(A), AND 14(C)
INDEX OF CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
The following consolidated financial statements of the Company and its
subsidiaries required to be included in Item 8 are listed below:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................ 17
Consolidated Financial Statements:
Balance Sheets at December 31, 1993 and 1994............................. 18
Statements of Income for the years ended December 31, 1992, 1993 and
1994.................................................................... 19
Statements of Shareholders' Equity for the years ended December 31, 1992,
1993 and 1994........................................................... 20
Statements of Cash Flows for the years ended December 31, 1992, 1993 and
1994.................................................................... 21
Notes to Consolidated Financial Statements............................... 23
</TABLE>
The following financial statement schedule of the Company and its
subsidiaries is included in Item 14(a)(2):
<TABLE>
<CAPTION>
CHEDULE NUMBERS DESCRIPTION PAGE
- --------------- ----------- ----
<S> <C> <C>
II Valuation and Qualifying Accounts.................................... 35
</TABLE>
All other financial statements and schedules not listed have been omitted
since the required information is included in the consolidated financial
statements or the notes thereto, or is not applicable or required.
13
<PAGE>
The following exhibits of the Company and its subsidiaries are included in
Item 14(c):
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C> <C>
3.1 Restated Articles of Incorporation of the Company, as amended
through December 9, 1992, filed November 3, 1993 (filed as an ex-
hibit to Registration Statement No. 33-50913 and incorporated
herein by reference).
3.2 Certificate of Determination of Preferences of Series C Market Auc-
tion Preferred Stock.
3.3 Certificate of Determination of Preferences of Series D Market Auc-
tion Preferred Stock.
3.4 Certificate of Determination of Preferences of Series E Market Auc-
tion Preferred Stock.
3.5 Certificate of Determination of Preferences of Series F Market Auc-
tion Preferred Stock.
3.6 By-Laws of the Company, including amendment thereto dated August
31, 1990 (filed as an exhibit to Registration Statement No. 33-
37600 and incorporated herein by reference).
4.1 Indenture dated as of November 1, 1991, between the Company and
Bank of America Illinois (formerly Continental Bank, National
Association), as Trustee (filed as an exhibit to Registration
Statement No. 33-43698 and incorporated herein by reference).
4.2 The Company agrees to furnish to the Commission upon request a copy
of each instrument with respect to issues of long-term debt of the
Company and its subsidiaries, the authorized principal amount of
which does not exceed 10% of the consolidated assets of the Company
and its subsidiaries
10.1* Employment Agreement with Leslie L. Gonda (filed as an exhibit to
Form 10-Q for the fiscal quarter ended May 31, 1990 and incorpo-
rated herein by reference).
10.2* Employment Agreement with Steven F. Udvar-Hazy (filed as an exhibit
to Form 10-Q for the fiscal quarter ended May 31, 1990 and incorpo-
rated herein by reference).
10.3 General Terms Agreement, dated November 10, 1988 between AVSA,
S.A.R.L. and the Company, including Letter Agreements Nos. 1
through 4 relating thereto (filed as exhibits to Form 8-K, dated
January 25, 1989 and incorporated herein by reference).
10.4 Purchase Agreement A321 dated February 14, 1990, between AVSA,
S.A.R.L. and the Company, including Letter Agreements relating
thereto (filed as an exhibit to Form 10-K, for the thirteen months
ended December 31, 1990 and incorporated herein by reference).
10.5 Amendments Nos. 1 and 2 dated as of June 18, 1991 and as of
December 10, 1992, respectively, to Purchase Agreement No. A321
dated as of February 14, 1990 between AVSA, S.A.R.L. and the Com-
pany (filed as an exhibit to Form 10-K for the year ended December
31, 1992 and incorporated herein by reference).
</TABLE>
- ------------
*Denotes management contract.
14
<PAGE>
<TABLE>
<S> <C>
10.6 Purchase Agreements, Nos. 1770 and 1771, dated as of December 15,
1992 between The Boeing Company and the Company, including Letter
Agreements related to each Purchase Agreement (filed as an exhibit
to Form 10-K for the year ended December 31, 1992 and incorporated
herein by reference).
10.7 Supplemental Agreement No. 1, dated as of June 4, 1993, to Purchase
Agreement No. 1771 between The Boeing Company and the Company
(filed as an exhibit to Form 8-K dated July 14, 1993 and incorpo-
rated herein by reference).
10.8 Supplemental Agreement No. 2, dated July 15, 1993, to Purchase
Agreement No. 1771 between The Boeing Company and the Company
(filed as an exhibit to Form 10-Q dated June 30, 1993 and
incorporated herein by reference).
10.9 Amendments Nos. 3 and 4 dated January 3, 1994 and February 28,
1994, respectively, to the Airbus A321 Purchase Agreement dated as
of February 14, 1990 between AVSA, A.S.R.L. and the Company (filed
as an exhibit to Form 10-K dated December 31, 1993 and incorporated
herein by reference).
10.10 Supplemental Agreement No. 2 dated December 7, 1993 to Purchase
Agreement No. 1770 dated as of December 15, 1992 between The Boeing
Company and the Company (filed as an exhibit to Form 10-K dated De-
cember 31, 1993 and incorporated herein by reference).
10.11 Supplemental Agreement No. 3 dated October 26, 1993 to Purchase
Agreement No. 1771 dated as of December 15, 1992 between The Boeing
Company and the Company (filed as an exhibit to Form 10-K dated De-
cember 31, 1993 and incorporated herein by reference).
10.12 Option Waiver Notice pursuant to Amendment No. 1, dated June 18,
1991, to Purchase Agreement No. A321 dated as of February 14, 1990
between AVSA, S.A.R.L. and the Company (filed as an exhibit to Form
10-Q dated June 30, 1994 and incorporated herein by reference).
10.13 Supplemental Agreement No. 3, dated as of August 5, 1994, to Pur-
chase Agreement No. 1770 between The Boeing Company and the Company
(filed as an exhibit to Form 10-Q dated September 30, 1994 and in-
corporated herein by reference).
10.14 Supplemental Agreement No. 4, dated as of October 14, 1994, to Pur-
chase Agreement No. 1770 between The Boeing Company and the Company
(filed as an exhibit to Form 10-Q dated September 30, 1994 and in-
corporated herein by reference).
10.15 Supplemental Agreement No. 5, dated as of November 16, 1994, to
Purchase Agreement No. 1770 between The Boeing Company and the Com-
pany (Confidential treatment requested).
10.16 Amendment No. 5 dated as of September 23, 1994 to the A321 Purchase
Agreement dated as of February 14, 1990 between AVSA, S.A.R.L. and
the Company.
</TABLE>
15
<PAGE>
<TABLE>
<S> <C> <C>
10.17 Amendment No. 6 dated as of December 27, 1994 to the A321 Purchase
Agreement dated as of February 14, 1990 between AVSA, S.A.R.L. and
the Company (Confidential treatment requested).
10.18 Letter Agreements Nos. 1, 2, 3, 4, 5, 6 and 7, each dated as of De-
cember 27, 1994 between AVSA, S.A.R.L. and the Company (Confiden-
tial treatment requested).
10.19 Aircraft Facility Agreement, dated as of December 14, 1994, by and
among the banks and financial institutions named therein, National
Westminster Bank PLC, Encore Leasing Limited, ILFC (Bermuda) 7,
Ltd., ILFC Ireland 2 Limited, ILFC (Bermuda) 5, Ltd., ILFC Ireland
3 Limited, ILFC (Bermuda) 6 Ltd. and the Company (Confidential
treatment requested).
10.20 Guarantee and Indemnity (Lessor), dated as of December 14, 1994, by
and between the Company and Encore Leasing Limited.
10.21 Revolving Credit Agreement, dated as of February 2, 1995, among the
Company, Union Bank of Switzerland, Los Angeles Branch, and the
other banks listed therein providing up to $450,000,000.
10.22 Revolving Credit Agreement, dated as of February 2, 1995, among the
Company, Union Bank of Switzerland, Los Angeles Branch, and the
other banks listed therein providing up to $1,350,000,000.
12. Computation of Ratio of Earnings to Fixed Charges and Preferred
Stock Dividends.
23. Consent of Ernst & Young LLP.
27. Financial Data Schedule.
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
International Lease Finance Corporation
Los Angeles, California
We have audited the accompanying consolidated balance sheets of
International Lease Finance Corporation as of December 31, 1994 and 1993, and
the related consolidated statements of income, shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of International Lease Finance Corporation at December 31, 1994 and 1993, and
the consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
ERNST & YOUNG LLP
Century City,
Los Angeles, California
February 21, 1995
17
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1994 1993
----------- ----------
<S> <C> <C>
Cash, including interest bearing accounts of $45,831
(1994) and $51,657 (1993)............................ $ 52,891 $ 61,566
Notes receivable--Notes B and D....................... 355,151 337,855
Net investment in finance and sales-type leases--Note
C.................................................... 92,233 290,269
Flight equipment under operating leases--Note G....... 9,928,416 7,295,241
Less accumulated depreciation........................ 1,077,337 779,404
----------- ----------
8,851,079 6,515,837
Deposits on flight equipment purchases--Note J........ 890,711 820,048
Accrued interest, other receivables and other assets.. 71,238 81,244
Investments--Note D................................... 18,983 17,837
Deferred debt issue costs--less accumulated amortiza-
tion of $22,346 (1994) and $16,390 (1993) ........... 20,846 15,165
----------- ----------
$10,353,132 $8,139,821
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables................... $ 124,025 92,229
Debt financing, net of deferred debt discount of
$19,028 (1994) and $10,194 (1993)--Note E............ 7,583,006 5,819,481
Security and other deposits on flight equipment....... 478,486 437,004
Rentals received in advance........................... 72,557 41,951
Deferred income taxes--Note H......................... 487,410 339,753
Current income taxes.................................. (33,124) 222
Commitments and contingencies--Note J
SHAREHOLDERS' EQUITY--Notes E and F
Preferred stock--no par value; 20,000,000 authorized
shares; Market Auction Preferred Stock, $100,000 per
share liquidation value; Series A, B, C and D, each
having 500 shares issued and outstanding (1994 and
1993)............................................... 200,000 200,000
Common stock--no par value; 100,000,000 authorized
shares, 35,818,122 (1994 and 1993) issued and out-
standing............................................ 3,582 3,582
Paid-in capital...................................... 582,941 532,941
Retained earnings.................................... 854,249 672,658
----------- ----------
1,640,772 1,409,181
----------- ----------
$10,353,132 $8,139,821
=========== ==========
</TABLE>
See accompanying notes.
18
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------------
1994 1993 1992
--------- -------- --------
<S> <C> <C> <C>
Revenues:
Rental of flight equipment--Note G................. $993,596 $795,437 $628,600
Flight equipment marketing......................... 76,193 53,680 46,845
Interest and other................................. 40,267 62,515 55,072
--------- -------- --------
1,110,056 911,632 730,517
Expenses:
Interest........................................... 376,560 301,205 243,536
Depreciation....................................... 334,587 268,170 192,165
Provision for overhaul............................. 57,619 39,893 28,055
Selling, general and administrative--Note I........ 29,283 24,724 20,521
--------- -------- --------
798,049 633,992 484,277
--------- -------- --------
INCOME BEFORE INCOME TAXES........................ 312,007 277,640 246,240
Provision for income taxes--Note H.................. 110,064 109,075 88,491
--------- -------- --------
NET INCOME........................................ $ 201,943 $168,565 $157,749
========= ======== ========
</TABLE>
See accompanying notes.
19
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
AUCTION PREFERRED STOCK COMMON STOCK
-------------------------- -----------------
NUMBER OF NUMBER OF PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
-------------------------- ---------- ------ -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1991................... 35,818,122 $3,582 $440,901 $370,725 $ 815,208
Capital contribution... 95,000 95,000
Sales of MAPS
preferred............. 1,000 $100,000 (1,432) 98,568
Dividend to AIG........ (10,330) (10,330)
Net income............. 157,749 157,749
---------- ------------- ---------- ------ -------- -------- ----------
Balance at December 31,
1992................... 1,000 100,000 35,818,122 3,582 534,469 518,144 1,156,195
Sale of MAPS preferred. 1,000 100,000 (1,528) 98,472
Dividend to AIG........ (11,359) (11,359)
Preferred stock
dividends............. (2,692) (2,692)
Net income............. 168,565 168,565
---------- ------------- ---------- ------ -------- -------- ----------
Balance at December 31,
1993................... 2,000 $ 200,000 35,818,122 $3,582 $532,941 $672,658 $1,409,181
Capital contribution... 50,000 50,000
Dividend to AIG........ (13,462) (13,462)
Preferred stock
dividends............. (6,890) (6,890)
Net income............. 201,943 201,943
---------- ------------- ---------- ------ -------- -------- ----------
Balance at December 31,
1994................... 2,000 $ 200,000 35,818,122 $3,582 $582,941 $854,249 $1,640,772
========== ============= ========== ====== ======== ======== ==========
</TABLE>
See accompanying notes.
20
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
---------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.............................. $ 201,943 $ 168,565 $ 157,749
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation of flight equipment........ 334,587 268,170 192,165
Deferred income taxes................... 147,657 113,793 49,102
Amortization of deferred debt issue
costs.................................. 5,956 5,055 4,554
Gain on sale of flight equipment and
investments included in amount
financed............................... (53,627) (24,806) (12,973)
Increase in notes receivable............ (36,608) (8,694) (7,398)
Equity in net income of affiliates...... (2,022) (3,036) (3,354)
Changes in operating assets and
liabilities:
(Increase) decrease in accrued
interest, other receivables and other
assets............................... 10,006 (21,110) (30,762)
Increase in accrued interest and other
payables............................. 31,796 13,029 20,280
Increase (decrease) in current income
taxes payable........................ (33,346) (20,262) 20,485
Increase in rentals received in
advance.............................. 30,606 3,326 10,552
---------- ----------- -----------
Net cash provided by operating
activities.............................. 636,948 494,030 400,400
---------- ----------- -----------
INVESTING ACTIVITIES:
Acquisition of flight equipment:
For operating leases.................. (2,621,669) (2,372,789) (1,665,978)
For finance leases.................... (4,790) (5,841)
Proceeds from disposal of flight
equipment--net of gain................. 119,799 126,005 119,482
Advances on notes receivable............ (16,227) (14,856) (27,614)
Collections on notes receivable......... 114,141 70,242 23,358
Collections on finance and sales-type
leases................................. 9,891 13,576 11,333
Purchase of investments................. (850) (2,333) (1,000)
Sale of investments--net of gain........ 1,727 32,822
---------- ----------- -----------
Net cash used in investing activities.... (2,397,978) (2,147,333) (1,546,260)
---------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing............ 4,746,500 4,265,761 2,462,790
Payments in reduction of debt financing. (2,974,141) (2,685,416) (1,455,470)
Proceeds from sale of MAPS preferred
stock (net of issue costs)............. 98,472 98,568
Cash contributions to capital by AIG.... 50,000 95,000
Debt issue costs........................ (11,637) (9,961) (7,677)
Change in unamortized debt discount..... (8,834) (3,154) 3,046
Payment of common and preferred
dividends.............................. (20,352) (14,051) (10,330)
Increase in customer deposits........... 41,482 119,992 74,458
Increase in deposits and progress
payments............................... (70,663) (111,955) (83,146)
---------- ----------- -----------
Net cash provided by financing
activities.............................. 1,752,355 1,659,688 1,177,239
---------- ----------- -----------
Net increase (decrease) in cash.......... (8,675) 6,385 31,379
Cash at beginning of year................ 61,566 55,181 23,802
---------- ----------- -----------
Cash at end of year..................... $ 52,891 $ 61,566 $ 55,181
========== =========== ===========
</TABLE>
(Table continued on next page)
21
<PAGE>
(Table continued from previous page)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
---------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest (net of amount capitalized $44,610
(1994), $39,363 (1993) and $36,291 (1992))....... $352,805 $264,571 $223,036
Income taxes...................................... (4,247) 15,395 17,619
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
1994
Flight equipment with a net book value of $222,873 was transferred from
finance and sales-type leases to operating leases.
Flight equipment was received in exchange for notes receivable in the
amount of $69,317.
Notes and finance and sales-type leases in the amount of $177,857 were
received as partial payments in exchange for flight equipment sold with
a book value of $124,230.
1993
Flight equipment with a net book value of $60,478 was transferred from
operating leases to finance and sales-type leases.
Flight equipment was received in exchange for notes receivable in the
amount of $41,987.
Notes in the amount of $228,645 were received as partial payments in
exchange for flight equipment sold with a book value of $204,185.
Notes in the amount of $26,600 were received in exchange for investments
in preferred stock with a book value of $26,153.
1992
Notes in the amount of $60,595 were received as partial payments in ex-
change for flight equipment sold with a book value of $47,622.
See accompanying notes.
22
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Parent Company: International Lease Finance Corporation (the "Company") is a
wholly owned subsidiary of American International Group, Inc. ("AIG"). AIG is
a holding company which through its subsidiaries is primarily engaged in a
broad range of insurance and insurance-related activities in the United States
and abroad.
Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. Investments of less than 20% in other affiliates are carried at
cost. Investments of between 20% and 50% in other affiliates are carried under
the equity method. All significant intercompany balances and transactions have
been eliminated in consolidation.
Intercompany Allocations: AIG allocates certain costs to its subsidiaries.
The charges amounted to $2,506 (1994), $2,312 (1993) and $225 (1992).
Rentals: The Company, as lessor, leases flight equipment principally under
operating leases. Accordingly, income is reported over the life of the lease
as rentals become receivable under the provisions of the lease or, in the case
of leases with varying payments, under the straight-line method over the
noncancelable term of the lease. In certain cases, leases provide for
additional amounts based on usage.
Flight Equipment Marketing: The Company is a marketer of flight equipment.
Marketing revenues include all revenues from such operations consisting of net
gains on sales of flight equipment, commissions and net gains on disposition
of leased flight equipment.
Flight Equipment: Flight equipment is stated at cost. Major additions and
modifications are capitalized. Normal maintenance and repairs; airframe and
engine overhauls; and compliance with return conditions of flight equipment on
lease are provided by and paid for by the lessee. Under the provisions of most
leases, for certain airframe and engine overhauls, the lessee is reimbursed
for costs incurred up to but not exceeding contingent rentals paid the Company
by the lessee. The Company provides a charge to operations for such
reimbursements based primarily upon the hours utilized during the period and
the expected reimbursement during the life of the lease.
Generally, all aircraft are depreciated using the straight-line method over
a 25 year life from the date of manufacture to a 15% residual value. Boeing
737-200 aircraft are depreciated to a residual value of 15% at December 31,
1996.
At the time assets are retired or otherwise disposed of, the cost and
accumulated depreciation and amortization are removed from the related
accounts and the difference, net of proceeds, is recorded as a gain or loss.
Capitalized Interest: The Company borrows certain funds to finance progress
payments for flight equipment being constructed to order. The interest
incurred on such borrowings is capitalized and included in the cost of the
equipment.
Deferred Debt Issue Costs: Deferred debt issue costs incurred in connection
with debt financing are being amortized over the life of the debt using the
interest rate method.
23
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments: As a result of the Company having specific
aircraft purchase agreements, it has been able to obtain financing options for
fixed rate debt. The financing is available upon the purchase of specific
aircraft. However, the Company is not required to use the financing options to
purchase the specific aircraft and may choose to use other financing methods.
Acquired financing options that are expected to be designated as hedges of
anticipated financing arrangements are carried at cost based on their
allocated fair values. Such costs are amortized over the lives of the acquired
financing options.
The Company has granted certain parties the right but not the obligation to
effectively convert certain of the Company's fixed note obligations to
floating rate obligations based on an established notional amount. The
proceeds of such option agreements are initially recorded as a liability.
Subsequently, the value of such options agreements, as well as the cost
allocated to undesignated aircraft financing options, are adjusted to fair
value with changes in value recorded in income.
When swap agreements resulting from this activity are effective in modifying
the terms of actual debt agreements from a fixed rate basis to a floating rate
basis, such swaps are treated by the accrual method. Periodic payments as well
as the amortization (by a level yield method) of the initial value are treated
as adjustments to interest expense from the related debt.
Income Taxes: The Company and its U.S. subsidiaries are included in the
consolidated federal income tax return of AIG. The Company and its
subsidiaries are included in the combined California unitary tax return of
AIG. The provision for income taxes is calculated on a separate return basis.
Income tax payments are made pursuant to a tax payment allocation agreement
whereby AIG credits or charges the Company for the corresponding increase or
decrease (not to exceed the separate return basis calculation) in AIG's
current taxes resulting from the inclusion of the Company in AIG's
consolidated tax return. Intercompany payments are made when such taxes are
due or tax benefits are realized by AIG.
The deferred tax liability is determined based on the difference between the
financial statement and tax basis of assets and liabilities and is measured at
the enacted tax rates that will be in effect when these differences reverse.
Deferred tax expense is determined by the change in the liability for deferred
taxes ("Liability Method").
Reclassifications: Certain amounts have been reclassified in the 1993 and
1992 financial statements to conform to the Company's 1994 presentation.
24
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE B--NOTES RECEIVABLE
Notes receivable are primarily from the sale of flight equipment and are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Fixed rate notes receivable due in varying installments to
2004:
Less than 8%............................................. $132,341 $ 94,951
8% to 9.99%.............................................. 104,585 49,923
10% to 12%............................................... 2,007 4,203
Prime to prime plus 5% and Libor plus 1.1% to Libor plus
1.5% notes receivable in varying installments to 2002.... 116,218 188,778
-------- --------
$355,151 $337,855
======== ========
</TABLE>
The Company restructured approximately $36,558 (1994) and $16,428 (1993) of
lease payments, of which $18,010 was outstanding at December 31, 1994 and is
included above.
At December 31, 1994, the minimum future notes receivable payments to be
received are as follows:
<TABLE>
<S> <C>
1995................................................................ $118,908
1996................................................................ 73,565
1997................................................................ 18,995
1998................................................................ 39,353
1999................................................................ 29,401
Thereafter.......................................................... 74,929
--------
$355,151
========
</TABLE>
NOTE C--NET INVESTMENT IN FINANCE AND SALES-TYPE LEASES
The following lists the components of the net investment in finance and
sales-type leases:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Total minimum lease payments to be received.............. $101,888 $358,106
Estimated residual values of leased flight equipment..... 29,127 76,328
Less: Unearned income.................................... (38,782) (144,165)
-------- --------
Net investment in finance and sales-type leases.......... $ 92,233 $290,269
======== ========
</TABLE>
The decrease in 1994 primarily resulted from the conversion of three
aircraft from finance leases to operating leases.
Minimum future lease payments to be received for flight equipment on finance
and sales-type leases at December 31, 1994 are as follows:
<TABLE>
<S> <C>
1995..................................... $ 13,515
1996..................................... 13,515
1997..................................... 12,270
1998..................................... 11,415
1999..................................... 10,835
Thereafter............................... 40,338
--------
Total minimum lease payments to be
received................................ $101,888
========
</TABLE>
25
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE D--INVESTMENTS
Investments consist of the following:
<TABLE>
<CAPTION>
1994 1993
--------------- ---------------
PERCENT PERCENT
OWNED AMOUNT OWNED AMOUNT
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cost method:
Air Liberte.................................... 10.8% $ 4,154 10.8% $ 4,154
Aeronautical Support Inc....................... 19.5% 1,000 19.5% 1,000
International Aircraft Investors............... 6.2% 300 6.2% 300
Southwest Airlines............................. <1 % 1,000 <1 % 1,000
Others......................................... 850
Equity method:
Pacific Ocean Leasing Ltd...................... 50.0% 7,223 50.0% 6,101
Pacific Asia Leasing Ltd....................... 25.0% 4,456 25.0% 3,681
Hoeri Corporation.............................. 50.0% 1,601
------- -------
$18,983 $17,837
======= =======
</TABLE>
In addition, the Company has notes receivable of $10,538 (1994) and $31,984
(1993) from companies in which it has investments.
At December 31, 1994, the Company had seven aircraft on lease to Air Liberte
and nine on lease to Southwest Airlines. These leases are similar in terms to
those of unaffiliated customers.
The Company has sold used aircraft and engines to International Aircraft
Investors ("IAI") on terms similar to those of unaffiliated customers (see
Note J). In exchange for these sales the Company has received notes which are
included in Notes Receivable in the accompanying consolidated balance sheets
(see Note B).
The Company has a 50% interest in Pacific Ocean Leasing Ltd. ("POL"), a
Bermuda corporation. POL presently owns one Boeing 767-200 aircraft, one spare
engine and various spare parts on lease to an airline. Additionally, the
Company has guaranteed the bank loan to POL (see Note J) and has a
subordinated loan to POL, which is included in Notes Receivable on the
accompanying consolidated balance sheets (see Note B).
The Company has a 25% interest in Pacific Asia Leasing Ltd. ("PAL"), a
Bermuda corporation. PAL presently owns one Boeing 767-300ER aircraft on lease
to an airline. The Company guaranteed a bridge loan in connection with such
purchase (see Note J).
In 1993, the Company invested $1,601 for a 50% interest in Hoeri Corporation
("Hoeri"), a British Virgin Islands corporation. In 1994, the subordinated
loan was paid off and the investment in the company was sold (see Note B).
26
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E--DEBT FINANCING
Debt financing is comprised of the following:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Commercial Paper (weighted average interest rate at
December 31, 5.73% (1994) and 3.34% (1993))....... $1,972,361 $1,444,977
Term Notes......................................... 2,950,000 2,550,000
Medium-Term Notes.................................. 2,011,770 1,765,920
Capital Lease Obligations.......................... 305,400
Bank and other term debt........................... 43,503 68,778
Bank lines of credit and revolvers................. 319,000
Less: Deferred debt discount....................... (19,028) (10,194)
---------- ----------
$7,583,006 $5,819,481
========== ==========
</TABLE>
Bank Financing:
As of December 31, 1994, the Company had committed credit agreements with 29
commercial banks aggregating $1,226,000 and uncommitted lines of credit with
two commercial banks in the amount of $125,000. Bank debt principally provides
for interest rates that vary according to the pricing option then in effect
and range from prime, .25% to 3/8% over LIBOR or .375% to .425% over CD rates,
at the option of the Company. The interest rates on the uncommitted bank lines
are fixed for a period of up to one year at rates determined by the banks.
Bank debt is subject to facility fees of up to .1875% of amounts available.
Bank financing is used primarily as backup for the Company's Commercial Paper
program.
Term Notes:
The Company has issued the following Notes which provide for a single
principal payment at maturity and cannot be redeemed prior to maturity:
<TABLE>
<CAPTION>
INITIAL
TERM 1994 1993
------- -------- --------
<S> <C> <C> <C>
6.50% Notes due April 1, 1994..................... 2 years $ $100,000
Floating Rate Notes due September 1, 1994......... 2 years 100,000
7.20% Notes due October 1, 1994................... 3 years 150,000
6% Notes due January 15, 1995..................... 3 years 150,000 150,000
8.20% Notes due April 15, 1995.................... 4 years 150,000 150,000
4 7/8% Notes due September 15, 1995............... 3 years 100,000 100,000
6 7/8% Notes due December 15, 1995................ 4 years 100,000 100,000
5 3/4% Notes due January 15, 1996................. 3 years 150,000 150,000
6 5/8% Notes due June 1, 1996..................... 4 years 100,000 100,000
4 3/4% Notes due July 15, 1996.................... 3 years 100,000 100,000
7.90% Notes due October 1, 1996................... 5 years 100,000 100,000
6 3/8% Notes due November 1, 1996................. 4 years 150,000 150,000
4 3/4% Notes due January 15, 1997................. 3 years 100,000
5 7/8% Notes due February 1, 1997................. 4 years 100,000 100,000
5 1/2% Notes due April 1, 1997.................... 4 years 100,000 100,000
6 1/2% Notes due July 15, 1997.................... 5 years 150,000 150,000
6 3/4% Notes due August 1, 1997................... 3 years 100,000
</TABLE>
27
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
NOTE E--DEBT FINANCING (CONTINUED)
Term Notes (continued):
<TABLE>
<CAPTION>
INITIAL
TERM 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Floating Rate Notes due October 15, 1997. 4 1/2 years 100,000 100,000
5 5/8% Notes due March 1, 1998........... 4 years 100,000
5 3/4% Notes due March 15, 1998.......... 5 years 100,000 100,000
7% Notes due June 1, 1998................ 4 years 100,000
5 3/4% Notes due July 1, 1998............ 5 years 100,000 100,000
8.35% Notes due October 1, 1998.......... 7 years 100,000 100,000
5 3/4% Notes due January 15, 1999........ 5 years 150,000
6 5/8% Notes due April 1, 1999........... 5 years 100,000
6 1/2% Notes due August 15, 1999......... 7 years 100,000 100,000
6.20% Notes due May 1, 2000.............. 7 years 100,000 100,000
8 7/8% Notes due April 15, 2001.......... 10 years 150,000 150,000
8 3/8% Notes due December 15, 2004....... 10 years 100,000
---------- ----------
$2,950,000 $2,550,000
========== ==========
</TABLE>
Medium-Term Notes:
The Company's Medium-Term Notes bear interest at rates varying between 3.75%
and 9.88%, inclusive, with maturities from 1995 through 2004. The Medium-Term
Notes provide for a single principal payment at the maturity of the respective
note. They cannot be redeemed by the Company prior to maturity.
Capital Lease Obligations:
At December 31, 1994, the Company had guaranteed funding facilities with
committed fixed rate funding for 1995 borrowings in the amount of $1,484,000.
The facilities provide for funding the purchase of up to 23 Airbus aircraft
during 1995. The Company has the right but not the obligation to utilize these
facilities and will make this decision based on the cost of the facilities
versus alternate funding opportunities existing on the exercise dates of the
facilities.
The Company's guaranteed funding facilities provide 10 year, fully
amortizing debt in three interest rate tranches. The first 62.5% of the debt
is at a fixed rate of 6.55%. The second 22.5% of the debt is at fixed rates
varying between 6.18% and 6.89%. The final 15% of the debt is at a floating
LIBOR based rate.
Maturities of debt financing (excluding commercial paper) at December 31,
1994 are as follows:
<TABLE>
<S> <C>
1995........................................................... $1,185,101
1996........................................................... 1,090,252
1997........................................................... 1,100,035
1998........................................................... 958,435
1999........................................................... 648,450
Thereafter..................................................... 647,400
----------
$5,629,673
==========
</TABLE>
Under the most restrictive provisions of the related borrowings,
consolidated retained earnings at December 31, 1994, in the amount of $82,000
are unrestricted as to payment of dividends.
28
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE F--SHAREHOLDERS' EQUITY
Preferred Stock:
In November 1993 and December 1992, 500 shares each of Series C and D and
500 shares each of Series A and B, respectively, of Market Auction Preferred
Stock ("MAPS") were issued in connection with public offerings at $100,000 per
share. Proceeds, net of issuance costs, to the Company were $98,472 (1993) and
$98,568 (1992). The MAPS have a liquidation value of $100,000 per share and
are not convertible. The dividend rate, other than the initial rate, for each
dividend period for each series will be reset approximately every 7 weeks (49
days) on the basis of orders placed in an auction. At December 31, 1994, the
dividend rates for Series A, B, C and D were 4.88%, 5.125%, 4.53% and 4.60%,
respectively.
Stock Appreciation Rights:
Stock Appreciation Rights ("SARs") were granted to certain employees of the
Company during 1990. The SARs granted generally vest over a nine year period
from the effective date and are exercisable immediately upon vesting. SARs
initially have no value but can gain a cash value based upon the difference
between a Benchmark Price and a Formula Price (based on adjusted pre-tax cash
flow of the Company), but not in excess of an aggregate of $150,000, to be
accrued and paid over the period of the plan. The SAR plan became effective on
January 1, 1991. No value has been earned or accrued under the SAR plan as of
December 31, 1994.
NOTE G--RENTAL INCOME
Minimum future rentals on noncancelable operating leases of flight equipment
which have been delivered at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------
<S> <C>
1995................................... $ 944,295
1996................................... 816,793
1997................................... 626,652
1998................................... 476,441
1999................................... 339,036
Thereafter............................. 657,035
----------
$3,860,252
==========
</TABLE>
Additional rentals earned by the Company based on the lessees' usage
aggregated $122,321 (1994), $101,761 (1993) and $72,589 (1992). Flight
equipment is leased, under operating leases, with remaining terms ranging from
one to 11 years.
29
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE H--INCOME TAXES
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
Current:
Federal......................................... $(34,027) $ (8,522) $34,944
State........................................... (3,508) 3,826 4,445
-------- -------- -------
(37,535) (4,696) 39,389
Deferred:
Federal......................................... 149,364 103,220 46,513
State........................................... (1,765) 10,551 2,589
-------- -------- -------
147,599 113,771 49,102
-------- -------- -------
$110,064 $109,075 $88,491
======== ======== =======
</TABLE>
The provision for deferred income taxes is comprised of the following
temporary differences:
<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- -------
<S> <C> <C> <C>
Accelerated depreciation on flight equipment.... $180,137 $108,548 $47,906
Excess of state income taxes not currently de-
ductible for Federal income tax purposes....... 626 (3,698) (880)
Deferred sales-type leases...................... (806) (1,092) (3,644)
Provision for overhauls......................... (9,951) (3,613) (3,666)
Rentals received in advance..................... (14,511) (1,077) (4,149)
Straight line rents............................. (2,315) 7,269 13,168
Changes in tax rates............................ -- 6,056 --
Other........................................... (5,581) 2,659 (1,874)
Investment and other tax credits................ -- (1,281) 2,096
-------- --------- -------
Subtotal.................................... 147,599 113,771 48,957
Decrease (increase) in net operating loss for
tax purposes only.............................. -- -- 145
-------- --------- -------
$147,599 $ 113,771 $49,102
======== ========= =======
</TABLE>
The deferred tax liability at December 31, 1994 consists of the following:
<TABLE>
<CAPTION>
1994
--------
<S> <C> <C>
Accelerated depreciation on flight equipment........... $522,282
Excess of state income taxes not currently deductible
for Federal income tax purposes....................... (10,089)
Deferred sales-type leases............................. 15,996
Provision for overhauls................................ (26,677)
Rentals received in advance............................ (30,314)
Straight line rents.................................... 18,034
Other.................................................. (1,822)
--------
$487,410
========
</TABLE>
30
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE H--INCOME TAXES (CONTINUED)
A reconciliation of computed expected total provision for income taxes to
the amount recorded is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
Computed expected provision based upon a federal
rate of 35% (1994 and 1993) and 34% (1992) ...... $109,202 $97,174 $83,722
State income taxes, net of Federal income taxes... 5,772 9,345 4,642
Foreign sales corporation benefit................. (3,178) (3,324) --
Dividend received exclusion....................... -- (598) (1,526)
Other............................................. (1,732) 422 1,653
Adjustments of deferred tax liability for changes
in tax rates..................................... -- 6,056 --
-------- -------- -------
$110,064 $109,075 $88,491
======== ======== =======
</TABLE>
NOTE I--OTHER INFORMATION
Concentration of Credit Risk
The Company leases and sells aircraft to airlines. All of the lease
receivables and the majority of notes receivable are from airlines located
throughout the world. The Company generally obtains deposits on leases and
obtains collateral in flight equipment on notes receivable. The Company has no
single customer which accounts for 10% or more of revenues.
Segment Information
The Company operates within one industry, the marketing of flight equipment
through leasing and sales.
Revenues include rentals of flight equipment to foreign airlines of $798,619
(1994), $655,773 (1993) and $546,452 (1992).
Miscellaneous
Interest and other revenue includes dividend income from its investment in
Alaska Air Group $2,431 (1993) and $6,400 (1992) and security deposit
forfeitures and early lease termination fees of $1,400 (1994), $16,329 (1993)
and $8,565 (1992).
Employee Benefit Plans
The Company's employees participate in various benefit plans sponsored by
AIG, including a noncontributory qualified defined benefit retirement plan and
a voluntary savings plan (401(k) plan).
AIG's U.S. plans do not separately identify projected benefit obligations
and plan assets attributable to employees of participating affiliates. AIG's
projected benefit obligations exceeded the plan assets at December 31, 1994 by
$21,375.
Gain on Disposition of Assets
During 1992, proceeds from the sale and leaseback of aircraft were $26,000.
The gain of $7,069 was deferred and is being credited to rent expense over the
term of the applicable lease agreement.
31
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE J--COMMITMENTS AND CONTINGENCIES
Aircraft orders and options
At December 31, 1994, the Company had committed to purchase 236 aircraft
deliverable from 1995 through 2000 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $13,379,200.
At December 31, 1994, the Company had options to purchase 51 aircraft
deliverable from 1996 through 2001 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $2,766,800.
Most of these purchase commitments and options are based upon master
arrangements with each of The Boeing Company ("Boeing"), AVSA, S.A.R.L., the
sales subsidiary of Airbus Industrie ("Airbus"), Fokker Aircraft USA Inc.
("Fokker") and McDonnell Douglas Corporation ("McDonnell Douglas").
The Boeing aircraft (models 737, 747, 757, 767 and 777), the Airbus aircraft
(models A300, A310, A319, A320, A321, A330 and A340), the Fokker aircraft
(model F-70) and the McDonnell Douglas aircraft (model MD-11) described above
are either being purchased, or the options to purchase have been granted,
pursuant to purchase agreements executed by the Company and Boeing, Airbus,
Fokker or McDonnell Douglas, respectively. These agreements establish the
pricing formulas (which include certain price adjustments based upon inflation
and other factors) and various other terms with respect to the purchase of
aircraft. Under certain circumstances, the Company has the right to alter the
mix of aircraft type ultimately acquired. As of December 31, 1994, the Company
had made non-refundable deposits (exclusive of capitalized interest) with
respect to the aircraft which the Company has committed to purchase of
approximately $430,080, $330,595, $2,000 and $39,181 with Boeing, Airbus,
Fokker and McDonnell Douglas, respectively.
If all 287 aircraft were to be acquired, the estimated aggregate purchase
price (including adjustment for anticipated inflation) would be approximately
$16,146,000. Management anticipates that a significant portion of such
aggregate purchase price will be funded by incurring additional debt. The
exact amount of the indebtedness to be incurred will depend upon the actual
purchase price of the aircraft, which can vary due to a number of factors,
including inflation, and the percentage of the purchase price of the aircraft
which must be financed.
Asset Value Guarantees
The Company guaranteed a portion of the residual value of one aircraft for a
fee paid in 1990, four aircraft for fees paid in 1991 and five aircraft for
fees paid in 1994. The aggregate guarantees at December 31, 1994, are $131,313
and, if called upon, are payable in the amounts of $2,000 (1995), $6,213
(1997), $3,100 (1999), $21,000 (2000), $63,000 (2003) and $36,000 (2006).
Other Guarantees
In connection with the acquisition of six aircraft by affiliates, the
Company guaranteed the loans, which at December 31, 1994 aggregated $65,493.
In connection with the acquisition of one aircraft by an unrelated company,
the Company guaranteed an aggregate of $1,440 of lease payments through 1996.
32
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE K--FINANCIAL INSTRUMENTS
In the normal course of business, the Company employs a variety of off-
balance sheet financial instruments and other derivative products to manage
its exposure to interest rates and the resulting impact of changes in interest
rates on earnings, with the objective to lower its overall borrowing cost and
to maintain its optimal mix of variable and fixed rate interest obligations.
These derivative products include interest rate swap agreements, interest rate
spreadlocks and interest rate swap options ("swaptions").
The counterparties to the Company's derivative instruments are all
recognized U.S. derivative dealers. The counterparties to the majority of the
notional amounts of the Company's derivative instruments are AAA rated and all
have at least an A credit rating. One of the counterparties is a related party
of the Company. All derivative contracts between the Company and the related
party are at arms length. The Company currently does not, although it can in
certain circumstances, require its counterparties to provide security for its
positions with the Company. Any failure of the instruments or counterparties
to perform under the derivative contracts would have an immaterial impact on
the Company's earnings.
At December 31, 1994 and 1993, the Company had interest rate swap agreements
with aggregate notional amounts of $294,761 and $125,000, respectively, which
effectively converted certain fixed rate obligations with a weighted average
interest rate of 6.46% (1994) and 5.56% (1993) to variable rate obligations
equal to the six month LIBOR rate. In addition, at December 31, 1994 and 1993,
the Company had an interest rate swap agreement with a notional amount of
$100,000 which effectively converted a floating rate obligation equal to the
one month commercial paper rate to a fixed rate obligation with a weighted
average interest rate of 5.82%. Also, at December 31, 1994 the Company had an
interest rate swap agreement with a notional amount of $50,000 which converted
a floating rate obligation equal to two year U.S. Treasuries minus 0.25% to a
floating rate obligation equal to three month LIBOR plus 0.25%. The interest
rate swap agreements expire in 1996 ($25,000 notional value), 1997 ($100,000
notional value), 1998 ($100,000 notional value), 1999 ($50,000 notional value)
and 2004 ($169,761 notional value).
At December 31, 1994, the Company had committed swaption contracts with an
aggregate notional amount of $1,116,280 substantially expiring through 1996.
The swaptions grant to the option holder the right but not the obligation to
effectively convert certain of the Company's fixed rate financing options with
a weighted average interest rate of 6.78% to floating rates equal to the six
month LIBOR rate. The swaptions were entered into with the objective to lower
the Company's borrowing costs and to obtain its optimal mix of variable and
fixed rate obligations.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying value reported in the balance
sheet for cash and cash equivalents approximates its fair value.
Notes receivable: The fair values for notes receivable are estimated
using discounted cash flow analyses, using interest rates currently being
offered for similar loans to borrowers with similar credit ratings.
33
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE K--FINANCIAL INSTRUMENTS (CONTINUED)
Investments: It was not practicable to estimate the fair value of most of
the Company's investments in the common and preferred stocks of other
companies because of the lack of a quoted market price and the inability to
estimate fair value without incurring excessive costs. The carrying amount
of these investments at December 31, 1994 represents the original cost or
original cost plus the Company's share of earnings of the investment, which
management believes is not impaired. For investments held by the Company
that had a quoted market price at December 31, 1994, the Company used such
quoted market price in estimating the fair value of such investments.
Debt financing: The carrying value of the Company's commercial paper and
term debt maturing within one year approximates its fair value. The fair
value of the Company's long-term debt is estimated using discounted cash
flow analyses, based on the Company's spread to Treasuries for similar debt
at year-end.
Off-balance-sheet instruments: Fair values for the Company's off-balance-
sheet instruments are based on pricing models or formulas using current
assumptions (swaps, swaptions and the guaranteed loan facility) and the
amount of the guarantee which would not be covered by the fair value of the
underlying collateral (loan guarantees and asset value guarantees).
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1994 are as follows:
<TABLE>
<CAPTION>
CARRYING
AMOUNT OF FAIR VALUE OF
ASSET (LIABILITY) ASSET (LIABILITY)
----------------- -----------------
<S> <C> <C>
Cash and cash equivalents... $ 52,891 $ 52,891
Notes receivable............ 355,151 347,828
Investments................. 18,983 21,223
Debt financing.............. (7,583,006) (7,447,708)
Off-balance-sheet financial
instruments:
Hedging Activities:
Swaps................... (544) (17,601)
Acquired financing
options................ -- 79,600
Other Risk Management
Activities:
Swaptions............... (72,905) (72,905)
Acquired financing
options................ 69,300 69,300
Loan guarantees......... -- --
Asset value guarantees.. -- --
</TABLE>
34
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
------ ------------ --------------------------- ------------ -------------
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER ACCOUNTS-- DEDUCTIONS-- BALANCE AT
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE(1) END OF PERIOD
----------- ------------ ---------- ---------------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Reserve for overhaul:
Year ended December 31,
1994................... $44,843 $57,619 $1,802(2) $32,710 $71,554
Year ended December 31,
1993................... $34,965 $39,893 $ 0 $30,015 $44,843
Year ended December 31,
1992................... $25,171 $28,055 $ 675(2) $18,936 $34,965
</TABLE>
- --------
(1)Reimbursements to lessees for overhauls performed.
(2)Payments received from lessees in lieu of compliance with return conditions.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: March 20, 1995
INTERNATIONAL LEASE FINANCE CORPORATION
By LESLIE L. GONDA
----------------------------------------
Leslie L. Gonda
Chairman of the Board
Pursuant to requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
LESLIE L. GONDA Director March 20, 1995
- ------------------------------------
Leslie L. Gonda
STEVEN F. UDVAR-HAZY Director March 20, 1995
- ------------------------------------
Steven F. Udvar-Hazy
LOUIS L. GONDA Director March 20, 1995
- ------------------------------------
Louis L. Gonda
M. R. GREENBERG Director March 20, 1995
- ------------------------------------
M. R. Greenberg
EDWARD E. MATTHEWS Director March 20, 1995
- ------------------------------------
Edward E. Matthews
PETROS K. SABATACAKIS Director March 20, 1995
- ------------------------------------
Petros K. Sabatacakis
HOWARD I. SMITH Director March 20, 1995
- ------------------------------------
Howard I. Smith
ALAN H. LUND Chief Financial Officer and March 20, 1995
- ------------------------------------ Chief Accounting Officer
Alan H. Lund
</TABLE>
36
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
Since the Registrant is a wholly owned subsidiary of AIG, no annual report
to security holders for the year ended December 31, 1994 or proxy statement,
form of proxy or other proxy soliciting materials have been sent to securities
holders since January 1, 1990.
37
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF PREFERRED STOCK OF
INTERNATIONAL LEASE FINANCE CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Steven F. Udvar-Hazy and Louis L. Gonda hereby certify
that:
1. They are the duly elected and acting President and Secretary,
respectively, of International Lease Finance Corporation (the "Company").
2. Pursuant to authority given by the Company's Restated Articles of
Incorporation, a duly appointed committee (the "Special Committee") of the Board
of Directors of the Company (such committee having been previously authorized to
exercise the powers of the Board of Directors as to the subject matter), has
duly adopted the following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Company provide for a
class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of the Company is authorized to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them; and
WHEREAS, the Company desires, pursuant to its authority as aforesaid, to
determine and fix the rights, preferences, privileges, and restrictions relating
to a series of said Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
determines the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to, said series of
Preferred Stock as follows:
ARTICLE ONE
DESIGNATION
Section 1. Designation.
A series of Preferred Stock shall be designated "Market Auction Preferred
Stock, Series C " (the "Series C MAPS").
Section 2. Amount.
The number of shares constituting Series C MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES C MAPS--GENERAL PROVISIONS.
Section 1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Additional Directors" has the meaning specified in Section 6(a) of
this ARTICLE TWO.
(b) "Agent Member" means the member of the Securities Depositary that will
act on behalf of an Existing Holder or a Potential Holder and that is identified
as such in such Existing Holder's or Potential Holder's Master Purchaser's
Letter.
(c) "Applicable 'AA' Composite Commercial Paper Rate," on any date, shall
mean in the case of any Standard Dividend Period or Short Dividend Period of (1)
49 days or more but less than 70 days, the interest equivalent of the 60-day
rate, (2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or more
but less than 148 days, the arithmetic average of the interest equivalent of the
90-day and 180-day rates, and (5) 148 days or more but less than 184 days, the
interest equivalent of the 180-day rate, in each case, on commercial paper
placed on behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa"
by Moody's, or the equivalent of such rating by another rating agency, as made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date. In the event that the
Federal Reserve Bank of New York does not make available any of the foregoing
rates, then such rates shall be the 60-day rate or arithmetic average of such
rates, as the case may be, as quoted on a discount basis or otherwise, by
Commercial Paper Dealers to the Auction Agent as of the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to provide
such rate or rates or, if the Company does not select any Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealers. "Substitute Commercial Paper Dealer" means Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers Inc or
their respective affiliates or successors or, if no such dealer furnishes such
quotations, a leading dealer in the commercial paper market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" means the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
(d) "Applicable Rate" means the rate per annum, resulting from the next
preceding Auction, at which dividends are payable on the shares of Series C MAPS
for any Dividend Period.
(e) "Applicable Treasury Bill Rate" for any Short Dividend Period in excess
of 183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of the
Federal Reserve System (the "Board") in "Federal Reserve Statistical Release
H.15(519)-Selected Interest Rates," or any successor publication by the Board,
within five Business Days preceding such date. In the event that the Board does
not publish such rate, or if such release is not available, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate will be the arithmetic mean
of the secondary market bid rate as of approximately 3:30 P.M., New York City
time, on the Business Day next preceding such date of the U.S. Government
Securities Dealers furnished to
2
<PAGE>
the Auction Agent for the issue of direct obligations of the United States
Treasury, in an aggregate principal amount of at least $1,000,000 with a
remaining maturity equal to, or next lower than, the length of such Short
Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by any Substitute U.S. Government
Securities Dealer or Dealers selected by the Company to provide such rate or
rates or, if the Company does not select any such Substitute U.S. Government
Securities Dealer or Dealers, by the remaining U.S. Government Securities
Dealer (if any); provided that, if the Company is unable to cause such
quotations to be furnished to the Auction Agent by such sources, the Company may
cause such rates to be furnished to the Auction Agent by such alternative source
as the Company in good faith deems to be reliable. "Substitute U.S. Government
Securities Dealers" means Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated or Salomon Brothers Inc or their respective affiliates or
successors or, if no such dealer provides such quotes, a leading dealer in the
government securities market selected by the Company in good faith. For
purposes of this definition, the "interest equivalent" of a rate stated on a
discount basis shall be equal to the quotient of (A) the discount rate divided
by (B) the difference between 1.00 and the discount rate.
(f) "Auction Agent" means Chemical Bank, or its successors, or any other
bank or trust company appointed by a resolution of the Board of Directors of the
Company, or its Special Committee, which enters into an agreement with the
Company to follow the Auction Procedures set forth in ARTICLE THREE hereof.
(g) "Auction Date" means the first Business Day preceding the first day of a
Dividend Period other than the Initial Dividend Period.
(h) "Broker-Dealer" means any broker-dealer, or other entity permitted by
law to perform the functions required of a Broker-Dealer in ARTICLE THREE, that
has been selected by the Company and has entered into a Broker-Dealer Agreement
with the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in ARTICLE THREE.
(j) "Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
New York City are authorized or obligated by law to close.
(k) "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Commercial Paper Dealers" means Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. or, in lieu of either thereof, their respective affiliates
or successors.
(n) "Common Stock" means all shares now or hereafter authorized of the class
of Common Stock of the Company presently authorized and any other shares into
which such shares may hereafter be changed from time to time.
(o) "Date of Original Issue" means the date on which the Company initially
issues shares of Series C MAPS.
3
<PAGE>
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(q) "Default Rate" means the Applicable Determining Rate multiplied by the
percentage, as it may be adjusted from time to time, shown opposite the lowest
Credit Ratings category in the definition of Maximum Applicable Rate, determined
as of the Business Day preceding a Failure to Deposit.
(r) "Dividend Payment Date" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(s) "Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(t) "Dividend Quarter" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(u) "Dividends-Received Deduction" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(v) "Existing Holder," means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of Series C MAPS in the
records of the Auction Agent.
(w) "Failure to Deposit" has the meaning specified in Section 2(e) of this
ARTICLE TWO.
(x) "Initial Dividend Payment Date" means January 31, 1994.
(y) "Initial Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(z) "Initial Dividend Rate" has the meaning specified in Section 2(a) of
this ARTICLE TWO.
(aa) "Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the Series C MAPS with respect to
the payment of dividends or the distribution of assets upon liquidation.
(ab) "Long Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(ac) "MAPS" means all shares of each series of the Company's Market Auction
Preferred Stock now or hereafter authorized.
(ad) "Maximum Applicable Rate," on any Auction Date, shall mean the rate per
annum obtained by multiplying the Applicable Determining Rate on such Auction
Date by a percentage (as it may be adjusted from time to time by the Company)
determined as set forth below based on the lower of the credit ratings assigned
to the Series C MAPS by Moody's and S&P (or if Moody's or S&P or both shall not
make such rating available, the equivalent of either or both of such ratings by
a Substitute Rating Agency or two Substitute Rating Agencies, as the case may
be, or in the event that only one such rating shall be available, the percentage
shall be based on such rating).
<TABLE>
<CAPTION>
Credit Ratings Applicable Percentage
-------------------- of Applicable
Moody's S&P Determining Rate
---------------- -------------- ---------------------
<S> <C> <C>
"aa3" or Above AA-- or Above 150%
"a3" to "a1" A-- to A+ 200%
"baa3" to "baa1" BBB-- to BBB+ 225%
Below "baa3" Below BBB-- 275%
</TABLE>
4
<PAGE>
(ae) "Master Purchaser's Letter" means a letter addressed to the Company,
the Auction Agent and a Broker-Dealer in which a Person agrees, among other
things, to offer to purchase, purchase, offer to sell or sell shares of Series C
MAPS as set forth in ARTICLE THREE.
(af) "Minimum Holding Period" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(ag) "Moody's" means Moody's Investors Service, Inc.
(ah) "Normal Dividend Payment Date" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ai) "Notice" has the meaning specified in Section 2(c) of this ARTICLE TWO.
(aj) "Notice of Long Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(ak) "Notice of Revocation" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(al) "Notice of Short Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(am) "Outstanding" means, as of any date, shares of MAPS theretofore issued
by the Company except, without duplication, (i) any shares of MAPS theretofore
cancelled, delivered to the Company for cancellation or redeemed and (ii) as of
any Auction Date, any shares of MAPS subject to redemption on the next following
Business Day.
(an) "Parity Capital Stock" means any and all shares of Capital Stock of the
Company ranking on a parity with or equal to the Series C MAPS as to the payment
of dividends and distribution of assets.
(ao) "Parity Securities" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(ap) "Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(aq) "Potential Holder" means any Person, including any Existing Holder, (i)
who has executed a Master Purchaser's Letter and (ii) who may be interested in
acquiring shares of Series C MAPS (or, in the case of an Existing Holder,
additional shares of Series C MAPS).
(ar) "Preferred Stock" means all shares now or hereafter authorized of the
class of Preferred Stock, without par value, of the Company, including the
shares of MAPS of any series.
(as) "S&P" means Standard & Poor's Corporation.
(at) "Securities Depositary" means The Depository Trust Company and its
successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
Securities Depositary in connection with shares of Series C MAPS.
(au) "Short Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(av) "Standard Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(aw) "Subsequent Dividend Period" has the meaning specified in Section 2(c)
of this ARTICLE TWO.
5
<PAGE>
(ax) "Subsequent Dividend Period Days" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ay) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934, as amended) selected by the
Company, subject to the approval by Morgan Stanley and Lehman Brothers, such
approval not to be unreasonably withheld.
(az) "Sufficient Clearing Bids" has the meaning specified in Section 4(a) of
ARTICLE THREE.
(ba) "U.S. Government Securities Dealers" shall mean Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. or, in lieu of either thereof, their
respective affiliates or successors.
Section 2. Dividends.
(a) Holders of Series C MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Restated Articles of Incorporation of the
Company, cumulative cash dividends at the Applicable Rate, determined as set
forth below, payable on the respective dates set forth below that may be
applicable with respect to such Series C MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of 2.92% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series C
MAPS will be the Applicable Rate, determined as set forth herein, and will be
payable on the respective dates set forth below.
(b) Dividends on the Series C MAPS will accumulate (whether or not declared)
from the Date of Original Issue. Except for the Initial Dividend Payment Date,
dividends on the Series C MAPS with a Standard Dividend Period will be payable,
except as provided below, on each seventh Monday following the preceding
Dividend Payment Date. Dividends on the Series C MAPS with a Short Dividend
Period will be payable, except as provided below, on the day following the last
day of such Short Dividend Period and will also be payable on such other dates
as are established at the time such Short Dividend Period is determined.
Dividends on the Series C MAPS with a Long Dividend Period will be payable,
except as provided below, on the day following the last day of such Long
Dividend Period and on the first day of the fourth calendar month after the
commencement of such Long Dividend Period and quarterly thereafter on the first
day of each applicable month. Each day on which dividends on Series C MAPS
would be payable as determined as set forth in this paragraph but for the
adjustments set forth below is referred to herein as a "Normal Dividend Payment
Date."
(i) In the case of dividends payable on Series C MAPS with a Standard
Dividend Period or a Short Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available
to Agent Members the amounts due as dividends on the Series C MAPS in next-
day funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day preceding such Normal Dividend Payment
Date that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on Series C MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date .
6
<PAGE>
(ii) In the case of dividends payable on Series C MAPS with a Long
Dividend Period, if :
(A)(1) the Securities Depositary shall continue to make available
to Agent Members the amounts due as dividends on the Series C MAPS in next-
day funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on the Series C MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on Series C MAPS would be payable as determined as set
forth in the preceding paragraphs is a day that would result in the number of
days between successive Auction Dates (determined by excluding the first Auction
Date and including the second Auction Date) not being at least equal to the
then-current minimum holding period (currently set forth in Section 246(c) of
the Code) (the "Minimum Holding Period") required for corporate taxpayers to be
entitled to the dividends-received deduction on preferred stock held by
nonaffiliated corporations (currently set forth in Section 243(a) of the Code)
(the "Dividends-Received Deduction"), then dividends on the Series C MAPS shall
be payable on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day that results in the
number of days between such successive Auction Dates (determined as set forth
above) being at least equal to the then-current Minimum Holding Period.
Each date on which dividends on Series C MAPS shall be payable as determined
as set forth above is referred to herein as a "Dividend Payment Date". If
applicable, the period from the preceding Dividend Payment Date to the next
Dividend Payment Date for Series C MAPS with a Long Dividend Period is hereby
referred to as a "Dividend Quarter." Although any particular Dividend Payment
Date may not occur on the originally scheduled Normal Dividend Payment Date
because of the adjustments set forth above, each succeeding Dividend Payment
Date will be, subject to such adjustments, the date determined as set forth
above as if each preceding Dividend Payment Date had occurred on the respective
originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend Payment
Dates shall automatically be adjusted so that there shall be a uniform number of
days in subsequent Dividend Periods (such number of days without giving effect
to the adjustment referred to above being referred to herein as the "Subsequent
Dividend Period Days") commencing after the date of such change in law equal to
or to the extent necessary, in excess of the then-current Minimum Holding
Period, provided that the number of Subsequent Dividend Period Days shall not
exceed by more than nine days the length of such then-current Minimum Holding
Period and shall be evenly divisible by seven, and the maximum number of
Subsequent Dividend Period Days, as adjusted pursuant to this provision, in no
event shall exceed 119 days.
(c) After the Initial Dividend Period for the Series C MAPS, each
subsequent Dividend Period will (except for the adjustments for non-Business
Days described above) be 49 days (each such 49-day period, subject to any
adjustment as a result of a change in law altering the Minimum Holding Period as
described above, being herein referred to as a "Standard Dividend Period"),
unless the Company specifies that any such subsequent Dividend Period will be a
Dividend Period of 50 to 364 days and consisting of a whole number of weeks (a
"Short Dividend Period") or a Dividend Period of one year or longer (a "Long
Dividend Period").
7
<PAGE>
Each such Standard Dividend Period, Short Dividend Period and Long Dividend
Period (together with the period commencing on the Date of Original Issue and
ending on the Initial Dividend Payment Date for the Series C MAPS (the "Initial
Dividend Period")) being referred to herein as a "Dividend Period." After the
Initial Dividend Period for the Series C MAPS, each successive Dividend Period
will commence on the Dividend Payment Date for the preceding Dividend Period and
will end (i) in the case of a Standard Dividend Period, on the day preceding the
next Dividend Payment Date and (ii) in the case of a Short Dividend Period or a
Long Dividend Period, on the last day of the Short Dividend Period or the Long
Dividend Period specified by the Company in the related Notice.
The Company may give telephonic and written notice, not less than ten and
not more than 30 days prior to an Auction Date, to the Auction Agent and the
Securities Depositary that the next succeeding Dividend Period will be a Short
Dividend Period (a "Notice of Short Dividend Period") or a Long Dividend Period
(a "Notice of Long Dividend Period" and, together with a Notice of Short
Dividend Period, a "Notice"). Each such Notice will specify (i) the next
succeeding Dividend Period as a Short Dividend Period or a Long Dividend Period,
(ii) the term thereof, (iii) in the case of any Long Dividend Period, additional
redemption provisions or restrictions on redemption, if any, and (iv) the
Dividend Payment Dates; provided that, for any Auction occurring after the
initial Auction, the Company may not give a Notice of a Short Dividend Period or
a Notice of a Long Dividend Period (and any such Notice shall be null and void)
unless Sufficient Clearing Bids were made in the last occurring Auction of any
series of MAPS (or all shares of such series were subject to Submitted Hold
Orders) and full cumulative dividends, if any, for all series of MAPS payable
prior to such date have been paid in full. The Board of Directors of the Company
may establish a Short Dividend Period or a Long Dividend Period for the Series C
MAPS. Notice may be revoked by the Company on or prior to the Business Day prior
to the related Auction Date by telephonic and written notice (a "Notice of
Revocation") to the Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Standard Dividend Period. In addition, if
the Company has given Notice with respect to the next succeeding Dividend Period
and has not given Notice of Revocation with respect thereto, but Sufficient
Clearing Bids are not made in the Auction for the Series C MAPS (other than
because all shares of Series C MAPS were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
will, notwithstanding such Notice, be a Standard Dividend Period and the Company
may not again give a Notice (and such Notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction of a series of MAPS or an
Auction has been held in which all shares of a series of MAPS were subject to
Submitted Hold Orders.
(d) Prior to each Dividend Payment Date for the Series C MAPS, the Company
shall deposit with the Auction Agent sufficient funds for the payment of
declared dividends.
Each dividend will be payable to the holder or holders of record of Series C
MAPS as they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of the Series C MAPS.
Any dividend payment made shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable, the
earliest Dividend Quarter) for which dividends have not been paid. So long as
the Series C MAPS are held of record by the nominee of the Securities
Depositary, dividends will be paid to the nominee of the Securities Depositary
on each Dividend Payment Date. The Securities Depositary will credit the
accounts of the Agent Members of Existing Holders in accordance with the
Securities Depositary's normal procedures, which now provide for payments in
next-day funds settled through the New York Clearing House. The Agent Member of
an Existing Holder will be responsible for holding or disbursing such payments
to Existing Holders in accordance with the instructions of such Existing
Holders.
8
<PAGE>
Holders of shares of the Series C MAPS shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends. No dividends will be declared or paid or set apart for
payment on the Series C MAPS for any period unless full cumulative dividends
have been or contemporaneously are declared and paid on all series of MAPS
through the most recent applicable Dividend Payment Date for such series of
MAPS. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series C MAPS which may be in
arrears.
So long as any MAPS are Outstanding, the Company shall not declare, pay or
set aside for payment any dividend or other distribution in respect of Junior
Capital Stock or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of Junior Capital Stock unless (i) full cumulative
dividends for all past Dividend Periods (and, if applicable, for all past
Dividend Quarters) and all Dividend Payment Dates occurring on or prior to the
date of the transaction shall have been declared and paid (or declared and a sum
sufficient for payment of the dividends set apart for payment) on all such MAPS
Outstanding and (ii) the Company has redeemed (or set apart for payment a sum
sufficient for redemption) the full number of MAPS required to be redeemed after
giving any notice of an optional redemption.
The amount of dividends per share on Series C MAPS payable for each Dividend
Period (or for each Dividend Quarter) shall be computed by multiplying the
Applicable Rate for each Dividend Period (or Dividend Quarter) by a fraction,
the numerator of which shall be the number of days in the Dividend Period (or
Dividend Quarter) (calculated by counting both the last day and the first day
thereof) such share was Outstanding, and the denominator of which shall be 360
and multiplying the amount so obtained by $100,000.
(e) The dividend rate for each Dividend Period subsequent to the Initial
Dividend Period for the Series C MAPS will be, except as provided below, the
Applicable Rate.
Notwithstanding the results of any Auction or any other provision herein,
the dividend rate on the Series C MAPS shall not exceed the Maximum Applicable
Rate for any Dividend Period; provided, however, that the Board of Directors of
the Company may increase the percentages used to calculate the Maximum
Applicable Rate at any time by giving notice to the Auction Agent and the
Securities Depositary. Any such notice of increase in the percentage used to
calculate the Maximum Applicable Rate must be given to the Auction Agent not
later than 10:00 A.M. on an Auction Date. Such increases may be made by the
Board of Directors of the Company from percentages referred to in the definition
of Maximum Applicable Rate as follows: from the 150% to up to 175%, from the
200% to up to 225% and from the 225% to up to 250%, with no change to the 275%
figure. The Board of Directors of the Company may also designate higher
percentages than those referred to in the preceding sentence (including the
275%) upon receipt of an opinion of counsel to the Company to the effect that
the use of such higher percentages will not adversely affect the tax treatment
of the Series C MAPS. The provisions of the first sentence of this paragraph
notwithstanding, at any time that the application of the provisions of the next
paragraph would result in a dividend rate on the Series C MAPS being in excess
of the Maximum Applicable Rate, the maximum dividend rate applicable to such
Series C MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on the Series C MAPS or (ii)
on the Business Day next preceding any redemption date, the full redemption
price (including accumulated and unpaid dividends) to be paid on such redemption
date for any share of the Series C MAPS (in each case referred to as a "Failure
to Deposit"), then, until the full amount due shall have been paid to the
Auction Agent, Auctions will be suspended and the Applicable Rate for such
Series shall be the Default Rate as determined as of the Business Day preceding
the Failure to Deposit. If such Failure to Deposit is cured within three
Business Days as provided below, the Applicable Rate for the Dividend Period
commencing on the second Business Day following such cure will be based upon the
results of an Auction to be held on the Business Day next succeeding such cure.
Unless such a cure is effected, the Default Rate
9
<PAGE>
shall continue in effect until there shall occur a Dividend Payment Date at
least two Business Days prior to which the full amount of any dividends (whether
or not earned or declared) payable on each Dividend Payment Date prior to and
including such Dividend Payment Date, and the full amount of any redemption
price (including accumulated and unpaid dividends) then due, shall have been
paid to the Auction Agent, and thereupon Auctions shall resume on the terms
stated herein for Dividend Periods commencing with such Dividend Payment Date.
If an Auction is not held on an Auction Date for any reason (other than the
suspension of Auctions due to a Failure to Deposit), the dividend rate for the
applicable Dividend Period shall be the Maximum Applicable Rate determined as of
such Auction Date.
Any Failure to Deposit with respect to the Series C MAPS shall be deemed to
be cured if, within three Business Days of such Failure to Deposit, with respect
to a Failure to Deposit relating to (a) the payment of dividends, the Company
deposits with the Auction Agent by 12:00 noon, New York City time, all
accumulated and unpaid dividends on the Series C MAPS, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which the Failure to Deposit occurred, plus an amount computed by multiplying
the Default Rate by a fraction, the numerator of which shall be the number of
days during the period from the Dividend Payment Date in respect of which such
Failure to Deposit occurred through the day preceding the Business Day next
succeeding the Auction held following such cure and the denominator of which
shall be 360, and applying the rate obtained against the aggregate liquidation
preference of the Series C MAPS and (b) the redemption of shares of Series C
MAPS, the deposit by the Company with the Auction Agent, by 12:00 noon, New York
City time, of funds sufficient for the redemption of such shares (including
accumulated and unpaid dividends), plus an amount computed by multiplying the
Default Rate by a fraction, the numerator of which shall be the number of days
for which such Failure to Deposit is not cured in accordance with this paragraph
(including the day such Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate liquidation preference of the
shares of Series C MAPS to be redeemed, and the giving of irrevocable
instructions by the Company to apply such funds and, if applicable, the income
and proceeds therefrom, to the payment of the redemption price (including
accumulated and unpaid dividends) for such shares of the Series C MAPS. If the
Company shall have cured such Failure to Deposit by making timely payment to the
Auction Agent, the Auction Agent shall give telephonic and written notice of
such cure to each Existing Holder of MAPS at the telephone number and address
specified in such Existing Holder's Master Purchaser's Letter and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such Series for the next Business Day.
(f) The Company may give telephonic and written notice, not later than 10:00
A.M. on an Auction Date, to the Auction Agent and the Securities Depositary of
an increase in the percentage used to calculate the Maximum Applicable Rate for
the Series C MAPS. Such notice shall specify the new percentages to be used to
calculate the Maximum Applicable Rate. The Board of Directors of the Company
may establish an increase in such percentages. The Company may not revoke any
notice of an increase in the percentages used to calculate the Maximum
Applicable Rate and such percentages, once increased, may not thereafter be
decreased.
Section 3. Redemption.
The Series C MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series C MAPS may be redeemed, in
whole or from time to time in part, out of funds legally available therefor, on
any Dividend Payment Date for the Series C MAPS, upon at least fifteen but not
more than 45 days' notice, at a redemption price per share equal to the sum of
$100,000 plus an amount equal to accumulated and unpaid dividends thereon
(whether or not earned or declared) to the date that the Company pays the full
amount payable upon redemption of the shares of Series C MAPS. The Company may
only redeem Series C MAPS in whole shares. Pursuant to such right of
10
<PAGE>
optional redemption, the Company may elect to redeem some or all of the shares
of Series C MAPS without redeeming shares of any other series of MAPS or redeem
some or all of the shares of any other series of MAPS without redeeming shares
of Series C MAPS.
Upon any date fixed for redemption (unless a Failure to Deposit occurs), all
rights of the holders of shares of Series C MAPS called for redemption will
cease and terminate, except the right of such holders to receive the amounts
payable in respect of such redemption therefor, but without interest, and such
shares of the Series C MAPS will be deemed no longer Outstanding.
So long as all of the Series C MAPS to be redeemed are held of record by a
nominee of the Securities Depositary, the redemption price (including
accumulated and unpaid dividends) for such shares of the Series C MAPS will be
paid by the Company to the Securities Depositary on the redemption date for
distribution to Agent Members in accordance with its normal procedures.
(b) Any shares of Series C MAPS which shall at any time have been redeemed
or purchased by the Company shall, after such redemption or purchase, be
cancelled in the manner provided by the laws of the State of California.
Section 4. Conversion or Exchange.
The holders of shares of Series C MAPS shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of the Capital Stock of
the Company or into any other securities of the Company.
Section 5. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series C MAPS will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of $100,000 per share plus
an amount equal to accumulated and unpaid dividends on each such share (whether
or not declared) to and including the date of such distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets of the Company are insufficient to pay the holders of the Series C
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series C MAPS will share ratably in any such
distribution of such assets with holders of Parity Capital Stock. Unless and
until payment in full has been made to holders of the Series C MAPS of the
liquidation distributions to which they are entitled as described in this
paragraph, no dividends or distributions will be made to holders of the
Company's Junior Capital Stock, and no purchase, redemption or other acquisition
for any consideration by the Company will be made in respect of the Company's
Junior Capital Stock. After the payment to the holders of the Series C MAPS of
the full amount of the preferential liquidation distributions to which they are
entitled pursuant to this paragraph, such holders (in their capacity as such
holders) will have no right or claim to any of the remaining assets of the
Company. Neither the consolidation nor the merger of the Company with or into
any other corporation or corporations, nor the sale or transfer by the Company
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Company for purposes of this Section 5.
11
<PAGE>
Section 6. Voting Rights.
(a) Holders of the Series C MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series C MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series C
MAPS which are then exercisable (the Series C MAPS and all such other securities
being referred to as the "Parity Securities") shall be in arrears for at least
180 consecutive days and shall not have been paid in full (a "Default Period"),
the holders of record of the Parity Securities voting as described below will be
entitled to elect two directors to the Board of Directors (the "Additional
Directors") whether or not the Board of Directors of the Company has taken
appropriate action to increase the established number of directors of the
Company by two, and the holders of the Common Stock as a class, shall be
entitled to elect the remaining number of directors.
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called a
special meeting of the holders of Parity Securities by mailing or causing to be
mailed to such holders a notice of such special meeting to be held not less than
ten and not more than 45 days after the date such notice is given. If the Board
of Directors of the Company does not call or cause to be called such a special
meeting, it may be called by any of such holders on like notice. The record
date for determining the holders of the Parity Securities entitled to notice of
and to vote at such special meeting will be the close of business on the
Business Day preceding the day on which such notice is mailed. At any such
special meeting, such holders, by plurality vote, voting together as a single
class without regard to series (to the exclusion of the holders of Junior
Capital Stock) will be entitled to elect two directors on the basis of one vote
per $100,000 liquidation preference (excluding amounts in respect of accumulated
and unpaid dividends). The holder or holders of one-third of the Parity
Securities then outstanding, present in person or by proxy, will constitute a
quorum for the election of the Additional Directors except as otherwise provided
by law. Notice of all meetings at which holders of the Series C MAPS shall be
entitled to vote will be given to such holders at their addresses as they appear
on the register of the Company. If a Default Period shall terminate after the
notice of a special meeting has been given but before such special meeting has
been held, the Company shall, as soon as practicable after such termination,
mail or cause to be mailed notice of such termination to holders of the Parity
Securities that would have been entitled to vote at such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or, in
the event there is no remaining Additional Director, by vote of the holders of
the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
12
<PAGE>
(b) Except as provided below, so long as any Series C MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the MAPS then outstanding (taken together as a single
class), given in person or by proxy, either in writing or at a meeting (voting
separately as a single class), (i) authorize, create or issue, or increase the
authorized amount of, any Capital Stock of the Company of any class ranking, as
to dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the Series C MAPS, or reclassify any authorized Capital Stock of the
Company into any such Capital Stock, or authorize, create or issue any
obligation or security convertible into or evidencing the right to purchase any
such Capital Stock, or (ii) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation, share
exchange, division or otherwise, so as to adversely affect any preference,
limitation or special right of the Series C MAPS.
Except as provided by law, the consent of the holders of the Series C MAPS
is not required and such holders are not entitled to vote upon (i) the
authorization, creation, issuance or increase in the authorized amount of the
Common Stock, additional series of MAPS or any Capital Stock of the Company of
any class ranking, as to dividends and upon the liquidation, dissolution or
winding up of the Company, on a parity with or junior to the Series C MAPS or
(ii) any merger, consolidation, share exchange or division of the Company (or
any successor corporation) with or into another corporation the result of which
is that the Series C MAPS that may be Outstanding from time to time may be
junior to any preferred shares of such corporation as to dividends and upon the
liquidation, dissolution or winding up of the surviving corporation if on or
prior to the date of effectiveness of such merger or consolidation, the Company
shall have given Moody's and S&P written notice of such merger or consolidation
and Moody's and S&P shall have confirmed in writing that the transaction will
not adversely affect the then existing rating for the MAPS. If either Moody's or
S&P shall change its rating categories for preferred stock, then the
determination of whether the transaction will not adversely affect the then
existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the Series
C MAPS necessary to make such a determination, such determination will be made
based upon the substantial equivalent of either or both of such ratings by a
Substitute Rating Agency or two Substitute Rating Agencies or, in the event that
only one such rating shall be available, based upon such available rating. If an
alternative nationally recognized securities rating agency or agencies are not
available, then for purposes of such determination the rating for the Series C
MAPS shall be deemed to be the highest relevant rating last published by
Moody's, S&P or any such Substitute Rating Agency.
Section 7. Sinking Fund.
Shares of Series C MAPS are not subject or entitled to the benefit of a
sinking fund.
13
<PAGE>
ARTICLE THREE
AUCTION PROCEDURES
Section 1. Definitions.
Capitalized terms not defined in this Section 1 shall have the respective
meanings specified in Section 1 of ARTICLE TWO. As used in this ARTICLE THREE,
the following terms have the following meanings:
(a) "Affiliate" means any Person controlled by, in control of or under
common control with the Company.
(b) "Applicable Determining Rate" means, (i) for any Standard Dividend
Period or Short Dividend Period of 183 days or less, the Applicable "AA"
Composite Commercial Paper Rate, (ii) for any Short Dividend Period of 184 to
364 days, the Applicable Treasury Bill Rate and (iii) for any Long Dividend
Period, the Applicable Treasury Note Rate.
(c) "Available Shares of Series C MAPS" has the meaning specified in Section
4(a) of this ARTICLE THREE.
(d) "Bid" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(e) "Bidder" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(f) "Hold Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(g) "Order" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(h) "Sell Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(i) "Submission Deadline" means 1:00 P.M., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified from
time to time by the Auction Agent as the time prior to which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for the
Auction to be conducted on such Auction Date.
(j) "Submitted Bid" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(k) "Submitted Hold Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(l) "Submitted Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(m) "Submitted Sell Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(n) "Winning Bid Rate" has the meaning specified in Section 4(a) of this
ARTICLE THREE.
14
<PAGE>
Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series C MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information as
to:
(A) the number of Outstanding shares of Series C MAPS, if any, held
by such Existing Holder that such Existing Holder desires to continue to
hold without regard to the Applicable Rate for the next succeeding Dividend
Period;
(B) the number of Outstanding shares of Series C MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell, provided
that the Applicable Rate for the next succeeding Dividend Period is less
than the rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding shares of Series C MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell without
regard to the Applicable Rate for the next succeeding Dividend Period; and
(ii) each Broker-Dealer, using a list of Potential Holders that shall be
maintained in accordance with the provisions set forth in the Broker-Dealer
Agreement for the purpose of conducting a competitive Auction, shall contact
both Existing Holders and Potential Holders, including Existing Holders with
respect to an offer by any such Existing Holder to purchase additional
shares of Series C MAPS, on such list to notify such Existing Holders and
Potential Holders as to the length of the next Dividend Period and (A) with
respect to any Short Dividend Period or Long Dividend Period, the Dividend
Payment Date(s) and (B) with respect to any Long Dividend Period, any dates
before which shares of Series C MAPS may not be redeemed and any redemption
premium applicable in an optional redemption and to determine the number of
Outstanding shares of Series C MAPS, if any, with respect to which each such
Existing Holder desires to submit an Order and each such Potential Holder
desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i) or (ii) of this Subsection (a) is
hereinafter referred to as an "Order" and each Existing Holder and each
Potential Holder placing an Order is hereinafter referred to as a "Bidder,"
an Order containing the information referred to in clause (i)(A) of this
Subsection (a) is hereinafter referred to as a "Hold Order," an Order
containing the information referred to in clause (i)(B) or (ii) of this
Subsection (a) is hereinafter referred to as a "Bid;" and an Order
containing the information referred to in clause (i)(C) of this Subsection
(a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series C MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
less than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
C MAPS to be determined as set forth in Subsections (a)(iv) and (c) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein; or
(C) a lesser number of Outstanding shares of Series C MAPS to be
determined as set forth in Subsections (b)(iii) and (c) of Section 5 of this
ARTICLE THREE if such specified rate per annum shall be higher than the
Maximum Applicable Rate and Sufficient Clearing Bids do not exist.
15
<PAGE>
(ii) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of Series C MAPS specified
in such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series
C MAPS to be determined as set forth in Subsections (b)(iii) and (c) of
Section 5 of this ARTICLE THREE if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer
to purchas e:
(A) the number of Outstanding shares of Series C MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
C MAPS to be determined as set forth in Subsections (a)(v) and (d) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein.
(c) Orders may be submitted for whole shares of MAPS only. Orders submitted
for fractional shares of MAPS shall not be valid.
Section 3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior to
the Submission Deadline on each Auction Date for the Series C MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of Outstanding shares of Series C MAPS that
are the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder;
(A) the number of Outstanding shares of Series C MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series C MAPS, if any,
subject to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(C) the number of Outstanding shares of Series C MAPS, if any,
subject to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed
submitted by a Broker-Dealer is hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order.")
16
<PAGE>
(b) If any rate per annum specified in any Submitted Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(c) If one or more Orders covering in the aggregate all of the Outstanding
shares of Series C MAPS held by an Existing Holder are not submitted to the
Auction Agent prior to the Submission Deadline for any reason (including the
failure of a Broker-Dealer to contact such Existing Holder or to submit such
Existing Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of Series C
MAPS held by such Existing Holder that are not subject to Orders submitted to
the Auction Agent.
(d) A Submitted Order or Submitted Orders of an Existing Holder that cover
in the aggregate more than the number of Outstanding shares of Series C MAPS
held by such Existing Holder will be considered valid in the following order of
priority:
(i) any Submitted Hold Order of such Existing Holder will be
considered valid up to and including the number of Outstanding shares of
Series C MAPS held by such Existing Holder, provided that, if there is more
than one such Submitted Hold Order and the aggregate number of shares of
Series C MAPS subject to such Submitted Hold Orders exceeds the number of
Outstanding shares of Series C MAPS held by such Existing Holder, the number
of shares of Series C MAPS subject to each such Submitted Hold Order will be
reduced pro rata so that such Submitted Hold Orders in the aggregate will
cover exactly the number of Outstanding shares of Series C MAPS held by such
Existing Holder;
(ii) any Submitted Bids of such Existing Holder will be considered
valid (in the ascending order of their respective rates per annum if there
is more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of Series C MAPS held by such Existing Holder equal to
the difference between (A) the number of Outstanding shares of Series C MAPS
held by such Existing Holder and (B) the number of Outstanding shares of
Series C MAPS subject to any Submitted Hold Order of such Existing Holder
referred to in clause (d)(i) above (and, if more than one Submitted Bid of
such Existing Holder specifies the same rate per annum and together they
cover more than the remaining number of shares of Series C MAPS that can be
the subject of valid Submitted Bids of such Existing Holder after
application of clause (d)(i) above and of the foregoing portion of this
clause (d)(ii) to any Submitted Bid or Submitted Bids of such Existing
Holder specifying a lower rate or rates per annum, the number of shares of
Series C MAPS subject to each of such Submitted Bids specifying the same
rate per annum will be reduced pro rata so that such Submitted Bids, in the
aggregate, cover exactly such remaining number of Outstanding shares of
Series C MAPS of such Existing Holder);
(iii) any Submitted Sell Order of such Existing Holder will be
considered valid up to and including the excess of the number of Outstanding
shares of Series C MAPS held by such Existing Holder over the sum of (A) the
number of shares of Series C MAPS subject to Submitted Hold Orders by such
Existing Holder referred to in clause (d)(i) above and (B) the number of
shares of Series C MAPS subject to valid Submitted Bids by such Existing
Holder referred to in clause (d)(ii) above; provided that, if there is more
than one Submitted Sell Order of such Existing Holder and the number of
shares of Series C MAPS subject to such Submitted Sell Orders is greater
than such excess, the number of shares of Series C MAPS subject to each of
such Submitted Sell Orders will be reduced pro rata so that such Submitted
Sell Orders, in the aggregate, will cover exactly the number of shares of
Series C MAPS equal to such excess.
The number of Outstanding shares of Series C MAPS, if any, subject to Submitted
Bids of such Existing Holder not valid under clause (d)(ii) above shall be
treated as the subject of a Submitted Bid by a Potential Holder at the rate per
annum specified in such Submitted Bids.
17
<PAGE>
(e) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of Series C MAPS
specified therein.
Section 4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date for the
Series C MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(i) the excess of the total number of Outstanding shares of Series C
MAPS over the number of shares of Series C MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series C MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series C MAPS that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than the
Maximum Applicable Rate exceeds or is equal to the sum of:
(A) the number of Outstanding shares of Series C MAPS that are the
subject of Submitted Bids by Existing Holders specifying one or more rates
per annum higher than the Maximum Applicable Rate, and
(B) the number of Outstanding shares of Series C MAPS that are
subject to Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of Series C MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series C MAPS are the subject
of Submitted Hold Orders), there shall exist "Sufficient Clearing Bids" and
such Submitted Bids by Potential Holders shall be hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the winning bid rate (the
"Winning Bid Rate"), which shall be the lowest rate per annum specified in
the Submitted Bids that if:
(A) each Submitted Bid from Existing Holders specifying the Winning
Bid Rate and all other Submitted Bids from Existing Holders specifying lower
rates per annum were accepted, thus entitling such Existing Holders to
continue to hold the shares of Series C MAPS that are the subject of such
Submitted Bids, and
(B) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential Holders
specifying lower rates per annum were accepted, thus entitling such
Potential Holders to purchase the shares of Series C MAPS that are the
subject of such Submitted Bids,
would result in such Existing Holders described in subclause (iii)(A) continuing
to hold an aggregate number of Outstanding shares of Series C MAPS that, when
added to the number of Outstanding shares of Series C MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series C MAPS.
(b) In connection with any Auction and promptly after the Auction Agent has
made the determinations pursuant to Subsection (a), the Auction Agent shall
advise the Company of the Maximum
18
<PAGE>
Applicable Rate and, based on such determinations, the Applicable Rate for the
next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(ii) if Sufficient Clearing Bids do not exist (other than because all
of the Outstanding shares of Series C MAPS are the subject of Submitted Hold
Orders), that the next succeeding Dividend Period will be a Standard
Dividend Period and the Applicable Rate for the next succeeding Dividend
Period shall be equal to the Maximum Applicable Rate for a Standard Dividend
Period determined as of the Business Day immediately preceding such Auction;
or
(iii) if all of the Outstanding shares of Series C MAPS are the subject
of Submitted Hold Orders, that the Applicable Rate for the next succeeding
Dividend Period shall be equal to 59% of the Applicable "AA" Composite
Commercial Paper Rate, in the case of Series C MAPS with a Standard Dividend
Period or a Short Dividend Period of 183 days or less, 59% of the Applicable
Treasury Bill Rate in the case of Series C MAPS with a Short Dividend Period
of 184 to 364 days, or 59% of the Applicable Treasury Note Rate in the case
of Series C MAPS with a Long Dividend Period, in effect on the Auction Date.
Section 5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares of Series C MAPS.
Based on the determinations made pursuant to Subsection (a) of Section 4,
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Auction Agent shall take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, subject to the provisions of
Subsections (c) and (d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted
and the Submitted Bid of each of the Existing Holders specifying any rate
per annum that is higher than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of Series
C MAPS that are the subject of such Submitted Sell Order or Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the Outstanding
shares of Series C MAPS that are the subject of such Submitted Bid;
(iii) the Submitted Bid of each of the Potential Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted, thus
entitling each such Existing Holder to continue to hold the Outstanding
shares of Series C MAPS that are the subject of such Submitted Bid, unless
the number of Outstanding shares of Series C MAPS subject to all such
Submitted Bids shall be greater than the number of Outstanding shares of
Series C MAPS ("Remaining Shares of Series C MAPS") equal to the excess of
the Available Shares of Series C MAPS over the number of Outstanding shares
of Series C MAPS subject to Submitted Bids described in Subsections (a)(ii)
and (a)(iii), in which event the Submitted Bids of each such Existing Holder
shall be rejected, and each such Existing Holder
19
<PAGE>
shall be required to sell Outstanding shares of Series C MAPS, but only in
an amount equal to the difference between (A) the number of Outstanding
shares of Series C MAPS then held by such Existing Holder subject to such
Submitted Bid and (B) the number of shares of Series C MAPS obtained by
multiplying (x) the number of Remaining Shares of Series C MAPS by (y) a
fraction, the numerator of which shall be the number of Outstanding shares
of Series C MAPS held by such Existing Holder subject to such Submitted Bid
and the denominator of which shall be the aggregate number of Outstanding
shares of Series C MAPS subject to such Submitted Bids made by all such
Existing Holders that specified a rate per annum equal to the Winning Bid
Rate; and
(v) the Submitted Bid of each of the Potential Holders specifying a rate
per annum that is equal to the Winning Bid Rate shall be accepted, but only
in an amount equal to the number of Outstanding shares of Series C MAPS
obtained by multiplying (x) the difference between the Available Shares of
Series C MAPS and the number of Outstanding shares of Series C MAPS subject
to Submitted Bids described in Subsections (a)(ii), (a)(iii) and (a)(iv) by
(y) a fraction, the numerator of which shall be the number of Outstanding
shares of Series C MAPS subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of Series C MAPS
subject to such Submitted Bids made by all such Potential Holders that
specified rates per annum equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all
of the Outstanding shares of Series C MAPS are subject to Submitted Hold
Orders), subject to the provisions of Subsection (c), Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids of Potential Holders shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus entitling such Existing Holder to continue to hold the
Outstanding shares of Series C MAPS that are the subject of such Submitted
Bid;
(ii) the Submitted Bid of each Potential Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of Series C MAPS that are the subject of such Submitted Bid; and
(iii) the Submitted Bids of each Existing Holder specifying any rate per
annum that is higher than the Maximum Applicable Rate shall be rejected,
thus requiring each such Existing Holder to sell the Outstanding shares of
Series C MAPS that are the subject of such Submitted Bid, and the Submitted
Sell Orders of each Existing Holder shall be accepted, in both cases only in
an amount equal to the difference between (A) the number of Outstanding
shares of Series C MAPS then held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (B) the number of shares of Series
C MAPS obtained by multiplying (x) the difference between the Available
Shares of Series A MAPS and the aggregate number of Outstanding shares of
Series C MAPS subject to Submitted Bids described in Subsections (b)(i) and
(b)(ii) by (y) a fraction, the numerator of which shall be the number of
Outstanding shares of Series C MAPS held by such Existing Holder subject to
such Submitted Bid or Submitted Sell Order and the denominator of which
shall be the aggregate number of Outstanding shares of Series C MAPS subject
to all such Submitted Bids and Submitted Sell Orders.
(c) If, as a result of the procedures described in Subsections (a) or (b),
any Existing Holder would be entitled or required to sell or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
Series C MAPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of shares of
Series C MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series C MAPS will be entitled
or required to be sold or purchased.
20
<PAGE>
(d) If, as a result of the procedures described in Subsection (a), any
Potential Holder would be entitled or required to purchase less than a whole
share of Series C MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series C
MAPS for purchase among Potential Holders so that only whole shares of Series C
MAPS are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of Series C MAPS on such Auction Date.
(e) Based on the results of each Auction, the Auction Agent shall determine,
with respect to each Broker-Dealer that submitted Bids or Sell Orders on behalf
of Existing Holders or Potential Holders, the aggregate number of Outstanding
shares of Series C MAPS to be purchased and the aggregate number of Outstanding
shares of Series C MAPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares of
Series C MAPS to be purchased and such aggregate number of Outstanding shares of
Series C MAPS to be sold differ, the Auction Agent shall determine to which
other Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers such Broker-Dealer shall receive, as the case may
be, Outstanding shares of Series C MAPS.
Section 6. Participation in Auctions.
The Company and its Affiliates shall not submit any Order in any Auction
except as set forth in the next sentence. Any Broker-Dealer that is an
Affiliate of the Company may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-Dealer holds
shares of Series C MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series C MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series C MAPS only pursuant to a Bid or Sell Order in accordance with the
procedures described in these Auction Procedures or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master Purchaser's
Letter to a Broker-Dealer, provided that in the case of all transfers other than
pursuant to Auctions such Existing Holder, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer and (b) unless otherwise required by
law, shall have the beneficial ownership of the shares of Series C MAPS held by
it maintained in book-entry form by the Securities Depositary in the account of
its Agent Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. All of the Outstanding shares of Series C MAPS of each
Series shall be represented by a single certificate for each Series registered
in the name of the nominee of the Securities Depositary unless otherwise
required by law or unless there is no Securities Depositary. If there is no
Securities Depositary, shares of Series C MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor and
be required to deliver a certificate therefor upon transfer or exchange thereof.
21
<PAGE>
RESOLVED FURTHER, that the Chairman of the Board, the President or any Vice
President, and the Secretary, the Chief Financial Officer, the Treasurer, or any
Assistant Secretary or Assistant Treasurer of this Company are each authorized
to execute, verify, and file a certificate of determination of preferences in
accordance with California law.
3. The authorized number of shares of Preferred Stock of the Company is
20,000,000, and the number of shares constituting Series C MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
November 17, 1993.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY, President
/s/ LOUIS L. GONDA
---------------------------------------------
LOUIS L. GONDA, Secretary
The undersigned, STEVEN F. UDVAR-HAZY and LOUIS L. GONDA, the President and
Secretary, respectively, of INTERNATIONAL LEASE FINANCE CORPORATION, each
declares under penalty of perjury that the matters set forth in the foregoing
Certificate are true of his own knowledge.
Executed at Los Angeles, California on November 17, 1993.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY
/s/ LOUIS L. GONDA
---------------------------------------------
LOUIS L. GONDA
22
<PAGE>
EXHIBIT 3.3
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF PREFERRED STOCK OF
INTERNATIONAL LEASE FINANCE CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Steven F. Udvar-Hazy and Louis L. Gonda hereby certify
that:
1. They are the duly elected and acting President and Secretary,
respectively, of International Lease Finance Corporation (the "Company").
2. Pursuant to authority given by the Company's Restated Articles of
Incorporation, a duly appointed committee (the "Special Committee") of the Board
of Directors of the Company (such committee having been previously authorized to
exercise the powers of the Board of Directors as to the subject matter), has
duly adopted the following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Company provide for a
class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of the Company is authorized to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them; and
WHEREAS, the Company desires, pursuant to its authority as aforesaid, to
determine and fix the rights, preferences, privileges, and restrictions relating
to a series of said Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
determines the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to, said series of
Preferred Stock as follows:
ARTICLE ONE
DESIGNATION
Section 1. Designation.
A series of Preferred Stock shall be designated "Market Auction Preferred
Stock, Series D" (the "Series D MAPS").
Section 2. Amount.
The number of shares constituting Series D MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES D MAPS--GENERAL PROVISIONS.
Section 1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Additional Directors" has the meaning specified in Section 6(a) of
this ARTICLE TWO.
(b) "Agent Member" means the member of the Securities Depositary that will
act on behalf of an Existing Holder or a Potential Holder and that is identified
as such in such Existing Holder's or Potential Holder's Master Purchaser's
Letter.
(c) "Applicable 'AA' Composite Commercial Paper Rate," on any date, shall
mean in the case of any Standard Dividend Period or Short Dividend Period of (1)
49 days or more but less than 70 days, the interest equivalent of the 60-day
rate, (2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or more
but less than 148 days, the arithmetic average of the interest equivalent of the
90-day and 180-day rates, and (5) 148 days or more but less than 184 days, the
interest equivalent of the 180-day rate, in each case, on commercial paper
placed on behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa"
by Moody's, or the equivalent of such rating by another rating agency, as made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date. In the event that the
Federal Reserve Bank of New York does not make available any of the foregoing
rates, then such rates shall be the 60-day rate or arithmetic average of such
rates, as the case may be, as quoted on a discount basis or otherwise, by
Commercial Paper Dealers to the Auction Agent as of the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to provide
such rate or rates or, if the Company does not select any Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealers. "Substitute Commercial Paper Dealer" means Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers Inc or
their respective affiliates or successors or, if no such dealer furnishes such
quotations, a leading dealer in the commercial paper market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" means the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
(d) "Applicable Rate" means the rate per annum, resulting from the next
preceding Auction, at which dividends are payable on the shares of Series D MAPS
for any Dividend Period.
(e) "Applicable Treasury Bill Rate" for any Short Dividend Period in excess
of 183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of the
Federal Reserve System (the "Board") in "Federal Reserve Statistical Release
H.15(519)-Selected Interest Rates," or any successor publication by the Board,
within five Business Days preceding such date. In the event that the Board does
not publish such rate, or if such release is not available, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate will be the arithmetic mean
of the secondary market bid rate as of approximately 3:30 P.M., New York City
time, on the Business Day next preceding such date of the U.S. Government
Securities Dealers furnished to
2
<PAGE>
the Auction Agent for the issue of direct obligations of the United States
Treasury, in an aggregate principal amount of at least $1,000,000 with a
remaining maturity equal to, or next lower than, the length of such Short
Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by any Substitute U.S. Government
Securities Dealer or Dealers selected by the Company to provide such rate or
rates or, if the Company does not select any such Substitute U.S. Government
Securities Dealer or Dealers, by the remaining U.S. Government Securities
Dealer (if any); provided that, if the Company is unable to cause such
quotations to be furnished to the Auction Agent by such sources, the Company may
cause such rates to be furnished to the Auction Agent by such alternative source
as the Company in good faith deems to be reliable. "Substitute U.S. Government
Securities Dealers" means Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated or Salomon Brothers Inc or their respective affiliates or
successors or, if no such dealer provides such quotes, a leading dealer in the
government securities market selected by the Company in good faith. For
purposes of this definition, the "interest equivalent" of a rate stated on a
discount basis shall be equal to the quotient of (A) the discount rate divided
by (B) the difference between 1.00 and the discount rate.
(f) "Auction Agent" means Chemical Bank, or its successors, or any other
bank or trust company appointed by a resolution of the Board of Directors of the
Company, or its Special Committee, which enters into an agreement with the
Company to follow the Auction Procedures set forth in ARTICLE THREE hereof.
(g) "Auction Date" means the first Business Day preceding the first day of a
Dividend Period other than the Initial Dividend Period.
(h) "Broker-Dealer" means any broker-dealer, or other entity permitted by
law to perform the functions required of a Broker-Dealer in ARTICLE THREE, that
has been selected by the Company and has entered into a Broker-Dealer Agreement
with the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in ARTICLE THREE.
(j) "Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
New York City are authorized or obligated by law to close.
(k) "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Commercial Paper Dealers" means Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. or, in lieu of either thereof, their respective affiliates
or successors.
(n) "Common Stock" means all shares now or hereafter authorized of the class
of Common Stock of the Company presently authorized and any other shares into
which such shares may hereafter be changed from time to time.
(o) "Date of Original Issue" means the date on which the Company initially
issues shares of Series D MAPS.
3
<PAGE>
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(q) "Default Rate" means the Applicable Determining Rate multiplied by the
percentage, as it may be adjusted from time to time, shown opposite the lowest
Credit Ratings category in the definition of Maximum Applicable Rate, determined
as of the Business Day preceding a Failure to Deposit.
(r) "Dividend Payment Date" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(s) "Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(t) "Dividend Quarter" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(u) "Dividends-Received Deduction" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(v) "Existing Holder," means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of Series D MAPS in the
records of the Auction Agent.
(w) "Failure to Deposit" has the meaning specified in Section 2(e) of this
ARTICLE TWO.
(x) "Initial Dividend Payment Date" means February 7, 1994.
(y) "Initial Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(z) "Initial Dividend Rate" has the meaning specified in Section 2(a) of
this ARTICLE TWO.
(aa) "Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the Series D MAPS with respect to
the payment of dividends or the distribution of assets upon liquidation.
(ab) "Long Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(ac) "MAPS" means all shares of each series of the Company's Market Auction
Preferred Stock now or hereafter authorized.
(ad) "Maximum Applicable Rate," on any Auction Date, shall mean the rate per
annum obtained by multiplying the Applicable Determining Rate on such Auction
Date by a percentage (as it may be adjusted from time to time by the Company)
determined as set forth below based on the lower of the credit ratings assigned
to the Series D MAPS by Moody's and S&P (or if Moody's or S&P or both shall not
make such rating available, the equivalent of either or both of such ratings by
a Substitute Rating Agency or two Substitute Rating Agencies, as the case may
be, or in the event that only one such rating shall be available, the percentage
shall be based on such rating).
<TABLE>
<CAPTION>
Credit Ratings Applicable Percentage
-------------------- of Applicable
Moody's S&P Determining Rate
---------------- -------------- ---------------------
<S> <C> <C>
"aa3" or Above AA-- or Above 150%
"a3" to "a1" A-- to A+ 200%
"baa3" to "baa1" BBB-- to BBB+ 225%
Below "baa3" Below BBB-- 275%
</TABLE>
4
<PAGE>
(ae) "Master Purchaser's Letter" means a letter addressed to the Company,
the Auction Agent and a Broker-Dealer in which a Person agrees, among other
things, to offer to purchase, purchase, offer to sell or sell shares of Series D
MAPS as set forth in ARTICLE THREE.
(af) "Minimum Holding Period" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(ag) "Moody's" means Moody's Investors Service, Inc.
(ah) "Normal Dividend Payment Date" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ai) "Notice" has the meaning specified in Section 2(c) of this ARTICLE TWO.
(aj) "Notice of Long Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(ak) "Notice of Revocation" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(al) "Notice of Short Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(am) "Outstanding" means, as of any date, shares of MAPS theretofore issued
by the Company except, without duplication, (i) any shares of MAPS theretofore
cancelled, delivered to the Company for cancellation or redeemed and (ii) as of
any Auction Date, any shares of MAPS subject to redemption on the next following
Business Day.
(an) "Parity Capital Stock" means any and all shares of Capital Stock of the
Company ranking on a parity with or equal to the Series D MAPS as to the payment
of dividends and distribution of assets.
(ao) "Parity Securities" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(ap) "Person" means and includes an individual, a partnership, a
corporation, a trust, an unincorporated association, a joint venture or other
entity or a government or any agency or political subdivision thereof.
(aq) "Potential Holder" means any Person, including any Existing Holder, (i)
who has executed a Master Purchaser's Letter and (ii) who may be interested in
acquiring shares of Series D MAPS (or, in the case of an Existing Holder,
additional shares of Series D MAPS).
(ar) "Preferred Stock" means all shares now or hereafter authorized of the
class of Preferred Stock, without par value, of the Company, including the
shares of MAPS of any series.
(as) "S&P" means Standard & Poor's Corporation.
(at) "Securities Depositary" means The Depository Trust Company and its
successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
Securities Depositary in connection with shares of Series D MAPS.
(au) "Short Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(av) "Standard Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(aw) "Subsequent Dividend Period" has the meaning specified in Section 2(c)
of this ARTICLE TWO.
5
<PAGE>
(ax) "Subsequent Dividend Period Days" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ay) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934, as amended) selected by the
Company, subject to the approval by Morgan Stanley and Lehman Brothers, such
approval not to be unreasonably withheld.
(az) "Sufficient Clearing Bids" has the meaning specified in Section 4(a) of
ARTICLE THREE.
(ba) "U.S. Government Securities Dealers" shall mean Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. or, in lieu of either thereof, their
respective affiliates or successors.
Section 2. Dividends.
(a) Holders of Series D MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Restated Articles of Incorporation of the
Company, cumulative cash dividends at the Applicable Rate, determined as set
forth below, payable on the respective dates set forth below that may be
applicable with respect to such Series D MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of 2.92% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series D
MAPS will be the Applicable Rate, determined as set forth herein, and will be
payable on the respective dates set forth below.
(b) Dividends on the Series D MAPS will accumulate (whether or not declared)
from the Date of Original Issue. Except for the Initial Dividend Payment Date,
dividends on the Series D MAPS with a Standard Dividend Period will be payable,
except as provided below, on each seventh Monday following the preceding
Dividend Payment Date. Dividends on the Series D MAPS with a Short Dividend
Period will be payable, except as provided below, on the day following the last
day of such Short Dividend Period and will also be payable on such other dates
as are established at the time such Short Dividend Period is determined.
Dividends on the Series D MAPS with a Long Dividend Period will be payable,
except as provided below, on the day following the last day of such Long
Dividend Period and on the first day of the fourth calendar month after the
commencement of such Long Dividend Period and quarterly thereafter on the first
day of each applicable month. Each day on which dividends on Series D MAPS
would be payable as determined as set forth in this paragraph but for the
adjustments set forth below is referred to herein as a "Normal Dividend Payment
Date."
(i) In the case of dividends payable on Series D MAPS with a Standard
Dividend Period or a Short Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available
to Agent Members the amounts due as dividends on the Series D MAPS in next-
day funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day preceding such Normal Dividend Payment
Date that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on Series D MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
6
<PAGE>
(ii) In the case of dividends payable on Series D MAPS with a Long
Dividend Period, if :
(A)(1) the Securities Depositary shall continue to make available
to Agent Members the amounts due as dividends on the Series D MAPS in next-
day funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent
Members the amounts due as dividends on the Series D MAPS in immediately
available funds on the dates on which such dividends are payable (and the
Securities Depositary shall have so advised the Auction Agent) and (2) a
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment
Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on Series D MAPS would be payable as determined as set
forth in the preceding paragraphs is a day that would result in the number of
days between successive Auction Dates (determined by excluding the first Auction
Date and including the second Auction Date) not being at least equal to the
then-current minimum holding period (currently set forth in Section 246(c) of
the Code) (the "Minimum Holding Period") required for corporate taxpayers to be
entitled to the dividends-received deduction on preferred stock held by
nonaffiliated corporations (currently set forth in Section 243(a) of the Code)
(the "Dividends-Received Deduction"), then dividends on the Series D MAPS shall
be payable on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day that results in the
number of days between such successive Auction Dates (determined as set forth
above) being at least equal to the then-current Minimum Holding Period.
Each date on which dividends on Series D MAPS shall be payable as determined
as set forth above is referred to herein as a "Dividend Payment Date". If
applicable, the period from the preceding Dividend Payment Date to the next
Dividend Payment Date for Series D MAPS with a Long Dividend Period is hereby
referred to as a "Dividend Quarter." Although any particular Dividend Payment
Date may not occur on the originally scheduled Normal Dividend Payment Date
because of the adjustments set forth above, each succeeding Dividend Payment
Date will be, subject to such adjustments, the date determined as set forth
above as if each preceding Dividend Payment Date had occurred on the respective
originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend Payment
Dates shall automatically be adjusted so that there shall be a uniform number of
days in subsequent Dividend Periods (such number of days without giving effect
to the adjustment referred to above being referred to herein as the "Subsequent
Dividend Period Days") commencing after the date of such change in law equal to
or to the extent necessary, in excess of the then-current Minimum Holding
Period, provided that the number of Subsequent Dividend Period Days shall not
exceed by more than nine days the length of such then-current Minimum Holding
Period and shall be evenly divisible by seven, and the maximum number of
Subsequent Dividend Period Days, as adjusted pursuant to this provision, in no
event shall exceed 119 days.
(c) After the Initial Dividend Period for the Series D MAPS, each
subsequent Dividend Period will (except for the adjustments for non-Business
Days described above) be 49 days (each such 49-day period, subject to any
adjustment as a result of a change in law altering the Minimum Holding Period as
described above, being herein referred to as a "Standard Dividend Period"),
unless the Company specifies that any such subsequent Dividend Period will be a
Dividend Period of 50 to 364 days and consisting of a whole number of weeks (a
"Short Dividend Period") or a Dividend Period of one year or longer (a "Long
Dividend Period").
7
<PAGE>
Each such Standard Dividend Period, Short Dividend Period and Long Dividend
Period (together with the period commencing on the Date of Original Issue and
ending on the Initial Dividend Payment Date for the Series D MAPS (the "Initial
Dividend Period")) being referred to herein as a "Dividend Period." After the
Initial Dividend Period for the Series D MAPS, each successive Dividend Period
will commence on the Dividend Payment Date for the preceding Dividend Period and
will end (i) in the case of a Standard Dividend Period, on the day preceding the
next Dividend Payment Date and (ii) in the case of a Short Dividend Period or a
Long Dividend Period, on the last day of the Short Dividend Period or the Long
Dividend Period specified by the Company in the related Notice.
The Company may give telephonic and written notice, not less than ten and
not more than 30 days prior to an Auction Date, to the Auction Agent and the
Securities Depositary that the next succeeding Dividend Period will be a Short
Dividend Period (a "Notice of Short Dividend Period") or a Long Dividend Period
(a "Notice of Long Dividend Period" and, together with a Notice of Short
Dividend Period, a "Notice"). Each such Notice will specify (i) the next
succeeding Dividend Period as a Short Dividend Period or a Long Dividend Period,
(ii) the term thereof, (iii) in the case of any Long Dividend Period, additional
redemption provisions or restrictions on redemption, if any, and (iv) the
Dividend Payment Dates; provided that, for any Auction occurring after the
initial Auction, the Company may not give a Notice of a Short Dividend Period or
a Notice of a Long Dividend Period (and any such Notice shall be null and void)
unless Sufficient Clearing Bids were made in the last occurring Auction of any
series of MAPS (or all shares of such series were subject to Submitted Hold
Orders) and full cumulative dividends, if any, for all series of MAPS payable
prior to such date have been paid in full. The Board of Directors of the Company
may establish a Short Dividend Period or a Long Dividend Period for the Series D
MAPS. Notice may be revoked by the Company on or prior to the Business Day prior
to the related Auction Date by telephonic and written notice (a "Notice of
Revocation") to the Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Standard Dividend Period. In addition, if
the Company has given Notice with respect to the next succeeding Dividend Period
and has not given Notice of Revocation with respect thereto, but Sufficient
Clearing Bids are not made in the Auction for the Series D MAPS (other than
because all shares of Series D MAPS were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
will, notwithstanding such Notice, be a Standard Dividend Period and the Company
may not again give a Notice (and such Notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction of a series of MAPS or an
Auction has been held in which all shares of a series of MAPS were subject to
Submitted Hold Orders.
(d) Prior to each Dividend Payment Date for the Series D MAPS, the Company
shall deposit with the Auction Agent sufficient funds for the payment of
declared dividends.
Each dividend will be payable to the holder or holders of record of Series D
MAPS as they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of the Series D MAPS.
Any dividend payment made shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable, the
earliest Dividend Quarter) for which dividends have not been paid. So long as
the Series D MAPS are held of record by the nominee of the Securities
Depositary, dividends will be paid to the nominee of the Securities Depositary
on each Dividend Payment Date. The Securities Depositary will credit the
accounts of the Agent Members of Existing Holders in accordance with the
Securities Depositary's normal procedures, which now provide for payments in
next-day funds settled through the New York Clearing House. The Agent Member of
an Existing Holder will be responsible for holding or disbursing such payments
to Existing Holders in accordance with the instructions of such Existing
Holders.
8
<PAGE>
Holders of shares of the Series D MAPS shall not be entitled to any
dividends, whether payable in cash, property or stock, in excess of full
cumulative dividends. No dividends will be declared or paid or set apart for
payment on the Series D MAPS for any period unless full cumulative dividends
have been or contemporaneously are declared and paid on all series of MAPS
through the most recent applicable Dividend Payment Date for such series of
MAPS. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series D MAPS which may be in
arrears.
So long as any MAPS are Outstanding, the Company shall not declare, pay or
set aside for payment any dividend or other distribution in respect of Junior
Capital Stock or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of Junior Capital Stock unless (i) full cumulative
dividends for all past Dividend Periods (and, if applicable, for all past
Dividend Quarters) and all Dividend Payment Dates occurring on or prior to the
date of the transaction shall have been declared and paid (or declared and a sum
sufficient for payment of the dividends set apart for payment) on all such MAPS
Outstanding and (ii) the Company has redeemed (or set apart for payment a sum
sufficient for redemption) the full number of MAPS required to be redeemed after
giving any notice of an optional redemption.
The amount of dividends per share on Series D MAPS payable for each Dividend
Period (or for each Dividend Quarter) shall be computed by multiplying the
Applicable Rate for each Dividend Period (or Dividend Quarter) by a fraction,
the numerator of which shall be the number of days in the Dividend Period (or
Dividend Quarter) (calculated by counting both the last day and the first day
thereof) such share was Outstanding, and the denominator of which shall be 360
and multiplying the amount so obtained by $100,000.
(e) The dividend rate for each Dividend Period subsequent to the Initial
Dividend Period for the Series D MAPS will be, except as provided below, the
Applicable Rate.
Notwithstanding the results of any Auction or any other provision herein,
the dividend rate on the Series D MAPS shall not exceed the Maximum Applicable
Rate for any Dividend Period; provided, however, that the Board of Directors of
the Company may increase the percentages used to calculate the Maximum
Applicable Rate at any time by giving notice to the Auction Agent and the
Securities Depositary. Any such notice of increase in the percentage used to
calculate the Maximum Applicable Rate must be given to the Auction Agent not
later than 10:00 A.M. on an Auction Date. Such increases may be made by the
Board of Directors of the Company from percentages referred to in the definition
of Maximum Applicable Rate as follows: from the 150% to up to 175%, from the
200% to up to 225% and from the 225% to up to 250%, with no change to the 275%
figure. The Board of Directors of the Company may also designate higher
percentages than those referred to in the preceding sentence (including the
275%) upon receipt of an opinion of counsel to the Company to the effect that
the use of such higher percentages will not adversely affect the tax treatment
of the Series D MAPS. The provisions of the first sentence of this paragraph
notwithstanding, at any time that the application of the provisions of the next
paragraph would result in a dividend rate on the Series D MAPS being in excess
of the Maximum Applicable Rate, the maximum dividend rate applicable to such
Series D MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on the Series D MAPS or (ii)
on the Business Day next preceding any redemption date, the full redemption
price (including accumulated and unpaid dividends) to be paid on such redemption
date for any share of the Series D MAPS (in each case referred to as a "Failure
to Deposit"), then, until the full amount due shall have been paid to the
Auction Agent, Auctions will be suspended and the Applicable Rate for such
Series shall be the Default Rate as determined as of the Business Day preceding
the Failure to Deposit. If such Failure to Deposit is cured within three
Business Days as provided below, the Applicable Rate for the Dividend Period
commencing on the second Business Day following such cure will be based upon the
results of an Auction to be held on the Business Day next succeeding such cure.
Unless such a cure is effected, the Default Rate
9
<PAGE>
shall continue in effect until there shall occur a Dividend Payment Date at
least two Business Days prior to which the full amount of any dividends (whether
or not earned or declared) payable on each Dividend Payment Date prior to and
including such Dividend Payment Date, and the full amount of any redemption
price (including accumulated and unpaid dividends) then due, shall have been
paid to the Auction Agent, and thereupon Auctions shall resume on the terms
stated herein for Dividend Periods commencing with such Dividend Payment Date.
If an Auction is not held on an Auction Date for any reason (other than the
suspension of Auctions due to a Failure to Deposit), the dividend rate for the
applicable Dividend Period shall be the Maximum Applicable Rate determined as of
such Auction Date.
Any Failure to Deposit with respect to the Series D MAPS shall be deemed to
be cured if, within three Business Days of such Failure to Deposit, with respect
to a Failure to Deposit relating to (a) the payment of dividends, the Company
deposits with the Auction Agent by 12:00 noon, New York City time, all
accumulated and unpaid dividends on the Series D MAPS, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which the Failure to Deposit occurred, plus an amount computed by multiplying
the Default Rate by a fraction, the numerator of which shall be the number of
days during the period from the Dividend Payment Date in respect of which such
Failure to Deposit occurred through the day preceding the Business Day next
succeeding the Auction held following such cure and the denominator of which
shall be 360, and applying the rate obtained against the aggregate liquidation
preference of the Series D MAPS and (b) the redemption of shares of Series D
MAPS, the deposit by the Company with the Auction Agent, by 12:00 noon, New York
City time, of funds sufficient for the redemption of such shares (including
accumulated and unpaid dividends), plus an amount computed by multiplying the
Default Rate by a fraction, the numerator of which shall be the number of days
for which such Failure to Deposit is not cured in accordance with this paragraph
(including the day such Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate liquidation preference of the
shares of Series D MAPS to be redeemed, and the giving of irrevocable
instructions by the Company to apply such funds and, if applicable, the income
and proceeds therefrom, to the payment of the redemption price (including
accumulated and unpaid dividends) for such shares of the Series D MAPS. If the
Company shall have cured such Failure to Deposit by making timely payment to the
Auction Agent, the Auction Agent shall give telephonic and written notice of
such cure to each Existing Holder of MAPS at the telephone number and address
specified in such Existing Holder's Master Purchaser's Letter and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such Series for the next Business Day.
(f) The Company may give telephonic and written notice, not later than 10:00
A.M. on an Auction Date, to the Auction Agent and the Securities Depositary of
an increase in the percentage used to calculate the Maximum Applicable Rate for
the Series D MAPS. Such notice shall specify the new percentages to be used to
calculate the Maximum Applicable Rate. The Board of Directors of the Company
may establish an increase in such percentages. The Company may not revoke any
notice of an increase in the percentages used to calculate the Maximum
Applicable Rate and such percentages, once increased, may not thereafter be
decreased.
Section 3. Redemption.
The Series D MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series D MAPS may be redeemed, in
whole or from time to time in part, out of funds legally available therefor, on
any Dividend Payment Date for the Series D MAPS, upon at least fifteen but not
more than 45 days' notice, at a redemption price per share equal to the sum of
$100,000 plus an amount equal to accumulated and unpaid dividends thereon
(whether or not earned or declared) to the date that the Company pays the full
amount payable upon redemption of the shares of Series D MAPS. The Company may
only redeem Series D MAPS in whole shares. Pursuant to such right of
10
<PAGE>
optional redemption, the Company may elect to redeem some or all of the shares
of Series D MAPS without redeeming shares of any other series of MAPS or redeem
some or all of the shares of any other series of MAPS without redeeming shares
of Series D MAPS.
Upon any date fixed for redemption (unless a Failure to Deposit occurs), all
rights of the holders of shares of Series D MAPS called for redemption will
cease and terminate, except the right of such holders to receive the amounts
payable in respect of such redemption therefor, but without interest, and such
shares of the Series D MAPS will be deemed no longer Outstanding.
So long as all of the Series D MAPS to be redeemed are held of record by a
nominee of the Securities Depositary, the redemption price (including
accumulated and unpaid dividends) for such shares of the Series D MAPS will be
paid by the Company to the Securities Depositary on the redemption date for
distribution to Agent Members in accordance with its normal procedures.
(b) Any shares of Series D MAPS which shall at any time have been redeemed
or purchased by the Company shall, after such redemption or purchase, be
cancelled in the manner provided by the laws of the State of California.
Section 4. Conversion or Exchange.
The holders of shares of Series D MAPS shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of the Capital Stock of
the Company or into any other securities of the Company.
Section 5. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series D MAPS will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of $100,000 per share plus
an amount equal to accumulated and unpaid dividends on each such share (whether
or not declared) to and including the date of such distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets of the Company are insufficient to pay the holders of the Series D
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series D MAPS will share ratably in any such
distribution of such assets with holders of Parity Capital Stock. Unless and
until payment in full has been made to holders of the Series D MAPS of the
liquidation distributions to which they are entitled as described in this
paragraph, no dividends or distributions will be made to holders of the
Company's Junior Capital Stock, and no purchase, redemption or other acquisition
for any consideration by the Company will be made in respect of the Company's
Junior Capital Stock. After the payment to the holders of the Series D MAPS of
the full amount of the preferential liquidation distributions to which they are
entitled pursuant to this paragraph, such holders (in their capacity as such
holders) will have no right or claim to any of the remaining assets of the
Company. Neither the consolidation nor the merger of the Company with or into
any other corporation or corporations, nor the sale or transfer by the Company
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Company for purposes of this Section 5.
11
<PAGE>
Section 6. Voting Rights.
(a) Holders of the Series D MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series D MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series D
MAPS which are then exercisable (the Series D MAPS and all such other securities
being referred to as the "Parity Securities") shall be in arrears for at least
180 consecutive days and shall not have been paid in full (a "Default Period"),
the holders of record of the Parity Securities voting as described below will be
entitled to elect two directors to the Board of Directors (the "Additional
Directors") whether or not the Board of Directors of the Company has taken
appropriate action to increase the established number of directors of the
Company by two, and the holders of the Common Stock as a class, shall be
entitled to elect the remaining number of directors.
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called a
special meeting of the holders of Parity Securities by mailing or causing to be
mailed to such holders a notice of such special meeting to be held not less than
ten and not more than 45 days after the date such notice is given. If the Board
of Directors of the Company does not call or cause to be called such a special
meeting, it may be called by any of such holders on like notice. The record
date for determining the holders of the Parity Securities entitled to notice of
and to vote at such special meeting will be the close of business on the
Business Day preceding the day on which such notice is mailed. At any such
special meeting, such holders, by plurality vote, voting together as a single
class without regard to series (to the exclusion of the holders of Junior
Capital Stock) will be entitled to elect two directors on the basis of one vote
per $100,000 liquidation preference (excluding amounts in respect of accumulated
and unpaid dividends). The holder or holders of one-third of the Parity
Securities then outstanding, present in person or by proxy, will constitute a
quorum for the election of the Additional Directors except as otherwise provided
by law. Notice of all meetings at which holders of the Series D MAPS shall be
entitled to vote will be given to such holders at their addresses as they appear
on the register of the Company. If a Default Period shall terminate after the
notice of a special meeting has been given but before such special meeting has
been held, the Company shall, as soon as practicable after such termination,
mail or cause to be mailed notice of such termination to holders of the Parity
Securities that would have been entitled to vote at such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or, in
the event there is no remaining Additional Director, by vote of the holders of
the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
12
<PAGE>
(b) Except as provided below, so long as any Series D MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the MAPS then outstanding (taken together as a single
class), given in person or by proxy, either in writing or at a meeting (voting
separately as a single class), (i) authorize, create or issue, or increase the
authorized amount of, any Capital Stock of the Company of any class ranking, as
to dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the Series D MAPS, or reclassify any authorized Capital Stock of the
Company into any such Capital Stock, or authorize, create or issue any
obligation or security convertible into or evidencing the right to purchase any
such Capital Stock, or (ii) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation, share
exchange, division or otherwise, so as to adversely affect any preference,
limitation or special right of the Series D MAPS.
Except as provided by law, the consent of the holders of the Series D MAPS
is not required and such holders are not entitled to vote upon (i) the
authorization, creation, issuance or increase in the authorized amount of the
Common Stock, additional series of MAPS or any Capital Stock of the Company of
any class ranking, as to dividends and upon the liquidation, dissolution or
winding up of the Company, on a parity with or junior to the Series D MAPS or
(ii) any merger, consolidation, share exchange or division of the Company (or
any successor corporation) with or into another corporation the result of which
is that the Series D MAPS that may be Outstanding from time to time may be
junior to any preferred shares of such corporation as to dividends and upon the
liquidation, dissolution or winding up of the surviving corporation if on or
prior to the date of effectiveness of such merger or consolidation, the Company
shall have given Moody's and S&P written notice of such merger or consolidation
and Moody's and S&P shall have confirmed in writing that the transaction will
not adversely affect the then existing rating for the MAPS. If either Moody's or
S&P shall change its rating categories for preferred stock, then the
determination of whether the transaction will not adversely affect the then
existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the Series
D MAPS necessary to make such a determination, such determination will be made
based upon the substantial equivalent of either or both of such ratings by a
Substitute Rating Agency or two Substitute Rating Agencies or, in the event that
only one such rating shall be available, based upon such available rating. If an
alternative nationally recognized securities rating agency or agencies are not
available, then for purposes of such determination the rating for the Series D
MAPS shall be deemed to be the highest relevant rating last published by
Moody's, S&P or any such Substitute Rating Agency.
Section 7. Sinking Fund.
Shares of Series D MAPS are not subject or entitled to the benefit of a
sinking fund.
13
<PAGE>
ARTICLE THREE
AUCTION PROCEDURES
Section 1. Definitions.
Capitalized terms not defined in this Section 1 shall have the respective
meanings specified in Section 1 of ARTICLE TWO. As used in this ARTICLE THREE,
the following terms have the following meanings:
(a) "Affiliate" means any Person controlled by, in control of or under
common control with the Company.
(b) "Applicable Determining Rate" means, (i) for any Standard Dividend
Period or Short Dividend Period of 183 days or less, the Applicable "AA"
Composite Commercial Paper Rate, (ii) for any Short Dividend Period of 184 to
364 days, the Applicable Treasury Bill Rate and (iii) for any Long Dividend
Period, the Applicable Treasury Note Rate.
(c) "Available Shares of Series D MAPS" has the meaning specified in Section
4(a) of this ARTICLE THREE.
(d) "Bid" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(e) "Bidder" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(f) "Hold Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(g) "Order" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(h) "Sell Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(i) "Submission Deadline" means 1:00 P.M., New York City time, on any
Auction Date or such other time on any Auction Date as may be specified from
time to time by the Auction Agent as the time prior to which each Broker-Dealer
must submit to the Auction Agent in writing all Orders obtained by it for the
Auction to be conducted on such Auction Date.
(j) "Submitted Bid" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(k) "Submitted Hold Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(l) "Submitted Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(m) "Submitted Sell Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(n) "Winning Bid Rate" has the meaning specified in Section 4(a) of this
ARTICLE THREE.
14
<PAGE>
Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series D MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information as
to:
(A) the number of Outstanding shares of Series D MAPS, if any, held
by such Existing Holder that such Existing Holder desires to continue to
hold without regard to the Applicable Rate for the next succeeding Dividend
Period;
(B) the number of Outstanding shares of Series D MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell, provided
that the Applicable Rate for the next succeeding Dividend Period is less
than the rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding shares of Series D MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell without
regard to the Applicable Rate for the next succeeding Dividend Period; and
(ii) each Broker-Dealer, using a list of Potential Holders that shall be
maintained in accordance with the provisions set forth in the Broker-Dealer
Agreement for the purpose of conducting a competitive Auction, shall contact
both Existing Holders and Potential Holders, including Existing Holders with
respect to an offer by any such Existing Holder to purchase additional
shares of Series D MAPS, on such list to notify such Existing Holders and
Potential Holders as to the length of the next Dividend Period and (A) with
respect to any Short Dividend Period or Long Dividend Period, the Dividend
Payment Date(s) and (B) with respect to any Long Dividend Period, any dates
before which shares of Series D MAPS may not be redeemed and any redemption
premium applicable in an optional redemption and to determine the number of
Outstanding shares of Series D MAPS, if any, with respect to which each such
Existing Holder desires to submit an Order and each such Potential Holder
desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of
information referred to in clause (i) or (ii) of this Subsection (a) is
hereinafter referred to as an "Order" and each Existing Holder and each
Potential Holder placing an Order is hereinafter referred to as a "Bidder,"
an Order containing the information referred to in clause (i)(A) of this
Subsection (a) is hereinafter referred to as a "Hold Order," an Order
containing the information referred to in clause (i)(B) or (ii) of this
Subsection (a) is hereinafter referred to as a "Bid;" and an Order
containing the information referred to in clause (i)(C) of this Subsection
(a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series D MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
less than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
D MAPS to be determined as set forth in Subsections (a)(iv) and (c) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein; or
(C) a lesser number of Outstanding shares of Series D MAPS to be
determined as set forth in Subsections (b)(iii) and (c) of Section 5 of this
ARTICLE THREE if such specified rate per annum shall be higher than the
Maximum Applicable Rate and Sufficient Clearing Bids do not exist.
15
<PAGE>
(ii) A Sell Order by an Existing Holder shall constitute an
irrevocable offer to sell:
(A) the number of Outstanding shares of Series D MAPS specified
in such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series
D MAPS to be determined as set forth in Subsections (b)(iii) and (c) of
Section 5 of this ARTICLE THREE if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer
to purchas e:
(A) the number of Outstanding shares of Series D MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
D MAPS to be determined as set forth in Subsections (a)(v) and (d) of
Section 5 of this ARTICLE THREE if the Applicable Rate determined on such
Auction Date shall be equal to the rate per annum specified therein.
(c) Orders may be submitted for whole shares of MAPS only. Orders submitted
for fractional shares of MAPS shall not be valid.
Section 3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior to
the Submission Deadline on each Auction Date for the Series D MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of Outstanding shares of Series D MAPS that
are the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder;
(A) the number of Outstanding shares of Series D MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series D MAPS, if any,
subject to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(C) the number of Outstanding shares of Series D MAPS, if any,
subject to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed
submitted by a Broker-Dealer is hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order.")
16
<PAGE>
(b) If any rate per annum specified in any Submitted Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(c) If one or more Orders covering in the aggregate all of the Outstanding
shares of Series D MAPS held by an Existing Holder are not submitted to the
Auction Agent prior to the Submission Deadline for any reason (including the
failure of a Broker-Dealer to contact such Existing Holder or to submit such
Existing Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of Series D
MAPS held by such Existing Holder that are not subject to Orders submitted to
the Auction Agent.
(d) A Submitted Order or Submitted Orders of an Existing Holder that cover
in the aggregate more than the number of Outstanding shares of Series D MAPS
held by such Existing Holder will be considered valid in the following order of
priority:
(i) any Submitted Hold Order of such Existing Holder will be
considered valid up to and including the number of Outstanding shares of
Series D MAPS held by such Existing Holder, provided that, if there is more
than one such Submitted Hold Order and the aggregate number of shares of
Series D MAPS subject to such Submitted Hold Orders exceeds the number of
Outstanding shares of Series D MAPS held by such Existing Holder, the number
of shares of Series D MAPS subject to each such Submitted Hold Order will be
reduced pro rata so that such Submitted Hold Orders in the aggregate will
cover exactly the number of Outstanding shares of Series D MAPS held by such
Existing Holder;
(ii) any Submitted Bids of such Existing Holder will be considered
valid (in the ascending order of their respective rates per annum if there
is more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of Series D MAPS held by such Existing Holder equal to
the difference between (A) the number of Outstanding shares of Series D MAPS
held by such Existing Holder and (B) the number of Outstanding shares of
Series D MAPS subject to any Submitted Hold Order of such Existing Holder
referred to in clause (d)(i) above (and, if more than one Submitted Bid of
such Existing Holder specifies the same rate per annum and together they
cover more than the remaining number of shares of Series D MAPS that can be
the subject of valid Submitted Bids of such Existing Holder after
application of clause (d)(i) above and of the foregoing portion of this
clause (d)(ii) to any Submitted Bid or Submitted Bids of such Existing
Holder specifying a lower rate or rates per annum, the number of shares of
Series D MAPS subject to each of such Submitted Bids specifying the same
rate per annum will be reduced pro rata so that such Submitted Bids, in the
aggregate, cover exactly such remaining number of Outstanding shares of
Series D MAPS of such Existing Holder);
(iii) any Submitted Sell Order of such Existing Holder will be
considered valid up to and including the excess of the number of Outstanding
shares of Series D MAPS held by such Existing Holder over the sum of (A) the
number of shares of Series D MAPS subject to Submitted Hold Orders by such
Existing Holder referred to in clause (d)(i) above and (B) the number of
shares of Series D MAPS subject to valid Submitted Bids by such Existing
Holder referred to in clause (d)(ii) above; provided that, if there is more
than one Submitted Sell Order of such Existing Holder and the number of
shares of Series D MAPS subject to such Submitted Sell Orders is greater
than such excess, the number of shares of Series D MAPS subject to each of
such Submitted Sell Orders will be reduced pro rata so that such Submitted
Sell Orders, in the aggregate, will cover exactly the number of shares of
Series D MAPS equal to such excess.
The number of Outstanding shares of Series D MAPS, if any, subject to Submitted
Bids of such Existing Holder not valid under clause (d)(ii) above shall be
treated as the subject of a Submitted Bid by a Potential Holder at the rate per
annum specified in such Submitted Bids.
17
<PAGE>
(e) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of Series D MAPS
specified therein.
Section 4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date for the
Series D MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(i) the excess of the total number of Outstanding shares of Series D
MAPS over the number of shares of Series D MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series D MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series D MAPS that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than the
Maximum Applicable Rate exceeds or is equal to the sum of:
(A) the number of Outstanding shares of Series D MAPS that are the
subject of Submitted Bids by Existing Holders specifying one or more rates
per annum higher than the Maximum Applicable Rate, and
(B) the number of Outstanding shares of Series D MAPS that are
subject to Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of Series D MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series D MAPS are the subject
of Submitted Hold Orders), there shall exist "Sufficient Clearing Bids" and
such Submitted Bids by Potential Holders shall be hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the winning bid rate (the
"Winning Bid Rate"), which shall be the lowest rate per annum specified in
the Submitted Bids that if:
(A) each Submitted Bid from Existing Holders specifying the Winning
Bid Rate and all other Submitted Bids from Existing Holders specifying lower
rates per annum were accepted, thus entitling such Existing Holders to
continue to hold the shares of Series D MAPS that are the subject of such
Submitted Bids, and
(B) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential Holders
specifying lower rates per annum were accepted, thus entitling such
Potential Holders to purchase the shares of Series D MAPS that are the
subject of such Submitted Bids,
would result in such Existing Holders described in subclause (iii)(A) continuing
to hold an aggregate number of Outstanding shares of Series D MAPS that, when
added to the number of Outstanding shares of Series D MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series D MAPS.
(b) In connection with any Auction and promptly after the Auction Agent has
made the determinations pursuant to Subsection (a), the Auction Agent shall
advise the Company of the Maximum
18
<PAGE>
Applicable Rate and, based on such determinations, the Applicable Rate for the
next succeeding Dividend Period as follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(ii) if Sufficient Clearing Bids do not exist (other than because all
of the Outstanding shares of Series D MAPS are the subject of Submitted Hold
Orders), that the next succeeding Dividend Period will be a Standard
Dividend Period and the Applicable Rate for the next succeeding Dividend
Period shall be equal to the Maximum Applicable Rate for a Standard Dividend
Period determined as of the Business Day immediately preceding such Auction;
or
(iii) if all of the Outstanding shares of Series D MAPS are the subject
of Submitted Hold Orders, that the Applicable Rate for the next succeeding
Dividend Period shall be equal to 59% of the Applicable "AA" Composite
Commercial Paper Rate, in the case of Series D MAPS with a Standard Dividend
Period or a Short Dividend Period of 183 days or less, 59% of the Applicable
Treasury Bill Rate in the case of Series D MAPS with a Short Dividend Period
of 184 to 364 days, or 59% of the Applicable Treasury Note Rate in the case
of Series D MAPS with a Long Dividend Period, in effect on the Auction Date.
Section 5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares of Series D MAPS.
Based on the determinations made pursuant to Subsection (a) of Section 4,
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Auction Agent shall take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, subject to the provisions of
Subsections (c) and (d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted
and the Submitted Bid of each of the Existing Holders specifying any rate
per annum that is higher than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of Series
D MAPS that are the subject of such Submitted Sell Order or Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the Outstanding
shares of Series D MAPS that are the subject of such Submitted Bid;
(iii) the Submitted Bid of each of the Potential Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted, thus
entitling each such Existing Holder to continue to hold the Outstanding
shares of Series D MAPS that are the subject of such Submitted Bid, unless
the number of Outstanding shares of Series D MAPS subject to all such
Submitted Bids shall be greater than the number of Outstanding shares of
Series D MAPS ("Remaining Shares of Series D MAPS") equal to the excess of
the Available Shares of Series D MAPS over the number of Outstanding shares
of Series D MAPS subject to Submitted Bids described in Subsections (a)(ii)
and (a)(iii), in which event the Submitted Bids of each such Existing Holder
shall be rejected, and each such Existing Holder
19
<PAGE>
shall be required to sell Outstanding shares of Series D MAPS, but only in
an amount equal to the difference between (A) the number of Outstanding
shares of Series D MAPS then held by such Existing Holder subject to such
Submitted Bid and (B) the number of shares of Series D MAPS obtained by
multiplying (x) the number of Remaining Shares of Series D MAPS by (y) a
fraction, the numerator of which shall be the number of Outstanding shares
of Series D MAPS held by such Existing Holder subject to such Submitted Bid
and the denominator of which shall be the aggregate number of Outstanding
shares of Series D MAPS subject to such Submitted Bids made by all such
Existing Holders that specified a rate per annum equal to the Winning Bid
Rate; and
(v) the Submitted Bid of each of the Potential Holders specifying a rate
per annum that is equal to the Winning Bid Rate shall be accepted, but only
in an amount equal to the number of Outstanding shares of Series D MAPS
obtained by multiplying (x) the difference between the Available Shares of
Series D MAPS and the number of Outstanding shares of Series D MAPS subject
to Submitted Bids described in Subsections (a)(ii), (a)(iii) and (a)(iv) by
(y) a fraction, the numerator of which shall be the number of Outstanding
shares of Series D MAPS subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of Series D MAPS
subject to such Submitted Bids made by all such Potential Holders that
specified rates per annum equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all
of the Outstanding shares of Series D MAPS are subject to Submitted Hold
Orders), subject to the provisions of Subsection (c), Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids of Potential Holders shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus entitling such Existing Holder to continue to hold the
Outstanding shares of Series D MAPS that are the subject of such Submitted
Bid;
(ii) the Submitted Bid of each Potential Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of Series D MAPS that are the subject of such Submitted Bid; and
(iii) the Submitted Bids of each Existing Holder specifying any rate per
annum that is higher than the Maximum Applicable Rate shall be rejected,
thus requiring each such Existing Holder to sell the Outstanding shares of
Series D MAPS that are the subject of such Submitted Bid, and the Submitted
Sell Orders of each Existing Holder shall be accepted, in both cases only in
an amount equal to the difference between (A) the number of Outstanding
shares of Series D MAPS then held by such Existing Holder subject to such
Submitted Bid or Submitted Sell Order and (B) the number of shares of Series
D MAPS obtained by multiplying (x) the difference between the Available
Shares of Series D MAPS and the aggregate number of Outstanding shares of
Series D MAPS subject to Submitted Bids described in Subsections (b)(i) and
(b)(ii) by (y) a fraction, the numerator of which shall be the number of
Outstanding shares of Series D MAPS held by such Existing Holder subject to
such Submitted Bid or Submitted Sell Order and the denominator of which
shall be the aggregate number of Outstanding shares of Series D MAPS subject
to all such Submitted Bids and Submitted Sell Orders.
(c) If, as a result of the procedures described in Subsections (a) or (b),
any Existing Holder would be entitled or required to sell or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
Series D MAPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of shares of
Series D MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series D MAPS will be entitled
or required to be sold or purchased.
20
<PAGE>
(d) If, as a result of the procedures described in Subsection (a), any
Potential Holder would be entitled or required to purchase less than a whole
share of Series D MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series D
MAPS for purchase among Potential Holders so that only whole shares of Series D
MAPS are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of Series D MAPS on such Auction Date.
(e) Based on the results of each Auction, the Auction Agent shall determine,
with respect to each Broker-Dealer that submitted Bids or Sell Orders on behalf
of Existing Holders or Potential Holders, the aggregate number of Outstanding
shares of Series D MAPS to be purchased and the aggregate number of Outstanding
shares of Series D MAPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares of
Series D MAPS to be purchased and such aggregate number of Outstanding shares of
Series D MAPS to be sold differ, the Auction Agent shall determine to which
other Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers such Broker-Dealer shall receive, as the case may
be, Outstanding shares of Series D MAPS.
Section 6. Participation in Auctions.
The Company and its Affiliates shall not submit any Order in any Auction
except as set forth in the next sentence. Any Broker-Dealer that is an
Affiliate of the Company may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-Dealer holds
shares of Series D MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series D MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series D MAPS only pursuant to a Bid or Sell Order in accordance with the
procedures described in these Auction Procedures or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master Purchaser's
Letter to a Broker-Dealer, provided that in the case of all transfers other than
pursuant to Auctions such Existing Holder, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer and (b) unless otherwise required by
law, shall have the beneficial ownership of the shares of Series D MAPS held by
it maintained in book-entry form by the Securities Depositary in the account of
its Agent Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. All of the Outstanding shares of Series D MAPS of each
Series shall be represented by a single certificate for each Series registered
in the name of the nominee of the Securities Depositary unless otherwise
required by law or unless there is no Securities Depositary. If there is no
Securities Depositary, shares of Series D MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor and
be required to deliver a certificate therefor upon transfer or exchange thereof.
21
<PAGE>
RESOLVED FURTHER, that the Chairman of the Board, the President or any Vice
President, and the Secretary, the Chief Financial Officer, the Treasurer, or any
Assistant Secretary or Assistant Treasurer of this Company are each authorized
to execute, verify, and file a certificate of determination of preferences in
accordance with California law.
3. The authorized number of shares of Preferred Stock of the Company is
20,000,000, and the number of shares constituting Series D MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
November 17, 1993.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY, President
/s/ LOUIS L. GONDA
---------------------------------------------
LOUIS L. GONDA, Secretary
The undersigned, STEVEN F. UDVAR-HAZY and LOUIS L. GONDA, the President and
Secretary, respectively, of INTERNATIONAL LEASE FINANCE CORPORATION, each
declares under penalty of perjury that the matters set forth in the foregoing
Certificate are true of his own knowledge.
Executed at Los Angeles, California on November 17, 1993.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY
/s/ LOUIS L. GONDA
---------------------------------------------
LOUIS L. GONDA
22
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF PREFERRED STOCK OF
INTERNATIONAL LEASE FINANCE CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Steven F. Udvar-Hazy and Julie I. Sackman hereby certify
that:
1. They are the duly elected and acting President and Secretary,
respectively, of International Lease Finance Corporation (the "Company").
2. Pursuant to authority given by the Company's Restated Articles of
Incorporation, a duly appointed committee (the "Special Committee") of the Board
of Directors of the Company (such committee having been previously authorized to
exercise the powers of the Board of Directors as to the subject matter), has
duly adopted the following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Company provide for a
class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of the Company is authorized to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them; and
WHEREAS, the Company desires, pursuant to its authority as aforesaid, to
determine and fix the rights, preferences, privileges, and restrictions relating
to a series of said Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
determines the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to, said series of
Preferred Stock as follows:
ARTICLE ONE
DESIGNATION
Section 1. Designation.
A series of Preferred Stock shall be designated "Market Auction Preferred
Stock, Series E" (the "Series E MAPS").
Section 2. Amount.
The number of shares constituting Series E MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES E MAPS--GENERAL PROVISIONS.
Section 1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Additional Directors" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(b) "Agent Member" means the member of the Securities Depositary that will
act on behalf of an Existing Holder or a Potential Holder and that is identified
as such in such Existing Holder's or Potential Holder's Master Purchaser's
Letter.
(c) "Applicable 'AA' Composite Commercial Paper Rate," on any date, shall
mean in the case of any Standard Dividend Period or Short Dividend Period of (1)
49 days or more but less than 70 days, the interest equivalent of the 60-day
rate, (2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or more
but less than 148 days, the arithmetic average of the interest equivalent of the
90-day and 180-day rates, and (5) 148 days or more but less than 184 days, the
interest equivalent of the 180-day rate, in each case, on commercial paper
placed on behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa"
by Moody's, or the equivalent of such rating by another rating agency, as made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date. In the event that the
Federal Reserve Bank of New York does not make available any of the foregoing
rates, then such rates shall be the 60-day rate or arithmetic average of such
rates, as the case may be, as quoted on a discount basis or otherwise, by
Commercial Paper Dealers to the Auction Agent as of the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to provide
such rate or rates or, if the Company does not select any Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealer (if any). "Substitute Commercial Paper Dealer" means Goldman, Sachs
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers
Inc or their respective affiliates or successors or, if no such dealer furnishes
such quotations, a leading dealer in the commercial paper market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" means the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
(d) "Applicable Rate" means the rate per annum, resulting from the next
preceding Auction, at which dividends are payable on the shares of Series E MAPS
for any Dividend Period.
(e) "Applicable Treasury Bill Rate" for any Short Dividend Period in excess
of 183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of the
Federal Reserve System (the "Board") in "Federal Reserve Statistical Release
H.15(519)-Selected Interest Rates," or any successor publication by the Board,
within five Business Days preceding such date. In the event that the Board does
not publish such rate, or if such release is not available, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate will be the arithmetic mean
of the secondary market bid rate as of approximately 3:30 P.M., New York City
time, on the Business Day next preceding such date of the U.S. Government
Securities Dealers furnished to
2
<PAGE>
the Auction Agent for the issue of direct obligations of the United States
Treasury, in an aggregate principal amount of at least $1,000,000 with a
remaining maturity equal to, or next lower than, the length of such Short
Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by any Substitute U.S. Government
Securities Dealer or Dealers selected by the Company to provide such rate or
rates or, if the Company does not select any such Substitute U.S. Government
Securities Dealer or Dealers, by the remaining U.S. Government Securities
Dealer (if any). "Substitute U.S. Government Securities Dealers" means Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon
Brothers Inc or their respective affiliates or successors or, if no such dealer
provides such quotes, a leading dealer in the government securities market
selected by the Company in good faith. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis shall be equal to the
quotient of (A) the discount rate divided by (B) the difference between 1.00 and
the discount rate.
(f) "Auction Agent" means Chemical Bank, or its successors, or any other bank
or trust company appointed by a resolution of the Board of Directors of the
Company, or its Special Committee, which enters into an agreement with the
Company to follow the Auction Procedures set forth in ARTICLE THREE hereof.
(g) "Auction Date" means the first Business Day preceding the first day of a
Dividend Period other than the Initial Dividend Period.
(h) "Broker-Dealer" means any broker-dealer, or other entity permitted by law
to perform the functions required of a Broker-Dealer in ARTICLE THREE, that has
been selected by the Company and has entered into a Broker-Dealer Agreement with
the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in ARTICLE THREE.
(j) "Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
New York City are authorized or obligated by law to close.
(k) "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Commercial Paper Dealers" means Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. or, in lieu of either thereof, their respective affiliates
or successors.
(n) "Common Stock" means all shares now or hereafter authorized of the class
of Common Stock of the Company presently authorized and any other shares into
which such shares may hereafter be changed from time to time.
(o) "Date of Original Issue" means the date on which the Company initially
issues shares of Series E MAPS.
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
3
<PAGE>
(q) "Default Rate" means the Applicable Determining Rate multiplied by the
percentage shown opposite the lowest Credit Ratings category in the definition
of Maximum Applicable Rate, determined as of the Business Day preceding a
Failure to Deposit.
(r) "Dividend Payment Date" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(s) "Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(t) "Dividend Quarter" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(u) "Dividends-Received Deduction" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(v) "Existing Holder," means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of Series E MAPS in the
records of the Auction Agent.
(w) "Failure to Deposit" has the meaning specified in Section 2(e) of this
ARTICLE TWO.
(x) "Initial Dividend Payment Date" means May 1, 1995.
(y) "Initial Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(z) "Initial Dividend Rate" has the meaning specified in Section 2(a) of this
ARTICLE TWO.
(aa) "Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the Series E MAPS with respect to
the payment of dividends or the distribution of assets upon liquidation.
(ab) "Long Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(ac) "MAPS" means all shares of each series of the Company's Market Auction
Preferred Stock now or hereafter authorized.
(ad) "Maximum Applicable Rate," on any Auction Date, shall mean the rate per
annum obtained by multiplying the Applicable Determining Rate on such Auction
Date by a percentage determined as set forth below based on the lower of the
credit ratings assigned to the Series E MAPS by Moody's and S&P (or if Moody's
or S&P or both shall not make such rating available, the equivalent of either or
both of such ratings by a Substitute Rating Agency or two Substitute Rating
Agencies, as the case may be, or in the event that only one such rating shall be
available, the percentage shall be based on such rating).
<TABLE>
<CAPTION>
Credit Ratings Applicable Percentage
----------------------
of Applicable
Moody's S&P Determining Rate
---------------- ------------- ---------------------
<S> <C> <C>
"aa3" or Above AA-- or Above 150%
"a3" to "a1" A-- to A+ 200%
"baa3" to "baa1" BBB-- to BBB+ 225%
Below "baa3" Below BBB-- 275%
</TABLE>
(ae) "Master Purchaser's Letter" means a letter addressed to the Company, the
Auction Agent and a Broker-Dealer in which a Person agrees, among other things,
to offer to purchase, purchase, offer to sell or sell shares of Series E MAPS as
set forth in ARTICLE THREE.
4
<PAGE>
(af) "Minimum Holding Period" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(ag) "Moody's" means Moody's Investors Service, Inc.
(ah) "Normal Dividend Payment Date" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(ai) "Notice" has the meaning specified in Section 2(c) of this ARTICLE TWO.
(aj) "Notice of Long Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(ak) "Notice of Revocation" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(al) "Notice of Short Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(am) "Outstanding" means, as of any date, shares of MAPS theretofore issued by
the Company except, without duplication, (i) any shares of MAPS theretofore
cancelled, delivered to the Company for cancellation or redeemed and (ii) as of
any Auction Date, any shares of MAPS subject to redemption on the next following
Business Day.
(an) "Parity Capital Stock" means any and all shares of Capital Stock of the
Company ranking on a parity with or equal to the Series E MAPS as to the payment
of dividends and distribution of assets.
(ao) "Parity Securities" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(ap) "Person" means and includes an individual, a partnership, a corporation,
a trust, an unincorporated association, a joint venture or other entity or a
government or any agency or political subdivision thereof.
(aq) "Potential Holder" means any Person, including any Existing Holder, (i)
who has executed a Master Purchaser's Letter and (ii) who may be interested in
acquiring shares of Series E MAPS (or, in the case of an Existing Holder,
additional shares of Series E MAPS).
(ar) "Preferred Stock" means all shares now or hereafter authorized of the
class of Preferred Stock, without par value, of the Company, including the
shares of MAPS of any series.
(as) "S&P" means Standard & Poor's Corporation.
(at) "Securities Depositary" means The Depository Trust Company and its
successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
Securities Depositary in connection with shares of Series E MAPS.
(au) "Short Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(av) "Standard Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(aw) "Subsequent Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(ax) "Subsequent Dividend Period Days" has the meaning specified in Section
2(b) of this ARTICLE TWO.
5
<PAGE>
(ay) "Substitute Rating Agency" shall mean a nationally recognized statistical
rating organization (as that term is used in the rules and regulations of the
Securities Exchange Act of 1934, as amended) selected by the Company, subject to
the approval by Morgan Stanley & Co. Incorporated and Lehman Brothers Inc., such
approval not to be unreasonably withheld.
(az) "Sufficient Clearing Bids" has the meaning specified in Section 4(a) of
ARTICLE THREE.
(ba) "U.S. Government Securities Dealers" shall mean Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. or, in lieu of either thereof, their
respective affiliates or successors.
Section 2. Dividends.
(a) Holders of Series E MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Restated Articles of Incorporation of the
Company, cumulative cash dividends at the Applicable Rate, determined as set
forth below, payable on the respective dates set forth below that may be
applicable with respect to such Series E MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of 4.80% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series E
MAPS will be the Applicable Rate, determined as set forth herein, and will be
payable on the respective dates set forth below.
(b) Dividends on the Series E MAPS will accumulate (whether or not declared)
from the Date of Original Issue. Except for the Initial Dividend Payment Date,
dividends on the Series E MAPS with a Standard Dividend Period will be payable,
except as provided below, on each seventh Monday following the preceding
Dividend Payment Date. Dividends on the Series E MAPS with a Short Dividend
Period will be payable, except as provided below, on the day following the last
day of such Short Dividend Period and will also be payable on such other dates
as are established at the time such Short Dividend Period is determined.
Dividends on the Series E MAPS with a Long Dividend Period will be payable,
except as provided below, on the day following the last day of such Long
Dividend Period and on the first day of the fourth calendar month after the
commencement of such Long Dividend Period and quarterly thereafter on the first
day of each applicable month. Each day on which dividends on Series E MAPS
would be payable as determined as set forth in this paragraph but for the
adjustments set forth below is referred to herein as a "Normal Dividend Payment
Date."
(i) In the case of dividends payable on Series E MAPS with a Standard
Dividend Period or a Short Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the Series E MAPS in next-day
funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day preceding such Normal Dividend Payment Date
that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent Members
the amounts due as dividends on Series E MAPS in immediately available funds
on the dates on which such dividends are payable (and the Securities
Depositary shall have so advised the Auction Agent) and (2) a Normal Dividend
Payment Date is not a Business Day, then dividends shall be payable on the
first Business Day following such Normal Dividend Payment Date.
(ii) In the case of dividends payable on Series E MAPS with a Long Dividend
Period, if:
6
<PAGE>
(A)(1) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the Series E MAPS in next-day
funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment Date
that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent Members
the amounts due as dividends on the Series E MAPS in immediately available
funds on the dates on which such dividends are payable (and the Securities
Depositary shall have so advised the Auction Agent) and (2) a Normal Dividend
Payment Date is not a Business Day, then dividends shall be payable on the
first Business Day following such Normal Dividend Payment Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on Series E MAPS would be payable as determined as set
forth in the preceding paragraphs is a day that would result in the number of
days between successive Auction Dates (determined by excluding the first Auction
Date and including the second Auction Date) not being at least equal to the
then-current minimum holding period (currently set forth in Section 246(c) of
the Code) (the "Minimum Holding Period") required for corporate taxpayers to be
entitled to the dividends-received deduction on preferred stock held by
nonaffiliated corporations (currently set forth in Section 243(a) of the Code)
(the "Dividends-Received Deduction"), then dividends on the Series E MAPS shall
be payable on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day that results in the
number of days between such successive Auction Dates (determined as set forth
above) being at least equal to the then-current Minimum Holding Period.
Each date on which dividends on Series E MAPS shall be payable as determined
as set forth above is referred to herein as a "Dividend Payment Date". If
applicable, the period from the preceding Dividend Payment Date to the next
Dividend Payment Date for Series E MAPS with a Long Dividend Period is hereby
referred to as a "Dividend Quarter." Although any particular Dividend Payment
Date may not occur on the originally scheduled Normal Dividend Payment Date
because of the adjustments set forth above, each succeeding Dividend Payment
Date will be, subject to such adjustments, the date determined as set forth
above as if each preceding Dividend Payment Date had occurred on the respective
originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend Payment
Dates shall automatically be adjusted so that there shall be a uniform number of
days in subsequent Dividend Periods (such number of days without giving effect
to the adjustment referred to above being referred to herein as the "Subsequent
Dividend Period Days") commencing after the date of such change in law equal to
or to the extent necessary, in excess of the then-current Minimum Holding
Period, provided that the number of Subsequent Dividend Period Days shall not
exceed by more than nine days the length of such then-current Minimum Holding
Period and shall be evenly divisible by seven, and the maximum number of
Subsequent Dividend Period Days, as adjusted pursuant to this provision, in no
event shall exceed 119 days.
(c) After the Initial Dividend Period for the Series E MAPS, each subsequent
Dividend Period will (except for the adjustments for non-Business Days described
above) be 49 days (each such 49-day period, subject to any adjustment as a
result of a change in law altering the Minimum Holding Period as described
above, being herein referred to as a "Standard Dividend Period"), unless the
Company specifies that any such subsequent Dividend Period will be a Dividend
Period of 50 to 364 days and consisting of a whole number of weeks (a "Short
Dividend Period") or a Dividend Period of one year or longer (a "Long Dividend
Period"). Each such Standard Dividend Period, Short Dividend Period and Long
Dividend Period (together with the period commencing on the Date of Original
Issue and ending on the Initial Dividend Payment Date for the
7
<PAGE>
Series E MAPS (the "Initial Dividend Period")) being referred to herein as a
"Dividend Period." After the Initial Dividend Period for the Series E MAPS,
each successive Dividend Period will commence on the Dividend Payment Date for
the preceding Dividend Period and will end (i) in the case of a Standard
Dividend Period, on the day preceding the next Dividend Payment Date and (ii) in
the case of a Short Dividend Period or a Long Dividend Period, on the last day
of the Short Dividend Period or the Long Dividend Period specified by the
Company in the related Notice.
The Company may give telephonic and written notice, not less than ten and not
more than 30 days prior to an Auction Date, to the Auction Agent and the
Securities Depositary that the next succeeding Dividend Period will be a Short
Dividend Period (a "Notice of Short Dividend Period") or a Long Dividend Period
(a "Notice of Long Dividend Period" and, together with a Notice of Short
Dividend Period, a "Notice"). Each such Notice will specify (i) the next
succeeding Dividend Period as a Short Dividend Period or a Long Dividend Period,
(ii) the term thereof, (iii) in the case of any Long Dividend Period, additional
redemption provisions or restrictions on redemption, if any, and (iv) the
Dividend Payment Dates; provided that, for any Auction occurring after the
initial Auction, the Company may not give a Notice of a Short Dividend Period or
a Notice of a Long Dividend Period (and any such Notice shall be null and void)
unless Sufficient Clearing Bids were made in the last occurring Auction of any
series of MAPS (or all shares of such series were subject to Submitted Hold
Orders) and full cumulative dividends, if any, for all series of MAPS payable
prior to such date have been paid in full. The Board of Directors of the
Company may establish a Short Dividend Period or a Long Dividend Period for the
Series E MAPS. Notice may be revoked by the Company on or prior to the Business
Day prior to the related Auction Date by telephonic and written notice (a
"Notice of Revocation") to the Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Standard Dividend Period. In addition, if
the Company has given Notice with respect to the next succeeding Dividend Period
and has not given Notice of Revocation with respect thereto, but Sufficient
Clearing Bids are not made in the Auction for the Series E MAPS (other than
because all shares of Series E MAPS were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
will, notwithstanding such Notice, be a Standard Dividend Period and the Company
may not again give a Notice (and such Notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction of a series of MAPS or an
Auction has been held in which all shares of a series of MAPS were subject to
Submitted Hold Orders.
(d) Prior to each Dividend Payment Date for the Series E MAPS, the Company
shall deposit with the Auction Agent sufficient funds for the payment of
declared dividends.
Each dividend will be payable to the holder or holders of record of Series E
MAPS as they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of the Series E MAPS.
Any dividend payment made shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable, the
earliest Dividend Quarter) for which dividends have not been paid. So long as
the Series E MAPS are held of record by the nominee of the Securities
Depositary, dividends will be paid to the nominee of the Securities Depositary
on each Dividend Payment Date. The Securities Depositary will credit the
accounts of the Agent Members of Existing Holders in accordance with the
Securities Depositary's normal procedures, which now provide for payments in
next-day funds settled through the New York Clearing House. The Agent Member of
an Existing Holder will be responsible for holding or disbursing such payments
to Existing Holders in accordance with the instructions of such Existing
Holders.
8
<PAGE>
Holders of shares of the Series E MAPS shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends. No dividends will be declared or paid or set apart for payment on
the Series E MAPS for any period unless full cumulative dividends have been or
contemporaneously are declared and paid on all series of MAPS through the most
recent applicable Dividend Payment Date for such series of MAPS. No interest,
or sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Series E MAPS which may be in arrears.
So long as any MAPS are Outstanding, the Company shall not declare, pay or set
aside for payment any dividend or other distribution in respect of Junior
Capital Stock or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of Junior Capital Stock unless (i) full cumulative
dividends for all past Dividend Periods (and, if applicable, for all past
Dividend Quarters) and all Dividend Payment Dates occurring on or prior to the
date of the transaction shall have been declared and paid (or declared and a sum
sufficient for payment of the dividends set apart for payment) on all such MAPS
Outstanding and (ii) the Company has redeemed (or set apart for payment a sum
sufficient for redemption) the full number of MAPS required to be redeemed after
giving any notice of an optional redemption.
The amount of dividends per share on Series E MAPS payable for each Dividend
Period (or for each Dividend Quarter) shall be computed by multiplying the
Applicable Rate for each Dividend Period (or Dividend Quarter) by a fraction,
the numerator of which shall be the number of days in the Dividend Period (or
Dividend Quarter) (calculated by counting both the last day and the first day
thereof) such share was Outstanding, and the denominator of which shall be 360
and multiplying the amount so obtained by $100,000.
(e) The dividend rate for each Dividend Period subsequent to the Initial
Dividend Period for the Series E MAPS will be, except as provided below, the
Applicable Rate.
Notwithstanding the results of any Auction or any other provision herein, the
dividend rate on the Series E MAPS shall not exceed the Maximum Applicable Rate
for any Dividend Period. The provisions of the previous sentence of this
paragraph notwithstanding, at any time that the application of the provisions of
the next paragraph would result in a dividend rate on the Series E MAPS being in
excess of the Maximum Applicable Rate, the maximum dividend rate applicable to
such Series E MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on the Series E MAPS or (ii)
on the Business Day next preceding any redemption date, the full redemption
price (including accumulated and unpaid dividends) to be paid on such redemption
date for any share of the Series E MAPS (in each case referred to as a "Failure
to Deposit"), then, until the full amount due shall have been paid to the
Auction Agent, Auctions will be suspended and the Applicable Rate for such
Series shall be the Default Rate as determined as of the Business Day preceding
the Failure to Deposit. If such Failure to Deposit is cured within three
Business Days as provided below, the Applicable Rate for the Dividend Period
commencing on the second Business Day following such cure will be based upon the
results of an Auction to be held on the Business Day next succeeding such cure.
Unless such a cure is effected, the Default Rate shall continue in effect until
there shall occur a Dividend Payment Date at least two Business Days prior to
which the full amount of any dividends (whether or not earned or declared)
payable on each Dividend Payment Date prior to and including such Dividend
Payment Date, and the full amount of any redemption price (including accumulated
and unpaid dividends) then due, shall have been paid to the Auction Agent, and
thereupon Auctions shall resume on the terms stated herein for Dividend Periods
commencing with such Dividend Payment Date. If an Auction is not held on an
Auction Date for any reason (other than the suspension of Auctions due to a
Failure to Deposit), the dividend rate for the applicable Dividend Period shall
be the Maximum Applicable Rate determined as of such Auction Date.
9
<PAGE>
Any Failure to Deposit with respect to the Series E MAPS shall be deemed to be
cured if, within three Business Days of such Failure to Deposit, with respect to
a Failure to Deposit relating to (a) the payment of dividends, the Company
deposits with the Auction Agent by 12:00 noon, New York City time, all
accumulated and unpaid dividends on the Series E MAPS, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which the Failure to Deposit occurred, plus an amount computed by multiplying
the Default Rate by a fraction, the numerator of which shall be the number of
days during the period from the Dividend Payment Date in respect of which such
Failure to Deposit occurred through the day preceding the Business Day next
succeeding the Auction held following such cure and the denominator of which
shall be 360, and applying the rate obtained against the aggregate liquidation
preference of the Series E MAPS and (b) the redemption of shares of Series E
MAPS, the deposit by the Company with the Auction Agent, by 12:00 noon, New York
City time, of funds sufficient for the redemption of such shares (including
accumulated and unpaid dividends), plus an amount computed by multiplying the
Default Rate by a fraction, the numerator of which shall be the number of days
for which such Failure to Deposit is not cured in accordance with this paragraph
(including the day such Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate liquidation preference of the
shares of Series E MAPS to be redeemed, and the giving of irrevocable
instructions by the Company to apply such funds and, if applicable, the income
and proceeds therefrom, to the payment of the redemption price (including
accumulated and unpaid dividends) for such shares of the Series E MAPS. If the
Company shall have cured such Failure to Deposit by making timely payment to the
Auction Agent, the Auction Agent shall give telephonic and written notice of
such cure to each Existing Holder of MAPS at the telephone number and address
specified in such Existing Holder's Master Purchaser's Letter and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such Series for the next Business Day.
Section 3. Redemption.
The Series E MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series E MAPS may be redeemed, in whole
or from time to time in part, out of funds legally available therefor, on any
Dividend Payment Date for the Series E MAPS, upon at least fifteen but not more
than 45 days' notice, at a redemption price per share equal to the sum of
$100,000 plus an amount equal to accumulated and unpaid dividends thereon
(whether or not earned or declared) to the date that the Company pays the full
amount payable upon redemption of the shares of Series E MAPS. The Company may
only redeem Series E MAPS in whole shares. Pursuant to such right of optional
redemption, the Company may elect to redeem some or all of the shares of Series
E MAPS without redeeming shares of any other series of MAPS or redeem some or
all of the shares of any other series of MAPS without redeeming shares of Series
E MAPS. In the event of a partial redemption, the shares to be redeemed shall
be selected by the Company or, at the Company's request, the Auction Agent by
lot or by such other method as such Person shall deem fair and equitable.
Upon any date fixed for redemption (unless a Failure to Deposit occurs), all
rights of the holders of shares of Series E MAPS called for redemption will
cease and terminate, except the right of such holders to receive the amounts
payable in respect of such redemption therefor, but without interest, and such
shares of the Series E MAPS will be deemed no longer Outstanding.
So long as all of the Series E MAPS to be redeemed are held of record by a
nominee of the Securities Depositary, the redemption price (including
accumulated and unpaid dividends) for such shares of the Series E MAPS will be
paid by the Company to the Securities Depositary on the redemption date for
distribution to Agent Members in accordance with its normal procedures.
10
<PAGE>
(b) Any shares of Series E MAPS which shall at any time have been redeemed or
purchased by the Company shall, after such redemption or purchase, be restored
to the status of authorized unissued shares, undesignated as to series, in the
manner provided by the laws of the State of California.
Section 4. Conversion or Exchange.
The holders of shares of Series E MAPS shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of the Capital Stock of
the Company or into any other securities of the Company.
Section 5. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series E MAPS will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of $100,000 per share plus
an amount equal to accumulated and unpaid dividends on each such share (whether
or not declared) to and including the date of such distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets of the Company are insufficient to pay the holders of the Series E
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series E MAPS will share ratably in any such
distribution of such assets with holders of Parity Capital Stock. Unless and
until payment in full has been made to holders of the Series E MAPS of the
liquidation distributions to which they are entitled as described in this
paragraph, no dividends or distributions will be made to holders of the
Company's Junior Capital Stock, and no purchase, redemption or other acquisition
for any consideration by the Company will be made in respect of the Company's
Junior Capital Stock. After the payment to the holders of the Series E MAPS of
the full amount of the preferential liquidation distributions to which they are
entitled pursuant to this paragraph, such holders (in their capacity as such
holders) will have no right or claim to any of the remaining assets of the
Company. Neither the consolidation nor the merger of the Company with or into
any other corporation or corporations, nor the sale or transfer by the Company
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Company for purposes of this Section 5.
Section 6. Voting Rights.
(a) Holders of the Series E MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series E MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series E
MAPS which are then exercisable (the Series E MAPS and all such other securities
being referred to as the "Parity Securities") shall be in arrears for at least
180 consecutive days and shall not have been paid in full (a "Default Period"),
the holders of record of the Parity Securities voting as described below will be
entitled to elect two directors to the Board of Directors (the "Additional
Directors") whether or not the Board of Directors of the Company has taken
appropriate action to increase the established number of directors of the
Company by two, and the holders of the Common Stock as a class, shall be
entitled to elect the remaining number of directors. If the Board of Directors
has not taken appropriate action to authorize an increase in the number of
directors by two and there are not two vacancies then existing on the Board of
Directors, then, upon the election of the two Additional Directors as provided
below, the term of all previously sitting directors shall cease (a "Termination
of Directors").
11
<PAGE>
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called a
special meeting of the holders of Parity Securities and, in the case of a
Termination of Directors, all holders of Capital Stock of the Company entitled
to vote for the election of directors generally ("Other Voting Securities"), by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. If the Board of Directors of the Company does not call or cause
to be called such a special meeting, it may be called by any of such holders on
like notice. The record date for determining the holders of the Parity
Securities and, if applicable, Other Voting Securities entitled to notice of and
to vote at such special meeting will be the close of business on the Business
Day preceding the day on which such notice is mailed. At any such special
meeting, the holders of Parity Securities, by plurality vote, voting together as
a single class without regard to series (to the exclusion of the holders of
Junior Capital Stock) will be entitled to elect the two Additional Directors on
the basis of one vote per $100,000 liquidation preference (excluding amounts in
respect of accumulated and unpaid dividends) and, in the case of a Termination
of Directors, the holders of Other Voting Securities shall be entitled to elect
the remaining members of the Board of Directors in the same manner as if such
election had occurred at an annual meeting of the Company. The holder or holders
of one-third of the Parity Securities then outstanding, present in person or by
proxy, will constitute a quorum for the election of the Additional Directors
except as otherwise provided by law. Notice of all meetings at which holders of
the Series E MAPS shall be entitled to vote will be given to such holders at
their addresses as they appear on the register of the Company. If a Default
Period shall terminate after the notice of a special meeting has been given but
before such special meeting has been held, the Company shall, as soon as
practicable after such termination, mail or cause to be mailed notice of such
termination to holders of the Parity Securities and, if applicable, Other Voting
Securities that would have been entitled to vote at such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or, in
the event there is no remaining Additional Director, by vote of the holders of
the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
(b) Except as provided below, so long as any Series E MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the MAPS then outstanding (taken together as a single
class), given in person or by proxy, either in writing or at a meeting (voting
separately as a single class), (i) authorize, create or issue, or increase the
authorized amount of, any Capital Stock of the Company of any class ranking, as
to dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the Series E MAPS, or reclassify any authorized Capital Stock of the
Company into any such Capital Stock, or authorize, create or issue any
obligation or security convertible into or evidencing the right to purchase any
such Capital Stock, or (ii) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation, share
exchange, division or otherwise, so as to adversely affect any preference,
limitation or special right of the Series E MAPS.
Except as provided by law, the consent of the holders of the Series E MAPS is
not required and such holders are not entitled to vote upon (i) the
authorization, creation, issuance or increase in the authorized
12
<PAGE>
amount of the Common Stock, additional series of MAPS or any Capital Stock of
the Company of any class ranking, as to dividends and upon the liquidation,
dissolution or winding up of the Company, on a parity with or junior to the
Series E MAPS or (ii) any merger, consolidation, share exchange or division of
the Company (or any successor corporation) with or into another corporation the
result of which is that the Series E MAPS that may be Outstanding from time to
time may be junior to any preferred shares of such corporation as to dividends
and upon the liquidation, dissolution or winding up of the surviving corporation
if on or prior to the date of effectiveness of such merger or consolidation, the
Company shall have given Moody's and S&P written notice of such merger or
consolidation and Moody's and S&P shall have confirmed in writing that the
transaction will not adversely affect the then existing rating for the MAPS. If
either Moody's or S&P shall change its rating categories for preferred stock,
then the determination of whether the transaction will not adversely affect the
then existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the Series
E MAPS necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the Series E
MAPS, such confirmation will be sought from two Substitute Rating Agencies if
they have made ratings available for the Series E MAPS necessary to make the
determination and are willing to make such confirmation or, in the event that
only one such rating agency shall make such ratings available and is willing to
make such confirmation, based upon such rating agency's confirmation.
Section 7. Sinking Fund.
Shares of Series E MAPS are not subject or entitled to the benefit of a
sinking fund.
ARTICLE THREE
AUCTION PROCEDURES
Section 1. Definitions.
Capitalized terms not defined in this Section 1 shall have the respective
meanings specified in Section 1 of ARTICLE TWO. As used in this ARTICLE THREE,
the following terms have the following meanings:
(a) "Affiliate" means any Person controlled by, in control of or under common
control with the Company.
(b) "Applicable Determining Rate" means, (i) for any Standard Dividend Period
or Short Dividend Period of 183 days or less, the Applicable "AA" Composite
Commercial Paper Rate, (ii) for any Short Dividend Period of 184 to 364 days,
the Applicable Treasury Bill Rate and (iii) for any Long Dividend Period, the
Applicable Treasury Note Rate.
(c) "Available Shares of Series E MAPS" has the meaning specified in Section
4(a) of this ARTICLE THREE.
(d) "Bid" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(e) "Bidder" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(f) "Hold Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
13
<PAGE>
(g) "Order" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(h) "Sell Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(i) "Submission Deadline" means 1:00 P.M., New York City time, on any Auction
Date or such other time on any Auction Date as may be specified from time to
time by the Auction Agent as the time prior to which each Broker-Dealer must
submit to the Auction Agent in writing all Orders obtained by it for the Auction
to be conducted on such Auction Date.
(j) "Submitted Bid" has the meaning specified in Section 3(a) of this ARTICLE
THREE.
(k) "Submitted Hold Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(l) "Submitted Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(m) "Submitted Sell Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(n) "Winning Bid Rate" has the meaning specified in Section 4(a) of this
ARTICLE THREE.
Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series E MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information as to:
(A) the number of Outstanding shares of Series E MAPS, if any, held by
such Existing Holder that such Existing Holder desires to continue to hold
without regard to the Applicable Rate for the next succeeding Dividend Period;
(B) the number of Outstanding shares of Series E MAPS, if any, held by
such Existing Holder that such Existing Holder desires to sell, provided that
the Applicable Rate for the next succeeding Dividend Period is less than the
rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding shares of Series E MAPS, if any, held by
such Existing Holder that such Existing Holder desires to sell without regard
to the Applicable Rate for the next succeeding Dividend Period; and
(ii) each Broker-Dealer, using a list of Potential Holders that shall be
maintained in accordance with the provisions set forth in the Broker-Dealer
Agreement for the purpose of conducting a competitive Auction, shall contact
both Existing Holders and Potential Holders, including Existing Holders with
respect to an offer by any such Existing Holder to purchase additional shares
of Series E MAPS, on such list to notify such Existing Holders and Potential
Holders as to the length of the next Dividend Period and (A) with respect to
any Short Dividend Period or Long Dividend Period, the Dividend Payment
Date(s) and (B) with respect to any Long Dividend Period, any dates before
which shares of Series E MAPS may not be redeemed and any redemption premium
applicable in an optional redemption and to determine the number of
Outstanding shares of Series E MAPS, if any, with respect to which each such
Existing Holder desires to submit an Order and each such Potential Holder
desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i) or (ii) of this Subsection (a) is hereinafter
referred to as an "Order" and each Existing
14
<PAGE>
Holder and each Potential Holder placing an Order is hereinafter referred to
as a "Bidder," an Order containing the information referred to in clause
(i)(A) of this Subsection (a) is hereinafter referred to as a "Hold Order,"
an Order containing the information referred to in clause (i)(B) or (ii) of
this Subsection (a) is hereinafter referred to as a "Bid;" and an Order
containing the information referred to in clause (i)(C) of this Subsection
(a) is hereinafter referred to as a "Sell Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series E MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be less
than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series
E MAPS to be determined as set forth in Subsections (a)(iv) and (c) of Section
5 of this ARTICLE THREE if the Applicable Rate determined on such Auction Date
shall be equal to the rate per annum specified therein; or
(C) a lesser number of Outstanding shares of Series E MAPS to be
determined as set forth in Subsections (b)(iii) and (c) of Section 5 of this
ARTICLE THREE if such specified rate per annum shall be higher than the
Maximum Applicable Rate and Sufficient Clearing Bids do not exist.
(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series E MAPS specified
in such Sell Order; or
(B) such number or a lesser number of Outstanding shares of
Series E MAPS to be determined as set forth in Subsections (b)(iii) and (c)
of Section 5 of this ARTICLE THREE if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer to
purchase:
(A) the number of Outstanding shares of Series E MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series E
MAPS to be determined as set forth in Subsections (a)(v) and (d) of Section 5
of this ARTICLE THREE if the Applicable Rate determined on such Auction Date
shall be equal to the rate per annum specified therein.
(c) Orders may be submitted for whole shares of MAPS only. Orders submitted
for fractional shares of MAPS shall not be valid.
Section 3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior
to the Submission Deadline on each Auction Date for the Series E MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
15
<PAGE>
(ii) the aggregate number of Outstanding shares of Series E MAPS that
are the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder;
(A) the number of Outstanding shares of Series E MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series E MAPS, if any,
subject to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(C) the number of Outstanding shares of Series E MAPS, if any,
subject to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate per
annum specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed
submitted by a Broker-Dealer is hereinafter referred to individually as a
"Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as
the case may be, or as a "Submitted Order.")
(b) If any rate per annum specified in any Submitted Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(c) If one or more Orders covering in the aggregate all of the Outstanding
shares of Series E MAPS held by an Existing Holder are not submitted to the
Auction Agent prior to the Submission Deadline for any reason (including the
failure of a Broker-Dealer to contact such Existing Holder or to submit such
Existing Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of Series E
MAPS held by such Existing Holder that are not subject to Orders submitted to
the Auction Agent.
(d) A Submitted Order or Submitted Orders of an Existing Holder that cover
in the aggregate more than the number of Outstanding shares of Series E MAPS
held by such Existing Holder will be considered valid in the following order of
priority:
(i) any Submitted Hold Order of such Existing Holder will be
considered valid up to and including the number of Outstanding shares of
Series E MAPS held by such Existing Holder, provided that, if there is more
than one such Submitted Hold Order and the aggregate number of shares of
Series E MAPS subject to such Submitted Hold Orders exceeds the number of
Outstanding shares of Series E MAPS held by such Existing Holder, the
number of shares of Series E MAPS subject to each such Submitted Hold Order
will be reduced pro rata so that such Submitted Hold Orders in the
aggregate will cover exactly the number of Outstanding shares of Series E
MAPS held by such Existing Holder;
(ii) any Submitted Bids of such Existing Holder will be considered
valid (in the ascending order of their respective rates per annum if there
is more than one Submitted Bid of such Existing Holder) for the number of
Outstanding shares of Series E MAPS held by such Existing Holder equal to
the difference between (A) the number of Outstanding shares of Series E
MAPS held by such Existing Holder and (B) the number of Outstanding shares
of Series E MAPS subject to any Submitted Hold Order of such Existing
Holder referred to in clause (d)(i) above (and, if more than one Submitted
Bid of such Existing Holder specifies the same rate per annum and together
they cover more than the
16
<PAGE>
remaining number of shares of Series E MAPS that can be the subject of
valid Submitted Bids of such Existing Holder after application of clause
(d)(i) above and of the foregoing portion of this clause (d)(ii) to any
Submitted Bid or Submitted Bids of such Existing Holder specifying a lower
rate or rates per annum, the number of shares of Series E MAPS subject to
each of such Submitted Bids specifying the same rate per annum will be
reduced pro rata so that such Submitted Bids, in the aggregate, cover
exactly such remaining number of Outstanding shares of Series E MAPS of
such Existing Holder);
(iii) any Submitted Sell Order of such Existing Holder will be
considered valid up to and including the excess of the number of
Outstanding shares of Series E MAPS held by such Existing Holder over the
sum of (A) the number of shares of Series E MAPS subject to Submitted Hold
Orders by such Existing Holder referred to in clause (d)(i) above and (B)
the number of shares of Series E MAPS subject to valid Submitted Bids by
such Existing Holder referred to in clause (d)(ii) above; provided that, if
there is more than one Submitted Sell Order of such Existing Holder and the
number of shares of Series E MAPS subject to such Submitted Sell Orders is
greater than such excess, the number of shares of Series E MAPS subject to
each of such Submitted Sell Orders will be reduced pro rata so that such
Submitted Sell Orders, in the aggregate, will cover exactly the number of
shares of Series E MAPS equal to such excess.
The number of Outstanding shares of Series E MAPS, if any, subject to Submitted
Bids of such Existing Holder not valid under clause (d)(ii) above shall be
treated as the subject of a Submitted Bid by a Potential Holder at the rate per
annum specified in such Submitted Bids.
(e) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of Series E MAPS
specified therein.
Section 4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date for the
Series E MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(i) the excess of the total number of Outstanding shares of Series E
MAPS over the number of shares of Series E MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series E MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series E MAPS that are the subject of Submitted Bids by Potential
Holders specifying one or more rates per annum equal to or lower than the
Maximum Applicable Rate exceeds or is equal to the sum of:
(A) the number of Outstanding shares of Series E MAPS that are
the subject of Submitted Bids by Existing Holders specifying one or more
rates per annum higher than the Maximum Applicable Rate, and
(B) the number of Outstanding shares of Series E MAPS that are
subject to Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of Series E MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series E MAPS are the subject
of Submitted Hold Orders), there shall exist "Sufficient Clearing Bids"
17
<PAGE>
and such Submitted Bids by Potential Holders shall be hereinafter referred
to collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the winning bid rate (the
"Winning Bid Rate"), which shall be the lowest rate per annum specified in
the Submitted Bids that if:
(A) each Submitted Bid from Existing Holders specifying the
Winning Bid Rate and all other Submitted Bids from Existing Holders
specifying lower rates per annum were accepted, thus entitling such
Existing Holders to continue to hold the shares of Series E MAPS that are
the subject of such Submitted Bids, and
(B) each Submitted Bid from Potential Holders specifying the
Winning Bid Rate and all other Submitted Bids from Potential Holders
specifying lower rates per annum were accepted, thus entitling such
Potential Holders to purchase the shares of Series E MAPS that are the
subject of such Submitted Bids,
would result in such Existing Holders described in subclause (iii)(A) continuing
to hold an aggregate number of Outstanding shares of Series E MAPS that, when
added to the number of Outstanding shares of Series E MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series E MAPS.
(b) In connection with any Auction and promptly after the Auction Agent
has made the determinations pursuant to Subsection (a), the Auction Agent shall
advise the Company of the Maximum Applicable Rate and, based on such
determinations, the Applicable Rate for the next succeeding Dividend Period as
follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for
the next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(ii) if Sufficiant Clearing Bids do not exist (other than because all
of the Outstanding shares of Series E MAPS are the subject of Submitted
Hold Orders), that the next succeeding Dividend Period will be a Standard
Dividend Period and the Applicable Rate for the next succeeding Dividend
Period shall be equal to the Maximum Applicable Rate for a Standard
Dividend Period determined as of the Business Day immediately preceding
such Auction; or
(iii) if all of the Outstanding shares of Series E MAPS are the
subject of Submitted Hold Orders, that the Applicable Rate for the next
succeeding Dividend Period shall be equal to 59% of the Applicable "AA"
Composite Commercial Paper Rate, in the case of Series E MAPS with a
Standard Dividend Period or a Short Dividend Period of 183 days or less,
59% of the Applicable Treasury Bill Rate in the case of Series E MAPS with
a Short Dividend Period of 184 to 364 days, or 59% of the Applicable
Treasury Note Rate in the case of Series E MAPS with a Long Dividend
Period, in effect on the Auction Date.
Section 5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares of Series E MAPS.
Based on the determinations made pursuant to Subsection (a) of Section 4,
the Submitted Bids and Submitted Sell Orders shall be accepted or rejected and
the Auction Agent shall take such other action as set forth below:
18
<PAGE>
(a) If Sufficient Clearing Bids have been made, subject to the provisions
of Subsections (c) and (d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted
and the Submitted Bid of each of the Existing Holders specifying any rate
per annum that is higher than the Winning Bid Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of
Series E MAPS that are the subject of such Submitted Sell Order or
Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying any
rate per annum that is lower than the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the
Outstanding shares of Series E MAPS that are the subject of such Submitted
Bid;
(iii) the Submitted Bid of each of the Potential Holders specifying
any rate per annum that is lower than the Winning Bid Rate shall be
accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted,
thus entitling each such Existing Holder to continue to hold the
Outstanding shares of Series E MAPS that are the subject of such Submitted
Bid, unless the number of Outstanding shares of Series E MAPS subject to
all such Submitted Bids shall be greater than the number of Outstanding
shares of Series E MAPS ("Remaining Shares of Series E MAPS") equal to the
excess of the Available Shares of Series E MAPS over the number of
Outstanding shares of Series E MAPS subject to Submitted Bids described in
Subsections (a)(ii) and (a)(iii), in which event the Submitted Bids of each
such Existing Holder shall be rejected, and each such Existing Holder shall
be required to sell Outstanding shares of Series E MAPS, but only in an
amount equal to the difference between (A) the number of Outstanding shares
of Series E MAPS then held by such Existing Holder subject to such
Submitted Bid and (B) the number of shares of Series E MAPS obtained by
multiplying (x) the number of Remaining Shares of Series E MAPS by (y) a
fraction, the numerator of which shall be the number of Outstanding shares
of Series E MAPS held by such Existing Holder subject to such Submitted Bid
and the denominator of which shall be the aggregate number of Outstanding
shares of Series E MAPS subject to such Submitted Bids made by all such
Existing Holders that specified a rate per annum equal to the Winning Bid
Rate; and
(v) the Submitted Bid of each of the Potential Holders specifying a
rate per annum that is equal to the Winning Bid Rate shall be accepted, but
only in an amount equal to the number of Outstanding shares of Series E
MAPS obtained by multiplying (x) the difference between the Available
Shares of Series E MAPS and the number of Outstanding shares of Series E
MAPS subject to Submitted Bids described in Subsections (a)(ii), (a)(iii)
and (a)(iv) by (y) a fraction, the numerator of which shall be the number
of Outstanding shares of Series E MAPS subject to such Submitted Bid and
the denominator of which shall be the aggregate number of Outstanding
shares of Series E MAPS subject to such Submitted Bids made by all such
Potential Holders that specified rates per annum equal to the Winning Bid
Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all
of the Outstanding shares of Series E MAPS are subject to Submitted Hold
Orders), subject to the provisions of Subsection (c), Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all other
Submitted Bids of Potential Holders shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus entitling such Existing Holder to continue to hold the
Outstanding shares of Series E MAPS that are the subject of such Submitted
Bid;
19
<PAGE>
(ii) the Submitted Bid of each Potential Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of Series E MAPS that are the subject of such Submitted Bid; an d
(iii) the Submitted Bids of each Existing Holder specifying any rate per
annum that is higher than the Maximum Applicable Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of Series E
MAPS that are the subject of such Submitted Bid, and the Submitted Sell Orders
of each Existing Holder shall be accepted, in both cases only in an amount
equal to the difference between (A) the number of Outstanding shares of Series
E MAPS then held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and (B) the number of shares of Series E MAPS obtained by
multiplying (x) the difference between the Available Shares of Series D MAPS
and the aggregate number of Outstanding shares of Series E MAPS subject to
Submitted Bids described in Subsections (b)(i) and (b)(ii) by (y) a fraction,
the numerator of which shall be the number of Outstanding shares of Series E
MAPS held by such Existing Holder subject to such Submitted Bid or Submitted
Sell Order and the denominator of which shall be the aggregate number of
Outstanding shares of Series E MAPS subject to all such Submitted Bids and
Submitted Sell Orders.
(c) If, as a result of the procedures described in Subsections (a) or (b),
any Existing Holder would be entitled or required to sell or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
Series E MAPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of shares of
Series E MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series E MAPS will be entitled
or required to be sold or purchased.
(d) If, as a result of the procedures described in Subsection (a), any
Potential Holder would be entitled or required to purchase less than a whole
share of Series E MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series E
MAPS for purchase among Potential Holders so that only whole shares of Series E
MAPS are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of Series E MAPS on such Auction Date.
(e) Based on the results of each Auction, the Auction Agent shall determine,
with respect to each Broker-Dealer that Submitted Bids or Sell Orders on behalf
of Existing Holders or Potential Holders, the aggregate number of Outstanding
shares of Series E MAPS to be purchased and the aggregate number of Outstanding
shares of Series E MAPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares of
Series E MAPS to be purchased and such aggregate number of Outstanding shares of
Series E MAPS to be sold differ, the Auction Agent shall determine to which
other Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers such Broker-Dealer shall receive, as the case may
be, Outstanding shares of Series E MAPS.
Section 6. Participation in Auctions.
The Company and its Affiliates shall not submit any Order in any Auction
except as set forth in the next sentence. Any Broker-Dealer that is an
Affiliate of the Company may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-Dealer holds
shares of Series E MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series E MAPS.
20
<PAGE>
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series E MAPS only pursuant to a Bid or Sell Order in accordance with the
procedures described in these Auction Procedures or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master Purchaser's
Letter to a Broker-Dealer, provided that in the case of all transfers other than
pursuant to Auctions such Existing Holder, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer and (b) unless otherwise required by
law, shall have the beneficial ownership of the shares of Series E MAPS held by
it maintained in book-entry form by the Securities Depositary in the account of
its Agent Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. All of the Outstanding shares of Series E MAPS of each
Series shall be represented by a single certificate for each Series registered
in the name of the nominee of the Securities Depositary unless otherwise
required by law or unless there is no Securities Depositary. If there is no
Securities Depositary, shares of Series E MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor and
be required to deliver a certificate therefor upon transfer or exchange thereof.
21
<PAGE>
RESOLVED FURTHER, that the Chairman of the Board, the President or any Vice
President, and the Secretary, the Chief Financial Officer, the Treasurer, or any
Assistant Secretary or Assistant Treasurer of this Company are each authorized
to execute, verify, and file a certificate of determination of preferences in
accordance with California law.
3. The authorized number of shares of Preferred Stock of the Company is
20,000,000, and the number of shares constituting Series E MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
January 25, 1995.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY, President
/s/ JULIE I. SACKMAN
---------------------------------------------
JULIE I. SACKMAN, Secretary
The undersigned, STEVEN F. UDVAR-HAZY and JULIE I. SACKMAN, the President
and Secretary, respectively, of INTERNATIONAL LEASE FINANCE CORPORATION, each
declares under penalty of perjury that the matters set forth in the foregoing
Certificate are true of his or her own knowledge.
Executed at Los Angeles, California on January 25, 1995.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY
/s/ JULIE I. SACKMAN
---------------------------------------------
JULIE I. SACKMAN
22
<PAGE>
EXHIBIT 3.5
CERTIFICATE OF DETERMINATION OF
PREFERENCES OF PREFERRED STOCK OF
INTERNATIONAL LEASE FINANCE CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Steven F. Udvar-Hazy and Julie I. Sackman hereby certify
that:
1. They are the duly elected and acting President and Secretary,
respectively, of International Lease Finance Corporation (the "Company").
2. Pursuant to authority given by the Company's Restated Articles of
Incorporation, a duly appointed committee (the "Special Committee") of the Board
of Directors of the Company (such committee having been previously authorized to
exercise the powers of the Board of Directors as to the subject matter), has
duly adopted the following recitals and resolutions:
WHEREAS, the Restated Articles of Incorporation of the Company provide for a
class of shares known as Preferred Stock, issuable from time to time in one or
more series; and
WHEREAS, the Board of Directors of the Company is authorized to determine or
alter the rights, preferences, privileges, and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock, to fix the number of
shares constituting any such series, and to determine the designation thereof,
or any of them; and
WHEREAS, the Company desires, pursuant to its authority as aforesaid, to
determine and fix the rights, preferences, privileges, and restrictions relating
to a series of said Preferred Stock and the number of shares constituting and
the designation of said series;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby fixes and
determines the designation of, the number of shares constituting, and the
rights, preferences, privileges, and restrictions relating to, said series of
Preferred Stock as follows:
ARTICLE ONE
DESIGNATION
Section 1. Designation.
A series of Preferred Stock shall be designated "Market Auction Preferred
Stock, Series F" (the "Series F MAPS").
Section 2. Amount.
The number of shares constituting Series F MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES F MAPS--GENERAL PROVISIONS.
Section 1. Definitions.
As used herein, the following terms have the following meanings:
(a) "Additional Directors" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(b) "Agent Member" means the member of the Securities Depositary that will
act on behalf of an Existing Holder or a Potential Holder and that is identified
as such in such Existing Holder's or Potential Holder's Master Purchaser's
Letter.
(c) "Applicable 'AA' Composite Commercial Paper Rate," on any date, shall
mean in the case of any Standard Dividend Period or Short Dividend Period of (1)
49 days or more but less than 70 days, the interest equivalent of the 60-day
rate, (2) 70 days or more but less than 85 days, the arithmetic average of the
interest equivalent of the 60-day and 90-day rates, (3) 85 days or more but less
than 120 days, the interest equivalent of the 90-day rate, (4) 120 days or more
but less than 148 days, the arithmetic average of the interest equivalent of the
90-day and 180-day rates, and (5) 148 days or more but less than 184 days, the
interest equivalent of the 180-day rate, in each case, on commercial paper
placed on behalf of issuers whose corporate bonds are rated "AA" by S&P or "Aa"
by Moody's, or the equivalent of such rating by another rating agency, as made
available on a discount basis or otherwise by the Federal Reserve Bank of New
York for the Business Day immediately preceding such date. In the event that the
Federal Reserve Bank of New York does not make available any of the foregoing
rates, then such rates shall be the 60-day rate or arithmetic average of such
rates, as the case may be, as quoted on a discount basis or otherwise, by
Commercial Paper Dealers to the Auction Agent as of the close of business on the
Business Day next preceding such date. If any Commercial Paper Dealer does not
quote a rate required to determine the Applicable "AA" Composite Commercial
Paper Rate, the Applicable "AA" Composite Commercial Paper Rate shall be
determined on the basis of the quotation or quotations furnished by the
remaining Commercial Paper Dealer (if any) and any Substitute Commercial Paper
Dealer or Substitute Commercial Paper Dealers selected by the Company to provide
such rate or rates or, if the Company does not select any Substitute Commercial
Paper Dealer or Substitute Commercial Paper Dealers, by the remaining Commercial
Paper Dealer (if any). "Substitute Commercial Paper Dealer" means Goldman, Sachs
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon Brothers
Inc or their respective affiliates or successors or, if no such dealer furnishes
such quotations, a leading dealer in the commercial paper market selected by the
Company in good faith. For purposes of this definition, the "interest
equivalent" means the equivalent yield on a 360-day basis of a discount-basis
security to an interest-bearing security.
(d) "Applicable Rate" means the rate per annum, resulting from the next
preceding Auction, at which dividends are payable on the shares of Series F MAPS
for any Dividend Period.
(e) "Applicable Treasury Bill Rate" for any Short Dividend Period in excess
of 183 days and "Applicable Treasury Note Rate" for any Long Dividend Period, on
any date, shall mean the interest equivalent of the rate for direct obligations
of the United States Treasury having an original maturity which is equal to, or
next lower than, the length of such Short Dividend Period or Long Dividend
Period, as the case may be, as published weekly by the Board of Governors of the
Federal Reserve System (the "Board") in "Federal Reserve Statistical Release
H.15(519)-Selected Interest Rates," or any successor publication by the Board,
within five Business Days preceding such date. In the event that the Board does
not publish such rate, or if such release is not available, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate will be the arithmetic mean
of the secondary market bid rate as of approximately 3:30 P.M., New York City
time, on the Business Day next preceding such date of the U.S. Government
Securities Dealers furnished to
2
<PAGE>
the Auction Agent for the issue of direct obligations of the United States
Treasury, in an aggregate principal amount of at least $1,000,000 with a
remaining maturity equal to, or next lower than, the length of such Short
Dividend Period or Long Dividend Period, as the case may be. If any U.S.
Government Securities Dealer does not quote a rate required to determine the
Applicable Treasury Bill Rate or Applicable Treasury Note Rate, the Applicable
Treasury Bill Rate or Applicable Treasury Note Rate shall be determined on the
basis of the quotation or quotations furnished by any Substitute U.S. Government
Securities Dealer or Dealers selected by the Company to provide such rate or
rates or, if the Company does not select any such Substitute U.S. Government
Securities Dealer or Dealers, by the remaining U.S. Government Securities
Dealer (if any). "Substitute U.S. Government Securities Dealers" means Goldman,
Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated or Salomon
Brothers Inc or their respective affiliates or successors or, if no such dealer
provides such quotes, a leading dealer in the government securities market
selected by the Company in good faith. For purposes of this definition, the
"interest equivalent" of a rate stated on a discount basis shall be equal to the
quotient of (A) the discount rate divided by (B) the difference between 1.00 and
the discount rate.
(f) "Auction Agent" means Chemical Bank, or its successors, or any other bank
or trust company appointed by a resolution of the Board of Directors of the
Company, or its Special Committee, which enters into an agreement with the
Company to follow the Auction Procedures set forth in ARTICLE THREE hereof.
(g) "Auction Date" means the first Business Day preceding the first day of a
Dividend Period other than the Initial Dividend Period.
(h) "Broker-Dealer" means any broker-dealer, or other entity permitted by law
to perform the functions required of a Broker-Dealer in ARTICLE THREE, that has
been selected by the Company and has entered into a Broker-Dealer Agreement with
the Auction Agent that remains effective.
(i) "Broker-Dealer Agreement" means an agreement between the Auction Agent
and a Broker-Dealer pursuant to which such Broker-Dealer agrees to follow the
procedures specified in ARTICLE THREE.
(j) "Business Day" means a day on which the New York Stock Exchange is open
for trading and which is not a Saturday, Sunday or other day on which banks in
New York City are authorized or obligated by law to close.
(k) "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's capital stock, whether outstanding on the Date of Original Issue or
thereafter.
(l) "Code" means the Internal Revenue Code of 1986, as amended.
(m) "Commercial Paper Dealers" means Morgan Stanley & Co. Incorporated and
Lehman Brothers Inc. or, in lieu of either thereof, their respective affiliates
or successors.
(n) "Common Stock" means all shares now or hereafter authorized of the class
of Common Stock of the Company presently authorized and any other shares into
which such shares may hereafter be changed from time to time.
(o) "Date of Original Issue" means the date on which the Company initially
issues shares of Series F MAPS.
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
3
<PAGE>
(q) "Default Rate" means the Applicable Determining Rate multiplied by the
percentage shown opposite the lowest Credit Ratings category in the definition
of Maximum Applicable Rate, determined as of the Business Day preceding a
Failure to Deposit.
(r) "Dividend Payment Date" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(s) "Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(t) "Dividend Quarter" has the meaning specified in Section 2(b) of this
ARTICLE TWO.
(u) "Dividends-Received Deduction" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(v) "Existing Holder," means a Person who has signed a Master Purchaser's
Letter and is listed as the beneficial owner of shares of Series F MAPS in the
records of the Auction Agent.
(w) "Failure to Deposit" has the meaning specified in Section 2(e) of this
ARTICLE TWO.
(x) "Initial Dividend Payment Date" means March 21, 1995.
(y) "Initial Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(z) "Initial Dividend Rate" has the meaning specified in Section 2(a) of this
ARTICLE TWO.
(aa) "Junior Capital Stock" means, with respect to the Company, any and all
Capital Stock of the Company ranking junior to the Series F MAPS with respect to
the payment of dividends or the distribution of assets upon liquidation.
(ab) "Long Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(ac) "MAPS" means all shares of each series of the Company's Market Auction
Preferred Stock now or hereafter authorized.
(ad) "Maximum Applicable Rate," on any Auction Date, shall mean the rate per
annum obtained by multiplying the Applicable Determining Rate on such Auction
Date by a percentage determined as set forth below based on the lower of the
credit ratings assigned to the Series F MAPS by Moody's and S&P (or if Moody's
or S&P or both shall not make such rating available, the equivalent of either or
both of such ratings by a Substitute Rating Agency or two Substitute Rating
Agencies, as the case may be, or in the event that only one such rating shall be
available, the percentage shall be based on such rating).
<TABLE>
<CAPTION>
Credit Ratings Applicable Percentage
--------------
of Applicable
Moody's S&P Determining Rate
----------------- ------------- ----------------------
<S> <C> <C>
"aa3" or Above AA-- or Above 150%
"a3" to "a1" A-- to A+ 200%
"baa3" to "baa1" BBB-- to BBB+ 225%
Below "baa3" Below BBB-- 275%
</TABLE>
4
<PAGE>
(ae) "Master Purchaser's Letter" means a letter addressed to the Company, the
Auction Agent and a Broker-Dealer in which a Person agrees, among other things,
to offer to purchase, purchase, offer to sell or sell shares of Series F MAPS as
set forth in ARTICLE THREE.
(af) "Minimum Holding Period" has the meaning specified in Section 2(b) of
this ARTICLE TWO.
(ag) "Moody's" means Moody's Investors Service, Inc.
(ah) "Normal Dividend Payment Date" has the meaning specified in Section 2(b)
of this ARTICLE TWO.
(ai) "Notice" has the meaning specified in Section 2(c) of this ARTICLE TWO.
(aj) "Notice of Long Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(ak) "Notice of Revocation" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(al) "Notice of Short Dividend Period" has the meaning specified in Section
2(c) of this ARTICLE TWO.
(am) "Outstanding" means, as of any date, shares of MAPS theretofore issued by
the Company except, without duplication, (i) any shares of MAPS theretofore
cancelled, delivered to the Company for cancellation or redeemed and (ii) as of
any Auction Date, any shares of MAPS subject to redemption on the next following
Business Day.
(an) "Parity Capital Stock" means any and all shares of Capital Stock of the
Company ranking on a parity with or equal to the Series F MAPS as to the payment
of dividends and distribution of assets.
(ao) "Parity Securities" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
(ap) "Person" means and includes an individual, a partnership, a corporation,
a trust, an unincorporated association, a joint venture or other entity or a
government or any agency or political subdivision thereof.
(aq) "Potential Holder" means any Person, including any Existing Holder, (i)
who has executed a Master Purchaser's Letter and (ii) who may be interested in
acquiring shares of Series F MAPS (or, in the case of an Existing Holder,
additional shares of Series F MAPS).
(ar) "Preferred Stock" means all shares now or hereafter authorized of the
class of Preferred Stock, without par value, of the Company, including the
shares of MAPS of any series.
(as) "S&P" means Standard & Poor's Corporation.
(at) "Securities Depositary" means The Depository Trust Company and its
successors and assigns or any other securities depository selected by the
Company which agrees to follow the procedures required to be followed by such
Securities Depositary in connection with shares of Series F MAPS.
(au) "Short Dividend Period" has the meaning specified in Section 2(c) of this
ARTICLE TWO.
(av) "Standard Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
(aw) "Subsequent Dividend Period" has the meaning specified in Section 2(c) of
this ARTICLE TWO.
5
<PAGE>
(ax) "Subsequent Dividend Period Days" has the meaning specified in Section
2(b) of this ARTICLE TWO.
(ay) "Substitute Rating Agency" shall mean a nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Securities Exchange Act of 1934, as amended) selected by the
Company, subject to the approval by Morgan Stanley & Co. Incorporated and Lehman
Brothers Inc., such approval not to be unreasonably withheld.
(az) "Sufficient Clearing Bids" has the meaning specified in Section 4(a) of
ARTICLE THREE.
(ba) "U.S. Government Securities Dealers" shall mean Morgan Stanley & Co.
Incorporated and Lehman Brothers Inc. or, in lieu of either thereof, their
respective affiliates or successors.
Section 2. Dividends.
(a) Holders of Series F MAPS shall be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds available
therefor under applicable law and the Restated Articles of Incorporation of the
Company, cumulative cash dividends at the Applicable Rate, determined as set
forth below, payable on the respective dates set forth below that may be
applicable with respect to such Series F MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of 4.60% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series F
MAPS will be the Applicable Rate, determined as set forth herein, and will be
payable on the respective dates set forth below.
(b) Dividends on the Series F MAPS will accumulate (whether or not declared)
from the Date of Original Issue. Except for the Initial Dividend Payment Date,
dividends on the Series F MAPS with a Standard Dividend Period will be payable,
except as provided below, on each seventh Tuesday following the preceding
Dividend Payment Date. Dividends on the Series F MAPS with a Short Dividend
Period will be payable, except as provided below, on the day following the last
day of such Short Dividend Period and will also be payable on such other dates
as are established at the time such Short Dividend Period is determined.
Dividends on the Series F MAPS with a Long Dividend Period will be payable,
except as provided below, on the day following the last day of such Long
Dividend Period and on the first day of the fourth calendar month after the
commencement of such Long Dividend Period and quarterly thereafter on the first
day of each applicable month. Each day on which dividends on Series F MAPS
would be payable as determined as set forth in this paragraph but for the
adjustments set forth below is referred to herein as a "Normal Dividend Payment
Date."
(i) In the case of dividends payable on Series F MAPS with a Standard
Dividend Period or a Short Dividend Period, if:
(A)(1) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the Series F MAPS in next-day
funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day preceding such Normal Dividend Payment Date
that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent Members
the amounts due as dividends on Series F MAPS in immediately available funds
on the dates on which such dividends are payable (and the Securities
Depositary shall have so advised the Auction Agent) and (2) a Normal
6
<PAGE>
Dividend Payment Date is not a Business Day, then dividends shall be payable
on the first Business Day following such Normal Dividend Payment Date.
(ii) In the case of dividends payable on Series F MAPS with a Long Dividend
Period, if:
(A)(1) the Securities Depositary shall continue to make available to
Agent Members the amounts due as dividends on the Series F MAPS in next-day
funds on the dates on which such dividends are payable and (2) a Normal
Dividend Payment Date is not a Business Day, or the day next succeeding such
Normal Dividend Payment Date is not a Business Day, then dividends shall be
payable on the first Business Day following such Normal Dividend Payment Date
that is next succeeded by a Business Day; or
(B)(1) the Securities Depositary shall make available to Agent Members
the amounts due as dividends on the Series F MAPS in immediately available
funds on the dates on which such dividends are payable (and the Securities
Depositary shall have so advised the Auction Agent) and (2) a Normal Dividend
Payment Date is not a Business Day, then dividends shall be payable on the
first Business Day following such Normal Dividend Payment Date.
Notwithstanding the foregoing, in case of payment in next-day funds, if the
date on which dividends on Series F MAPS would be payable as determined as set
forth in the preceding paragraphs is a day that would result in the number of
days between successive Auction Dates (determined by excluding the first Auction
Date and including the second Auction Date) not being at least equal to the
then-current minimum holding period (currently set forth in Section 246(c) of
the Code) (the "Minimum Holding Period") required for corporate taxpayers to be
entitled to the dividends-received deduction on preferred stock held by
nonaffiliated corporations (currently set forth in Section 243(a) of the Code)
(the "Dividends-Received Deduction"), then dividends on the Series F MAPS shall
be payable on the first Business Day following such date on which dividends
would be so payable that is next succeeded by a Business Day that results in the
number of days between such successive Auction Dates (determined as set forth
above) being at least equal to the then-current Minimum Holding Period.
Each date on which dividends on Series F MAPS shall be payable as determined
as set forth above is referred to herein as a "Dividend Payment Date". If
applicable, the period from the preceding Dividend Payment Date to the next
Dividend Payment Date for Series F MAPS with a Long Dividend Period is hereby
referred to as a "Dividend Quarter." Although any particular Dividend Payment
Date may not occur on the originally scheduled Normal Dividend Payment Date
because of the adjustments set forth above, each succeeding Dividend Payment
Date will be, subject to such adjustments, the date determined as set forth
above as if each preceding Dividend Payment Date had occurred on the respective
originally scheduled Normal Dividend Payment Date.
In addition, notwithstanding the foregoing, in the event of a change in law
altering the Minimum Holding Period, the period of time between Dividend Payment
Dates shall automatically be adjusted so that there shall be a uniform number of
days in subsequent Dividend Periods (such number of days without giving effect
to the adjustment referred to above being referred to herein as the "Subsequent
Dividend Period Days") commencing after the date of such change in law equal to
or to the extent necessary, in excess of the then-current Minimum Holding
Period, provided that the number of Subsequent Dividend Period Days shall not
exceed by more than nine days the length of such then-current Minimum Holding
Period and shall be evenly divisible by seven, and the maximum number of
Subsequent Dividend Period Days, as adjusted pursuant to this provision, in no
event shall exceed 119 days.
(c) After the Initial Dividend Period for the Series F MAPS, each subsequent
Dividend Period will (except for the adjustments for non-Business Days described
above) be 49 days (each such 49-day period, subject to any adjustment as a
result of a change in law altering the Minimum Holding Period as described
7
<PAGE>
above, being herein referred to as a "Standard Dividend Period"), unless the
Company specifies that any such subsequent Dividend Period will be a Dividend
Period of 50 to 364 days and consisting of a whole number of weeks (a "Short
Dividend Period") or a Dividend Period of one year or longer (a "Long Dividend
Period"). Each such Standard Dividend Period, Short Dividend Period and Long
Dividend Period (together with the period commencing on the Date of Original
Issue and ending on the Initial Dividend Payment Date for the Series F MAPS (the
"Initial Dividend Period")) being referred to herein as a "Dividend Period."
After the Initial Dividend Period for the Series F MAPS, each successive
Dividend Period will commence on the Dividend Payment Date for the preceding
Dividend Period and will end (i) in the case of a Standard Dividend Period, on
the day preceding the next Dividend Payment Date and (ii) in the case of a Short
Dividend Period or a Long Dividend Period, on the last day of the Short Dividend
Period or the Long Dividend Period specified by the Company in the related
Notice.
The Company may give telephonic and written notice, not less than ten and not
more than 30 days prior to an Auction Date, to the Auction Agent and the
Securities Depositary that the next succeeding Dividend Period will be a Short
Dividend Period (a "Notice of Short Dividend Period") or a Long Dividend Period
(a "Notice of Long Dividend Period" and, together with a Notice of Short
Dividend Period, a "Notice"). Each such Notice will specify (i) the next
succeeding Dividend Period as a Short Dividend Period or a Long Dividend Period,
(ii) the term thereof, (iii) in the case of any Long Dividend Period, additional
redemption provisions or restrictions on redemption, if any, and (iv) the
Dividend Payment Dates; provided that, for any Auction occurring after the
initial Auction, the Company may not give a Notice of a Short Dividend Period or
a Notice of a Long Dividend Period (and any such Notice shall be null and void)
unless Sufficient Clearing Bids were made in the last occurring Auction of any
series of MAPS (or all shares of such series were subject to Submitted Hold
Orders) and full cumulative dividends, if any, for all series of MAPS payable
prior to such date have been paid in full. The Board of Directors of the
Company may establish a Short Dividend Period or a Long Dividend Period for the
Series F MAPS. Notice may be revoked by the Company on or prior to the Business
Day prior to the related Auction Date by telephonic and written notice (a
"Notice of Revocation") to the Auction Agent and the Securities Depositary.
If the Company does not give a Notice with respect to the next succeeding
Dividend Period or gives a Notice of Revocation with respect thereto, such next
succeeding Dividend Period will be a Standard Dividend Period. In addition, if
the Company has given Notice with respect to the next succeeding Dividend Period
and has not given Notice of Revocation with respect thereto, but Sufficient
Clearing Bids are not made in the Auction for the Series F MAPS (other than
because all shares of Series F MAPS were subject to Submitted Hold Orders) or
such Auction is not held for any reason, such next succeeding Dividend Period
will, notwithstanding such Notice, be a Standard Dividend Period and the Company
may not again give a Notice (and such Notice shall be null and void) until
Sufficient Clearing Bids have been made in an Auction of a series of MAPS or an
Auction has been held in which all shares of a series of MAPS were subject to
Submitted Hold Orders.
(d) Prior to each Dividend Payment Date for the Series F MAPS, the Company
shall deposit with the Auction Agent sufficient funds for the payment of
declared dividends.
Each dividend will be payable to the holder or holders of record of Series F
MAPS as they appear on the stock books of the Company on the Business Day next
preceding the applicable Dividend Payment Date. Dividends in arrears for any
past Dividend Period (and for any past Dividend Quarter during a Long Dividend
Period) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the holder or holders of record of the Series F MAPS.
Any dividend payment made shall first be credited against the dividends
accumulated with respect to the earliest Dividend Period (or, if applicable, the
earliest Dividend Quarter) for which dividends have not been paid. So long as
the Series F MAPS are held of record by the nominee of the Securities
Depositary, dividends will be paid to the nominee of the Securities Depositary
on each Dividend Payment Date. The Securities Depositary will credit the
accounts of the Agent Members of Existing Holders in accordance with the
Securities Depositary's normal procedures, which now
8
<PAGE>
provide for payments in next-day funds settled through the New York Clearing
House. The Agent Member of an Existing Holder will be responsible for holding
or disbursing such payments to Existing Holders in accordance with the
instructions of such Existing Holders.
Holders of shares of the Series F MAPS shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends. No dividends will be declared or paid or set apart for payment on
the Series F MAPS for any period unless full cumulative dividends have been or
contemporaneously are declared and paid on all series of MAPS through the most
recent applicable Dividend Payment Date for such series of MAPS. No interest,
or sum of money in lieu of interest, shall be payable in respect of any dividend
payment or payments on the Series F MAPS which may be in arrears.
So long as any MAPS are Outstanding, the Company shall not declare, pay or set
aside for payment any dividend or other distribution in respect of Junior
Capital Stock or call for redemption, redeem, purchase or otherwise acquire for
consideration any shares of Junior Capital Stock unless (i) full cumulative
dividends for all past Dividend Periods (and, if applicable, for all past
Dividend Quarters) and all Dividend Payment Dates occurring on or prior to the
date of the transaction shall have been declared and paid (or declared and a sum
sufficient for payment of the dividends set apart for payment) on all such MAPS
Outstanding and (ii) the Company has redeemed (or set apart for payment a sum
sufficient for redemption) the full number of MAPS required to be redeemed after
giving any notice of an optional redemption.
The amount of dividends per share on Series F MAPS payable for each Dividend
Period (or for each Dividend Quarter) shall be computed by multiplying the
Applicable Rate for each Dividend Period (or Dividend Quarter) by a fraction,
the numerator of which shall be the number of days in the Dividend Period (or
Dividend Quarter) (calculated by counting both the last day and the first day
thereof) such share was Outstanding, and the denominator of which shall be 360
and multiplying the amount so obtained by $100,000.
(e) The dividend rate for each Dividend Period subsequent to the Initial
Dividend Period for the Series F MAPS will be, except as provided below, the
Applicable Rate.
Notwithstanding the results of any Auction or any other provision herein, the
dividend rate on the Series F MAPS shall not exceed the Maximum Applicable Rate
for any Dividend Period. The provisions of the previous sentence of this
paragraph notwithstanding, at any time that the application of the provisions of
the next paragraph would result in a dividend rate on the Series F MAPS being in
excess of the Maximum Applicable Rate, the maximum dividend rate applicable to
such Series F MAPS shall be such higher dividend rate as provided below.
In the event of the failure by the Company to pay to the Auction Agent by
12:00 noon, New York City time, (i) on the Business Day next preceding any
Dividend Payment Date, the full amount of any dividend (whether or not earned or
declared) to be paid on such Dividend Payment Date on the Series F MAPS or (ii)
on the Business Day next preceding any redemption date, the full redemption
price (including accumulated and unpaid dividends) to be paid on such redemption
date for any share of the Series F MAPS (in each case referred to as a "Failure
to Deposit"), then, until the full amount due shall have been paid to the
Auction Agent, Auctions will be suspended and the Applicable Rate for such
Series shall be the Default Rate as determined as of the Business Day preceding
the Failure to Deposit. If such Failure to Deposit is cured within three
Business Days as provided below, the Applicable Rate for the Dividend Period
commencing on the second Business Day following such cure will be based upon the
results of an Auction to be held on the Business Day next succeeding such cure.
Unless such a cure is effected, the Default Rate shall continue in effect until
there shall occur a Dividend Payment Date at least two Business Days prior to
which the full amount of any dividends (whether or not earned or declared)
payable on each Dividend Payment Date prior to and including such Dividend
Payment Date, and the full amount of any redemption price (including accumulated
and unpaid dividends) then due, shall have been paid to the Auction Agent, and
thereupon Auctions shall resume on the terms stated herein for Dividend Periods
commencing with such Dividend Payment Date. If an Auction is not held on an
Auction Date for any reason (other than the
9
<PAGE>
suspension of Auctions due to a Failure to Deposit), the dividend rate for the
applicable Dividend Period shall be the Maximum Applicable Rate determined as of
such Auction Date.
Any Failure to Deposit with respect to the Series F MAPS shall be deemed to be
cured if, within three Business Days of such Failure to Deposit, with respect to
a Failure to Deposit relating to (a) the payment of dividends, the Company
deposits with the Auction Agent by 12:00 noon, New York City time, all
accumulated and unpaid dividends on the Series F MAPS, including the full amount
of any dividends to be paid with respect to the Dividend Period with respect to
which the Failure to Deposit occurred, plus an amount computed by multiplying
the Default Rate by a fraction, the numerator of which shall be the number of
days during the period from the Dividend Payment Date in respect of which such
Failure to Deposit occurred through the day preceding the Business Day next
succeeding the Auction held following such cure and the denominator of which
shall be 360, and applying the rate obtained against the aggregate liquidation
preference of the Series F MAPS and (b) the redemption of shares of Series F
MAPS, the deposit by the Company with the Auction Agent, by 12:00 noon, New York
City time, of funds sufficient for the redemption of such shares (including
accumulated and unpaid dividends), plus an amount computed by multiplying the
Default Rate by a fraction, the numerator of which shall be the number of days
for which such Failure to Deposit is not cured in accordance with this paragraph
(including the day such Failure to Deposit occurs and excluding the day such
Failure to Deposit is cured) and the denominator of which shall be 360, and
applying the rate obtained against the aggregate liquidation preference of the
shares of Series F MAPS to be redeemed, and the giving of irrevocable
instructions by the Company to apply such funds and, if applicable, the income
and proceeds therefrom, to the payment of the redemption price (including
accumulated and unpaid dividends) for such shares of the Series F MAPS. If the
Company shall have cured such Failure to Deposit by making timely payment to the
Auction Agent, the Auction Agent shall give telephonic and written notice of
such cure to each Existing Holder of MAPS at the telephone number and address
specified in such Existing Holder's Master Purchaser's Letter and to each
Broker-Dealer as promptly as practicable after such cure is effected and
schedule an Auction for such Series for the next Business Day.
Section 3. Redemption.
The Series F MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series F MAPS may be redeemed, in whole
or from time to time in part, out of funds legally available therefor, on any
Dividend Payment Date for the Series F MAPS, upon at least fifteen but not more
than 45 days' notice, at a redemption price per share equal to the sum of
$100,000 plus an amount equal to accumulated and unpaid dividends thereon
(whether or not earned or declared) to the date that the Company pays the full
amount payable upon redemption of the shares of Series F MAPS. The Company may
only redeem Series F MAPS in whole shares. Pursuant to such right of optional
redemption, the Company may elect to redeem some or all of the shares of Series
F MAPS without redeeming shares of any other series of MAPS or redeem some or
all of the shares of any other series of MAPS without redeeming shares of Series
F MAPS. In the event of a partial redemption, the shares to be redeemed shall
be selected by the Company or, at the Company's request, the Auction Agent by
lot or by such other method as such Person shall deem fair and equitable.
Upon any date fixed for redemption (unless a Failure to Deposit occurs), all
rights of the holders of shares of Series F MAPS called for redemption will
cease and terminate, except the right of such holders to receive the amounts
payable in respect of such redemption therefor, but without interest, and such
shares of the Series F MAPS will be deemed no longer Outstanding.
So long as all of the Series F MAPS to be redeemed are held of record by a
nominee of the Securities Depositary, the redemption price (including
accumulated and unpaid dividends) for such shares of the
10
<PAGE>
Series F MAPS will be paid by the Company to the Securities Depositary on the
redemption date for distribution to Agent Members in accordance with its normal
procedures.
(b) Any shares of Series F MAPS which shall at any time have been redeemed or
purchased by the Company shall, after such redemption or purchase, be restored
to the status of authorized unissued shares, undesignated as to series, in the
manner provided by the laws of the State of California.
Section 4. Conversion or Exchange.
The holders of shares of Series F MAPS shall not have any rights to convert
such shares into or exchange such shares for shares of any other class or
classes or of any other series of any class or classes of the Capital Stock of
the Company or into any other securities of the Company.
Section 5. Liquidation Rights.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series F MAPS will be
entitled to receive, out of the assets of the Company available for distribution
to shareholders after satisfying claims of creditors but before any payment or
distribution of assets is made to holders of Junior Capital Stock, a
preferential liquidation distribution in the amount of $100,000 per share plus
an amount equal to accumulated and unpaid dividends on each such share (whether
or not declared) to and including the date of such distribution. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the assets of the Company are insufficient to pay the holders of the Series F
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series F MAPS will share ratably in any such
distribution of such assets with holders of Parity Capital Stock. Unless and
until payment in full has been made to holders of the Series F MAPS of the
liquidation distributions to which they are entitled as described in this
paragraph, no dividends or distributions will be made to holders of the
Company's Junior Capital Stock, and no purchase, redemption or other acquisition
for any consideration by the Company will be made in respect of the Company's
Junior Capital Stock. After the payment to the holders of the Series F MAPS of
the full amount of the preferential liquidation distributions to which they are
entitled pursuant to this paragraph, such holders (in their capacity as such
holders) will have no right or claim to any of the remaining assets of the
Company. Neither the consolidation nor the merger of the Company with or into
any other corporation or corporations, nor the sale or transfer by the Company
of all or any part of its assets, shall be deemed to be a liquidation,
dissolution or winding up of the Company for purposes of this Section 5.
Section 6. Voting Rights.
(a) Holders of the Series F MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series F MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series F
MAPS which are then exercisable (the Series F MAPS and all such other securities
being referred to as the "Parity Securities") shall be in arrears for at least
180 consecutive days and shall not have been paid in full (a "Default Period"),
the holders of record of the Parity Securities voting as described below will be
entitled to elect two directors to the Board of Directors (the "Additional
Directors") whether or not the Board of Directors of the Company has taken
appropriate action to increase the established number of directors of the
Company by two, and the holders of the Common Stock as a class, shall be
entitled to elect the remaining number of directors. If the Board of Directors
has not taken appropriate action to authorize an increase in the number of
directors by two and
11
<PAGE>
there are not two vacancies then existing on the Board of Directors, then, upon
the election of the two Additional Directors as provided below, the term of all
previously sitting directors shall cease (a "Termination of Directors").
As soon as practicable after the beginning of a Default Period (or a
reinstatement of the voting rights of holders of Parity Securities as provided
herein), the Board of Directors of the Company will call or cause to be called a
special meeting of the holders of Parity Securities and, in the case of a
Termination of Directors, all holders of Capital Stock of the Company entitled
to vote for the election of directors generally ("Other Voting Securities"), by
mailing or causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date such
notice is given. If the Board of Directors of the Company does not call or
cause to be called such a special meeting, it may be called by any of such
holders on like notice. The record date for determining the holders of the
Parity Securities and, if applicable, Other Voting Securities entitled to notice
of and to vote at such special meeting will be the close of business on the
Business Day preceding the day on which such notice is mailed. At any such
special meeting, the holders of Parity Securities, by plurality vote, voting
together as a single class without regard to series (to the exclusion of the
holders of Junior Capital Stock) will be entitled to elect the two Additional
Directors on the basis of one vote per $100,000 liquidation preference
(excluding amounts in respect of accumulated and unpaid dividends) and, in the
case of a Termination of Directors, the holders of Other Voting Securities shall
be entitled to elect the remaining members of the Board of Directors in the same
manner as if such election had occurred at an annual meeting of the Company.
The holder or holders of one-third of the Parity Securities then outstanding,
present in person or by proxy, will constitute a quorum for the election of the
Additional Directors except as otherwise provided by law. Notice of all
meetings at which holders of the Series F MAPS shall be entitled to vote will be
given to such holders at their addresses as they appear on the register of the
Company. If a Default Period shall terminate after the notice of a special
meeting has been given but before such special meeting has been held, the
Company shall, as soon as practicable after such termination, mail or cause to
be mailed notice of such termination to holders of the Parity Securities and, if
applicable, Other Voting Securities that would have been entitled to vote at
such special meeting.
So long as a Default Period continues, (i) any vacancy in the office of an
Additional Director may be filled (except as provided in the following clause
(ii)) by the person appointed in an instrument in writing signed by the
remaining Additional Director and filed with the Secretary of the Company or, in
the event there is no remaining Additional Director, by vote of the holders of
the outstanding Parity Securities, voting together as a single class without
regard to series, in a meeting of shareholders or at a meeting of holders of
Parity Securities called for such purpose, and (ii) in the case of the removal
of any Additional Director, the vacancy may be filled by appointment by the
person elected by the vote of the holders of the outstanding Parity Securities,
voting together as a single class without regard to series, at the same meeting
at which such removal shall be voted upon or any subsequent meeting. Each
director who shall be elected or appointed by the remaining Additional Director
as aforesaid shall be an Additional Director.
At such time as a Default Period shall terminate, (i) the term of office of
the Additional Directors shall terminate and (ii) the voting rights of the
holders of the Parity Securities to elect directors shall cease (subject to the
occurrence of a subsequent Default Period).
12
<PAGE>
(b) Except as provided below, so long as any Series F MAPS remain
Outstanding, the Company shall not, without the consent of the holders of at
least two-thirds of all of the MAPS then outstanding (taken together as a single
class), given in person or by proxy, either in writing or at a meeting (voting
separately as a single class), (i) authorize, create or issue, or increase the
authorized amount of, any Capital Stock of the Company of any class ranking, as
to dividends or upon the liquidation, dissolution or winding up of the Company,
prior to the Series F MAPS, or reclassify any authorized Capital Stock of the
Company into any such Capital Stock, or authorize, create or issue any
obligation or security convertible into or evidencing the right to purchase any
such Capital Stock, or (ii) amend, alter or repeal the provisions of the
Company's Articles of Incorporation, whether by merger, consolidation, share
exchange, division or otherwise, so as to adversely affect any preference,
limitation or special right of the Series F MAPS.
Except as provided by law, the consent of the holders of the Series F MAPS is
not required and such holders are not entitled to vote upon (i) the
authorization, creation, issuance or increase in the authorized amount of the
Common Stock, additional series of MAPS or any Capital Stock of the Company of
any class ranking, as to dividends and upon the liquidation, dissolution or
winding up of the Company, on a parity with or junior to the Series F MAPS or
(ii) any merger, consolidation, share exchange or division of the Company (or
any successor corporation) with or into another corporation the result of which
is that the Series F MAPS that may be Outstanding from time to time may be
junior to any preferred shares of such corporation as to dividends and upon the
liquidation, dissolution or winding up of the surviving corporation if on or
prior to the date of effectiveness of such merger or consolidation, the Company
shall have given Moody's and S&P written notice of such merger or consolidation
and Moody's and S&P shall have confirmed in writing that the transaction will
not adversely affect the then existing rating for the MAPS. If either Moody's
or S&P shall change its rating categories for preferred stock, then the
determination of whether the transaction will not adversely affect the then
existing rating for the MAPS shall be made based upon the substantially
equivalent new rating categories for preferred stock of such rating agency. If
either Moody's or S&P, or both, shall not make a rating available for the Series
F MAPS necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the Series F
MAPS, such confirmation will be sought from two Substitute Rating Agencies if
they have made ratings available for the Series F MAPS necessary to make the
determination and are willing to make such confirmation or, in the event that
only one such rating agency shall make such ratings available and is willing to
make such confirmation, based upon such rating agency's confirmation.
Section 7. Sinking Fund.
Shares of Series F MAPS are not subject or entitled to the benefit of a
sinking fund.
ARTICLE THREE
AUCTION PROCEDURES
Section 1. Definitions.
Capitalized terms not defined in this Section 1 shall have the respective
meanings specified in Section 1 of ARTICLE TWO. As used in this ARTICLE THREE,
the following terms have the following meanings:
(a) "Affiliate" means any Person controlled by, in control of or under common
control with the Company.
13
<PAGE>
(b) "Applicable Determining Rate" means, (i) for any Standard Dividend Period
or Short Dividend Period of 183 days or less, the Applicable "AA" Composite
Commercial Paper Rate, (ii) for any Short Dividend Period of 184 to 364 days,
the Applicable Treasury Bill Rate and (iii) for any Long Dividend Period, the
Applicable Treasury Note Rate.
(c) "Available Shares of Series F MAPS" has the meaning specified in Section
4(a) of this ARTICLE THREE.
(d) "Bid" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(e) "Bidder" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(f) "Hold Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(g) "Order" has the meaning specified in Section 2(a) of this ARTICLE THREE.
(h) "Sell Order" has the meaning specified in Section 2(a) of this ARTICLE
THREE.
(i) "Submission Deadline" means 1:00 P.M., New York City time, on any Auction
Date or such other time on any Auction Date as may be specified from time to
time by the Auction Agent as the time prior to which each Broker-Dealer must
submit to the Auction Agent in writing all Orders obtained by it for the Auction
to be conducted on such Auction Date.
(j) "Submitted Bid" has the meaning specified in Section 3(a) of this ARTICLE
THREE.
(k) "Submitted Hold Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(l) "Submitted Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(m) "Submitted Sell Order" has the meaning specified in Section 3(a) of this
ARTICLE THREE.
(n) "Winning Bid Rate" has the meaning specified in Section 4(a) of this
ARTICLE THREE.
Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series F MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information as to:
(A) the number of Outstanding shares of Series F MAPS, if any, held
by such Existing Holder that such Existing Holder desires to continue to hold
without regard to the Applicable Rate for the next succeeding Dividend Period;
(B) the number of Outstanding shares of Series F MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell, provided
that the Applicable Rate for the next succeeding Dividend Period is less than
the rate per annum specified by such Existing Holder; and/or
(C) the number of Outstanding shares of Series F MAPS, if any, held
by such Existing Holder that such Existing Holder desires to sell without
regard to the Applicable Rate for the next succeeding Dividend Period; and
14
<PAGE>
(ii) each Broker-Dealer, using a list of Potential Holders that shall be
maintained in accordance with the provisions set forth in the Broker-Dealer
Agreement for the purpose of conducting a competitive Auction, shall contact
both Existing Holders and Potential Holders, including Existing Holders with
respect to an offer by any such Existing Holder to purchase additional shares
of Series F MAPS, on such list to notify such Existing Holders and Potential
Holders as to the length of the next Dividend Period and (A) with respect to
any Short Dividend Period or Long Dividend Period, the Dividend Payment
Date(s) and (B) with respect to any Long Dividend Period, any dates before
which shares of Series F MAPS may not be redeemed and any redemption premium
applicable in an optional redemption and to determine the number of
Outstanding shares of Series F MAPS, if any, with respect to which each such
Existing Holder desires to submit an Order and each such Potential Holder
desires to submit a Bid.
For the purposes hereof, the communication to a Broker-Dealer of information
referred to in clause (i) or (ii) of this Subsection (a) is hereinafter
referred to as an "Order" and each Existing Holder and each Potential Holder
placing an Order is hereinafter referred to as a "Bidder," an Order containing
the information referred to in clause (i)(A) of this Su bsection (a) is
hereinafter referred to as a "Hold Order," an Order containing the information
referred to in clause (i)(B) or (ii) of this Subsection (a) is hereinafter
referred to as a "Bid;" and an Order containing the information referred to in
clause (i)(C) of this Subsection (a) is hereinafter referred to as a "Sell
Order."
(b) (i) A Bid by an Existing Holder shall constitute an irrevocable offer
to sell:
(A) the number of Outstanding shares of Series F MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be less
than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series F
MAPS to be determined as set forth in Subsections (a)(iv) and (c) of Section 5
of this ARTICLE THREE if the Applicable Rate determined on such Auction Date
shall be equal to the rate per annum specified therein; or
(C) a lesser number of Outstanding shares of Series F MAPS to be
determined as set forth in Subsections (b)(iii) and (c) of Section 5 of this
ARTICLE THREE if such specified rate per annum shall be higher than the
Maximum Applicable Rate and Sufficient Clearing Bids do not exist.
(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series F MAPS specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series F
MAPS to be determined as set forth in Subsections (b)(iii) and (c) of Section
5 of this ARTICLE THREE if Sufficient Clearing Bids do not exist.
(iii) A Bid by a Potential Holder shall constitute an irrevocable offer to
purchase:
(A) the number of Outstanding shares of Series F MAPS specified in
such Bid if the Applicable Rate determined on such Auction Date shall be
higher than the rate per annum specified in such Bid; or
(B) such number or a lesser number of Outstanding shares of Series F
MAPS to be determined as set forth in Subsections (a)(v) and (d) of Section 5
of this ARTICLE THREE if the Applicable Rate determined on such Auction Date
shall be equal to the rate per annum specified therein.
15
<PAGE>
(c) Orders may be submitted for whole shares of MAPS only. Orders submitted
for fractional shares of MAPS shall not be valid.
Section 3. Submission of Orders by Broker-Dealers to Auction Agent.
(a) Each Broker-Dealer shall submit in writing to the Auction Agent prior to
the Submission Deadline on each Auction Date for the Series F MAPS all Orders
obtained by such Broker-Dealer, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate number of Outstanding shares of Series F MAPS that are
the subject of such Order;
(iii) to the extent that such Bidder is an Existing Holder;
(A) the number of Outstanding shares of Series F MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series F MAPS, if any,
subject to any Bid placed by such Existing Holder and the rate per annum
specified in such Bid; and
(C) the number of Outstanding shares of Series F MAPS, if any,
subject to any Sell Order placed by such Existing Holder; and
(iv) to the extent such Bidder is a Potential Holder, the rate per annum
specified in such Potential Holder's Bid.
(Each "Hold Order," "Bid" or "Sell Order" as submitted or deemed submitted
by a Broker-Dealer is hereinafter referred to individually as a "Submitted
Hold Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may
be, or as a "Submitted Order.")
(b) If any rate per annum specified in any Submitted Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall round
such rate up to the next highest one-thousandth (.001) of 1%.
(c) If one or more Orders covering in the aggregate all of the Outstanding
shares of Series F MAPS held by an Existing Holder are not submitted to the
Auction Agent prior to the Submission Deadline for any reason (including the
failure of a Broker-Dealer to contact such Existing Holder or to submit such
Existing Holder's Order or Orders), such Existing Holder shall be deemed to have
submitted a Hold Order covering the number of Outstanding shares of Series F
MAPS held by such Existing Holder that are not subject to Orders submitted to
the Auction Agent.
(d) A Submitted Order or Submitted Orders of an Existing Holder that cover in
the aggregate more than the number of Outstanding shares of Series F MAPS held
by such Existing Holder will be considered valid in the following order of
priority:
(i) any Submitted Hold Order of such Existing Holder will be considered
valid up to and including the number of Outstanding shares of Series F MAPS
held by such Existing Holder, provided that, if there is more than one such
Submitted Hold Order and the aggregate number of shares of Series F MAPS
subject to such Submitted Hold Orders exceeds the number of Outstanding shares
of Series F MAPS held by such Existing Holder, the number of shares of Series
F MAPS subject to each
16
<PAGE>
such Submitted Hold Order will be reduced pro rata so that such Submitted Hold
Orders in the aggregate will cover exactly the number of Outstanding shares of
Series F MAPS held by such Existing Holder;
(ii) any Submitted Bids of such Existing Holder will be considered valid (in
the ascending order of their respective rates per annum if there is more than
one Submitted Bid of such Existing Holder) for the number of Outstanding
shares of Series F MAPS held by such Existing Holder equal to the difference
between (A) the number of Outstanding shares of Series F MAPS held by such
Existing Holder and (B) the number of Outstanding shares of Series F MAPS
subject to any Submitted Hold Order of such Existing Holder referred to in
clause (d)(i) above (and, if more than one Submitted Bid of such Existing
Holder specifies the same rate per annum and together they cover more than the
remaining number of shares of Series F MAPS that can be the subject of valid
Submitted Bids of such Existing Holder after application of clause (d)(i)
above and of the foregoing portion of this clause (d)(ii) to any Submitted Bid
or Submitted Bids of such Existing Holder specifying a lower rate or rates per
annum, the number of shares of Series F MAPS subject to each of such Submitted
Bids specifying the same rate per annum will be reduced pro rata so that such
Submitted Bids, in the aggregate, cover exactly such remaining number of
Outstanding shares of Series F MAPS of such Existing Holder);
(iii) any Submitted Sell Order of such Existing Holder will be considered
valid up to and including the excess of the number of Outstanding shares of
Series F MAPS held by such Existing Holder over the sum of (A) the number of
shares of Series F MAPS subject to Submitted Hold Orders by such Existing
Holder referred to in clause (d)(i) above and (B) the number of shares of
Series F MAPS subject to valid Submitted Bids by such Existing Holder referred
to in clause (d)(ii) above; provided that, if there is more than one Submitted
Sell Order of such Existing Holder and the number of shares of Series F MAPS
subject to such Submitted Sell Orders is greater than such excess, the number
of shares of Series F MAPS subject to each of such Submitted Sell Orders will
be reduced pro rata so that such Submitted Sell Orders, in the aggregate, will
cover exactly the number of shares of Series F MAPS equal to such excess.
The number of Outstanding shares of Series F MAPS, if any, subject to Submitted
Bids of such Existing Holder not valid under clause (d)(ii) above shall be
treated as the subject of a Submitted Bid by a Potential Holder at the rate per
annum specified in such Submitted Bids.
(e) If there is more than one Submitted Bid by any Potential Holder in any
Auction, each such Submitted Bid shall be considered a separate Submitted Bid
with respect to the rate per annum and number of shares of Series F MAPS
specified therein.
Section 4. Determination of Sufficient Clearing Bids, Winning Bid Rate and
Applicable Rate.
(a) Not earlier than the Submission Deadline on each Auction Date for the
Series F MAPS, the Auction Agent shall assemble all Orders submitted or deemed
submitted to it by the Broker-Dealers and shall determine:
(i) the excess of the total number of Outstanding shares of Series F MAPS
over the number of shares of Series F MAPS that are the subject of Submitted
Hold Orders (such excess being hereinafter referred to as the "Available
Shares of Series F MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding shares of
Series F MAPS that are the subject of Submitted Bids by Potential Holders
specifying one or more rates per annum equal to or lower than the Maximum
Applicable Rate exceeds or is equal to the sum of:
17
<PAGE>
(A) the number of Outstanding shares of Series F MAPS that are the
subject of Submitted Bids by Existing Holders specifying one or more rates per
annum higher than the Maximum Applicable Rate, and
(B) the number of Outstanding shares of Series F MAPS that are
subject to Submitted Sell Orders.
(if such excess or such equality exists (other than because the number of
Outstanding shares of Series F MAPS in clauses (A) and (B) above are each zero
because all of the Outstanding shares of Series F MAPS are the subject of
Submitted Hold Orders), there shall exist "Sufficient Clearing Bids" and such
Submitted Bids by Potential Holders shall be hereinafter referred to
collectively as "Sufficient Clearing Bids"); and
(iii) if Sufficient Clearing Bids exist, the winning bid rate (the "Winning
Bid Rate"), which shall be the lowest rate per annum specified in the
Submitted Bids that if:
(A) each Submitted Bid from Existing Holders specifying the Winning
Bid Rate and all other Submitted Bids from Existing Holders specifying lower
rates per annum were accepted, thus entitling such Existing Holders to
continue to hold the shares of Series F MAPS that are the subject of such
Submitted Bids, and
(B) each Submitted Bid from Potential Holders specifying the Winning
Bid Rate and all other Submitted Bids from Potential Holders specifying lower
rates per annum were accepted, thus entitling such Potential Holders to
purchase the shares of Series F MAPS that are the subject of such Submitted
Bids,
would result in such Existing Holders described in subclause (iii)(A) continuing
to hold an aggregate number of Outstanding shares of Series F MAPS that, when
added to the number of Outstanding shares of Series F MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series F MAPS.
(b) In connection with any Auction and promptly after the Auction Agent has
made the determinations pursuant to Subsection (a), the Auction Agent shall
advise the Company of the Maximum Applicable Rate and, based on such
determinations, the Applicable Rate for the next succeeding Dividend Period as
follows:
(i) if Sufficient Clearing Bids exist, that the Applicable Rate for the
next succeeding Dividend Period shall be equal to the Winning Bid Rate;
(ii) if Sufficient Clearing Bids do not exist (other than because all of the
Outstanding shares of Series F MAPS are the subject of Submitted Hold Orders),
that the next succeeding Dividend Period will be a Standard Dividend Period
and the Applicable Rate for the next succeeding Dividend Period shall be equal
to the Maximum Applicable Rate for a Standard Dividend Period determined as of
the Business Day immediately preceding such Auction; or
(iii) if all of the Outstanding shares of Series F MAPS are the subject of
Submitted Hold Orders, that the Applicable Rate for the next succeeding
Dividend Period shall be equal to 59% of the Applicable "AA" Composite
Commercial Paper Rate, in the case of Series F MAPS with a Standard Dividend
Period or a Short Dividend Period of 183 days or less, 59% of the Applicable
Treasury Bill Rate in the case of Series F MAPS with a Short Dividend Period
of 184 to 364 days, or 59% of the Applicable Treasury Note Rate in the case of
Series F MAPS with a Long Dividend Period, in effect on the Auction Date.
18
<PAGE>
Section 5. Acceptance and Rejection of Submitted Bids and Submitted Sell Orders
and Allocation of Shares of Series F MAPS.
Based on the determinations made pursuant to Subsection (a) of Section 4, the
Submitted Bids and Submitted Sell Orders shall be accepted or rejected and the
Auction Agent shall take such other action as set forth below:
(a) If Sufficient Clearing Bids have been made, subject to the provisions of
Subsections (c) and (d), Submitted Bids and Submitted Sell Orders shall be
accepted or rejected in the following order of priority and all other Submitted
Bids shall be rejected:
(i) the Submitted Sell Orders of Existing Holders shall be accepted and the
Submitted Bid of each of the Existing Holders specifying any rate per annum
that is higher than the Winning Bid Rate shall be rejected, thus requiring
each such Existing Holder to sell the Outstanding shares of Series F MAPS that
are the subject of such Submitted Sell Order or Submitted Bid;
(ii) the Submitted Bid of each of the Existing Holders specifying any rate
per annum that is lower than the Winning Bid Rate shall be accepted, thus
entitling each such Existing Holder to continue to hold the Outstanding shares
of Series F MAPS that are the subject of such Submitted Bid;
(iii) the Submitted Bid of each of the Potential Holders specifying any rate
per annum that is lower than the Winning Bid Rate shall be accepted;
(iv) the Submitted Bid of each of the Existing Holders specifying a rate per
annum that is equal to the Winning Bid Rate shall be accepted, thus entitling
each such Existing Holder to continue to hold the Outstanding shares of Series
F MAPS that are the subject of such Submitted Bid, unless the number of
Outstanding shares of Series F MAPS subject to all such Submitted Bids shall
be greater than the number of Outstanding shares of Series F MAPS ("Remaining
Shares of Series F MAPS") equal to the excess of the Available Shares of
Series F MAPS over the number of Outstanding shares of Series F MAPS subject
to Submitted Bids described in Subsections (a)(ii) and (a)(iii), in which
event the Submitted Bids of each such Existing Holder shall be rejected, and
each such Existing Holder shall be required to sell Outstanding shares of
Series F MAPS, but only in an amount equal to the difference between (A) the
number of Outstanding shares of Series F MAPS then held by such Existing
Holder subject to such Submitted Bid and (B) the number of shares of Series F
MAPS obtained by multiplying (x) the number of Remaining Shares of Series F
MAPS by (y) a fraction, the numerator of which shall be the number of
Outstanding shares of Series F MAPS held by such Existing Holder subject to
such Submitted Bid and the denominator of which shall be the aggregate number
of Outstanding shares of Series F MAPS subject to such Submitted Bids made by
all such Existing Holders that specified a rate per annum equal to the Winning
Bid Rate; and
(v) the Submitted Bid of each of the Potential Holders specifying a rate
per annum that is equal to the Winning Bid Rate shall be accepted, but only in
an amount equal to the number of Outstanding shares of Series F MAPS obtained
by multiplying (x) the difference between the Available Shares of Series F
MAPS and the number of Outstanding shares of Series F MAPS subject to
Submitted Bids described in Subsections (a)(ii), (a)(iii) and (a)(iv) by (y) a
fraction, the numerator of which shall be the number of Outstanding shares of
Series F MAPS subject to such Submitted Bid and the denominator of which shall
be the aggregate number of Outstanding shares of Series F MAPS subject to such
Submitted Bids made by all such Potential Holders that specified rates per
annum equal to the Winning Bid Rate.
(b) If Sufficient Clearing Bids have not been made (other than because all of
the Outstanding shares of Series F MAPS are subject to Submitted Hold Orders),
subject to the provisions of Subsection (c),
19
<PAGE>
Submitted Orders shall be accepted or rejected as follows in the following order
of priority and all other Submitted Bids of Potential Holders shall be rejected:
(i) the Submitted Bid of each Existing Holder specifying any rate per annum
that is equal to or lower than the Maximum Applicable Rate shall be accepted,
thus entitling such Existing Holder to continue to hold the Outstanding shares
of Series F MAPS that are the subject of such Submitted Bid;
(ii) the Submitted Bid of each Potential Holder specifying any rate per
annum that is equal to or lower than the Maximum Applicable Rate shall be
accepted, thus requiring such Potential Holder to purchase the Outstanding
shares of Series F MAPS that are the subject of such Submitted Bid; and
(iii) the Submitted Bids of each Existing Holder specifying any rate per
annum that is higher than the Maximum Applicable Rate shall be rejected, thus
requiring each such Existing Holder to sell the Outstanding shares of Series F
MAPS that are the subject of such Submitted Bid, and the Submitted Sell Orders
of each Existing Holder shall be accepted, in both cases only in an amount
equal to the difference between (A) the number of Outstanding shares of Series
F MAPS then held by such Existing Holder subject to such Submitted Bid or
Submitted Sell Order and (B) the number of shares of Series F MAPS obtained by
multiplying (x) the difference between the Available Shares of Series D MAPS
and the aggregate number of Outstanding shares of Series F MAPS subject to
Submitted Bids described in Subsections (b)(i) and (b)(ii) by (y) a fraction,
the numerator of which shall be the number of Outstanding shares of Series F
MAPS held by such Existing Holder subject to such Submitted Bid or Submitted
Sell Order and the denominator of which shall be the aggregate number of
Outstanding shares of Series F MAPS subject to all such Submitted Bids and
Submitted Sell Orders.
(c) If, as a result of the procedures described in Subsections (a) or (b),
any Existing Holder would be entitled or required to sell or any Potential
Holder would be entitled or required to purchase, a fraction of a share of
Series F MAPS on any Auction Date, the Auction Agent shall, in such manner as in
its sole discretion it shall determine, round up or down the number of shares of
Series F MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series F MAPS will be entitled
or required to be sold or purchased.
(d) If, as a result of the procedures described in Subsection (a), any
Potential Holder would be entitled or required to purchase less than a whole
share of Series F MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series F
MAPS for purchase among Potential Holders so that only whole shares of Series F
MAPS are purchased on such Auction Date by any Potential Holder, even if such
allocation results in one or more of such Potential Holders not purchasing any
shares of Series F MAPS on such Auction Date.
(e) Based on the results of each Auction, the Auction Agent shall determine,
with respect to each Broker-Dealer that submitted Bids or Sell Orders on behalf
of Existing Holders or Potential Holders, the aggregate number of Outstanding
shares of Series F MAPS to be purchased and the aggregate number of Outstanding
shares of Series F MAPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares of
Series F MAPS to be purchased and such aggregate number of Outstanding shares of
Series F MAPS to be sold differ, the Auction Agent shall determine to which
other Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers
acting for one or more sellers such Broker-Dealer shall receive, as the case may
be, Outstanding shares of Series F MAPS.
20
<PAGE>
Section 6. Participation in Auctions.
The Company and its Affiliates shall not submit any Order in any Auction
except as set forth in the next sentence. Any Broker-Dealer that is an
Affiliate of the Company may submit Orders in Auctions but only if such Orders
are not for its own account, except that if such affiliated Broker-Dealer holds
shares of Series F MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series F MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series F MAPS only pursuant to a Bid or Sell Order in accordance with the
procedures described in these Auction Procedures or to or through a Broker-
Dealer or to a Person that has delivered a signed copy of a Master Purchaser's
Letter to a Broker-Dealer, provided that in the case of all transfers other than
pursuant to Auctions such Existing Holder, its Broker-Dealer or its Agent Member
advises the Auction Agent of such transfer and (b) unless otherwise required by
law, shall have the beneficial ownership of the shares of Series F MAPS held by
it maintained in book-entry form by the Securities Depositary in the account of
its Agent Member, which in turn will maintain records of such Existing Holder's
beneficial ownership. All of the Outstanding shares of Series F MAPS of each
Series shall be represented by a single certificate for each Series registered
in the name of the nominee of the Securities Depositary unless otherwise
required by law or unless there is no Securities Depositary. If there is no
Securities Depositary, shares of Series F MAPS shall be registered in the
register of the Company in the name of the Existing Holder thereof and such
Existing Holder thereupon will be entitled to receive a certificate therefor and
be required to deliver a certificate therefor upon transfer or exchange thereof.
21
<PAGE>
RESOLVED FURTHER, that the Chairman of the Board, the President or any Vice
President, and the Secretary, the Chief Financial Officer, the Treasurer, or any
Assistant Secretary or Assistant Treasurer of this Company are each authorized
to execute, verify, and file a certificate of determination of preferences in
accordance with California law.
3. The authorized number of shares of Preferred Stock of the Company is
20,000,000, and the number of shares constituting Series F MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on January
25, 1995.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY, President
/s/ JULIE I. SACKMAN
---------------------------------------------
JULIE I. SACKMAN, Secretary
The undersigned, STEVEN F. UDVAR-HAZY and JULIE I. SACKMAN, the President and
Secretary, respectively, of INTERNATIONAL LEASE FINANCE CORPORATION, each
declares under penalty of perjury that the matters set forth in the foregoing
Certificate are true of his or her own knowledge.
Executed at Los Angeles, California on January 25, 1995.
/s/ STEVEN F. UDVAR-HAZY
---------------------------------------------
STEVEN F. UDVAR-HAZY
/s/ JULIE I. SACKMAN
---------------------------------------------
JULIE I. SACKMAN
22
<PAGE>
EXHIBIT 10.15
Supplemental Agreement No. 5
to
Purchase Agreement No. 1770
between
The Boeing Company
and
International Lease Finance Corporation
Relating to Boeing Model 767-300ER Aircraft
THIS SUPPLEMENTAL AGREEMENT, entered into as of the
16th day of November, 1994, by and between THE BOEING COMPANY, a
Delaware corporation (hereinafter called Boeing), and
International Lease Finance Corporation, a company with its
principal office in the City of Los Angeles, State of California,
(hereinafter called Buyer);
W I T N E S S E T H:
WHEREAS, the parties hereto entered into an agreement
on December 15, 1992, relating to Boeing Model 767-3OOER
aircraft, which agreement, as amended, together with all exhibits
and specifications attached thereto and made a part thereof, is
hereinafter called the "Purchase Agreement;" and
WHEREAS, the parties desire to supplement the Purchase
Agreement as hereinafter set forth, to revise the Alternate
Advance Payment Schedule defined in Attachment A to Letter
Agreement No. 6-1162-RLL-494 to agree with the schedule set forth
in letter 6-1162-RLL-444, dated November 3, 1992, Summary of
"Handshake Agreement";
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Letter Agreement No. 6-1162-RLL-494, entitled "Advance
Payments," Attachment A "Alternate Advance Payment Schedule" is
deleted in its entirety and replaced by the following new
Attachment A which is attached hereto and incorporated into the
Purchase Agreement by this reference.
The Purchase Agreement shall be deemed to be supplemented to the
extent herein provided and as so supplemented shall continue in
full force and effect.
EXECUTED IN DUPLICATE as of the day and year first above written.
THE BOEING COMPANY INTERNATIONAL LEASE
FINANCE CORPORATION
By:/s/R. Leo Lyons By:/s/ Alan H. Lund
Its: Attorney-In-Fact Its: Senior Vice President
Chief Financial Officer
and Treasurer
<PAGE>
Attachment A to
Letter Agreement No.
6-1162-RLL-494 Page 1
ALTERNATE ADVANCE PAYMENT SCHEDULE
767-300ER AIRCRAFT
Amount Due Per Aircraft
(Percentage of Advance)
Due Date of Payment Payment Base Price)
* *
* *
* *
* *
* *
* *
* *
___
Total *
- -----------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
EXHIBIT 10.16
AMENDMENT NO. 5
TO THE AIRBUS A321 PURCHASE AGREEMENT
dated as of February 14, 1990
between
AVSA, S.A.R.L.
and
INTERNATIONAL LEASE FINANCE CORPORATION
This Amendment No. 4 (hereinafter referred to as the "Amendment") entered into
as of September 23, 1994, by and between AVSA, S.A.R.L., a societe a
responsabilite limitee organized and existing under the laws of the Republic of
France, having its registered office located at 2, Rond-Point Maurice Bellonte,
31700 Blagnac, France (hereinafter referred to as the "Seller") and
INTERNATIONAL LEASE FINANCE CORPORATION, a corporation organized and existing
under the laws of the State of California, having its principal corporate
offices located at 1999 Avenue of the Stars, 39th Floor, Los Angeles, CA 90067,
U.S.A. (hereinafter referred to as the "Buyer");
WITNESSETH
WHEREAS, the Buyer and the Seller entered into a certain A321 Purchase
Agreement, dated as of February 14, 1990, relating to the sale by the Seller and
the purchase by the Buyer of twelve (12) firmly ordered Airbus Industrie A321
model aircraft (the "Aircraft") and four (4) option Airbus Industrie A321 model
aircraft (the "Purchase Agreement"), which agreement has been further amended by
and supplemented with all Exhibits, Appendices and Letter Agreements attached
thereto and has been amended by Amendment No. 1 dated as of June 18, 1991,
Amendment No. 2 dated as of December 10, 1992, Amendment No. 3 dated as of
January 3, 1994 and Amendment No. 4 dated as of February 28, 1994.
WHEREAS, the Buyer and the Seller entered into a certain General Terms
Agreement, dated as of November 10, 1988, which agreement, as previously amended
and supplemented together with all Exhibits, Appendices, and Letter Agreements
attached thereto is hereinafter called the "G.T.A.";
Amdt.5
1
<PAGE>
WHEREAS, the Buyer has requested, and the Seller agrees, to have all Aircraft
remaining to be delivered as of the date hereof by the Seller to the Buyer
manufactured in accordance with the same standard technical specification.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. STANDARD TECHNICAL SPECIFICATION
--------------------------------
The Buyer and the Seller hereby agree that, with respect to all Aircraft ordered
by the Buyer to the Seller and originally scheduled to be manufactured in
accordance with the provisions of sub-clause 3.2 of the Purchase Agreement (the
"Remaining Aircraft"), sub-clause 3.2 of the Purchase Agreement is hereby
superseded and replaced by the following provisions:
QUOTE
3.2. The Remaining Aircraft shall be manufactured in accordance with the A321-
200 Standard Specification Document No. E000.01000, Issue 2, dated January 31,
1992 (the "Standard Specification"), as amended by the change orders set forth
in Exhibit B to the Amendment No. 2 to the Purchase Agreement. Such Standard
Specification, as so amended, is hereinafter referred to as the "Specification".
The Specification may be further modified from time to time pursuant to the
General Terms Agreement.
UNQUOTE
The Remaining Aircraft are listed in Appendix 1 hereof.
2. AIRFRAME PRICE
--------------
As a consequence of paragraph 1 above, the Buyer and the Seller agree that, with
respect to the Remaining Aircraft, sub-Clause 4.1.1 of the Purchase Agreemnt is
hereby superseded and replaced by the following provisions:
QUOTE
The Base Price of the Airframe for the Remaining Aircraft shall be the base
price of the A321 airframe as described in paragraph 1 of Amendment No. 5 to the
Purchase Agreement (excluding Buyer Furnished Equipment and SCN's other than
those SCN's listed in Exhibit B to Amendment No. 2 to the Purchase Agreement),
as quoted in paragraph 4.1.1 of Amendment No. 2 to the Purchase Agreement.
UNQUOTE
3. EFFECT ON PREDELIVERY PAYMENTS
------------------------------
The Buyer and the Seller hereby agree that the Aircraft Predelivery Payment
Reference Price with respect to the Remaining Aircraft will not be adjusted to
reflect the Airframe Price change described in paragraph 2 hereof.
Amdt.5 2
<PAGE>
4. EFFECT OF AMENDMENT
-------------------
The Purchase Agreement shall be deemed to be amended to the extent herein
provided, and, except as specifically amended hereby, shall continue in full
force and effect in accordance with its original terms. All capitalized terms
not otherwise defined herein shall have the meanings provided for in the
Purchase Agreement.
This Amendment shall be effective upon satisfaction of all conditions hereof and
of the Purchase Agreement.
5. CONFIDENTIALITY
---------------
Subject to any legal or governmental requirements of disclosure, the parties
(which for this purpose shall include their employees, agents and advisors)
shall maintain the terms and conditions of this Amendment and any reports or
other data furnished hereunder strictly confidential. Without limiting the
generality of the foregoing, the Buyer shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally permissible,
in any filing that the Buyer is required to make with any governmental agency,
and the Buyer shall make all applications that may be necessary to implement the
foregoing. The Buyer and the Seller shall consult with each other prior to
making any public disclosure, otherwise permitted hereunder, of this Amendment
or the terms and conditions hereof. The provisions of this Paragraph 5 shall
survive any termination of this Amendment.
6. GOVERNING LAW AND JURISDICTION
------------------------------
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. THE PERFORMANCE OF THIS AMENDMENT SHALL BE DETERMINED
ALSO IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR STATE COURTS
LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO AND ACCEPTS SUCH JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS SHALL NOT APPLY
TO THIS AMENDMENT.
If the foregoing correctly sets forth our understanding, please execute this
Amendment in the space provided below, whereupon this Amendment shall constitute
part of the Purchase Agreement as of the date first above written.
Agreed and Accepted, Yours sincerely,
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: H.B. DUNCAN By: CHRISTOPHE MOUREY
------------------------------- ----------------------------
H.B. Duncan Christophe Mourey
Its: Senior Vice President Its: Chief Executive Officer
Amdt.5 3
Sept. 23rd /94.
<PAGE>
Appendix 1
----------
A321s -- REMAINING AIRCRAFT
Aircraft Delivery
Delivery Rank Date
- ------------- --------
2 11/95
3 12/95
4 04/96
5 05/96
6 06/96
7 10/96
8 11/96
9 12/96
10 02/97
11 03/97
13 04/97
14 04/97
15 05/97
16 06/97
18 03/98
Amdt. 5
<PAGE>
EXHIBIT 10.17
Amendment No. 6
TO THE A321 PURCHASE AGREEMENT
dated as of February 14, 1990
between
AVSA, S.A.R.L.,
and
INTERNATIONAL LEASE FINANCE CORPORATION
This Amendment No. 6 (hereinafter referred to as the "Amendment")
entered into as of December 27th, 1994, by and between AVSA,
S.A.R.L., a societe a responsabilite limitee organized and
existing under the laws of the Republic of France, having its
registered office located at 2, Rond Point Maurice Bellonte,
31700 Blagnac (France) (hereinafter referred to as the "Seller"),
and INTERNATIONAL LEASE FINANCE CORPORATION, a corporation
organized and existing under the laws of the State of California,
United States of America, having its principal corporate offices
located at 1999 Avenue of the Stars, 39th Floor, Los Angeles,
California 90067 (hereinafter referred to as the "Buyer").
WITNESSETH:
WHEREAS, the Buyer and the Seller entered into an A321 Purchase
Agreement, dated as of February 14, 1990, relating to the sale by
the Seller and the purchase by the Buyer of twelve (12) firmly
ordered Airbus Industrie A321-100 model aircraft (the "Aircraft")
and four (4) option Airbus Industrie A321-100 model aircraft (the
"Option Aircraft"), which agreement, as previously amended by and
supplemented with all Exhibits, Appendices and Letter Agreements
attached thereto and as amended by Amendment No. 1 dated as of
June 18, 1991, Amendment No. 2 dated as of December 10, 1992,
Amendment No. 3 dated as of January 3, 1994, Amendment No. 4
dated as of February 28, 1994 and Amendment No. 5 dated as of
September 23, 1994 is hereinafter called the "Agreement."
WHEREAS, the Buyer now desires to increase its order by nine (9)
firmly ordered aircraft (individually and collectively referred
to as the "Incremental Aircraft") and three (3) option aircraft
(individually and collectively referred to as the "Incremental
Option Aircraft").
ILFC-A321 Amdt. 6-1
WHEREAS, the Seller is a sales subsidiary of Airbus Industrie
(the "Manufacturer") and will purchase the Incremental Aircraft
and Incremental Option Aircraft from the Manufacturer for resale
to the Buyer.
1
<PAGE>
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. INCREMENTAL ORDER
The Buyer hereby firmly orders nine (9) Incremental Aircraft
and takes an option to firmly order three (3) Incremental
Option Aircraft.
It is agreed that the terms and conditions of the sale and
purchase of the Incremental Aircraft and the Incremental
Option Aircraft shall be the same as those applying to,
respectively, Aircraft and Option Aircraft, except as
specifically set forth to the contrary in this Amendment.
2. SPECIFICATION
Subclause 3.2 of the Agreement is hereby superseded and
replaced by the following provisions, with respect to
Incremental Aircraft and Incremental Option Aircraft:
QUOTE
3.2 The Incremental Aircraft shall be manufactured in
accordance with the A321-100 Standard Specification,
Document No. E.000.01000, Issue 3, dated January 31, 1994 (a
copy of which is annexed as Exhibit "A" of Amendment No. 6
to this Agreement), as amended by the change orders set
forth in Exhibit "B" of Amendment No. 2 to this Agreement.
Such Standard Specification, as so amended, is hereinafter
referred to as the "Specification." The Specification may
be further modified from time to time pursuant to the
General Terms Agreement.
UNQUOTE
ILFC-A321 Amdt. 6-2
3. PRICE
Clause 4 of the Agreement is hereby superseded and replaced
by the following provisions, with respect to Incremental
Aircraft and Incremental Option Aircraft:
QUOTE
4.1 Base Price of the Incremental Aircraft and Incremental
Option Aircraft
The "Base Price" of each Incremental Aircraft is the sum of:
--the Base Price of the Airframe, and
--the Base Price of the Propulsion Systems.
4.1.1 Base Price of the Airframe
The Base Price of the Airframe shall be the sum of:
(i) the Base Price of the standard A321-100 airframe as
described in Exhibit "A" of Amendment No. 2 to this
Agreement (excluding Buyer Furnished Equipment and SCN's) at
delivery conditions prevailing in January 1994, which is
*
, and
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2
<PAGE>
(ii) the Base Price of all change orders set forth in
Exhibit "B" of Amendment No. 2 to this Agreement that are
mutually agreed upon prior to the execution and delivery of
this Agreement, at delivery conditions prevailing in January
1994, which is *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
This Base Price of the Airframe is subject to adjustment to
the date of delivery in accordance with the Airframe Price
Revision Formula set forth in Appendix 1 of Amendment No. 6
to this Agreement.
ILFC-A321 Amdt. 6-3
4.1.2 Propulsion Systems Base Price
4.1.2.1 Base Price of the CFM International CFM 56-5B-1
Propulsion Systems
The Base Price of a set of CFM 56-5B-1 Propulsion Systems is
the sum of the Base Prices quoted below in (i) and (ii):
(i) Base Price of the CFM 56-SB-1 Engines
The Base Price of a set of two (2) CFM 56-5B-1 engines and
additional standard equipment, at delivery conditions
prevailing in January 1994, which is:
*
Said Base Price has been calculated with reference to the
Reference Price indicated by CFM International of
*
as defined by the Reference
Composite Price Index of 111.82 and in accordance with
delivery conditions prevailing in April 1988.
Said Reference Price is subject to adjustment to the date of
delivery of the Incremental Aircraft in accordance with the
CFM International Price Revision Formula set forth in
Appendix 2 of Amendment No. 6 to this Agreement.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(ii) Base Price of Nacelles and Thrust Reversers
The Base Price of a set of two (2) nacelles and two (2)
thrust reversers for the CFM 56-5B-1 engines at delivery
conditions prevailing in January 1994, which is:
*
Said Base Price is subject to adjustment to the date of
delivery of the Incremental Aircraft in accordance with the
Airframe Price Revision Formula set forth in Appendix 1 of
Amendment No. 6 to this Agreement.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3
<PAGE>
ILFC-A321 Amdt. 6-4
4.1.2.2 Base Price of the CFM International 56-5B-2
Propulsion Systems
The Base Price of a set of CFM 56-5B-2 Propulsion Systems is
the sum of the Base Prices quoted below in (i), (ii) and
(iii):
(i) Base Price of the CFM 56-5B-2 Engines
The Base Price of a set of two (2) CFM 56-5B-2 engines and
additional standard equipment, at delivery conditions
prevailing in January 1994, which is:
*
Said Base Price has been calculated with reference to the
Reference Price indicated by CFM International of
*
as defined by the Reference Composite
Price Index of 111.82 and in accordance with delivery
conditions prevailing in April 1988.
Said Reference Price is subject to adjustment to the date of
delivery of the Incremental Aircraft in accordance with the
CFM International Price Revision Formula set forth in
Appendix 2 of Amendment No. 6 to this Agreement.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(ii) Base Price of Nacelles and Thrust Reversers
The Base Price of a set of two (2) nacelles and two (2)
thrust reversers for the CFM 56-5B-2 engines, at delivery
conditions prevailing in January 1994, which is:
*
Said Base Price is subject to adjustment to the date of
delivery of the Incremental Aircraft in accordance with the
Airframe Price Revision Formula set forth in Appendix 1 of
Amendment No. 6 to this Agreement.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4
<PAGE>
ILFC-A321 Amdt. 6-5
(iii) Base Price of the Propulsion Systems Configuration
Option
The Base Price of the configuration option incurred by the
Seller for the CFM 56-5B-2 engines, at delivery conditions
prevailing in January 1994, which is:
*
Said Base Price is subject to adjustment to the date of
delivery of the Incremental Aircraft in accordance with the
Airframe Price Revision Formula set forth in Appendix 1 of
Amendment No. 6 to this Agreement.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4.1.2.3 Base Price of the International Aero Engines IAE
Y2530-A5 Propulsion Systems
The Base Price of a set of two (2) IAE V2530-A5 Propulsion
Systems, including related equipment, nacelles and thrust
reversers, at delivery conditions prevailing in January
1994, is:
*
Said Base Price has been calculated with reference to the
Reference Price indicated by International Aero Engines of
*
in accordance with theoretical delivery conditions
prevailing in July 1988.
Said Reference Price is subject to adjustment to the date of
delivery of the Incremental Aircraft in accordance with the
International Aero Engines Price Revision Formula set forth
in Appendix 3 of Amendment No. 6 to this Agreement.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4.2 Selection of Propulsion Systems
The Buyer shall notify the Seller in writing no later than
* months prior to delivery of each Incremental
Aircraft of its selection of the Propulsion Systems to be
installed at delivery on such Incremental Aircraft. The
previous sentence notwithstanding, (i) the Seller reserves
the right to increase this * month lead time
should it become necessary due to commercial or industrial
constraints imposed on the Seller, and (ii) the Seller will
reduce this * month lead time should commercial
and industrial conditions allow such a reduction.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5
<PAGE>
ILFC-A321 Amdt. 6-6
4.3 Validity of the Reference Price of the Propulsion
Systems
It is understood that the prices and the price revision
formulae concerning the Propulsion Systems and related
equipment are based on information received from the
Propulsion Systems manufacturers and remain subject to any
modifications that might be communicated by said Propulsion
Systems manufacturers to the seller, the Manufacturer and/or
the Buyer.
4.4 Final Contract Price
The Final Contract Price for any Incremental Aircraft and
firmly ordered Incremental Option Aircraft at delivery
thereof shall be the sum of:
(i) the Base Price of the Airframe constituting a part of
such Incremental Aircraft, as adjusted at the time of actual
delivery in accordance with Subclause 4.1.1;
(ii) *
constituting a part of
such Incremental Aircraft to be mutually agreed in SCN's
entered into pursuant to Clause 3 of the General Terms
Agreement after the date of execution of Amendment No. 6 to
this Agreement, as adjusted at the time of actual delivery
in accordance with the Airframe Price Revision Formula in
Appendix 1 of Amendment No. 6 to this Agreement;
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
(iii) the Base Price of the installed Propulsion Systems
constituting a part of such Incremental Aircraft, as
adjusted at the time of actual delivery in accordance with
the applicable provisions of Subclause 4.1.2.1, 4.1.2.2 or
4.1.2.3; and
(iv) any other amount resulting from any other provisions
of Amendment No. 6 to this Agreement and/or any other
written agreement between the Buyer and the Seller relating
to the Incremental Aircraft and specifically making
reference to the Final Contract Price of an Incremental
Aircraft.
UNQUOTE
ILFC-A321 Amdt. 6-7
4. LETTER AGREEMENT NO. 1 TO THE AGREEMENT
With respect to Incremental Aircraft, Paragraphs A, B, C and
D of Letter Agreement No. 1 to the Agreement are hereby
superseded and replaced by the following provisions:
6
<PAGE>
QUOTE
A. Purchase Price Credit Memorandum
A.1 Upon delivery of each Incremental Aircraft, the Seller
will provide the Buyer with a credit memorandum amounting to
*
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
A.2 Each credit memorandum is quoted at delivery conditions
prevailing in January 1994, is subject to adjustment to the
date of delivery of the relevant Incremental Aircraft in
accordance with the Airframe Price Revision Formula set
forth in Appendix 1 to Amendment No. 6 to the Agreement and
shall be used by the Buyer either to reduce the Final
Contract Price of the Incremental Aircraft or to purchase
goods and services from the Seller or any of its affiliates.
B. New Operators Credit Memorandum
B.1 Upon delivery of each Incremental Aircraft, the Buyer
shall earn the right to a credit of *
, (the "Incremental
Contribution"), which amount shall be credited by the Seller
to a notional account (the "New Narrow Body Operators
Account") upon such delivery.
The New Narrow Body Operators Account shall be the same as
the New Narrow Body Operators Account referred to in
paragraph B.1 of Amendment No. 2, (dated as of even date
herewith), to the A319 Purchase Agreement and B.1 of
Amendment No. 12, (dated as of even date herewith), to the
A320 Purchase Agreement.
*
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7
<PAGE>
ILFC-A321 Amdt. 6-8
B.2 During the first * months after delivery of
an Incremental Aircraft to the Buyer for which a New A321
Operators Credit is being used, the New A321 Operators
Credit may only be used for the benefit of the new operator.
*
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
C. Promotion Credit Memorandum
In addition, the Seller will, commencing on the date hereof
provide the Buyer with a credit memorandum (not subject to
escalation) of *
per Incremental Aircraft. Such additional credit
shall be used by the Buyer for the promotion of Aircraft
leases.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8
<PAGE>
ILFC-A321 Amdt. 6-9
D. New Airframe Credit Memorandum
As a special concession, the Seller will make available to
the Buyer an additional airframe credit memorandum for each
Incremental Aircraft, amounting to *
(the "New Airframe
Credit").
This credit memorandum is quoted at delivery conditions
prevailing in January 1994 and is subject to adjustment to
the date of delivery of the relevant Incremental Aircraft in
accordance with the Airframe Price Revision Formula set
forth in Appendix 1 to Amendment No. 6 to the Agreement and
shall be used by the Buyer either to reduce the Final
Contract Price of the Incremental Aircraft or to purchase
goods and services from the Seller or any of its affiliates.
The Buyer has the option, at any time until * months prior
to the delivery of an Incremental Aircraft, to direct the
Seller to apply a portion of the New Airframe Credit *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
9
<PAGE>
ILFC-A321 Amdt. 6-10
E. *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10
<PAGE>
UNQUOTE
ILFC-A321 Amdt. 6-11
5. DELIVERY SCHEDULE
The delivery schedule set forth in Subclause 5.1 of the
Agreement for Aircraft and Option Aircraft is hereby amended
by the addition of the following nine (9) Incremental
Aircraft and three (3) Incremental Option Aircraft:
(i) Incremental Aircraft
1 in April 1998
1 in November 1998
1 in April 1999
1 in October 1999
1 in January 2000
1 in March 2000
1 in April 2000
1 in May 2000
1 in November 2000
(ii) Incremental Option Aircraft
1 in February 2001
1 in May 2001
1 in October 2001
6. PREDELIVERY PAYMENTS
6.1 With respect to Incremental Aircraft and Incremental
Option Aircraft, the third and fourth sentences of Subclause
6.1 of the Agreement are hereby superseded and replaced by
the following sentences:
QUOTE
For the purpose of calculating the Predelivery Payment
Reference Price, Y is 1994. All predelivery payments made
by the Buyer prior to the date of its selection of
Propulsion Systems shall be calculated based on a
Predelivery Payment Reference Price containing the Base
Price for the IAE V2530-AS Propulsion Systems.
UNQUOTE
ILFC-A321 Amdt. 6-12
6.2 Subclause 6.2 of the Agreement is hereby superseded and
replaced by the following provisions, with respect to
Incremental Aircraft:
11
<PAGE>
QUOTE
Predelivery payments in respect of each Aircraft shall be
paid to the Seller according to the following schedule:
Percentage of Aircraft
Predelivery Payment
Payment Date Reference Price
- * *
- * *
- * *
- * *
- * *
- * *
________________________________________________________
TOTAL PAYMENT PRIOR TO DELIVERY *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
12
<PAGE>
UNQUOTE
6.3 Subclauses 6.4 and 6.5 of the Agreement shall not apply
to the Incremental Aircraft.
ILFC-A321 Amdt. 6-13
7. *
7.1 *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
13
<PAGE>
7.2 *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ILFC-A321 Amdt. 6-14
7.3 *
7.3.1 *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
14
<PAGE>
7.3.2 *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7.3.3 *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
15
<PAGE>
ILFC-A321 Amdt. 6-15
7.4 *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8. INCREMENTAL OPTION AIRCRAFT
For each Incremental Option Aircraft, the Buyer shall pay,
upon execution of this Amendment, an option fee amounting to
* (the "Option
Fee"). Upon exercise of an Incremental Option Aircraft, the
Option Fee shall be credited against the predelivery
payments due by the Buyer to the Seller as per paragraph 6
of this Amendment.
The exercise of each Incremental Option Aircraft shall
become effective upon receipt by the Seller, at the time of
option exercise, of all predelivery payments that would have
been due had such Incremental Option Aircraft been an
Incremental Aircraft at the time of signature of this
Amendment. Upon such effectivity, the Incremental Option
Aircraft shall be considered an Incremental Aircraft under
the Amendment, except that the provisions of paragraphs D
and E of Letter Agreement No. 1 to the Agreement (as amended
by the provisions of paragraph 4 above) shall apply to the
exercised Incremental Option Aircraft only if the Buyer has
irrevocably exercised its option to purchase all Incremental
Option Aircraft by December 31, 1995.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
9. *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
16
<PAGE>
10. INCREASED MTOW
10.1 In the event that the Manufacturer has, as of the date
hereof, already certified an increased *
capability for A321 type aircraft *
to the A321 type aircraft
* , and in the event such increased *
* capability shall be applicable to the Incremental
Aircraft or Aircraft then undelivered to the Buyer, then the
Seller shall offer such capability to the Buyer. Upon
acceptance, such increased * capability shall be
made the subject of an SCN. The price of the SCN for
Incremental Aircraft and Aircraft shall be, per *
in January
1994 delivery conditions (subject to adjustment in
accordance with the Airframe Price Revision Formula set
forth in Appendix 1 to this Amendment).
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ILFC-A321 Amdt. 6-16
10.2 In the event that the Manufacturer, after the date
hereof and before the year 2000, certifies an increased
* capability for the A321 type
aircraft that *
, and in the event such
increased * capability shall be applicable to the
Incremental Aircraft or Aircraft then undelivered to the
Buyer, then the Seller shall offer such capability to the
Buyer. The increased * shall be made the subject
of an SCN, upon the Buyer's acceptance thereof. The price
of the SCN shall be (i) for Incremental Aircraft, *
, or (ii) for
Aircraft, * at January 1994
delivery conditions (subject to adjustment in accordance
with the Airframe Price Revision Formula set forth in
Appendix 1 to this Amendment) multiplied by the number of
pounds of additional weight.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10.3 Should a Service Bulletin ("SB") for increased *
or * be or become available for the A321 type
aircraft, the Seller shall offer such SB to the Buyer with
respect to all delivered Incremental Aircraft and Aircraft.
The prices that the Buyer shall pay shall be the same as
those quoted above in Subparagraphs 10.1 and 10.2,
*
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10.4 Further to the Buyer's request, the Seller will make
its best reasonable efforts to develop and certify an
*
.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
17
<PAGE>
11. CONFIDENTIALITY
Subject to any legal or governmental requirements of
disclosure, the parties (which for this purpose shall
include their employees, agents and advisors) shall maintain
the terms and conditions of this Amendment and any reports
or other data furnished hereunder strictly confidential.
Without limiting the generality of the foregoing, the Buyer
shall use its best efforts to limit the disclosure of the
contents of this Amendment, to the extent legally
permissible, in any filing that the Buyer is required to
make with any governmental agency, and the Buyer shall make
all applications that may be necessary to implement the
ILFC-A321 Amdt. 6-17
foregoing. The Buyer and the Seller shall consult with each
other prior to making any public disclosure, otherwise
permitted hereunder, of this Amendment or the terms and
conditions thereof. The provisions of this Paragraph 11
shall survive any termination of this Amendment.
12. EFFECT OF AMENDMENT
The Agreement shall be deemed amended to the extent herein
provided, and, except as specifically amended hereby, shall
continue in full force and effect in accordance with its
original terms. All capitalized terms not otherwise defined
herein shall have the meanings provided for in the
Agreement.
13. GOVERNING LAW AND JURISDICTION
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE
PERFORMANCE OF THIS AMENDMENT SHALL BE DETERMINED ALSO IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE
FEDERAL OR STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK,
AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO AND
ACCEPTS SUCH JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF
GOODS SHALL NOT APPLY TO THIS AMENDMENT.
18
<PAGE>
If the foregoing correctly sets forth our
understanding, please execute this Amendment in the space
provided below, whereupon this Amendment shall constitute part of
the Agreement.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/RG DUNCAN By: /s/CHRISTOPHE MOUREY
R.G. Duncan
Its: Senior Vice President Its: Chief Executive Officer
Date: 27 Dec 1994 Date: December 1994
ILFC-A321 Amdt. 6-18
19
<PAGE>
APPENDIX 1
AIRFRAME PRICE REVISION FORMULA
1. BASE PRICE
The Base Price of the Airframe is as quoted in Paragraph 3
of the Amendment.
The Base Price of a set of two (2) nacelles and two (2)
thrust reversers is as quoted in Paragraph 3 of the
Amendment.
2. BASE PERIOD
The above Base Prices have been established in accordance
with the averaged economic conditions prevailing in December
1992/January 1993/February 1993 and corresponding to
theoretical delivery conditions prevailing in January 1994
as defined by HEb and ICb index values indicated in
Paragraph 4 of this Appendix 1.
These Base Prices are subject to adjustment for changes in
economic conditions as measured by data obtained from the US
Department of Labor, Bureau of Labor Statistics, and in
accordance with the provisions of Paragraphs 4 and 5 of this
Appendix 1.
HEb and ICb index values indicated in Paragraph 4 of this
Appendix 1 will not be subject to any revision of these
indexes.
ILFC-A321 Amdt. 6-19
3. REFERENCE INDEXES
Labor Index: "Aircraft and Parts," Standard Industrial
Classification 372--Average hourly earnings (hereinafter
referred to as "HE SIC 372"), published by the US Department
of Labor, Bureau of Labor Statistics, in "Employment and
Earnings," Establishment Data: Hours and Earnings (Table
B15: Average hours and earnings of production or
nonsupervisory workers on private nonfarm payrolls by
detailed industry).
Material Index: "Industrial Commodities" (hereinafter
referred to as "IC-Index"), published by the US Department
of Labor, Bureau of Labor Statistics, in "Producer Prices
and Price Indexes" (Table 6: Producer prices and price
indexes for commodity groupings and individual items).
(Base year 1982 = 100.)
20
<PAGE>
4. - REVISION FORMULA
Pn = (Pb + F) (0.75 HEn/HEb + 0.25 ICn/ICb)
Where
Pn = Revised Base Price of the Airframe or of the
nacelles and thrust reversers, as applicable, at
delivery of the Incremental Aircraft.
Pb = Base Price of the Airframe or of the nacelles and
thrust reversers, as applicable, at economic
conditions December 1992/January 1993/February
1993 averaged (January 1994 delivery conditions).
F = (0.005 x N x Pb) Where N = The calendar year of
delivery of the Incremental Aircraft minus 1994.
HEn = The arithmetic average of HE SIC 372 for the
11th, 12th and 13th months prior to the month of
delivery of the Incremental Aircraft (2 decimals).
HEb = HE SIC 372 for December 1992/January 1993/February
1993 averaged (= 17.05).
ICn = The arithmetic average of the IC-Index for the
11th, 12th and 13th months prior to the month of
delivery of the Incremental Aircraft (1 decimal).
ICb = IC-Index for December 1992/January 1993/February
1993 averaged (= 118.3).
In determining the Revised Base Price at delivery of the
Incremental Aircraft, each quotient shall be calculated to
the nearest ten thousandth (4 decimals). If the next
succeeding place is five (5) or more, the preceding decimal
place shall be raised to the next higher figure. The final
factor shall be rounded to the nearest ten thousandth (4
decimals).
After final computation, Pn shall be rounded to the next
whole number (0.5 or more rounded to 1).
ILFC-A321 Amdt. 6-20
5. GENERAL PROVISIONS
5.1 If the US Department of Labor substantially revises the
methodology or discontinues any of the indexes referred to
in this Appendix 1, the Seller shall select a substitute for
the revised or discontinued index, such substitute index to
lead in application to the same adjustment result, insofar
as possible, as would have been achieved by continuing the
use of the original index as it may have fluctuated had it
not been revised or discontinued.
Appropriate revision of the formula shall be made to
accomplish this result.
5.2 The Revised Base Price at delivery of the Incremental
Aircraft shall be the final price and will not be subject to
further adjustments in the indexes.
ILFC-A321 Amdt. 6-21
21
<PAGE>
APPENDIX 2
CFM INTERNATIONAL PRICE REVISION FORMULA
1. REFERENCE PRICE
The Reference Price of a set of two (2) CFM International
CFM 56-5B-1 or CFM-56-5B-2 engines and additional equipment,
as applicable, is as quoted in Paragraph 3 of the Amendment.
These Reference Prices are subject to adjustment for changes
in economic conditions as measured by data obtained from the
US Department of Labor, Bureau of Labor Statistics, and in
accordance with the provisions of Paragraphs 4 and 5 of this
Appendix 2.
2. REFERENCE PERIOD - REFERENCE COMPOSITE PRICE INDEX
The above Reference Price has been established in accordance
with the economic conditions prevailing in October 1987
(April 1988 theoretical delivery conditions), as defined,
according to CFM International, by the Reference Composite
Price Index of 111.82.
3. REFERENCE INDEXES
Labor Index: "Aircraft Engines and Engine Parts," Standard
Industrial Classification 3724--Average hourly earnings
(hereinafter referred to as "HE SIC 3724"), published by the
US Department of Labor, Bureau of Labor Statistics, in
"Employment and Earnings," Establishment Data: Hours and
Earnings (Table B15: Average hours and earnings of
production or nonsupervisory workers on private nonfarm
payrolls by detailed industry).
Material Index (I): "Industrial Commodities" (hereinafter
referred to as "IC-Index"), published by the US Department
of Labor, Bureau of Labor Statistics, in "Producer Prices
and Price Indexes" (Table 6: Producer prices and price
indexes for commodity groupings and individual items).
(Base year 1982 = 100.)
Material Index (II): "Metals and Metal Products" Code 10
(hereinafter referred to as "MMP-Index"), published by the
US Department of Labor, Bureau of Labor Statistics, in
"Producer Prices and Price Indexes" (Table 6: Producer
prices and price indexes for commodity groupings and
individual items). (Base year 1982 = 100.)
ILFC-A321 Amdt. 6-22
Energy Index: "Fuels and Related Products and Power" Code
5 (hereinafter referred to as "EP-Index"), published by the
US Department of Labor, Bureau of Labor Statistics, in
"Producer Prices and Price Indexes" (Table 6: Producer
prices and price indexes for commodity groupings and
individual items). (Base year 1982 = 100.)
22
<PAGE>
4. REVISION FORMULA
Pn = Pb x CPIn
----
111.82
Where
Pn = Revised Reference Price of a set of two (2)
engines at delivery of the Incremental Aircraft.
Pb = Reference Price as defined above.
CPIn = Composite Price Index for the sixth month prior to
the month of delivery of the Incremental Aircraft.
Said Composite Price Index is composed as follows:
CPIn = 0.55 (HEn x 100) + 0.10 ICn + 0.25 MMPn + 0.10 EPn
---
(11.16)
Where
HEn = HE SIC 3724 for the sixth month prior to the
month of delivery of the Incremental
Aircraft; the quotient HEn/11.16 is rounded
to the nearest third decimal place. The
product by 0.55 is rounded to the nearest
second decimal place.
ICn = IC-Index for the sixth month prior to the
month of delivery of the Incremental
Aircraft.
MMPn = MMP-Index for the sixth month prior to the
month of delivery of the Incremental
Aircraft. The product by 0.25 is rounded to
the nearest second decimal place.
EPn = EP-Index for the sixth month prior to the
month of delivery of the Incremental
Aircraft.
ILFC-A321 Amdt. 6-23
The Composite Price Index shall be determined to the second
decimal place. If the next succeeding decimal place is five
(5) or more, the preceding decimal figure shall be raised to
the next higher figure.
The final factor shall be rounded to the nearest thousandth
(3 decimals).
23
<PAGE>
5. GENERAL PROVISIONS
5.1 The Revised Reference Price at delivery of the Incremental
Aircraft shall be the final price and will not be subject to
further adjustments in the indexes.
5.2 If no final index value is available for any of the
applicable months, the published preliminary figures will be
the basis on which the Revised Reference Price will be
computed.
5.3 If the US Department of Labor substantially revises the
methodology of calculation of the indexes referred to in
this Appendix 2 or discontinues any of these indexes, the
Seller shall, in agreement with CFM International, apply a
substitute for the revised or discontinued index, such
substitute index to lead in application to the same
adjustment result, insofar as possible, as would have been
achieved by continuing the use of the original index as it
may have fluctuated had it not been revised or discontinued.
Appropriate revision of the formula shall be made to
accomplish this result.
5.4 Should the above escalation provisions become null and void
by action of the US Government, the Reference Price shall be
adjusted to reflect increases in the cost of labor, material
and fuel which have occurred from the period represented by
the applicable Reference Price Indexes to the sixth month
prior to the scheduled delivery of the Incremental Aircraft.
5.5 The Revised Reference Price at delivery of the Incremental
Aircraft in no event shall be less than the Reference Price
defined in Paragraph 1 of this Appendix 2.
ILFC-A321 Amdt. 6-24
24
<PAGE>
APPENDIX 3
INTERNATIONAL AERO ENGINES PRICE REVISION FORMULA
1. REFERENCE PRICE
The Reference Price of a set of two (2) International Aero
Engines V2530-A5 Propulsion Systems, as applicable, is as
quoted in Paragraph 3 of the Amendment.
This Reference Price is subject to adjustment for changes in
economic conditions as measured by data obtained from the US
Department of Labor, Bureau of Labor Statistics, and in
accordance with the provisions of Paragraphs 4 and 5 of this
Appendix 3.
2. REFERENCE PERIOD
The above Reference Prices have been established in
accordance with the economic conditions prevailing in March
1988 (or July 1988 theoretical delivery conditions) as
defined, according to International Aero Engines, by the
HEb, MMPb and EPb index values indicated in Paragraph 4 of
this Appendix 3.
3. INDEXES
Labor Index: "Aircraft Engines and Engine Parts" Standard
Industrial Classification 3724--Average hourly earnings
(hereinafter referred to as "HE SIC 3724"), published by the
US Department of Labor, Bureau of Labor Statistics, in
"Employment and Earnings," Establishment Data: Hours and
Earnings (Table B15: Average hours and earnings of
production or nonsupervisory workers on private nonfarm
payrolls by detailed industry).
Material Index: "Metals and Metal Products" Code 10
(hereinafter referred to as "MMP-Index"), published by the
US Department of Labor, Bureau of Labor Statistics, in
"Producer Prices and Price Indexes" (Table 6: Producer
prices and price indexes for commodity groupings and
individual items). (Base year 1982 = 100.)
Energy Index: "Fuels and Related Products and Power" Code 5
(hereinafter referred to as "EP-Index"), published by the US
Department of Labor, Bureau of Labor Statistics, in
"Producer Prices and Price Indexes" (Table 6: Producer
prices and price indexes for commodity groupings and
individual items). (Base year 1982 = 100.)
ILFC-A321 Amdt. 6-25
25
<PAGE>
4. REVISION FORMULA
Pn = Pb [(0.60 HEn)/HEb + (0.30 MMPn)/MMPb + (0.10 EPn)/EPb]
Where
Pn = Revised Reference Price of a set of two (2)
Propulsion systems at delivery of the Incremental
Aircraft.
Pb = Reference Price at economic conditions March 1988
HEn = HE SIC 3724 for the fourth month prior to the
month of delivery of the Incremental Aircraft.
HEb = HE SIC 3724 for March 1988 (= 13.58)
MMPn = MMP-Index for the fourth month prior to the month
of delivery of the Incremental Aircraft.
MMPb = MMP-Index for March 1988 (= 115.4)
EPn = EP-Index for the fourth month prior to the month
of delivery of the Incremental Aircraft.
EPb = EP-Index for March 1988 (= 65.9)
In determining the Revised Reference Price each quotient
((0.60 HEn)/HEb, (0.30 MMPn)/MMPb and (0.10 EPn)/EPb) shall
be calculated to the nearest ten thousandth (4 decimals).
If the next succeeding place is five (5) or more the
preceding decimal place shall be raised to the next higher
figure.
After final computation, Pn shall be rounded to the next
whole number (0.5 or more rounded to 1).
5. GENERAL PROVISIONS
5.1 The Revised Reference Price at delivery of the Incremental
Aircraft shall be the final price and will not be subject to
further adjustments in the indexes.
5.2 If no final index value is available for any of the
applicable months, the published preliminary figures will be
the basis on which the Revised Reference Price will be
computed.
ILFC-A321 Amdt. 6-26
26
<PAGE>
5.3 If the US Department of Labor substantially revises the
methodology of calculation of the indexes referred to in
this Appendix 3 or discontinues any of these indexes, the
separate Seller shall, in agreement with International Aero
Engines, apply a substitute for the revised or discontinued
index, such substitute index to lead in application to the
same adjustment result, insofar as possible, as would have
been achieved by continuing the use of the original index as
it may have fluctuated had it not been revised or
discontinued.
Appropriate revision of the formula shall be made to
accomplish this result.
5.4 Should the above escalation provisions become null and void
by action of the US Government, the Reference Price shall be
adjusted to reflect increases in the cost of labor, material
and fuel which have occurred from the period represented by
the applicable Reference Price Indexes to the fourth month
prior to the scheduled delivery of the Incremental Aircraft.
ILFC-A321 Amdt. 6-27
27
<PAGE>
EXHIBIT A
The A321-100 Standard Specification is contained in a
separate folder.
ILFC-A321 Amdt. 6-28
28
<PAGE>
EXHIBIT 10.18
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 1
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A319 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) A300 New Operators Credits:
Paragraph intentionally deleted
2) Rescheduling of delivery dates:
AVSA and ILFC agree to the following rescheduling of aircraft:
- The A300-600R ordered for delivery in December 1994 is
hereby rescheduled for delivery in January 1995, and
- The A320 ordered for delivery in December 1994 is hereby
rescheduled for delivery in January 1995, and
- The A320 ordered for delivery in September 1995 is hereby
rescheduled for delivery in June 1995.
Normal escalation shall apply to the rescheduled A300-600R aircraft
as well as to the A320 aircraft rescheduled from December to
January, except that the "F" factor contained in the airframe price
revision formula shall not apply for the transition from 1994 to
1995 for either aircraft.
<PAGE>
3) *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4) Exercise of Options:
ILFC commits to exercise options to firmly order a minimum of 2 of
the 10 option aircraft contained in the Incremental Order by no
later than December 31, 1995. In the event ILFC fails to exercise
the option to firmly order two incremental aircraft, ILFC shall
forego a certain Additional Airframe Credit Memorandum, and a
certain New Airframe Credit Memorandum for the last two firmly
ordered aircraft of the Incremental Order.
5) *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
6) * MTOW for the * type aircraft:
AVSA confirms that Airbus Industrie has identified the development
of an * version which would feature a * of * (the * ),
subject to certain structural changes to the standard specification
of the * aircraft ordered by ILFC.
AVSA commits to make available to ILFC the * for
ILFC's * deliveries from the second quarter of 1997 onward.
AVSA further agrees that the price for the *
option shall be * (in 1/1994 conditions). This amount
corresponds to a charge of * (in 1/1994 conditions), *
* featured by the *
ILFC agrees, however, that AVSA may invoice the option at a price
not to exceed * (in 1/1994 conditions), provided that it
issues a *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7) Reconfiguration assistance:
This Paragraph is intentionally deleted
8) *
Upon receipt by AVSA of the predelivery payments due upon execution
of the Amendments and this Letter Agreement, AVSA shall issue a
credit memorandum in an amount of * in favor of ILFC (the
* ). This credit shall be used exclusively for the
* of Airbus aircraft offered by ILFC, or offered
jointly by ILFC and AVSA or Airbus Industrie. *
to be funded by this credit must previously have been
jointly designed and approved by AVSA and ILFC. It is agreed that
this shall be the sole use of this credit. AVSA agrees, to the
extent practicable, to make available, or cause to be made
available its and Airbus Industrie's in-house resources such as *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
9) *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential. Without limiting the generality
of the foregoing, the ILFC shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally
permissible, in any filing that ILFC is required to make with any
governmental agency, and the ILFC shall make all applications that
may be necessary to implement the foregoing. ILFC and AVSA shall
consult with each other prior to making any public disclosure,
otherwise permitted hereunder, of this Letter Agreement or the
terms and conditions thereof. The provisions of this Paragraph 8
shall survive any termination of this Letter Agreement.
11) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Letter Agreement in the space provided below,
whereupon this Letter Agreement shall constitute part of the
Amendments defined above.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 2
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A319 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) Deliveries
*
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential. Without limiting the generality
of "the foregoing, the ILFC shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally
permissible, in any filing that ILFC is required to make with any
governmental agency, and the ILFC shall make all applications that
may be necessary to implement the foregoing. ILFC and AVSA shall
consult with each other prior to making any public disclosure,
otherwise permitted hereunder, of this Letter Agreement or the
terms and conditions thereof. The provisions of this Paragraph 2
shall survive any termination of this Letter Agreement.
3) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
<PAGE>
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION. THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL
SALE OF GOODS SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Amendment in the space provided below,
whereupon this Amendment shall constitute part of the Agreement.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 3
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A319 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) Predelivery Payments
*
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
2) Collateralisation of predelivery payments
The parties acknowledge that AVSA currently holds predelivery
payments from ILFC under various aircraft purchase agreements
between the parties, and that the amount of predelivery payments
will vary from time to time as aircraft are delivered and/or more
predelivery payments are made. ILFC hereby pledges that, in the
event ILFC should fail to make on its due date any material payment
owing under any existing purchase agreement (with due regard to any
grace period that may exist under such agreement), AVSA may apply
any amount of any predelivery payment it then holds with respect to
any aircraft to compensate for damages AVSA may suffer as a result
of ILFC's failure to make such payment in a timely manner. The
utilization of prior predelivery payments to compensate for damages
will not serve as cure of the default for failure to make timely
payment. Further, a default will consequently also then exist with
respect to the aircraft whose predelivery payment(s) may have been
utilized as compensation for damages. Such damages may include but
not be limited to interest on moneys due and storage,
reconfiguration or remarketing of aircraft.
This unrestricted right is without prejudice, and in addition, to
any other rights AVSA may have in the event of such default by
ILFC. This specific right shall expire upon due payment by ILFC to
AVSA of the predelivery payment due 24 months prior to delivery of
the last Incremental Aircraft ordered pursuant to the Amendments.
3) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential.
Without limiting the generality of the foregoing, the ILFC shall
use its best efforts to limit the disclosure of the contents of
this Amendment, to the extent legally permissible, in any filing
that ILFC is required to make with any governmental agency, and the
ILFC shall make all applications that may be necessary to implement
the foregoing.
ILFC and AVSA shall consult with each other prior to making any
public disclosure, otherwise permitted hereunder, of this Letter
Agreement or the terms and conditions thereof. The provisions of
this Paragraph 2 shall survive any termination of this Letter
Agreement.
3) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION.
<PAGE>
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Amendment in the space provided below,
whereupon this Amendment shall constitute part of the Agreement.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 4
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A319 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) Option exercise date:
Notwithstanding the provisions of Paragraph 8 of each of the
Amendments, and notwithstanding the provisions of all previous
agreements between ILFC and AVSA with respect to options to
purchase aircraft, it is agreed that ILFC shall have the option to
purchase each Incremental Option Aircraft until the first day of
the 24th month prior to the scheduled month of delivery of such
Incremental Option Aircraft. Upon exercise of an option to
purchase an Incremental Option Aircraft, ILFC shall make all the
predelivery payments that would have been due on or prior to that
date, had such Incremental Option Aircraft been a firmly ordered
Incremental Aircraft under the corresponding Amendment, less any
amount of Option Fee already paid by ILFC to AVSA with respect to
such Incremental Option Aircraft.
<PAGE>
2) Option Fee:
Notwithstanding the provisions of Paragraph 8 of each of the
Amendments, AVSA agrees that ILFC shall have the option to pay the
Option Fees referred to in each such Paragraph 8 as follows:
- ILFC shall pay * per Incremental Option Aircraft
on January 10, 1995.
- Unless the option to purchase an Incremental Option
Aircraft has been exercised earlier, ILFC shall pay another
portion of the Option Fee for such Incremental Option Aircraft
on the first day of the 27th month prior to the scheduled
month of delivery of such Incremental Option Aircraft.
Failure to pay any portion of the Option Fee due for each
Incremental Option Aircraft on the date such portion is due, shall
void ILFC's option to purchase such Incremental Option Aircraft.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential. Without limiting the generality
of the foregoing, the ILFC shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally
permissible, in any filing that ILFC is required to make with any
governmental agency, and the ILFC shall make all applications that
may be necessary to implement the foregoing. ILFC and AVSA shall
consult with each other prior to making any public disclosure,
otherwise permitted hereunder, of this Letter Agreement or the
terms and conditions thereof. The provisions of this Paragraph 8
shall survive any termination of this Letter Agreement.
4) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Amendment in the space provided below,
whereupon this Amendment shall constitute part of the Agreement.
<PAGE>
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 5
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A319 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) Goods and services credit:
AVSA agrees to issue in ILFC's favor a credit memorandum in an
amount of * upon the earlier of (i) delivery of the
A310-300 aircraft scheduled to be delivered in * and
(ii) delivery of the A300-600R also scheduled for delivery in
* . ILFC may use this credit for the payment of any goods
and services provided by AVSA to ILFC.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential. Without limiting the generality
of the foregoing, the ILFC shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally
permissible, in any filing that ILFC is required to make with any
governmental agency, and the ILFC shall make all applications that
may be necessary to implement the foregoing. ILFC and AVSA shall
consult with each other prior to making any public disclosure,
otherwise permitted hereunder, of this Letter Agreement or the
terms and conditions thereof. The provisions of this Paragraph 8
shall survive any termination of this Letter Agreement.
3) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Amendment in the space provided below,
whereupon this Amendment shall constitute part of the Agreement.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 6
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A3l9 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) Lease *
On an exceptional basis, and in recognition of ILFC's success in
placing A300-600R aircraft with *
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE>
2) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential. Without limiting the generality
of the foregoing, the ILFC shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally
permissible, in any filing that ILFC is required to make with any
governmental agency, and the ILFC shall make all applications that
may be necessary to implement the foregoing. ILFC and AVSA shall
consult with each other prior to making any public disclosure,
otherwise permitted hereunder, of this Letter Agreement or the
terms and conditions thereof. The provisions of this Paragraph 8
shall survive any termination of this Letter Agreement.
3) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Amendment in the space provided below,
whereupon this Amendment shall constitute part of the Agreement.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
December 27th, 1994
International Lease Finance Corporation
1999 Avenue of the Stars
Los Angeles, California
Letter Agreement No. 7
Dear Sirs:
Reference is made to a certain Amendment No. 2 to the A319 Purchase
Agreement, Amendment No. 12 to the A320 Purchase Agreement and
Amendment No. 6 to the A321 Purchase Agreement, all three
Amendments dated December 27th, 1994 (the "Amendments").
In consideration for the order for 30 firm and 10 optional Airbus
narrow-body aircraft as set forth in the above mentioned Amendments
(the "Incremental Order"), AVSA and ILFC agree to the following
arrangements, which shall be effective upon, part of and subject to
execution of the Amendments.
1) *
AVSA hereby agrees to provide ILFC with *
, per each Incremental
Aircraft ordered pursuant to the Amendments.
This allocation is understood to be in addition to the allocation
granted for each Incremental Aircraft pursuant to the provisions of
Letter Agreement No. 3 to the General Terms Agreement, dated
November 10, 1988.
- ---------------
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2) Confidentiality:
Subject to any legal or governmental requirements of disclosure,
the parties (which for this purpose shall include their employees,
agents and advisors) shall maintain the terms and conditions of
this Letter Agreement and any reports or other data furnished
hereunder strictly confidential. Without limiting the generality
of the foregoing, the ILFC shall use its best efforts to limit the
disclosure of the contents of this Amendment, to the extent legally
permissible, in any filing that ILFC is required to make with any
governmental agency, and the ILFC shall make all applications that
may be necessary to implement the foregoing. ILFC and AVSA shall
consult with each other prior to making any public disclosure,
otherwise permitted hereunder, of this Letter Agreement or the
terms and conditions thereof. The provisions of this Paragraph 8
shall survive any termination of this Letter Agreement.
3) Jurisdiction:
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE PERFORMANCE
OF THIS LETTER AGREEMENT SHALL BE DETERMINED ALSO IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
ANY DISPUTE ARISING HEREUNDER SHALL BE REFERRED TO THE FEDERAL OR
STATE COURTS LOCATED IN NEW YORK CITY, NEW YORK, AND EACH OF THE
PARTIES HERETO IRREVOCABLY SUBMITS TO AND ACCEPTS SUCH
JURISDICTION.
THE UNITED NATIONS CONVENTION ON THE INTERNATIONAL SALE OF GOODS
SHALL NOT APPLY TO THIS LETTER AGREEMENT.
The existing agreements between AVSA and ILFC shall be deemed
amended to the extent herein provided, and, except as specifically
<PAGE>
amended hereby, shall continue in full force and effect in
accordance with their original terms. All capitalized terms not
otherwise defined herein shall have the meanings provided for in
the existing agreements.
If the foregoing correctly sets forth our understanding,
please execute this Amendment in the space provided below,
whereupon this Amendment shall constitute part of the Agreement.
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ RG DUNCAN By: /s/ CHRISTOPHE MOUREY
Its: R.G. Duncan Its: Christophe Mourey
Senior Vice President AVSA Chief Executive Officer
Date: December 27, 1994 Date: December 27, 1994
<PAGE>
EXHIBIT 10.19
Dated 14 December, 1994
(1) THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN
(as Lenders)
(2) NATIONAL WESTMINSTER BANK PLC
(as Agent)
(3) NATIONAL WESTMINSTER BANK PLC
(as Security Agent)
(4) ENCORE LEASING LIMITED
(as Borrower)
(5) ILFC (BERMUDA) 7, LTD.
(as Bermuda Lessee)
(6) ILFC IRELAND 2 LIMITED
(as Irish Lessee)
(7) ILFC (BERMUDA) 5, LTD.
(as Bermuda Parent)
(8) ILFC IRELAND 3 LIMITED
(as Irish Parent)
(9) ILFC (BERMUDA) 6, LTD.
(as Bermuda Option Holder)
(10) INTERNATIONAL LEASE FINANCE CORPORATION
(as Guarantor)
______________________________
AIRCRAFT FACILITY AGREEMENT
in respect of a term facility in the
maximum principal amount of US$1,375,000,000
for the financing of up to twenty-one (21)
Airbus Aircraft
______________________________
WILDE SAPTE
____
LONDON
TABLE OF CONTENTS
Clause
No. Heading Page
1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . .3
2. AVAILABILITY . . . . . . . . . . . . . . . . . . . . . .38
3. SYNDICATE. . . . . . . . . . . . . . . . . . . . . . . . 41
4. MANNER OF UTILISING THE FACILITY . . . . . . . . . . . .51
5. PROVISIONS RELATING TO EACH ADVANCE AND EACH AIRCRAFT. . 59
6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 91
7. UNDERTAKINGS AND COVENANTS . . . . . . . . . . . . . . . 109
8. CANCELLATION EVENTS. . . . . . . . . . . . . . . . . . . 126
9. LOAN EVENTS OF TERMINATION . . . . . . . . . . . . . . . 131
10. GUARANTEE AND INDEMNITY. . . . . . . . . . . . . . . . . 134
11. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . 140
12. INCREASED COSTS, FEES AND EXPENSES AND VALUE ADDED TAX . 141
13. RIGHTS CUMULATIVE, VARIATION, WAIVERS. . . . . . . . . . 141
14. ASSIGNMENTS AND TRANSFERS. . . . . . . . . . . . . . . . 141
15. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . 144
16. PRESERVATION OF INDEMNITIES. . . . . . . . . . . . . . . 144
17. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . 144
18. SET-OFF AND PRO RATA PAYMENTS. . . . . . . . . . . . . . 148
19. GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . . 150
20. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 151
21. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 152
22. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . 152
23. AGENT FOR GERMAN LEAD MANAGER. . . . . . . . . . . . . . 154
SCHEDULE 1 -THE LENDERS - PART I - THE BRITISH LENDERS . . . .155
SCHEDULE 1 -PART II - THE FRENCH LENDERS . . . . . . . . . . .157
SCHEDULE 1 -PART III - THE GERMAN LENDERS. . . . . . . . . . .161
SCHEDULE 2 -FORM OF TRANSFER CERTIFICATE . . . . . . . . . . .164
SCHEDULE 3 -UTILISATION NOTICE . . . . . . . . . . . . . . . .170
SCHEDULE 4 -PART I - Details of Proposed Aircraft and
Proposed Delivery Schedule. . . . . . . . . . . . 173
SCHEDULE 4 -PART II - Sample Loan/Lease Profiles as a
Percentage of Aircraft Cost . . . . . . . . . . . 174
SCHEDULE 5 -GUARANTOR COVENANTS. . . . . . . . . . . . . . . .175
ATTACHMENT A TO SCHEDULE 5 - Fixed Charge plus Preferred
Coverage Ratio for Four Fiscal
Quarters Ended 31st December 1993. 191
ATTACHMENT B TO SCHEDULE 5 - List of Subsidiaries and Special
Purpose Corporations . . . . ... 192
ATTACHMENT C TO SCHEDULE 5 - List of Partnerships And Joint
Ventures . . . . . . . . . . . . 193
SCHEDULE 6 - NOTICE OF DRAWDOWN. . . . . . . . . . . . . . . 194
SCHEDULE 7 - CONDITIONS PRECEDENT TO AN ADVANCE. . . . . . . .196
PART I . . . . . . . . . . .. . . . . . . . . . .196
PART II. . . . . . . . . . . . . . . . . . . . .197
SCHEDULE 8 - ENGLISH PROCESS AGENTS. . . . . . . . . . . . . .201
APPENDIX A - FORM OF LOAN SUPPLEMENT . . . . . . . . . . . . .204
APPENDIX B - FORM OF LEASE AGREEMENT . . . . . . . . . . . . .205
APPENDIX C - FORM OF PURCHASE AGREEMENT ASSIGNMENT (INCLUDING
AIRFRAME WARRANTIES) . . . . . . . . . . . . . .206
APPENDIX D - FORM OF ENGLISH LAW AIRCRAFT MORTGAGE . . . . . .207
APPENDIX E - FORM OF GENERAL SECURITY ASSIGNMENT . . . . . . .208
APPENDIX F - FORM OF SUB-LEASE SECURITY ASSIGNMENT . . . . . .209
APPENDIX G - FORM OF DEED OF ASSIGNMENT OF GENERAL TERMS
AGREEMENT RE ENGINE WARRANTIES . . . . . . . . .210
APPENDIX H - FORM OF APPROVED SUB-LESSEE'S POWER OF ATTORNEY .211
APPENDIX I - FORM OF BFE BILL OF SALE. . . . . . . . . . . . .212
APPENDIX J - FORM OF AIRCRAFT BILL OF SALE . . . . . . . . . .213
APPENDIX K - FORM OF OPTION HOLDER'S POWER OF ATTORNEY . . . .218
THIS FACILITY AGREEMENT is made the 14 day
of December, 1994
BETWEEN:-
(1) NATIONAL WESTMINSTER BANK PLC (Lead Manager), a banking
institution established under the laws of England, whose
registered office is at 41 Lothbury, London EC2P 2BP and
CANADIAN IMPERIAL BANK OF COMMERCE (Co-Lead Manager), a
banking institution established under the laws of Canada
acting through its London Office at Cottons Centre, Cottons
Lane, London SE1 2QL and MIDLAND BANK PLC (Co-Lead
Manager), a banking institution established under the laws
of England, whose registered office is at 27/32 Poultry,
London EC2P 2BX and THE BANK OF NOVA SCOTIA (Co-Lead
Manager) a banking institution established under the Federal
laws of Canada and acting through its London Branch at
Scotia House, 33 Finsbury Square, London EC2A 1BB and THE
SUMITOMO TRUST & BANKING CO., LTD. (Co-Lead Manager), a
banking institution incorporated under the laws of Japan,
acting through its London Branch at 155 Bishopsgate, London
EC2M 3XU and BAYERISCHE HYPOTHEKEN- UND WECHSEL-BANK AG
(Manager) a banking institution established under the laws
of Germany acting through its London Branch at 29 Gresham
Street, London EC2V 7HN and CIBC INC. (Manager), a
corporation incorporated under the laws of the State of
Delaware, United States of America whose principal place of
business is at 425 Lexington Avenue, New York, NY 10017
(herein together with their successors, permitted assigns
and permitted transferees called the "British Lenders");
(2) BANQUE PARIBAS (Lead Manager), a banking institution
established under the laws of France, whose principal place
of business is at 3 Rue d'Antin, 75002 Paris and NATIONAL
WESTMINSTER BANK PLC (Co-Lead Manager) a banking institution
established under the laws of England acting through its
Paris Branch at 13 Rue d'Uzes, 75002 Paris and BANQUE
INDOSUEZ (Co-Lead Manager), a banking institution
established under the laws of France, whose principal place
<PAGE>
of business is at 96 Boulevard Haussmann, 75008 Paris and
BANQUE NATIONALE DE PARIS (Co-Lead Manager), a banking
institution established under the laws of France, whose
principal place of business is at 16 Boulevard des Italiens,
75002 Paris and CREDIT FONCIER DE FRANCE (Co-Lead Manager),
a banking institution established under the laws of France,
whose principal place of business is at 19 Rue des
Capucines, 75001 Paris and CREDIT NATIONAL (Co-Lead
Manager), a banking institution established under the laws
of France, whose principal place of business is at 45 Rue
Saint-Dominique, 75007 Paris and ROYAL BANK OF CANADA S.A.
(Co-Lead Manager), a banking institution established under
the laws of France, whose principal place of business is at
29 Rue de la Bienfaisance, 75008 Paris and SOCIETE GENERALE
(Co-Lead Manager), a banking institution established under
the laws of France, whose principal place of business is at
29 Boulevard Haussmann, 75008 Paris and THE FUJI BANK,
LIMITED (Co-Lead Manager), a banking institution
incorporated under the laws of Japan, acting through its
Paris Branch at 26 Avenue des Champs-Elysees, 75008 Paris
and THE INDUSTRIAL BANK OF JAPAN, LIMITED (Co-Lead Manager),
a banking institution incorporated under the laws of Japan,
acting through its Paris branch at 2 Place du Palais-Royal,
Centre D'Affaires "Le Louvre", 75044 Paris and THE LONG-TERM
CREDIT BANK OF JAPAN, LTD. (Co-Lead Manager), a banking
institution incorporated under the laws of Japan, acting
through its Paris Branch at 55-57 Boulevard Haussmann, 75008
Paris (herein together with their successors, permitted
assigns and permitted transferees called the "French
Lenders");
(3) BAYERISCHE HYPOTHEKEN- UND WECHSEL-BANK AG (Lead Manager), a
banking institution established under the laws of Germany
and having its principal place of business at Theatinerstr.
11, 80333 Munich and BAYERISCHE LANDESBANK GIROZENTRALE (Co-
Lead Manager) a banking institution established under the
laws of Germany and whose principal place of business is at
Brienner Str. 20, 80277, Munich, Germany and COMMERZBANK AG
(Co-Lead Manager) a banking institution established under
the laws of Germany and whose principal place of business is
at Neue Mainzer Strasse 32-36, 60311 Frankfurt, Germany and
LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE (Co-Lead Manager)
a banking institution established under the laws of Germany
and whose principal place of business is at Martensdamm 6,
24103 Kiel, Germany and KREDITANSTALT FUR WIEDERAUFBAU, (Co-
Lead Manager) a public corporation established under the
laws of Germany and having its principal place of business
at Palmengartenstrasse 5-9, 60325 Frankfurt am Main and
NATIONAL WESTMINSTER BANK AG (Manager) a banking institution
established under the laws of Germany and whose principal
place of business is at Feldbergstrasse 35, 60323 Frankfurt
am Main, Germany (herein together with their successors,
permitted assigns and permitted transferees called the
"German Lenders");
(the British Lenders, the French Lenders and the German
Lenders being herein together called the "Lenders" and
severally a "Lender")
(4) NATIONAL WESTMINSTER BANK PLC, a banking institution
established under the laws of England, whose registered
office is at 41 Lothbury, London EC2P 2BP in its capacity as
agent for and on behalf of itself and the Lenders (herein in
such capacity called the "Agent");
(5) NATIONAL WESTMINSTER BANK PLC, a banking institution
established under the laws of England, whose registered
<PAGE>
office is at 41 Lothbury, London EC2P 2BP in its capacity as
security agent for and on behalf of itself and the Lenders
(herein in such capacity called the "Security Agent");
(6) ENCORE LEASING LIMITED, a company organised and existing
under the laws of the Cayman Islands and having its
registered office at P.O. Box 2003, George Town, Grand
Cayman, Cayman Islands, BWI (herein called the "Borrower");
(7) ILFC (BERMUDA) 7, LTD., a company incorporated under the
laws of Bermuda and having its registered office at 29
Richmond Road, Hamilton HM-AX, Bermuda (herein called the
"Bermuda Lessee");
(8) ILFC IRELAND 2 LIMITED, a company incorporated under the
laws of Ireland and having its registered office at AIG
House, Merrion Road, Dublin 4, Ireland (herein called the
"Irish Lessee");
(9) ILFC (BERMUDA) 5, LTD., a company incorporated under the
laws of Bermuda and having its registered office at 29
Richmond Road, Hamilton HM-AX, Bermuda (hereinafter called
the "Bermuda Parent");
(10) ILFC IRELAND 3 LIMITED, a company incorporated under the
laws of Ireland and having its registered office at AIG
House, Merrion Road, Dublin 4, Ireland (herein called the
"Irish Parent");
(11) ILFC (BERMUDA) 6, LTD., a company incorporated under the
laws of Bermuda and having its registered office at 29
Richmond Road, Hamilton HM-AX, Bermuda (herein called the
"Bermuda Option Holder");
(12) INTERNATIONAL LEASE FINANCE CORPORATION, a corporation
incorporated under the laws of the State of California and
having its principal place of business at 1999 Avenue of the
Stars, 39th Floor, Los Angeles, CA 90067 (herein called the
"Guarantor").
WHEREAS:-
(A) Pursuant to the Purchase Agreements the Guarantor has agreed
with the Seller for the supply, inter-alia, of the Facility
Aircraft.
(B) This Facility Agreement sets out the terms upon which the
Lenders are to make available to the Borrower the facilities
referred to herein on the terms and subject to the
conditions set out below to enable the Borrower to purchase
any or all of the Facility Aircraft and to lease the same to
one of the Lessees.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Facility Agreement, each of the other Facility
Documents and each of the Operative Documents (including, in
each case, as appropriate, the Recitals, the Schedules and
the Annexes thereto) except where the context otherwise
requires or there is express provision to the contrary, the
following words and expressions shall have the following
meanings:-
"ACCELERATION EVENT" means (i) a Cancellation Event in
respect of which the Agent has served a notice in accordance
<PAGE>
with the provisions of Clause 8.1 having the effect set out
in Clause 8.2.2 or (ii) in relation to a Lease Agreement, a
Termination Event in respect of which the Borrower has
served a notice in accordance with the provisions of Clause
16.2.2 of that Lease Agreement (and for the purposes of this
definition where such a Termination Event refers to an
opinion of "the Lessor" or depends upon "the Lessor's"
consideration or determination of whether such event has
occurred or has or would have certain consequences, then
irrespective of the opinion of "the Lessor" or "the
Lessor's" consideration or determination at that time with
respect to such event, such event shall for the purposes of
this definition be deemed to have occurred if the Security
Agent is of the relevant opinion or considers or determines
that the relevant event has occurred or the Agent, the
Security Agent or any of the Lenders would suffer the
relevant consequences) or (iii) an Acceleration Event (as
that term is defined in the 1994 Facility Agreement);
"ACCEPTANCE CERTIFICATE" means, in respect of an Aircraft,
the certificate signed by the relevant Lessee and given by
the relevant Lessee to the Borrower pursuant to Clause 5 of
the relevant Lease Agreement, in or substantially in the
form of Schedule 5 to the relevant Lease Agreement;
"ACCOUNT" means the Dollar account number 272275BX of the
Borrower in the Cayman Islands with Coutts & Co. (Cayman)
Limited of Coutts House, West Bay Road, PO Box 707, George
Town, Grand Cayman, Cayman Islands, BWI and which may be
charged and assigned to the Security Agent pursuant to the
Deed of Assignment and Charge or such other account in
London as the Borrower may from time to time designate by
not less than ten (10) Business Days notice to the Security
Agent and the Guarantor;
"ADDITIONAL AMOUNTS" means all those amounts that are
expressed to be payable by the Bermuda Lessee or, as the
case may be, the Irish Lessee or, as the case may be, any
other Alternative Lessee to the Security Agent, the Agent
or any of the Lenders pursuant to the Priorities and
Indemnities Agreement;
"ADDITIONAL LESSEE" means any additional sub-lessee which is
nominated in the relevant Utilisation Notice in accordance
with the provisions of Clause 4.2.1 for insertion into the
structure between the relevant Lessee or, as the case may
be, another additional lessee and the relevant Approved
Sub-Lessee or, as the case may be, another additional lessee
in respect of the delivery of a particular Aircraft and
which is accepted by the Lead Managers in accordance with
the provisions of Clause 4.2.3;
"ADVANCE" means, in respect of a Utilisation, the aggregate
of the sums to be advanced by each of the Lenders to the
Borrower by way of loan in respect of that Utilisation;
"AFFECTED LENDER" shall have the meaning given thereto in
Clause 5.11.3;
"AIG" means American International Group, Inc. a corporation
duly organised and existing under the laws of Delaware whose
principal place of business is at 70 Pine Street, New York,
N.Y. 10270, USA;
"AIG GROUP COMPANY" means AIG and any person of which or in
which AIG owns, directly or indirectly, 50% or more of:-
<PAGE>
(a) the combined voting power of all classes of stock
having general voting power under ordinary
circumstances to elect a majority of the board of
directors of such person, if it is a corporation;
(b) the capital interest or profits interest or such
person, if it is a partnership, joint venture or
similar entity; or
(c) the beneficial interest of such person, if it is a
trust, association or other unincorporated
organisation;
"AIRCRAFT" means, as the context may require, any or all of
the Facility Aircraft nominated by the Bermuda Lessee or, as
the case may be, the Irish Lessee in a Utilisation Notice to
be the subject matter of a Utilisation;
"AIRCRAFT OPERATIVE DOCUMENTS" means, in respect of an
Aircraft, each of (i) the relevant Loan Supplement, the
relevant Notice of Drawdown, the relevant Bill of Sale, the
relevant BFE Bill of Sale, the relevant Purchase Agreement
(to the extent that it relates to that Aircraft and the
Warranties relating to that Aircraft), the relevant Engine
Agreement (to the extent that it relates to the Engines
Warranties relating to that Aircraft), the relevant Lease
Agreement, the relevant Acceptance Certificate, each of the
Aircraft Security Documents and (ii) (a) any other document,
instrument or memorandum annexed to any of the documents
referred to in (i) above, (b) any notice or acknowledgement
referred to in or required pursuant to the terms of any of
the documents referred to in (i) above and (c) any document,
instrument or memorandum (x) which arises following a
restructuring in accordance with the terms of this Facility
Agreement and/or the Priorities and Indemnities Agreement of
any or all of the arrangements contemplated by any of the
documents referred to in (i) above or (y) which the
Guarantor or the relevant Lessee agrees constitutes an
Aircraft Operative Document or (z) which is entered into in
substitution for or which amends or augments or varies all
or any part of any of the documents referred to in this
definition (including this part (ii)(c)(z)) in each case in
accordance with the terms of this Facility Agreement;
"AIRCRAFT PROCEEDS" means, in relation to an Aircraft or any
Engine:-
(a) any Final Disposition Proceeds;
(b) any and all other proceeds of enforcement of the
Security Documents relating to such Aircraft;
(c) any Total Loss Proceeds;
(d) any Requisition Proceeds; and
(e) any and all other amounts (other than in respect of
fees) received by the Borrower, the Agent, the Security
Agent or any Lender from any of the Obligors (whether
directly or through the Borrower);
"AIRCRAFT PURCHASE PRICE" means, in respect of an Aircraft,
the net final invoice price for that Aircraft (including any
Buyer Furnished Equipment) after deduction of all credit
memoranda of the Seller and/or the Manufacturer and any
capitalised interest which net final invoice price, in the
event that it exceeds the figure set out opposite such
<PAGE>
Aircraft in the column entitled "Assumed Maximum Aircraft
Purchase Price" in Schedule 4 Part I, has been approved by
the Lead Managers and the Export Credit Agencies;
"AIRCRAFT SECURITY DOCUMENTS" means, in respect of an
Aircraft, each of (i) this Facility Agreement, the
Priorities and Indemnities Agreement, the relevant General
Security Assignment, the Deed of Assignment and Charge, the
relevant Mortgage, the Guarantee and Indemnity (Lessor), the
Deed of Assignment of Guarantee and Indemnity (Lessor), the
relevant Sub-Lease Collateral Charge, the relevant
Assignment of Sub-Lease Collateral Charge, the relevant Sub-
Lease Security Assignment, the relevant Deed of Assignment
of General Terms Agreements Re Engine Warranties, the
relevant Purchase Agreement Assignment, the Charge Over
Shares of Borrower, such other Charge Over Shares as relates
to the relevant Lessee, the relevant Power of Attorney (if
any), the relevant Option Holder's Power of Attorney, (ii)
(a) any other instrument, document or memorandum annexed to
any of the documents referred to in (i) above, (b) any
notice or acknowledgement referred to in or required
pursuant to the terms of any of the documents referred to in
(i) above and (c) any document, instrument or memorandum (w)
which arises following a restructuring of any or all of the
arrangements contemplated by any of the documents referred
to in (i) above or (x) which the Guarantor or the relevant
Lessee agrees constitutes an Aircraft Security Document or
(y) which secures the obligations of any one or more of the
Obligors under any of the Aircraft Operative Documents or
(z) which is entered into in substitution for or which
amends or augments or varies all or any part of any of the
documents referred to in this definition (including this
part (ii)(c)(z)) in each case in accordance with the terms
of this Facility Agreement;
"AIRFRAME" means, in respect of an Aircraft, the airframe
more particularly identified in Schedule 1 to the relevant
Lease Agreement including all Parts installed in or on the
airframe at the Delivery Date (or which, having been removed
therefrom, remain the property of the Borrower pursuant to
the terms of that Lease Agreement), and all substitutions,
renewals and replacements from time to time made in or to or
installed in or on the said airframe in accordance with the
terms and conditions of that Lease Agreement including any
Parts which are for the time being detached from the
airframe but remain the property of the Borrower;
"ALTERNATIVE LESSEE" means, in respect of the delivery of a
specific Aircraft, such person as the Lead Managers and the
Guarantor may agree in accordance with the provisions of
Clause 4.2.3 shall take that Aircraft on lease from the
Borrower and being in each case a wholly-owned indirect
subsidiary of the Guarantor;
"ALTERNATIVE LESSEE MAINTENANCE RESERVE COLLATERAL ACCOUNT"
means, in respect of an Alternative Lessee, such Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Alternative Lessee
to establish at the time the Alternative Lessee enters into
the relevant Alternative Lessee Sub-Lease Collateral Charge
for the purpose of compliance by the Alternative Lessee with
Clause 7.5 of each of the Lease Agreements to which the
Alternative Lessee is to be a party;
"ALTERNATIVE LESSEE RENTAL COLLATERAL ACCOUNT" means, in
respect of an Alternative Lessee, such Dollar account
outside the United Kingdom as the Borrower and the Security
<PAGE>
Agent may reasonably require the Alternative Lessee to
establish at the time the Alternative Lessee enters into the
relevant Alternative Lessee Sub-Lease Collateral Charge for
the purpose of compliance by the Alternative Lessee with
Clause 7.3 of each of the Lease Agreements to which the
Alternative Lessee is to be a party;
"ALTERNATIVE LESSEE SECURITY DEPOSIT COLLATERAL ACCOUNT"
means, in respect of an Alternative Lessee, such Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Alternative Lessee
to establish at the time the Alternative Lessee enters into
the relevant Alternative Lessee Sub-Lease Collateral Charge
for the purpose of compliance by the Alternative Lessee with
Clause 7.4 of each of the Lease Agreements to which the
Alternative Lessee is to be a party;
"ALTERNATIVE LESSEE SUB-LEASE COLLATERAL CHARGE" means, in
respect of an Alternative Lessee, the deed of assignment and
charge relating to, inter alia, Maintenance Reserves,
Security Deposits and Sub-Lease Rentals in relation to any
of the Aircraft of which that Alternative Lessee is to be
the Lessee to be entered into between the relevant
Alternative Lessee and the Borrower substantially in the
form of the Irish Lessee Sub-Lease Collateral Charge;
"ANCILLARY DOCUMENTS" means the fees letter agreements dated
of even date herewith and made between the Guarantor and the
Agent or, as the case may be, between the Guarantor and the
Borrower;
"APPROVED SUB-LEASE" means, in respect of an Aircraft, any
contract for the sub-lease, hire or bailment of that
Aircraft into which the relevant Lessee is entitled to enter
in accordance with the provisions of Clause 9 of the
relevant Lease Agreement;
"APPROVED SUB-LESSEE" means, in respect of an Aircraft, the
operator for the time being of that Aircraft under an
Approved Sub-Lease;
"ASSIGNMENT OF ALTERNATIVE LESSEE SUB-LEASE COLLATERAL
CHARGE" means any deed of assignment entered into from time
to time between the Borrower and the Security Agent in
respect of an Alternative Lessee Sub-Lease Collateral Charge
substantially in the form of the Assignment of Bermuda
Lessee and Irish Lessee Sub-Lease Collateral Charge mutatis
mutandis;
"ASSIGNMENT OF BERMUDA LESSEE AND IRISH LESSEE SUB-LEASE
COLLATERAL CHARGES" means the agreement so entitled of even
date herewith between the Borrower and the Security Agent;
"ASSIGNMENT OF SUB-LEASE COLLATERAL CHARGE" means any one of
the Assignment of Bermuda Lessee and Irish Lessee Sub-Lease
Collateral Charges and any Assignment of Alternative Lessee
Sub-Lease Collateral Charge and "Assignments of Sub-Lease
Collateral Charges" shall have a corresponding meaning;
"AVAILABILITY PERIOD" means the period from the date hereof
up to and including 30th April 1996 or such later date as
the parties hereto may agree, subject to earlier termination
as provided for in this Facility Agreement;
"AVIATION AUTHORITY" means, in respect of an Aircraft, any
Government Entity which under the laws of the State of
Registration may from time to time:-
<PAGE>
(a) have control or supervision of civil aviation in the
State of Registration; or
(b) have jurisdiction over the registration, airworthiness
or operation of, or other matters relating to, that
Aircraft;
"BANK TRANSFEREE" shall have the meaning given thereto in
Clause 14.3;
"BANKING DAY" means a day (other than a Saturday, Sunday or
holiday scheduled by law) on which banks are open for the
transaction of domestic and foreign exchange business and
otherwise for the transaction of business of the nature
required by this Facility Agreement, the other Facility
Documents and the Operative Documents, as applicable, in
London and New York City and also in relation to a day on
which a payment is required, in the place where such payment
is to be made in accordance with this Facility Agreement,
any of the other Facility Documents or any of the Operative
Documents, as applicable;
"BASLE PAPER" means any provision or provisions of the paper
entitled "International Convergence of Capital Measurement
and Capital Standards" dated July 1988 prepared by the Basle
Committee on Business Regulations and Supervisory Practices
either (i) which, prior to the date hereof, have been
implemented or (ii) in respect of which, prior to the date
hereof, an announcement of the date of implementation or of
the intention to implement after the date of this Facility
Agreement has been made, such implementation or announcement
(as the case may be) being made pursuant to any notice,
directive or guideline applicable to banks generally by the
Bank of England, the Banque de France, the Deutsche
Bundesbank, the Federal Reserve Bank of New York or other
applicable authority, government, department, committee or
agency (which under the laws of any jurisdiction in which a
Lender has an office for the time being has control or
supervision of banking regulation) in each case whether or
not having the force of law but in respect of which
compliance by banks or other financial institutions in the
relevant jurisdiction generally is customary;
"BERMUDA LESSEE MAINTENANCE RESERVE COLLATERAL ACCOUNT"
means the existing Dollar account in the name of the Bermuda
Lessee approved by the Security Agent or such other Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Bermuda Lessee to
establish following a Trigger Event, for the purpose of
compliance by the Bermuda Lessee with Clause 7.5 of each of
the Lease Agreements to which the Bermuda Lessee is to be a
party;
"BERMUDA LESSEE RENTAL COLLATERAL ACCOUNT" means the
existing Dollar account in the name of the Bermuda Lessee
approved by the Security Agent or such other Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Bermuda Lessee to establish
following a Trigger Event for the purpose of compliance by
the Bermuda Lessee with Clause 7.3 of each of the Lease
Agreements to which the Bermuda Lessee is to be a party;
"BERMUDA LESSEE SECURITY DEPOSIT COLLATERAL ACCOUNT" means
the existing Dollar account in the name of the Bermuda
Lessee approved by the Security Agent or such other Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Bermuda Lessee to
<PAGE>
establish following a Trigger Event for the purpose of
compliance by the Bermuda Lessee with Clause 7.4 of each of
the Lease Agreements to which the Bermuda Lessee is to be a
party;
"BERMUDA LESSEE SUB-LEASE COLLATERAL CHARGE" means, in
respect of the Bermuda Lessee, the deed of assignment and
charge relating to, inter alia, Maintenance Reserves,
Security Deposits and Sub-Lease Rentals in relation to any
of the Aircraft of which the Bermuda Lessee is to be the
Lessee of even date herewith between the Bermuda Lessee and
the Borrower;
"BFE BILL OF SALE" means, in respect of an Aircraft, the
bill of sale executed or to be executed by the Guarantor in
favour of the Seller substantially in the form of Appendix I
pursuant to which title to the Buyer Furnished Equipment is
transferred from the Guarantor to the Seller;
"BILL OF SALE" means, in respect of an Aircraft, the bill of
sale executed or to be executed by the Seller in favour of
the Borrower relating to that Aircraft substantially in the
form of Appendix J evidencing the transfer of title to that
Aircraft from the Seller to the Borrower;
"BORROWER CONSTITUTIONAL DOCUMENTS" means the Certificate of
Incorporation and Memorandum and Articles of Association of
the Borrower;
"BRITISH CREDITS" shall, in respect of an Advance, have the
meaning given to that term in the relevant Loan Supplement;
"BUSINESS DAY" means a day (other than a Saturday or Sunday
or holiday scheduled by law) on which banks are open for the
transaction of domestic and foreign exchange business and
otherwise for the transaction of business of the nature
required by this Facility Agreement, the other Facility
Documents and the Operative Documents, as appropriate, in
London, Paris, Frankfurt, Luxembourg, Los Angeles, New York
City, Bermuda and the Cayman Islands and, when used in
respect of an Aircraft of which the Irish Lessee is or is to
be the Lessee, Dublin and, when used in respect of an
Aircraft of which an Alternative Lessee is or is to be the
Lessee, the city in which such Alternative Lessee has its
principal place of business;
"BUYER FURNISHED EQUIPMENT" means, in respect of an
Aircraft, the buyer furnished equipment relating to that
Aircraft supplied by the Guarantor to the Seller prior to
the Delivery Date or, as the case may be, during any post
delivery modification period relating to the relevant
Aircraft and more particularly described in the Schedule to
the BFE Bill of Sale;
"CANCELLATION EVENT" means the occurrence of any of the
events or circumstances referred to in Clause 8.1;
"CHANGE IN LAW" means in each case after the date of this
Facility Agreement, the implementation, introduction,
abolition, withdrawal or variation of any applicable law,
regulation, practice or concession or official directive,
ruling, request, notice, guideline, statement of policy or
practice statement by the Bank of England, the Banque de
France, the Deutsche Bundesbank, the Federal Reserve Bank of
New York, the European Union or any central bank, tax,
fiscal, governmental, local, international, national or
other competent authority or agency (whether or not having
<PAGE>
the force of law but in respect of which compliance by banks
or other financial institutions in the relevant jurisdiction
is generally customary) or any change in any interpretation,
or the introduction or making of any new or further
interpretation, or any new or different interpretation by
any court, tribunal, governmental, revenue, international,
national, fiscal or other competent authority or the
compliance by banks or other financial institutions with any
new or different request or direction (in either case
whether or not having the force of law but in respect of
which compliance by banks or other financial institutions in
the relevant jurisdiction is generally customary) from any
central bank, fiscal, governmental, revenue, international,
national, monetary or other authority PROVIDED ALWAYS THAT
in respect of a Lender, any such implementation,
introduction, abolition, withdrawal or variation, change in
interpretation or new or different interpretation in
relation to any applicable law or regulation and/or
practice, concession, directive, ruling, request, notice,
guideline, statement of policy or practice statement having
effect in the jurisdiction in which the relevant Lender has
its Lending Office after the date of this Facility Agreement
shall not constitute a Change in Law if, prior to the date
of this Facility Agreement, such implementation,
introduction, abolition, withdrawal or variation, change in
interpretation or new or different interpretation had been
announced generally to banks and other financial
institutions in the jurisdiction in which the relevant
Lender has its Lending Office by way of the publication of
any Act of Parliament, statute or statutory instrument or
the publication or delivery or issue of any notice,
directive or guideline applicable to banks generally by the
relevant central bank, a European Union institution or other
applicable authority, government, department, committee or
agency (which under the laws of the jurisdiction in which
the relevant Lender has its Lending Office for the time
being has control or supervision of banking regulations);
"CHARGE OVER SHARES OF ADDITIONAL LESSEE" means any deed of
charge entered into from time to time between the relevant
Parent and the Security Agent in relation to the shares of
any Additional Lessee substantially in the form of the
Charge Over Shares of Irish Lessee;
"CHARGE OVER SHARES OF ALTERNATIVE LESSEE" means any deed of
charge entered into from time to time between the relevant
Parent and the Security Agent in relation to the shares of
any Alternative Lessee substantially in the form of the
Charge Over Shares of Irish Lessee;
"CHARGE OVER SHARES OF BERMUDA LESSEE" means the agreement
so entitled of even date herewith and made between the
Bermuda Parent and the Security Agent and relating to the
shares of the Bermuda Lessee;
"CHARGE OVER SHARES OF BORROWER" means the agreement so
entitled of even date herewith and made between the Trustee
and the Security Agent and relating to the shares of the
Borrower;
"CHARGE OVER SHARES OF IRISH LESSEE" means the agreement so
entitled of even date herewith and made between the Irish
Parent and the Security Agent and relating to the shares of
the Irish Lessee;
"CHARGES OVER SHARES" means together the Charge Over Shares
of Bermuda Lessee, the Charge Over Shares of Irish Lessee,
<PAGE>
the Charge Over Shares of Borrower, any Charge Over Shares
of Alternative Lessee and any Charge Over Shares of
Additional Lessee and "Charge Over Shares" shall have a
corresponding meaning;
"COLLATERAL" means, in respect of an Aircraft, collectively
the "Assigned Property" as defined in the General Security
Assignment, the "Assigned Property" as defined in the
Mortgage, and the "Assigned Cash" and "Accounts" as defined
in the relevant Sub-Lease Collateral Charge and the
"Assigned Cash" and "Account" as defined in the Deed of
Assignment and Charge;
"COMMITMENT" means, in relation to a Lender, at any time the
amount described as such set out opposite the name of such
Lender in Schedule 1 or, as the case may be, the Schedule to
the relevant Transfer Certificate, as the same may be
cancelled or reduced pursuant to the terms of this Facility
Agreement (including, without limitation, the terms of
Clauses 2.5.2 and 2.5.3) less the amount of such Lender's
Relevant Proportion of any Advances made before such time;
"COMPULSORY ACQUISITION" means, in respect of an Aircraft or
an Engine, its requisition for title or other compulsory
acquisition of title (but excluding requisition for use or
hire) of such Aircraft or Engine, as the case may be;
"CONTRACTUAL RATE" means, in relation to an Interest Period
or other relevant period in respect of the outstanding
amount of the Credits relating to an Advance, the percentage
rate of interest per annum obtained by the application of
the following formula:-
[A x X%] + [B x Y%] + [C x Z%]
------------------------------
A + B + C
where
A = the principal amount outstanding in respect of Tranche
1A at the time of the application of the formula;
B = the principal amount outstanding in respect of Tranche
1B at the time of the application of the formula;
C = the principal amount outstanding in respect of Tranche
2 at the time of the application of the formula;
X% = the rate of interest per annum in respect of Tranche 1A
as set out in the relevant Loan Supplement;
Y% = the rate of interest per annum in respect of Tranche 1B
as set out in the relevant Loan Supplement; and
Z% = the rate of interest per annum in respect of Tranche 2
for the relevant Interest Period or other relevant
period as calculated in accordance with the provisions
of Clause 5.3.2;
"CORPORATION TAX" means corporation tax chargeable under the
United Kingdom Income and Corporation Taxes Act 1988 and any
Tax on the net income, profits or gains of companies imposed
by any country other than the United Kingdom or Tax of a
similar nature enacted in addition to or substitution for
any of the same;
"COUTTS REPRESENTATIVE" means Coutts & Co (Cayman) Limited,
<PAGE>
a company incorporated in the Cayman Islands having its
registered office at Coutts House, West Bay Road, PO Box
707, George Town, Grand Cayman, Cayman Islands, BWI;
"COUTTS REPRESENTATIVE'S INDEMNITY" means the letter of
indemnity to be given by the Security Agent in favour of
Coutts & Co. (Cayman) Limited;
"CREDITS" means, in respect of an Advance, together the
British Credits, the French Credits and the German Credits
or (as the context may require) the aggregate principal
amount of the British Credits, the French Credits and the
German Credits owing to the Lenders in respect of the
relevant Advance from time to time and "Credit" shall have a
corresponding meaning;
"DECLARATION OF TRUST" means the declaration of trust to be
entered into by the Trustee and dated of even date herewith;
"DEED OF ASSIGNMENT AND CHARGE" means the deed of assignment
and charge relating to the Account of even date herewith
between the Borrower and the Security Agent;
"DEED OF ASSIGNMENT OF GENERAL TERMS AGREEMENT RE ENGINE
WARRANTIES" means, in respect of an Aircraft, the deed of
assignment of the relevant Engine Agreement in so far as it
relates to the Engine Warranties in respect of the Engines
relating to that Aircraft to be entered into between the
Guarantor and the Borrower substantially in the form of
Appendix G;
"DEED OF ASSIGNMENT OF GUARANTEE AND INDEMNITY (LESSOR)"
means the deed of assignment relating to the Guarantee and
Indemnity (Lessor) of even date herewith between the
Borrower and the Security Agent;
"DEFAULT INTEREST PERIOD" means, in relation to the
determination of Default Rate LIBOR, each period (not
exceeding six months) as the Agent, or as the case may be,
the Borrower, selects in its absolute discretion, the first
such period commencing on the date of the relevant default
and each subsequent period commencing on the last day of the
preceding period for so long as the relevant default
continues;
"DEFAULT RATE" means (i) at any time prior to the relevant
Advance being made, the aggregate of (a) Default Rate LIBOR,
(b) the Margin and (c) one per cent. (1%) per annum and (ii)
at any time after the relevant Advance has been made, then
in respect of all amounts relating to that Advance, (a) in
relation to the British Credits and the French Credits, the
rate of interest per annum equal to whichever shall be the
higher of one per cent. (1%) per annum above the Contractual
Rate and one per cent. (1%) per annum above Default Rate
LIBOR, and (b) in relation to the German Credits, the rate
of interest per annum equal to whichever shall be the higher
of one per cent. (1%) per annum above the Contractual Rate,
one per cent. (1%) per annum above Default Rate LIBOR and
one per cent. (1%) per annum above the applicable funding
cost incurred by the German Lenders if the German Credits or
a part thereof are at the relevant time funded in any
currency other than Dollars, and in all cases comprised in
(i) and (ii) above shall be calculated on the basis of a
three hundred and sixty (360) day year, accrue from day to
day and shall be payable in respect of each Default Interest
Period;
<PAGE>
"DEFAULT RATE LIBOR" means the rate per annum which is
conclusively (save for manifest error) certified by the
Agent to be the rate (rounded upwards to the nearest one
sixteenth of one per cent. (1/16%)) for deposits in Dollars
in an amount substantially equal to the sum in default for a
period comparable to the Default Interest Period which
appears on the Telerate Page 3750 (or its successor or
replacement page) as of 11.00 a.m. London time on the first
day of the relevant Default Interest Period provided that if
such rate does not appear on Telerate Page 3750 (or its
successor or replacement page) Default Rate LIBOR for the
relevant Default Interest Period shall be the rate per
annum, certified by the Agent as the arithmetic mean
(rounded upwards to the nearest one sixteenth of one per
cent. (1/16%)) of the respective rates per annum notified to
the Agent at which the Reference Banks are offered Dollar
deposits by prime banks in the London Interbank Euro
Currency Market in an amount substantially equal to the sum
in default and for a period having a duration equal to or as
close as practicable to the Default Interest Period at or
about 11.00 a.m. (London time) on the first day of the
relevant Default Interest Period provided that (a) if one of
the Reference Banks does not provide such rates, Default
Rate LIBOR in relation to such Default Interest Period shall
be determined on the basis of the rate notified by the
Reference Bank providing such rate, and (b) if neither of
the Reference Banks provides such a rate, then Default Rate
LIBOR in relation to such Default Interest Period shall be
the rate per annum certified by the Agent (acting upon the
instructions from each Lender) as the arithmetic mean
(rounded upwards to the nearest one sixteenth of one per
cent. (1/16%)) of the cost to each of the Lenders of funding
(whether in Dollars or in any other currency) an amount
substantially equal to that Lender's Relevant Proportion of
the sum in default for a period having a duration equal to
or as close as practicable to such Default Interest Period
at or about 11.00 a.m. (London time) on the first day of
such Default Interest Period;
"DELIVERY DATE" means, in respect of an Aircraft, the date
upon which that Aircraft is delivered to the relevant Lessee
pursuant to the relevant Lease Agreement which date shall be
a Banking Day;
"DOLLARS" and "US$" means the lawful currency for the time
being of the United States of America;
"DRAWDOWN DATE" means, in respect of an Advance, the
Delivery Date for the relevant Aircraft;
"ENGINE" or "ENGINES" means, in respect of an Aircraft, (a)
each of the engines described in Schedule 1 of the relevant
Lease Agreement, whether or not from time to time during the
relevant Lease Period installed on the Airframe or any other
airframe but which, having been removed from the Airframe,
remains the property of the Borrower in accordance with the
terms of the relevant Lease Agreement or (b) any other
engine which may from time to time be installed upon or
attached to the Airframe which becomes the property of the
Borrower in accordance with the relevant Lease Agreement and
(c) insofar as the same belong to the Borrower, any and all
appliances, instruments or accessories or other equipment or
Parts of whatever nature from time to time relating to an
engine referred to in (a) and (b) above whether or not
installed on or attached to such engine and (d) insofar as
the same belong to the Borrower, all substitutions,
replacements or renewals from time to time made on or to any
<PAGE>
item referred to in (a), (b) and (c) above in accordance
with the terms of the relevant Lease Agreement;
"ENGINE AGREEMENTS" means together (a) the general terms
agreement dated 22 June 1984 between CFM International S.A.
and the Guarantor, (b) the general terms agreement dated 1
November 1985 between General Electric Company and the
Guarantor, (c) the general terms agreement dated 9 December
1992 between IAE International Aero Engines AG and the
Guarantor, (d) the Consolidated JT8D-200 Series/PW2000
Series/PW4000 Series Propulsion System/Engine Support
Proposal dated 11 May 1988 between United Technologies
Corporation, Pratt & Whitney Group and the Guarantor and (e)
the letter agreement dated 9th February 1990 between Rolls
Royce plc and the Guarantor, including, in each case, any
amendment, modification, letter agreements and supplements
thereto and "Engine Agreement" shall mean any one of them;
"ENGINE MANUFACTURERS" means CFM International S.A., General
Electric Company, IAE International Aero Engines AG, United
Technologies Corporation, Pratt & Whitney Group and Rolls
Royce plc;
"ENGINE WARRANTIES" means, in respect of the Engines
relating to an Aircraft, the warranties, including the
conditions and limitations applicable thereto, as set forth
in (i) Exhibit B to the Engine Agreement between CFM
International S.A. and the Guarantor, (ii) Exhibit B to the
Engine Agreement between General Electric Company and the
Guarantor, (iii) Clauses 4.1 and 4.2 of the Engine Agreement
between IAE International Aero Engines AG and the Guarantor,
(iv) the engine sales warranty and service policy benefits
set out in the Engine Agreement between United Technologies
Corporation, Pratt & Whitney Group and the Guarantor or, as
the case may be, (v) the Rolls Royce Trent Warranty CE35
within the DEG1828 Agreement dated 11th October 1990 between
the Guarantor and Rolls Royce plc, together with, in each
case, the patent indemnities set forth in the relevant
Engine Agreement and any and all rights of the Guarantor
under the relevant Engine Agreement to compel performance of
the same and the right to claim damages in respect thereof
but only insofar as such warranties, indemnities and rights
arise in respect of the Engines relating to the relevant
Aircraft;
"EXCLUDED LESSOR'S LIEN" means, in relation to an Aircraft,
any Lien to the extent the same arises in respect of (i) a
debt, liability or other obligation (whether financial or
otherwise) imposed on the Borrower or any person claiming
through or under the Borrower as purchaser of that Aircraft
pursuant to the relevant Purchase Agreement Assignment or
arising from the operation, maintenance, insurance, repair,
modification and storage of that Aircraft, any Engine or any
Parts by the relevant Lessee or any Additional Lessee of
that Aircraft or any Approved Sub-Lessee, (ii) any Lien
created pursuant to any of the Facility Documents and/or the
relevant Aircraft Operative Documents, (iii) any Lien
arising as a result of Taxes in respect of which the
liability to pay the same, or the amount of the same, is
being disputed by the Borrower or any person claiming
through or under the Borrower in good faith and in a manner
effectively staying the enforcement of such Lien, (iv) any
Lien arising by Applicable Law where such Lien does not
arise as a result of an act or omission of the Borrower or
any person claiming through or under the Borrower, unless
such act or omission is permitted or contemplated by any of
the Facility Documents or any of the relevant Aircraft
<PAGE>
Operative Documents or arises as a result of a breach by any
of the Obligors of its respective obligations under any of
the Facility Documents or any of the relevant Aircraft
Operative Documents or (v) any Lien arising solely by reason
of a Change in Law; and "Excluded Lessor's Liens" shall be
construed accordingly;
"EXPENSES" means any and all out-of-pocket costs and
expenses (including, without limitation, reasonable or
otherwise capped legal fees and expenses, accountants' fees
and expenses, insurance and other advisers' fees and
expenses, experts' fees and translation fees but excluding
all Taxes), as well as any Value Added Tax thereon, which
may be reasonably incurred or sustained by the Security
Agent, the Agent, any of the Lenders and/or the Borrower in
connection with any of the Facility Documents and/or any of
the Security Documents and/or any of the other Operative
Documents or in connection with the performance and/or
enforcement or preservation and/or attempted enforcement or
preservation of their respective rights and/or duties
hereunder or thereunder PROVIDED ALWAYS THAT the reference
to such out-of-pocket costs and expenses being "reasonably"
incurred or sustained (and in particular to legal fees and
expenses being "reasonable or otherwise capped") shall not
apply when such out-of-pocket costs and expenses are
incurred or sustained in connection with the enforcement or
preservation and/or attempted enforcement or preservation of
rights and/or duties;
"EXPIRY DATE" means, in respect of the leasing of an
Aircraft pursuant to a Lease Agreement, the tenth (10th)
anniversary of the Delivery Date of that Aircraft or such
earlier date upon which the leasing of that Aircraft
pursuant to that Lease Agreement terminates howsoever in
accordance with the provisions of that Lease Agreement;
"EXPORT CREDIT AGENCIES" means each of the export credit
agencies of (1) Her Britannic Majesty's Government
represented by the Export Credits Guarantee Department (2)
Germany represented by Hermes
Kreditversicherungsaktiengesellschaft and (3) the French
Republic represented by Compagnie Francaise d'Assurance pour
le Commerce Exterieur;
"FACILITY" means the term loan facility made available by
the Lenders to the Borrower on the terms and subject to the
conditions of this Facility Agreement;
"FACILITY AGREEMENT" means this aircraft facility agreement;
"FACILITY AIRCRAFT" means, as the context may require, any
or all of the Airbus A300-600R, A310-300, A320, A321, A330
and A340 Airframes with their installed Engines currently
scheduled to be sold and delivered by the Seller to the
Guarantor during 1995 pursuant to the Purchase Agreements
and referred to in Schedule 4 Part I;
"FACILITY AMOUNT" shall have the meaning ascribed thereto in
Clause 2.1;
"FACILITY DOCUMENTS" means each of (i) the Facility
Agreement, the Priorities and Indemnities Agreement, each of
the Charges Over Shares and the other documents, instruments
and agreements relating thereto referred to in Clause
3.2.1(a)(xiii), (xiv) and (xv), the Ancillary Documents, the
Guarantee and Indemnity (Lessor), the Deed of Assignment of
Guarantee and Indemnity (Lessor), the Deed of Assignment and
<PAGE>
Charge, each of the Sub-Lease Collateral Charges, each of
the Assignments of Sub-Lease Collateral Charges, the
Declaration of Trust, the Management Agreement, the Borrower
Constitutional Documents, the Lenders' Agreement, the
Interlender Agreement, the MeesPierson Comfort Letter, the
Coutts Representative's Indemnity and the Management
Agreement Side Letter, (ii)(a) any other document,
instrument or memorandum annexed to any of the documents
referred to in (i) above and (b) any notice or
acknowledgement referred to in or required pursuant to the
terms of any of the documents referred to in (i) above and
(c) any document, instrument or memorandum (x) which arises
following a restructuring in accordance with the terms of
this Facility Agreement and/or the Priorities and
Indemnities Agreement of any or all of the arrangements
contemplated by any of the documents referred to in (i)
above or (y) which the Guarantor or any of the Lessees
agrees constitutes a Facility Document or (z) which is
entered into in substitution for or which amends or augments
or varies all or any part of any of the documents referred
to in this definition (including this part (ii)(c)(z)) in
each case in accordance with the terms of this Facility
Agreement;
"FINAL DISPOSITION" means, in relation to an Aircraft or an
Engine:-
(a) the sale by the Borrower or the Security Agent as
mortgagee against immediate payment in cash or for
other consideration, whether through an agent on its
behalf or otherwise, of all its right, title and
interest in and to such Aircraft or such Engine (as the
case may be) (including, without limitation, a sale to
the relevant Lessee and/or the relevant Option Holder
and/or the Guarantor whether pursuant to the terms of
the relevant Lease Agreement or otherwise howsoever);
or
(b) completion by delivery of such Aircraft or such Engine
(as the case may be) to the purchaser or lessee, as the
case may be, of a sale, lease or other disposition by
or on behalf of the Borrower or the Security Agent as
mortgagee pursuant to a conditional sale, hire
purchase, full pay-out finance lease or other
arrangement involving the retention by or on behalf of
the Borrower or the Security Agent as mortgagee of
title to, or a security or similar interest in, such
Aircraft or such Engine (as the case may be);
"FINAL DISPOSITION PROCEEDS" means, in relation to an
Aircraft or an Engine, the aggregate amount of:-
(a) all consideration (whether cash or otherwise) received
and retained by or on behalf of the Borrower or the
Security Agent as mortgagee upon or as a result of the
Final Disposition of such Aircraft or such Engine (as
the case may be);
(b) any cash received and retained as a result of the sale
by the Borrower or the Security Agent as mortgagee of
its right, title and interest in and to any agreement
for the Final Disposition of such Aircraft or such
Engine in a manner contemplated by paragraph (b) of the
definition of Final Disposition or any non-cash
consideration received by either of them as a result of
the Final Disposition of such Aircraft or any such
Engine (as the case may be); and
<PAGE>
(c) any non-refundable deposit paid to or for the account
of the Borrower or the Security Agent as mortgagee by a
person acquiring or proposing to acquire such Aircraft
or any such Engine (as the case may be) under a
contract or offer to purchase or otherwise acquire it
which has been withdrawn, terminated or cancelled or
has lapsed;
"FRENCH CREDITS" shall, in respect of an Advance, have the
meaning given to that term in the relevant Loan Supplement;
"GENERAL SECURITY ASSIGNMENT" means, in respect of an
Aircraft, the general security assignment relating to the
Lease Agreement and the Sub-Lease Security Assignment in
each case for that Aircraft to be entered into between the
Borrower and the Security Agent substantially in the form of
Appendix E;
"GERMAN CREDITS" shall, in respect of an Advance, have the
meaning given to that term in the relevant Loan Supplement;
"GOVERNMENT ENTITY" means (i) any national government,
political sub-division thereof, or local jurisdiction
therein; and/or (ii) any board, commission, department,
division, organ, instrumentality, court or agency thereof,
howsoever constituted; and/or (iii) any person who is a
member thereof or who is controlled directly or indirectly
thereby (and for these purposes "control" shall mean the
power to direct its management and its policies whether
through the ownership of voting capital, by contract or
otherwise);
"GUARANTEE AND INDEMNITY (LESSOR)" means the guarantee and
indemnity of even date herewith between the Guarantor and
the Borrower;
"GUARANTEED OBLIGATIONS" means any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether or not
for the payment of money, and including, without limitation,
any obligation or liability to pay damages and including any
interest which, but for the application of bankruptcy or
insolvency laws, would have accrued on the amounts in
question), and without regard as to whether any of the
Guaranteed Obligations may, for the purposes of applicable
law, be recharacterized as other than lease rental
obligations which are now or which may at any time and from
time to time hereafter be due, owing, payable or incurred or
be expressed to be due, owing, payable or incurred from or
by any or all of the Obligors to the Agent, the Security
Agent and/or any of the Lenders under or in connection with
any of the Facility Documents and/or any of the Operative
Documents and references to "Guaranteed Obligations"
includes references to any part thereof;
"GUARANTOR'S GROUP" means the Guarantor and its
Subsidiaries;
"HABITUAL BASE" means, in respect of an Aircraft, the
country in which such Aircraft is habitually based for the
time being;
"HYPOLUX" means Hypobank International S.A. of 4, rue
Alphonse Weicker, L-2099 Luxembourg-Kirchberg;
"INDEBTEDNESS" means (other than in Schedule 5) any
obligation (whether incurred as principal or as surety) for
<PAGE>
the payment or repayment of money, whether present or
future, actual or contingent;
"INDEMNITEES" means together the Agent, the Security Agent
and each Lender together with their respective officers and
employees and "Indemnitee" shall mean any one of them;
"INSURANCES" means, in relation to an Aircraft, any and all
contracts or policies of insurance and reinsurance required
to be effected and maintained in accordance with the
relevant Lease Agreement including, but not limited to, the
provisions of Clause 14 of and Schedule 9 to that Lease
Agreement;
"INSURERS" means, in respect of the Insurances such
insurance underwriters and/or insurance companies in the
major international insurance markets as may be approved by
the Borrower and the Security Agent;
"INTEREST PERIOD" means, in respect of an Advance, each
period commencing on the Delivery Date of the relevant
Aircraft or, as the case may be, a Repayment Date (and
including that day) and ending on the next subsequent
Repayment Date (but excluding that day);
"INTERLENDER AGREEMENT" means the agreement so entitled to
be entered into between (1) the Lenders, the Agent and the
Security Agent and (2) the Lenders, the Agent and the
Security Agent (as those terms are defined in the 1994
Facility Agreement);
"IRISH LESSEE MAINTENANCE RESERVE COLLATERAL ACCOUNT" means
the existing Dollar account in the name of the Irish Lessee
approved by the Security Agent or such other Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Irish Lessee to establish
following a Trigger Event, for the purpose of compliance by
the Irish Lessee with Clause 7.5 of each of the Lease
Agreements to which the Irish Lessee is to be a party;
"IRISH LESSEE RENTAL COLLATERAL ACCOUNT" means the existing
Dollar account in the name of the Irish Lessee approved by
the Security Agent or such other Dollar account outside the
United Kingdom as the Borrower and the Security Agent may
reasonably require the Irish Lessee to establish following a
Trigger Event for the purpose of compliance by the Irish
Lessee with Clause 7.3 of each of the Lease Agreements to
which the Irish Lessee is to be a party;
"IRISH LESSEE SECURITY DEPOSIT COLLATERAL ACCOUNT" means the
existing Dollar account in the name of the Irish Lessee
approved by the Security Agent or such other Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Irish Lessee to establish
following a Trigger Event for the purpose of compliance by
the Irish Lessee with Clause 7.4 of each of the Lease
Agreements to which the Irish Lessee is to be a party;
"IRISH LESSEE SUB-LEASE COLLATERAL CHARGE" means, in respect
of the Irish Lessee, the deed of assignment and charge
relating to, inter alia, Maintenance Reserves, Security
Deposits and Sub-Lease Rentals in relation to any of the
Aircraft of which the Irish Lessee is to be the Lessee of
even date herewith between the Irish Lessee and the
Borrower;
"LEASE AGREEMENT" means, in respect of an Aircraft, the
<PAGE>
lease agreement relating to that Aircraft to be entered into
between the Borrower as lessor, the relevant Lessee as
lessee and the relevant Option Holder substantially in the
form of Appendix B;
"LEASE PERIOD" means, in respect of an Aircraft, the period
commencing on the Delivery Date of that Aircraft and
continuing up to and including the Expiry Date;
"LENDERS' AGREEMENT" means the agreement so entitled of even
date herewith and made between the Agent, the Security Agent
and each of the Lenders;
"LENDING OFFICE" means, in relation to a Lender, its branch
or office at the address specified against its name in
Schedule 1 or specified in the Transfer Certificate whereby
such Lender becomes a party hereto or such other branch or
office determined in accordance with the provisions of this
Facility Agreement and/or the Priorities and Indemnities
Agreement;
"LESSEE" means, in respect of an Aircraft, as the case may
be the Bermuda Lessee, the Irish Lessee or an Alternative
Lessee nominated as such in the Utilisation Notice and
accepted by the Lead Managers and the Guarantor in
accordance with the provisions of Clause 4.2.3 and "Lessees"
shall have a corresponding meaning;
"LESSOR'S LIEN" means, in relation to an Aircraft, any Lien
created by or through the Borrower over that Aircraft, any
Engine or any Parts or exercised, asserted or claimed (other
than by any of the Obligors) against that Aircraft, any
Engine or any Parts in respect of a debt, liability or other
obligation (whether financial or otherwise) of the Borrower
or any person claiming through or under the Borrower but
excluding Excluded Lessor's Liens;
"LIBOR" means, in respect of an Interest Period or other
relevant period, the rate per annum which is conclusively
(save for manifest error) certified by the Agent to be the
rate (rounded upwards to the nearest one sixteenth of one
per cent. (1/16%)) for deposits of Dollars in an amount
substantially equal to the relevant Advance or other
relevant amount for a period equal to, or as close as
practicable to, the relevant Interest Period or other
relevant period which appears on the Telerate Page 3750 (or
its successor or replacement page) as at 11.00 a.m. (London
time) two (2) London Banking Days prior to the commencement
of the relevant Interest Period or other relevant period or
if such rate does not appear on the Telerate Page 3750 (or
its successor or replacement page), LIBOR for the relevant
Interest Period or other relevant period shall be the rate
per annum, conclusively (save for manifest error) certified
by the Agent as the arithmetic mean (rounded upwards if
necessary to the nearest one sixteenth of one per cent.
(1/16%)), of the respective rates per annum notified to the
Agent at which the Reference Banks are offered Dollar
deposits by prime banks in the London Interbank Euro
Currency Market in an amount substantially equal to the
relevant Advance or other relevant amount and for a period
having a duration equal to or as close as practicable to
such Interest Period or such other relevant period, as the
case may be, at or about 11.00 a.m. (London time) two (2)
London Banking Days prior to the commencement of such
Interest Period or other relevant period provided that if
one of the Reference Banks does not provide such rates,
LIBOR in relation to such Interest Period or such other
<PAGE>
relevant period shall be determined on the basis of the rate
notified by the Reference Bank providing such rate;
"LIEN" means, in relation to an Aircraft, any encumbrance or
security interest whatsoever, howsoever created or arising
including (without prejudice to the generality of the
foregoing) any right of ownership, security, mortgage,
pledge, charge, lease (save for any Approved Sub-Lease),
lien, statutory right in rem, hypothecation, title retention
arrangement, attachment, levy, claim, right of possession or
detention or right of set-off (but excluding any right of
set-off arising in favour of a banker and by way of
operation of law) or security interest whatsoever, howsoever
created or arising or any right or arrangement having a
similar effect to any of the above;
"LIST A EVENT" means in respect of any of the Aircraft, (x)
any of (i) the Termination Events set out in Clauses
16.1(a), (e) (insofar as the same relates to the Guarantor's
financial covenants), (f), (g), (h), (m), (n), (o) and (p)
of the relevant Lease Agreement and (ii) the Cancellation
Events set out in Clauses 8.1.1, 8.1.3 (insofar as the same
relates to the Guarantor's financial covenants), 8.1.5,
8.1.6, 8.1.8, 8.1.9, 8.1.10 and 8.1.11 of this Facility
Agreement and (y) any List A Event (as that term is, or will
be, defined in the 1994 Facility Agreement);
"LIST B EVENT" means in respect of any of the Aircraft, (y)
any Termination Event and/or Cancellation Event which is not
a List A Event and each Loan Event of Termination and (z)
any List B Event (as that term is, or will be defined in the
1994 Facility Agreement);
"LOAN SUPPLEMENT" means, in respect of an Aircraft, the loan
supplement relating to that Aircraft to be entered into
between the Borrower, the Agent and the Security Agent
substantially in the form of Appendix A;
"LOAN EVENT OF TERMINATION" means, in respect of an Advance,
each of the events set out in Clause 9;
"LONDON BANKING DAY" means a day (other than a Saturday,
Sunday or holiday scheduled by law) on which banks are open
for business in London;
"LOSSES" means any losses, demands, liabilities, claims,
actions, proceedings, penalties, fines, damages, adverse
judgments, orders or other sanctions;
"MAINTENANCE RESERVE AMOUNT" means, in respect of an
Aircraft, such part of the amount which is from time to time
standing to the credit of the Bermuda Lessee Maintenance
Reserve Collateral Account or, as the case may be, the Irish
Lessee Maintenance Reserve Collateral Account or, as the
case may be, an Alternative Lessee Maintenance Reserve
Collateral Account which represents the Maintenance Reserves
in respect of that Aircraft;
"MAINTENANCE RESERVES" means, in respect of an Aircraft, the
airframe reserves and engine reserves payable from time to
time by an Approved Sub-Lessee to the relevant Lessee
pursuant to the terms of the relevant Approved Sub-Lease and
which become the property of the relevant Lessee;
"MAJORITY LENDERS" means (i) in relation to any decision,
discretion, action or inaction under any of the Facility
Documents and/or any of the Operative Documents in respect
<PAGE>
of which any of the Lead Managers must follow the
instructions of the relevant Export Credit Agency under the
relevant Support Agreement, all of the Lead Managers and
(ii) in relation to any other decision, discretion, action
or inaction under any of the Facility Documents and/or any
of the Operative Documents the Lenders the aggregate of
whose Commitments (in respect of the Unutilised Facility)
or, as the case may be, Relevant Proportions of Advances
already made and which remain outstanding, at the relevant
time, is equal to or exceeds sixty-six and two thirds per
cent. (66 2/3%) of the aggregate of the Total Commitments or,
as the case may be, the Advances;
"MANAGEMENT AGREEMENT" means the Agreement so entitled of
even date herewith and made between the Trustee, the
Manager, the Borrower, the Coutts Representative, the
Security Agent and the Guarantor;
"MANAGEMENT AGREEMENT SIDE LETTER" means the letter
agreement entered into or to be entered into by MeesPierson
(Cayman) Limited, the Security Agent and the Guarantor;
"MANAGER" means MeesPierson (Cayman) Limited of P.O. Box
2003, George Town, Grand Cayman, Cayman Islands, BWI in its
capacity as manager of the Borrower;
"MANDATORY LEASE PROVISIONS" means, in respect of a Lease
Agreement, each of the provisions set out in Schedule 7 to
that Lease Agreement;
"MANDATORY PREPAYMENT EVENT" means, in respect of a Lease
Agreement, the occurrence of any of the events referred to
in Clause 18 of such Lease Agreement;
"MANUFACTURER" means Airbus Industrie G.I.E. of 1 Rond Point
Maurice Bellonte, Blagnac 31707, France;
"MARGIN" means nought point seven per cent. (0.7%) per
annum;
"MEESPIERSON COMFORT LETTER" means the letter agreement
entered or to be entered into between MeesPierson N.V. and
the Bermuda Lessee, the Irish Lessee, the Guarantor, the
Bermuda Option Holder, the Lenders, the Agent and the
Security Agent;
"MORTGAGE" means, in respect of an Aircraft, the deed of
assignment and first priority English law mortgage relating
to that Aircraft to be entered into between the Borrower and
the Security Agent substantially in the form of Appendix D;
"NOTICE OF DRAWDOWN" means, in respect of an Advance, the
notice of drawdown to be given by the Borrower to the Agent
substantially in the form of Schedule 6;
"OBLIGORS" means any or all of the Bermuda Lessee, the Irish
Lessee, any Alternative Lessee, any Additional Lessee, the
Bermuda Parent, the Irish Parent, any other Parent, the
Bermuda Option Holder, any other Option Holder and where the
context so permits, the Guarantor, and "Obligor" means any
one of them;
"OPERATIVE DOCUMENTS" means each of (i) the Loan
Supplements, the Notices of Drawdown, the Bills of Sale, the
BFE Bills of Sale, the Purchase Agreements (to the extent
that they relate to the Aircraft and the Warranties), the
Engine Agreements (to the extent that they relate to the
<PAGE>
Engines Warranties), the Lease Agreements, the Acceptance
Certificates, each of the Security Documents and (ii) (a)
any other document, instrument or memorandum annexed to any
of the documents referred to in (i) above, (b) any notice or
acknowledgement referred to in or required pursuant to the
terms of any of the documents referred to in (i) above and
(c) any document, instrument or memorandum (x) which arises
following a restructuring in accordance with the terms of
this Facility Agreement and/or the Priorities and
Indemnities Agreement of any or all of the arrangements
contemplated by any of the documents referred to in (i)
above or (y) which the Guarantor or any relevant Lessee
agrees constitutes an Operative Document or (z) which is
entered into in substitution for or which amends or augments
or varies all or any part of any of the documents referred
to in this definition (including this part (ii)(c)(z)) in
each case in accordance with the terms of this Facility
Agreement;
"OPTION HOLDER" means, in respect of an Aircraft, as the
case may be the Bermuda Option Holder or such other person
nominated as such in the Utilisation Notice and accepted by
the Lead Managers and the Guarantor in accordance with the
provisions of Clause 4.2.3 being in each case a wholly-owned
indirect subsidiary of the Guarantor and "Option Holders"
shall have a corresponding meaning;
"OPTION HOLDER'S POWER OF ATTORNEY" means, in respect of an
Aircraft, the power of attorney concerning, inter alia, the
discharge of the relevant Second Mortgage to be granted by
the relevant Option Holder in favour of the Borrower, the
Agent and the Security Agent in the form of Appendix K or in
such other form as the Agent and the Security Agent may
reasonably require;
"PARENT" means as the case may be the Bermuda Parent or the
Irish Parent or such other person nominated as such in a
Utilisation Notice and accepted by the Lead Managers and the
Bermuda Lessee or, as the case may be, the Irish Lessee in
accordance with the provisions of Clause 4.2.3 and being in
each case a wholly-owned subsidiary of the Guarantor and
"Parents" shall have a corresponding meaning;
"PARTS" means, in respect of an Aircraft, all modules,
appliances, parts, accessories, auxiliary power unit,
instruments, furnishings and other equipment of whatsoever
nature including, without limitation, the Buyer Furnished
Equipment and any service bulletin kits or the like but
excluding complete Engines or engines and equipment
(including, but not limited to, in-flight entertainment and
telecommunications equipment) which is from time to time
attached to the Airframe and leased to the relevant Lessee
other than primarily for the purpose of financing the
acquisition of such equipment in circumstances where such
equipment, that at any time of determination are
incorporated or installed in or attached to the Airframe or
any Engine or, having been removed therefrom, title to which
remains vested in the Borrower in accordance with the
provisions of the Lease Agreement; and "Part" shall have a
corresponding meaning;
"PERMITTED LIENS" means, in relation to an Aircraft:-
(a) any Lien for Taxes or other governmental or statutory
charges or levies not yet assessed or, if assessed, not
yet due and payable or, if due and payable, which the
relevant Lessee or, where relevant, an Approved Sub-
<PAGE>
Lessee is disputing or contesting in good faith by
appropriate proceedings (and for the payment of which
adequate cash reserves are available, or when required
in order to pursue such proceedings, an adequate bond
has been provided) so long as such proceedings, or the
continued existence of such Lien, do not at that time
involve any danger of the sale, forfeiture or loss of
the Airframe, any Engine or any Parts or any interest
therein; or
(b) any Lien for the fees or charges of any airport or air
navigation authority arising in the ordinary course of
business by statute or by operation of law, in each
case for amounts the payment of which either is not yet
due and payable or, if due and payable, is being
disputed or contested in good faith by appropriate
proceedings (and for the payment of which adequate cash
reserves are available, or when required in order to
pursue such proceedings, an adequate bond has been
provided) so long as such proceedings, or the continued
existence of such Lien, do not at that time involve any
danger of the sale, forfeiture or loss of the Airframe,
any Engine or any Parts or any interest therein; or
(c) any Lien for the fees or charges of any supplier,
mechanic, workman, repairer, employee or like lien
arising in the ordinary course of business by statute
or by operation of law, in each case for amounts (i)
the payment of which is not yet due and payable, or
(ii) which are not overdue for payment having regard to
the custom of the relevant trade, in circumstances
where no assertive or enforcement action against the
Aircraft has yet been taken by the relevant supplier,
mechanic, workman, repairer, employee or holder of like
lien or by any successor or assign of each of them
("the Claimant"), or (iii) if due and payable is being
disputed or contested in good faith with the Claimant
by appropriate proceedings (and for the payment of
which adequate cash reserves are available, or when
required in order to pursue such proceedings, an
adequate bond has been provided) so long as such
proceedings, or the continued existence of such Lien,
do not at that time involve any danger of the sale,
forfeiture or loss of the Airframe, any Engine or any
Parts or any interest therein; or
(d) Liens (other than Liens for Taxes) arising out of
judgments or awards against the relevant Lessee or any
Approved Sub-Lessee with respect to which at the time
an appeal is being presented in good faith and with
respect to which there shall have been secured a stay
of execution pending such appeal (and for the payment
of which adequate cash reserves are available, or when
required in order to pursue such proceedings, an
adequate bond has been provided) so long as such
judgment or award, or the continued existence of such
Lien, do not at that time involve any danger of the
sale, forfeiture or loss of the Airframe, any Engine or
any Parts or any interest therein; or
(e) the rights of the relevant Lessee under any of the
Facility Documents and the relevant Aircraft Operative
Documents; or
(f) the rights of the relevant Option Holder under any of
the Facility Documents, the relevant Aircraft Operative
Documents and the Second Mortgage; or
<PAGE>
(g) the rights of the Borrower under any of the Facility
Documents, the relevant Aircraft Operative Documents
and the Second Mortgage; or
(h) Excluded Lessor's Liens; or
(i) any Lien created by the Borrower pursuant to the Second
Mortgage; or
(j) the rights of others under agreements or arrangements
to the extent expressly permitted by the provisions of
Clause 11.3 of the relevant Lease Agreement; or
(k) any other Lien created with the prior written consent
of the Borrower and the Security Agent;
"POTENTIAL CANCELLATION EVENT" means any event which with
any one or more of the lapse of time, the giving of notice,
or the making of a determination, could become a
Cancellation Event were a notice to be given by the Agent to
the Guarantor pursuant to Clause 8.1;
"POWER OF ATTORNEY" means, in respect of an Aircraft, any
power of attorney concerning, inter alia, the de-
registration of the relevant Aircraft to be granted by the
Approved Sub-Lessee in accordance with the provisions of the
relevant Lease Agreement in favour of the Borrower, the
Agent and the Security Agent in the form of Appendix H or in
such other form as the Agent and the Security Agent may
reasonably require;
"PRIORITIES AND INDEMNITIES AGREEMENT" means the priorities
and indemnities agreement of even date herewith between (1)
the Bermuda Lessee, (2) the Irish Lessee, (3) the Guarantor,
(4) the Bermuda Option Holder, (5) the Borrower, (6) the
Lenders, (7) the Agent and (8) the Security Agent;
"PROCEEDS ACCOUNT" means the account of the Security Agent
with National Westminster Bank Plc designated by the
Security Agent and notified to the other parties hereto as
the account to which any Aircraft Proceeds will be credited
or such other account as the Security Agent may designate
from time to time by notice to the other parties hereto;
"PROHIBITED COUNTRY" means, in relation to an Aircraft, Iraq
for so long as The Iraq and Kuwait (United Nations
Sanctions) (No. 2) Order, 1990 remains in effect, the
Republics of Serbia and Montenegro for so long as the Serbia
and Montenegro (United Nations Prohibition of Flights) Order
1992 remains in effect, Libya, for so long as the Libya
(United Nations Prohibition of Flights) Order 1992 remains
in effect and any country to which the export and/or use of
A300/A310/A320/A321/ A330/A340 aircraft (as the case may be)
is not permitted under (i) the Export of Goods Control Order
1992, (ii) the United States Export Administration Act 1979
(as amended) or any successor legislation and/or the Export
Administration Regulations promulgated thereunder, (iii) any
similar or corresponding legislation then in effect in
France, Spain or Germany, (unless knowledge of any non-
applicability of such legislation or regulations referred to
in (i), (ii) or (iii) above is in the public domain) or (iv)
any subsequent United Nations Sanctions Orders the effect of
which prohibits or restricts the export to and/or use of
A300/A310/A320/A321/A330/A340 aircraft (as the case may be)
in such country;
"PURCHASE AGREEMENT ASSIGNMENT" means, in respect of an
<PAGE>
Aircraft, the purchase agreement assignment relating to the
relevant Purchase Agreement insofar as it relates to the
title to and the Warranties in respect of that Aircraft to
be entered into between the Guarantor and the Borrower
substantially in the form of Appendix C;
"PURCHASE AGREEMENTS" means together (i) each of the five
aircraft purchase agreements relating to A300, A310, A320,
A330 and A340 Aircraft respectively, between the Seller and
the Guarantor each dated 10th November 1988, and (ii) the
aircraft purchase agreement relating to A321 Aircraft
between the Seller and the Guarantor dated 14th February
1990 (each such aircraft purchase agreement incorporating
the General Terms Agreement dated 10th November 1988)
whereby the Seller agreed to sell and the Guarantor agreed
to purchase, inter alia, each of the Facility Aircraft,
together with the exhibits thereto and letter agreements
made between the Seller and the Guarantor, as any or all of
such aircraft purchase agreements may have been or may be
hereafter amended and/or supplemented from time to time by
any change orders or letter agreements entered into in
accordance with their respective provisions and "Purchase
Agreement" shall mean any one of them;
"REFERENCE BANKS" means National Westminster Bank Plc and
Banque Paribas, London Branch;
"RELEVANT AIRCRAFT" means, in respect of a Lessee, such of
the Facility Aircraft as are from time to time leased to
such Lessee pursuant to a Lease Agreement between such
Lessee as lessee, the Borrower as lessor and the relevant
Option Holder;
"RELEVANT LEASE PAYMENTS" means, in respect of a Lease
Agreement, all or any of the following which are payable by
the relevant Lessee pursuant to any provision of that Lease
Agreement, namely (i) Rent and Termination Sums, (ii) all
sums payable pursuant to Clause 22 of that Lease Agreement,
(iii) default interest on any of the foregoing, and (iv) all
sums payable pursuant to Clauses 5.2 and 5.3 of the
Priorities and Indemnities Agreement in relation to any of
the foregoing and default interest thereon;
"RELEVANT LOAN PAYMENT" shall have the meaning given thereto
in Clause 5.6.7(a);
"RELEVANT PROPORTION" means, with respect to any Lender and
an Advance, at any time, the proportion which such Lender's
share of the Credits bears to the total amount of the
Credits at such time;
"RENT" means, in respect of each Rental Payment Date under a
Lease Agreement, the aggregate of the following amounts:-
(a) the aggregate of the amount in Dollars set out opposite
such date in the Columns headed "Principal Component of
Rent" and "Fixed Interest Component of Rent" in Part I
of Schedule 6 to that Lease Agreement as the same may
be varied in accordance with the provisions of Clause
7.2 of that Lease Agreement;
(b) the amount in Dollars set out opposite such date in the
Column headed "Principal Component of Rent" in Part II
of Schedule 6 to that Lease Agreement as the same may
be varied in accordance with the provisions of Clause
7.2 of that Lease Agreement; and
<PAGE>
(c) the amount of interest calculated in accordance with
paragraph (c) of Part II of Schedule 6 to that Lease
Agreement as the same may be varied in accordance with
the provisions of Clause 7.2 of that Lease Agreement;
"RENTAL PAYMENT DATE" means, in respect of a Lease
Agreement, each of the twenty (20) dates for payment of an
instalment of Rent under that Lease Agreement as set forth
in Column 1 in Part I of Schedule 6 to that Lease Agreement;
"REPAYMENT DATE" means, in relation to an Advance, each
repayment date as set forth in Column 1 of Schedule 2(1) to
the relevant Loan Supplement PROVIDED ALWAYS THAT if any
Repayment Date would otherwise fall on a day which is not a
Banking Day, such Repayment Date shall be deemed to fall on
the next succeeding Banking Day unless such next succeeding
Banking Day falls in the next calendar month, in which event
such Repayment Date shall be deemed to fall on the
immediately preceding Banking Day;
"REPAYMENT INSTALMENT" means, in relation to an Advance,
with respect to each Repayment Date, the amount of Dollars
due and payable on such Repayment Date, as determined in
accordance with Clauses 5.2.8 and 5.4.1 and as set out in
the relevant Loan Supplement;
"REPRESENTATIVES" means the Agent and the Security Agent;
"REQUIRED INSURED VALUE" means, in relation to an Aircraft,
the higher of the market value of that Aircraft and 110% of
the principal amount outstanding in respect of the relevant
Credits from time to time;
"REQUISITION PROCEEDS" means, in relation to an Aircraft,
any monies and/or other compensation received directly by
the Borrower and/or the Security Agent in its capacity as
mortgagee in respect of the Compulsory Acquisition of such
Aircraft or the requisition for use or hire of such
Aircraft;
"SCHEDULED DELIVERY MONTH" means, in respect of any
Aircraft, the month in which that Aircraft is scheduled to
be delivered as set out in Schedule 4 Part I as the same may
be varied by any notice delivered by the Guarantor to the
Agent under Clause 2.5.1;
"SECOND MORTGAGE" means, in respect of an Aircraft, the
second priority English law mortgage relating to that
Aircraft to be entered into between the Borrower and the
relevant Option Holder in such form as may be agreed between
the relevant Option Holder, the Borrower and the Security
Agent;
"SECURED OBLIGATIONS" means together (a) any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether or not
for the payment of money, and including, without limitation,
any obligation or liability to pay damages) which are now or
which may at any time and from time to time hereafter be
due, owing, payable or incurred or expressed to be due,
owing, payable or incurred from or by the Borrower or any of
the Obligors to any one or more of the Lenders, the Agent
and/or the Security Agent under any of the Facility
Documents and/or any of the Operative Documents, together
with any and all of the obligations of the Borrower arising
by operation of law after the Lenders have made payment of
any Tax Liability and/or any Loss and/or Expense suffered or
<PAGE>
incurred by the Borrower for which none of the Lessees has
reimbursed the Borrower in accordance with the terms of this
Facility Agreement and/or any other Operative Document
and/or any Facility Document (i) to account, pay and remit
to the Lenders any and all payments received by the Borrower
from any of the Lessees in respect of such reimbursements
and (ii) to transfer to the Lenders and allow the Lenders to
exercise, in each case as subrogee, the Borrower's rights
and remedies against any or all of the Lessees and/or the
Guarantor in respect of such reimbursements and any and all
such monies, liabilities and obligations of the Borrower
shall form part of the Secured Obligations whether or not
the Borrower is personally liable for the same and whether
or not any recourse may be had with respect thereto against
the Borrower and/or its assets, and (b) the Secured
Obligations (as that term is defined in the 1994 Facility
Agreement);
"SECURED PARTIES" means the Lenders, the Agent and/or the
Security Agent;
"SECURITY DEPOSIT" means, in respect of an Aircraft, any
security deposit payable by an Approved Sub-Lessee to the
relevant Lessee pursuant to the relevant Approved Sub-Lease;
"SECURITY DOCUMENTS" means each of (i) this Facility
Agreement, the Priorities and Indemnities Agreement, the
General Security Assignments, the Deed of Assignment and
Charge, the Mortgages, the Guarantee and Indemnity (Lessor),
the Deed of Assignment of Guarantee and Indemnity (Lessor),
the Sub-Lease Collateral Charges, the Assignments of Sub-
Lease Collateral Charges, the Sub-Lease Security
Assignments, the Deeds of Assignment of General Terms
Agreements Re Engine Warranties, the Purchase Agreement
Assignments, the Charges Over Shares, the Powers of Attorney
(if any), the Option Holder's Powers of Attorney (ii) (a)
any other instrument, document or memorandum annexed to any
of the documents referred to in (i) above, (b) any notice or
acknowledgement referred to in or required pursuant to the
terms of any of the documents referred to in (i) above and
(c) any document, instrument or memorandum (w) which arises
following a restructuring of any or all of the arrangements
contemplated by any of the documents referred to in (i)
above or (x) which the Guarantor or any relevant Lessee
agrees constitutes a Security Document or (y) which secures
the obligations of any of the Obligors and/or the Borrower
under any of the Operative Documents or (z) which is entered
into in substitution for or which amends or augments or
varies all or any part of any of the documents referred to
in this definition (including this part (ii)(c)(z)) in each
case in accordance with the terms of this Facility
Agreement;
"SECURITY INTEREST" means any encumbrance or security
interest whatsoever, howsoever created or arising, including
(without prejudice to the generality of the foregoing) any
right of ownership, security, mortgage, charge, pledge,
lien, right of possession or detention, statutory right in
rem, hypothecation, lease, title retention, attachment,
levy, claim, right of set-off (but excluding any right of
set-off arising in favour of a banker and by way of
operation of law) or any right or arrangement having a
similar effect to any of the above;
"SECURITY PERIOD" means the period commencing on the date
hereof and ending on the date upon which the Secured
Obligations shall have been satisfied in full;
<PAGE>
"SELLER" means AVSA S.A.R.L., a French societe a
responsabilite limitee, duly organised and existing under
the laws of the Republic of France and having its registered
office at 2 Rond Point Maurice-Bellonte 31700 Blagnac,
France together with its successors and assigns;
"STATE OF REGISTRATION" means, in relation to an Aircraft,
the United States of America, Bermuda, the Cayman Islands,
Ireland or the United Kingdom or any other state or
territory in which that Aircraft may for the time being be
registered pursuant to an Approved Sub-Lease;
"SUB-LEASE COLLATERAL CHARGE" means any one of the Bermuda
Lessee Sub-Lease Collateral Charge, the Irish Lessee
Sub-Lease Collateral Charge and any Alternative Lessee
Sub-Lease Collateral Charge and "Sub-Lease Collateral
Charges" shall have a corresponding meaning;
"SUB-LEASE RENTALS" means, in respect of an Aircraft, the
rentals payable by an Approved Sub-Lessee pursuant to the
relevant Approved Sub-Lease;
"SUB-LEASE SECURITY ASSIGNMENT" means, in respect of an
Aircraft in relation to which a quiet enjoyment covenant is
to be given to the Approved Sub-Lessee by the Borrower and
the Security Agent, the security assignment relating to the
Approved Sub-Lease of that Aircraft to be entered into
between the relevant Lessee and the Borrower substantially
in the form of Appendix F;
"SUBSIDIARY" means any person of which or in which the
Guarantor and its other Subsidiaries own directly or
indirectly 50% or more of:-
(a) the combined voting power of all classes of stock
having general voting power under ordinary
circumstances to elect a majority of the board of
directors of such person, if it is a corporation;
(b) the capital interest or profits interest of such
person, if it is a partnership, joint venture or
similar entity; or
(c) the beneficial interest of such person, if it is a
trust, association or other unincorporated
organisation;
PROVIDED HOWEVER that so long as (i) the Guarantor continues
to own not more than fifty per cent. (50%) of Pacific Ocean
Leasing, Ltd., and (ii) Pacific Ocean Leasing, Ltd. does not
materially alter the manner in which it conducts the
business in which it is currently engaged, Pacific Ocean
Leasing, Ltd. shall not be considered a Subsidiary within
the foregoing definition for the purposes of this Facility
Agreement;
"SUPPORT AGREEMENTS" means, in relation to a Utilisation,
together (i) the Support Agreement to be entered into
between (1) Her Britannic Majesty's Government represented
by the Export Credits Guarantee Department and (2) the
British Lenders and (ii) the Promesse de Garantie and the
Police d'Assurance Credit to be entered into between (1) the
French Republic represented by Compagnie Francaise
d'Assurance pour le Commerce Exterieur and (2) the French
Lenders and (iii) the Finanzkreditgarantie-Erklarung to be
entered into between (1) Germany represented by Hermes
Kreditversicherungsaktiengesellschaft and (2) the German
<PAGE>
Lenders;
"TAX" means all present and future taxes, charges, imposts,
duties, levies, deductions, withholdings or fees of any kind
whatsoever, or any amount payable on account of or as
security for any of the foregoing, payable at the instance
of or imposed by any statutory, governmental, international,
state, federal, provincial, local or municipal authority,
agency, body or department whatsoever or any central bank or
monetary agency or European Union institution, in each case
in England or elsewhere, together with any penalties,
additions, whether fines, surcharges or interest relating
thereto; and "Taxes" and "Taxation" shall be construed
accordingly;
"TAX LIABILITY" means in respect of any person:-
(a) any liability or any increase in the liability of that
person to make any payment or payments of or in respect
of Tax;
(b) the loss or setting off against income, profits or
gains or against any liability to make a payment or
payments of or in respect of Tax of any relief,
allowance, deduction or credit in respect of Tax ("a
Relief") which would otherwise have been available to
that person; and
(c) the loss or setting off against any liability to make a
payment or payments of or in respect of Tax of a right
to repayment of Tax which would otherwise have been
available to that person,
and in any case falling within (b) or (c) above the amount
that is to be treated as a Tax Liability shall be determined
as follows:-
(i) in a case which falls within (b) above and where the
Relief that was the subject of the loss or setting off
was or would have been a deduction from or offset
against Tax, the Tax Liability shall be the amount of
that Relief;
(ii) in a case which falls within (b) above and which
involves the loss of a Relief which would otherwise
have been available as a deduction from or offset
against gross income, profits or gains the Tax
Liability shall be the amount of Tax which would (on
the basis of the Tax rates current at the date of the
loss and assuming that the person has sufficient gross
income, profits or gains to utilise the Relief) have
been saved but for the loss of the Relief;
(iii) in a case which falls within (b) above and which
involves the setting off of a Relief which would
otherwise have been available as a deduction from
or offset against gross income, profits or gains,
the Tax Liability shall be the amount of Tax which
has been or will be saved in consequence of the
setting off;
(iv) in a case which falls within (c) above, the Tax
Liability shall be the amount of the repayment that
would have been obtained but for the loss or setting
off;
For the purposes of this definition any question of whether
<PAGE>
or not any relief, allowance, deduction, credit or right to
repayment of Tax has been lost or set off, and, if so, the
date on which that loss or set off took place, shall be
certified by the relevant Lender or, as the case may be, the
Representative and the provisions of Clause 21 shall apply
to such certificate;
"TECHNICAL RECORDS" means, in respect of an Aircraft, all
technical data, manuals, computer records, logbooks and
other records (whether kept or to be kept in compliance with
any law or regulation or any requirement for the time being
of the Aviation Authority or otherwise) relating to that
Aircraft, any Engine or any Parts;
"TERMINATION EVENT" means, in relation to a Lease Agreement,
any of the events set out in Clause 16 of that Lease
Agreement (and for the purposes of this definition where
such a Termination Event refers to an opinion of "the
Lessor" or depends upon "the Lessor's" consideration or
determination of whether such event has occurred or has or
would have certain consequences, then irrespective of the
opinion of "the Lessor" or "the Lessor's" consideration or
determination at that time with respect to such event, such
event shall for the purposes of this definition be deemed to
have occurred if the Agent is of the relevant opinion or
considers or determines that the relevant event has occurred
or the Agent, the Security Agent or any of the Lenders would
have or suffer the relevant consequences);
"TERMINATION SUM" means in relation to an Aircraft and for a
particular date, the amount calculated for that date in
accordance with the provisions of Part III of Schedule 6 to
the relevant Lease Agreement;
"TOTAL COMMITMENTS" means the aggregate from time to time of
all the Commitments;
"TOTAL LOSS", "TOTAL LOSS DATE", "TOTAL LOSS PAYMENT DATE"
and "TOTAL LOSS PROCEEDS" in relation to an Aircraft shall
have the meaning given thereto in the relevant Lease
Agreement;
"TRANCHE 1A" shall, in relation to a Utilisation, have the
meaning given thereto in Clause 4.3.4;
"TRANCHE 1B" shall, in relation to a Utilisation, have the
meaning given thereto in Clause 4.3.4;
"TRANCHE 2", "TRANCHE 2 INITIAL" and "TRANCHE 2 MISMATCH"
shall, in relation to a Utilisation, have the meaning given
thereto in Clause 4.3.4;
"TRANSACTION" means, in relation to any person, the
transaction comprising each of the Facility Documents and
each of the Operative Documents entered into by that person;
"TRANSFER CERTIFICATE" means a certificate in the form of
Schedule 2, signed by or on behalf of the transferring
Lender, each of the Obligors, the Borrower, the Agent and
the person who is a party thereto as transferee;
"TRIGGER EVENT" means the commercial paper (short term debt)
obligations of the Guarantor being or becoming rated below
A2 by Standard and Poor's Corporation or P2 by Moody's
Investor Service, Inc., or an equivalent by an alternative
service of equivalent recognition (if neither Standard and
Poor's Corporation nor Moody's Investor Service, Inc. has
<PAGE>
assigned any rating) or the placing on "creditwatch"
(otherwise than with a view to upgrading) of, or other
negative qualification upon, such rating level of the
Guarantor;
"TRUSTEE" means MeesPierson (Cayman) Limited of P.O. Box
2003, George Town, Grand Cayman, Cayman Islands, BWI in its
capacity as trustee of the trust created pursuant to the
Declaration of Trust;
"UNUTILISED FACILITY" means, at any time, the lesser of (i)
the Total Commitments and (ii) one billion three hundred and
seventy-five million Dollars (US$1,375,000,000) as such
amount may have been reduced by (a) the amount of each
Advance made before such time and (b) the amount of each
reduction made to the Facility Amount pursuant to Clause
2.5.2 or 2.5.3;
"UTILISATION" means each utilisation of the Facility
pursuant to Clause 4 or, as the context may require, the
amount referred to in a Utilisation Notice as being that
part of the Facility Amount in Dollars allocated by the
Guarantor for financing of the Aircraft referred to in that
Utilisation Notice;
"UTILISATION DATE" means, in relation to a Utilisation, the
Business Day upon which the Advance relating to that
Utilisation is made available to the Borrower in accordance
with the terms and subject to the conditions of this
Facility Agreement;
"UTILISATION DOCUMENTATION" means, in respect of a
Utilisation, all documents entered into by the relevant
parties to give effect to the financing of the Aircraft the
subject matter of the Utilisation as specified in Clause
4.5;
"UTILISATION NOTICE" means any notice given by the Bermuda
Lessee or, as the case may be, the Irish Lessee pursuant to
Clause 4.1 and substantially in the form of Schedule 3;
"VALUE ADDED TAX" or "VAT" means value added tax as provided
for in the United Kingdom Value Added Tax Act 1994 and
legislation (whether delegated or otherwise) supplemental
thereto or in any primary or subordinate legislation
promulgated by the European Union or any body or agency
thereof and any Tax similar or equivalent to value added tax
imposed by any country other than the United Kingdom and any
similar or turnover tax replacing or introduced in addition
to any of the same;
"WARRANTIES" means, in respect of an Aircraft, the Standard
Warranty, Service Life Policy, Vendor Warranties, Interface
Commitment and Patent Indemnity given, assigned or extended
by the Seller under or pursuant to Clauses 12 and 13 of and
as defined in the Purchase Agreement relating to that
Aircraft with respect to the Aircraft, Airframe and any
Parts (but not further or otherwise) and any and all rights
of the relevant Lessee and/or the Borrower under the
Purchase Agreement and/or the Purchase Agreement Assignment
in each case relating to that Aircraft to compel performance
of the same;
"1994 BORROWER" means the Borrower as that term is defined
in the 1994 Facility Agreement;
"1994 FACILITY" means the term loan facility made available
<PAGE>
pursuant to the 1994 Facility Agreement by the banks and
financial institutions named therein;
"1994 FACILITY AGREEMENT" means the Facility Agreement dated
28th January 1994 and made between (1) the banks and
financial institutions named therein, (2) the Agent, (3) the
Security Agent, (4) Bravo Leasing Limited, (5) ILFC
(Bermuda) 4, Ltd., (6) the Bermuda Parent, (7) the Bermuda
Option Holder and (8) the Guarantor as amended and
supplemented by a Supplemental Agreement dated 7th November
1994 and made between the parties to the said Facility
Agreement, the Irish Lessee, the Irish Parent and
MeesPierson (Cayman) Limited as the same may have been or
may be further amended and/or supplemented from time to
time;
"1994 FACILITY AIRCRAFT" means any one or more (as the
context may require) of the Airbus aircraft which have been
or which are to be financed pursuant to the 1994 Facility
Agreement;
"1994 GUARANTOR" means the Guarantor as that term is defined
in the 1994 Facility Agreement;
"1994 LENDERS" means the Lenders as that term is defined in
the 1994 Facility Agreement;
"1994 LESSEE" means ILFC (Bermuda) 4, Ltd., ILFC Ireland 2
Limited and any other person who accedes to the 1994
Facility Agreement on the basis that such person shall have
the same rights and obligations in respect of an aircraft
that it leases from the Lessor as ILFC Bermuda 4, Ltd. and
"1994 Lessees" shall mean all of them;
"1994 OBLIGORS" means the 1994 Lessees, the 1994 Option
Holders, the 1994 Parents and the 1994 Guarantor;
"1994 OPERATIVE DOCUMENTS" means the Operative Documents as
that term is defined in the 1994 Facility Agreement as the
same may have been or may be further amended and/or
supplemented from time to time;
"1994 OPTION HOLDER" means any Option Holder as that term is
defined in the 1994 Facility Agreement and "1994 Option
Holders" shall mean all of them;
"1994 PARENTS" means ILFC (Bermuda) 5, Ltd,. ILFC Ireland 3
Limited and any other person who accedes to the 1994
Facility Agreement on the basis that such person shall have
the same rights and obligations thereunder as ILFC (Bermuda)
5, Ltd. has and "1994 Parents" shall mean all of them;
"1994 SECURED PARTIES" means the Lenders, the Agent and/or
the Security Agent as each of those terms is defined in the
1994 Facility Agreement and "1994 Secured Party" means any
one of them;
"1994 SECURITY AGENT" means the Security Agent as that term
is defined in the 1994 Facility Agreement;
"1994 SECURITY DOCUMENTS" means Security Documents as that
term is defined in the 1994 Facility Agreement as the same
may have been or may be further amended and/or supplemented
from time to time.
1.2 Any and all other words and expressions defined in this
Facility Agreement shall, unless the context otherwise
<PAGE>
requires or there is express provision to the contrary, have
the same meanings when used in any of the other Facility
Documents and/or any of the Operative Documents.
1.3 Clause headings and the table of contents are inserted for
convenience of reference only and shall be ignored in the
interpretation of this Facility Agreement.
1.4 In this Facility Agreement, each of the other Facility
Documents and each of the Operative Documents unless the
context otherwise requires:-
1.4.1 references to Clauses, Articles, Schedules and
Appendices are to be construed as references to
the Clauses of, Schedules to, and Appendices to
this Facility Agreement, each of the other
Facility Documents and each of the Operative
Documents, as applicable, and references to this
Facility Agreement, each of the other Facility
Documents and each of the Operative Documents
include their respective Schedules and Appendices;
1.4.2 references to (or to any specified provision of)
this Facility Agreement, each of the other
Facility Documents and each of the Operative
Documents or any other document shall be construed
as references to this Facility Agreement, that
other Facility Document, that other Operative
Document, that document or that provision as in
force for the time being and as amended,
supplemented, novated or substituted from time to
time in accordance with the terms hereof or
thereof;
1.4.3 references to any law or enactment shall be deemed
to include references to such law or enactment as
re-enacted, amended, extended, consolidated or
replaced and any orders, decrees, proclamations,
regulations, instruments or other subordinate
legislation made thereunder;
1.4.4 words importing the plural shall include the
singular and vice versa;
1.4.5 words importing any gender shall be construed as
including every gender;
1.4.6 references to a person shall be construed as
including references to an individual, company,
corporation, firm, partnership, consortium, joint
venture, association, organisation, authority or
other unincorporated body of persons, trust or any
state or government or international organisation
or agency, European Union institution, committee
or department, or any instrumentality, agency or
political sub-division thereof or authority, board
or body created or constituted thereby (in each
case, whether or not having separate legal
personality);
1.4.7 the words "other" and "otherwise" shall not be
construed ejusdem generis with any foregoing words
where a wider construction is possible;
1.4.8 the Borrower, each of the Obligors, the Agent, the
Security Agent, and each of the Lenders shall
include their respective successors and permitted
<PAGE>
assigns and permitted transferees; and
1.4.9 the words "including" and "in particular" shall be
construed as being by way of illustration or
emphasis only and shall not be construed as, nor
shall they take effect as, limiting the generality
of any foregoing words.
2. AVAILABILITY
2.1 FACILITY
Subject to the terms and conditions of this Facility
Agreement and in reliance on the representations and
warranties of the Borrower, the Bermuda Lessee, the Irish
Lessee, the Bermuda Parent, the Irish Parent, the Bermuda
Option Holder and the Guarantor set out in Clause 6, the
Lenders hereby grant and undertake to make available a
facility in the maximum principal amount of the lesser of
(i) the aggregate of the Aircraft Purchase Prices for each
of the Facility Aircraft and (ii) one billion three hundred
and seventy-five million Dollars (US$1,375,000,000) (the
"Facility Amount") to the Borrower.
2.2 AVAILABILITY PERIOD
The Facility shall be available for drawdown at any time
before the expiry of the Availability Period on the terms
and subject to the conditions of this Facility Agreement.
2.3 NUMBER OF AIRCRAFT
All or any one or more of the Facility Aircraft may be
financed under this Facility.
2.4 PURPOSE
Advances made under any Utilisation Documentation shall be
used by the Borrower solely for the purpose of financing the
acquisition, and paying the Aircraft Purchase Price, of the
Facility Aircraft specified in the Utilisation Notice and a
Utilisation Notice may specify only one of the Facility
Aircraft and then only with the Engines specified in
Schedule 4 Part I installed thereon as the subject matter of
the Utilisation but neither the Agent, the Security Agent
nor any of the Lenders shall be obliged to concern itself
with the application of any of the Advances.
2.5 REDUCTION AND CANCELLATION OF THE FACILITY
2.5.1 The availability of Utilisations has been
predicated on the basis that each of the Facility
Aircraft will be delivered during the Scheduled
Delivery Month for such Facility Aircraft
specified in Schedule 4 Part I and accordingly the
Guarantor shall promptly, following receipt of
notice from or agreement with, the Seller, notify
the Agent and the Borrower of any change in the
Scheduled Delivery Month for a Facility Aircraft.
Upon receipt by the Agent of such notice, and
provided that the new Scheduled Delivery Month
falls within the Availability Period, the
Scheduled Delivery Month for the relevant Facility
Aircraft shall be amended accordingly and
thereafter Schedule 4 Part I shall be read and
construed as amended by such amended Scheduled
<PAGE>
Delivery Month.
2.5.2 If the Bermuda Lessee or, as the case may be, the
Irish Lessee fails to effect a Utilisation with
respect to any of the Facility Aircraft by the
date such Facility Aircraft is actually delivered
by the Seller to the Guarantor under the relevant
Purchase Agreement, the Facility Amount shall,
with effect from the date upon which the Guarantor
notifies the Agent in writing of the delivery of
such Facility Aircraft, be reduced by:-
(a) in the case of the first of the Facility
Aircraft in respect of which a Utilisation
is not effected, an amount equal to the
assumed maximum Aircraft Purchase Price
for that Facility Aircraft as specified
in the column entitled "Assumed Maximum
Aircraft Purchase Price" in Schedule 4
Part I less ten million Dollars
(US$10,000,000); and
(b) in the case of each other Facility Aircraft in
respect of which a Utilisation is not effected,
an amount equal to the assumed maximum Aircraft
Purchase Price for that Facility Aircraft as
specified in the column entitled "Assumed
Maximum Aircraft Purchase Price" in
Schedule 4 Part I.
2.5.3 Without prejudice to the provisions of Clause
2.5.2, the Guarantor shall be entitled at any time
and from time to time (other than in relation to a
Facility Aircraft in respect of which a
Utilisation Notice has been served by the Bermuda
Lessee or, as the case may be, the Irish Lessee
and not withdrawn) to give notice to the Agent
that it wishes to cancel the Facility insofar as
the Facility relates to one or more of the
Facility Aircraft. Following receipt of such
notice by the Agent, the Facility Amount shall be
reduced by:-
(a) in the case of the first of the Facility
Aircraft in respect of which a Utilisation
is not effected, an amount equal to the
assumed maximum Aircraft Purchase Price
for that Facility Aircraft as specified
in the column entitled "Assumed Maximum
Aircraft Purchase Price" in Schedule 4 Part I
less ten million Dollars (US$10,000,000); and
(b) in the case of each other Facility Aircraft in
respect of which a Utilisation is not effected,
an amount equal to the assumed maximum Aircraft
Purchase Price for that Facility Aircraft as
specified in the column entitled "Assumed
Maximum Aircraft Purchase Price" in
Schedule 4 Part I.
Neither the Bermuda Lessee nor the Irish Lessee
shall thereafter be entitled to serve a
Utilisation Notice in respect of the Facility
Aircraft specified in the notice referred to in
this Clause 2.5.3.
2.5.4 Any reduction in the Facility Amount pursuant to
<PAGE>
Clauses 2.5.2 or 2.5.3 shall reduce the
Commitments of the British Lenders, the French
Lenders and the German Lenders respectively by an
amount equal to the amount specified in the
columns in Schedule 4 Part I entitled "Assumed
British Lenders Portion", Assumed French Lenders
Portion" and "Assumed German Lenders Portion"
respectively (less, in the case of such a
reduction as is referred to in Clauses 2.5.2(a)
and 2.5.3(a), a total of ten million Dollars
(US$10,000,000) which shall be allocated amongst
the Commitments of the British Lenders, the French
Lenders, and the German Lenders as provided in
Clause 2.5.5) and the Commitment of each of the
Lenders shall be reduced by such proportion of the
reduction in the Commitments of the British
Lenders, the French Lenders or, as the case may
be, the German Lenders as is equal to the
proportion which the Commitment of such Lender
bears to the Commitments of the British Lenders,
the French Lenders or, as the case may be, the
German Lenders.
2.5.5 The amount of ten million Dollars (US$10,000,000)
referred to in Clauses 2.5.2(a) and 2.5.3(a)
above, shall be allocated to the Commitments of
the British Lenders, the French Lenders and the
German Lenders in the proportions which such
Commitments specified in the columns in Schedule 4
Part I entitled "Assumed British Lenders'
Portion", "Assumed French Lenders' Portion" and
"Assumed German Lenders' Portion" respectively in
respect of the relevant Facility Aircraft bear to
the amount specified in the column in Schedule 4
Part I entitled "Assumed Maximum Aircraft Purchase
Price" and shall be allocated to the Commitment of
each of the Lenders in respect of such Aircraft in
such proportion as is equal to the proportion
which the Commitment of such Lender in respect of
such Aircraft bears to the Commitments of the
British Lenders, the French Lenders or, as the
case may be, the German Lenders in respect of such
Aircraft.
2.5.6 Upon the expiry of the Availability Period, the
Unutilised Facility (if any) then remaining shall
be cancelled.
2.6 CURRENCY
The Advances shall be made available wholly in Dollars.
3. SYNDICATE
3.1 SEVERAL OBLIGATIONS
3.1.1 The obligations of each Lender to make its
Commitment or any part thereof available under
this Facility Agreement and to perform its
obligations under any Utilisation Documentation
are several and not joint. The failure of any
Lender to carry out its obligations under this
Facility Agreement or any Utilisation
Documentation shall neither:-
(i) result in any of the Agent, the Security Agent
<PAGE>
or any other Lender or the Borrower assuming
any additional obligation or liability
whatsoever; or
(ii) relieve the Borrower, any of the Obligors, the
Agent, the Security Agent or any of the Lenders
from their respective obligations under this
Facility Agreement; or
(iii) result in any of the Obligors assuming any
additional obligation or liability whatsoever
to any other party,
PROVIDED ALWAYS THAT:-
(a) if a Lender fails to fund its Relevant Proportion
of an Advance, the relevant Lead Manager shall use
all reasonable endeavours to persuade the relevant
Lender to fund its Relevant Proportion of such
Advance; and
(b) if, notwithstanding the reasonable endeavours of
the relevant Lead Manager, a Lender fails to fund
its Relevant Proportion of an Advance and such
Advance is nevertheless made available to the
Borrower by the Agent, the relevant Lessee shall,
on the date which is three (3) Business Days after
receipt by the relevant Lessee of the Agent's
first written demand, pay to the Borrower an
amount equal to the relevant Lender's Relevant
Proportion of the relevant Advance by way of
prepayment pursuant to the relevant Lease
Agreement and immediately upon receipt by the
Borrower from the relevant Lessee of such amount,
the Borrower shall prepay the relevant Lender's
Relevant Proportion of the Advance to the Agent
which shall in turn remit the payment to the
relevant Lead Manager.
3.1.2 Nothing contained in this Facility Agreement shall
be deemed to constitute any two or more of the
Lenders and/or the Borrower a partnership,
association, joint venture or other entity.
3.2 CONDITIONS PRECEDENT
3.2.1 The obligations of each of the Lenders, the Agent
and the Security Agent to perform their respective
obligations under this Facility Agreement shall be
subject to the following conditions precedent
having been fulfilled to the satisfaction of, or
written waiver in respect thereof having been
given by, the Agent on or prior to the date of
this Facility Agreement:-
(a) the Agent shall have received:-
(i) a Director's Certificate of the Bermuda
Lessee attaching thereto, and certifying
as true copies of the originals:-
(aa) the Memorandum of Association and
Bye-laws of the Bermuda Lessee;
(bb) the resolutions of the board of the
Bermuda Lessee approving the entry
into by the Bermuda Lessee of the
<PAGE>
Facility Documents to which the
Bermuda Lessee is a party and the
entry into by the Bermuda Lessee of
each of the Operative Documents to
which the Bermuda Lessee is to, or
may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Bermuda Lessee the Facility
Documents to which the Bermuda
Lessee is a party and the Operative
documents to which the Bermuda
Lessee is to, or may, be a party;
(ii) a Director's Certificate of the Irish
Lessee attaching thereto, and certifying
as true copies of the originals:-
(aa) the Memorandum and Articles of
Association of the Irish Lessee;
(bb) the resolutions of the board of the
Irish Lessee approving the entry
into by the Irish Lessee of the
Facility Documents to which the
Irish Lessee is a party and the
entry into by the Irish Lessee of
each of the Operative Documents to
which the Irish Lessee is to, or
may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Irish Lessee the Facility
Documents to which the Irish Lessee
is a party and the Operative
documents to which the Irish Lessee
is to, or may, be a party;
(iii) an Assistant Secretary's Certificate of
the Guarantor and attaching thereto, and
certifying as true copies of the
originals:-
(aa) the Articles of Incorporation and
Bylaws of the Guarantor;
(bb) the resolutions of the board of the
Guarantor approving the entry into
by the Guarantor of the Facility
Documents to which the Guarantor is
a party and the entry into by the
Guarantor of each of the Operative
Documents to which the Guarantor is
to, or may, be a party; and
(cc) the specimen signatures of those
persons whose names are set out in
the relevant certificate and who
are authorised to sign on behalf of
the Guarantor the Facility
Documents to which the Guarantor is
a party and the Operative Documents
to which the Guarantor is to, or
may, be a party;
<PAGE>
(iv) a Director's Certificate of the Bermuda
Parent attaching thereto, and certifying
as true copies of the originals:-
(aa) the Memorandum of Association and
Bye-laws of the Bermuda Parent;
(bb) the resolutions of the board of the
Bermuda Parent approving the entry
into by the Bermuda Parent of the
Facility Documents to which the
Bermuda Parent is a party and the
entry into by the Bermuda Parent of
each of the Operative Documents to
which the Bermuda Parent is to, or
may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Bermuda Parent the Facility
Documents to which the Bermuda
Parent is a party and the entry
into by the Bermuda Parent of each
of the Operative Documents to which
the Bermuda Parent is to, or may,
be a party;
(v) a Director's Certificate of the Irish
Parent attaching thereto, and certifying
as true copies of the originals:-
(aa) the Memorandum and Articles of
Association of the Irish Parent;
(bb) the resolutions of the board of the
Irish Parent approving the entry
into by the Irish Parent of the
Facility Documents to which the
Irish Parent is a party and the
entry into by the Irish Parent of
each of the Operative Documents to
which the Irish Parent is to, or
may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Irish Parent the Facility
Documents to which the Irish Parent
is a party and the entry into by
the Irish Parent of each of the
Operative Documents to which the
Irish Parent is to, or may, be a
party;
(vi) a Director's Certificate of the Bermuda
Option Holder attaching thereto, and
certifying as true copies of the
originals:-
(aa) the Memorandum of Association and
Bye-laws of the Bermuda Option
Holder;
(bb) the resolutions of the board of the
Bermuda Option Holder approving the
entry into by the Bermuda Option
Holder of the Facility Documents to
<PAGE>
which the Bermuda Option Holder is
a party and the entry into by the
Bermuda Option Holder of each of
the Operative Documents to which
the Bermuda Option Holder is to, or
may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Bermuda Option Holder the
Facility Documents to which the
Bermuda Option Holder is a party
and the entry into by the Bermuda
Option Holder of each of the
Operative Documents to which the
Bermuda Option Holder is to, or
may, be a party;
(vii) a Secretary's Certificate of the
Borrower setting out the specimen
signatures of those persons authorised
to sign the Facility Documents to which
the Borrower is a party and attaching
thereto, and certifying as true copies
of the originals:-
(aa) the Memorandum and Articles of
Association of the Borrower;
(bb) the resolutions of the board of the
Borrower approving the entry into
by the Borrower and the Facility
Documents to which the Borrower is
a party and the entry into by the
Borrower of each of the Operative
Documents to which the Borrower is
to, or may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Borrower the Facility
Documents to which the Borrower is
a party and the entry into by the
Borrower of each of the Operative
Documents to which the Borrower is
to, or may, be a party;
(viii) extracts of the Purchase Agreements and
the Engines Agreements containing the
Warranties and the Engine Warranties
respectively;
(ix) originals of the Ancillary Documents
addressed to the Agent and certified
copies of the Ancillary Documents
addressed to the Borrower, each duly
executed by the Guarantor;
(x) originals of the Priorities and Indemnities
Agreement, duly executed by the Bermuda
Lessee, the Irish Lessee, the Bermuda
Option Holder, the Guarantor and the
Borrower;
(xi) a copy, certified as a true copy, by a
duly authorised officer of the Guarantor
of the Guarantee and Indemnity (Lessor);
<PAGE>
(xii) an original of the Deed of Assignment of
Guarantee and Indemnity (Lessor) duly
executed by the Borrower together with
duly executed originals of the notices
and acknowledgements referred to
therein;
(xiii) duly executed originals of the Charge
over Shares of the Bermuda Lessee,
together with certified copies of the
Memorandum of Association, Bye-laws,
Minute Books, and the Share Register (if
any) of the Bermuda Lessee and the
originals of the Share Certificates of
the Bermuda Lessee as referred to
therein and duly executed originals of
the Letters of Resignation, Irrevocable
Proxy and undated Share Transfer Forms
referred to therein;
(xiv) duly executed originals of the Charge
over Shares of the Irish Lessee,
together with certified copies of the
Memorandum and Articles of Association,
Minute Books and the Share Register (if
any) of the Irish Lessee and the
originals of the Share Certificates of
the Irish Lessee as referred to therein
and duly executed originals of the
Letters of Resignation, Irrevocable
Proxy and undated Share Transfer Forms
referred to therein;
(xv) duly executed originals of the Charge
over Shares of Borrower, together with
certified copies of the Certificate of
Incorporation, Memorandum and Articles
of Association, Minute Books, the
Register of Mortgages and Charges and
the original Share Certificates
and the original Register of members of the
Borrower as referred to therein and duly
executed originals of the Letters of
Resignation, Irrevocable Proxy and undated
Share Transfer Forms referred to therein;
(xvi) originals of the Interlender Agreement
duly executed by the Lenders, the Agent
and the Security Agent (as those terms
are defined in the 1994 Facility
Agreement) but held in escrow pending
execution of documents amending the 1994
Facility;
(xvii) Certificate of Exemption of the Borrower;
(xviii) originals of the Management Agreement
duly executed by the Trustee, the
Manager, the Coutts Representative, the
Guarantor and the Borrower;
(xix) a copy, certified as a true copy by a
duly authorised officer of the Trustee,
of the Declaration of Trust;
(xx) a copy, certified as a true copy by a
duly authorised officer of the Bermuda
<PAGE>
Lessee, of the Bermuda Lessee Sub-Lease
Collateral Charge together with duly
executed originals of the notices and
acknowledgements referred to therein;
(xxi) a copy, certified as a true copy by a
duly authorised officer of the Irish
Lessee, of the Irish Lessee Sub-Lease
Collateral Charge together with duly
executed originals of the notices and
acknowledgements referred to therein;
(xxii) duly executed originals of the
Assignment of Bermuda Lessee and Irish
Lessee Sub-Lease Collateral Charges
together with duly executed originals of
the notices and acknowledgements
referred to therein;
(xxiii) duly executed originals of the Deed of
Assignment and Charge together with duly
executed originals of the notices and
acknowledgements referred to therein;
(xxiv) an original of the MeesPierson Comfort
Letter duly executed by MeesPierson
N.V.;
(xxv) an original of the Management Agreement
Side Letter duly executed by the
Trustee;
(xxvi) legal opinion from Maples and Calder,
Cayman Islands counsel to the Lenders;
(xxvii) legal opinion from A & L Goodbody, Irish
Counsel to the Guarantor and the
Lenders;
(xxviii) a legal opinion from Appleby, Spurling &
Kempe, Bermuda counsel to the Lenders;
(xxix) a legal opinion from Buchalter Nemer,
Fields & Younger, California counsel to
the Lenders;
(xxx) a legal opinion from in-house counsel to
the Guarantor;
(xxxi) a legal opinion from Wilde Sapte,
English counsel to the Lenders;
(xxxii) Bermuda Monetary Authority Consent in
respect of the Charge Over Shares of
Bermuda Lessee; and
(b) the Agent shall have received the fees to be paid
by the Guarantor on the date of this Facility
Agreement pursuant to the Ancillary Documents.
3.2.2 The obligations of the Borrower to perform its
obligations under this Facility Agreement shall be
subject to the following conditions precedent
having been fulfilled to the satisfaction of, or
written waiver in respect thereof having been
given by, the Borrower on or prior to the date of
this Facility Agreement:-
<PAGE>
(a) the Borrower shall have received:-
(i) a Director's Certificate of the Bermuda
Lessee attaching thereto, and certifying as
true copies of the originals:-
(aa) the Memorandum of Association and Bye-
laws of the Bermuda Lessee;
(bb) the resolutions of the board of the
Bermuda Lessee approving the entry
into by the Bermuda Lessee of the
Facility Documents to which the
Bermuda Lessee is a party and the
entry into by the Bermuda Lessee of
each of the Operative Documents to
which the Bermuda Lessee is
to, or may, be a party; and
(cc) the Power of Attorney appointing those
authorised to sign on behalf of the
Bermuda Lessee the Facility Documents
to which the Bermuda Lessee is a party
and the Operative documents to which
the Bermuda Lessee is to, or may, be a
party;
(ii) a Director's Certificate of the Irish Lessee
attaching thereto, and certifying as true
copies of the originals:-
(aa) the Memorandum and Articles of
Association of the Irish Lessee;
(bb) the resolutions of the board of the
Irish Lessee approving the entry into
by the Irish Lessee of the Facility
Documents to which the Irish Lessee is
a party and the entry into by the
Irish Lessee of each of the Operative
Documents to which the Irish Lessee is
to, or may, be a party; and
(cc) the Power of Attorney appointing those
authorised to sign on behalf of the
Irish Lessee the Facility Documents to
which the Irish Lessee is a party and
the Operative documents to which the
Irish Lessee is to, or may, be a
party;
(iii) an Assistant Secretary's Certificate of
the Guarantor and attaching thereto, and
certifying as true copies of the
originals:-
(aa) the Articles of Incorporation and
Bylaws of the Guarantor;
(bb) the resolutions of the board of the
Guarantor approving the entry into
by the Guarantor of the Facility
Documents to which the Guarantor is
a party and the entry into by the
Guarantor of each of the Operative
Documents to which the Guarantor is
to, or may, be a party and the
<PAGE>
entry into by the Guarantor of each
of the Operative Documents to which
the Guarantor is to, or may, be a
party; and
(cc) the specimen signatures of those
persons whose names are set out in
the relevant certificate and who are
authorised to sign on behalf of the
Guarantor the Facility Documents to
which the Guarantor is a party and
the Operative Documents to which the
Guarantor is to, or may, be a party;
(iv) a Director's Certificate of the Bermuda
Parent attaching thereto, and certifying
as true copies of the originals:-
(aa) the Memorandum of Association and
Bye-laws of the Bermuda Parent;
(bb) the resolutions of the board of the
Bermuda Parent approving the entry
into by the Bermuda Parent of the
Facility Documents to which the
Bermuda Parent is a party and the
entry into by the Bermuda Parent of
each of the Operative Documents to
which the Bermuda Parent is to, or
may, be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Bermuda Parent the Facility
Documents to which the Bermuda
Parent is a party and the entry
into by the Bermuda Parent of each
of the Operative Documents to which
the Bermuda Parent is to, or may,
be a party;
(v) a Director's Certificate of the Irish
Parent attaching thereto, and certifying
as true copies of the originals:-
(aa) the Memorandum and Articles of
Association of the Irish Parent;
(bb) the resolutions of the board of the
Irish Parent approving the entry
into by the Irish Parent of the Facility
Documents to which the Irish Parent is
a party and the entry into by the
Irish Parent of each of the
Operative Documents to which the
Irish Parent is to, or may, be
a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Irish Parent the Facility
Documents to which the Irish Parent
is a party and the entry into by
the Irish Parent of each of the
Operative Documents to which the
Irish Parent is to, or may,
<PAGE>
be a party;
(vi) a Director's Certificate of the Bermuda
Option Holder attaching thereto, and
certifying as true copies of the
originals:-
(aa) the Memorandum of Association and
Bye-laws of the Bermuda Option
Holder;
(bb) the resolutions of the board of the
Bermuda Option Holder approving the
entry into by the Bermuda Option
Holder of the Facility Documents to
which the Bermuda Option Holder is a
party and the entry into by the
Bermuda Option Holder of each of the
Operative Documents to which the
Bermuda Option Holder is to, or may,
be a party; and
(cc) the Power of Attorney appointing
those authorised to sign on behalf
of the Bermuda Option Holder the
Facility Documents to which the
Bermuda Option Holder is a party
and the entry into by the Bermuda
Option Holder of each of the
Operative Documents to which the
Bermuda Option Holder is to, or
may, be a party;
(vii) originals of the Ancillary Documents
addressed to the Borrower duly executed
by the Guarantor;
(viii) duly executed originals of the
Priorities and Indemnities Agreement;
(ix) an original of the Guarantee and Indemnity
(Lessor) duly executed by the Guarantor;
(x) a legal opinion from A & L Goodbody, Irish
Counsel to the Guarantor;
(xi) a legal opinion from Appleby, Spurling &
Kempe, Bermuda counsel to the Borrower;
(xii) a legal opinion from Buchalter, Nemer,
Fields & Younger, California counsel to
the Borrower;
(xiii) a legal opinion from in-house counsel to
the Guarantor;
(b) the Borrower shall have received the fees to be
paid by the Guarantor on the date of this Facility
Agreement pursuant to the Ancillary Documents.
4. MANNER OF UTILISING THE FACILITY
4.1 UTILISATION NOTICES
4.1.1 On each occasion when the Bermuda Lessee or, as
the case may be, the Irish Lessee wishes to cause
<PAGE>
a Utilisation to be effected under this Facility
it shall serve a Utilisation Notice upon the Agent
and the Borrower setting out:-
(i) the proposed Utilisation Date being a Business Day
not earlier than thirty (30) days (or such shorter
period as the Majority Lenders, in any particular
case, may agree) after the date of service of such
notice;
(ii) the requested amount of the proposed Advance;
(iii) a description of the Facility Aircraft the
subject matter of the proposed Utilisation,
including, without limitation, its
manufacturer's serial number, the proposed
Registration Mark and the Engine type
installed;
(iv) the identity of the proposed Approved Sub-Lessee
of the Aircraft, the jurisdiction in which it is
proposed that the Aircraft shall be registered
and/or habitually based and confirmation whether
the proposed Approved Sub-Lessee will require
the Borrower and the Agent to provide quiet
enjoyment covenants in accordance with the
provisions of the Lease Agreement; and
(v) subject to Clause 4.1.2, the expected identity of
the proposed Lessee, the proposed Option Holder
and the proposed Parent and confirmation as to
whether any request is being made for one or more
Additional Lessees in the structure. In the event
that the Lessee is other than the Bermuda Lessee
or the Irish Lessee and/or the Option Holder is
other than the Bermuda Option Holder and/or an
Additional Lessee is required, the Bermuda Lessee
shall provide such details as it is then possible
for the Bermuda Lessee to provide as to the
identity and ownership of the proposed Lessee
and/or Option Holder and/or Additional Lessee and
of the proposed structure of the Transaction in
respect of the Utilisation, and shall request the
consent of the Lead Managers and the Borrower
thereto in accordance with Clause 4.2.3;
and having attached thereto a certified copy of the
latest draft (or, if the same is then available, a
certified copy of the executed) of the proposed
Approved Sub-Lease.
4.1.2 Notwithstanding the provisions of Clause 4.1.1(v),
at any time up to twenty one (21) days prior to
the Utilisation Date, the Bermuda Lessee or, as
the case may be, the Irish Lessee may notify the
Agent of any change to the parties described in
the Utilisation Notice pursuant to Clause 4.1.1(v)
(including, without limitation, the identity of
the Lessee) and such notification shall not affect
the validity of the Utilisation Notice.
4.1.3 The Bermuda Lessee or, as the case may be, the
Irish Lessee shall serve upon the Agent and the
Borrower a certified copy of each subsequent draft
(if any) of any proposed Approved Sub-Lease as and
when the same becomes available and shall provide
the Agent and the Borrower with written
<PAGE>
confirmation of the Aircraft Purchase Price as
soon as the same becomes available from the Seller
and in any event not later than five (5) Business
Days prior to the proposed Utilisation Date and
shall from time to time as soon as the same
becomes available, provide further details of the
identity and ownership of an Alternative Lessee
and/or Option Holder and/or Additional Lessee and
of the proposed structure of the Transaction if
different from that contemplated in this Facility
Agreement.
4.1.4 The Agent shall notify each of the Lenders and the
Borrower once it has received a Utilisation Notice
complying with the requirements of sub-Clause
4.1.1 by sending a copy thereof to each of the
Lenders and to the Borrower. The Agent shall then
instruct the Lenders' counsel to prepare the
relevant Utilisation Documentation and to
circulate those documents to each of the Lenders
as soon as the same have been produced. The Agent
shall procure that the relevant Utilisation
Documentation is circulated to the Lenders at
least ten (10) days prior to the proposed
Utilisation Date, or, if later, as soon as
practicable after receipt by the Agent of the
legal opinions referred to in Clauses 9.2.2(c)
and/or 9.4.2(h) of the relevant Lease Agreement
and having regard to any additional Security
Documents or other requirements which are shown to
be necessary by the said legal opinions.
4.1.5 The Bermuda Lessee or, as the case may be, the
Irish Lessee may not issue a Utilisation Notice:-
(i) unless:-
(a) the proposed Utilisation Date would fall
within the Availability Period; and
(b) no Cancellation Event or Potential
Cancellation Event has occurred and is
continuing or would result from the
drawdown of the relevant Advance;
(ii) if, taking into account the country of
registration or habitual-base of the Facility
Aircraft which the Bermuda Lessee or, as the case
may be, the Irish Lessee proposes to be the
subject of the Utilisation Notice, twenty-five per
cent (25%) of the Facility Aircraft as at the date
of this Facility Agreement (rounded to the nearest
whole number, but excluding for the purposes of
such calculation any Facility Aircraft which is so
registered or habitually based solely as a result
of an Approved Sub-Lessee sub-sub-leasing such
Facility Aircraft in accordance with the terms of
the relevant Approved Sub-Lease) would be
registered or habitually based in the same country
as the country in which the Bermuda Lessee or, as
the case may be, the Irish Lessee intends that the
Facility Aircraft which the Bermuda Lessee or, as
the case may be, the Irish Lessee proposes to be
the subject of the Utilisation Notice will be
registered or habitually based;
(iii) if the country to which the Bermuda Lessee
<PAGE>
or, as the case may be, the Irish Lessee
intends that the Facility Aircraft which the
Bermuda Lessee or, as the case may be, the
Irish Lessee proposes to be the subject of
the Utilisation Notice will be registered or
habitually-based is the United Kingdom,
France, Germany or Spain;
(iv) if the Bermuda Lessee or, as the case may be, the
Irish Lessee intends that the Facility Aircraft
which the Bermuda Lessee or, as the case may be,
the Irish Lessee proposes to be the subject of
the Utilisation Notice will be registered or
habitually based in a Prohibited Country or the
United States of America.
4.2 ALTERNATIVE LESSEES AND ADDITIONAL LESSEES AND OPTION
HOLDERS OTHER THAN THE BERMUDA OPTION HOLDER
4.2.1 In respect of the financing of a particular
Facility Aircraft pursuant to the Facility, the
Bermuda Lessee or, as the case may be, the Irish
Lessee shall be entitled to request that:-
(a) another person (other than the Bermuda Lessee or
the Irish Lessee) should act as the Lessee of that
Facility Aircraft (and any such person shall be an
"Alternative Lessee" for the purposes of the
Facility Documents and Operative Documents);
and/or
(b) one or more additional persons are incorporated
into the structure as Additional Lessee(s) to take
the relevant Facility Aircraft on lease from a
Lessee either directly or through another
additional person acting as an Additional Lessee
and to lease it to the relevant Approved
Sub-Lessee either directly or through another
additional person acting as an Additional Lessee
(and any such person shall be an "Additional
Lessee" for the purposes of the Facility Documents
and the Operative Documents); and/or
(c) another person (other than the Bermuda Option
Holder) should act as the Option Holder in respect
of that Facility Aircraft; and/or
(d) the Lessee of that Facility Aircraft is a
subsidiary of a person other than the Bermuda
Parent or the Irish Parent; and/or
(e) another person (whether acting in a nominee or
trust capacity or otherwise) not able to comply
with the requirements of Clause 4.2.2 should act
as the Lessee of that Facility Aircraft.
Any such request shall be made by the Bermuda
Lessee or, as the case may be, the Irish Lessee in
the relevant Utilisation Notice for consideration
by the Lead Managers.
4.2.2 Any such Alternative Lessee or Additional Lessee
or Option Holder or Parent nominated by the
Bermuda Lessee or, as the case may be, the Irish
Lessee in a Utilisation Notice shall be a company
capable of providing representations and
warranties and covenants having substantially the
<PAGE>
same effect as those given by the Bermuda Lessee,
the Bermuda Option Holder and the Bermuda Parent
respectively in Clauses 6 and 7 and, in the case
of any such Alternative Lessee or Additional
Lessee or Option Holder shall be a wholly-owned
indirect Subsidiary of the Guarantor and, in the
case of any such Parent, shall be a wholly-owned
Subsidiary of the Guarantor.
4.2.3 Upon receipt by the Agent of a Utilisation Notice
containing any such request as is referred to in
Clause 4.2.1, the Lead Managers shall consider any
such requests in good faith and shall notify the
Bermuda Lessee or, as the case may be, the Irish
Lessee as soon as reasonably practicable whether
the Lead Managers are prepared to consent to such
requests. Any decision as to whether or not to
consent to any such request shall be at the
absolute discretion of the Lead Managers.
4.2.4 In the event that the consent required pursuant to
Clause 4.2.3 is forthcoming then as conditions
precedent to the relevant Advance being made:-
(a) any such Alternative Lessee and/or Additional
Lessee and/or Option Holder and/or Parent shall
accede to this Facility Agreement, the Priorities
and Indemnities Agreement and such other Facility
Documents as the Agent in its absolute discretion
considers appropriate and shall provide
representations and warranties and covenants and
undertakings having at least substantially the
same effect as the representations, warranties,
covenants and undertakings given by the Bermuda
Lessee, the Bermuda Option Holder and the Bermuda
Parent in Clauses 6 and 7 of this Facility
Agreement so that any such Alternative Lessee
and/or Additional Lessee and/or Option Holder
and/or Parent shall be deemed to be a party to
this Facility Agreement and, if appropriate, the
Priorities and Indemnities Agreement and such of
the other Facility Documents as may be appropriate
as if named therein as a party and shall have the
same rights, benefits, obligations and liabilities
thereunder in relation to the relevant Facility
Aircraft as the Bermuda Lessee, the Bermuda Option
Holder and the Bermuda Parent respectively;
(b) each of the parties to this Facility Agreement and
any such Alternative Lessee and/or Additional
Lessee and/or Option Holder and/or Parent shall
enter into such other documents and provide such
security as the Agent may, in its absolute
discretion, require in order to ensure that the
Borrower, the Agent, the Security Agent and each
of the Lenders are in the same position
(including, without limitation, as to their
security position) with respect to such
Alternative Lessee and/or Additional Lessee
<PAGE>
and/or Option Holder and/or Parent as they
are in with respect to the Bermuda Lessee,
the Bermuda Option Holder and the Bermuda
Parent respectively under the Facility
Documents and the Operative Documents
(including, without limitation, by entering
into, in respect of an Alternative Lessee, an
Alternative Lessee Sub-Lease Collateral Charge
and an Assignment of Alternative Lessee Sub-Lease
Collateral Charge and a Charge Over Shares of
Alternative Lessee and, in respect of an
Additional Lessee, a Charge Over Shares of
Additional Lessee).
4.3 NUMBER AND COMPOSITION OF ADVANCES
4.3.1 The Facility shall be available in up to
twenty-one 21 Advances.
4.3.2 The maximum amount of an Advance in respect of a
Facility Aircraft shall be the lesser of:-
(i) the Unutilised Facility at the time when the
Advance is made; and
(ii) the Aircraft Purchase Price relating to that
Facility Aircraft.
4.3.3 Subject to the terms and conditions of this
Facility Agreement and the relevant Utilisation
Documentation, the British Lenders, the French
Lenders and the German Lenders shall participate
in each Advance through their respective Lending
Offices in certain proportions. On the assumption
that the Facility Aircraft and Engine type for
each Utilisation is as specified in Schedule 4
Part I, the proportions of each Advance to be
provided by the British Lenders, the French
Lenders and the German Lenders respectively shall
be as set out in the columns headed "Assumed
British Lenders Portion", "Assumed French Lenders
Portion" and "Assumed German Lenders Portion"
respectively in Schedule 4 Part I. In the event
that the Facility Aircraft type and/or the Engine
type in respect of any Utilisation is not that
specified in Schedule 4 Part I, the proportions of
the relevant Advance to be provided by the British
Lenders, the French Lenders and the German Lenders
shall be as determined by agreement between the
Lead Managers and the Export Credit Agencies and
the Agent shall notify the Borrower and the
relevant Lessee thereof.
Each Lender shall participate in the Advances
through its Lending Office to the extent of its
Relevant Proportion.
4.3.4 Each Advance to be disbursed pursuant to this
Facility Agreement shall be regarded as a single
advance. Notwithstanding the foregoing:-
(a) each Advance shall be divided into two (2)
tranches. On the assumption that the first
tranche (hereinafter "Tranche 1") is drawndown
on the Delivery Date of the relevant Aircraft
and is eighty-five per cent. (85%) of the Advance,
it shall amortise as described in Clause 4.3.4(b).
On the assumption that the second tranche
(hereinafter "Tranche 2") is drawndown on the
Delivery Date of the relevant Aircraft and is
fifteen per cent. of the Advance it shall
amortise as described in Clause 4.3.4(c);
(b) Tranche 1 shall be divided into two (2)
portions. On the assumption that the first
<PAGE>
portion ("Tranche 1A") is drawndown on the
Delivery Date of the relevant Aircraft and
is sixty-two point five per cent. (62.5%)
of the Advance as set out in Column
(2) under the heading "Tranche 1A" in Schedule 4
Part II, it shall amortise as shown in Column (2)
under the heading "Tranche 1A" so that the
percentage outstanding in respect of Tranche 1
under the heading "Tranche 1A" from time to time
is (i) on the Delivery Date of the relevant
Aircraft or on a Repayment Date the percentage
shown opposite the words "Delivery Date" or the
relevant Repayment Date number in the said Column
(2) under the heading "Tranche 1A" and (ii) in the
case of any date other than a Repayment Date the
percentage shown opposite the Repayment Date
number immediately preceding the relevant date in
the said Column (2) or in the case of any date
preceding the Repayment Date number 1, the
percentage specified opposite the Delivery Date in
each case under the heading "Tranche 1A". On the
assumption that the second portion ("Tranche 1B")
is drawndown on the Delivery Date of the relevant
Aircraft and is twenty-two point five per cent.
(22.5%) of the Advance as set out in Column (3)
under the heading "Tranche 1B" in Schedule 4 Part
II, the percentage outstanding in respect of
Tranche 1B from time to time shall be (i) on the
Delivery Date of the relevant Aircraft or on a
Repayment Date, the percentage shown opposite
the words "Delivery Date" or the relevant Repayment
Date number in the said Column (3) under the
heading "Tranche 1B" and (ii) in the case of any
date other than a Repayment Date, the percentage
shown opposite the Repayment Date number
immediately preceding the relevant date in Column
(3) or in the case of any date preceding the
Repayment Date number 1, the percentage
specified opposite the Delivery Date in each
case under the heading "Tranche 1B".
(c) Tranche 2 shall be divided into two (2) portions.
On the assumption that the first portion (the
"Initial Portion") is drawndown on the Delivery
Date of the relevant Aircraft and is fifteen per
cent. (15%) of the Advance as set out in Column
(4) under the heading "Tranche 2 Initial" in
Schedule 4 Part II, it shall amortise in ten equal
installments of principal as shown in Column (4)
under the heading "Tranche 2 Initial" so that the
percentage outstanding in respect of Tranche 2
under the heading "Tranche 2 Initial" from time to
time is (i) on the Delivery Date of the relevant
Aircraft or on a Repayment Date the percentage
shown opposite the words "Delivery Date" or the
relevant Repayment Date number in the said Column
(4) under the heading "Tranche 2 Initial" and (ii)
in the case of any date other than a Repayment
Date the percentage shown opposite the Repayment
Date number immediately preceding the relevant
date in the said Column (4) or in the case of any
date preceding the Repayment Date number 1 the
amount specified opposite the Delivery Date in
each case under the heading "Tranche 2 Initial".
On the assumption that the second portion (the
"Mismatch Portion") is, from time to time, in the
<PAGE>
percentage of Aircraft Purchase Price specified in
Column (5) in Schedule 4 Part II under the heading
"Tranche 2 Mismatch", the percentage outstanding
in respect of such portion from time to time shall
be (i) on the Delivery Date of the relevant
Aircraft or on a Repayment Date, the percentage
shown opposite the words "Delivery Date" or the
relevant Repayment Date number in the said Column
(5) under the heading "Tranche 2 Mismatch" and
(ii) in the case of any date other than a
Repayment Date, the percentage shown opposite the
Repayment Date number immediately preceding the
relevant date or in the case of any date preceding
the Repayment Date number 1 the amount specified
opposite Delivery Date in each case under the
heading "Tranche 2 Mismatch";
(d) the principal amount outstanding in respect of the
Advance on the final Repayment Date shall be an
amount equal to twenty-four per cent. (24%) of the
initial amount of the Advance which shall be
equivalent to the aggregate of the "Principal
Component of Rent" set out opposite the Final
Rental Payment Date in Part I of Schedule 6 to the
relevant Lease Agreement and the "Outstanding
Principal Component of Rent" set out opposite the
final "Value Date" in paragraph (c) of Part II
of Schedule 6 to the relevant Lease Agreement.
On each Rental Payment Date, the Rent payable
under the relevant Lease Agreement shall be equal
to the total of principal and interest payable in
respect of the relevant Advance.
4.3.5 The parties acknowledge and agree that the
contents of Schedule 4 Part II are provided for
illustration purposes only and are not intended to
represent the initial amounts, or the
amortisation, of any particular tranche of any
particular Advance which may be made pursuant to
this Facility Agreement and any Utilisation
Documentation. The relevant schedules in relation
to a particular Advance shall be those set out in
Schedules 2(1) and 2(2) to the relevant Loan
Supplement;
4.4 OBLIGATION TO EXECUTE UTILISATION DOCUMENTATION
Each of the Agent, the Security Agent and the Borrower
shall:-
4.4.1 subject to (i) receipt of a Utilisation Notice
relating to that Utilisation and (ii) satisfaction
in full or waiver of the conditions set out in
Clause 4.1.4, at least five (5) Business Days
prior to the Utilisation Date, execute the Loan
Supplement relating to that Utilisation and each
of the Lenders hereby authorises and instructs the
Agent and the Security Agent (having obtained
confirmation from the Lead Manager for the French
Lenders and Hypolux on behalf of the Lead Manager
for the German Lenders as to the proportions of
the relevant Advance to be provided by the French
Lenders and the German Lenders respectively and as
to the interest rates to be inserted into the
relevant Loan Supplement in accordance with Clause
5.3.1) to execute each Loan Supplement for and on
behalf of each of the Lenders;
<PAGE>
4.4.2 subject to (i) Clause 4.4.1 and (ii) receipt by
the Agent of a Notice of Drawdown relating to that
Utilisation in accordance with the terms of Clause
5.2.4(b) execute the Utilisation Documentation and
the relevant Aircraft Operative Documents on or
before the Utilisation Date and subject to the
terms and conditions of this Facility Agreement
and the Utilisation Documentation (including,
without limitation, the conditions precedent set
out therein) execute all such other documents and
take all such other steps as may be expressly
required of it under this Facility Agreement
and/or the relevant Utilisation Documentation in
order to enable the relevant Advance to be made.
4.5 UTILISATION DOCUMENTATION
The documents to be presented at each Utilisation together
with the conditions precedent referred to therein (together
"the Utilisation Documentation") for each Utilisation shall
be the following:-
(i) the Purchase Agreement;
(ii) the Purchase Agreement Assignment;
(iii) the BFE Bill of Sale;
(iv) the Lease Agreement;
(v) the Loan Supplement;
(vi) the Mortgage;
(vii) the General Security Assignment;
(viii) the Sub-Lease Security Assignment (if applicable);
(ix) the Deed of Assignment of General Terms Agreement Re
Engine Warranties;
(x) the Power of Attorney (if applicable);
(xi) the Second Mortgage;
(xii) the Option Holder's Power of Attorney;
(xiii) if the relevant Lessee is an Alternative Lessee,
the Alternative Lessee Sub-Lease Collateral
Charge, the Assignment of Alternative Lessee
Sub-Lease Collateral Charge and the Charge Over
Shares of Alternative Lessee and such other
documents as may be required by the Lead Managers
as a condition of their consent pursuant to Clause
4.2.3;
(xiv) in respect of each Additional Lessee (if any) the
Charge Over Shares of Additional Lessee and such
other documents as may be required by the Lead
Managers as a condition of their consent pursuant
to Clause 4.2.3.
5. PROVISIONS RELATING TO EACH ADVANCE AND EACH AIRCRAFT
5.1 AMOUNT AND PURPOSE OF CREDITS
5.1.1 On the terms and subject to the conditions of this
Facility Agreement and the relevant Loan
Supplement, the Lenders grant to the Borrower for
disbursement on the relevant Utilisation Date,
advances in Dollars up to an aggregate amount
calculated in accordance with Clause 4.3.2 and set
out in the relevant Loan Supplement.
5.1.2 The British Lenders, the French Lenders and the
German Lenders grant to the Borrower, for
disbursement on the relevant Utilisation Date,
advances in Dollars up to the aggregate amount
calculated in accordance with Clause 4.3.3 and set
out in the relevant Loan Supplement for the
<PAGE>
British Credits, the French Credits and the German
Credits respectively.
5.1.3 The obligations of the British Lenders, the French
Lenders and the German Lenders in respect of each
Advance are several and not joint. The failure of
a Lender to perform its obligations in respect of
an advance shall not affect the obligations of the
Borrower towards either Representative or any
other Lender nor, subject to the provisions of the
proviso to Clause 3.1.1, shall the Agent, the
Security Agent or any other Lender be liable for
the failure of such Lender to perform its
obligations.
Therefore, subject to the provisions of the
proviso to Clause 3.1.1, each British Lender is
only responsible for the portion of the British
Credits specified opposite its name in Schedule 1
Part I to the relevant Loan Supplement, each of
the French Lenders is only responsible for the
portion of the French Credits specified opposite
its name in Schedule 1 Part II to the relevant
Loan Supplement and each of the German Lenders is
only responsible for that portion of the German
Credits specified opposite its name in Schedule 1
Part III to the relevant Loan Supplement.
5.2 DISBURSEMENT OF THE CREDITS
5.2.1 The Aircraft Purchase Price shall be made
available by payment to the account of the Seller,
specified by the Seller to the Agent, on behalf
and for the account of the Borrower.
5.2.2 Subject to Clause 5.2.6 all payments by the
Lenders in respect of the Credits shall be
effected on the Delivery Date and as between the
British Lenders, the French Lenders and the German
Lenders, in the proportions of the Dollar amount
specified by the Seller in the commercial invoice
for the relevant Aircraft referred to in paragraph
5 of Part II of Schedule 7 hereto as are
determined in accordance with the provisions of
Clause 4.3.3.
5.2.3 The obligation of the Lenders to make available
and disburse the Credits is subject to each of the
conditions precedent specified in Schedule 7 to
this Facility Agreement having been fulfilled to
the satisfaction of the Agent or otherwise waived
in writing by the Agent on or before the Delivery
Date.
5.2.4 Subject to Clause 5.2.3, the Credits shall be made
available by each of the British Lenders, the
French Lenders and the German Lenders in their
respective proportions by payment to their
respective Lead Managers (or, in the case of the
German Lenders, Hypolux) and the Lead Managers
(or, in the case of the German Lenders, Hypolux)
shall make the Credits available by one
disbursement, through the Agent, on the date
requested by the Borrower if:-
(a) such date is the Delivery Date and is a Banking
Day which falls during the Availability Period;
<PAGE>
and
(b) not later than 2.30 p.m. (London time) on the
third (3rd) Business Day before the proposed date
for the disbursement of the Credits the Agent has
received a Notice of Drawdown from the Borrower
which shall specify, inter alia:-
(i) the intended Drawdown Date;
(ii) the Aircraft Purchase Price; and
(iii) the total amount of the Credits.
5.2.5 A Notice of Drawdown once given shall be
irrevocable.
5.2.6 Subject to the agreement of each of the Lead
Managers at the relevant time, if, in any case on
or following delivery of the Aircraft by the
Seller to the Borrower and the receipt by the
Agent of the documents stipulated in Schedule 7
which appear on their face to be in order, the
Agent delivers to the Seller an unconditional and
irrevocable undertaking to pay an amount equal to
the Credits to the Seller within a specific period
of time, then notwithstanding the provisions of
Clause 5.2.4, the disbursement relative to the
Aircraft shall be deemed to be made on the date of
such undertaking. The Agent shall have no
obligation to give such an undertaking to the
Seller unless the Agent shall first have received
corresponding undertakings from each Lead Manager
in respect of the British Lenders', the French
Lenders' or, as the case may be, the German
Lenders' Relevant Proportion of the Credits and
each Lead Manager shall first have received
corresponding undertakings from each relevant
Lender in respect of that Lender's Relevant
Proportion of the Credits.
5.2.7 The Borrower shall not be entitled to waive its
right to undisbursed Credits without the consent
of the Seller.
5.2.8 The Credits to be disbursed in respect of the
Advance shall be regarded as a single advance.
Notwithstanding the foregoing:-
(a) each Credit shall be divided into two (2)
tranches. The first tranche (hereinafter "Tranche
1") shall initially be the aggregate of the
initial amounts specified opposite the words
"Delivery Date" in Column (4) in the relevant part
of Schedule 2(1) to the relevant Loan Supplement
(being eighty-five per cent. (85%) of the Credits)
and shall amortise as described in Clause
5.2.8(b). The second tranche (hereinafter
"Tranche 2") shall initially be the aggregate of
the initial amounts specified opposite the words
"Delivery Date" in Column (5) in the relevant part
of Schedule 2(1) to the relevant Loan Supplement
(being fifteen per cent. (15%) of the Credits) and
shall amortise as described in Clause 5.2.8(c);
(b) Tranche 1 shall be divided into two (2) portions.
The first portion ("Tranche 1A") shall be in the
<PAGE>
initial amount specified opposite the words
"Delivery Date" in Column (4) under the heading
"Tranche 1A" in the relevant part of Schedule 2(1)
to the relevant Loan Supplement, being sixty-two
point five per cent. (62.5%) of the Credits which
shall amortise as shown in Column (4) under the
heading "Tranche 1A" so that the principal amount
outstanding in respect of Tranche 1 under the
heading "Tranche 1A" from time to time is (i) on
the Delivery Date or on a Repayment Date the
amount shown opposite that date in the said Column
(4) under the heading "Tranche 1A" and (ii) in the
case of any date other than a Repayment Date the
amount shown opposite the Repayment Date
immediately preceding the relevant date in the
said Column 4 or in the case of any date preceding
the first listed Repayment Date, the amount
specified opposite the words "Delivery Date" in
each case under the heading "Tranche 1A". The
second portion ("Tranche 1B") shall be in the
initial amount specified in Column (4) under the
heading "Tranche 1B" in the relevant part of
Schedule 2(1) to the relevant Loan Supplement
(being twenty-two point five per cent. (22.5%) of
the Credits), the principal amount outstanding in
respect of Tranche 1B from time to time being (i)
on the Delivery Date or on a Repayment Date, the
amount shown opposite that date in the said Column
(4) under the heading "Tranche 1B" and (ii) in the
case of any date other than a Repayment Date, the
amount shown opposite the Repayment Date
immediately preceding the relevant date in Column
(4) or in the case of any date preceding the first
listed Repayment Date, the amount specified
opposite the words "Delivery Date" in each case
under the heading "Tranche 1B";
(c) Tranche 2 shall be divided into two (2) portions.
The first portion (the "Initial Portion") shall be
in the initial amount specified opposite the words
"Delivery Date" in Column (5) in the relevant part
of Schedule 2(1) to the relevant Loan Supplement
under the heading "Initial" (being fifteen per
cent. (15%) of the Credits), which shall amortise
in ten (10) equal installments of principal as
shown in Column (5) under the heading "Initial" so
that the principal amount outstanding in respect
of Tranche 2 under the heading "Initial" from time
to time is (i) on the Delivery Date or on a
Repayment Date the amount shown opposite that date
in the said Column (5) under the heading "Initial"
and (ii) in the case of any date other than a
Repayment Date the amount shown opposite the
Repayment Date immediately preceding the relevant
date in the said Column (5) or in the case of any
date preceding the first listed Repayment Date,
the amount specified opposite the words "Delivery
Date" in each case under the heading "Initial".
The second portion (the "Mismatch Portion") shall,
from time to time, be in the amounts specified in
Column (5) in the relevant part of Schedule 2(1)
to the relevant Loan Supplement under the heading
"Mismatch", the principal amount outstanding in
respect of such portion from time to time being
(i) on the Delivery Date or on a Repayment Date,
the amount shown opposite that date in the said
column (5) under the heading "Mismatch" and (ii)
<PAGE>
in the case of any date other than a Repayment
Date, the amount shown opposite the Repayment Date
immediately preceding the relevant date or in the
case of any date preceding the first listed
Repayment Date, the amount specified opposite the
words "Delivery Date" in each case under the
heading "Mismatch";
(d) The principal amount outstanding in respect of the
Credits on the final Repayment Date shall be an
amount equal to twenty-four per cent. (24%) of the
initial amount of the Credits which shall be
equivalent to the Aggregate of the "Principal
Component of Rent" set out opposite the final
Rental Payment Date in paragraph (b) of Part II of
Schedule 6 to the relevant Lease Agreement and the
"Outstanding Principal Component of Rent" set out
opposite the final "Value Date" in paragraph (c)
of Part II of Schedule 6 to the relevant Lease
Agreement.
5.3 INTEREST
5.3.1 The Borrower shall pay interest on Tranche 1A and
Tranche 1B of each of the Credits for each
Interest Period at the fixed rates per annum
specified in the relevant Loan Supplement.
5.3.2 The Borrower shall pay interest on the principal
amount outstanding from time to time in respect of
Tranche 2 of each of the Credits for each Interest
Period at the rate per annum which is the
aggregate of (i) the Margin and (ii) LIBOR in
relation to that Interest Period. The Agent shall
notify the Borrower, the relevant Lessee, the
Guarantor, each Lender and Hypolux of LIBOR for
each Interest Period promptly following the
setting of LIBOR for that Interest Period.
5.3.3 Following receipt by the Agent of the Notice of
Drawdown, (i) not less than two (2) Business Days
before the Utilisation Date, the Agent shall
notify the Guarantor, the relevant Lessee, each
Lender and Hypolux of the fixed interest rates
which would be available to apply to Tranche 1B of
the Advance in relation to all interest periods up
to the Expiry Date for the relevant Aircraft on
the basis of the amounts requested for the Advance
in the Utilisation Notice, and (ii) the Agent
shall notify the Guarantor, the relevant Lessee,
each Lender and Hypolux of LIBOR for the first
Interest Period in respect of Tranche 2 of the
Advance relating to that Utilisation.
5.3.4 Interest shall accrue from the Drawdown Date and
shall be calculated on the outstanding amount of
the Credits on the basis of a year of three
hundred and sixty (360) days and the actual number
of days elapsed and shall be payable in arrears on
each Repayment Date, subject to Clause 5.8.7.
5.4 REPAYMENT AND PREPAYMENT
5.4.1 The Borrower shall repay the Credits in twenty
(20) consecutive semi-annual repayments. Each
Repayment Instalment shall comprise principal and
<PAGE>
accrued interest and shall:-
(a) in the case of Tranche 1A and 1B of the British
Credits be the aggregate of the amounts set out
opposite the relevant Repayment Date in column 3
of Part A of Schedule 2(1) to the relevant Loan
Supplement and in the case of Tranche 2 of the
British Credits be the aggregate of the (i)
principal amounts set out opposite the relevant
Repayment Date in column 2 of Part A of Schedule
2(1) to the relevant Loan Supplement and (ii)
accrued interest thereon calculated in accordance
with the provisions of Clause 5.3.2;
(b) in the case of Tranche 1A and 1B of the French
Credits be the aggregate of the amounts set out
opposite the relevant Repayment Date in column 3
of Part B of Schedule 2(1) to the relevant Loan
Supplement and in the case of Tranche 2 of the
French Credits be the aggregate of the (i)
principal amounts set out opposite the relevant
Repayment Date in Column 2 of Part B of Schedule
2(1) to the relevant Loan Supplement and (ii)
accrued interest thereon calculated in accordance
with the provisions of Clause 5.3.2;
(c) in the case of Tranche 1A and 1B of the German
Credits be the aggregate of the amounts set out
opposite the relevant Repayment Date in Column 3
of Part C of Schedule 2(1) to the relevant Loan
Supplement and in the case of Tranche 2 of the
German Credits be the aggregate of the (i)
principal amounts set out opposite the relevant
Repayment Date in column 2 of Part C of Schedule
2(1) to the relevant Loan Supplement and (ii)
accrued interest thereon calculated in accordance
with the provisions of Clause 5.3.2.
5.4.2 Each Repayment Instalment and the principal and
interest amounts thereof determined in accordance
with the provisions of Clause 5.2 and Schedule
2(1) to the relevant Loan Supplement and Schedule
2(2) to the relevant Loan Supplement and the
interest rate set out in Clause 5.3.1 relating to
Tranche 1B will be calculated on the assumption
that (i) the Drawdown Date will occur on the date
specified in the relevant Loan Supplement, (ii)
the interest rate for Tranche 1B is the rate per
annum specified in the Loan Supplement and (iii)
the total amount of the Credits to be made
available to the Borrower on the Drawdown Date
will be the amount specified in the relevant Loan
Supplement. In the event that any such assumption
proves to be incorrect, the Agent shall prepare a
substitute Schedule 2(1) to the relevant Loan
Supplement and Schedule 2(2) to the relevant Loan
Supplement to replace the existing Schedule 2(1)
to the relevant Loan Supplement and Schedule 2(2)
to the relevant Loan Supplement on the same basis
as the initial Schedule 2(1) to the relevant Loan
Supplement and Schedule 2(2) to the relevant Loan
Supplement but with reference to the actual
Drawdown Date, the actual rate of interest
applicable to Tranche 1B and the actual amount
drawndown in respect of the relevant Advance.
Such substitute Schedule 2(1) to the relevant Loan
Supplement and Schedule 2(2) to the relevant Loan
<PAGE>
Supplement will be agreed by the Lenders with the
Borrower and the relevant Lessee and then signed
by or on behalf of the Lenders, the Borrower and
the relevant Lessee in substitution for, and shall
for all purposes hereof become, Schedule 2(1) to
the relevant Loan Supplement and Schedule 2(2) to
the relevant Loan Supplement. Thereafter all
repayments of the Credits together with interest
thereon shall be made in accordance with the
substitute Schedule 2(1) to the relevant Loan
Supplement and Schedule 2(2) to the relevant Loan
Supplement.
5.4.3 The Borrower may voluntarily prepay the whole or,
subject to the provisions of the Priorities and
Indemnities Agreement, part of the Credits on any
date provided that:-
(a) the relevant Lessee has given to the Borrower
notice of exercise of the relevant Option
Holder's option to purchase the Aircraft in
accordance with the Lease Agreement;
(b) the Agent shall have received from the Borrower
not less than ten (10) Business Days' notice
(which once given shall be irrevocable) or such
shorter period as the Agent may agree in writing
of its intention to make such prepayment
specifying the date on which such prepayment is
to be made;
(c) any such prepayment shall be made in Dollars;
and
(d) the Borrower shall simultaneously pay all
interest on the amount prepaid which has
accrued to the date of actual prepayment
together with any and all other amounts then
due and payable in connection with the Credits
pursuant to any Facility Document or Operative
Document and all amounts which any Lender
certifies to be necessary to compensate it
for any broken funding costs in relation
to any interest exchange or other hedging
arrangements entered into in connection with its
participation in the Credits or any part thereof
including those incurred in liquidating deposits
or re-employing funds taken or borrowed (whether
in Dollars or any other currency) to make or
maintain the Credits.
5.4.4 The Borrower shall not be entitled to prepay the
whole or any part of the Credits otherwise than as
specifically provided in this Clause 5.4 and/or
the Priorities and Indemnities Agreement, and no
amount prepaid may be re-borrowed.
5.4.5 In the case of a reduction in the Aircraft
Purchase Price of the Aircraft, or in the case of
any other payment arrangement between the
Borrower, the Guarantor and the Seller to the same
effect, the Borrower shall notify the Agent
thereof and shall immediately refund an amount
equal to such reduction. Subject to the
provisions of Clause 17 of the Priorities and
Indemnities Agreement and of Clause 18.2 such
refunding shall be applied to the outstanding
<PAGE>
installments of the credits in the reverse order
of their maturity together with all interest
accrued thereon provided that any such refunding
shall reduce the amount outstanding under each
tranche of each of the Credits by the same
percentage.
5.4.6 If at any time there occurs an Acceleration Event,
then the Agent shall be entitled without having to
resort to any legal procedure whatsoever to demand
immediate prepayment of the Credits, whereupon the
same shall become immediately due and payable
together with all interest accrued thereon and
other amounts due and payable to the Lenders
and/or the Representatives under any provision of
this Facility Agreement and/or any of the other
Operative Documents and all amounts which any
Lender certifies to be necessary to compensate it
for any Losses and/or Expenses reasonably suffered
or incurred by it together with broken funding
costs in relation to any interest exchange or
other hedging arrangements entered into in
connection with its participation in the Credits
or any part thereof including those incurred in
liquidating deposits or re-employing funds taken
or borrowed (whether in Dollars or any other
currency) in connection with the Credits ("Broken
Funding Costs") and for the account of the British
Lenders, the French Lenders and the German
Lenders, such amounts as any such Lender may
certify as necessary to compensate it for all
credit insurance premiums, liabilities and Losses
incurred by it directly to the relevant Export
Credit Agency as a result of such prepayment and
the Agent and/or the Security Agent may at any
time thereafter enforce its rights and those of
the Lenders under all or any of the relevant
Aircraft Security Documents or under applicable
law.
5.4.7 In the case of any prepayment whether under
Clauses 5.4.3, 5.4.5, or 5.4.6 or under any other
provision of this Facility Agreement or, as the
case may be, the Priorities and Indemnities
Agreement (other than any voluntary prepayment by
the Borrower or any prepayment which arises as a
result of the occurrence of an Acceleration Event
or as a result of any other breach or default by
the Borrower and/or any of the Obligors of any of
their respective obligations under any of the
Facility Documents and/or any of the Operative
Documents):-
(a) such Broken Funding Costs as relate to the funding
of Tranche 2 of the Credits shall be calculated
without reference to any profit being comprised
therein and on the basis of the amount by which:-
(i) an amount equal to interest on the amount of
the relevant prepayment at LIBOR for the
Interest Period in which the prepayment was
made, for a period from and including the
date of prepayment to but excluding the last
day of the Interest Period in which the
prepayment was made,
would exceed:-
<PAGE>
(ii) the amount of interest which, in the bona
fide opinion of each Lender, would have been
payable to that Lender on the last day of the
Interest Period in which the relevant
prepayment was made in respect of a deposit
in an amount substantially equal to the
amount of the relevant prepayment placed by
that Lender with a prime bank in the London
Interbank Euro Currency Market on the date on
which the prepayment was made for a period
from and including the date on which the
prepayment was made to but excluding the last
day of the Interest Period in which the
prepayment was made;
(b) if the Agent (acting upon the instructions of the
Majority Lenders) so agrees, then at the request
of the Borrower or the relevant Lessee, the
Interest Periods for the period from the date of
the relevant event which gives rise to the
requirement or, as the case may be, request for
prepayment until the date of actual prepayment may
be adjusted to such length as may be agreed from
time to time between the Agent (acting upon the
instructions of the Majority Lenders), the
Borrower and the relevant Lessee.
5.4.8 In the case of any prepayment whether under
Clauses 5.4.3, 5.4.5 or 5.4.6 or under any other
provision of this Facility Agreement or, as the
case may be, the Priorities and Indemnities
Agreement, the Borrower shall pay to the Agent for
the account of the British Lenders, the French
Lenders and the German Lenders respectively such
amounts as any such Lender may certify as
necessary to compensate it for all credit
insurance premiums, liabilities and Losses
incurred by it directly to the relevant Export
Credit Agency as a result of such prepayment.
5.5 OVERDUE PAYMENTS AND INDEMNIFICATION
5.5.1 If the Borrower fails to pay on the due date any
sum payable to a Lender and/or the Agent and/or
the Security Agent under any Facility Document or
any Aircraft Operative Document (or fails to pay
on demand any sum which is expressed to be payable
on demand) in connection with the Credits the
Borrower shall pay interest to the Agent for the
account of the relevant Lender and/or, as the case
may be, the Agent and/or the Security Agent on
such unpaid amount from (and including) the due
date or, as the case may be, the date of demand to
(but excluding) the date of actual payment (after
as well as before judgement) at the Default Rate
for each Default Interest Period.
5.5.2 Interest at the Default Rate for each Default
Interest Period shall be calculated on the basis
of a year of three hundred and sixty (360) days
and the actual number of days elapsed and shall
accrue from day to day and be due and payable on
the last day of each Default Interest Period and,
if not paid, shall, to the extent permitted by
applicable law, be compounded on such date.
5.5.3 The payment of interest by the Borrower pursuant
<PAGE>
to the foregoing provisions of this Clause 5.5
shall in no way prejudice or preclude any of the
Lenders and/or either of the Representatives from
making any other claims or pursuing any other
rights and remedies that may be available to them
as a matter of law in the circumstances
contemplated by Clause 5.5.1.
5.6 TAXES
5.6.1 All sums payable to the Agent, the Security Agent
and/or any of the Lenders pursuant to or in
connection with the Credits pursuant to any of the
Facility Documents and/or any of the Aircraft
Operative Documents shall be paid in full (i)
without any set-off or counterclaim whatsoever and
(ii) free and clear of all deductions or
withholdings of or on account of Tax whatsoever
save only as may be required by law.
5.6.2 If any deduction or withholding is required by law
in respect of any payment due (other than payments
covered by Clause 5.6.3) to the Agent, the
Security Agent, any Lender or any of the Export
Credit Agencies pursuant to or in connection with
the Credits pursuant to any of the Facility
Documents or any of the Aircraft Operative
Documents and/or any of the Support Agreements,
the Borrower shall:-
(a) if the payment is to be made by the Borrower
ensure or procure that the deduction or
withholding is made and that it does not exceed
the minimum legal requirement therefor;
(b) if the payment is to be made by the Borrower pay,
or procure the payment of, the full amount
deducted or withheld to the relevant Taxation or
other authority in accordance with the applicable
law;
(c) if the payment is to be made by the Borrower,
increase the payment in respect of which the
deduction or withholding is required so that
(subject to Clause 5.6.4) the net amount received
by the Representatives and/or (as the case may be)
the Lenders after the deduction or withholding
(and after taking account of any further deduction
or withholding which is required to be made as a
consequence of the increase) shall be equal to the
amount which the Representatives and/or the
Lenders would have been entitled to receive in the
absence of any requirement to make a deduction or
withholding;
(d) if the payment is to be made by any person other
than the Borrower, pay (subject to Clause 5.6.4)
directly to the Agent for the account of the
relevant Representative and/or (as the case may
be) the relevant Lender and/or (as the case may
be) the relevant Export Credit Agency such sum
(a "compensating sum") as will, after taking into
account any deduction or withholding which the
payer is obliged to make from the compensating
sum, enable the relevant Representative and/or the
relevant Lender and/or the relevant Export Credit
Agency to receive, on the due date for payment, a
<PAGE>
net sum equal to the sum which the relevant
Representative and/or the relevant Lenders and/or
the relevant Export Credit Agency would have
received in the absence of any obligation of any
party to make a deduction or withholding; and
(e) if the payment is to be made by the Borrower,
promptly deliver, or procure the delivery, to
the Agent of appropriate receipts evidencing the
deduction or withholding which has been made.
5.6.3 To the extent that the Agent or Security Agent is
obliged to make any deduction or withholding from
any payment to a Lender (an "agency payment")
which relates to an amount or amounts received by
the Agent or the Security Agent from the Borrower
for the account of that Lender in connection with
the Credits pursuant to this Facility Agreement or
any of the Aircraft Operative Documents, the
Borrower shall, subject to Clause 5.6.4, pay
directly to the Lender such sum (a "compensating
sum") as will, after taking into account any
deduction or withholding which the Borrower is
obliged to make from the compensating sum, enable
the Lender to receive, on the due date for payment
of the agency payment, an amount equal to the
agency payment which the Lender would have
received in the absence of any obligation of any
party to make a deduction or withholding.
5.6.4 The Borrower shall not be obliged to make payment
to an Indemnitee pursuant to Clauses 5.6.2 and
5.6.3, against any Taxes or Tax Liability to the
extent that such Taxes or Tax Liability:-
(a) arises from any action or omission which
constitutes wilful misconduct, fraud or
gross negligence thereof on the part of
such Indemnitee;
(b) would not have been incurred if such Indemnitee
had not been in breach of its respective
representations or warranties under any of the
Facility Documents and/or any of the Operative
Documents, or had not failed in the observance
and performance of its express obligations under
any of the Facility Documents and/or any of the
Operative Documents (but excluding any such breach
or failure in consequence (directly or indirectly)
of a failure by the Borrower and/or any of the
Obligors duly and punctually to perform any of
their respective obligations under any of the
Facility Documents and/or any of the Operative
Documents or in consequence of any event or
circumstance outside the reasonable control of
such Indemnitee);
(c) comprises Corporation Tax on the overall net
income, profit or capital gains of any
Indemnitee (or, in the case of any Indemnitee
acting through a branch outside the main
jurisdiction in which it is resident for Tax
purposes comprises Corporation Tax on the
overall net income, profit or capital
gains of that Indemnitee in the jurisdiction
to which that Indemnitee's interest in the
Transaction is properly attributable for Tax
<PAGE>
purposes) attributable to any sums receivable by
any Indemnitee (other than any payment by way of
indemnity) under any payment obligations contained
in any of the Facility Documents or Operative
Documents (including the payment due from the
relevant Option Holder under Clause 19.3 of the
Lease Agreement);
(d) comprises any penalties, additions to Tax, fines
or interest on or in respect of Taxes or Tax
Liabilities which would not have arisen but for
avoidable delay of or failure by such Indemnitee
in the filing of Tax returns which such Indemnitee
was obliged to file by any law of the jurisdiction
of incorporation or, in the case of a Lender, the
jurisdiction in which its Lending Office is
located, and which such Indemnitee ought
reasonably to have been aware it was so obliged
to file in connection with the Transaction or the
payment of Taxes other than any such delay or
failure in consequence (directly or indirectly) of
a request by the Borrower and/or any of the
Obligors or a delay of or failure by the Borrower
and/or any of the Obligors duly and punctually to
perform any of their respective obligations under
any of the Facility Documents and/or any of the
Operative Documents or in consequence of any event
or circumstance outside the reasonable control of
such Indemnitee or otherwise caused (directly or
indirectly) by the Borrower and/or any of the
Obligors;
(e) is imposed by a jurisdiction other than the main
jurisdiction in which such Indemnitee is resident
for Tax purposes to the extent that it gives rise
to a corresponding credit which such Indemnitee
has retained and utilised against any Tax
Liability imposed in the main jurisdiction in
which such Indemnitee is so resident;
(f) arises as a result of the Borrower being at any
time a company "controlled by persons resident
in the United Kingdom" within the meaning of
Section 747 of the Income and Corporation Taxes
Act 1988 or being deemed to be controlled in the
United Kingdom for the purposes of any legislation
amending, supplementing or replacing the
provisions of Chapter IV of Part XVII of the said
Act and such control or deemed control is properly
referable to the aggregate interest of the
Lenders (including for the avoidance of doubt,
assignees, transferees and successors in title
of Lenders) who are either resident in the
United Kingdom for United Kingdom Tax purposes
or controlled by persons who are so resident
(the "UK Lenders"), being such as to entitle
the UK Lenders in the event of winding-up of
the Borrower or in any other circumstances to
receive fifty per cent. (50%) or more of the
assets of the Borrower which would then be
available for distribution among the
participators (as defined in Section 417 of the
said Act) (but excluding any circumstances in
which Section 747 of the said Act applies or
deemed control arises (i) in consequence of any
event or circumstance outside the reasonable
control of the relevant Indemnitee or (ii) as a
<PAGE>
result of any transfer or assignment pursuant to
Clause 5.5.2 or Clause 13 or in the circumstances
described in the proviso to Clause 24.3 of the
Priorities and Indemnities Agreement or (iii) as
a result of any transfer or assignment which is
required by any of the Export Credit Agencies or
(iv) as a result of any transfer or assignment
which takes place at the request of the Borrower
and/or any of the Obligors or (v) as a result of
any transfer or assignment which is not undertaken
voluntarily (and for the avoidance of doubt, the
provisions concerning a voluntary transfer set out
in Clause 29.8 of the Priorities and Indemnities
Agreement shall apply for the purposes of this
Clause 5.6.4(f)); or
(g) would not have arisen but for:-
(i) any failure by such Indemnitee to file any
relevant Tax return or Tax computation
which such Indemnitee was obliged to file
by any law of the jurisdiction of incorporation
or, in the case of a Lender, the jurisdiction
in which its Lending Office is located or any
documents which such Lender is obliged to
file as a result of any applicable law,
regulation, practice, concession, official
directive, ruling, request, notice,
guideline, statement of policy or practice
statement by the Bank of England, the Banque
de France, the Deutsche Bundesbank, the
Federal Reserve Bank of New York, the
European Union or any central bank, Tax,
fiscal, governmental, local, international,
national or other competent authority or
agency (whether or not having the force of
law but in respect of which compliance by
banks or other financial institutions or
other persons in the relevant jurisdiction
is customary) and in each case which such
Indemnitee ought reasonably to have been
aware it was so obliged to file in connection
with the Transaction except for any such
failure caused (directly or indirectly) by
(1) any action or inaction of the Borrower
and/or any of the Obligors or (2) any event
or circumstance outside the reasonable
control of such Indemnitee; or
(ii) any failure (subject to the same exceptions
and exclusions as set out in Clause
5.6.4(g)(i)) to file or provide the Borrower
or the relevant Lessee with any Tax claims,
forms, affidavits, declarations or other
like documents which the Borrower or the
relevant Lessee has reasonably requested
such Indemnitee in writing to file or provide
(any such request containing sufficient detail
to enable such Indemnitee to comply with the
terms thereof) unless such Indemnitee
determines acting in good faith but
nevertheless in its sole discretion that it
is unable to file or provide or that it
would be illegal or contrary to any applicable
law, official regulation, practice, concession,
directive, ruling, request, notice,
guideline, statement of policy or practice
<PAGE>
statement by the Bank of England, the
Banque de France, the Deutsche Bundesbank,
the Federal Reserve Bank of New York, the
European Union or any central bank, Tax,
fiscal, governmental, local, international,
national or other competent authority or
agency (whether or not having the force of
law but in respect of which compliance by
banks or other financial institutions or
other persons in the relevant jurisdiction is
customary) for such Indemnitee so to do or so
to do would or may result in the breach of
any agreement or confidentiality undertaking
or the disclosure of any information about
such Indemnitee's Tax affairs which such
Indemnitee considers (in its bona fide
opinion) to be of a confidential nature.
5.6.5 If a Lender or Representative determines, in its
absolute discretion, that it has received,
realised, utilised and retained a Tax benefit by
reason of any deduction or withholding in respect
of which the Borrower has made an increased
payment or paid a compensating sum under this
Clause 5.6, such Lender or Representative shall,
provided it has received all amounts which are
then due and payable by the Borrower, and/or each
of the Obligors under any of the provisions of the
Facility Documents and the Operative Documents or,
to the extent that the Tax benefit exceeds the
amounts then due and payable, has set-off such
amounts against the Tax benefit, pay to the
Borrower (to the extent that the Lender or
Representative can do so without prejudicing the
amount of such benefit or repayment and the right
of such Lender or Representative to obtain any
other benefit, relief or allowance which may be
available to it) such amount, if any, as such
Lender or Representative in its bona fide opinion
shall determine will leave such Lender or
Representative in no worse position than such
Lender or Representative would have been in if the
deduction or withholding had not been required
(and taking into account any set-off as referred
to above) PROVIDED THAT:-
(i) no Lender or Representative shall be under any
obligation to pay any amount under this Clause
5.6.5 to the extent that it is under an
obligation to make a payment in respect of
the same Tax benefit to any Lessee under
Clause 5.4 of the Priorities and Indemnities
Agreement;
(ii) each Lender and Representative shall have an
absolute discretion as to the time at which and
the order and manner in which it realises or
utilises any Tax benefit and shall not be
obliged to arrange its business or its Tax
affairs in any particular way in order to be
eligible for any Tax benefit;
(iii) no Lender or Representative shall be obliged
to disclose any information regarding its
business, Tax affairs or Tax computations;
(iv) if any Lender or Representative has made a
<PAGE>
payment to the Borrower pursuant to this
Clause 5.6.5 on account of any Tax benefit
and it subsequently transpires that such
Lender or Representative did not receive
that Tax benefit, or received a lesser
Tax benefit or has lost or been denied such
Tax benefit, the Borrower shall pay on written
demand to such Lender or Representative such
sum as such Lender or Representative may
determine as being necessary to restore the
after-Tax position of the Lender or
Representative to that which it would
have been had no adjustment under this proviso
(iv) been necessary; and
(v) the Lender or Representative shall not be
obliged to make any payment under this
Clause 5.6 if, by doing so, it would contravene
the terms of any applicable law or any notice,
direction or requirement of any governmental
or regulatory authority (whether or not having
the force of law but in respect of which
compliance by banks or other financial
institutions or other persons in the relevant
jurisdiction is generally customary).
5.6.6 If circumstances arise which would be likely to,
or would be likely upon the giving of a notice or
with the lapse of time or both, to result in (i)
the Borrower making a payment to any Lender or
either of the Representatives under any provisions
of this Clause 5.6, or (ii) an increase in the
amount of any payment to be made by the Borrower
to any Lender or either of the Representatives
under any provisions of this Clause 5.6, then the
provisions of Clause 13 of the Priorities and
Indemnities Agreement shall apply.
5.6.7 If:-
(a) pursuant to any Lease Agreement, the Borrower
receives any Relevant Lease Payment and the same
is to be applied by the Borrower in funding a
portion or all of any payments to be made by the
Borrower in connection with the Credits pursuant
to this Facility Agreement (each such payment
being a "Relevant Loan Payment"); and
(b) by virtue of any applicable law the Borrower is
required to deduct or withhold Taxes in respect of
the Relevant Loan Payment and the amount of the
Relevant Lease payment is in an amount
insufficient to enable the Borrower both to
satisfy all of its corresponding obligations in
relation to the Relevant Loan Payment and its
liability to the relevant Taxation authorities in
accounting for such deduction or withholding
required to be made in respect of Taxes pursuant
to this Clause 5.6,
then the Borrower shall pay the Relevant Loan Payment
in accordance with this Facility Agreement and in the
event that by the date occurring seven (7) Business
Days prior to the latest date upon which the Borrower
is required to account to the relevant Tax authorities
in respect of such deduction or withholding (the
"Latest Date"), the Borrower shall not have received a
<PAGE>
payment from the relevant Lessee in an amount
sufficient to enable the Borrower to satisfy the
Borrower's liability to the relevant Taxation
authorities in relation to such deduction or
withholding, each Lender shall not less than three (3)
Business Days prior to the Latest Date pay to the
Borrower such proportion of that amount which is
sufficient to enable the Borrower to satisfy such
liability as is equivalent to the proportion which that
Lender's relevant proportion bears to the Credits,
PROVIDED THAT no Lender shall be obliged to pay to the
Borrower any amount in excess of the amount required to
be deducted or withheld by the Borrower on account of
Taxes in respect of such part of the Relevant Loan
Payment as is actually received by or on behalf of such
Lender.
5.7 CURRENCY
All payments to the Agent, the Security Agent and/or the
Lenders in connection with the Credits under this Facility
Agreement or any of the Aircraft Operative Documents shall,
unless otherwise provided (either in this Facility Agreement
or in any notice, demand or other document issued pursuant
to or in connection with this Facility Agreement) be
effected to the Agent (where appropriate, for the account of
the relevant Lender) in Dollars.
5.8 PERFORMANCE PROCEDURE
5.8.1 On each date on which an amount is due in Dollars
from the Borrower in connection with the Credits
pursuant to this Facility Agreement or any of the
Aircraft Operative Documents, the Borrower shall
before 12.00 noon (New York time) on such due date
make the same available to the Agent by payment in
Dollars in same day funds (or such other funds as
may from time to time be customary for the
settlement in New York City of international
banking transactions in Dollars) to the Agent's
account with National Westminster Bank Plc (New
York Branch), 175 Water Street, New York, NY
10038, USA (or to such other account in New York
City as the Agent may upon not less than five (5)
Banking Days' written notice from time to time
designate) or, if the payment is to be made in a
currency other than Dollars, to such account or
accounts as may from time to time be nominated in
writing by the Agent by not less than five (5)
Banking Days' notice.
5.8.2 Upon receipt by the Agent of an amount referred to
in Clause 5.8.1 the Agent shall if such amount is
received prior to 12.00 noon (local time) on the
due date make available on such due date (and
otherwise on the next Banking Day) to each Lead
Manager (or, in the case of the German Lenders, to
Hypolux) such portion of the amounts so made
available to the Agent as represents the aggregate
of the entitlement of the British Lenders or, as
the case may be the French Lenders or, as the case
may be, the German Lenders of such amounts in
Dollars (or in the relevant other currency) in
such funds as are received by the Agent to the
Accounts referred to in Clauses 5.8.4, 5.8.5 and
5.8.6 respectively.
<PAGE>
5.8.3 Without prejudice to the provisions of Clause
5.8.2, the Agent shall not be obliged to make
available to any Lead Manager (or, in the case of
the German Lenders, Hypolux) or any Lender any sum
which it is expecting to receive for the account
of such Lead Manager (or, in the case of the
German Lenders, Hypolux) or such Lender in
connection with the Credits pursuant to this
Facility Agreement or any of the Aircraft
Operative Documents until it has been able to
establish that it has received that sum from the
Borrower. If and to the extent that it does make
available or make payment of any sum as aforesaid
but it transpires that it had not then received
the sum which it made available or paid out:-
(a) the relevant Lead Manager (or, in the case of the
German Lenders, Hypolux) shall on request refund
or, as the case may be, reimburse such sum to the
Agent; and
(b) the relevant Lead Manager (or, in the case of the
German Lenders, Hypolux) shall on request pay to
the Agent the amount (as certified by the Agent)
which will indemnify the Agent against any funding
or other cost, loss, expense or liability as a
result of making available or paying out that sum
before receiving it; and
(c) each relevant Lender shall indemnify the relevant
Lead Manager (or, in the case of the German
Lenders, Hypolux) in respect of such proportion of
the amounts referred to in paragraphs (a) and (b)
above (if any) as relates to such Lender.
5.8.4 All payments for the account of the British
Lenders to be made by the Agent shall remain in
the account referred to in Clause 5.8.1 (for
disbursement to the British Lenders).
5.8.5 All payments for the account of the German Lenders
to be made by the Agent shall be made by payment
in Dollars in same day funds to the Dollar Account
no. 001-1-329026 of Hypolux with Chase Manhattan
1, Chase Manhattan Plaza, New York, N.Y. 10081
quoting the reference "Airbus/Export Finance-ILFC
95" or, if the payment is to be made in a currency
other than Dollars, to such account or accounts as
may from time to time be nominated to the Agent in
writing by Hypolux by not less than five (5)
Banking Days' notice. A facsimile advice
confirming that such payment instructions have
been given shall be despatched to Hypolux".
5.8.6 All payments for the account of the French Lenders
to be made by the Agent shall be made by payment
in Dollars in same day funds to the Dollar account
of Banque Paribas with Bankers Trust Co., 280 Park
Avenue, New York 10015, New York Account number
04003399, quoting the reference "378-ref
ILFC/Encore Leasing Limited Loan Supplement No.
[ ] dated [ ] 199 Aircraft MSN
[ ]" or, if the payment is to be made in a
currency other than Dollars, to such account or
accounts as may from time to time be nominated to
the Agent in writing by the French Lead Manager by
not less than five (5) Banking Days' notice. A
<PAGE>
facsimile advice confirming that such payment
instructions have been given shall be despatched
to Banque Paribas at its Paris facsimile number 33
1 42 98 11 28 quoting the reference "Department
no. 378, ILFC/Encore Leasing Limited Loan
Supplement No. [ ] dated [ ] 199
Aircraft MSN [ ]".
5.8.7 If any amount falls due to be paid to the Agent or
any of the Lenders in connection with the Credits
under this Facility Agreement or any of the
Aircraft Operative Documents on a day which is not
a Banking Day, then it shall be due and payable on
the immediately succeeding Banking Day unless the
immediately succeeding Banking Day falls in the
next month when the same shall be due and payable
on the immediately preceding Banking Day and the
amount shall not be adjusted.
5.9 APPLICATION OF SUMS RECEIVED BY THE LENDERS
All sums received by any Lender or by the Agent or the
Security Agent being an amount equal to Total Loss Proceeds,
Requisition Proceeds, Final Disposition Proceeds, Aircraft
Proceeds or Insurance Proceeds in respect of the Aircraft
shall be applied by such Lender or the Agent or the Security
Agent (as the case may be) in accordance with the provisions
of the Clause 17 of the Priorities and Indemnities
Agreement.
5.10 INDEMNITIES
5.10.1 The Borrower agrees to pay, assume liability for,
and indemnify, protect, defend, save and keep
harmless the Security Agent, the Agent and each of
the Lenders and its and their respective servants,
agents, employees, directors and officers (each an
"Indemnitee") from and against all Losses
(excluding all Taxes) and/or Expenses which may
from time to time be imposed on, incurred or
suffered by or asserted against or required to be
made by any Indemnitee (whether or not any such
Loss and/or Expense is also indemnified or insured
against by any other person) resulting from the
financing by the Lenders of the Borrower's
acquisition and ownership of the Aircraft or from
the leasing by the Borrower to the relevant Lessee
of, or the leasing by the relevant Lessee to any
person of, the Aircraft, the Airframe, any Engine
or any Part, or in connection with or arising
directly or indirectly out of or in any way
connected with the manufacture, acceptance,
purchase, delivery, any delay in or postponement
of delivery, non-delivery, ownership, possession,
charter, use, presence, operation, condition,
storage, packing, freight, shipping,
transportation, modification, alteration,
maintenance, insurance, overhaul, replacement,
refurbishment, remarketing, management, sale,
registration, de-registration, redelivery,
servicing or repair of the Aircraft, the Airframe,
any Engine or any Part or in connection with or
arising from any Indemnitee being a mortgagee of
or having or being deemed to have any interest
(whether as security or otherwise) in all or any
part of the Aircraft, the Airframe, any Engine or
any Part, whether or not such claim may be
<PAGE>
attributable to any defect in the Aircraft, the
Airframe, any Engine or any Part and regardless of
when the same shall arise and whether or not the
Aircraft is in the possession or control of the
Borrower, any Lessee, any Additional Lessee, the
Guarantor or any Approved Sub-Lessee.
5.10.2 If
(a) the Delivery Date is postponed or cancelled for
any reason whatsoever; or
(b) the Aircraft shall not have been delivered on the
Delivery Date to the Borrower and accepted by the
relevant Lessee pursuant to the Lease Agreement as
a result of any of the conditions set forth in
Schedule 4 to the Lease Agreement not being
fulfilled to the satisfaction of or waived by
the Borrower,
then the Borrower shall reimburse, indemnify and hold
harmless each of the Security Agent, the Agent and
each of the Lenders for, against and from all or any
Losses (excluding all Taxes) and/or Expenses which
the Security Agent, the Agent or the Lenders or any
of them respectively may suffer, sustain or incur as a
consequence thereof (and, in the case of postponement,
as a consequence of remaining in readiness for and
acting in accordance with such postponed Delivery
Date) in respect of funds borrowed or mobilised by the
Security Agent, the Agent or the Lenders, or any of
them, respectively in connection with the purchase or
sale of the Aircraft and/or the financing or funding
of the Credits, the liquidation or redeployment of
any deposits taken or made and/or funding costs in
relation to any interest exchange or other hedging
arrangements entered into in connection with its
participation in the Credits or any part thereof
and/or in connection with any foreign exchange
business transacted for such purpose, the substitute
investment (for the then current Interest Period) of
such funds with a return lower than the cost of such
funds and/or the prepayment of such funds to the
source from which they were borrowed or mobilised and
reasonable legal or other fees and out-of-pocket
Expenses arising in connection therewith. If the
Delivery Date is postponed or cancelled solely due to
reasons within the control of the Borrower and/or any
of the Obligors, then in addition to the foregoing the
Borrower shall indemnify each of the Security Agent,
the Agent and the Lenders in respect of the loss of
use of funds borrowed or mobilised as aforesaid. In
each case, such reimbursement, indemnification and
holding harmless shall be made by the Borrower paying
each of the Security Agent, the Agent and the Lenders
on its first demand all amounts certified thereby as
necessary so as to reimburse, indemnify and/or hold
harmless the Security Agent, the Agent or any of the
Lenders, as the case may be,
PROVIDED ALWAYS THAT each of the Lenders agrees to
maintain the availability of the funds to make the
Credits for up to five (5) Business Days after the
proposed Drawdown Date specified in the Notice of
Drawdown if the proposed Drawdown Date has been
delayed as a result of a delay in the delivery of the
Aircraft by the Seller (provided that such delay has
<PAGE>
not been caused by any breach or by default of the
Borrower and/or any of the Obligors and/or an Approved
Sub-Lessee) in relation to the Purchase Agreement
and/or any of the Facility Documents and/or any of the
other Aircraft Operative Documents. In those
circumstances, then in respect of such five (5)
Business Day period, the provisions of this Clause
5.10.2 shall not apply, PROVIDED ALWAYS THAT the
Borrower shall be liable to pay interest upon the
amount of the Credits from the Drawdown Date proposed
in the Notice of Drawdown at the rates specified in
and otherwise in accordance with the terms of, Clause
5.3 until the date of actual drawdown and all other
provisions of the Facility Documents and the Aircraft
Operative Documents shall continue in full force and
effect in relation to the Credits.
5.10.3 The Borrower agrees to indemnify the Security
Agent, the Agent and each Lender against, and to
pay promptly on demand to the Security Agent, the
Agent or any Lender from time to time, all amounts
which the Security Agent, the Agent or such Lender
certifies to be necessary to compensate it for any
Losses (excluding all Taxes) and/or Expenses
suffered or incurred by it together with any
broken funding costs in relation to any interest
exchange or other hedging arrangements entered
into in connection with its participation in the
Credits or any part thereof and including those
incurred in liquidating deposits, re-employing
funds taken or borrowed (whether in Dollars or any
other currency) in connection with the Credits)
and for the account of the British Lenders, the
French Lenders and the German Lenders, such
amounts as any such Lender may certify as
necessary to compensate it for all credit
insurance premiums, liabilities and losses
incurred by it directly to the relevant Export
Credit Agency as a result of prepayment which the
Security Agent, the Agent or any of the Lenders
may sustain or incur as a consequence of or in
connection with:-
(i) any default in punctual payment by the Borrower
and/or any of the Obligors to any person of any
sums payable by any of the Obligors under any of
the Aircraft Operative Documents to which any of
the Obligors is a party;
(ii) any default in punctual performance by the
Borrower and/or any of the Obligors of any
other obligation owed to any person under any
of the Aircraft Operative Documents to which
any of the Obligors is a party;
(iii) any misrepresentation by the Borrower and/or
any of the Obligors under any of the Aircraft
Operative Documents to which any of the
Obligors is a party;
(iv) the occurrence or continuance of any
Cancellation Event, Termination Event,
Mandatory Prepayment Event or Loan Event of
Termination;
(v) the occurrence or continuance of any event as a
result of which the Termination Sum under the
<PAGE>
Lease Agreement becomes due and payable;
(vi) any prepayment of the Credits or any part
thereof or any interest accrued thereon;
(vii) suing for or recovering any sum properly due
under any Facility Document or any Aircraft
Operative Document or in contemplation of or
otherwise preserving or enforcing (or
attempting to preserve or enforce) its rights
under any Facility Document or any Aircraft
Operative Document including without
limitation any action to recover possession
of the Aircraft or any part thereof whether
or not such action proceeds to judgment.
5.10.4 The Indemnities contained in Clauses 5.10.1,
5.10.2 and 5.10.3 shall not extend to any Losses
and/or Expenses of any Indemnitee to the extent
that such Losses and/or Expenses:-
(a) are caused by the wilful misconduct, fraud or
gross negligence on the part of such Indemnitee;
(b) are Losses and/or Expenses for which such
Indemnitee has received and is entitled to retain
an indemnity payment pursuant to other provisions
of this Facility Agreement or any other Facility
Document or any Operative Document;
(c) are required to be paid or borne by such
Indemnitee pursuant to the terms of any Facility
Document or any Operative Document;
(d) would not have been incurred if such Indemnitee
had not been in breach of its respective
representations or warranties under any of the
Facility Documents or any of the Operative
Documents, or had not failed in the observance
and performance of its obligations under any of
the Facility Documents or any of the Operative
Documents (but excluding any such breach or
failure in consequence (directly or indirectly)
of a failure by the Borrower and/or any of the
Obligors duly and punctually to perform any of
their respective obligations under any of the
Facility Documents or any of the Operative
Documents or in consequence of any event or
circumstance outside the reasonable control of
such Indemnitee).
5.10.5 Payments by way of indemnity under this Clause
5.10 shall be made in the currency of the Loss
and/or Expense which gave rise to the obligation
to indemnify.
5.10.6 Any amount received or recovered by the Agent, the
Security Agent and/or any Lender, as the case may
be, in respect of any monies or liabilities due,
arising or incurred by the Borrower or any other
person to such party under any of the Facility
Documents or any of the Operative Documents
(whether as a result of any judgment or order of
any court (including enforcement thereof) or in
the bankruptcy, reorganisation, liquidation or
dissolution of any of the Borrower or any other
person (including making or filing a claim or
<PAGE>
proof against the Borrower or any other person) or
by way of damages for any breach of any obligation
to make any payment to such Agent, Security Agent
or Lender) in a currency (the "Currency of
Payment") other than the Currency in which the
payment should have been made pursuant to the
relevant Facility Document or the relevant
Operative Document (the "Currency of Obligation")
in whatever circumstances and for whatever reason
shall only constitute a discharge to the Borrower
to the extent of the amount of the Currency of
Obligation which such Agent, Security Agent or
Lender, as the case may be, is able or would have
been able, on the date or dates of receipt by it
of such payment or payments in the Currency of
Payment (or, in the case of any such date which is
not a Banking Day, on the next succeeding Banking
Day), to purchase in the foreign exchange market
of its choice with the amount or amounts of the
Currency of Payment so received.
5.10.7 If the amount of the Currency of Obligation which
the Agent, the Security Agent or the Lender is so
able to purchase falls short of the amount
originally due to such party hereunder, the
Borrower shall indemnify and hold harmless such
party on demand against and from any loss or
damage arising as a result of paying to such party
that amount in the Currency of Obligation
certified by such party as necessary to indemnify
and hold it harmless.
5.10.8 Where under any provision of any of the Facility
Documents or any of the Operative Documents the
Borrower has an obligation to indemnify or
reimburse any of the Lenders or the
Representatives in respect of any Loss, Expense or
payment, the calculation of the amount payable by
way of indemnity or reimbursement shall be based
upon the likely Tax treatment in the hands of the
Lender or the Representative (as determined by the
Lender or the Representative in its bona fide
opinion) of the amount payable by way of indemnity
or reimbursement and of the Loss, Expense or
payment in respect of which that amount is payable
so as to leave the Lender or the Representative in
the same after-Tax position (the "After-Tax
Neutral Position") as it would have been in had
the payment made to the Lender or the
Representative not given rise to a Tax Liability
and had the Loss or Expense incurred or payment
made by the Lender or the Representative not been
deductible in the Accounting Period in which that
Loss, Expense or payment was incurred or made.
5.10.9 If a Lender or, as the case may be, Representative
determines, in its bona fide opinion, that as a
result of the application of Clause 5.10.8, it has
received and retained an amount in excess of that
required to preserve its After-Tax Neutral
Position, such Lender or, as the case may be,
Representative shall, provided it has received all
amounts which are then due and payable by each of
the Obligors under any of the provisions of the
Facility Documents and of the Operative Documents,
pay to the Borrower (to the extent that the Lender
or, as the case may be, Representative can do so
<PAGE>
without prejudicing its After-Tax Neutral Position
and the right of such Lender or, as the case may
be, Representative to obtain any other benefit,
relief or allowance which may be available to it)
such amount, if any, as such Lender or, as the
case may be, Representative in its absolute
discretion shall determine will restore such
Lender's or, as the case may be, Representative's
After-Tax Neutral Position PROVIDED THAT:-
(i) no Lender or Representative shall be under any
obligation to pay any amount under this Clause
5.10.9 to the extent that it is under an
obligation to make a payment in respect of the
same Tax benefit to the relevant Lessee under
Clause 12.2 of the Priorities and Indemnities
Agreement;
(ii) each Lender and Representative shall have an
absolute discretion as to the time at which
and the order and manner in which it realises
or utilises any Tax benefit and shall not be
obliged to arrange its business or its Tax
affairs in any particular way in order to be
eligible for any Tax benefit;
(iii) each Lender and Representative shall not be
obliged to disclose any information regarding
its business, Tax affairs or Tax
computations;
(iv) if any Lender or Representative has made a
payment to the Borrower pursuant to this
Clause 5.10.9 to restore that person's After-
Tax Neutral Position and it subsequently
transpires that the After-Tax Neutral
Position of such Lender or Representative was
not so restored, the Borrower shall pay on
demand to such Lender or Representative such
sum as such Lender or Representative may
determine as being necessary to restore the
After-Tax Neutral Position of the Lender or
Representative to that which it would have
been had no adjustment under this proviso
(iv) been necessary; and
(v) the Lender or Representative shall not be obliged
to make any payment under this Clause 5.10.9 if,
by doing so, it would contravene the terms of
any applicable law or any notice, direction or
requirement of any governmental or regulatory
authority (whether or not having the force of
law but in respect of which compliance by banks
or other financial institutions or other persons
in the relevant jurisdictions is generally
customary).
5.11 CHANGE IN CIRCUMSTANCES
5.11.1 If a Change in Law shall:-
(i) subject any of the Lenders or either of the
Representatives to any Tax Liability in
connection with its commitment to or
participation in the Transaction or any
part thereof other than Tax on its overall
net income; or
<PAGE>
(ii) change the basis or timing of Taxation of any
of the Lenders or either of the
Representatives in respect of payments of
principal, interest or any other amount paid,
payable or to become payable in connection
with the Transaction (or the treatment for
Taxation purposes of such payments); or
(iii) change the basis on which any of the Lenders
or either of the Representatives is treated
for Taxation purposes in respect of any
principal, interest or other amounts payable
by any of the Lenders or either of the
Representatives on, or otherwise in respect
of, deposits and other loans from third
parties used to effect or maintain its
commitment to or participation in the
Transaction or any Facility Document or
Operative Document; or
(iv) impose, modify or deem applicable any
reserve, cash ratio, special deposit, capital
adequacy, and/or liquidity requirement or any
other analogous requirement, or require the
making of any special deposits, against or in
respect of any assets or liabilities of,
deposits with or for the account of, or loans
or Commitments by, any of the Lenders or
either of the Representatives to its assets
and/or obligations any Facility Document or
Operative Documents or in relation to the
Transaction; or
(v) change the manner in which any of the Lenders or
either of the Representatives is required by any
regulatory authority to allocate capital
resources to its assets and/or obligations
under or in relation to the Transaction; or
(vi) impose on any of the Lenders or either of the
Representatives any other condition directly
affecting its Participation in, or Commitment
in respect of, the Transaction;
and the result of any of the foregoing is or will be
either to give rise to a Tax Liability for any of
the Lenders or either of the Representatives or to
increase the cost to any of the Lenders or either
Representative of funding, making available or
maintaining its participation in the Transaction or
any part thereof or of funding, making or maintaining
its participation in the Credits or to render any of
the Lenders or either of the Representatives unable
to obtain the rate of return on its overall capital
which it would have been able to obtain but for its
entering into and/or performing its obligations and/or
assuming or maintaining its Commitment under the
Transaction or to reduce the amount of any payment
received or receivable by any of the Lenders or
either of the Representatives or to reduce its
return from the Transaction or any part thereof,
then and in any such case:-
(x) such person shall promptly notify the Borrower
through the Agent;
(y) the Borrower shall pay from time to time to the
<PAGE>
Agent for the account of that Lender or
Representative on demand all amounts which that
Lender or Representative certifies (in a
certificate which complies with the provisions
of Clause 21.1 and which shall, save for manifest
error, be conclusive and binding) are necessary to
compensate that Lender or Representative for the
Tax Liability or the increase in cost or reduction
in its return or reduction in the amount of any
payment received; and
(z) without prejudice to the foregoing each of the
Lenders and the Representatives confirms that,
if the Borrower so requests, the Lender and the
relevant Representative shall consult with the
Borrower in accordance with the provisions of
Clause 13 of the Priorities and Indemnities
Agreement and the provisions of Clause 13 of the
Priorities and Indemnities Agreement shall then
apply to this Clause 5.11.1 as if this Clause
5.11.1 were specifically referred to therein.
5.11.2 The provisions of Clause 5.11.1 shall not apply in
respect of any Tax Liability, increased cost,
reduction in the rate of return or reduction in
the amount of any payment received or receivable
to the extent that the same:-
(a) arises from the implementation of any of the
terms, proposals or recommendations of the Basle
Paper;
(b) arises from any action or omission of an
Indemnitee which constitutes wilful misconduct,
fraud or gross negligence on the part of such
Indemnitee;
(c) would not have been incurred if such Indemnitee
had not been in breach of its respective
representations or warranties under any of the
Facility Documents or any of the Operative
Documents, or had not failed in the observance
and performance of its express obligations under
any of the Facility Documents or any of the
Operative Documents (but excluding any such breach
or failure in consequence (directly or indirectly)
of a failure by the Borrower and/or any of the
Obligors duly and punctually to perform any of
their respective obligations under any of the
Facility Documents or any of the Operative
Documents or in consequence of any event or
circumstance outside the reasonable control of
such Indemnitee);
(d) is a Tax Liability for which such Indemnitee has
received and retained a payment pursuant to other
provisions of any of the Facility Documents or any
of the Operative Documents (or would so have been
or would so be but for the provisions of this
Clause 5.11.2);
(e) comprises Corporation Tax on the overall net
income, profit or capital gains of any Indemnitee
(or, in the case of any Indemnitee which is acting
through a branch outside the main jurisdiction in
which it is resident for Tax purposes, comprises
Corporation Tax on the overall net income, profits
<PAGE>
or capital gains of that Indemnitee in the
jurisdiction to which that Indemnitee's interest
in the Transaction is properly attributable for
Tax purposes) attributable to any sums receivable
by any Indemnitee under any payment obligations
contained in any of the Facility Documents or
Operative Documents (including the payment due
from the relevant Option Holder under Clause 19.3
of the Lease Agreement) other than any payment by
way of indemnity;
(f) comprises any penalties, additions to Tax, fines
or interest on or in respect of Taxes or Tax
Liabilities which would not have arisen but for
avoidable delay of or failure by such Indemnitee
in the filing of Tax returns which such
Indemnitee was obliged to file by any law of the
jurisdiction of incorporation or, in the case
of a Lender, the jurisdiction in which its
Lending Office is located, and which such
Indemnitee ought reasonably to have been aware
it was so obliged to file in connection with
the Transaction or the payment of Taxes other
than any such delay or failure in consequence
(directly or indirectly) of a request by the
Borrower and/or any of the Obligors and/or a
delay of or failure by the Borrower and/or any
of the Obligors duly and punctually to perform
any of their respective obligations under any
of the Facility Documents and/or any of the
Operative Documents or in consequence of any
event or circumstance outside the reasonable
control of such Indemnitee or otherwise caused
(directly or indirectly) by the Borrower and/or
any of the Obligors; or
(g) is imposed by a jurisdiction other than the main
jurisdiction in which such Indemnitee is resident
for Tax purposes to the extent that it gives rise
to a corresponding credit which such Indemnitee
has retained and utilised against any Tax
Liability imposed in the main jurisdiction in
which such Indemnitee is so resident; or
(h) arises as a result of the Borrower being at any
time a company "controlled by persons resident in
the United Kingdom" within the meaning of Section
747 of the Income and Corporation Taxes Act 1988
or being deemed to be controlled in the United
Kingdom for the purposes of any legislation
amending, supplementing or replacing the
provisions of Chapter IV of Part XVII of the said
Act and such control or deemed control would not
have arisen but for the aggregate interest of the
Lenders (including for the avoidance of doubt,
assignees, transferees and successors in title of
Lenders) who are either resident in the United
Kingdom for United Kingdom Tax purposes or
controlled by persons who are so resident (the "UK
Lenders"), being such as to entitle the UK Lenders
in the event of winding-up of the Borrower or in
any other circumstances to receive fifty per cent.
(50%) or more of the assets of the Borrower which
would then be available for distribution among the
participators (as defined in Section 417 of the
said Act) (but excluding any circumstances in
which Section 747 of the said Act applies or
<PAGE>
deemed control arises (i) in consequence of any
event or circumstance outside the reasonable
control of the relevant Indemnitee or (ii) as a
result of any transfer or Assignment pursuant to
Clause 5.5.2 or Clause 13 or Clause 24.3 of the
Priorities and Indemnities Agreement or (iii) as
a result of any transfer or assignment which is
required by any of the Export Credit Agencies or
(iv) as a result of any transfer or assignment
which takes place at the request of any of the
Obligors, or (v) as a result of any transfer or
assignment which is not undertaken voluntarily
(and for the avoidance of doubt, the provisions
concerning a voluntary transfer set out in
Clause 29.8 of the Priorities and Indemnities
Agreement shall apply for the purposes of
this Clause 5.11.2(h)); or
(i) would not have arisen but for:-
(i) any failure by such Indemnitee to file any
relevant Tax return or Tax computation
which such Indemnitee was obliged to file
by any law of the jurisdiction of incorporation
or, in the case of a Lender, the jurisdiction
in which its Lending Office is located or any
documents which such Lender is obliged to
file as a result of any applicable law,
regulation, practice, concession, official
directive, ruling, request, notice,
guideline, statement of policy or practice
statement by the Bank of England, the Banque
de France, the Deutsche Bundesbank, the
Federal Reserve Bank of New York, the
European Union or any central bank, Tax,
fiscal, governmental, local, international,
national or other competent authority or
agency (whether or not having the force of
law but in respect of which compliance by
banks or other financial institutions in
the relevant jurisdiction is customary) and
which such Indemnitee ought reasonably to have
been aware it was so obliged to file in
connection with the Transaction except for
any such failure caused (directly or
indirectly) by (1) any action or omission
of the Borrower and/or any of the Obligors
or (2) any event or circumstance outside
the reasonable control of such Indemnitee; or
(ii) any failure (subject to the same exceptions
and exclusions as set out in sub-paragraph
(i) of this Clause 5.11.2(i)) to file or
provide the Borrower or the relevant Lessee
with any Tax claims, forms, affidavits,
declarations or other like documents which
the Borrower or the relevant Lessee has
reasonably requested such Indemnitee in
writing to file or provide (any such request
containing sufficient detail to enable such
Indemnitee to comply with the terms thereof)
unless such Indemnitee determines acting in
good faith but nevertheless in its sole
discretion that it is unable to file or
provide or that it would be illegal or
contrary to any applicable law, official
regulation, practice, concession, directive,
<PAGE>
ruling, request, notice, guideline, statement
of policy, practice statement or official
proposal by the Bank of England, the Banque
de France, the Deutsche Bundesbank, the
Federal Reserve Bank of New York the European
Union or any central bank, Tax, fiscal,
governmental, local, international, national
or other competent authority or agency
(whether or not having the force of law but
in respect of which compliance by banks or
other financial institutions in the relevant
jurisdiction is customary) for such
Indemnitee so to do or so to do would or may
result in the breach of any agreement or
confidentiality undertaking or the disclosure
of any information about such Indemnitee's
Tax affairs which such Indemnitee considers
(in its bona fide opinion) to be of a
confidential nature.
5.11.3 If, in relation to any Interest Period or other
relevant period:-
(a) the Agent is notified by any Lender (in this
Clause 5.11.3 the "Affected Lender") that deposits
in Dollars in amounts sufficient to fund such
affected Lender's participation in the Credits are
not in the ordinary course of business available
in the London Inter-Bank Market for a period equal
to the relevant Interest Period or other relevant
period; or
(b) the Agent is notified by the affected Lender that
LIBOR does not represent the effective cost to
such Affected Lender of obtaining Dollar deposits
in amounts sufficient to fund its participation in
the Credits during the relevant Interest Period or
other relevant period; or
(c) the Agent determines that, by reason of
circumstances affecting the London Inter-Bank
Market generally, reasonable and adequate means do
not or will not exist for ascertaining LIBOR in
relation to such Interest Period or other relevant
period,
then:-
(i) the Agent shall promptly give a notice to the
Borrower and each Lender in writing advising
of such event;
(ii) the Borrower shall on each subsequent
Repayment Date for so long as such
circumstances continue pay to the Agent for
the account of the Affected Lender an amount
equal to interest on the Affected Lender's
Relevant Proportion of the principal amount
outstanding during that Interest Period or
other relevant period at the rate which is
equal to the cost to such Affected Lender (as
conclusively determined in the absence of
manifest error by such Affected Lender and
notified to the Agent) of obtaining Dollars
from whatever source or sources it may in its
absolute discretion select for funding its
Relevant Proportion of the Credits during
<PAGE>
such Interest Period or other relevant
period.
5.11.4 Each Lender confirms that if it receives a notice
from the Agent pursuant to Clause 5.11.3(c)(i) as
aforesaid then the provisions of Clause 13 of the
Priorities and Indemnities Agreement shall apply
as if Clause 5.11.3 were specifically referred to
therein.
5.12 LIMITED RECOURSE
5.12.1 The Borrower, as security for its obligations
hereunder and certain other obligations under
other documents to which it is a party in
connection with the financing of the Aircraft, is
willing:-
(a) to assign, charge and create a security interest
in favour of the Security Agent in and over the
Borrower's right, title and interest to and in
the Account and the Assigned Cash (as defined in
the Deed of Assignment and Charge) upon and subject
to the terms of the Deed of Assignment and Charge;
(b) to assign to the Security Agent and create a
security interest in favour of the Security Agent
in and over the Borrower's right, title and
interest to and in the Lease Agreements, the
Relevant Lease Payments and the Sub-Lease Security
Assignments upon and subject to the terms of the
General Security Assignments;
(c) to assign to the Security Agent and create a
security interest in favour of the Security
Agent in and over the Borrower's right, title
and interest in and to the Guarantee and
Indemnity (Lessor) upon and subject to the
terms of the Deed of Assignment of Guarantee
and Indemnity (Lessor);
(d) to mortgage and create a security interest in
favor of the Security Agent in and over the
Borrower's right, title and interest to and in,
inter alia, the Aircraft upon and subject to the
terms of the Mortgages;
(e) to assign to the Security Agent and create a
security interest in favour of the Security
Agent in and over the Borrower's right, title and
interest to and in the Maintenance Reserves, the
Security Deposits and the Sub-Lease Rentals upon
and subject to the terms of the Assignments of
Sub-Lease Collateral Charges.
<PAGE>
In recognition of the Borrower's willingness to do
such acts and things, the Lenders are prepared to
limit their recourse against the Borrower in respect
of the Credits and any and all other amounts payable
or which may become payable by the Borrower under any
of the Facility Documents and/or any of the Operative
Documents in connection with the Credits to the Deed
of Assignment and Charge, the General Security
Assignments, the Deed of Assignment of Guarantee and
Indemnity (Lessor), the Mortgages, the Assignments of
Sub-Lease Collateral Charges, the Priorities and
Indemnities Agreement and/or the 1994 Security
Documents as provided in this Clause 5.12.
5.12.2 Notwithstanding anything herein (save in this
Clause 5.12) or in the Security Documents to the
contrary, all amounts payable or expressed to be
payable to or for the account of the Lenders or
either of the Representatives by the Borrower on,
under or in respect of its obligations and
liabilities under this Facility Agreement, the
Deed of Assignment and Charge (if and when entered
into), the General Security Assignments, the Deed
of Assignment of Guarantee and Indemnity (Lessor),
the Mortgages, the Assignments of Sub-Lease
Collateral Charges, and the Priorities and
Indemnities Agreement and/or whether arising as a
matter of law or otherwise shall be recoverable
only from and to the extent of sums that are
received and retained by the Borrower (or any
person claiming through or on behalf of the
Borrower) pursuant to any provision of the
Facility Agreement and/or the Lease Agreements
and/or the Sub-Lease Security Assignments and/or
the Deeds of Assignment of General Terms Agreement
re Engine Warranties and/or the Purchase Agreement
Assignments and/or the Sub-Lease Collateral
Charges and/or the Guarantee and Indemnity
(Lessor) and/or the Priorities and Indemnities
Agreement (after deducting from each such payment
received and retained by the Borrower any
withholding or deduction which the Borrower is
obliged by law to make from such payment) and the
realisation of any proceeds from the enforcement
of any security granted to the Security Agent
under the Security Documents and/or the 1994
Security Documents and the Lenders and each
Representative agree to look solely to such sums
for payments to be made by the Borrower under this
Facility Agreement, the Deed of Assignment and
Charge (if and when entered into), the General
Security Assignments, the Deed of Assignment of
Guarantee and Indemnity (Lessor), the Mortgages,
the Assignments of Sub-Lease Collateral Charges,
and the Priorities and Indemnities Agreement and
that the Lenders and each Representative shall not
otherwise take or pursue any other judicial or
other steps or proceedings, or exercise any other
right or remedy that the Lenders or either of the
Representatives or any of the 1994 Secured Parties
might otherwise have against the Borrower or its
assets (including without limitation rights of
set-off). Except to the extent otherwise
expressly provided herein or in any of the other
Security Documents, the Borrower shall have no
obligation to take an affirmative action to
enforce or preserve its rights against any Lessee
under any of the Security Documents (other than
the giving of notices or the making of demands
provided for in the Security Documents) unless
indemnified to its reasonable satisfaction.
5.12.3 Clause 5.12.2 shall be of no application to the
Borrower and the Borrower shall be fully liable
and the Agent, the Security Agent, each Lender
and/or the 1994 Secured Parties shall be at
liberty to prove all their respective rights and
remedies against the Borrower and its assets for
any loss, damage, cost or expense , (including
<PAGE>
without limitation legal fees and expenses)
sustained or incurred by the Agent, the Security
Agent, any Lender or any 1994 Secured Party as a
consequence of (a) the wilful misconduct or gross
negligence of the Borrower or (b) a representation
or warranty made by the Borrower in any Facility
Document and/or any Operative Document being
untrue, incorrect or misleading which would have a
material adverse effect upon the ability of the
Borrower to perform or comply with its obligations
under this Facility Agreement or any of the
Facility Documents or any other Aircraft Operative
Document.
5.12.4 The provisions of this Clause 5.12 shall only
limit the personal liability of the Borrower for
the discharge of its monetary obligations under
this Facility Agreement or any of the Facility
Documents or any other Operative Document and
shall not (i) limit or restrict in any way the
accrual of interest on any unpaid amount, or (ii)
derogate from or otherwise limit the right of
recovery, realisation or application by the
Lenders or either of the Representatives or any of
the 1994 Secured Parties under or pursuant to any
of the Security Documents or any of the 1994
Security Documents or anything assigned,
mortgaged, charged, pledged or secured under or
pursuant to any of the Security Documents or any
of the 1994 Security Documents.
6. REPRESENTATIONS AND WARRANTIES
6.1 To induce each of the Lenders, the Agent, the Security Agent
and the Borrower to enter into the Facility Documents and
the Operative Documents, the Bermuda Lessee represents and
warrants to the Lenders, the Agent, the Security Agent and
the Borrower that:-
6.1.1 it is a company duly incorporated and validly
existing under the laws of Bermuda and has full
power, authority and legal right to own its property
and carry on its business as presently conducted;
6.1.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.1.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Bermuda Lessee to all
the terms and conditions hereof and thereof and to
act for and on behalf of the Bermuda Lessee as
contemplated hereby and thereby;
6.1.4 the Facility Documents and the Operative Documents to
which the Bermuda Lessee is or is to be a party
constitute or will when executed constitute legal,
valid and binding obligations of the Bermuda Lessee
enforceable in accordance with their terms subject to
the qualifications set out in the Legal Opinions to
<PAGE>
be provided to the Lenders and the Borrower in
accordance with the provisions of Clauses 3.2.1(a)(xxvi),
(xxvii), (xxviii), (xxix), (xxx) and (xxxi) and
3.2.2(a)(x), (xi), (xii) and (xiii) of this Facility
Agreement (in respect of the Facility Documents) and
Schedule 7 to this Facility Agreement (in respect of
the relevant Aircraft Operative Documents);
6.1.5 the execution and delivery by the Bermuda Lessee of,
the performance of its obligations under, and
compliance with the provisions of, the Facility
Documents and the Operative Documents to which the
Bermuda Lessee is or is to be a party will not (i)
contravene any existing applicable law to which the
Bermuda Lessee is subject, (ii) conflict with, or
result in any breach of any of the terms of, or
constitute a default under, any document, instrument
or agreement to which the Bermuda Lessee is a party or
is subject or by which it or any of its assets may be
bound, (iii) contravene or conflict with any provision
of its constitutional documents, or (iv) result in the
creation or imposition of, or oblige it to create, any
Security Interest on or over any of its assets other
than those created pursuant to the Facility Documents
and the Operative Documents;
6.1.6 every consent, registration, licence and qualification
required by the Bermuda Lessee to enable it to carry
on its business has been duly obtained or made and is
in full force and effect and there has been no default
in the observance or performance of any of the
conditions or restrictions (if any) imposed on, or in
connection with, any such consent, registration,
licence and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Bermuda Lessee or its
ability to perform its obligations hereunder;
6.1.7 every consent, registration, licence and qualification
required by the Bermuda Lessee to authorise, or
required by it in connection with, the execution,
delivery, legality, validity, priority,
enforceability, admissibility in evidence or
effectiveness of the Facility Documents and the
Operative Documents to which it is or is to be a party
has been duly obtained or made and is in full force
and effect and there has been no default in the
observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection
with, any such consent, licence, registration and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Bermuda Lessee or the legality, validity,
priority, enforceability, admissibility in evidence or
effectiveness of such Facility Documents or Operative
Documents;
6.1.8 no litigation, arbitration or administrative
proceeding is taking place, pending or, to the actual
knowledge of its officers, threatened against it, or
against any of its assets, which in any such case
could have a material adverse effect on the business,
assets or financial condition of the Bermuda Lessee or
its ability to perform its obligations under any of
the Facility Documents and/or the Operative Documents
to which it is or is to be a party;
<PAGE>
6.1.9 the Bermuda Lessee has not taken any action nor, to
its knowledge or the knowledge of its officers, have
any steps been taken or legal proceedings been started
for the winding-up, dissolution or re-organisation or
for the appointment of a receiver or administrative
receiver, or an administrator, trustee or similar
officer of it or of any or all of its assets;
6.1.10 the obligations of the Bermuda Lessee under the
Facility Documents and the Operative Documents to
which it is or is to be a party are, or will when
the same are executed be, direct, general and
unconditional obligations of the Bermuda Lessee
and rank at least pari passu with all other
present and future unsecured and unsubordinated
obligations of the Bermuda Lessee save for
obligations mandatorily preferred by law;
6.1.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.1.12 it has not, prior to entering into the Facility
Documents, or, as the case may be, any of the
Operative Documents engaged in any business or
transaction or entered into any contract or
agreement with any person or otherwise created or
incurred any liability to, or acquired any asset
from, any person, other than any such
transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been
necessary solely in order for the Bermuda Lessee
to establish itself as a company duly incorporated
and validly existing under the laws of Bermuda or
(ii) have occurred pursuant to any other Facility
Document or Operative Document;
6.1.13 there have been no amendments or supplements to
the Memorandum of Association and Bye-Laws of the
Bermuda Lessee from the form of those documents
last seen by the Agent and the Memorandum of
Association and Bye-Laws in the form last seen by
the Agent remain in full force and effect; and
6.1.14 the board resolutions and power of attorney
supplied by the Bermuda Lessee to the Agent
pursuant to the provisions of Clause 3.2 of this
Facility Agreement remain in full force and effect
and have not been amended, supplemented, varied or
revoked, in whole or in part, since they were
entered into and the authority therein given to
the persons therein named to agree and execute on
behalf of the Bermuda Lessee the Facility
Documents and the Operative Documents remains in
full force and effect and has not been revoked,
amended, supplemented or varied, in whole or in
part.
6.2 To induce each of the Lenders, the Agent, the Security Agent
and the Borrower to enter into the Facility Documents and
the Operative Documents, the Irish Lessee represents and
warrants to the Lenders, the Agent, the Security Agent and
the Borrower that:-
6.2.1 it is a company duly incorporated and validly existing
under the laws of Ireland and has full power,
authority and legal right to own its property and
carry on its business as presently conducted;
<PAGE>
6.2.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.2.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Irish Lessee to all the
terms and conditions hereof and thereof and to act for
and on behalf of the Irish Lessee as contemplated
hereby and thereby;
6.2.4 the Facility Documents and the Operative Documents to
which the Irish Lessee is or is to be a party
constitute or will when executed constitute legal,
valid and binding obligations of the Irish Lessee
enforceable in accordance with their terms subject to
the qualifications set out in the Legal Opinions to be
provided to the Lenders and the Borrower in accordance
with the provisions of Clauses 3.2.1(a) (xxvi),
(xxvii), (xxviii), (xxix), (xxx) and (xxxi) and
3.2.2(a)(x),(xi), (xii) and (xiii) of this Facility
Agreement (in respect of the Facility Documents) and
Schedule 7 to this Facility Agreement (in respect of
the relevant Aircraft Operative Documents);
6.2.5 the execution and delivery by the Irish Lessee of, the
performance of its obligations under, and compliance
with the provisions of, the Facility Documents and the
Operative Documents to which the Irish Lessee is or is
to be a party will not (i) contravene any existing
applicable law to which the Irish Lessee is subject,
(ii) conflict with, or result in any breach of any of
the terms of, or constitute a default under, any
document, instrument or agreement to which the Irish
Lessee is a party or is subject or by which it or any
of its assets may be bound, (iii) contravene or
conflict with any provision of its constitutional
documents, or (iv) result in the creation or
imposition of, or oblige it to create, any Security
Interest on or over any of its assets other than those
created pursuant to the Facility Documents and the
Operative Documents;
6.2.6 every consent, registration, licence and qualification
required by the Irish Lessee to enable it to carry on
its business has been duly obtained or made and is in
full force and effect and there has been no default in
the observance or performance of any of the conditions
or restrictions (if any) imposed on, or in connection
with, any such consent, registration, licence and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Irish Lessee or its ability to perform its
obligations hereunder;
6.2.7 every consent, registration, licence and qualification
required by the Irish Lessee to authorise, or required
by it in connection with, the execution, delivery,
legality, validity, priority, enforceability,
admissibility in evidence or effectiveness of the
Facility Documents and the Operative Documents to
which it is or is to be a party has been duly obtained
<PAGE>
or made and is in full force and effect and there has
been no default in the observance or performance of
any of the conditions or restrictions (if any) imposed
on, or in connection with, any such consent, licence,
registration and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Irish Lessee or the
legality, validity, priority, enforceability,
admissibility in evidence or effectiveness of such
Facility Documents or Operative Documents;
6.2.8 no litigation, arbitration or administrative
proceeding is taking place, pending or, to the actual
knowledge of its officers, threatened against it, or
against any of its assets, which in any such case
could have a material adverse effect on the business,
assets or financial condition of the Irish Lessee or
its ability to perform its obligations under any of
the Facility Documents and/or the Operative Documents
to which it is or is to be a party;
6.2.9 the Irish Lessee has not taken any action nor, to its
knowledge or the knowledge of its officers, have any
steps been taken or legal proceedings been started for
the winding-up, dissolution or re-organisation or for
the appointment of a receiver or administrative
receiver, or an administrator, examiner, trustee or
similar officer of it or of any or all of its assets;
6.2.10 the obligations of the Irish Lessee under the
Facility Documents and the Operative Documents to
which it is or is to be a party are, or will when
the same are executed be, direct, general and
unconditional obligations of the Irish Lessee and
rank at least pari passu with all other present
and future unsecured and unsubordinated
obligations of the Irish Lessee save for
obligations mandatorily preferred by law;
6.2.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.2.12 it has not, prior to entering into the Facility
Documents, or, as the case may be, any of the
Operative Documents engaged in any business or
transaction or entered into any contract or
agreement with any person or otherwise created or
incurred any liability to, or acquired any asset
from, any person, other than any such
transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been
necessary solely in order for the Irish Lessee to
establish itself as a company duly incorporated
and validly existing under the laws of Ireland or
(ii) have occurred pursuant to any other Facility
Document or Operative Document or (iii) have
occurred in connection with the 1994 Facility;
6.2.13 there have been no amendments or supplements to
the Memorandum of Association and Articles of
Association of the Irish Lessee from the form of
those documents last seen by the Agent and the
Memorandum of Association and Articles of
Association in the form last seen by the Agent
remain in full force and effect; and
<PAGE>
6.2.14 the board resolutions and power of attorney
supplied by Irish Lessee to the Agent pursuant to
the provisions of Clause 3.2 of this Facility
Agreement remain in full force and effect and have
not been amended, supplemented, varied or revoked,
in whole or in part since they were entered into
and the authority therein given to the persons
therein named to agree and execute on behalf of
Irish Lessee the Facility Documents and the
Operative Documents remains in full force and
effect and has not been revoked, amended,
supplemented or varied, in whole or in part.
6.3 To induce the Lenders, the Agent, the Security Agent and the
Borrower to enter into the Facility Documents and the
Operative Documents, the Guarantor represents and warrants
to the Lenders, the Agent, the Security Agent and the
Borrower that:-
6.3.1 it is a corporation duly incorporated and validly
existing and in good standing under the laws of the
State of California and has full power, authority and
legal right to own its property and carry on its
business as presently conducted;
6.3.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.3.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Guarantor to all the
terms and conditions hereof and thereof and to act for
and on behalf of the Guarantor as contemplated hereby
and thereby;
6.3.4 the Facility Documents and the Operative Documents to
which it is or is to be a party constitute or will
when executed constitute legal, valid and binding
obligations of the Guarantor enforceable in accordance
with their respective terms subject to the
qualifications set out in the Legal Opinions to be
provided to the Lenders and the Borrower in accordance
with the provisions of Clauses 3.2.1(a) (xxvi),
(xxvii), (xxviii), (xxix), (xxx) and (xxxi) and
3.2.2(a)(x),(xi), (xii) and (xiii) of this Facility
Agreement (in respect of the Facility Documents) and
Schedule 7 to this Facility Agreement (in respect of
the relevant Aircraft Operative Documents);
6.3.5 the execution and delivery of, the performance of its
obligations under, and compliance with the provisions
of, the Facility Documents and the Operative Documents
to which it is or is to be a party will not (i)
contravene any existing applicable law to which the
Guarantor is subject, (ii) conflict with, or result in
any breach of any of the terms of, or constitute a
default under, any document, instrument or agreement
to which the Guarantor is a party or is subject or by
which it or any of its assets may be bound, (iii)
contravene or conflict with any provision of its
constitutional documents, or (iv) result in the
creation or imposition of, or oblige it to create, any
<PAGE>
Security Interest on or over any of its assets (other
than the Security Interests created pursuant to the
Facility Documents and the Operative Documents);
6.3.6 every consent, registration, licence and qualification
required by the Guarantor to enable it to carry on its
business has been duly obtained or made and is in full
force and effect and there has been no default in the
observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection
with, any such consent, registration, licence and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Guarantor or its ability to perform its
obligations under the Facility Documents and the
Operative Documents to which it is or is to be a
party;
6.3.7 every consent, registration, licence and
qualification required by the Guarantor to authorise,
or required by it in connection with, the execution,
delivery, legality, validity, priority, enforceability,
admissibility in evidence or effectiveness of the
Facility Documents and the Operative Documents to
which it is or is to be a party has been duly obtained
or made and is in full force and effect and there has
been no default in the observance or performance of
any of the conditions or restrictions (if any) imposed
on, or in connection with, any such consent, licence,
registration and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Guarantor or the legality,
validity, priority, enforceability, admissibility in
evidence or effectiveness of such Facility Documents
or Operative Documents;
6.3.8 the Guarantor is not (nor with the giving of notice or
lapse of time or both or the making of any relevant
determination or the fulfillment of any other
condition would be) in breach of or in default under
any document, instrument or agreement to which it is a
party or is subject or by which it or any of its
assets may be bound and no litigation, arbitration or
administrative proceeding is taking place, pending or,
to the actual knowledge of its officers, threatened
against it, or against any of its assets, which in any
such case could have a material adverse effect on the
business, assets or financial condition of the
Guarantor or its ability to perform its obligations
under the Facility Documents and the Operative
Documents to which it is or is to be a party;
6.3.9 the Guarantor has not taken any action nor, to its
knowledge or the knowledge of its officers, have any
steps been taken or legal proceedings been started for
the winding-up, dissolution or re-organisation or for
the appointment of a receiver or administrative
receiver, or an administrator, trustee or similar
officer of it or of any or all of its assets;
6.3.10 the obligations of the Guarantor under the
Facility Documents and the Operative Documents to
which it is or is to be a party are, or will when
the same are executed be, direct, general and
unconditional obligations of the Guarantor and
rank at least pari passu with all other present
and future unsecured and unsubordinated
<PAGE>
obligations of the Guarantor save for obligations
mandatorily preferred by law;
6.3.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.3.12 the audited consolidated financial statements of
the Guarantor for the period ending on 31st
December 1993 have been prepared in accordance
with generally accepted accounting principles and
standards applicable in the United States of
America and in conjunction with the notes thereto,
fairly present the financial position and the
state of affairs of the Guarantor and its
Subsidiaries as at 31st December 1993;
6.3.13 the Guarantor is the beneficial owner of the
entire share capital of each of the Bermuda Parent
and the Irish Parent and the legal owner thereof
other than of one (1) share in the Irish Parent
which is held by Mr D. Kent as nominee;
6.3.14 there have been no amendments or supplements to
the Articles of Incorporation and Bylaws of the
Guarantor from the form of those documents last
seen by the Agent and the Articles of
Incorporation and Bylaws in the form last seen by
the Agent remain in full force and effect; and
6.3.15 the board resolutions and power of attorney
supplied by the Guarantor to the Agent pursuant to
the provisions of Clause 3.2 of this Facility
Agreement remain in full force and effect and have
not been amended, supplemented, varied or revoked,
in whole or in part since they were entered into
and the authority therein given to the persons
therein named to agree and execute on behalf of
the Guarantor the Facility Documents and the
Operative Documents remains in full force and
effect and has not been revoked, amended,
supplemented or varied, in whole or in part.
6.4 To induce each of the Lenders, the Agent, the Security Agent
and the Borrower to enter into the Facility Documents and
the Operative Documents, the Bermuda Parent represents and
warrants to the Lenders, the Agent, the Security Agent and
the Borrower that:-
6.4.1 it is a company duly incorporated and validly existing
under the laws of Bermuda and has full power,
authority and legal right to own its property and
carry on its business as presently conducted;
6.4.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.4.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Bermuda Parent to all
the terms and conditions hereof and thereof and to
act for and on behalf of the Bermuda Parent as
contemplated hereby and thereby;
<PAGE>
6.4.4 the Facility Documents and the Operative Documents to
which the Bermuda Parent is or is to be a party
constitute or will when executed constitute legal,
valid and binding obligations of the Bermuda Parent
enforceable in accordance with their terms subject to
the qualifications set out in the Legal Opinions to be
provided to the Lenders and the Borrower in accordance
with the provisions of Clauses 3.2.1(a) (xxvi),
(xxvii), (xxviii), (xxix), (xxx) and (xxxi) and
3.2.2(a)(x),(xi), (xii) and (xiii) of this Facility
Agreement (in respect of the Facility Documents) and
Schedule 7 to this Facility Agreement (in respect of
the relevant Aircraft Operative Documents);
6.4.5 the execution and delivery by the Bermuda Parent of,
the performance of its obligations under, and
compliance with the provisions of, the Facility
Documents and the Operative Documents to which the
Bermuda Parent is or is to be a party will not (i)
contravene any existing applicable law to which the
Bermuda Parent is subject, (ii) conflict with, or
result in any breach of any of the terms of, or
constitute a default under, any document, instrument
or agreement to which the Bermuda Parent is a party or
is subject or by which it or any of its assets may be
bound, (iii) contravene or conflict with any provision
of its constitutional documents, or (iv) result in the
creation or imposition of, or oblige it to create, any
Security Interest on or over any of its assets other
than those created pursuant to the Facility Documents
and the Operative Documents;
6.4.6 every consent, registration, licence and qualification
required by the Bermuda Parent to enable it to carry
on its business has been duly obtained or made and is
in full force and effect and there has been no default
in the observance or performance of any of the
conditions or restrictions (if any) imposed on, or in
connection with, any such consent, registration,
licence and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Bermuda Parent or its
ability to perform its obligations hereunder;
6.4.7 every consent, registration, licence and qualification
required by the Bermuda Parent to authorise, or
required by it in connection with, the execution,
delivery, legality, validity, priority,
enforceability, admissibility in evidence or
effectiveness of the Facility Documents and the
Operative Documents to which it is or is to be a party
has been duly obtained or made and is in full force
and effect and there has been no default in the
observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection
with, any such consent, licence, registration and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Bermuda Parent or the legality, validity,
priority, enforceability, admissibility in evidence or
effectiveness of such Facility Documents or Operative
Documents;
6.4.8 no litigation, arbitration or administrative
proceeding is taking place, pending or, to the actual
<PAGE>
knowledge of its officers, threatened against it, or
against any of its assets, which in any such case
could have a material adverse effect on the business,
assets or financial condition of the Bermuda Parent or
its ability to perform its obligations under any of
the Facility Documents and/or the Operative Documents
to which it is or is to be a party;
6.4.9 the Bermuda Parent has not taken any action nor, to
its knowledge or the knowledge of its officers, have
any steps been taken or legal proceedings been started
for the winding-up, dissolution or re-organisation or
for the appointment of a receiver or administrative
receiver, or an administrator, trustee or similar
officer of it or of any or all of its assets;
6.4.10 the obligations of the Bermuda Parent under the
Facility Documents and the Operative Documents to
which it is or is to be a party are, or will when
the same are executed be, direct, general and
unconditional obligations of the Bermuda Parent
and rank at least pari passu with all other
present and future unsecured and unsubordinated
obligations of the Bermuda Parent save for
obligations mandatorily preferred by law;
6.4.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.4.12 it has not, prior to entering into the Facility
Documents, or, as the case may be, any of the
Operative Documents engaged in any business or
transaction or entered into any contract or
agreement with any person or otherwise created or
incurred any liability to, or acquired any asset
from, any person, other than any such
transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been
necessary solely in order for the Bermuda Parent
to establish itself as a company duly incorporated
and validly existing under the laws of Bermuda or
(ii) have occurred pursuant to any other Facility
Document or Operative Document or (iii) have been
necessary to enable the Bermuda Parent to become
the legal and beneficial owner of the shares in
the Bermuda Lessee and the Bermuda Option Holder
or (iv) have occurred in connection with the 1994
Facility or (v) have been necessary to enable the
Bermuda Parent to become the legal and beneficial
owner of the shares in the Lessee (as that term is
defined in the 1994 Facility Agreement);
6.4.13 the Bermuda Parent is the legal and beneficial
owner of the entire issued share capital of the
Bermuda Lessee and the Bermuda Option Holder;
6.4.14 there have been no amendments or supplements to
the Memorandum of Association and Bye-Laws of the
Bermuda Parent from the form of those documents
last seen by the Agent and the Memorandum of
Association and Bye-Laws in the form last seen by
the Agent remain in full force and effect;
6.4.15 the board resolutions and power of attorney
supplied by the Bermuda Parent to the Agent
pursuant to the provisions of Clause 3.2 of this
Facility Agreement remain in full force and effect
<PAGE>
and have not been amended, supplemented, varied or
revoked, in whole or in part since they were
entered into and the authority therein given to
the persons therein named to agree and execute on
behalf of the Bermuda Parent the Facility
Documents and the Operative Documents remains in
full force and effect and has not been revoked,
amended, supplemented or varied, in whole or in
part.
6.5. To induce each of the Lenders, the Agent, the Security Agent
and the Borrower to enter into the Facility Documents and
the Operative Documents, the Irish Parent represents and
warrants to the Lenders, the Agent, the Security Agent and
the Borrower that:-
6.5.1 it is a company duly incorporated and validly existing
under the laws of Ireland and has full power,
authority and legal right to own its property and
carry on its business as presently conducted;
6.5.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.5.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Irish Parent to all the
terms and conditions hereof and thereof and to act for
and on behalf of the Irish Parent as contemplated
hereby and thereby;
6.5.4 the Facility Documents and the Operative Documents to
which the Irish Parent is or is to be a party
constitute or will when executed constitute legal,
valid and binding obligations of the Irish Parent
enforceable in accordance with their terms subject to
the qualifications set out in the Legal Opinions to
be provided to the Lenders and the Borrower in
accordance with the provisions of Clauses
3.2.1(a) (xxvi), (xxvii), (xxviii), (xxix), (xxx)
and (xxxi) and 3.2.2(a)(x),(xi), (xii) and (xiii)
of this Facility Agreement (in respect of the
Facility Documents) and Schedule 7 to this Facility
Agreement (in respect of the relevant Aircraft
Operative Documents);
6.5.5 the execution and delivery by the Irish Parent of, the
performance of its obligations under, and compliance
with the provisions of, the Facility Documents and the
Operative Documents to which the Irish Parent is or is
to be a party will not (i) contravene any existing
applicable law to which the Irish Parent is subject,
(ii) conflict with, or result in any breach of any of
the terms of, or constitute a default under, any
document, instrument or agreement to which the Irish
Parent is a party or is subject or by which it or any
of its assets may be bound, (iii) contravene or
conflict with any provision of its constitutional
documents, or (iv) result in the creation or
imposition of, or oblige it to create, any Security
Interest on or over any of its assets other than those
<PAGE>
created pursuant to the Facility Documents and the
Operative Documents;
6.5.6 every consent, registration, licence and qualification
required by the Irish Parent to enable it to carry on
its business has been duly obtained or made and is in
full force and effect and there has been no default in
the observance or performance of any of the conditions
or restrictions (if any) imposed on, or in connection
with, any such consent, registration, licence and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Irish Parent or its ability to perform its
obligations hereunder;
6.5.7 every consent, registration, licence and qualification
required by the Irish Parent to authorise, or required
by it in connection with, the execution, delivery,
legality, validity, priority, enforceability,
admissibility in evidence or effectiveness of the
Facility Documents and the Operative Documents to
which it is or is to be a party has been duly obtained
or made and is in full force and effect and there has
been no default in the observance or performance of
any of the conditions or restrictions (if any) imposed
on, or in connection with, any such consent, licence,
registration and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Irish Parent or the
legality, validity, priority, enforceability,
admissibility in evidence or effectiveness of such
Facility Documents or Operative Documents;
6.5.8 no litigation, arbitration or administrative
proceeding is taking place, pending or, to the actual
knowledge of its officers, threatened against it, or
against any of its assets, which in any such case
could have a material adverse effect on the business,
assets or financial condition of the Irish Parent or
its ability to perform its obligations under any of
the Facility Documents and/or the Operative Documents
to which it is or is to be a party;
6.5.9 the Irish Parent has not taken any action nor, to its
knowledge or the knowledge of its officers, have any
steps been taken or legal proceedings been started for
the winding-up, dissolution or re-organisation or for
the appointment of a receiver or administrative
receiver, or an administrator, examiner, trustee or
similar officer of it or of any or all of its assets;
6.5.10 the obligations of the Irish Parent under the
Facility Documents and the Operative Documents to
which it is or is to be a party are, or will when
the same are executed be, direct, general and
unconditional obligations of the Irish Parent and
rank at least pari passu with all other present
and future unsecured and unsubordinated
obligations of the Irish Parent save for
obligations mandatorily preferred by law;
6.5.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.5.12 it has not, prior to entering into the Facility
Documents, or, as the case may be, any of the
Operative Documents engaged in any business or
<PAGE>
transaction or entered into any contract or
agreement with any person or otherwise created or
incurred any liability to, or acquired any asset
from, any person, other than any such
transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been
necessary solely in order for the Irish Parent to
establish itself as a company duly incorporated
and validly existing under the laws of Ireland or
(ii) have occurred pursuant to any other Facility
Document or Operative Document or (iii) have been
necessary to enable the Irish Parent to become the
legal and beneficial owner of the shares in the
Irish Lessee or (iv) have occurred in connection
with the 1994 Facility;
6.5.13 the Irish Parent is the legal owner of all but one
of the shares in the Irish Lessee and is the
beneficial owner of the entire issued share
capital of the Irish Lessee;
6.5.14 there have been no amendments or supplements to
the Memorandum of Association and Articles of
Association of the Irish Parent from the form of
those documents last seen by the Agent and the
Memorandum of Association and Articles of
Association in the form last seen by the Agent
remain in full force and effect; and
6.5.15 the board resolutions and power of attorney
supplied by Irish Parent to the Agent pursuant to
the provisions of Clause 3.2 of this Facility
Agreement remain in full force and effect and have
not been amended, supplemented, varied or revoked,
in whole or in part since they were entered into
and the authority therein given to the persons
therein named to agree and execute on behalf of
Irish Parent the Facility Documents and the
Operative Documents remains in full force and
effect and has not been revoked, amended,
supplemented or varied, in whole or in part.
6.6 To induce each of the Lenders, the Agent, the Security Agent
and the Borrower to enter into the Facility Documents and
the Operative Documents, the Bermuda Option Holder
represents and warrants to the Lenders, the Agent, the
Security Agent and the Borrower that:-
6.6.1 it is a company duly incorporated and validly existing
under the laws of Bermuda and has full power,
authority and legal right to own its property and
carry on its business as presently conducted;
6.6.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.6.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Bermuda Option Holder to
all the terms and conditions hereof and thereof and to
act for and on behalf of the Bermuda Option Holder as
contemplated hereby and thereby;
<PAGE>
6.6.4 the Facility Documents and the Operative Documents to
which the Bermuda Option Holder is or is to be a party
constitute or will when executed constitute legal,
valid and binding obligations of the Bermuda Option
Holder enforceable in accordance with their terms
subject to the qualifications set out in the Legal
Opinions to be provided to the Lenders and the
Borrower in accordance with the provisions of Clauses
3.2.1(a) (xxvi), (xxvii), (xxviii), (xxix), (xxx) and
(xxxi) and 3.2.2(a)(x),(xi), (xii) and (xiii) of this
Facility Agreement (in respect of the Facility
Documents) and Schedule 7 to this Facility Agreement
(in respect of the relevant Aircraft Operative
Documents);
6.6.5 the execution and delivery by the Bermuda Option
Holder of, the performance of its obligations under,
and compliance with the provisions of, the Facility
Documents and the Operative Documents to which the
Bermuda Option Holder is or is to be a party will not
(i) contravene any existing applicable law to which
the Bermuda Option Holder is subject, (ii) conflict
with, or result in any breach of any of the terms of,
or constitute a default under, any document,
instrument or agreement to which the Bermuda Option
Holder is a party or is subject or by which it or any
of its assets may be bound, (iii) contravene or
conflict with any provision of its constitutional
documents, or (iv) result in the creation or
imposition of, or oblige it to create, any Security
Interest on or over any of its assets other than those
created pursuant to the Facility Documents and the
Operative Documents;
6.6.6 every consent, registration, licence and qualification
required by the Bermuda Option Holder to enable it to
carry on its business has been duly obtained or made
and is in full force and effect and there has been no
default in the observance or performance of any of the
conditions or restrictions (if any) imposed on, or in
connection with, any such consent, registration,
licence and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Bermuda Option Holder or
its ability to perform its obligations hereunder;
6.6.7 every consent, registration, licence and qualification
required by the Bermuda Option Holder to authorise, or
required by it in connection with, the execution,
delivery, legality, validity, priority,
enforceability, admissibility in evidence or
effectiveness of the Facility Documents and the
Operative Documents to which it is or is to be a party
has been duly obtained or made and is in full force
and effect and there has been no default in the
observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection
with, any such consent, licence, registration and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Bermuda Option Holder or the legality,
validity, priority, enforceability, admissibility in
evidence or effectiveness of such Facility Documents
or Operative Documents;
<PAGE>
6.6.8 no litigation, arbitration or administrative
proceeding is taking place, pending or, to the actual
knowledge of its officers, threatened against it, or
against any of its assets, which in any such case
could have a material adverse effect on the business,
assets or financial condition of the Bermuda Option
Holder or its ability to perform its obligations under
any of the Facility Documents and/or the Operative
Documents to which it is or is to be a party;
6.6.9 the Bermuda Option Holder has not taken any action
nor, to its knowledge or the knowledge of its
officers, have any steps been taken or legal
proceedings been started for the winding-up,
dissolution or re-organisation or for the appointment
of a receiver or administrative receiver, or an
administrator, trustee or similar officer of it or of
any or all of its assets;
6.6.10 the obligations of the Bermuda Option Holder under
the Facility Documents and the Operative Documents
to which it is or is to be a party are, or will
when the same are executed be, direct, general and
unconditional obligations of the Bermuda Option
Holder and rank at least pari passu with all other
present and future unsecured and unsubordinated
obligations of the Bermuda Option Holder save for
obligations mandatorily preferred by law;
6.6.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.6.12 it has not, prior to entering into the Facility
Documents, or, as the case may be, any of the
Operative Documents engaged in any business or
transaction or entered into any contract or
agreement with any person or otherwise created or
incurred any liability to, or acquired any asset
from, any person, other than any such
transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been
necessary solely in order for the Bermuda Option
Holder to establish itself as a company duly
incorporated and validly existing under the laws
of Bermuda or (ii) have occurred pursuant to any
other Facility Document or Operative Document or
(iii) have occurred in connection with the 1994
Facility;
6.6.13 there have been no amendments or supplements to
the Memorandum of Association and Bye-Laws of the
Bermuda Option Holder from the form of those
documents last seen by the Agent and the
Memorandum of Association and Bye-Laws in the form
last seen by the Agent remain in full force and
effect; and
6.6.14 the board resolutions and power of attorney
supplied by the Bermuda Option Holder to the Agent
pursuant to the provisions of Clause 3.2 of this
Facility Agreement remain in full force and effect
and have not been amended, supplemented, varied or
revoked, in whole or in part since they were
entered into and the authority therein given to
the persons therein named to agree and execute on
behalf of the Bermuda Option Holder the Facility
Documents and the Operative Documents remains in
<PAGE>
full force and effect and has not been revoked,
amended, supplemented or varied, in whole or in
part.
6.7 To induce each of the Lenders, the Agent, the Security
Agent, the Bermuda Lessee, the Irish Lessee, the Bermuda
Option Holder, the Guarantor, the Bermuda Parent and the
Irish Parent to enter into the Facility Documents and the
Operative Documents, the Borrower represents and warrants to
the Lenders, the Agent, the Security Agent, the Bermuda
Lessee, the Irish Lessee, the Guarantor, the Bermuda Parent
and the Irish Parent that:-
6.7.1 it is a company duly incorporated and validly existing
under the laws of the Cayman Islands and has full
power, authority and legal right to own its property
and carry on its business as presently conducted;
6.7.2 it has the power and capacity to execute and deliver,
and to perform its obligations under the Facility
Documents and the Operative Documents to which it is
or is to be a party and all necessary action has been
taken to authorise the execution, delivery and
performance of the same;
6.7.3 it has taken all necessary legal action to authorise
the person or persons who execute and deliver the
Facility Documents and the Operative Documents to
which it is or is to be a party to execute and deliver
the same and thereby bind the Borrower to all the
terms and conditions hereof and thereof and to act for
and on behalf of the Borrower as contemplated hereby
and thereby;
6.7.4 the Facility Documents and the Operative Documents to
which the Borrower is or is to be a party constitute
or will when executed constitute legal, valid and
binding obligations of the Borrower enforceable in
accordance with their terms subject to the
qualifications set out in the Legal Opinions to be
provided to the Lenders in accordance with the
provisions of Clauses 3.2.1(a) (xxvi), (xxvii),
(xxviii), (xxix), (xxx) and (xxxi) and
3.2.2(a)(x),(xi), (xii) and (xiii) of this Facility
Agreement (in respect of the Facility Documents) and
Schedule 7 to this Facility Agreement (in respect of
the relevant Aircraft Operative Documents);
6.7.5 the execution and delivery by the Borrower of, the
performance of its obligations under, and compliance
with the provisions of, the Facility Documents and the
Operative Documents to which the Borrower is or is to
be a party will not (i) contravene any existing
applicable law to which the Borrower is subject, (ii)
conflict with, or result in any breach of any of the
terms of, or constitute a default under, any document,
instrument or agreement to which the Borrower is a
party or is subject or by which it or any of its
assets may be bound, (iii) contravene or conflict with
any provision of its constitutional documents, or (iv)
result in the creation or imposition of, or oblige it
to create, any Security Interest on or over any of its
assets other than those created pursuant to the
Facility Documents and the Operative Documents;
6.7.6 every consent, registration, licence and qualification
required by the Borrower to enable it to carry on its
<PAGE>
business has been duly obtained or made and is in full
force and effect and there has been no default in the
observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection
with, any such consent, registration, licence and/or
qualification which could have a material adverse
effect on the business, assets or financial condition
of the Borrower or its ability to perform its
obligations hereunder;
6.7.7 every consent, registration, licence and qualification
required by the Borrower to authorise, or required by
it in connection with, the execution, delivery,
legality, validity, priority, enforceability,
admissibility in evidence or effectiveness of the
Facility Documents and the Operative Documents to
which it is or is to be a party has been duly obtained
or made and is in full force and effect and there has
been no default in the observance or performance of
any of the conditions or restrictions (if any) imposed
on, or in connection with, any such consent, licence,
registration and/or qualification which could have a
material adverse effect on the business, assets or
financial condition of the Borrower or the legality,
validity, priority, enforceability, admissibility in
evidence or effectiveness of such Facility Documents
or Operative Documents;
6.7.8 no litigation, arbitration or administrative
proceeding is taking place, pending or, to the actual
knowledge of its officers, threatened against it, or
against any of its assets, which in any such case
could have a material adverse effect on the business,
assets or financial condition of the Borrower or its
ability to perform its obligations under any of the
Facility Documents and/or the Operative Documents to
which it is or is to be a party;
6.7.9 the Borrower has not taken any action nor, to its
knowledge or the knowledge of its officers, have any
steps been taken or legal proceedings been started for
the winding-up, dissolution or re-organisation or for
the appointment of a receiver or administrative
receiver, or an administrator, trustee or similar
officer of it or of any or all of its assets;
6.7.10 the obligations of the Borrower under the Facility
Documents and the Operative Documents to which it
is or is to be a party are, or will when the same
are executed be, direct, general and unconditional
obligations of the Borrower and rank at least pari
passu with all other present and future unsecured
and unsubordinated obligations of the Borrower
save for obligations mandatorily preferred by law;
6.7.11 no Cancellation Event or Potential Cancellation
Event has occurred and is continuing;
6.7.12 it has not, prior to entering into the Facility
Documents, or, as the case may be, any of the
Operative Documents engaged in any business or
transaction or entered into any contract or
agreement with any person or otherwise created or
incurred any liability to, or acquired any asset
from, any person, other than any such
transactions, contracts, agreements, liabilities
or acquisitions of assets as (i) have been
<PAGE>
necessary solely in order for the Borrower to
establish itself as a company duly incorporated
and validly existing under the laws of the Cayman
Islands or (ii) have occurred pursuant to any
other Facility Document or Operative Document;
6.7.13 there have been no amendments or supplements to
the Memorandum of Association and Articles of
Association of the Borrower from the form of those
documents last seen by the Agent and the
Memorandum of Association and Articles of
Association in the form last seen by the Agent
remain in full force and effect; and
6.7.14 the board resolutions and power of attorney
supplied by Borrower to the Agent pursuant to the
provisions of Clause 3.2 of this Facility
Agreement remain in full force and effect and have
not been amended, supplemented, varied or revoked,
in whole or in part since they were entered into
and the authority therein given to the persons
therein named to agree and execute on behalf of
Borrower the Facility Documents and the Operative
Documents remains in full force and effect and has
not been revoked, amended, supplemented or varied,
in whole or in part.
6.8 The representations and warranties set out in Clauses 6.1 to
6.7 (inclusive) shall be deemed to be repeated by the
relevant party on each date the Bermuda Lessee or, as the
case may be, the Irish Lessee serves a Utilisation Notice
pursuant to Clause 4.1.1 and on each Utilisation Date in
each case in relation to the Facility Aircraft which is the
subject of the relevant Utilisation Notice and the Aircraft
Operative Documents in respect thereof as though made on
such date with reference to the facts and circumstances then
existing on such date (but so the representation and
warranty in Clause 6.3.12 shall for this purpose refer to
the then latest audited financial statements of the
Guarantor).
7. UNDERTAKINGS AND COVENANTS
7.1 BERMUDA LESSEE COVENANTS
The Bermuda Lessee hereby undertakes and covenants with each
of the Lenders, the Agent, the Security Agent and the
Borrower separately and severally that from the date of this
Facility Agreement and so long as it remains under any
obligation, actual or contingent, under the Facility
Documents and/or any of the Operative Documents:-
7.1.1 it shall remain duly incorporated and validly existing
under the laws of Bermuda;
7.1.2 it shall obtain, maintain in full force and effect and
comply in all material respects with, any present or
future authorisations (governmental or otherwise),
approvals, licences and consents and, subject to the
provisions of Clause 13.1 of each of the Lease
Agreements to which it is to, or may be a party, do,
or cause to be done, all other acts and things, which
may from time to time be necessary for the continued
due performance of its obligations under the Facility
Documents and the Operative Documents;
<PAGE>
7.1.3 it shall inform the Agent of any Potential
Cancellation Event or Cancellation Event promptly upon
becoming aware of the same and shall provide the Agent
with full details of any steps which it is taking, or
is considering taking, in order to remedy or mitigate
the effect of any Potential Cancellation Event or any
Cancellation Event or otherwise in connection
therewith;
7.1.4 it shall promptly, upon being requested so to do by
the Agent and/or the Security Agent take all such
steps and enter into and execute all such documents
and/or agreements of whatsoever nature in order to
enable the Agent or, as the case may be, the Security
Agent to effect any registration, recording, filing,
notarisation or any other action in respect of any of
the Facility Documents and/or the Operative Documents
which are required by law or reasonably requested by
the Agent, or as the case may be, the Security Agent
(provided always that the Bermuda Lessee shall not be
required to do any act or thing or take any step in
connection with the registration, recording or filing
of any instrument creating or evidencing a Security
Interest over an Aircraft (but excluding any Security
Interest of the Agent, the Security Agent or any of
the Lenders in any of the Lease Agreements, any of the
Approved Sub-Leases, any of the Requisition Proceeds,
any of the Warranties or any of the Engine
Warranties)) to ensure the validity, enforceability or
priority of the liabilities and obligations of the
Bermuda Lessee or the rights of the Borrower, the
Agent, the Security Agent and/or each of the Lenders
under any of the Facility Documents and/or the
Operative Documents;
7.1.5 the only business of the Bermuda Lessee shall be the
leasing of the Aircraft and the sub-leasing and
purchase of such Aircraft as contemplated in the Lease
Agreements and the Bermuda Lessee covenants that it
shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent) engage in
any other business or transaction;
7.1.6 it shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent), enter into
any contract or agreement with any person, or
otherwise create or incur any liability to, or acquire
any asset from, any person, other than (a) any
liability to the Guarantor or any Subsidiary (provided
that any such liability is in all respects subordinate
to any Indebtedness of the Bermuda Lessee arising, or
which may arise, under any of the Facility Documents
and/or the Operative Documents), and (b) such
liabilities with respect to Taxes, ordinary operating
costs and overhead expenses and the acquisition of
such assets as have arisen or may arise in the
ordinary course of carrying on its business as
referred to in Clause 7.1.5;
7.1.7 it shall ensure that at all times its obligations
under the Facility Documents and the Operative
Documents rank at least pari passu with its
obligations owed to all its unsecured creditors save
for obligations mandatorily preferred by law;
<PAGE>
7.1.8 it shall duly observe and perform all of the
covenants, obligations and conditions which are
required to be observed and performed on its part
under each of the Facility Documents and/or the
Operative Documents to which it is, or is to be, a
party;
7.1.9 it shall not create or acquiesce in the creation of
any Security Interest on or with respect to the
Aircraft, the Insurances, the Warranties, the Engine
Warranties or any part thereof other than Permitted
Liens;
7.1.10 it shall not (without the prior written consent of
the Security Agent, which consent shall be
exercisable at the absolute discretion of the
Security Agent) issue any shares (other than to
AIG, any AIG Group Company, the Guarantor or any
Subsidiary on terms that any such shares are
immediately charged to the Security Agent on terms
substantially the same as those contained in the
Charge Over Shares of Bermuda Lessee or on such
terms as may otherwise be agreed by the Security
Agent);
7.1.11 subject always to the provisions of the Facility
Documents and/or the Operative Documents it shall
not sell, lease, transfer or otherwise dispose of,
by one or more transactions or series of
transactions (whether related or not), the whole
or any part of its revenues or assets (other than
in respect of its revenues, to the Guarantor or
any Subsidiary);
7.1.12 it shall deliver to the Agent sufficient copies
for distribution to each of the Lenders of its
audited financial statements for each of its
financial years (which shall be prepared in
accordance with generally accepted accounting
principles and practices in the United States of
America, shall give a true and fair view of the
profits and losses of the Bermuda Lessee for the
relevant financial year and the state of its
affairs at the end of such financial year) as soon
as practicable and not later than one hundred and
eighty (180) days after the end of the financial
year to which they relate; and
7.1.13 it shall procure that at all times a majority of
the members of its board of directors shall be
officers or employees of the Guarantor, a
Subsidiary, AIG or an AIG Group Company and it
shall procure further that no member of its board
of directors shall be replaced or substituted
(other than by another officer or employee of the
Guarantor, a Subsidiary, AIG or an AIG Group
Company) without the prior written consent of the
Security Agent (which consent shall be exercisable
in the absolute discretion of the Security Agent).
7.2 IRISH LESSEE COVENANTS
The Irish Lessee hereby undertakes and covenants with each
of the Lenders, the Agent, the Security Agent and the
Borrower separately and severally that from the date of this
Facility Agreement and so long as it remains under any
obligation, actual or contingent, under the Facility
Documents and/or any of the Operative Documents:-
<PAGE>
7.2.1 it shall remain duly incorporated and validly existing
under the laws of Ireland;
7.2.2 it shall obtain, maintain in full force and effect and
comply in all material respects with, any present or
future authorisations (governmental or otherwise),
approvals, licences and consents and, subject to the
provisions of Clause 13.1 of each of the Lease
Agreements to which it is to, or may, be a party, do,
or cause to be done, all other acts and things, which
may from time to time be necessary for the continued
due performance of its obligations under the Facility
Documents and the Operative Documents;
7.2.3 it shall inform the Agent of any Potential
Cancellation Event or Cancellation Event promptly upon
becoming aware of the same and shall provide the Agent
with full details of any steps which it is taking, or
is considering taking, in order to remedy or mitigate
the effect of any Potential Cancellation Event or any
Cancellation Event or otherwise in connection
therewith;
7.2.4 it shall promptly, upon being requested so to do by
the Agent and/or the Security Agent take all such
steps and enter into and execute all such documents
and/or agreements of whatsoever nature in order to
enable the Agent or, as the case may be, the Security
Agent to effect any registration, recording, filing,
notarisation or any other action in respect of any of
the Facility Documents and/or the Operative Documents
which are required by law or reasonably requested by
the Agent, or as the case may be, the Security Agent
(provided always that the Irish Lessee shall not be
required to do any act or thing or take any step in
connection with the registration, recording or filing
of any instrument creating or evidencing a Security
Interest over an Aircraft (but excluding any Security
Interest of the Agent, the Security Agent or any of
the Lenders in any of the Lease Agreements, any of the
Approved Sub-Leases, any of the Requisition Proceeds,
any of the Warranties or any of the Engine
Warranties)) to ensure the validity, enforceability or
priority of the liabilities and obligations of the
Irish Lessee or the rights of the Borrower, the Agent,
the Security Agent and/or each of the Lenders under
any of the Facility Documents and/or the Operative
Documents;
7.2.5 the only business of the Irish Lessee shall be the
leasing of the Aircraft and the 1994 Facility Aircraft
and the sub-leasing and purchase of such Aircraft as
contemplated in the Lease Agreements and the
sub-leasing and purchase of the 1994 Facility Aircraft
as contemplated in the Lease Agreements (as that term
is defined in the 1994 Facility Agreement) and the
Irish Lessee covenants that it shall not, without the
prior written consent of the Security Agent (such
consent to be exercisable in the absolute discretion
of the Security Agent) engage in any other business or
transaction;
7.2.6 it shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent), enter into
<PAGE>
any contract or agreement with any person, or
otherwise create or incur any liability to, or acquire
any asset from, any person, other than (a) any
liability to the Guarantor or any Subsidiary (provided
that any such liability is in all respects subordinate
to any Indebtedness of the Irish Lessee arising, or
which may arise, under any of the Facility Documents
and/or the Operative Documents), and (b) such
liabilities with respect to Taxes, ordinary operating
costs and overhead expenses and the acquisition of
such assets as have arisen or may arise in the
ordinary course of carrying on its business as
referred to in Clause 7.2.5;
7.2.7 it shall ensure that at all times its obligations
under the Facility Documents and the Operative
Documents rank at least pari passu with its
obligations owed to all its unsecured creditors save
for obligations mandatorily preferred by law;
7.2.8 it shall duly observe and perform all of the
covenants, obligations and conditions which are
required to be observed and performed on its part
under each of the Facility Documents and/or the
Operative Documents to which it is, or is to be, a
party;
7.2.9 it shall not create or acquiesce in the creation of
any Security Interest on or with respect to the
Aircraft, the Insurances, the Warranties, the Engine
Warranties or any part thereof other than Permitted
Liens;
7.2.10 it shall not (without the prior written consent of
the Security Agent, which consent shall be
exercisable at the absolute discretion of the
Security Agent) issue any shares (other than to
AIG, any AIG Group Company, the Guarantor or any
Subsidiary on terms that any such shares are
immediately charged to the Security Agent on terms
substantially the same as those contained in the
Charge Over Shares of Irish Lessee or on such
terms as may otherwise be agreed by the Security
Agent);
7.2.11 subject always to the provisions of the Facility
Documents and/or the Operative Documents it shall
not sell, lease, transfer or otherwise dispose of,
by one or more transactions or series of
transactions (whether related or not), the whole
or any part of its revenues or assets (other than
in respect of its revenues, to the Guarantor or
any Subsidiary);
7.2.12 it shall deliver to the Agent sufficient copies
for distribution to each of the Lenders of its
audited financial statements for each of its
financial years (which shall be prepared in
accordance with generally accepted accounting
principles and practices in Ireland, shall give a
true and fair view of the profits and losses of
the Irish Lessee for the relevant financial year
and the state of its affairs at the end of such
financial year) as soon as practicable and not
later than one hundred and eighty (180) days after
the end of the financial year to which they
relate;
<PAGE>
7.2.13 it shall procure that at all times a majority of
the members of its board of directors shall be
officers or employees of the Guarantor, a
Subsidiary, AIG or any AIG Group Company and it
shall procure further that no member of its board
of directors shall be replaced or substituted
(other than by another officer or employee of the
Guarantor, a Subsidiary, AIG or any AIG Group
Company) without the prior written consent of the
Security Agent (which consent shall be exercisable
in the absolute discretion of the Security Agent);
7.2.14 it shall use all reasonable endeavours to procure
that at all times (i) it remains resident for Tax
purposes in Ireland and that (ii) save as may
arise solely as a result of a Change in Law the
effect of which is that the Irish Lessee ceases to
be treated for Taxation purposes in Ireland in the
same way as Irish companies generally, any profits
which it makes are subject to Taxation in Ireland
under the general rules and regulations in Ireland
applicable to Irish companies and that (iii) it
does not (without the prior written consent of the
Security Agent which consent shall be exercisable
in the absolute discretion of the Security Agent)
take any steps to become the beneficiary of a
reduced rate of Tax pursuant to Section 39, 39A or
39B of the Finance Act 1980 of Ireland (as
amended) or any other statutory provision (present
or future) in Ireland providing for a reduced rate
of Tax in Ireland; and
7.2.15 it shall at all times maintain bank accounts with
a branch in Ireland of a bank acceptable to the
Security Agent and shall procure that all payments
of rent, security deposits, supplemental rent and
maintenance reserves payable under any Approved
Sub-Lease to which it is or is to be a party shall
be paid into the accounts referred to in the Irish
Lessee Sub-Lease Collateral Charge.
7.3 BORROWER COVENANTS
The Borrower hereby undertakes and covenants with the Agent,
the Security Agent, the Lenders, the Bermuda Lessee, the
Irish Lessee, the Bermuda Option Holder, the Guarantor, the
Bermuda Parent and the Irish Parent separately and severally
that from the date of this Facility Agreement and so long as
it remains under any obligation, actual or contingent, under
any of the Facility Documents and/or the Operative
Documents:-
7.3.1 it shall remain duly incorporated and validly existing
under the laws of the Cayman Islands;
7.3.2 it shall obtain, maintain in full force and effect and
comply in all material respects with, any present or
future authorisations (governmental or otherwise)
approvals, licences and consents and, do, or cause to
be done, all other acts and things, which may from
time to time be necessary for the continued due
performance of its obligations under the Facility
Documents and the Operative Documents;
7.3.3 it shall inform the Agent and the Guarantor of any
Cancellation Event or Potential Cancellation Event
promptly upon becoming aware of the same and shall
<PAGE>
provide the Agent and the Guarantor with full details
of any steps which it is taking, or is considering
taking, in order to remedy or mitigate the effect of
the Cancellation Event or, as the case may be,
Potential Cancellation Event or otherwise in
connection therewith;
7.3.4 it shall promptly, upon being requested so to do by
the Agent and/or the Security Agent take all such
steps and enter into and execute all such documents
and/or agreements of whatsoever nature in order to
enable the Agent or, as the case may be, the Security
Agent to effect any registration, recording, filing,
notarisation or any other action in respect of any of
the Facility Documents and/or the Operative Documents
which are required by law or reasonably requested by
the Agent, or as the case may be, the Security Agent
(provided always that the Borrower shall not be
required to do any act or thing or take any step in
the State of Registration of an Aircraft in connection
with the registration, recording or filing of any
instrument creating or evidencing a Security Interest
over that Aircraft (but excluding any Security
Interest of the Agent, the Security Agent or any of
the Lenders in any of the Lease Agreements or any of
the Approved Sub-Leases, any of the Requisition
Proceeds, any of the Warranties or any of the Engine
Warranties)) to ensure the validity, enforceability or
priority of the liabilities and obligations of any or
all of the Obligors and/or the Borrower or the rights
of the Agent, the Security Agent and/or each of the
Lenders under any of the Facility Documents and/or the
Operative Documents;
7.3.5 it shall limit its business exclusively to the
purchase and leasing of the Aircraft and transactions
contemplated by the Facility Documents and the
Operative Documents and such activities and matters
incidental to any of the foregoing;
7.3.6 it shall not, without the prior written consent of the
Security Agent and, prior to the occurrence of an
Acceleration Event, the Guarantor (such consent to be
exercisable in the absolute discretion of the Security
Agent and the Guarantor), enter into any contract or
agreement with any person, or otherwise create or
incur any liability to, or acquire any asset from, any
person, other than such liabilities with respect to
Taxes, ordinary operating costs and overhead expenses
and the acquisition of such assets as have arisen or
may arise in the ordinary course of carrying on its
business as referred to in Clause 7.3.5;
7.3.7 it shall ensure that at all times its obligations
under the Facility Documents and the Operative
Documents rank at least pari passu with its
obligations owed to all its unsecured creditors save
for obligations mandatorily preferred by law;
7.3.8 it shall duly observe and perform all of the
covenants, obligations and conditions which are
required to be observed and performed on its part
under each of the Facility Documents and/or the
Operative Documents to which it is, or is to be, a
party;
<PAGE>
7.3.9 it shall not create or acquiesce in the creation of
any Security Interest on or with respect to any of the
Aircraft, the Insurances, the Warranties, the Engine
Warranties or any part thereof other than Permitted
Liens;
7.3.10 it shall not (without the prior written consent of
the Security Agent and the Guarantor which consent
shall be exercisable at the absolute discretion of
the Security Agent and the Bermuda Lessee) issue
any shares;
7.3.11 subject always to the provisions of the Facility
Documents and/or the Operative Documents, it shall
not sell, lease, transfer or otherwise dispose of,
by one or more transactions or series of
transactions (whether related or not), the whole
or any part of its revenues or assets;
7.3.12 on the date upon which the Borrower receives
written notice from the relevant Lessee so to do,
it shall issue to the Agent a Notice of Drawdown,
provided that:-
(a) if the Borrower receives such written notice from
the relevant Lessee at any time after 5.00 p.m.
(London time) on the relevant date, it shall have
no obligation to issue a Notice of Drawdown until
the next Business Day; and
(b) the form of Notice of Drawdown requested by the
relevant Lessee shall be in the form attached
hereto in Schedule 6;
7.3.13 it shall in relation to each Advance, use all
reasonable endeavours to ensure the prompt
satisfaction of those of the conditions precedent
set out in Schedule 7 as are within its power or
control;
7.3.14 on the date upon which the Borrower receives
written notice from the relevant Lessee of the
exercise by the relevant Option Holder of its
option to purchase an Aircraft pursuant to the
relevant Lease Agreement, it shall issue to the
Agent a notice of prepayment pursuant to Clause
5.4.3;
7.3.15 it will not knowingly do anything or knowingly
take any action or knowingly omit to take any
action which has or may have the effect of
prejudicing the absolute and first priority
entitlement of the Security Agent against a
liquidator, receiver, administrator or similar
officer or official, to all rights, monies and
property expressed to be mortgaged, assigned,
charged or pledged to the Security Agent by the
Borrower pursuant to the Facility Document or any
of the Security Documents to which it is a party;
7.3.16 it shall promptly inform the Agent and the
Security Agent as soon as it becomes aware of the
loss of or material damage to any of the Aircraft
or of the occurrence of any other event
constituting a Total Loss provided that if the
relevant Lessee has informed the Agent of any such
material damage or Total Loss the Borrower's
obligation under this Clause 7.3.17 shall be
discharged; and
<PAGE>
7.3.17 it shall promptly inform the Agent and the
Security Agent as soon as it becomes aware of any
Security Interest which may be created or may
arise over or in respect of any of the Aircraft or
any part thereof other than any Security Interest
created by any of the Facility Documents or any of
the Operative Documents.
7.4 GUARANTOR COVENANTS
7.4.1 The Guarantor hereby undertakes and covenants with
each of the Lenders, the Agent, the Security Agent and
the Borrower separately and severally in the terms set
out in Schedule 5.
7.4.2 The Guarantor hereby further undertakes and covenants
with each of the Lenders, the Agent, the Security
Agent and the Borrower separately and severally that
it will enter into a Guarantee and Indemnity with the
Lender, the Agent, the Security Agent and the Borrower
in respect of any and all of the obligations of any
Additional Lessee, any Alternative Lessee, any Option
Holder and any Parent under the Facility Documents and
the Operative Documents substantially in the terms of
Clause 10.
7.5 BERMUDA PARENT COVENANTS
The Bermuda Parent hereby undertakes and covenants with each
of the Lenders, the Agent, the Security Agent and the
Borrower separately and severally that from the date of this
Facility Agreement and for so long as it remains under any
obligation, actual or contingent, under the Facility
Documents and/or any of the Operative Documents:-
7.5.1 it shall remain duly incorporated and validly existing
under the laws of Bermuda and shall not, without the
prior written consent of the Security Agent, make any
amendment to the constitutional documents of the
Bermuda Lessee and/or the Bermuda Option Holder;
7.5.2 it shall obtain, maintain in full force and effect and
comply in all material respects with, any present or
future authorisations (governmental or otherwise)
approvals, licences and consents and do, or cause to
be done, all other acts and things, which may from
time to time be necessary for the continued due
performance of its obligations under the Facility
Documents and the Operative Documents;
7.5.3 it shall inform the Agent of any Potential
Cancellation Event or Cancellation Event promptly upon
becoming aware of the same and shall provide the Agent
with full details of any steps which it is taking, or
is considering taking, in order to remedy or mitigate
the effect of any Potential Cancellation Event or any
Cancellation Event or otherwise in connection
therewith;
7.5.4 it shall promptly, upon being requested so to do by
the Agent and/or the Security Agent take all such
steps and enter into and execute all such documents
and/or agreements of whatsoever nature in order to
enable the Agent or, as the case may be, the Security
Agent to effect any registration, recording, filing,
<PAGE>
notarisation or any other action in respect of any of
the Facility Documents and/or the Operative Documents
which are required by law or reasonably requested by
the Agent, or as the case may be, the Security Agent
(provided always that the Bermuda Parent shall not be
required to do any act or thing or take any step in
connection with the registration, recording or filing
of any instrument creating or evidencing a Security
Interest over an Aircraft (but excluding any Security
Interest of the Agent, the Security Agent or any of
the Lenders in any of the Lease Agreements or any of
the Approved Sub-Leases, any of the Requisition
Proceeds, any of the Warranties or any of the Engine
Warranties)) to ensure the validity, enforceability or
priority of the liabilities and obligations of any or
all of the Obligors or the rights of the Borrower, the
Agent, the Security Agent and/or each of the Lenders
under any of the Facility Documents and/or the
Operative Documents;
7.5.5 the only business of the Bermuda Parent shall be (i)
the legal ownership of the issued shares in the
Bermuda Lessee, any Alternative Lessee, any Additional
Lessee, the Bermuda Option Holder and any other
Option Holder and entering into the Charge Over
Shares of Bermuda Lessee, any Charges Over Shares of
Alternative Lessee, any Charges Over Shares of
Additional Lessee and the documents incidental
thereto and the transactions contemplated by the
Facility Documents and the Operative Documents to
which it is, or is to be, a party and (ii) the legal
and beneficial ownership of the issued shares in the
Lessee (as that term is defined in the 1994 Facility
Agreement) and entering into the Charge Over Shares
(as that term is defined in the 1994 Facility Agreement)
and the documents incidental thereto and the transactions
contemplated by the 1994 Facility Agreement and the
Facility Documents and Operative Documents (as those
terms are defined in the 1994 Facility Agreement) and
such activities and matters incidental to any of the
foregoing and the Bermuda Parent covenants that it
shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent) engage in
any other business or transaction;
7.5.6 it shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent), enter into
any contract or agreement with any person, or
otherwise create or incur any liability to, or acquire
any asset from, any person, other than (a) any
liability to the Guarantor or any Subsidiary,
(provided that any such liability is in all respects
subordinate to any Indebtedness of the Bermuda Parent
arising, or which may arise, under any of the Facility
Documents and/or any of the Operative Documents), and
(b) such liabilities with respect to Taxes, ordinary
operating costs and overhead expenses and the
acquisition of such assets as have arisen or may arise
in the ordinary course of carrying on its business as
referred to in Clause 7.5.5;
7.5.7 it shall ensure that at all times its obligations
under the Facility Documents and the Operative
Documents rank at least pari passu with its
obligations owed to all its unsecured creditors save
for obligations mandatorily preferred by law;
<PAGE>
7.5.8 it shall duly observe and perform all of the
covenants, obligations and conditions which are
required to be observed and performed on its part
under each of the Operative Documents to which it is,
or is to be, a party;
7.5.9 it shall not create any Security Interest on or with
respect to the Charged Property (as that term is
defined in the Charge Over Shares of Bermuda Lessee)
or the Charged Property (as that term will be defined
in any Charge Over Shares of Alternative Lessee and/or
any Charge Over Shares of Additional Lessee which may
be entered into by the Bermuda Parent);
7.5.10 it shall not (without the prior written consent of
the Security Agent which consent shall be
exercisable at the absolute discretion of the
Security Agent), issue any shares (other than to
AIG, any AIG Group Company, the Guarantor or any
Subsidiary) and the Bermuda Parent shall not
(other than pursuant to the Charge Over Shares of
Bermuda Lessee or pursuant to any Charge Over
Shares of Alternative Lessee and/or Charge Over
Shares of Additional Lessee which may be entered
into by the Bermuda Parent) sell, transfer or
dispose of, encumber or create any Security
Interest over or alter the rights attaching to any
of its shares in the Bermuda Lessee and/or the
Bermuda Option Holder and/or any Alternative
Lessee and/or Additional Lessee the shares of
which are owned by the Bermuda Parent;
7.5.11 subject always to the provisions of the Facility
Documents and/or the Operative Documents it shall
not sell, lease, transfer or otherwise dispose of,
by one or more transactions or series of
transactions (whether related or not), the whole
or any part of its revenues or assets (other than
in respect of its revenues, to the Guarantor or
any Subsidiary); and
7.5.12 it shall procure that at all times a majority of
the members of its board of directors shall be
officers or employees of the Guarantor, a
Subsidiary, AIG or an AIG Group Company and it
shall procure further that no member of its board
of directors shall be replaced or substituted
(other than by another officer or employee of the
Guarantor, a Subsidiary, AIG or an AIG Group
Company) without the prior written consent of the
Security Agent (which consent shall be exercisable
in the absolute discretion of the Security Agent).
7.6 IRISH PARENT COVENANTS
The Irish Parent hereby undertakes and covenants with each
of the Lenders, the Agent, the Security Agent and the
Borrower separately and severally that from the date of this
Facility Agreement and for so long as it remains under any
obligation, actual or contingent, under the Facility
Documents and/or any of the Operative Documents:-
7.6.1 it shall remain duly incorporated and validly existing
under the laws of Ireland and shall not, without the
prior written consent of the Security Agent, make any
<PAGE>
amendment to the constitutional documents of the Irish
Lessee;
7.6.2 it shall obtain, maintain in full force and effect and
comply in all material respects with, any present or
future authorisations (governmental or otherwise)
approvals, licences and consents and do, or cause to
be done, all other acts and things, which may from
time to time be necessary for the continued due
performance of its obligations under the Facility
Documents and the Operative Documents;
7.6.3 it shall inform the Agent of any Potential
Cancellation Event or Cancellation Event promptly upon
becoming aware of the same and shall provide the Agent
with full details of any steps which it is taking, or
is considering taking, in order to remedy or mitigate
the effect of any Potential Cancellation Event or any
Cancellation Event or otherwise in connection
therewith;
7.6.4 it shall promptly, upon being requested so to do by
the Agent and/or the Security Agent take all such
steps and enter into and execute all such documents
and/or agreements of whatsoever nature in order to
enable the Agent or, as the case may be, the Security
Agent to effect any registration, recording, filing,
notarisation or any other action in respect of any of
the Facility Documents and/or the Operative Documents
which are required by law or reasonably requested by
the Agent, or as the case may be, the Security Agent
(provided always that the Irish Parent shall not be
required to do any act or thing or take any step in
connection with the registration, recording or filing
of any instrument creating or evidencing a Security
Interest over an Aircraft (but excluding any Security
Interest of the Agent, the Security Agent or any of
the Lenders in any of the Lease Agreements or any of
the Approved Sub-Leases, any of the Requisition
Proceeds, any of the Warranties or any of the Engine
Warranties)) to ensure the validity, enforceability or
priority of the liabilities and obligations of any or
all of the Obligors or the rights of the Borrower, the
Agent, the Security Agent and/or each of the Lenders
under any of the Facility Documents and/or the
Operative Documents;
7.6.5 the only business of the Irish Parent shall be (i) the
legal ownership of the issued shares in the Irish
Lessee, any Alternative Lessee, any Additional Lessee,
and any Option Holder (other than the Bermuda Option
Holder) and entering into the Charge Over Shares of
Irish Lessee, any Charges Over Shares of Alternative
Lessee, any Charges Over Shares of Additional Lessee
and the documents incidental thereto and the
transactions contemplated by the Facility Documents
and the Operative Documents to which it is, or is to
be, a party and (ii) the legal ownership of the issued
shares in the Alternative Lessee (as that term is
defined in the 1994 Facility Agreement) and entering
into the Charge Over Shares of Alternative Lessee (as
that term is defined in the 1994 Facility Agreement)
and the documents incidental thereto and the
transactions contemplated by the 1994 Facility
Agreement and the Facility Documents and Operative
Documents (as those terms are defined in the 1994
Facility Agreement) and such activities and matters
<PAGE>
incidental to any of the foregoing and the Irish
Parent covenants that it shall not, without the prior
written consent of the Security Agent (such consent to
be exercisable in the absolute discretion of the
Security Agent) engage in any other business or
transaction;
7.6.6 it shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent), enter into
any contract or agreement with any person, or
otherwise create or incur any liability to, or acquire
any asset from, any person, other than (a) any
liability to the Guarantor or any Subsidiary,
(provided that any such liability is in all respects
subordinate to any Indebtedness of the Irish Parent
arising, or which may arise, under any of the Facility
Documents and/or any of the Operative Documents), and
(b) such liabilities with respect to Taxes, ordinary
operating costs and overhead expenses and the
acquisition of such assets as have arisen or may arise
in the ordinary course of carrying on its business as
referred to in Clause 7.6.5;
7.6.7 it shall ensure that at all times its obligations
under the Facility Documents and the Operative
Documents rank at least pari passu with its
obligations owed to all its unsecured creditors save
for obligations mandatorily preferred by law;
7.6.8 it shall duly observe and perform all of the
covenants, obligations and conditions which are
required to be observed and performed on its part
under each of the Operative Documents to which it is,
or is to be, a party;
7.6.9 it shall not create any Security Interest on or with
respect to the Charged Property (as that term is
defined in the Charge Over Shares of Irish Lessee) or
the Charged Property (as that term will be defined in
any Charge Over Shares of Alternative Lessee and/or
any Charge Over Shares of Additional Lessee which may
be entered into by the Irish Parent);
7.6.10 it shall not (without the prior written consent of
the Security Agent which consent shall be
exercisable at the absolute discretion of the
Security Agent), issue any shares (other than to
AIG, any AIG Group Company, the Guarantor or any
Subsidiary) and the Irish Parent shall not (other
than pursuant to the Charge Over Shares of Irish
Lessee or pursuant to any Charge Over Shares of
Alternative Lessee and/or Charge Over Shares of
Additional Lessee which may be entered into by the
Irish Parent) sell, transfer or dispose of,
encumber or create any Security Interest over or
alter the rights attaching to any of its shares in
the Irish Lessee and/or any Option Holder and/or
any Alternative Lessee and/or any Additional
Lessee the shares of which are owned by the Irish
Parent;
7.6.11 subject always to the provisions of the Facility
Documents and/or the Operative Documents it shall
not sell, lease, transfer or otherwise dispose of,
by one or more transactions or series of
transactions (whether related or not), the whole
<PAGE>
or any part of its revenues or assets (other than
in respect of its revenues, to the Guarantor or
any Subsidiary);
7.6.12 it shall procure that at all times a majority of
the members of its board of directors shall be
officers or employees of the Guarantor, a
Subsidiary, AIG or an AIG Group Company and it
shall procure further that no member of its board
of directors shall be replaced or substituted
(other than by another officer or employee of the
Guarantor, a Subsidiary, AIG or an AIG Group
Company) without the prior written consent of the
Security Agent (which consent shall be exercisable
in the absolute discretion of the Security Agent);
and
7.6.13 it shall use all reasonable endeavours to procure
that at all times (i) it remains resident for Tax
purposes in Ireland and that (ii) save as may
arise solely as a result of a Change in Law the
effect of which is that the Irish Parent ceases to
be treated for Taxation purposes in Ireland in the
same way as Irish companies generally, any profits
which it makes are subject to Taxation in Ireland
under the general rules and regulations in Ireland
applicable to Irish companies and that (iii) it
does not (without the prior written consent of the
Security Agent which consent shall be exercisable
in the absolute discretion of the Security Agent)
take any steps to become the beneficiary of a
reduced rate of Tax pursuant to Section 39, 39A or
39B of the Finance Act 1980 of Ireland (as
amended) or any other statutory provision (present
or future) in Ireland providing for a reduced rate
of Tax in Ireland.
7.7 BERMUDA OPTION HOLDER COVENANTS
The Bermuda Option Holder hereby undertakes and covenants
with each of the Lenders, the Agent, the Security Agent and
the Borrower separately and severally that from the date of
this Facility Agreement and for so long as it remains under
any obligation, actual or contingent, under the Facility
Documents and/or any of the Operative Documents:-
7.7.1 it shall remain duly incorporated and validly existing
under the laws of Bermuda;
7.7.2 it shall obtain, maintain in full force and effect and
comply in all material respects with, any present or
future authorisations (governmental or otherwise)
approvals, licences and consents and do, or cause to
be done, all other acts and things, which may from
time to time be necessary for the continued due
performance of its obligations under the Facility
Documents and the Operative Documents;
7.7.3 it shall inform the Agent of any Potential
Cancellation Event or Cancellation Event promptly upon
becoming aware of the same and shall provide the Agent
with full details of any steps which it is taking, or
is considering taking, in order to remedy or mitigate
the effect of any Potential Cancellation Event or any
Cancellation Event or otherwise in connection
therewith;
<PAGE>
7.7.4 it shall promptly, upon being requested so to do by
the Agent and/or the Security Agent take all such
steps and enter into and execute all such documents
and/or agreements of whatsoever nature in order to
enable the Agent or, as the case may be, the Security
Agent to effect any registration, recording, filing,
notarisation or any other action in respect of any of
the Facility Documents and/or the Operative Documents
which are required by law or reasonably requested by
the Agent, or as the case may be, the Security Agent
(provided always that the Bermuda Option Holder shall
not be required to do any act or thing or take any
step in connection with the registration, recording or
filing of any instrument creating or evidencing a
Security Interest over an Aircraft (but excluding any
Security Interest of the Agent, the Security Agent or
any of the Lenders in any of the Lease Agreements or
any of the Approved Sub-Leases, any of the Requisition
Proceeds, any of the Warranties or any of the Engine
Warranties)) to ensure the validity, enforceability or
priority of the liabilities and obligations of any and
all of the Obligors or the rights of the Borrower, the
Agent, the Security Agent and/or each of the Lenders
under any of the Facility Documents and/or the
Operative Documents;
7.7.5 the only business of the Bermuda Option Holder shall
be (i) to hold the benefit of the option to purchase
any or all of the Aircraft in accordance with the
terms of each of the Lease Agreements, to exercise any
such option and to dispose of any Aircraft acquired
pursuant thereto and entering into this Facility
Agreement, the Priorities and Indemnities Agreement,
each of the Lease Agreements and the documents
incidental thereto and the transactions contemplated
by the Facility Documents and the Operative Documents
to which it is, or is to be, a party and (ii) to hold
the benefit of the option to purchase any or all of
the 1994 Facility Aircraft in accordance with the
terms of the Lease Agreements (as that term is defined
in the 1994 Facility Agreement) to exercise any such
option and to dispose of any 1994 Facility Aircraft
acquired pursuant thereto and entering into the 1994
Facility Agreement and the Priorities and Indemnities
Agreement and the Lease Agreements (as those terms are
defined in the 1994 Facility Agreement) and the
documents incidental thereto and the transactions
completed by the Facility Documents and the Operative
Documents (as those terms are defined in the 1994
Facility Agreement) and such activities and matters
incidental to any of the foregoing and the Bermuda
Option Holder covenants that it shall not, without the
prior written consent of the Security Agent (such
consent to be exercisable in the absolute discretion
of the Security Agent) engage in any other business or
transaction;
7.7.6 it shall not, without the prior written consent of the
Security Agent (such consent to be exercisable in the
absolute discretion of the Security Agent), enter into
any contract or agreement with any person, or
otherwise create or incur any liability to, or acquire
any asset from, any person, other than (a) any option
to purchase an Aircraft pursuant to a Lease Agreement,
(b) any liability to the Guarantor or any Subsidiary,
(provided that any such liability is in all respects
subordinate to any Indebtedness of the Bermuda Option
<PAGE>
Holder arising, or which may arise, under any of the
Facility Documents and/or any of the Operative
Documents), and (c) such liabilities with respect to
Taxes, ordinary operating costs and overhead expenses
and the acquisition of such assets as have arisen or
may arise in the ordinary course of carrying on its
business as referred to in Clause 7.7.5;
7.7.7 it shall ensure that at all times its obligations
under the Facility Documents and the Operative
Documents rank at least pari passu with its
obligations owed to all its unsecured creditors save
for obligations mandatorily preferred by law;
7.7.8 it shall duly observe and perform all of the
covenants, obligations and conditions which are
required to be observed and performed on its part
under each of the Operative Documents to which it is,
or is to be, a party;
7.7.9 it shall not create or acquiesce in the creation of
any Security Interest on or with respect to the
Aircraft, the Insurances, the Warranties, the Engine
Warranties or any part thereof other than Permitted
Liens;
7.7.10 it shall not (without the prior written consent of
the Security Agent which consent shall be
exercisable at the absolute discretion of the
Security Agent) issue any shares (other than to
the Bermuda Parent, the Guarantor, any Subsidiary,
AIG or any AIG Group Company);
7.7.11 subject always to the provisions of the Facility
Documents and/or the Operative Documents it shall
not sell, lease, transfer or otherwise dispose of,
by one or more transactions or series of
transactions (whether related or not), the whole
or any part of its revenues or assets (other than
in respect of its revenues, to the Guarantor or
any Subsidiary, and other than any Aircraft
acquired pursuant to its exercise of a purchase
option contained in a Lease Agreement); and
7.7.12 it shall procure that at all times a majority of
the members of its board of directors shall be
officers or employees of the Guarantor, a
Subsidiary, AIG or an AIG Group Company and it
shall procure further that no member of its board
of directors shall be replaced or substituted
(other than by another officer or employee of the
Guarantor, a Subsidiary, AIG or an AIG Group
Company) without the prior written consent of the
Security Agent (which consent shall be exercisable
in the absolute discretion of the Security Agent).
8. CANCELLATION EVENTS
8.1 It shall be a Cancellation Event if:-
8.1.1 any amount due from any of the Obligors under any of
the Facility Documents to which the relevant Obligor
is a party is not paid on the due date therefor and
such failure continues for three (3) Business Days
after notice of such failure has been given by the
Agent to the relevant Obligor, or in respect of any
<PAGE>
sum payable on demand, such failure continues for
three (3) Business Days after notice of such failure
has been given by the Agent to the relevant Obligor
except where any such failure as aforesaid arises as a
result of the making of such payment becoming unlawful
or illegal by reason of any Change in Law, in which
event Clause 7 of the Priorities and Indemnities
Agreement shall apply; or
8.1.2 any of the Obligors fails to observe or perform any of
its obligations (other than the obligations mentioned
in Clause 8.1.1 and Clause 8.1.3 and, in relation to
the Guarantor, the Guarantor's covenants under Clause
7.4 of and Schedule 5 to this Facility Agreement)
under any of the Facility Documents and in respect of
any such failure which is capable of being remedied,
it shall not have been remedied within thirty (30)
days (or if at the end of such thirty (30) day period
such failure has not been so remedied but the relevant
Obligor has demonstrated to the satisfaction of the
Agent that there is a reasonable prospect of remedying
such failure and the relevant Obligor acting in good
faith is using all reasonable endeavours to remedy
such failure within such other period as the Agent in
its opinion agrees, after receipt by the relevant
Obligor of notice from the Agent requiring such
remedy, and in respect of any such failure which is
not capable of remedy it shall, in the opinion of the
Agent materially adversely affect the rights of the
Agent, the Security Agent and/or any of the Lenders
under this Facility Agreement or any other Facility
Document or any Operative Document, except where any
such failure arises as a result of (i) the performance
or observance of any such obligations or undertakings
becoming unlawful or illegal by reason of any Change
in Law (provided that such failure is not a failure to
observe or perform any obligations of Clause 7 of the
Priorities and Indemnities Agreement); or (ii) a
breach by an Approved Sub-Lessee of its obligations
under an Approved Sub-Lease in circumstances where the
relevant Lessee is complying in full with the
provisions of Clause 13 of the relevant Lease
Agreement PROVIDED ALWAYS THAT the grace period
referred to in this Clause 8.1.2 shall not entitle the
relevant Lessee to operate any of the Aircraft to
which such failure relates, or allow any of the
Aircraft to which such failure relates to be operated,
otherwise than in accordance with all applicable
laws); or
8.1.3 the Guarantor fails to observe or perform any of its
covenants under Clause 7.4 of and Schedule 5 to this
Facility Agreement and in respect of any such failure
which is capable of being remedied, such failure shall
not have been remedied within thirty (30) days or (if
at the end of such thirty (30) day period such failure
has not been so remedied but the Guarantor has
demonstrated to the satisfaction of the Agent that
there is a reasonable prospect of remedying such
failure and the Guarantor acting in good faith is
using all reasonable endeavours to remedy such
failure) within such other period as the Agent in its
opinion agrees, after receipt by the Guarantor of
notice from the Agent requiring such remedy; or
8.1.4 any representation, warranty or statement made or
deemed to be made by or on behalf of any of the
<PAGE>
Obligors in any of the Facility Documents or which is
contained in any certificate, statement, notice,
opinion or any other document provided by or on behalf
of any of the Obligors under or in connection with any
of the Facility Documents proves to be incorrect or
misleading in any material respect (as at the date
when made, or when deemed to have been repeated) with
reference to the facts and circumstances subsisting at
such date and in the opinion of the Agent such
incorrectness materially adversely affects the rights
under any of the Facility Documents and/or any of the
Operative Documents of the Borrower, the Agent, the
Security Agent and/or any of the Lenders; or
8.1.5 any Indebtedness (which word shall, for the purposes
of this Clause 8.1.5, have the meaning set out in
Schedule 5) of any of the Obligors (other than
Indebtedness to a Subsidiary of the Guarantor or
Indebtedness of any of the Obligors to the Guarantor)
exceeding thirty-five million Dollars (US$35,000,000)
in aggregate (or the equivalent thereof, as determined
by the Agent by reference to prevailing market
exchange rates from time to time, in any other
currency):-
(a) is not paid when due (or within any applicable
grace period relating thereto); or
(b) is declared to be due or otherwise becomes due or
otherwise becomes capable of being declared due
and payable before its stated maturity by reason
of a default by any of the Obligors or an event of
default (howsoever described) under the document
relating to that Indebtedness; or
8.1.6 AIG ceases to own beneficially, whether directly or
indirectly, at least fifty one per cent. (51%) of the
issued common stock of the Guarantor; or
8.1.7 if any Lessee and/or the Guarantor:-
(a) materially changes or threatens to change
materially the nature or scope of its aircraft
operating leasing and aircraft trading business or
aircraft operating leasing ceases to be a core
activity of its business; or
(b) suspends or threatens to suspend all or a
substantial part of its aircraft operating leasing
and aircraft trading business operations (other
than suspensions of a temporary nature resulting
from (i) a strike or (ii) a similar event not
within the control of the relevant Lessee or the
Guarantor, as the case may be) which it now
conducts directly or indirectly, or any Government
Entity expropriates all or any substantial part of
its assets; or
(c) ceases, or threatens to cease, to carry on all or
a substantial part of its aircraft operating
leasing and aircraft trading business or
operations as presently undertaken at the date of
this Facility Agreement,
and as a result of any of the foregoing is or is
likely, in the reasonable opinion of the Agent,
materially and adversely to affect the ability of any
<PAGE>
of the Obligors to perform its respective obligations
under any of the Facility Documents and/or any of the
Operative Documents; or
8.1.8 an encumbrancer takes possession of, or a trustee in
bankruptcy, administrator, administrative receiver,
examiner, receiver or similar officer is appointed in
respect of all or a substantial part of the business
or assets of any of the Obligors or any such
substantial part of the business or assets is placed
in judicial management or distress or any form of
execution is levied or enforced upon or sued out
against any such part of the business or assets and is
not discharged within fourteen (14) days of being
levied, enforced or sued out; or
8.1.9 any of the Obligors (i) admits in writing its
inability to pay generally its debts as they become
due, (ii) suspends payment of its debts or becomes
unable to pay its debts generally as they fall due,
(iii) suspends or threatens in writing to suspend
making payments or declares a moratorium or seeks a
rescheduling (whether of principal or interest) with
respect to all or any class of its debts (other than
for the purposes of a reconstruction, merger or
amalgamation neither involving nor arising out of the
insolvency of any of the Obligors the terms of which
have been previously approved by the Agent), (iv)
convenes a meeting of its creditors or proposes or
makes any arrangement or composition with or any
assignment for the benefit of its creditors, (v) any
of the Obligors shall be adjudicated or found bankrupt
or insolvent by a competent court, (vi) a petition for
the winding-up or dissolution of any of the Obligors
shall be presented and not discharged within fourteen
(14) days (other than a petition demonstrated by the
relevant Obligor to the satisfaction of the Agent to
have been made frivolously or vexatiously) or (vii)
any order shall be made by any competent court for its
winding up, liquidation or dissolution; or
8.1.10 any of the Obligors takes any corporate action, or
other steps are taken or legal proceedings are
commenced for its winding-up, dissolution (other
than for the purposes of and followed by a
reconstruction previously approved in writing by
the Agent, unless during or following such
reconstruction the relevant Obligor becomes or is
declared to be insolvent), administration or re-
organisation or for the appointment of a
liquidator, receiver, administrator, examiner,
administrative receiver, trustee or similar
officer of it or of any or all of its assets and
revenues; or
8.1.11 there occurs, in relation to any of the Obligors
in any country or territory in which any of them
carries on business or in the jurisdiction of
whose courts any part of their assets are subject
any event which corresponds and has an analogous
effect in law and in result in that country or
territory with any of those mentioned in sub-
Clauses 8.1.8 to 8.1.10 inclusive; or
<PAGE>
8.1.12 If, prior to the first Utilisation Date:-
(a) the guarantee and indemnity obligations of the
Guarantor contained in Clause 10; and/or
(b) the Guarantee and Indemnity (Lessor),
have for any reason become invalid, ineffective or
unenforceable in whole or in any material part; or
8.1.13 any event or series of events occurs which in the
reasonable opinion of the Agent is likely to have
a material adverse effect on the creditworthiness
or financial condition of the Guarantor's Group or
the ability of the Obligors to comply with their
obligations under any of the Facility Documents
and/or any of the Operative Documents to which
they are respectively a party; or
8.1.14 any Termination Event in respect of any Lease
Agreement already entered into, shall occur and be
continuing (PROVIDED THAT if any such event refers
to an opinion of the Borrower or depends upon the
Borrower's consideration or determination of
whether such event has occurred or has or would
have certain consequences, then, irrespective of
the opinion of the Borrower or the Borrower's
consideration or determination at that time, with
respect to such event, such event shall for the
purposes of this sub-Clause 8.1 be deemed to have
occurred if the Majority Lenders are of the
relevant opinion or consider or determine that the
relevant event has occurred or has or would have
the relevant consequences); or
8.1.15 any Cancellation Event (as that term is defined in
the 1994 Facility Agreement) shall occur and be
continuing;
and, whilst any such circumstances continue, the Agent,
acting on the instructions of the Majority Lenders, may give
notice to the Guarantor that it elects to treat such event
as a Cancellation Event.
8.2 Without prejudice to any other rights of the Lenders
(whether under the Facility Documents and/or the Operative
Documents or otherwise howsoever), at any time after the
Agent has given the notice referred to in Clause 8.1 to the
Guarantor declaring that a Cancellation Event has occurred,
then either:-
8.2.1 if the Agent so specifies in the notice referred to in
Clause 8.1, the right of the Bermuda Lessee or, as the
case may be, the Irish Lessee to serve a Utilisation
Notice and/or to require any Advance to be made in
relation to any Utilisation shall be suspended until
the Cancellation Event has been remedied to the
satisfaction of the Agent, acting on the instructions
of the Majority Lenders (in which case the Agent shall
give notice to the Bermuda Lessee and the Irish Lessee
to that effect), whereupon the Unutilised Facility
shall become available for Utilisation on the terms
and subject to the conditions of this Facility
Agreement; or
8.2.2 if the Agent so specifies in the notice referred to in
Clause 8.1:-
(a) no further Advances may be made in relation to any
Utilisation; and
<PAGE>
(b) the Unutilised Facility shall be cancelled and the
Lenders and the Representatives shall be relieved
of any obligation to enter into any Utilisation
Documentation in respect thereof; and
(c) the Lenders and the Representatives may exercise
such other rights in respect of the occurrence of
such event as is given to them under the Facility
Documents and/or the Operative Documents relating
to any Utilisation already drawndown.
9. LOAN EVENTS OF TERMINATION
9.1 In respect of any of the Credits relating to an Advance,
each of the following events shall constitute a Loan Event
of Termination:-
9.1.1 a failure by the Borrower to pay any amount payable by
it hereunder (whether on a due date or on demand) or
under any of the Facility Documents or under any of
the Operative Documents within three (3) Business Days
of the due date or, in the case of an amount due on
demand, from the date of receipt of the demand in
respect thereof; or
9.1.2 a failure by the Borrower to observe or perform its
obligations under any of the undertakings contained in
Clause 7.3 and, but only if such default is capable of
remedy, such default shall continue for more than
fourteen (14) days after receipt of notice thereof
from the Agent without being remedied to the
satisfaction of the Agent; or
9.1.3 any representation or warranty made by any or all of
the Borrower, the Trustee or the Manager in writing
herein or in any of the Facility Documents or in any
of the Aircraft Operative Documents or which is
contained in any document or certificate furnished
under or in connection with any of the Facility
Documents or any of the Aircraft Operative Documents
to which any or all of the Borrower, the Trustee or
the Manager is a party shall prove to have been false
or incorrect in any respect on the date as of which
made, which in the opinion of the Majority Lenders
would materially and adversely affect their respective
interests or rights hereunder or thereunder; or
9.1.4 a default by any or all of the Borrower, the Trustee
or the Manager under any of the Facility Documents or
any of the Aircraft Operative Documents to which they
are respectively parties, in the performance of or
compliance with any Agreement, condition or provision
hereof or thereof (other than as referred to in
Clauses 9.1.1, 9.1.2, 9.1.3 or 9.1.5) which default,
in the opinion of the Majority Lenders, would
materially and adversely affect their respective
interests and rights hereunder or thereunder and, but
only if such default is capable of remedy, such
default shall continue for more than fourteen (14)
days after receipt of notice thereof from the Agent
without being remedied to the satisfaction of the
Majority Lenders; or
9.1.5 any or all of the Borrower, the Trustee or the Manager
shall (i) admit in writing its inability to pay its
debts generally as they become due, (ii) file a
voluntary petition in bankruptcy or a voluntary
<PAGE>
petition or an answer seeking reorganisation in a
proceeding under any bankruptcy laws (as now or
hereafter in effect) or an answer admitting the
material allegations of a petition filed against any
or all of the Borrower, the Trustee or the Manager or
any or all of the Borrower, the Trustee or the Manager
shall by voluntary petition, answer or consent, seek
relief under the provisions of any other now existing
or future bankruptcy or other similar law providing
for the reorganisation or winding-up of corporations,
or providing for an Agreement, composition, extension
or adjustment with its Creditors, (iii) make a general
assignment for the benefit of Creditors, (iv) consent
to the appointment of a receiver, administrator,
administrative receiver, trustee, liquidator or the
like of itself or of a substantial part of its
property or (v) cease or threaten to cease to carry on
its business; or
9.1.6 the commencement of a proceeding or a case, without
the application or consent of any or all of the
Borrower, the Trustee or the Manager, in any court of
competent jurisdiction, which shall not be struck out
within thirty (30) days of commencement and which
seeks (i) the liquidation, reorganisation,
dissolution, winding-up, or composition or
readjustment of debts of any or all of the Borrower,
the Trustee or the Manager, (ii) appointment of a
trustee, receiver, administrator, administrative
receiver, custodian, liquidator or the like of any or
all of the Borrower, the Trustee or the Manager, or of
all or any substantial part of the property or assets
of any or all of the Borrower, the Trustee or the
Manager, or (iii) similar relief in respect of any or
all of the Borrower, the Trustee or the Manager under
any law providing for the relief of debtors, or any
order for relief against any or all of the Borrower,
the Trustee or the Manager, shall be entered in an
involuntary case under such bankruptcy law; or
9.1.7 the occurrence of any event analogous to any of the
events specified in Clauses 9.1.5 or 9.1.6 in any
jurisdiction; or
9.1.8 any person (other than the Agent, the Security Agent,
the Lenders or any of them) asserts a claim (not being
in respect of any Permitted Lien):-
(a) which is likely to establish in favour of such
person a prior right or interest in any of the
property the subject of the Facility Documents
and/or the Aircraft Security Documents;
(b) which the Security Agent reasonably considers to
be prejudicial to the rights and interests of the
Majority Lenders in respect of any of the property
the subject of the Facility Documents and/or the
Aircraft Security Documents; and
(c) such assertion of a claim is not prevented,
dismissed or dealt with (including, without
limitation, through the provision of alternative
collateral) to the reasonable satisfaction of the
Security Agent within a period of fourteen (14)
days (or such longer period as the Agent shall
approve) from the date on which the Security Agent
<PAGE>
notifies the Borrower and the relevant Lessee of
the claim referred to in this Clause 9.1.8, or
9.1.9 a Loan Event of Termination in respect of any of the
other Credits relating to any other Advance shall
occur; or
9.1.10 an Acceleration Event shall occur; or
9.1.11 a Loan Event of Termination (as that term is
defined in the 1994 Facility Agreement) shall
occur and such Loan Event of Termination (as that
term is defined in the 1994 Facility Agreement) is
continuing after the cure period referred to in
Clause 25 of the Priorities and Indemnities
Agreement (as that term is defined in the 1994
Facility Agreement).
9.2 Following the occurrence of any of the Loan Events of
Termination referred to in Clause 9.1, and provided that
such Loan Event of Termination is continuing after the cure
period referred to in Clause 25 of the Priorities and
Indemnities Agreement, the Agent may (acting in accordance
with the instructions of the Majority Lenders), without
prejudice to any other rights or any power or remedy
available to the Lenders, by notice to the Borrower (such
notice to be copied to the relevant Lessee and the
Guarantor) declare that:-
9.2.1 the Credits shall be cancelled forthwith whereupon
the same shall be cancelled and the commitment of
each Lender in respect of the Aircraft shall be
reduced to zero; and/or
9.2.2 the principal amount of the Credits then outstanding
and all interest accrued thereon and all other sums
payable under the Facility Documents and the Aircraft
Operative Documents in connection with the Credits
shall become immediately due and payable, whereupon
the same shall become immediately due and payable;
and/or
9.2.3 the Agent and/or the Security Agent may enforce its
rights and those of the Lenders under all or any of
the Facility Documents and/or the Aircraft Operative
Documents or under applicable law.
9.3 Any notice which any provision of Clause 9.1 provides is to
be served by the Agent upon the Borrower shall be copied by
the Agent to the relevant Lessee.
10. GUARANTEE AND INDEMNITY
10.1 GUARANTEE AND INDEMNITY
In consideration of the Lenders agreeing to make available
the Facility to the Lessees through the Borrower, the
Guarantor:-
10.1.1 as primary obligor and not as surety only, hereby
unconditionally and irrevocably guarantees to the
Agent, the Security Agent and each of the Lenders
the due and punctual observance and performance by
any or all of the Obligors of all of the
Guaranteed Obligations;
<PAGE>
10.1.2 hereby unconditionally covenants with and
undertakes to the Agent, the Security Agent and
each of the Lenders that in the event of a default
by any or all of the Obligors in the observance or
performance for whatever reason of any of their
respective Guaranteed Obligations, the Guarantor
shall forthwith on demand by the Agent or, as the
case may be, the Security Agent or any Lender
perform such Guaranteed Obligation, or cause such
Guaranteed Obligation to be performed, punctually
as if such Guaranteed Obligation were performed by
the relevant Obligor;
10.1.3 hereby irrevocably and unconditionally undertakes,
covenants and agrees with the Agent, the Security
Agent and each of the Lenders as a primary
obligation to indemnify the Agent, the Security
Agent and each of the Lenders and keep the Agent,
the Security Agent and each of the Lenders
indemnified on demand and on a full indemnity
basis from and against any and all Losses or
Expenses incurred or sustained by the Agent and/or
the Security Agent and/or any of the Lenders in
relation to and arising out of the failure of any
or all of the Obligors duly and punctually to
perform the Guaranteed Obligations or as a result
of the whole or any part of the Guaranteed
Obligations being or becoming void, voidable,
unenforceable or ineffective as against any or all
of the Obligors for any reason whatsoever
irrespective of whether such reason or any related
fact or circumstance was known or ought to have
been known to the Agent, the Security Agent, any
of the Lenders or any of their respective
officers, employees, agents or advisers.
10.2 PRINCIPAL DEBTOR
As a separate and alternative stipulation in addition to its
liabilities in Clause 10.1, the Guarantor hereby agrees that
any part of the Guaranteed Obligations which is expressed to
be performed by any or all of the Obligors under the
Facility Documents and/or the Operative Documents but which
may not be recoverable from, or capable of performance by,
the Guarantor on the footing of a guarantee (whether by
reason of the dissolution of any or all of the Obligors or
any reconstruction or amalgamation in which or as a
consequence of which any or all of the Obligors loses its
separate corporate identity or any other fact or
circumstance whatsoever and whether or not such fact or
circumstance was known or ought to have been known to the
Agent and/or the Security Agent and/or any of the Lenders or
any of their respective officers, employees, agents or
advisers) shall nevertheless be recoverable from, or capable
of performance by, the Guarantor as if it were the principal
debtor.
10.3 LIABILITY FOR INTEREST
In addition to its liabilities under Clauses 10.1 and 10.2
above, the Guarantor hereby agrees to pay or cause to be
paid to the Agent on demand (i) interest (including compound
interest and both before and after judgment) on the amount
or any part thereof for the time being unpaid and due to the
Agent and/or the Security Agent and/or the Lenders under
this Clause 10 from the date of demand on the Guarantor for
payment until payment is made at the Default Rate (unless
<PAGE>
interest at the Default Rate continues to be charged to any
or all of the Obligors in respect of that same amount under
the Facility Documents and/or the Operative Documents and is
thereby payable by the Guarantor pursuant to Clause 10.1 or
10.2), and (ii) all legal and other costs, charges and
expenses (on a full indemnity basis) incurred by or on
behalf of the Agent and/or the Security Agent and/or any of
the Lenders following any default by any or all of the
Obligors under the Facility Documents and/or the Operative
Documents in enforcing or endeavouring to enforce the
payment of any sums due under this Clause 10.
10.4 CONTINUING OBLIGATIONS
The guarantee and indemnity contained in this Clause 10
shall be a continuing guarantee and indemnity which shall
continue in full force and effect irrespective of the
legality, validity or enforceability of any other provision
of the Facility Documents and/or the Operative Documents and
shall not be satisfied by an intermediate payment of the
whole or part of any sum or sums of money owing by any or
all of the Obligors under the Facility Documents and/or the
Operative Documents and shall remain in operation until all
monies owing under the terms of the Facility Documents
and/or the Operative Documents shall have been paid off or
satisfied and shall be in addition to and not in
substitution for or derogation of any other security held by
the Agent, the Security Agent, any of the Lenders, the
Borrower or any of them in respect of the obligations of any
or all of the Obligors under the Facility Documents and/or
the Operative Documents.
10.5 PRIMARY OBLIGATIONS
The Guarantor hereby agrees that its obligations under this
Clause 10 are the primary obligations of it and shall be
unconditional and shall be in addition to and shall not in
any way be prejudiced or affected by:-
10.5.1 any collateral or other indemnity or security
(including rights of subrogation) now or hereafter
held by the Agent and/or the Security Agent and/or
any of the Lenders and/or the Borrower in respect
of the Guaranteed Obligations; or
10.5.2 any forbearance, whether as to payment,
performance or otherwise howsoever or the absence
of any action to enforce the same or any time or
other indulgence granted by the Agent and/or the
Security Agent and/or the Lenders and/or the
Borrower to any one or more of the Obligors under
any of the Facility Documents and/or the Operative
Documents; or
10.5.3 any variation, amendment, supplement, extension,
modification or waiver of or consent to any of the
terms of the Facility Documents and/or the
Operative Documents; or
10.5.4 any arrangement, compromise or composition made
between the Agent and/or the Security Agent and/or
any of the Lenders and/or the Borrower and any one
or more of the Obligors and/or any other person;
or
10.5.5 the liability of any one or more of the Obligors
or any other person or guarantor to the Agent, the
<PAGE>
Security Agent and/or any of the Lenders and/or
the Borrower under any of the Facility Documents
and/or any of the Operative Documents being
discharged or varied or the Agent and/or the
Security Agent and/or any of the Lenders and/or
the Borrower concurring in, accepting or varying
any compromise, arrangement or settlement with any
one or more of the Obligors and/or any other
person or guarantor or concurring in or varying
any deed of arrangement or deed of assignment for
the benefit of creditors of any such person;
10.5.6 the Agent and/or the Security Agent and/or any of
the Lenders and/or the Borrower taking or omitting
to take any security from any one or more of the
Obligors and/or any other person or guarantor in
respect of the obligations of any one or more of
the Obligors under or in respect of any of the
Guaranteed Obligations whether contemporaneously
with this Facility Agreement or otherwise;
10.5.7 the taking of any other or further securities or
guarantees by the Agent and/or the Security Agent
and/or any of the Lenders and/or the Borrower or
the Agent and/or the Security Agent and/or any of
the Lenders and/or the Borrower omitting to take
any other or further securities or guarantees or
any dealing with, exchange, release or invalidity
of any securities or guarantees held by the Agent
and/or the Security Agent and/or any of the
Lenders and/or the Borrower or any omission or
neglect to perfect or enforce any such security or
guarantee;
10.5.8 the insolvency, liquidation or bankruptcy of any
one or more of the Obligors or any other person or
any amalgamation, merger or reconstruction of any
one or more of the Obligors or any change in the
constitution, ownership, status or control of any
one or more of the Obligors;
10.5.9 the total or partial invalidity or
unenforceability of or any defect in any of the
Facility Documents and/or the Operative Documents
or any security constituted hereafter in effect,
which affects or might in any manner affect any of
the terms and provisions hereof or thereof or the
rights of the Agent and/or the Security Agent
and/or any of the Lenders and/or the Borrower
against any one or more of the Obligors; or
10.5.10 any other fact or circumstance whatsoever and
whether or not similar to any of the foregoing
which could or might in any way diminish the
obligations of the Guarantor under this Clause 10.
10.6 NO DEMANDS, ETC.
The Guarantor hereby waives any right to require a
proceeding first against any one or more of the Obligors and
any other notice and all demands whatsoever (other than the
initial demand for payment or performance upon the relevant
Obligor where the same is required pursuant to the terms of
the Facility Documents and/or the Operative Documents). Any
settlement or discharge between the Agent and/or the
Security Agent and/or the Lenders and the Guarantor shall be
conditional upon no security or payment to the Agent and/or
<PAGE>
the Security Agent and/or any of the Lenders any one or more
of the Obligors or any other person on behalf of the
relevant Obligor being avoided or reduced by virtue of any
provisions or enactments relating to bankruptcy, insolvency
or liquidation for the time being in force and the Agent
and/or the Security Agent and/or each of the Lenders shall
be entitled to recover the value or amount of any such
security or payment from the Guarantor subsequently as if
such settlement or discharge had not occurred.
The Guarantor hereby waives further:- (a) notice of
acceptance hereof; (b) notice of any financial
accommodations made or extended under the Facility Documents
and/or the Operative Documents or of the creation or of the
existence of any Guaranteed Obligations; (c) notice of the
amount of the Guaranteed Obligations, subject, however to
the Guarantor's right to make enquiry of the Agent and/or
the Security Agent and/or any of the Lenders to ascertain
the amount of the Guaranteed Obligations at any reasonable
time; (d) notice of any adverse change in the financial
condition of any one or more of the Obligors or of any other
fact which might increase the Guarantor's risk hereunder;
(e) except as expressly required under any of the Facility
Documents and/or Operative Documents, notice of any
Cancellation Event, Termination Event, Mandatory Prepayment
Event or Loan Event of Termination; and (f) all other
notices except if such notice is specifically required to be
given to the Guarantor under any of the Facility Documents
and/or Operative Documents and demands to which the
Guarantor might otherwise be entitled.
10.7 TIME OF THE ESSENCE
Time shall be of the essence as regards the Guarantor's
obligations hereunder, but no failure or delay on the part
of the Agent and/or the Security Agent and/or any of the
Lenders in exercising any right or remedy hereunder or under
this Facility Agreement shall operate as a waiver thereof
nor shall any single or any partial exercise or waiver of
any such right or remedy preclude its further exercise or
the exercise of any other right and the rights and remedies
hereby or thereby provided are cumulative and not exclusive
of any rights or remedies provided by law.
10.8 SECURITIES REALISED ACCOUNT
For the purpose of enabling the Agent and/or the Security
Agent and/or the Lenders to sue any one or more of the
Obligors or to prove in the liquidation or insolvency of any
one or more of the Obligors or in any similar proceedings
for any monies due but unpaid by any one or more of the
Obligors to the Agent and/or the Security Agent and/or the
Lenders under any of the Facility Documents and/or the
Operative Documents, the Agent, the Security Agent or the
Lenders may at any time and for such time as it may think
fit place any monies received or recovered under this Clause
10 or under any other guarantee contained in any of the
Facility Documents and/or the Operative Documents to the
credit of a securities realised account or accounts (subject
to the accrual thereon of interest at market rates as
conclusively determined by the Agent which interest shall be
credited to the relevant account) without any obligation on
the part of the Agent, the Security Agent or the Lenders to
apply the same or any part thereof in or towards the
discharge of the indebtedness and liabilities of the
Guarantor. Upon the Agent, the Security Agent or the
Lenders (as the case may be) reasonably considering the
<PAGE>
further retention of such monies to be unnecessary, the
amount standing to the credit of the relevant account or
accounts shall be paid to the Guarantor.
10.9 SET-OFF AND SECURITY
From the date or dates upon which any demand is properly
made against the Guarantor under this Facility Agreement
until such time as each of the Agent, the Security Agent and
the Lenders have received, and are entitled to retain,
payment of the Guaranteed Obligations in full, the Guarantor
shall not:-
10.9.1 claim any set-off or counterclaim against any one
or more of the Obligors in respect of any payment
by the Guarantor hereunder or in respect of any
outstanding actual or contingent liability between
the Guarantor any one or more of the Obligors; or
10.9.2 make or enforce any claim or right (including a
right of subrogation or contribution) against any
one or more of the Obligors or prove in
competition with the Agent and/or the Security
Agent and/or any of the Lenders, in the event of
the liquidation or winding-up of any one or more
of the Obligors in respect of any payment by the
Guarantor hereunder or in respect of any
outstanding actual or contingent liability between
the Guarantor and any one or more of the Obligors;
or
10.9.3 in competition with the Agent and/or the Security
Agent and/or the Lenders, claim the benefit of any
security or guarantee now or hereafter held by the
Agent and/or the Security Agent and/or the
Lenders, for any money or liabilities due or
incurred by any one or more of the Obligors to the
Agent and/or the Security Agent and/or the
Lenders, or any share therein.
10.10 ACKNOWLEDGEMENT AND DECLARATION
The Guarantor agrees, acknowledges and declares that:-
10.10.1 if any payment received by any of the Agent and/or
the Security Agent and/or the Lenders and/or the
Borrower in respect of monies owing or due and
payable by any one or more of the Obligors to any
of the Agent and/or the Security Agent and/or the
Lenders and/or the Borrower shall on the
subsequent insolvency or liquidation of any one or
more of the Obligors be avoided under any laws
relating to insolvency or liquidation, such
payment shall not be considered as discharging or
diminishing the liability of the Guarantor under
this Clause 10 and this Clause 10 (and the other
terms of this Facility Agreement insofar as
relevant thereto) shall continue to apply as if
such payment had at all times remained owing by
the relevant Obligor; and
10.10.2 this Facility Agreement (insofar as it relates to
the guarantee and indemnity contained in this
Clause 10) shall remain the property of the Agent
and/or the Security Agent and/or the Lenders and
notwithstanding that all monies and liabilities
<PAGE>
due or incurred by any or all of the Obligors to
any of the Agent and/or the Security Agent and/or
the Lenders which are guaranteed hereunder shall
have been paid or discharged the Security Agent
shall be entitled not to discharge the guarantee
and indemnity contained in this Clause 10 or any
security held by the Security Agent for the
obligations of the Guarantor hereunder for a
period of seven (7) months after the last of such
monies and liabilities have been paid or
discharged and in the event of bankruptcy,
winding-up or any similar proceedings being
commenced in respect of any one or more of the
Obligors the Security Agent shall be at liberty
not to discharge the guarantee and indemnity
contained in this Clause 10 or any security held
by the Security Agent for the obligations of the
Guarantor hereunder for and during such further
period as the Security Agent may reasonably
determine.
11. FEES
The Guarantor shall pay to each of the Agent (for itself and
for the account of the Lenders) and the Borrower certain
fees (including, without limitation, management and
commitment fees), at the times and in the amounts specified
in letters from the Agent to the Guarantor and letters from
the Borrower to the Guarantor each entitled "Fees Letter
Agreement".
12. INCREASED COSTS, FEES AND EXPENSES AND VALUE ADDED TAX
For the avoidance of doubt, the parties hereto agree that
the provisions of Clauses 5, 6, 7, 12 and 18 of the
Priorities and Indemnities Agreement shall apply to this
Facility Agreement as if set out herein in full subject to
Clause 10 of the Priorities and Indemnities Agreement.
13. RIGHTS CUMULATIVE, VARIATION, WAIVERS
The respective rights of the Agent, the Security Agent, any
Lender and the Borrower pursuant to this Facility Agreement
are cumulative, may be exercised as often as they consider
appropriate and are in addition to their respective rights
under the general law. The respective rights in relation to
the Facility (whether arising pursuant to this Facility
Agreement or under the general law) shall not be capable of
being waived or varied otherwise than by an express waiver
or variation in writing; and in particular any failure to
exercise, or any delay in exercising, any such rights shall
not operate as a waiver or variation of that or any other
such right; any defective or partial exercise of any such
rights shall not preclude any other or further exercise of
that or any other such right; and no act or course of
conduct or negotiation on their part, or on their behalf,
shall in any way preclude them from exercising any such
right or constitute a suspension or any variation of any
such right.
14. ASSIGNMENTS AND TRANSFERS
14.1 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement, none of the Obligors
shall assign any rights or transfer any obligations arising
from this Facility Agreement without the prior written
consent of each of the Lenders (which each of the Lenders
shall have absolute discretion to withhold).
<PAGE>
14.2 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement, the Borrower shall not
assign any rights or transfer any obligations arising from
this Facility Agreement without the prior written consent of
the Guarantor (unless and until the occurrence of an
Acceleration Event) and of the Agent acting on the
instructions of the Majority Lenders (which the Guarantor
and the Lenders shall have absolute discretion to withhold).
14.3 Any Lender may at any time transfer all or any of its
rights, benefits and obligations under this Facility
Agreement or change its Lending Office (whether in the same
or a different jurisdiction) provided always that (a) prior
to the transfer or change in Lending Office becoming
effective (but without affecting the validity of the
transfer or change in Lending Office), the relevant Lender
gives notice to the Guarantor (with a copy to the Agent) of
the identity of the Bank Transferee or, as the case may be,
the new Lending Office and the jurisdiction of tax residence
of the Bank Transferee or, as the case may be, the new
Lending Office and the jurisdiction of tax residence of the
persons controlling the Bank Transferee, (b) the Bank
Transferee has a credit rating with Standard and Poor's
Corporation of at least BBB or a credit rating with Moody's
Investor Service Inc. of at least Baa or, in each case, the
equivalent successor rating, and is not on negative credit
watch to fall below such rating, (c) the Bank Transferee is
neither resident in the United Kingdom for United Kingdom
tax purposes nor controlled by persons who are so resident
if the transfer to the Bank Transferee would result in
Advances of Lenders resident in the United Kingdom for
United Kingdom tax purposes or controlled by persons who are
so resident constituting fifty per cent. (50%) or more of
the Advances as at the date of the proposed transfer, and
(d) none of the Lessees shall be under any obligation to pay
any greater amount under the Facility Documents following
and as a consequence (directly or indirectly) of any such
transfer or change in Lending Office unless and until a
Change in Law occurs (excluding any Change of Law which
occurs, or the intended implementation of which is
officially announced before the date of such transfer or
change in Lending Office), PROVIDED FURTHER THAT the
provisos set out above shall not apply to the extent that
any Lender (i) is required by any of the Export Credit
Agencies so to assign or transfer (whether to another
Lending Office of the Lender or to the relevant Export
Credit Agency or to another bank or financial institution)
or (ii) has so assigned or transferred or changed its
Lending Office pursuant to Clauses 5.5.2 or 13 of the
Priorities and Indemnities Agreement or in the circumstances
described in the proviso to Clause 24.3 of the Priorities
and Indemnities Agreement.
14.4 If any Lender (the "Existing Lender") wishes to transfer all
or any part of its rights, benefits and/or obligations to
another bank or financial institution (the "Bank
Transferee"), such transfer shall be effected by
way of a novation by the delivery to, and the execution by,
the Agent of a duly completed Transfer Certificate or in
such other manner as all parties hereto may agree.
14.5 On the date specified in the Transfer Certificate:-
(i) to the extent that in the Transfer Certificate the
Existing Lender seeks to transfer its rights and
<PAGE>
obligations hereunder the Borrower, each of the
Obligors and the Existing Lender shall each be
released from further obligations to each other under
this Facility Agreement and their respective rights
against each other shall be cancelled (such rights and
obligations being referred to in this Clause 14.5 as
"Discharged Rights and Obligations");
(ii) the Borrower, the Agent, the Security Agent, each of
the Obligors and the Bank Transferee shall each assume
obligations towards each other and/or acquire rights
against each other which, subject to Clause 14.3
above, differ from the Discharged Rights and
Obligations only insofar as the Borrower, each of the
Obligors, and the Bank Transferee have assumed and/or
acquired the same in place of the Borrower, each of
the Obligors and the Existing Lender;
(iii) the Agent, the Security Agent, each of the Obligors,
the Borrower, the Bank Transferee and the other
Lenders shall acquire the same rights and assume the
same obligations among themselves as they would have
acquired and assumed had the Bank Transferee
originally been a party hereunder as a Lender with the
rights and/or the obligations acquired or assumed by
it as a result of the transfer; and
(iv) the Bank Transferee, the Agent, the Security Agent and
each of the other Lenders shall acquire the same
rights and assume the same obligations amongst
themselves in respect of the Lenders Agreement and the
Interlender Agreement as they would have acquired and
assumed had the Bank Transferee originally been a
party to the Lenders Agreement and the Interlender
Agreement as a Lender in the place of the Existing
Lender
PROVIDED THAT the provisions of this Clause 14.5 shall not
become effective unless and until the Bank Transferee has
executed a transfer certificate in relation to the
Priorities and Indemnities Agreement transferring to such
Bank Transferee the same proportion of the Existing Lenders'
rights, benefits and obligations under the Priorities and
Indemnities Agreement as are transferred to such Bank
Transferee in relation to this Facility Agreement by the
Transfer Certificate referred to in Clause 14.4.
14.6 Each of the Obligors and the Borrower each with respect to
itself hereby confirm that the execution of any such
Transfer Certificate by the Agent, for and on behalf of,
inter alia, each of the Obligors and the Borrower
respectively shall be binding upon and enforceable against
each of the Obligors and the Borrower respectively as if
each of the Obligors and the Borrower had each executed the
Transfer Certificate itself.
14.7 The Agent shall promptly complete Transfer Certificates on
written request by an Existing Lender. Each of the
Obligors, the Borrower and each of the Lenders hereby
irrevocably authorise the Agent to execute any duly
completed Transfer Certificate on its behalf provided that
such authorisation does not extend to the execution of a
Transfer Certificate on behalf of either the Existing Lender
or the Bank Transferee named therein.
14.8 The Agent shall promptly notify the Guarantor and the
Borrower of (i) the receipt and execution on its behalf by
<PAGE>
the Agent of any Transfer Certificate and (ii) as soon as it
becomes aware thereof any change in the jurisdiction of a
Lending Office of a Lender.
14.9 In relation to any transfer contemplated by this Clause 14
which is undertaken voluntarily by the Agent, the Security
Agent or any Lender, the costs and expenses thereby incurred
by the Agent, the Security Agent and each Lender shall be
for the account of the Bank Transferee or, as the case may
be, the Existing Lender. Subject thereto, the Lessees on a
joint and several basis hereby agree to pay on demand all
the out-of-pocket costs and expenses (including, without
limitation, legal and other professional fees and expenses)
incurred by the Agent, the Security Agent and each Lender in
connection with any transfer contemplated by this Clause 14.
For the purposes of this Clause 14.9, a voluntary transfer
by the Borrower, the Agent, the Security Agent or any Lender
shall not include any transfer as a result of the
application of Clauses 5.5.2 or 13 of the Priorities and
Indemnities Agreement or the proviso to Clause 24.3 of the
Priorities and Indemnities Agreement nor any transfer
required by any of the Export Credit Agencies or, in respect
of the Borrower, any transfer required by reason of the
Borrower ceasing to be resident exclusively on the Cayman
Islands for tax purposes or ceasing to be a "tax exempt
company" for the purposes of the laws of the Cayman Islands
or the Borrower becoming, or being deemed to be, resident in
the United Kingdom for Tax purposes.
15. SEVERABILITY
If at any time any provision hereof is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity nor the
enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under
the law of any other jurisdiction shall in any way be
affected or impaired thereby.
16. PRESERVATION OF INDEMNITIES
The indemnities contained in this Facility Agreement shall
constitute a separate and independent obligation from the
other obligations contained in this Facility Agreement,
shall give rise to a separate and independent cause of
action, shall apply irrespective of any indulgence granted
by the Borrower, the Agent, the Security Agent and any
Lender from time to time and shall continue in full force
and effect notwithstanding the termination or expiry of this
Facility Agreement.
17. NOTICES
17.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
(a) in order to be valid be in English and in writing;
(b) be deemed to have been duly served on, given to or
made in relation to a party if it is:-
(i) left at the address of that party set out herein
or at such other address as that party may notify
to the other parties hereto in writing from time
to time or to any officer of the addressee; or
<PAGE>
(ii) posted by first class airmail postage prepaid
in an envelope addressed to that party at
such address; or
(iii) sent by facsimile to the facsimile number of
that party set out herein or to such other
number as that party may notify to the other
parties hereto from time to time;
(c) be sufficient if:-
(i) executed under the seal of the party giving,
serving or making the same; or
(ii) signed or sent on behalf of the party giving,
serving or making the same by any attorney,
director, secretary, agent or other duly
authorised representative of such party;
(d) be effective:-
(i) in the case of a letter, when left at the address
referred to in Clause 17.1(b)(i) or delivered in
person to any officer of the addressee or (as the
case may be) seven (7) Business Days after being
deposited in the post first class airmail postage
prepaid in an envelope addressed to the addressee
at the address referred to in Clause 17.1(b)(i);
and
(ii) in the case of a facsimile transmission, when
receipt is confirmed by return facsimile or
by telephone (or on actual receipt if not so
confirmed);
17.2 For the purposes of this Clause 17, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
(a) if to the Bermuda Lessee to:-
ILFC (BERMUDA) 7, LTD.
29 Richmond Road
Hamilton HM-AX
Bermuda
Facsimile No: 1 809 292 6735/2276
Attention: Mr. T. Leishman
with a copy to the Guarantor
(b) if to the Irish Lessee
ILFC IRELAND 2 LIMITED
AIG House
Merrion Road
Dublin 4
Ireland
Facsimile No: 353 1 283 7774
Attention: Mr D. Kent
with a copy to the Guarantor
<PAGE>
(c) if to the Bermuda Parent to:-
ILFC (BERMUDA) 5, LTD.
29 Richmond Road
Hamilton HM-AX
Bermuda
Facsimile No: 1 809 292 6735/2276
Attention: Mr. T. Leishman
with a copy to the Guarantor
(d) if to the Irish Parent to:-
ILFC IRELAND 3 LIMITED
AIG House
Merrion Road
Dublin 4
Ireland
Facsimile No: 353 1 283 7774
Attention: Mr D. Kent
with a copy to the Guarantor
(e) if to the Bermuda Option Holder to:-
ILFC (BERMUDA) 6, LTD.
29 Richmond Road
Hamilton HM-AX
Bermuda
Facsimile No: 1 809 292 6735/2276
Attention: Mr. T. Leishman
with a copy to the Guarantor
(f) if to the Guarantor to:-
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars
39th Floor
Los Angeles
CA 90067
United States
Tel: 1 310 788 1999
Facsimile No: 1 310 788 1990
Attention: Legal Department and Chief
Financial Officer
(g) if to the Borrower to:-
ENCORE LEASING LIMITED
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Tel: 809 949 7942
Facsimile No. 809 929 8340
Attention: Trust Services
with a copy to the Agent
<PAGE>
(h) if to the Agent or the Security Agent to:-
NATIONAL WESTMINSTER BANK PLC
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
England
Tel: 071 375 5738/5931/5929
Facsimile No: 071 375 5854
Attention: Head of Corporate Banking Agency
Group
(i) if to a Lender from any of the Obligors, then to such
Lender care of the Agent.
(j) if to a Lead Manager, then to the address and/or
facsimile number set out opposite the name of such
Lead Manager in the relevant Part of Schedule 1.
18. SET-OFF AND PRO RATA PAYMENTS
18.1 SET-OFF
The Borrower, each Lender and each of the Representatives
may, at any time after the occurrence of an Acceleration
Event and/or Mandatory Prepayment Event set off from any sum
payable by it to any one or more of the Obligors under any
of the Facility Documents and/or any of the Operative
Documents any sum due and unpaid by the relevant Obligor to
the Borrower, such Lender or Representative in each case
under or in relation to any of the Facility Documents and/or
the Operative Documents and any document or agreement
entered into pursuant to or in connection with any of the
Facility Documents and/or the Operative Documents.
18.2 Subject to the provisions of Clause 5.6.2(b) hereof and
Clause 5.2 of the Priorities and Indemnities Agreement, the
Borrower shall not be entitled to deduct any sum which may
be due to the Borrower from the Lenders (or any of them)
howsoever arising from any sum payable by the Borrower under
or in connection with any of the Facility Documents and/or
any of the Operative Documents.
The Borrower shall not be entitled to refuse or to postpone
performance of any payment or other obligation under any of
the Facility Documents and/or any of the Operative Documents
by reason of any claim which it may have or may consider
that it has against the Lenders (or any of them) under or in
connection with any of the Facility Documents and/or any of
the Operative Documents, or any other agreement with any of
the Lenders.
18.3 PRO-RATA SHARING
(a) Provided that no Acceleration Event has occurred and
is continuing, if any Lender (the "Sharing Lender")
shall at any time obtain (whether by way of voluntary
or involuntary payment, right of set-off, or
otherwise) a proportion of its Credits in any sum due
from the Borrower or a proportion in respect of its
participation in any sum due from any one or more of
the Obligors under any of the Facility Documents
and/or any of the Operative Documents which is greater
than the proportion obtained by the Lender or Lenders
respectively obtaining the smallest proportion of its
Credits, or as the case may be, its participation
therein, including a nil receipt, (the amount so
obtained by the Sharing Lender which is attributable
<PAGE>
to such excess being here called "the excess amount"),
then:-
(i) the Sharing Lender shall promptly pay to the
Agent, for the account of the Lenders, an amount
equal to the excess amount, whereupon the Agent
shall notify the Borrower or, as the case may be,
the relevant Obligor of such amount and its
receipt by the Agent;
(ii) the Agent shall treat such payment as if it
were a payment by the Borrower or, as the
case may be, the relevant Obligor on account
of sums owed to the Lenders; and
(iii) as between the Borrower or, as the case may
be, the relevant Obligor and the Sharing
Lender the excess amount shall be treated as
not having been paid, while as between the
Borrower or, as the case may be, the relevant
Obligor and each Lender it shall be treated
as having been paid to the extent any moneys
are received by such Lender.
(b) Each Lender shall forthwith notify the Agent of any
such receipt or recovery by it other than by payment
through the Agent.
(c) If any excess amount subsequently has to be wholly or
partly refunded to the Borrower or, as the case may
be, the relevant Obligor by any Sharing Lender which
has paid an amount equal thereto to the Agent under
(a) above, each Lender to which any part of that
amount was distributed shall on request from the
Sharing Lender repay to the Sharing Lender such
Lender's pro rata share of the amount which has to be
so refunded by the Sharing Lender. Each Lender shall
on request supply to the Agent such information as the
Agent may from time to time request for the purpose of
this Clause. Notwithstanding the foregoing provisions
of this Clause, (i) no Sharing Lender shall be obliged
to share any excess amount which it receives or
recovers pursuant to legal proceedings taken by it to
recover any sums owing to it under any of the Facility
Documents and/or any of the Operative Documents with
any other party which has a legal right to, but does
not, either join in such proceedings or commence and
diligently pursue separate proceedings to enforce its
rights in the same or another court, unless the
proceedings instituted by the Sharing Lender are
instituted by it without prior notice having been
given to such party through the Agent and (ii) no
Lender shall be obliged to exercise any right of
set-off it may have against any or all of the Borrower
or any of the Obligors at any time, or to set-off
against any obligations of the Borrower, or any of the
Obligors in relation to the Facility Documents and/or
the Operative Documents any sum which such Lender may
hold on deposit or otherwise from the Borrower or any
Obligor, or any other right against the Borrower or
any Obligor in favour of such Lender which sum has
been received or right has arisen unrelated to and
independent from the Transaction.
<PAGE>
19. GOVERNING LAW AND JURISDICTION
19.1 This Facility Agreement and each of the Ancillary Documents
shall be governed and construed in accordance with English
law.
19.2 Each of the parties hereto irrevocably agrees for the
benefit of each of the Agent, the Security Agent, the
Lenders and the Borrower that the courts of England shall
have jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out
of or in connection with this Facility Agreement and/or the
Ancillary Documents and, for such purposes, irrevocably
submits to the jurisdiction of such courts.
19.3 Each party irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause
19.2 being nominated as the forum to hear and determine any
suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Facility
Agreement and/or the Ancillary Documents and agrees not to
claim that any such court is not a convenient or appropriate
forum in each case whether on the grounds of venue or forum
non conveniens or any similar grounds or otherwise.
19.4 For the purpose of any suit, action, proceeding or
settlement of dispute in the English courts (whether under
this Facility Agreement, the Ancillary Documents, any of the
other Facility Documents or any of the Operative Documents),
each of the Obligors, the Borrower and each Lender which is
not incorporated in England hereby designates, appoints and
empowers an agent to accept service of process in respect of
any such suit, action, proceeding or settlement of dispute
the identity of which is set out in Schedule 8 and hereby
confirm that such agent is willing to accept service of such
process on behalf of the relevant Obligor, the Borrower or,
as the case may be, the relevant Lender in respect of this
Facility Agreement, the Ancillary Documents, any other
Facility Document and any Operative Document.
If, for any reason, the agent specified in Schedule 8 no
longer serves as agent of the relevant Obligor, the Borrower
or, as the case may be, the relevant Lender to receive
service of process in England in respect of any one or more
of this Facility Agreement, any of the Ancillary Documents,
any of the other Facility Documents, or any of the Operative
Documents, the relevant Obligor, the Borrower, or as the
case may be, the relevant Lender, shall promptly appoint
another such agent acceptable to the Agent (in the case of
the relevant Obligor), or, as the case may be, the Guarantor
(in the case of the Borrower or a Lender) and advise the
Agent or the Guarantor, as the case may be, thereof. Upon
such appointment, the replacement agent shall be deemed to
be substituted for the replaced agent in Schedule 8 and
Schedule 8 shall thereafter be read and construed
accordingly.
19.5 The submission to the jurisdiction of the courts referred to
in Clause 19.2 shall not (and shall not be construed so as
to) limit the right of any party to take proceedings against
any other party in any other court of competent jurisdiction
nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
19.6 To the extent that any one or more of the Obligors or any of
the property of any one or more of the Obligors is or
becomes entitled at any time to any immunity on the grounds
of sovereignty or otherwise from any legal action, suit or
<PAGE>
proceeding, from set-off or counterclaim, from the
jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment
in aid of execution, or from execution prior to judgment, or
other legal process in any jurisdiction, each of the
Obligors for itself and its property does hereby irrevocably
and unconditionally waive, and agrees not to plead or claim,
any such immunity with respect to its obligations,
liabilities or any other matter under or arising out of or
in connection with any of the Facility Documents and/or the
Operative Documents or the subject matter hereof or thereof.
20. COUNTERPARTS
This Facility Agreement may be executed in any number of
counterparts and by different parties thereto on separate
counterparts and any single counterpart or set of
counterparts signed, in either case, by all the parties
hereto shall be deemed to constitute a full and original
agreement for all purposes but all counterparts shall
constitute but one and the same instrument.
21. MISCELLANEOUS
21.1 A certificate given by the Agent, the Security Agent, any
Lender or the Borrower as to the amount of any sum required
to be paid to it under any provisions of this Facility
Agreement or any of the other Facility Documents or any of
the Operative Documents shall, save as otherwise provided
for in this Facility Agreement or any of the other Facility
Documents or any of the Operative Documents and save in the
case of manifest error, be conclusive evidence of the
matters therein stated for all purposes of this Facility
Agreement or, as the case may be, any of the other Facility
Documents, or, as the case may be, any of the Operative
Documents. Any such certificate shall contain a reasonable
explanation of the way in which the sum required to be paid
was calculated, together with reasonable supporting
evidence, PROVIDED THAT in providing such a reasonable
explanation and such evidence, neither the Agent nor the
Security Agent nor any of the Lenders shall be required to
disclose any documents and/or information relating to its
business or affairs which it considers (in its bona fide
opinion) to be of a confidential nature.
21.2 The parties hereto agree and acknowledge that this Facility
Agreement shall continue in full force and effect for all
purposes notwithstanding that the Commitments may at any
time be reduced to zero.
21.3 Each of the parties hereto agrees that no amendments,
variations, supplements or modifications may be made to any
of the Facility Documents or any of the Operative Documents
(i) other than by an instrument in writing executed by the
parties to such Facility Document or, as the case may be,
Operative Document and (ii) without the prior consent in
writing of the Agent on behalf of the Lenders and each of
the other parties hereto (which consent shall not be
unreasonably withheld).
22. CONFIDENTIALITY
22.1 At all times during the Security Period and after the
termination thereof each party hereto shall use all
reasonable endeavours to ensure that its respective
officers, directors, employees and agents shall keep secret
<PAGE>
and confidential and not, without the prior written consent
of all the other parties hereto, disclose to any third party
the terms of any of the Facility Documents or of any of the
Operative Documents, or any of the information, reports or
documents supplied by or on behalf of any of the other
parties hereto, save that any such party shall be entitled
to disclose any such terms, information, reports or
documents:-
(i) in connection with any proceedings arising out of or
in connection with any of the Facility Documents or
any of the Operative Documents to the extent that such
party may consider necessary to protect its interest;
or
(ii) to any potential assignee or transferee of all or any
of such party's rights under any of the Facility
Documents or any of the Operative Documents or any
other person proposing to enter into contractual
arrangements with such party in relation to or in
connection with the transactions contemplated by any
of the Facility Documents or any of the Operative
Documents, subject to it obtaining an undertaking from
such potential assignee or other person in the terms
similar to this Clause 22.1; or
(iii) if required to do so by an order of a court of
competent jurisdiction whether in pursuance of any
procedure for discovering documents or otherwise; or
(iv) pursuant to any law or regulation having the force of
law (including, without limitation, SEC filing
requirements); or
(v) to any fiscal, monetary, tax, governmental or other
competent authority; or
(vi) to its auditors, legal or other professional advisers;
or
(vii) to any of the Export Credit Agencies; or
(viii) in any manner contemplated by any of the Facility
Documents or any of the Operative Documents.
22.2 In addition, any party shall be entitled to disclose or use
any such information, reports or documents if the
information contained therein shall have emanated in
conditions free from confidentiality bona fide from some
person other than the relevant party hereto and such party
would, but for the preceding provisions of this Clause 22
have been free to disclose or use the same.
22.3 Each party may, notwithstanding any other provision of this
Clause 22, release to any potential assignee or transferee
(permitted in each case pursuant hereto or to the relevant
Facility Document and/or Operative Document), or other
person proposing to enter into contractual arrangements with
such party in relation to or in connection with the
transactions contemplated by any of the Facility Documents
or any of the Operative Documents, a copy of any of the
Facility Documents and any of the Operative Documents,
PROVIDED THAT each such potential assignee or transferee or
other person confirms in writing to the other parties to
this Facility Agreement that it is bound by the terms of
this Clause 22 as if it had been a party to this Facility
Agreement.
<PAGE>
23. AGENT FOR GERMAN LEAD MANAGER
Bayerische Hypotheken- und Wechsel-Bank AG in its capacity
as German Lead Manager hereby notifies each of the other
parties to the Facility Agreement that, for the purposes of
the Facility Agreement, each of the other Facility Documents
and each of the Operative Documents, it has appointed
Hypolux as its agent to exercise and/or perform, on its
behalf, any and all rights and/or obligations and to take
any and all decisions of the German Lead Manager under this
Facility Agreement, each of the other Facility Documents and
each of the Operative Documents (other than any such rights,
obligations and/or decisions as relate to the declaration of
a Cancellation Event, a Loan Event of Termination and/or an
Acceleration Event or pertaining to the German export credit
insurance). Each of the parties hereto confirms and
acknowledges that the performance by Hypolux of the rights,
obligations and/or decisions of the German Lead Manager
shall, subject to the terms and conditions of the Facility
Agreement, the other Facility Documents and the Operative
Documents and to the extent so performed, be binding on it
and each of the parties shall be entitled to perform each
and every one of their obligations which are expressed to be
due to be performed in favour of the German Lead Manager in
favour of Hypolux and such performance shall be deemed to
constitute good performance of the relevant obligation.
IN WITNESS whereof this Facility Agreement has been executed by
the duly authorised representatives of the parties hereto on the
day and year first above written.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1 - PART I
THE BRITISH LENDERS
<S> <C> <C> <C> <C>
Lender Lending Office Address for Jurisdiction of Amount of British
Notices Incorporation Lenders
Commitments (US$)
- ---------- --------------- ----------------- ---------------- -----------------
National Group Treasury Kings Cross House England 125,789,000.00
Westminster Commercial Loans Phase 2
Bank Plc London 200 Pentonville
Road
London N1 9HL
Tel: 0171 239 8000
Fax: 0171 239 8257
Attn: Manager
Canadian London Cottons Centre Canada 42,500,000.00
Imperial Bank Cottons Lane (Tranche 1 only)
of Commerce London SE1 2QL
Tel: 0171 234 6586
Fax: 0171 234 6085
Attn: T. Everitt
Midland Bank Corporate and 27/32 Poultry England 50,000,000.00
Plc Institutional London
Banking EC2P 2BX
Aerospace London
Tel: 0171 260 5187
Fax: 0171 260 4495
Attn: M. Harris
The Bank of London Scotia House Canada 50,000,000.00
Nova Scotia 33 Finsbury Square
London EC3A 1BB
Tel: 0171 826 5795
Fax: 0171 454 9019
Attn: W. Swords
The Sumitomo London 155 Bishopsgate Japan 50,000,000.00
Trust & London EC2M 3XU
Banking Co.,
Ltd.
Tel: 0171 945 7000
Fax: 0171 945 7177
Attn: Joanne McNeil
Bayerische London 29 Gresham Street Germany 25,000,000.00
Hypotheken- London EC2V 7HN
und Wechsel-
Bank AG
Tel: 0171 782 8288
Fax: 0171 638 1710
Attn: Simon Treacy
CIBC Inc. CIBC Leasing Inc. 425 Lexington Avenue Canada 7,500,000.00
New York New York (Tranche 2 only)
NY 10017
Tel: 0101 212 856 3888
Fax: 0101 212 856 3888
Attn: Richard Vogt
</TABLE>
<PAGE>
SCHEDULE 1 - PART II
THE FRENCH LENDERS
<TABLE>
<S> <C> <C> <C> <C>
Lender Lending Office Address for Jurisdiction of Amount of French
Notices Incorporation Lenders
Commitments
(US$)
- ------- -------------- ------------- --------------- -----------------
Banque Paris By Post: France 108,175,518.00
Paribas BP141, 75078 Paris,
Cedex 02
Attn: DBC-GCE1 378
Tel: 331 42 98 09 43
Fax: 331 42 98 11 28
By Hand:
3, rue d'Antin,
75002 Paris
with a copy sent for
attention of Aerospace
Group
Tel: 331 4298 1307
Fax: 331 4298 1989
Attn: S. Ries
National Paris 13 rue d'Uzes England 77,44,324.30
Westminster 75002 Paris
Bank Plc
(Paris Branch)
Tel: 33 44 76 52 61
Fax: 33 42 21 1588
Attn: P. Tauzin
Banque Paris Head of Aerospace France 40,046,795.30
Indosuez Group
47 Rue de Monceau
75008 Paris
France
Tel: 010 331 4420 1549
Fax: 010 331 4420 2906
Attn: M.M. Dembinski
Banque Paris 27 Boulevard des France 40,046,795.30
Nationale Italiens
de Paris 75002 Paris
France
Tel: 010 331 4014 5959
Fax: 010 331 4014 7949
Attn: E. LeBlanc
Credit Paris 19 Rue des Capucines France 40,046,795.30
Foncier de 75001
France Paris
France
Tel: 010 331 4244 9840
Fax: 010 331 4244 7944
Attn: J.M. Maraval
Credit Paris 45 Rue St Dominique France 40,046,795.30
National 75007 Paris
France
Tel: 010 331 4550 9053
Fax: 010 331 4555 4509
Attn: B. Lecerf
Royal Bank Paris 29 Rue de la France 40,046,795.30
of Canada Bienfaisance
S.A. 75008 Paris
France
Tel: 010 331 4408 4239
Fax: 010 331 4293 3211
Attn: P. Davies
Societe Paris Aircraft Finance France 40,046,795.30
Generale Tour "Les Miroirs"
Batiment "D"
18 Avenue of Alsace
La Defence 3
92400 Courbevoie
France
Tel: 010 331 4098 2402
Fax: 010 331 4098 8507
Attn: F. Roussel Pollet
Financement du Commerce
Exterieur
9 Rue de Vienne
75008 Paris
France
Tel: 010 331 4098 2612
Fax: 010 331 4098 3388
Attn: F. Refabert
The Fuji Paris 26 Avenue des Champs- Japan 40,046,795.30
Bank, Elysees
Limited 75008 Paris
France
Tel: 010 331 4413 6034
Fax: 010 331 4413 6060
Attn: E. McDonald
The Indus- Paris Centre D'Affaires Japan 40,046,795.30
trial Bank "Le Louvre"
of Japan, 2 Place du Palais-Royal
Limited 75044 Paris
France
Tel: 010 331 4015 2800
Fax: 010 331 4261 2478
Attn: A.M. Dumortier
The Long- Paris 55/57 Boulevard Japan 40,046,795.30
Term Credit Haussmann
Bank of 75008 Paris
Japan, Ltd. France
Tel: 010 331 4924 0144
Fax: 010 331 4966 1839
Attn: C. Liegeois
with a copy to:-
(London Branch)
Albangate
125 London Wall
London EC2Y 5AH
Tel: 0171 628 5111
Fax: 0171 814 9866
Attn: S. Townend
</TABLE>
<PAGE>
SCHEDULE 1 - PART III
THE GERMAN LENDERS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Lender Lending Office Address for Jurisdiction of Amount of German
Notices Incorporation Lenders
Commitments (US$)
- ------- -------------- -------------- ---------------- -----------------
Bayerische New York Hypobank International Germany 135,615,500.00
Hypotheken- S.A.
und 4, rue Alphonse Weicker
Wechsel-Bank L-2099 Luxembourg
AG Kirchberg
Tel: 010 352 4272 2124
Fax: 010 352 4272 4510
Attn: Credit Department
with a copy to:
-FB/INT-KDN-PSF
Theatinerstr. 11
D-80333 Munich
Tel: 010 4989 9244 2571
Fax: 010 4989 9244 2225
Attn: Aircraft Finance
in the event that a notice
is being sent to all German
Lenders (and not just the
Lead Managers), an additional
copy to:-
Financial Square
32nd Floor
New York
Tel: 0101 212 248 0767
Fax: 0101 212 440 0741
Kreditanstalt Frankfurt Palmengartenstrasse 5-9 Germany 167,254,500.00
60325 Frankfurt am
Main
Germany
Tel: 010 4969 7431-0
Fax: 010 4969 7431-2944
Attn: Aerospace
Department K III b
Bayerische Munich Bockenheimer Landstrasse Germany 50,000,000.00
Landesbank 19,
Girozentrale 60325 Frankfurt
Germany
Tel: 010 49 69 7190 7423
Fax: 010 49 69 7190 7157
Attn: Ruediger Fern
Aircraft Finance
Dept
with a copy to:
Karolinenplatz 2
80333 Munchen
Germany
Tel: 010 49 89 2171 1834
Fax: 010 49 89 2171 1143
Attn: Herrn Sprogies
Legal Department
Commerzbank Los Angeles Neue Mainzer Str. 32-36 Germany 50,000,000.00
AG 60311 Frankfurt
Germany
Tel: 010 49 69 1362 3680
Fax: 010 49 69 1362 3742
Attn: Matthias Hommel
Export Finance
Department
Landesbank Kiel Martensdamm 6 Germany 50,000,000.00
Schleswig- 24103 Kiel
Holstein Germany
Girozentrale
Tel: 010 49 431 900 1534
Fax: 010 49 231 900 1542
Attn: Marie-Theres
Kroger Aircraft
Finance Dept
National Frankfurt Feldbergstrasse 35. Germany 25,000,000.00
Westminster 60323
Bank AG Frankfurt am Main
Germany
Tel: 010 49 69 17006 390
Fax: 010 49 69 17006 335
Attn: Mr. Rottschalk/Mrs.
Winkels
</TABLE>
<PAGE>
SCHEDULE 2
FORM OF TRANSFER CERTIFICATE
To: [Agent]
Transfer Certificate
--------------------
This transfer certificate ("Transfer Certificate") relates to a
facility agreement dated [ ] 1994 and made between (1) the
banks and financial institutions named therein as Lenders, (2)
National Westminster Bank Plc as Agent, (3) National Westminster
Bank Plc as Security Agent, (4) Encore Leasing Limited, (the
"Borrower"), (5) ILFC (Bermuda) 7, Ltd., (the "Bermuda Lessee"),
(6) ILFC Ireland 2 Limited (the "Irish Lessee"), (7) ILFC
(Bermuda) 5, Ltd., (the "Bermuda Parent"), (8) ILFC Ireland 3
Limited (the "Irish Parent"), (9) ILFC (Bermuda) 6, Ltd., (the
"Bermuda Option Holder") and (10) International Lease Finance
Corporation (the "Guarantor") (the "Agreement" which term shall
include any amendments or supplements thereto) and to each of the
Loan Supplements made between the Agent, the Security Agent and
the Borrower in respect of an Advance under the Agreement.
Terms defined or incorporated by reference in the Agreement
shall, unless otherwise defined, have the same meanings when used
in this Transfer Certificate.
I. [Details of the Existing Lender] (the "Existing Lender"):-
1. confirms that to the extent that details appear in the
Schedule to this Transfer Certificate under the headings
"Existing Lender's Commitment", "Amount of Commitment
Transferred and the Related Rights and Obligations of the
Existing Lender to be Transferred", "Existing Lender's
<PAGE>
Participation" and "Amount of Existing Lender's
Participation Transferred and Related Rights and Obligations
of the Existing Lender to be Transferred" those details
accurately summarize its Commitment and its participation in
the Facility and its participation in each Advance already
made all or part of which is to be transferred (as more
particularly described in the Loan Supplements);
2. requests [Details of Bank Transferee] (the "Bank
Transferee") to accept and procure, in accordance with
Clause 14.4 of the Agreement, the substitution of the
Existing Lender by the Bank Transferee in respect of the
amount specified in the Schedule hereto of its Commitment
and its participation in the Facility and its participation
in each Advance already made (as more particularly described
in the Loan Supplements) by signing this Transfer
Certificate.
II. The Bank Transferee hereby requests each of the Obligors,
the Lenders, the Borrower, the Agent and the Security Agent
to accept this executed Transfer Certificate as being
delivered under and for the purposes of Clause 14.4 of the
Agreement so as to take effect in accordance with the terms
thereof on the Transfer Date or on such later date as may be
determined in accordance with the terms thereof.
III. The Bank Transferee:-
1. confirms that it has received a copy of the Agreement
and copies of each Loan Supplement together with such
other documents and information as it has requested in
connection with this transaction;
2. confirms that it has not relied and will not rely on
the Existing Lender to check or enquire on its behalf
into the legality, validity, effectiveness, adequacy,
accuracy or completeness of any such documents or
information; and
3. agrees that it has not relied and will not rely on any
of the Existing Lender, the Agent or any of the
Lenders to assess or keep under review on its behalf
the financial condition, creditworthiness, condition,
affairs, status or nature of any party to any of the
Facility Documents or the legality, validity,
priority, adequacy, effectiveness or enforceability of
any of the Facility Documents.
IV. The Bank Transferee undertakes with the Existing Lender and
each of the other parties to the Agreement that it shall
perform in accordance with their terms all those obligations
which, by the terms of the Agreement, will be assumed by it
upon delivery of the executed copy of this Transfer
Certificate to the Agent and further undertakes with the
Existing Lender, each of the other Lenders, the Agent and
the Security Agent that it shall perform in accordance with
their terms all of the obligations of the Existing Lender
under the Lenders' Agreement and the Interlender Agreement
as if the Bank Transferee had originally been a party to the
Lenders' Agreement and the Interlender Agreement and each of
the other Lenders, the Agent and the Security Agent
undertake with the Bank Transferee to perform their
obligations under the Lenders' Agreement and the Interlender
Agreement to the Existing Lender in favour of the Bank
Transferee as if the Bank Transferee had originally been a
party to the Lenders' Agreement and the Interlender
Agreement.
<PAGE>
V. With effect from the Transfer Date as specified in the
Schedule hereto or such later date as may be determined in
accordance with the terms of Clause 14.4 of the Agreement,
the Lenders, the Agent the Security Agent, each of the
Obligors and the Borrower accept the Bank Transferee as a
party to the Agreement in substitution for the Existing
Lender with respect to all those rights and obligations
which by the terms of the Agreement will be assumed by the
Bank Transferee after delivery of the executed copy of this
Transfer Certificate to the Agent.
VI. None of the Existing Lender, any of the Lenders, the Agent,
the Security Agent or the Borrower:-
1. makes any representation or warranty or assumes any
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of the
Agreement; or
2. assumes any responsibility for the financial condition
of any of the Obligors or for the performance and
observance by any of the Obligors or any other party
to any of the Facility Documents and/or any of the
Operative Documents or any other document relating
thereto of any of the Obligor's or such other party's
obligations under any of the Facility Documents and/or
any of the Operative Documents or any document
relating thereto and any and all conditions and
warranties, whether express or implied by law or
otherwise, are excluded.
VII. None of the Obligors assumes any responsibility for the
financial condition of any party, other than the Obligors,
or for the performance or observance by any party, other
than the Obligors, to any of the Facility Documents and/or
the Operative Documents or any other document relating
thereto or such party's obligations under the Agreement or
any document relating thereto (other than those of the
Obligors) and any and all conditions and warranties whether
express or implied by law or otherwise, are excluded (other
than in relation to the financial condition, performance or
observance of the Obligors).
VIII. The Bank Transferee confirms that its Lending Office
and address for notices for the purposes of the
Agreement are as set out in the Schedule hereto.
<PAGE>
IX. A. The Existing Lender hereby gives notice to the Bank
Transferee (and the Bank Transferee hereby
acknowledges and agrees with the Existing Lender) that
the Existing Lender is under no obligation to re-
purchase (or in any other manner to assume, undertake
or discharge any obligation or liability in relation
to) the transferred Commitment, and/or transferred
participation in the Advances already made (as more
particularly described in the Loan Supplements) and/or
the transferred rights and/or obligations at any time
after this Transfer Certificate shall have taken
effect.
B. Following the date upon which this Transfer
Certificate shall have taken effect, without limiting
the provisions hereof, each of the Bank Transferee and
the Existing Lender hereby acknowledges and confirms
to the other that in relation to the relative
Commitment/participation in the Advances already made
(as more particularly described in the Loan
Supplements) and the rights and/or obligations under
the Agreement assumed by the Bank Transferee (or part
thereof), variations, amendments or alterations to any
of the terms of the Agreement and/or any of the Loan
Supplements arising in connection with any re-
negotiation or re-scheduling of the obligations
hereunder shall apply to and be binding on the Bank
Transferee alone.
X. The Existing Lender hereby gives notice that nothing herein
or in the Agreement (or any document relating thereto) shall
oblige the Lender to (i) accept a re-transfer from the Bank
Transferee of the whole or any part of its rights, benefits
and/or obligations under the Agreement transferred pursuant
hereto or (ii) support any losses directly or indirectly
sustained or incurred by the Bank Transferee for any reason
whatsoever including, without limitation, the non-
performance by any other party to the Agreement (or any
document relating thereto) of its obligations under any such
document. The Bank Transferee hereby acknowledges the
absence of any such obligation as is referred to in (i) or
(ii) above.
XI. The Bank Transferee hereby confirms, pursuant to and
in accordance with the provisions of Clause 19.4 of
the Agreement, that its agent for service of process
in England is as set out in the Schedule to this
Transfer Certificate and confirms that such agent is
willing to accept service of such process as is
described in Clause 19.4 of the Agreement on behalf of
the Bank Transferee in respect of the Agreement, any
other Facility Document and any Operative Document.
<PAGE>
XII. This Transfer Certificate shall be governed by and construed
in accordance with English Law.
[Bank Transferee]
By: ..........................
(Duly Authorised)
[Existing Lender]
By: ..........................
(Duly Authorised)
The Agent on behalf of itself and all other parties to the
Agreement (other than the Existing Lender).
By: ..........................
(Duly Authorised)
Dated: [ ]
<PAGE>
SCHEDULE TO THE TRANSFER CERTIFICATE
Existing Lender's Commitment Amount of Commitment Transferred and
the Related Rights and Obligations
of the Existing Lender to be Transferred
- ---------------------------- ----------------------------------------
Existing Lender's Participation Amount of Existing Lender's
in Advances already made Participation in Advances already made
Transferred and Related rights and
Obligations of the Existing Lender to
be Transferred.
- ----------------------------- ----------------------------------------
Date:
[Bank Transferee]
Lending Office: Address for notices:
[ ] [ ]
Telephone: [ ]
Facsimile: [ ]
Jurisdiction of Incorporation:
[ ]
English Process Agent:
[ ]
Transfer Date: [ ]
<PAGE>
SCHEDULE 3
UTILISATION NOTICE
To: (1) NATIONAL WESTMINSTER BANK PLC (as Agent)
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
Facsimile No: 071-375 5854
Telex No: 919675 NWCB G
Attention: Head of Corporate Banking Agency Group
C.C: NATIONAL WESTMINSTER BANK PLC
Leasing and Asset Finance
7th Floor
135 Bishopsgate
London EC2M 3UR
Facsimile No: 071-375 5650
Telex No: 919675 NWCB G
Attention: Director of Leasing and Asset Finance
(2) ENCORE LEASING LIMITED (the "Borrower")
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Facsimile No: 809 949 8340
Telex No: 0293 4498
Attention: Trust Services
From: [ILFC (Bermuda) 7, Ltd. (the "Bermuda Lessee")
29 Richmond Road
Hamilton
HM-AX
Bermuda]
[ILFC Ireland 2 Limited (the "Irish Lessee")
AIG House
Merrion Road
Dublin 4
Ireland]
RE: Aircraft Facility Agreement dated , 1994 and
made between the banks and financial institutions named
therein as Lenders, National Westminster Bank Plc as Agent
and Security Agent, the Borrower, the Bermuda Lessee, the
Irish Lessee, ILFC (Bermuda) 5, Ltd. as Bermuda Parent,
ILFC Ireland 3 Limited as Irish Parent, ILFC (Bermuda)
6, Ltd. as Bermuda Option Holder and International
Lease Finance Corporation (the "Facility Agreement")
-------------------------------------------------------
[The Bermuda Lessee] [The Irish Lessee] hereby gives notice in
accordance with Clause 4.1.1 of the Facility Agreement that:-
(i) [the Bermuda Lessee] [the Irish Lessee] desires to effect a
Utilisation on [ ];
(ii) the requested amount of the proposed Advance is US$[ ];
<PAGE>
(iii) the Aircraft the subject of the Utilisation is one
Airbus [*A300/A310/A320/A321/A330/A340] Aircraft with
manufacturer's serial number [ ], proposed [ ]
Registration Mark [ ] and [ ] installed
Engines;
(iv) the proposed sub-lessee of the Aircraft the subject of the
Utilisation is [ ], a company incorporated in
[ ] and it is proposed that the Aircraft shall be
[registered] [habitually-based] in [ ]. The sub-
lessee [will] [will not] require quiet enjoyment covenants
from the Borrower and the Security Agent in the form agreed
between the Borrower, the Security Agent and the Guarantor.
A certified copy of the [executed sub-lease] [latest draft
of the proposed sub-lease] is attached hereto;
(v) [the Bermuda Lessee] [the Irish Lessee] [confirms that the
Lessee of the Aircraft shall be the [Bermuda Lessee] [Irish
Lessee]] [hereby requests the Lead Managers and the Borrower
to approve in accordance with Clause 4.2.3 of the Facility
Agreement an Alternative Lessee [appropriate details] as the
Lessee];
(vi) [the Bermuda Lessee] [the Irish Lessee] [confirms that the
Option Holder in respect of the Aircraft shall be the
Bermuda Option Holder] [hereby requests the Lead Manager and
the Borrower to approve in accordance with Clause 4.2.3 of
the Facility Agreement an alternative person as Option
Holder [appropriate details]];
(vii) [the Bermuda Lessee] [the Irish Lessee] [confirms that
the Parent of the proposed Lessee is [the Bermuda
Parent] [the Irish Parent]] [hereby requests the Lead
Managers and the Borrower to approve in accordance
with Clause 4.2.3 of the Facility Agreement another
person as the Parent [appropriate details]]; and
[(viii) [the Bermuda Lessee] [the Irish Lessee] hereby
requests the Lead Manager and the Borrower to approve
in accordance with Clause 4.2.3 of the Facility
Agreement the insertion of [ ] Additional
Lessee[s] in the structure [appropriate details]].
[The Bermuda Lessee] [The Irish Lessee] hereby certifies that as
at the date of this notice no Cancellation Event or Potential
Cancellation Event has occurred and is continuing or would result
from the drawdown of the Advance, the subject of this
Utilisation.
Capitalised terms used herein defined in the Facility Agreement
have the same meanings herein.
[ILFC (BERMUDA) 7, LTD]
[ILFC IRELAND 2 LIMITED]
By:
----------------------------
Name:
Title:
<PAGE>
SCHEDULE 4
PART I
<TABLE>
<CAPTION>
DETAILS OF PROPOSED AIRCRAFT AND PROPOSED AIRCRAFT DELIVERY SCHEDULE
(ALL FIGURES IN US$)
Assumed
Maximum Assumed Assumed Assumed
Scheduled Proposed Aircraft Split British French German
Aircraft Delivery Engine Initial Purchase ------------------- Lenders Lenders Lenders
No. Month Type Type Sub-Leasee Price UK France Germany Portion Portion Portion
- ------- ------------ ---------- ----------- ------------- -------- -- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 January 1995 A300-600R PW4158 CHINA AIRLINES * * * * * * *
2 February 1995 A300-600R CF6-80C2 EMIRATES * * * * * * *
3 March 1995 A300-600R CF6-80C2 AIR AFRIQUE * * * * * * *
4 March 1995 A320 V2500 SAETA * * * * * * *
5 April 1995 A310-300 CF6-80C2A2 EMIRATES * * * * * * *
6 April 1995 A300-600R CF6-80C2 AIR AFRIQUE * * * * * * *
7 April 1995 A320 V2500 SAETA * * * * * * *
8 April 1995 A320 CFM56-5 ONUR AIR * * * * * * *
9 April 1995 A330 PW4164 (1) * * * * * * *
10 April 1995 A340 CFM56-5C3G AIR MAURITIUS * * * * * * *
11 May 1995 A330 Trent DRAGONAIR * * * * * * *
12 June 1995 A321 CFM56-5B1/2 SWISSAIR * * * * * * *
13 June 1995 A340 CFM56 AIR CANADA * * * * * * *
14 July 1995 A340 CFM56 AIR CANADA * * * * * * *
15 September 1995 A320 V2500 (1) * * * * * * *
16 September 1995 A330 Trent DRAGONAIR * * * * * * *
17 October 1995 A320 V2500 (1) * * * * * * *
18 November 1995 A320 V2500 (1) * * * * * * *
19 November 1995 A321 V2500-A5 DRAGONAIR(F1) * * * * * * *
20 December 1995 A320 V2500 TACA(1) * * * * * * *
21 December 1995 A321 V2500-A5 (1) * * * * * * *
Total * * * * * * *
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
</TABLE>
NOTE: 1. "(1)" denotes potential or unconfirmed sub-lessee. ILFC may at its
discretion, change the identity of the initial sub-lessees.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4: PART II
INTERNATIONAL LEASE FINANCE CORPORATION SAMPLE LOAN/LEASE PROFILES
AS A PERCENTAGE OF AIRCRAFT COST
FOR 1995 AIRBUS A300/A310/A320/A321/A330/A340 DELIVERIES
(1) (2) (3) (4) (5) (6) (7) (8) (9)
Repayment Date Tranche 1A Tranche 1B Tranche 2 Tranche 2 Tranche 1 Tranche 2 Total Total
Number (Semi- ECA ECA Initial Mismatch Total Total Loan Lease
annual Repayments)
- ------------------ ----------- ----------- --------- --------- --------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Delivery Date * * * * * * * *
1 * * * * * * * *
2 * * * * * * * *
3 * * * * * * * *
4 * * * * * * * *
5 * * * * * * * *
6 * * * * * * * *
7 * * * * * * * *
8 * * * * * * * *
9 * * * * * * * *
10 * * * * * * * *
11 * * * * * * * *
12 * * * * * * * *
13 * * * * * * * *
14 * * * * * * * *
15 * * * * * * * *
16 * * * * * * * *
17 * * * * * * * *
18 * * * * * * * *
19 * * * * * * * *
20 * * * * * * * *
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASSUMPTIONS:
- --------------
Interest Rates (for annuity calculations)
Tranche 1A *
Tranche 1B *
* PURSUANT TO 17 CFR 240.24B-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
</TABLE>
<PAGE>
SCHEDULE 5
GUARANTOR COVENANTS
1. In this Schedule 5 each of the following words shall have
the following meanings:-
"Capitalised Lease" means any lease under which any
obligations of the lessee are, or are required to be,
capitalised on a balance sheet of the lessee in accordance
with generally accepted accounting principles in the United
States of America;
"Capitalised Rentals" means, as of the date of any
determination, the amount at which the obligations of the
lessee, due and to become due under all Capitalised Leases
under which the Guarantor or any Subsidiary is a lessee, are
reflected as a liability on a consolidated balance sheet of
the Guarantor and its Subsidiaries;
"Code" means the United States of America Internal Revenue
Code of 1986, as amended;
"Consolidated Tangible Net Worth" means, as of the date of
any determination, the total of shareholders' equity
(including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock), less the
sum of the total amount of goodwill, organisation expenses,
unamortized debt issue costs (determined on an after tax
basis), deferred assets other than prepaid insurance and
prepaid taxes the excess of cost of shares acquired over
book value of related assets, surplus resulting from any
revaluation write-up of assets subsequent to December 31,
1993, and such other assets as are properly classified as
intangible assets, all determined in accordance with
generally accepted accounting principles in the United
States of America consolidating the Guarantor and its
Subsidiaries, and less the excess, if any, of all Restricted
Investments of the Guarantor and its Subsidiaries on a
consolidated basis over twenty-five million Dollars
(US$25,000,000);
"ERISA" means the United States of America Employee
Retirement Income Security Act of 1974, as amended;
"ERISA Affiliate" means any corporation, trade or business
that is, along with the Guarantor or any Subsidiary, a
member of a controlled group of corporations or a controlled
group of trades or businesses, as described in sections
414(b) and 414(c), respectively, of the Code or section 4001
of ERISA;
"FASB 13" means the United States of America Statement of
Financial Accounting Standards No. 13 (Accounting for
Leases) as in effect on the date hereof;
"Fixed Charge Plus Preferred Coverage Ratio" on the last day
of any quarter of any fiscal year of the Guarantor means the
ratio for the period of four fiscal quarters ending on such
day of earnings to combined fixed charges and preferred
stock dividends referred to in Paragraph (d)(1)(i) of Item
503 of Regulation S-K of the United States of America
Securities and Exchange Commission, as amended from time to
time, and determined pursuant to Paragraphs (d)(2) through
(d)(10) of such Item 503 with the Guarantor as "registrant"
(such ratio for the four fiscal quarters ended December 31,
1993 is attached hereto as Attachment A); PROVIDED, however
that if the Majority Lenders in their sole discretion
determine that amendments to Regulations S-K subsequent to
the date hereof substantially modify the provisions of such
Item 503, "Fixed Charge Plus Preferred Coverage Ratio" shall
have the meaning determined by this definition without
regard to any such amendments;
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government;
"Guarantees" by any Person means all obligations (other than
endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such
Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other
<PAGE>
Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation all
obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness
or obligation or any property or assets constituting
security therefor, (b) to advance or supply funds (i) for
the purchase or payment of such Indebtedness or obligation
or (ii) to maintain working capital or other balance sheet
condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or
obligation, (c) to lease property or to purchase securities
or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the
ability of the primary obligor to make payment of the
Indebtedness or obligation, or (d) otherwise to assure the
owner of the Indebtedness or obligation of the primary
obligor against loss in respect thereof; PROVIDED HOWEVER
that the obligation described in clause (c) shall not
include (i) obligations of a buyer under an agreement with a
seller to purchase goods or services entered into in the
ordinary course of such buyer's and seller's businesses
unless such agreement requires that such buyer make payment
whether or not delivery is ever made of such goods or
services, and (ii) remarketing agreements where the
remaining debt on an aircraft does not exceed the aircraft's
net book value, determined in accordance with industry
standards, except that clause (c) shall apply to the amount
of remaining debt under a remarketing agreement that exceeds
the net book value of the aircraft. For the purposes of all
computations made under this Facility Agreement, a Guarantee
in respect of any Indebtedness for borrowed money shall be
deemed to be Indebtedness equal to the principal amount of
such Indebtedness for borrowed money which has been
guaranteed, and a Guarantee in respect of any other
obligation or liability or any dividend shall be deemed to
be Indebtedness equal to the maximum aggregate amount of
such obligation, liability or dividend;
"Indebtedness" of any Person means, and includes all
obligations of such person which in accordance with
generally accepted accounting principles in the United
States of America shall be classified upon a balance sheet
of such person as liabilities of such person, and in any
event shall include all:-
(a) obligations of such Person for money or which have
been incurred in connection with the acquisition of
property or assets (other than security and other
deposits on flight equipment);
(b) obligations secured by any Lien or other charge upon
property or assets owned by such Person, even though
such Person has not assumed or become liable for the
payment of such obligations;
(c) obligations created or arising under any conditional
sale, or other title retention agreement with respect
to property acquired by such Person, notwithstanding
the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of
default are limited to repossession or sale of
property;
(d) Capitalised Rentals under any Capitalised Lease;
<PAGE>
(e) obligations evidenced by bonds, debentures, notes or
other similar instruments; and
(f) Guarantees by such Person to the extent required
pursuant to the definition thereof,
but:
(i) shall not include amounts which would otherwise be
taken into account which are owed by the Guarantor
to any of its Subsidiaries or by any Subsidiary of
the Guarantor to the Guarantor or another
Subsidiary of the Guarantor;
(ii) no amount shall be taken into account more
than once in the same calculation;
(iii) shall not include any aircraft lease rentals
received in advance;
(iv) shall not include any concessions received in
advance from manufacturers;
(v) shall not include any amounts in respect of
deferred Tax;
"Investment" means any investment, made in cash or by
delivery of any kind of property or asset, in any Person,
whether (i) by acquisition of (x) shares of stock or
similar interest, (y) Indebtedness, or (z) other obligation
or security, or (ii) by loan, advance or capital contribution,
or otherwise. For the purposes of this Facility Agreement,
Investment shall exclude any notes receivable and any
finance or sales type leases entered into by the Guarantor or
any of its Subsidiaries in the ordinary course of business.
The amount of any Investment shall be the original cost of
such Investment plus the cost of all additions thereto and
minus the amount of any portion of such Investment repaid
to such Person in cash as a result of capital, but without
any other adjustment for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such
Investment.
"Lien" means any mortgage, pledge, lien, security interest or
other charge, encumbrance or preferential arrangement, including
the retained security title of a conditional vendor or lessor;
"Litigation Actions" means all litigation, claims and arbitration
proceedings, proceedings before any Governmental Authority or
investigations which are pending or, to the knowledge of the
Guarantor, threatened against, or affecting, the Guarantor or any
Subsidiary;
"Material Adverse Effect" shall mean (i) any material adverse
effect on the business, properties, condition (financial or
otherwise) or operations, present or prospective, of the
Guarantor and its Subsidiaries, taken as a whole since any
stated reference date or from and after the date of
determination, as the case may be, (ii) any material adverse
effect on the ability of the Guarantor to perform its obligations
hereunder or under any of the other Facility Documents or under
any of the Operative Documents to which it is a party or (iii) any
adverse effect on the legality, validity, binding effect or
enforceability of any material provision of this Facility
Agreement, the other Facility Documents or the Operative
Documents;
<PAGE>
"Operating Lease" means any lease other than a Capitalised Lease;
PROVIDED HOWEVER that leases with an original term of less than
one year shall not be Operating Leases;
"Operating Lease Rental" of an Operating Lease means, as of the
date of any determination thereof, the net present value of the
aggregate unpaid amount due at such date and to become due from
the Guarantor or any Subsidiary, on a consolidated basis, as
lessee under such Operating Lease discounted at such lessee's
incremental borrowing rate or if the interest rate implicit in
such Operating Lease can be practically determined and is
smaller, at such interest rate, such present value and interest
rate being determined in accordance with standard financial
practice and such borrowing rate being determined in accordance
with FASB 13, excluding from such aggregate amount all amounts
which are in excess of the minimum aggregate unpaid amount due
at such date and to become due from such lessee under such
Operating Lease assuming that such lessee would take or fail
to take all actions with respect to all termination, renewal,
purchase and other options as would produce the least amount
becoming due under such Operating Lease, and "Operating Lease
Rentals" means, as of the date of any determination, the aggregate
Operating Lease Rental of all Operating Leases as of such date;
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA;
"Permitted Acquisitions" means purchases or other acquisitions,
or Investments by acquisition of shares of stock, for which
cumulatively and in the aggregate since the date hereof the
Guarantor has not given consideration in value exceeding fifty
million Dollars (US$50,000,000);
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind;
"Plan" means, at any date, any employee pension benefit plan
(as defined in section 3(2) of ERISA) which is subject to
Title IV of ERISA (other than a Multiemployer Plan) and to
which the Guarantor or any ERISA Affiliate may have any
liability, including any liability by reason of having been
a substantial employer within the meaning of section 4063 of
ERISA at any time during the preceding five years, or by
reason of being deemed to be a contributing sponsor under
section 4069 of ERISA;
"Related Party" means any Person (other than a Subsidiary):-
(i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or
is under common control with, the Guarantor;
(ii) which beneficially owns or holds five per cent.
(5%) or more of the equity interest of the
Guarantor; or
(iii) twenty per cent. (20%) or more of the equity
interest of which is beneficially owned or held
by the Guarantor or a Subsidiary.
The term "control" means, for the purposes of the above
definition, the possession, directly or indirectly, of
the power to direct or cause the direction of the
management and policies of a Person, whether through
the ownership of voting securities, by contract or
otherwise;
<PAGE>
"Reportable Event" has the meaning assigned to such term in
section 4043 of ERISA;
"Restricted Investments" means, as of the date of any
determination, Investments other than:
(a) Investments in commercial paper or corporate
promissory note(s) which at the date of any
determination hereunder are accorded an A1 or
higher rating by Standard & Poor's Corporation
or any equivalent or higher rating by Moody's
Investor Service, Inc. or another nationally
recognised credit rating agency of similar
standing issued by United States of America,
Canadian, European or Japanese bank
holding companies, utility or utility holding
companies or industrial or financial companies,
in each case maturing in not more than two
hundred and seventy (270) days from the
date of acquisition;
(b) Investments in direct obligations of the United
States of America, or any agency thereof, maturing
in twelve (12) months or less from the date of
acquisition thereof;
(c) Guarantees of Indebtedness of a Subsidiary by the
Guarantor or a Wholly-owned Subsidiary;
(d) Permitted Acquisitions by the Guarantor; and
(e) Advances to AIG for the purpose of including funds so
advanced in the pooled short term investments made by
AIG for the respective accounts of AIG and its
subsidiaries, except for any such advance which
remains unpaid for more than ten (10) Business Days;
"Taxes" with respect to any Person means for the purposes
only of this Schedule 5 income, excise and other taxes, and
all assessments, imposts, duties and other governmental
charges or levies imposed upon such Person, its income or
any of its properties, franchises or assets by any Governmental
Authority;
"Wholly-owned Subsidiary" means any Person of which or in
which the Guarantor and its other Wholly-owned Subsidiaries
own directly or indirectly one hundred per cent. (100%) of:-
(a) the issued and outstanding shares of stock (except
shares required as directors' qualifying shares);
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or
similar entity; or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organisation.
2. The Guarantor hereby undertakes and covenants with the
Agent, the Security Agent, each of the Lenders and the
Borrower separately and severally that from the date of
this Facility Agreement and for so long as it remains under
any obligation, actual or contingent, under this Facility
Agreement or any of the other Facility Documents or any of
the Operative Documents:-
<PAGE>
2.1 the Guarantor shall furnish to the Security Agent
sufficient copies for each Lender (which the Security
Agent shall promptly furnish to each Lender) and to
the Borrower:-
(a) as soon as available, and in any event within
ninety-five (95) days after the end of each fiscal
year of the Guarantor, a copy of the audited financial
statements and annual audit report of the Guarantor
and its Subsidiaries for such fiscal year beginning
with the year ending 31 December 1994 prepared on a
consolidated basis and in conformity with generally
accepted accounting principles in the United States
of America and certified by Ernst & Young or by another
independent United States of America certified public
accountant of recognised national standing in the
United States of America selected by the Guarantor
and satisfactory to the Majority Lenders;
(b) as soon as available, and in any event within fifty
(50) days after the end of each quarter (except the
last quarter) of each fiscal year of the Guarantor,
a copy of the unaudited financial statements of the
Guarantor and its Subsidiaries for such quarter
prepared in a manner consistent with the audited
financial statements referred to in Paragraph 2.1(a)
signed by the Guarantor's chief financial officer
and consisting of at least a balance sheet as at the
close of such quarter and statements of earnings and
cash flows for such quarter and for the period from the
beginning of such fiscal year to the close of such
quarter;
(c) contemporaneously with the furnishing of a copy of
each annual audit report and of each set of
quarterly statements provided for in this Paragraph
2.1, a certificate of the Guarantor dated the date of
such annual report or such quarterly statements and
signed by the Guarantor's chief financial officer, to
the effect that no Cancellation Event has occurred and
is continuing, or, if there is any such event,
describing it and the steps, if any, being taken to
cure it and containing a computation of, and showing
compliance with, each of the financial ratios and
restrictions contained in this Schedule 5;
(d) promptly from time to time, a written report of any
change in the list of the Guarantor's Subsidiaries
set forth in Attachment B and in the list of
partnerships and joint ventures set forth in
Attachment C;
(e) promptly after the filing or making thereof, copies
of all 8-K's (other than 8-K's relating solely to the
insurance by the Guarantor of securities pursuant to
an effective registration statement), 10-Q's, 10-K's,
and other material reports or registration statements
filed by the Guarantor or any Subsidiary with or to
any securities exchange or the Securities and Exchange
Commission;
(f) from time to time, copies of all reports, circulars,
notices, statements and other documents issued by the
Guarantor to holders of its stock listed on a
recognised stock exchange (in their capacity as such
<PAGE>
holders) generally in the same form as provided to
such shareholders promptly after the same are so
issued; and
(g) from time to time such other information concerning
the Guarantor and its Subsidiaries as any Lender or
the Security Agent may reasonably request;
2.2 forthwith upon learning of the occurrence of any of the
following, the Guarantor shall furnish to the Security
Agent and the Borrower written notice thereof, describing
the same and the steps being taken by the Guarantor or the
Subsidiary affected with respect thereto:
(a) the occurrence of any or all of a Cancellation Event,
a Termination Event, a Mandatory Prepayment Event or a
Loan Event of Termination;
(b) the institution of any Litigation Action, provided
that the Guarantor need not give notice of any new
Litigation Action unless such Litigation Action,
together with all other pending Litigation Actions,
could, if adversely determined, reasonably be
expected to have a Material Adverse Effect;
(c) the entry of any judgment or decree against the
Guarantor or any Subsidiary in the amount of one
million Dollars (US$1,000,000) or more if the
aggregate amount of all judgments and decrees then
outstanding against the Guarantor and all
Subsidiaries exceeds ten million Dollars
(US$10,000,000) after deducting (1) the amount
with respect to which the Guarantor or any Subsidiary
is insured and with respect to which the insurer has
not denied coverage in writing, and (2) the amount
for which the Guarantor or any Subsidiary is
otherwise indemnified if the terms of such indemnification
are satisfactory to the Security Agent and the Majority
Lenders;
(d) the occurrence of a Reportable Event with respect to
any Plan; the institution of any steps by the
Guarantor, any ERISA Affiliate, the PBGC or any
other Person to terminate any Plan; the institution
of any steps by the Guarantor or any ERISA Affiliate
to withdraw from any Plan; the occurrence of any
material increase in the contingent liability of the
Guarantor or any Subsidiary with respect to any
post-retirement welfare benefits; or the failure
of the Guarantor or any other Person to make a
required contribution to a Plan if such failure
is sufficient to give rise to a lien under
section 302(f) of ERISA in each case, provided
that the relevant occurrence, institution or
failure (as the case may be) could reasonably be
expected to have a Material Adverse Effect;
(e) the occurrence of a material adverse change in the
business, credit, operations, financial condition or
prospects of the Guarantor and its Subsidiaries taken
as a whole;
2.3 subject to Paragraphs 2.8(w) and (x) the Guarantor will
maintain and preserve and, subject to the provisions of
Paragraphs (w), (y) and (z) of Paragraph 2.8, cause each
Subsidiary to maintain and preserve, its respective
existence as a corporation or other form of business
<PAGE>
organisation, as the case may be, and all rights,
privileges, licences, patents, patent rights, copyrights,
trademarks, trade names, franchises and other authority to
the extent material and necessary for the conduct of its
respective business in the ordinary course as conducted from
time to time, except as may be determined by the Board of
Directors of the Guarantor in good faith to wind up and
dissolve a Subsidiary that is not necessary or material to
the business of the Guarantor in its ordinary course as
conducted from time to time;
2.4 the Guarantor will engage, and cause each Subsidiary to
engage, in substantially the same fields of business as it
is engaged in on the date hereof;
2.5 the Guarantor will maintain, and cause such Subsidiary to
maintain, complete and accurate books and records in which
full and correct entries in conformity with generally
accepted accounting principles in the United States of
America shall be made of all dealings and transactions in
relation to its respective business and activities and will
permit, and cause each Subsidiary to permit, access by the
Security Agent, each Lender and the Borrower to the books
and records of the Guarantor and such Subsidiary during
normal business hours, and permit, and cause each
Subsidiary to permit, the Security Agent, each Lender
and the Borrower to make copies of such books and records;
2.6 the Guarantor will pay, and cause each Subsidiary to pay,
when due, all of its Taxes (or in the case of Taxes
affecting property leased by the Guarantor or any Subsidiary
to any lessee, cause, and cause each Subsidiary to
cause, such lessee to pay when due, such Taxes),
PROVIDED ALWAYS THAT there shall be no
Cancellation Event or Termination Event in
consequence of a breach by the Guarantor of this
paragraph 2.6 if such breach relates solely:-
(a) to any Taxes which the Guarantor, such Subsidiary or
such lessee. as the case may be, is contesting in
good faith and by appropriate proceedings and the
Guarantor or such Subsidiary or such lessee has set
aside on its books such reserves or other appropriate
provisions therefor as may be required by generally
accepted accounting principles in the United States of
America;
(b) to any Taxes of the Guarantor in an amount less than
ten million Dollars (US$10,000,000); or
(c) to any Taxes of any Subsidiary to the extent that
non-payment of any such Tax would be expected not to
have a material adverse effect on the ability of any
of the Obligors to perform their respective
obligations under any of the Facility Documents
and/or the Operative Documents to which they are
respectively a party;
2.7 the Guarantor will comply, and cause each Subsidiary to
comply, in all material respects with all statutes and
governmental rules and regulations applicable to it; and
use reasonable efforts to cause, and cause each Subsidiary
to use reasonable efforts to cause, each lessee of property
owned by the Guarantor or the Subsidiary or any Subsidiary
to comply in all material respects with all statutes,
governmental rules and regulations applicable to such
<PAGE>
property or applicable to such lessee in connection with
its leasing;
Provided however that in the case of any lease of property
owned by the Guarantor or any of its Subsidiaries, in
circumstances where the lessee (being a lessee which is not
a Subsidiary of the Guarantor) has failed to comply in all
material respects as aforesaid, there shall be no breach
of this paragraph 2.7 if:
(a) the relevant lease agreement includes an obligation
on the part of the Lessee on substantially similar
terms to the foregoing provisions of this paragraph 2.7;
(b) the relevant failure does not result in a breach of
any of the payment obligations of any of the
Obligors pursuant to this Facility Agreement, any
other Facility Documents or any of the Operative
Documents to which they are respectively a party; and
(c) the Guarantor or the relevant Subsidiary shall not
be aware of the relevant failure or, having become so
aware, shall not have consented to or acquiesced in
or connived in the occurrence or continuance of such
failure beyond such period as may reasonably be
necessary in order to remedy the relevant failure.
2.8 the Guarantor will, except with respect to any Permitted
Acquisition, not, and not permit any Subsidiary to:-
(a) be a party to any merger or consolidation;
(b) except in the normal course of its business, sell,
transfer, convey, lease or otherwise dispose of all
or any substantial part of the assets of the Guarantor
and its Subsidiaries taken as a whole except with
respect to the special purpose corporations named in
Attachment C.
Notwithstanding the foregoing:-
(v) the Guarantor may merge into or consolidate with AIG
or any AIG Group Company, provided always that (i)
AIG shall at all times have beneficial ownership, whether
directly or indirectly, of at least fifty-one per
cent. (51%) of the issued common stock of the merged
entity, (ii) the merged entity shall covenant with
each of the Lenders, the Agent, the Security Agent
and the Borrower separately and severally in the terms
of Clauses 7.4.1 and 7.4.2 of, and Schedule 5 to, the
Facility Agreement, and (iii) the merged entity shall
otherwise assume all of the obligations and
liabilities of the Guarantor under each of the
Facility Documents and each of the Operative
Documents;
(w) the Guarantor or any Subsidiary may dispose of assets
("Relevant Assets") to a company (a "Vehicle Company")
incorporated for the purpose of an issue of debt
securities (whether securities of the Vehicle Company
or another Person) in respect of which the payment of
interest and/or repayment of principal is to be made
primarily out of proceeds accruing from the leasing or
sale of the Relevant Assets, or from proceeds of
insurance or requisition proceeds with respect to the
Relevant Assets, provided that the Guarantor or, as
the case may be, the relevant Subsidiary is to be paid
<PAGE>
either the book or fair market value of the Relevant
Assets on their disposal to the Vehicle Company or, to
the extent that the Guarantor or the relevant
Subsidiary is to receive less than the book or fair
market value of the Relevant Assets, the Guarantor or
a Subsidiary retains or is granted an option to
purchase the Relevant Assets from the Vehicle Company
for a nominal consideration;
(x) the Guarantor may, provided it has obtained the prior
written consent of the Agent, sell, transfer, convey,
lease or assign all or a substantial part of its
business to any Wholly-owned Subsidiary in the
ordinary course of its business for full
consideration (or as the case may be, full market
rent) in money or money's worth on an arm's length
basis;
(y) any Wholly-owned Subsidiary may merge into the
Guarantor or AIG or an AIG Group Company or into or
with any other Wholly-owned Subsidiary; and
(z) any Wholly-owned Subsidiary (other than the Lessee)
may sell, transfer, convey, lease or assign all or a
substantial part of its assets to the Guarantor or
another Wholly-owned Subsidiary;
provided, in each of the cases described in the
preceding paragraphs (v), (w), (x), (y) and (z), that
immediately thereafter and after giving effect thereto
no Acceleration Event shall have occurred and be
continuing and in the case of any merger or
consolidation to which the Guarantor is a party, the
Person formed by such consolidation shall assume
the Guarantor's obligations and performance of the
Guarantor's covenants under this Facility Agreement,
each of the other Facility Documents and each of the
Operative Documents in writing satisfactory in form and
substance to the Security Agent.
For the purposes of this Paragraph 2.8 only, a sale,
transfer, conveyance, lease or other disposition of
assets shall be deemed to be a "substantial part" of
the assets of the Guarantor and its Subsidiaries only
if the value of such assets, when added to the value
of all other assets sold, transferred, conveyed,
leased or otherwise disposed of by the Guarantor
and its Subsidiaries (other than (i) in the normal
course of business or (ii) pursuant to Paragraph (z)
of this Paragraph 2.8) during the same fiscal year,
exceeds five per cent. (5%) of the Guarantor's
Consolidated Tangible Net Worth determined as of the
end of the immediately preceding fiscal year. As
used in the preceding sentence, the term "value"
shall mean, with respect to any asset disposed of,
the greater of such asset's book or fair market
value as of the date of disposition, with "book value"
being the value of such asset as would appear
immediately prior to such disposition on a balance
sheet of the owner of such asset prepared in
accordance with United States of America
generally accepted accounting principles;
2.9 the Guarantor will not declare or pay any dividends
whatsoever or make any distribution on any capital stock
of the Guarantor (except in shares of, or warrants or
rights to subscribe for or purchase shares of, capital
<PAGE>
stock of the Guarantor), and not, and not permit any
Subsidiary to, make any payment to acquire or retire
shares of capital stock of the Guarantor, at any time
when a Cancellation Event has occurred and is continuing
provided, however, that notwithstanding the foregoing,
this Paragraph 2.9 shall not prohibit the payment of
dividends on any of the Guarantor's money market
preferred stock that was sold to the public pursuant
to an effective registration statement under the
United States of America Securities Act of 1933;
2.10 the Guarantor will not, and not permit any Subsidiary to,
create or permit to exist any Lien upon or with respect to
any of its properties or assets of any kind, now owned or
hereafter acquired, or on any income or profits therefrom,
except for:-
(a) Liens existing on the date hereof that are reflected
in the financial statements of the Guarantor dated
prior to the date hereof;
(b) Liens upon or in any property (other than property
acquired for lease to a Person other than the
Guarantor or a Subsidiary) acquired or held by the
Guarantor or a Subsidiary in the ordinary course of
business to secure Indebtedness under Capitalised
Leases incurred or guaranteed by the Guarantor or any
Subsidiary
(c) Liens on the Indebtedness of a Subsidiary owing to
the Guarantor or a Wholly-owned Subsidiary;
(d) Liens on property of a corporation existing at the
time such corporation is merged into or consolidated
with the Guarantor or a Subsidiary or at the time of
purchase, lease or other acquisition of the
properties of a corporation or firm as an entirety or
substantially as an entirety by the Guarantor or a
Subsidiary, provided that any such Lien shall not
extend to or cover any assets or properties of the
Guarantor owned by the Guarantor prior to such
merger, consolidation, purchase, lease or acquisition,
unless otherwise permitted under this Paragraph 2.10;
(e) leases or sub-leases granted to others in the
ordinary and usual course of the Guarantor's business;
(f) easements, rights of way, restrictions and other
similar charges or encumbrances not interfering with
the ordinary conduct of the business of the Guarantor
or any Subsidiary;
(g) banker's Liens arising, other than by contract, in
the ordinary and usual course of the Guarantor's
business;
(h) Liens incurred or deposits made in the ordinary
course of business in connection with surety and appeal
bonds, leases, government contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money), provided however, that the obligation so
secured is not overdue or is being contested in good
faith and by appropriate proceedings diligently
pursued;
<PAGE>
(i) any replacements or successive replacement in whole
or in part of any Lien referred to in the foregoing
paragraphs (a) to (h) inclusive, provided however,
that the principal amount of any Indebtedness secured
by the Lien shall not be increased and the principal
repayment schedule and maturity of such Indebtedness
shall not be extended and (1) such replacement shall
be limited to all or part of the property which
secured the Lien so replaced (plus improvements and
construction on such property), or (2) if the
property which secured the Lien so replaced has been
destroyed, condemned or damaged and pursuant to the
terms of the Lien other than such replacement shall
be limited to all or part of such substituted property;
(j) Liens created by or resulting from any litigation or
other proceeding which is being contested in good
faith by appropriate proceedings, including Liens
arising out of judgments or awards against the
Guarantor or any Subsidiary with respect to which the
Guarantor or such Subsidiary is in good faith
prosecuting an appeal or proceedings for review; or
Liens incurred by the Guarantor or any Subsidiary for
the purpose of obtaining a stay or discharge in the
course of any litigation or other proceeding to which
the Guarantor or such Subsidiary is a party;
(k) carrier's, warehouseman's, mechanic's, landlord's and
materialmen's Liens, Liens for Taxes, assessments and
other governmental charges and other similar Liens,
in each case arising in the ordinary course of
business, securing obligations that are not incurred
in connection with the obtaining of any advance or
credit and which are either not overdue or are being
contested in good faith and by appropriate proceedings
diligently pursued;
(l) Liens securing Indebtedness of any Lessee or
Additional Lessee or the Lessee (as that term is
defined in the 1994 Facility Agreement) for the
purpose of providing subsidized financing of the
acquisition of Airbus Industrie aircraft, the
repayment obligations of which will be supported by
guarantees issued by certain European government
export credit agencies, certain guarantees of the
Guarantor and a charge over the shares of any Lessee
or Additional Lessee or the Lessee (as that term is
defined in the 1994 Facility Agreement), provided
that such Liens shall encumber only the assets of
any Lessee or Additional Lessee or the Lessee (as
that term is defined in the 1994 Facility Agreement)
or such charged shares of any Lessee or Additional
Lessee or the Lessee (as that term is defined in
the 1994 Facility Agreement); and
(m) other Liens securing Indebtedness of the Guarantor or
any Subsidiary in an aggregate amount which, together
with all other outstanding Indebtedness of the
Guarantor and the Subsidiaries secured by Liens not
listed in Paragraphs (a) to (l) of this Paragraph
2.10 does not at the time exceed twelve and one half
per cent. (12.5%) of the Consolidated Tangible Net
Worth of the Guarantor as shown on its audited
consolidated financial statements as of the end of
the fiscal year preceding the date of determination
minus the amount of outstanding Liens permitted
under Paragraph 2.10(l);
<PAGE>
2.11 the Guarantor will not, and will not permit any
Subsidiary to, enter into or be a party to any
transaction or arrangement, including, without limitation,
the purchase, sale, lease or exchange of property or the
rendering of any service, with any Related Party, except
in the ordinary course of and pursuant to the reasonable
requirements of the Guarantor's or such Subsidiary's
business and upon fair and reasonable terms no less
favourable to the Guarantor or such Subsidiary than
would be obtained in a comparable arm's length
transaction with a Person not a Related Party;
2.12 the Guarantor shall procure that none of the Obligors
(without the prior written consent of the Security Agent
which consent shall be exercisable at the absolute
discretion of the Security Agent and the Borrower) issues
any shares (other than to AIG, any AIG Group Company, the
Guarantor or any Subsidiary or any other Person acting
as a nominee for such companies on terms that any such
shares are immediately charged to the Security Agent
on terms substantially the same as those contained in
the Charge Over Shares of Bermuda Lessee or on such
terms as may otherwise be agreed by the Security Agent)
and the Guarantor shall not alter any of the rights
attaching to the issued shares of any of the Obligors
and the Guarantor shall not sell, transfer or dispose
of, encumber or create any Lien over any of its
shares in any Parent and shall procure that no Parent
alters any of the rights attaching to the issued shares
of any Lessee and/or Additional Lessee and/or any Option
Holder and that no Parent sells, transfers or disposes of,
encumbers or creates any Lien over any of its shares in
any Lessee and/or Additional Lessee and/or any Option
Holder other than pursuant to the Charges Over Shares, the
Guarantor shall not, without the prior written consent of
the Security Agent, alter any of the Constitutional
Documents of any of the Obligors;
2.13 the Guarantor shall procure that at all times a majority
(in number and voting power) of the members of the board
of directors of each of the Obligors shall be officers
and employees of the Guarantor, a Subsidiary of the
Guarantor or an AIG Group Company and the Guarantor
shall procure further that no member of the board of
directors of any of the Obligors shall be replaced or
substituted (other than by another officer or employee
of the Guarantor, a Subsidiary of the Guarantor or an
AIG Group Company) without the prior written consent
of the Security Agent which consent shall be
exercisable at the absolute discretion of the Security
Agent;
2.14 the Guarantor shall not permit the ratio of Indebtedness
to Consolidated Tangible Net Worth to exceed (i) at any
time prior to 1st January 1998, six hundred per cent.
(600%) on the last day of any financial year and six
hundred and fifty per cent. (650%) at any other time
and (ii) at any time on or after 1st January 1998,
five hundred per cent. (500%) on the last day of any
financial year and five hundred and fifty per cent.
(550%) at any other time;
2.15 the Guarantor shall not permit the Fixed Charge Plus
Preferred Coverage Ratio on the last day of any quarter
of any financial year of the Guarantor, calculated on a
four quarter rolling basis, to be less than one hundred
and twenty-five per cent. (125%); and
2.16 the Guarantor shall not permit the Guarantor's
Consolidated Tangible Net Worth to be less than one
billion two hundred million Dollars (US$1,200,000,000),
plus fifty per cent. (50%) of cumulative net income of
the Guarantor and its Subsidiaries determined on a
consolidated basis in accordance with United States
of America generally accepted accounting principles
since 31st December 1993, plus fifty per cent. (50%)
of cumulative equity capital injections from
AIG since 31st December 1993, plus fifty per cent.
(50%) of the net proceeds from any Preferred Stock
issuance since 31st December 1993.
<PAGE>
ATTACHMENT A TO SCHEDULE 5
FIXED CHARGE PLUS PREFERRED COVERAGE RATIO
FOR FOUR FISCAL QUARTERS ENDED 31ST DECEMBER 1993
Earnings US$'000
Net income 168,565
Add:
Provision for income taxes 109,075
Fixed charges 340,568
Less:
Capitalised interest 39,363
-------
Earnings as adjusted (A) 578,845
Preferred dividend requirements 2,692
Ratio of income before provision
for income taxes to net income 165%
Preferred dividend factor on
pretax basis 4,442
Fixed charges
Interest expense 301,205
Capitalised interest 39,363
Estimate of minimum rents
under operating leases
representing the interest
factor ---------
Fixed charges as adjusted 340,568
Fixed charges and preferred stock
dividends (B) 345,010
Ratio of earnings to fixed charges 1.68x
and preferred stock dividends ((A)
divided by (B))
<PAGE>
ATTACHMENT B TO SCHEDULE 5
LIST OF SUBSIDIARIES
AND SPECIAL PURPOSE CORPORATIONS(1)
Name Jurisdiction of Incorporation
- ----------------------------- ------------------------------
Interlease Management Corporation California
Interlease Aviation Corporation California
(2)ILFC Aircraft Holding Corporation California
(2)Aircraft SPC-1, Inc. California
(2)Aircraft SPC-2, Inc. California
(2)Aircraft SPC-3, Inc. California
(2)ILFC (Bermuda) No. III Ltd. Bermuda
(2)International Lease Finance Corporation
Ltd. Bermuda
ILFC (Bermuda) 4, Ltd. Bermuda
ILFC (Bermuda) 5, Ltd. Bermuda
ILFC (Bermuda) 6, Ltd. Bermuda
ILFC (Bermuda) 7, Ltd. Bermuda
ILFC Belgium S.A. Belgium
ILFC International Lease Finance
Corporation Ltd. Canada
Atlantic International Aviation
Holdings, Inc. California
ILFC Ireland Limited Ireland
ILFC Ireland 2 Limited Ireland
ILFC Ireland 3 Limited Ireland
- -----------
(1) Each Subsidiary and special purpose corporation is wholly-
owned, directly or indirectly, by the Company.
(2) Special purpose subsidiaries.
<PAGE>
ATTACHMENT C TO SCHEDULE 5
LIST OF PARTNERSHIPS
AND JOINT VENTURES
Pacific Ocean Leasing Ltd.
Pacific Asia Leasing Ltd.
Hoeri Corporation
<PAGE>
SCHEDULE 6
NOTICE OF DRAWDOWN
RE: AIRCRAFT MSN [ ]
To: National Westminster Bank Plc (as Agent)
7th Floor
135 Bishopsgate
London EC2M 3UR
England
From: Encore Leasing Limited (the "Borrower")
Re: Facility Agreement dated , 1994 and made
between (1) the banks and financial institutions named
therein as Lenders, (2) National Westminster Bank Plc as
Agent (3) National Westminster Bank Plc Security as Agent,
(4) the Borrower, (5) the Bermuda Lessee, (6) the Irish
Lessee, (7) the Bermuda Parent, (8) the Irish Parent, (9)
the Bermuda Option Holder and (10) the Guarantor ("the
Facility Agreement") and the Utilisation Notice dated
[ ] 1994 from [the Bermuda Lessee] [the
Irish Lessee] to the Agent and the Borrower (the "Utilisation
Notice")
The Borrower hereby gives notice in accordance with Clause 5.2.4
of the Facility Agreement and in connection with the Utilisation
Notice that:-
(i) the Borrower desires the Lenders to disburse the
Credits on [ ] 199[ ];
(ii) the Delivery Date is [ ];
(iii) the Aircraft Purchase Price is US$ [ ]; and
(iv) the Borrower desires to make a drawdown on the Drawdown
Date in the amount of US$[ ].
The account into which the Credits should be paid is
account no. [ ] with [ ].
The Borrower hereby certifies that all representations and
warranties on its part contained in the Facility Documents and
the Aircraft Operative Documents remain true and correct at the
date of this notice and no event has occurred which constitutes
or, with the passing of time or the giving of notice or the
making of any determination or any combination thereof would
constitute a Loan Event of Termination.
Capitalised terms used herein and defined in the Facility
Agreement have the same meanings herein.
Encore Leasing Limited
By:
Name:
Title:
<PAGE>
SCHEDULE 7
CONDITIONS PRECEDENT TO AN ADVANCE
PART I
The Agent shall have received three (3) Business Days prior to
the Drawdown Date or such lesser period as the Agent, the
Security Agent, the Lenders and the Borrower shall have agreed in
writing all of the following documents in form and substance
satisfactory to the Agent, which shall be in full force and
effect on the Drawdown Date:-
1. duly executed originals of all Aircraft Operative Documents
to which the Agent and/or the Lenders are party and
certified copies of all other Aircraft Operative Documents
(other than those referred to in Part II of this Schedule 7);
2. the form of the Legal Opinions as follows (addressed also
to, or for the benefit also of, the Export Credit
Agencies):-
(i) a Legal Opinion from Maples and Calder, Cayman Islands
Counsel to the Lenders, in form and content
satisfactory to the Agent;
(ii) a Legal Opinion from Buchalter Nemer Fields & Younger,
California Counsel to the Lenders in form and content
satisfactory to the Agent;
(iii) if the Bermuda Lessee is the Lessee and/or the
Bermuda Option Holder is the Option Holder or any other
Obligor is Bermudan, a Legal Opinion from Appleby
Spurling & Kempe, Bermuda Counsel to the Lenders in
form and content satisfactory to the Agent;
(iv) if the Irish Lessee is the Lessee or any other Obligor
is Irish, a Legal Opinion from A & L Goodbody, Irish
Counsel to the Guarantor in form and substance
satisfactory to the Agent;
(v) a Legal Opinion from White & Case, New York Counsel to
the Lenders in form and content satisfactory to the
Agent;
(vi) a Legal Opinion from Wilde Sapte, English Counsel to
the Lenders in form and content satisfactory to the
Agent;
(vii) a Legal Opinion from In-house Counsel to the Seller,
in form and content satisfactory to the Agent;
<PAGE>
(viii) a Legal Opinion from In-house Counsel to the
Engine Manufacturer, in form and content
satisfactory to the Agent;
(ix) a Legal Opinion from In-house Counsel to the
Guarantor, in form and content satisfactory to the
Agent;
(x) a Legal Opinion from Counsel to the Lenders in the
jurisdiction of any Alternative Lessee and/or
Additional Lessee and/or Option Holder (other than the
Bermuda Option Holder) connected with the relevant
Aircraft;
(xi) each of the Legal Opinions referred to in Clause
9.2.2(c) and Clause 9.4.2(h) of the Lease Agreement;
3. if the Lessee is an Alternative Lessee or there are any
Additional Lessees, duly executed originals of a comfort
letter from MeesPierson N.V. addressed to such Alternative
Lessee and/or Additional Lessee in substantially the same
form as the MeesPierson Comfort Letter;
4. payment instructions relating to payments to be made on the
Delivery Date under the Operative Documents; and
5. any requisite approvals of the competent authorities of
Germany represented by HERMES KREDITVERSICHERUNGSAKTIEN-
GESELLSCHAFT, the French Republic represented by COMPAGNIE
FRANCAISE D'ASSURANCE POUR LE COMMERCE EXTERIEUR and Her
Britannic Majesty's Government represented by the Export
Credits Guarantee Department in terms satisfactory to the
German Lenders, the French Lenders and the British Lenders
respectively.
<PAGE>
CONDITIONS PRECEDENT TO AN ADVANCE
PART II
In addition, the Agent shall have received on or before the
Drawdown Date all of the following:-
1. evidence of registration of the Aircraft with the Aviation
Authority in the name of the Approved Sub-Lessee as
"Registered Operator" with the interests of the Borrower as
owner noted thereon or, as the case may be, in the name of
the Borrower with the interests of the Approved Sub-Lessee
as "operator" noted thereon;
2. a certificate of the Insurance Broker of the Approved
Sub-Lessee and letter of undertaking from such Broker in
respect of the insurances required to be maintained in
accordance with the terms of the Lease Agreement addressed
to the Security Agent in each case in the agreed and annexed
form or in such other form and substance acceptable to the
Security Agent;
3. evidence satisfactory to the Agent that the bills of sale
relating to the transfer of title to the Aircraft and the
Buyer Furnished Equipment will be delivered by the Seller to
the Borrower;
4. evidence satisfactory to the Agent that (i) an Acceptance
Certificate for the Aircraft duly executed by the relevant
Lessee will be delivered to the Borrower pursuant to the
Lease Agreement (ii) the acceptance certificate for the
Aircraft duly executed by the Approved Sub-Lessee will be
delivered pursuant to the Approved Sub-Lease and (iii) the
re-acceptance certificate for the Aircraft will be delivered
duly executed by the Approved Sub-Lessee pursuant to the
Approved Sub-Lease within five (5) Banking Days of the
completion of the post-delivery modifications to the
Aircraft (if any);
5. a commercial invoice for the Aircraft (including the Buyer
Furnished Equipment) issued by the Seller specifying the
Aircraft purchase price;
6. duly executed originals of all of the notices and
acknowledgements to the Purchase Agreement Assignment, the
General Security Assignment, the Deed of Assignment of
General Terms Agreement re Engine Warranties, the Sub-Lease
Security Assignment, the Mortgage, the relevant Sub-Lease
Collateral Charge and the relevant Assignment of Sub-Lease
Collateral Charge;
7. duly executed originals or, as the case may be, certified
copies of the documents ancillary to any Charge Over Shares
entered into in connection with the delivery of the
Aircraft;
<PAGE>
8. in form and substance satisfactory to the Agent certified
copies of all consents, authorisations, approvals, filings
and registrations (if any) of or with any governmental or
other competent agency or authority (including in relation
to exchange control) which any of the Legal Opinions
referred to in paragraph 2 of Part I of this Schedule 7
provide are required to be obtained or made by any party to
the Aircraft Operative Documents in connection with the
execution, delivery and performance of the Aircraft
Operative Documents or any documents contemplated thereby;
9. in form and substance satisfactory to the Agent, exhibits to
the Acceptance Certificate (if any);
10. such other documents (and in such form) in relation to the
transaction constituted or contemplated by the Aircraft
Operative Documents which any of the legal opinions referred
to in paragraph 2 of Part I of this Schedule 7 provide are
required;
11. copies of all documents (not otherwise required under this
annex) as are conditions precedent under any Aircraft
Operative Document;
12. evidence satisfactory to the Agent that on the Drawdown Date
at the time the Mortgage is to come into effect, the
Aircraft shall be in the United Kingdom or in United Kingdom
airspace or in such other location in respect of which the
Agent is able to obtain a satisfactory legal opinion that,
under the relevant conflicts of laws rules, the Mortgage
will be recognised, valid and binding as an English Law
Mortgage;
13. evidence of the Consent and Agreement of the Seller and the
Engine Manufacturer to the provisions of the warranty
assignments pursuant to the purchase Agreement Assignment,
the Deed of Assignment of General Terms Agreement re Engine
Warranties and the Mortgage and (where appropriate) the
service of such documents upon the Seller and/or the Engine
Manufacturer by huissiers de justice in accordance with the
provisions of Article 1690 of the French Civil Code;
14. a certified copy of the certificate of airworthiness in the
public transport (passenger) category issued by the Aviation
Authority with respect to the Aircraft together with a
certified copy of the Air Operator's Certificate issued by
the Aviation Authority;
15. a certified copy of the bill of sale issued by the Guarantor
in favour of the Seller and relating to the Buyer Furnished
Equipment and having attached thereto a Schedule describing
the nature, the quantity, the Vendor and the part number of
the individual items which comprise the Buyer Furnished
Equipment;
16. an undertaking from the Guarantor addressed to the Agent
confirming that the Buyer Furnished Equipment has been
installed on the Aircraft or, in respect of such of the
Buyer Furnished Equipment as is scheduled for installation
during any post-delivery modification period for the
Aircraft, that it will be installed by the end of the
post-delivery modification period and promptly following the
end of any post-delivery modification period, confirmation
from the Guarantor addressed to the Agent that the Buyer
Furnished Equipment Scheduled for installation on the
Aircraft during the post-delivery modification period has in
fact been installed on the Aircraft;
<PAGE>
17. a certificate from the Manufacturer addressed to the Agent
concerning the Buyer Furnished Equipment in form and
substance satisfactory to the Export Credit Agenies;
18. written notice from the Borrower confirming that the
conditions precedent to the Borrower's obligations to
purchase the Aircraft pursuant to the Purchase Agreement
Assignment and the Purchase Agreement and to lease the same
to the relevant Lessee under the Lease Agreement (other than
the condition precedent referred to in Clause 4.1.1 of the
Lease Agreement) have been satisfied in full or waived by
the Borrower;
19. written notice from a duly authorised representative of the
relevant Lessee confirming that the conditions precedent to
the relevant Lessee's obligations to take on lease the
Aircraft from the Borrower pursuant to the Lease Agreement
have been satisfied in full or waived by the relevant
Lessee;
20. in the circumstances where the provisions of Clause 5.4.2
apply, substitute schedules to replace Schedule 2(1) and
Schedule 2(2) to the Loan Supplement duly signed for and on
behalf of the Borrower and the relevant Lessee;
and no Change in Law shall have occurred after the date of this
Facility Agreement which would make illegal or otherwise prohibit
the entry into or performance of the transactions contemplated by
any of the Facility Documents or any of the Aircraft Operative
Documents by any party hereto or thereto.
<PAGE>
SCHEDULE 8
ENGLISH PROCESS AGENTS
Bermuda Lessee: Freshfields (ref: TMRL)
65 Fleet Street
London EC4Y 1HS
Irish Lessee: Freshfields (ref: TMRL)
65 Fleet Street
London EC4Y 1HS
Bermuda Parent: Freshfields (ref: TMRL)
65 Fleet Street
London EC4Y 1HS
Irish Parent: Freshfields (ref: TMRL)
65 Fleet Street
London EC4Y 1HS
Guarantor: Freshfields (ref: TMRL)
65 Fleet Street
London EC4Y 1HS
Bermuda Option Holder: Freshfields (ref: TMRL)
65 Fleet Street
London EC4Y 1HS
Borrower: MeesPierson Management Services
99 Gresham Street
London EC2V 7PH
Banque Paribas: Banque Paribas, London Branch
33 Wigmore Street
London W1H 0BN
Banque Indosuez: Banque Indosuez, London Branch
122 Leadenhall Street
London EC3V 4QH
Banque Nationale de Paris: Banque Nationale de Paris,
London Branch
8-13 King William Street
London EC4P 4HS
Credit Foncier de France: Credit Foncier de France,
UK Representation
11 Old Jewry
London EC2R 8DU
Credit National: Credit National, London Branch
4 Throgmorton Avenue
London EC2N 2DL
Attention: Patrick Clough
Royal Bank of Canada S.A.: Royal Bank of Canada,
71 Queen Victoria Street
London EC4V 4DE
Societe Generale: Societe Generale
60 Gracechurch Street
London EC3V OHD
The Fuji Bank, Limited: The Fuji Bank, Limited,
London Branch
7-11 Finsbury Circus
London EC2H 7DH
<PAGE>
The Industrial Bank of Japan,
Limited: The Industrial Bank of Japan,
Limited
London Branch
Bracken House
One Friday Street
London EC4M 9JA
The Long-Term Credit Bank
of Japan, Ltd.: The Long-Term Credit Bank
of Japan, Ltd., London Branch
Alban Gate
125 London Wall
London EC2Y 5AH
Bayerische Hypotheken- und
Wechsel-Bank AG: Hypo-Bank, London Branch
41 Moorgate
London EC2R 6AE
Kreditanstalt fur
Wiederaufbau: Wilde Sapte
1 Fleet Place
London EC4M 7WS
Attn: Managing Partner
Bayerische Landesbank
Girozentrale: Bayerische Landesbank
Bavaria House
13/14 Appold Street
London EC2A 2AA
Commerzbank AG: Commerzbank AG, London Branch
Commerzbank House
23 Austin Friars
London EC2N 2EN
Landesbank Schleswig-Holstein
Girozentrale: Sudwestdeutsche Landesbank
Girozentrale
London Branch
Aldermary House
10-15 Queen Street
London EC4N 1TJ
National Westminster Bank AG: National Westminster Bank Plc
Corporate Banking Agency Group
Level 7
135 Bishopsgate
London EC2M 3UR
<PAGE>
APPENDIX A
FORM OF LOAN SUPPLEMENT
<PAGE>
APPENDIX A
Dated _____________________ 199[ ]
(1) ENCORE LEASING LIMITED
(as Borrower)
- and -
(2) NATIONAL WESTMINSTER BANK PLC
(as Agent)
- and -
(3) NATIONAL WESTMINSTER BANK PLC
(as Security Agent)
LOAN SUPPLEMENT NO. 1995-[ ]
relating to an advance
of US$[ ]
for the financing of one
Airbus A3[ ] Aircraft
Manufacturer's Serial Number [ ]
<PAGE>
TABLE OF CONTENTS
Article No. Heading Page No.
1. Interpretation . . . . . . . . . . . . . . . . . . 3
2. Amount of Credits. . . . . . . . . . . . . . . . . 4
3. Repayment of Advance . . . . . . . . . . . . . . . 5
4. Tranches 1A and 1B Interest. . . . . . . . . . . . 5
5. Drawdown Date. . . . . . . . . . . . . . . . . . . 5
6. Governing Law And Jurisdiction . . . . . . . . . . 5
7. Miscellaneous. . . . . . . . . . . . . . . . . . . 6
SCHEDULE 1 - PART I THE BRITISH LENDERS
SCHEDULE 1 - PART II THE FRENCH LENDERS
SCHEDULE 1 - PART III THE GERMAN LENDERS
SCHEDULE 2 (1) Repayment Schedule:
- Part A - The British Lenders.........................
- Part B - The French Lenders..........................
- Part C - The German Lenders..........................
SCHEDULE 2(2) - Repayment Schedule Summary
<PAGE>
THIS LOAN SUPPLEMENT is made the day of 199[ ]
BETWEEN:-
(1) ENCORE LEASING LIMITED, a company organised and existing
under the laws of the Cayman Islands and having its
registered office at P.O. Box 2003, George Town, Grand
Cayman, Cayman Islands, BWI (herein called the
"Borrower");
(2) NATIONAL WESTMINSTER BANK PLC a banking institution
established under the laws of England whose registered
office is at 41 Lothbury, London EC2P 2BP in its capacity
as agent for and on behalf of itself and each of the
Lenders (herein in such capacity called the "Agent"); and
(3) NATIONAL WESTMINSTER BANK PLC a banking institution
established under the laws of England whose registered
office is at 41 Lothbury, London EC2P 2BP in its capacity
as security agent for and on behalf of itself and each of
the Lenders (herein in such capacity called the "Security
Agent").
PREAMBLE
(A) Pursuant to the Facility Agreement, the Lenders have
agreed to make available to the Borrower a facility of up
to US$1,375,000,000 in respect of up to twenty-one (21)
Airbus Industrie aircraft.
(B) A Utilisation Notice has been served in respect of the
Aircraft.
(C) This Loan Supplement is supplemental to the provisions of
the Facility Agreement which relate to each Advance.
<PAGE>
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 Words and expressions defined in the Facility Agreement
shall, unless otherwise specifically defined herein or
unless the context otherwise requires, have the same
respective meanings when used in this Loan Supplement
(including the Preamble and the Annexes).
1.2 In this Loan Supplement (including the Preamble and the
Annexes) the following words and expressions have, unless
the context otherwise requires, the following meanings:-
"AIRCRAFT" means the A3[ ] Airbus Aircraft with
manufacturer's serial number [ ] more particularly
described in the relevant Deed of Assignment and Mortgage;
"BRITISH CREDITS" shall have the meaning given thereto in
Clause 2.1(b);
"FACILITY AGREEMENT" means the aircraft facility agreement
dated [ ] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited,
(7) ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited,
(9) ILFC (Bermuda) 6, Ltd and (10) International Lease
Finance Corporation; and
"FRENCH CREDITS" shall have the meaning given thereto in
Clause 2.1(c);
"GERMAN CREDITS" shall have the meaning given thereto in
Clause 2.1(d).
1.3 Clauses 1.3 and 1.4 of the Facility Agreement shall be
deemed to be incorporated herein, mutatis mutandis, as if
reference therein to "this Facility Agreement" were
references to "this Loan Supplement".
2. AMOUNT OF CREDITS
2.1 (a) The aggregate amount of advances to be made by the
Lenders in respect of the Aircraft shall be
[ ] Dollars (US$[ ]).
<PAGE>
(b) The aggregate amount of advances to be made by the
British Lenders in respect of the Aircraft shall be
[ ] Dollars (US$[ ]) (herein
called the "British Credits") being [ ] per
cent. ([ ]% of the Credits.)
(c) The aggregate amount of advances to be made by the
French Lenders in respect of the Aircraft shall be
[ ] Dollars (US$[ ]) (herein
called the "French Credits") being [ ] per cent.
([ ]%) of the Credits.
(d) The aggregate amount of advances to be made by the
German Lenders in respect of the Aircraft referred
to in Clause 5.1.2 of the Facility Agreement shall
not exceed [ ] Dollars (US$[ ])
(herein called the "German Credits") being [ ] per
cent. ([ ]%) of the Credits.
2.2 Each of the British Lenders shall only be responsible for
the portion of the British Credits specified opposite its
name in Schedule 1, Part I, each of the French Lenders
shall only be responsible for the portion of the French
Lenders specified oppose its name in Schedule 1, Part II
and each of the German Lenders shall only be responsible
for the portion of the German Credits set out opposite its
name in Schedule 1, Part III.
3. REPAYMENT OF ADVANCE
3.1 Attached hereto as Schedule 2 are the repayment schedules
for each of the British Lenders, the French Lenders and
the German Lenders referred to in Clauses 5.2.8 and 5.4.1
of the Facility Agreement.
4. TRANCHES 1A AND 1B INTEREST
The interest payable on Tranche 1A and 1B as referred to
in Clause 5.3.1 of the Facility Agreement shall be [ ]%
and [ ]% respectively per annum.
5. DRAWDOWN DATE
For the purposes of Clause 5.4.2 of the Facility
Agreement, the assumed Drawdown Date shall be
[ ].
6. GOVERNING LAW AND JURISDICTION
6.1 This Loan Supplement shall be governed by and construed in
accordance with English law.
6.2 The Borrower hereby irrevocably agrees for the benefit of
the Agent and the Security Agent that the courts of
England shall have jurisdiction to hear and determine any
suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Loan
Supplement and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
6.3 The Borrower hereby irrevocably waives any objection which
it might now or hereafter have to the courts referred to
in Clause 6.2 being nominated as the forum to hear and
<PAGE>
determine any suit, action or proceeding, and to settle
any disputes, which may arise out of or in connection with
this Loan Supplement and agrees not to claim that any such
court is not a convenient or appropriate forum in each
case whether on the grounds of venue or forum non
conveniens or any similar grounds or otherwise.
6.4 The submission to the jurisdiction of the courts referred
to in Clause 6.2 shall not (and shall not be construed so
as to) limit the right of the Agent or the Security Agent
to take proceedings against the Borrower in any other
court of competent jurisdiction nor shall the taking of
proceedings by the Agent or the Security Agent in any one
or more jurisdictions preclude the taking of proceedings
by the Agent or the Security Agent in any other
jurisdiction, whether concurrently or not.
6.5 To the extent that the Borrower or any of the property of
the Borrower is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from
any legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any competent
court, from service of process, from attachment prior to
judgment, from attachment in aid of execution, or from
execution prior to judgment, or other legal process in any
jurisdiction, the Borrower for itself and its property
does hereby irrevocably and unconditionally waive, and
agrees not to plead or claim, any such immunity with
respect to its obligations, liabilities or any other
matter under or arising out of or in connection with any
of this Loan Supplement or the subject matter hereof.
7. MISCELLANEOUS
7.1 This Loan Supplement may be executed in any number of
counterparts and by different parties hereto on separate
counterparts each of which when executed and delivered
shall constitute an original but all counterparts shall
together constitute but one and the same instrument.
7.2 All amendments to this Loan Supplement shall be made in
writing and in accordance with the provisions of Clause
19.3 of the Facility Agreement.
7.3 This Loan Supplement is supplemental to the Facility
Agreement and the Advance referred to herein is made in
accordance with and shall be regulated by the terms and
conditions of the Facility Agreement, the other Facility
Documents and the relevant Aircraft Operative Documents.
AS WITNESS the hands of the duly authorised representatives of
the parties hereto on the date first-before written.
<PAGE>
<TABLE>
SCHEDULE 1 - PART I
THE BRITISH LENDERS
<S> <C> <C> <C> <C>
Amount
of British
Address for Jurisdiction of Lenders
Lender Lending Office Notices Incorporation Commitments (US$)
National Group Treasury Kings Cross House England
Westminster Commercial Loans Phase 2
Bank Plc London 200 Pentonville Road
London N1 9HL
Tel: 0171 239 8000
Fax: 0171 239 8257
Attn: Manager
Canadian London Cottons Centre Canada
Imperial Bank Cottons Lane
of Commerce London SE1 2QL
Tel: 0171 234 6586
Fax: 0171 234 6085
Attn: T. Everitt
Midland Bank Corporate and 27/32 Poultry England
Plc Institutional London
Banking Aerospace EC2P 2BX
London
Tel: 0171 260 5187
Fax: 0171 260 4495
Attn: M. Harris
The Bank of London Scotia House Canada
Nova Scotia 33 Finsbury Square
London EC2A 1BB
Tel: 0171 826 5795
Fax: 0171 454 9019
Attn: W. Swords
The Sumitomo London 155 Bishopsgate Japan
Trust & Banking London EC2M 3XU
Co., Ltd.
Tel: 0171 945 7000
Fax: 0171 945 7177
Attn: Joanne McNeil
Bayerisch London 29 Gresham Street Germany
Hypotheken- London EC2V 7HN
und Wechsel-
Bank AG Tel: 0171 782 8288
Fax: 0171 638 1710
Attn: Simon Treacy
CIBC Inc. CIBC Leasing Inc. 425 Lexington Avenue Canada
New York New York
NY 10017
Tel: 0101 212 856 3888
Fax: 0101 212 856 3688
Attn: Richard Vogt
</TABLE>
<PAGE>
<TABLE>
SCHEDULE 1 - PART II
THE FRENCH LENDERS
<S> <C> <C> <C> <C>
Lender Lending Office Address for Jurisdiction of Amount of French
Notices Incorporation Lenders
Commitments (US$)
- ------ -------------- ------------ ---------------- ------------------
Banque
Paribas Paris By Post: France
BP141, 75078 Paris,
Cedex 02
Attn: DBC-GCE1 378
Tel: 331 42 98 09 43
Fax: 331 42 98 11 28
By Hand:
3, rue d'Antin,
75002 Paris
with a copy sent for
attention of Aerospace
Group
Tel: 331 4298 1307
Fax: 331 4298 1989
Attn: S. Ries
National
Westminster Paris 13 rue d'Uzes England
Bank Plc 75002 Paris
(Paris Branch)
Tel: 33 44 76 52 61
Fax: 33 42 21 1588
Attn: P. Tauzin
Banque Paris Head of Aerospace France
Indosuez Group
47 Rue de Monceau
75008 Paris
France
Tel: 010 331 4420 1549
Fax: 010 331 4420 2906
Attn: M.M. Dembinski
Banque Nationale Paris 27 Boulevard des France
de Paris Italiens
75002 Paris
France
Tel: 010 331 4014 5959
Fax: 010 331 4014 7949
Attn: E. LeBlanc
Credit
Foncier de Paris 19 Rue des Capucines France
France 75001
Paris
France
Tel: 010 331 4244 9840
Fax: 010 331 4244 7944
Attn: J.M. Maraval
Credit
National Paris 45 Rue St Dominique France
75007 Paris
France
Tel: 010 331 4550 9053
Fax: 010 331 4555 4509
Attn: B. Lecerf
Royal Bank
of Paris 29 Rue de la France
Canada S.A. Bienfaisance
75008 Paris
France
Tel: 010 331 4408 4239
Fax: 010 331 4293 3211
Attn: P. Davies
Societe
Generale Paris Aircraft Finance
France Tour "Les Miroirs"
Batiment "D"
18 Avenue d'Alsace
La Defence 3
92400 Courbevoie
France
Tel: 010 331 4098 2402
Fax: 010 331 4098 8507
Attn: F. Roussel Pollet
Financement du Commerce Exterieur
9 Rue de Vienne
75008 Paris
France
Tel: 010 331 4098 2612
Fax: 010 331 4098 3388
Attn: F. Refabert
The Fuji
Bank, Paris 26 Avenue des Champs- Japan 40,046,795.30
Limited Elysees
75008 Paris
France
Tel: 010 331 4413 6034
Fax: 010 331 4413 6060
Attn: E. McDonald
The Industrial
Bank Paris Centre D'Affaires Japan 40,046,795.30
of Japan,
Limited "Le Louvre"
2 Place du Palais-Royal
75044 Paris
Cedex 01
Tel: 010 331 4015 2800
Fax: 010 331 4261 2478
Attn: A.M. Dumortier
The Long-
Term Credit Paris 55/57 Boulevard Japan 40,046,795.30
Bank of Japan, Haussmann
Ltd. 75008 Paris
France
Tel: 010 331 4924 0144
Fax: 010 331 4966 1839
Attn: C. Liegeois
with a copy to:-
(London Branch)
Albangate
125 London Wall
London EC2Y 5AH
Tel: 0171 628 5111
Fax: 0171 814 9866
Attn: S. Townend
</TABLE>
<PAGE>
<TABLE>
SCHEDULE 1 - PART III
THE GERMAN LENDERS
<S> <C> <C> <C> <C>
Lender Lending Office Address for Jurisdiction of Amount of German
Notices Incorporation Lenders
Commitments (US$)
- ----- --------------- ----------- --------------- -----------------
Bayerische New York Hypobank Inter- Germany 135,615,500.00
Hypotheken-und national S.A.
Wechsel-Bank 4, rue Alphonse
AG Weicker
L-2099 Luxembourg
Kirchberg
Tel: 010 352 4272 2124
Fax: 010 352 4272 4510
Attn: Credit Department
with a copy to:-FB/INT-KDN-PSF
Theatinerstr. 11
D-80333 Munich
Tel: 010 4989 9244 2571
Fax: 010 4989 9244 2225
Attn: Aircraft Finance
in the event that a notice is
being sent to all German Lenders
(and not just the Lead Managers),
an additional copy to:-
Financial Square
32nd Floor
New York
Tel: 0101 212 248 0767
Fax: 0101 212 440 0741
Kreditanstalt Frankfurt Palmengartenstrasse Germany 167,254,500.00
Fur Wiederaufbau 5-9
60325 Frankfurt am Main
Germany
Tel: 010 4969 7431-0
Fax: 010 4969 7431-2944
Attn: Aerospace
Department K III b
Bayerische Munich Bockenheimer Germany 50,000,000.00
Landesbank Landstrasse 19,
Girozentrale 60325 Frankfurt
Germany
Tel: 010 49 69 7190 7423
Fax: 010 49 69 7190 7157
Attn: Ruediger Fern
Aircraft Finance
Dept
with a copy to:
Karolinenplatz 2
80333 Munchen
Germany
Tel: 010 49 89 2171 1834
Fax: 010 49 89 2171 1143
Attn: Herrn Sprogies
Legal Department
Commerzbank Los Angeles Neue Mainzer Str. Germany 50,000,000.00
AG 32-36
60311 Frankfurt
Germany
Tel: 010 49 69 1362 3680
Fax: 010 49 69 1362 3742
Attn: Matthias Hommel
Export Finance
Department
Landesbank Kiel Martensdamm 6 Germany 50,000,000.00
Schleswig- 24103 Kiel
Holstein Germany
Girozentrale
Tel: 010 49 431 900 1534
Fax: 010 49 231 900 1542
Attn: Marie-Theres
Kroger
Aircraft Finance
Dept
National Frankfurt Feldbergstrasse 35 Germany 25,000,000.00
Westminste 60323
Bank AG Frankfurt am Main
Germany
Tel: 010 49 69 17006 390
Fax: 010 49 69 17006 335
Attn: Mr. Rottschalk/Mrs.
Winkels
</TABLE>
<PAGE>
SCHEDULE 2 (1)
REPAYMENT SCHEDULE
Part A - The British Lenders
<TABLE>
<S> <C> <C> <C>
(1) (2) (3) (4)
Repayment Repayment Instalment Principal Amount
Date Principal Repayment US$ (principal and interest) US$ Outstanding US$
Tranche 1A Tranche 1B Tranche 1A Tranche 1B Tranche 1A
Tranche 2 Tranche 1B
<C>
(5)
Principal Amount
Outstanding US$
Tranche 2
Delivery Date Initial Mismatch Initial Mismatch
</TABLE>
<PAGE>
SCHEDULE 2 (1)
REPAYMENT SCHEDULE
Part B - The French Lenders
<TABLE>
<S> <C> <C> <C>
(1) (2) (3) (4)
Repayment Repayment Instalment
Principal Amount
Date Principal Repayment US$ (principal and interest) US$ Outstanding US$
Tranche 1A Tranche 1B Tranche 1A Tranche 1B Tranche 1A
Tranche 2 Tranche 1B
<C>
(5)
Principal Amount
Outstanding US$
Tranche 2
Delivery Date Initial Mismatch Initial Mismatch
</TABLE>
<PAGE>
SCHEDULE 2 (1)
REPAYMENT SCHEDULE
Part C - The German Lenders
<TABLE>
<S> <C> <C> <C>
(1) (2) (3) (4)
Repayment Repayment Instalment Principal Amount
Date Principal Repayment US$ (principal and interest) US$ Outstanding US$
Tranche 1A Tranche 1B Tranche 1A Tranche 1B Tranche 1A
Tranche 2 Tranche 1B
<C>
(5)
Principal Amount
Outstanding US$
Tranche 2
Delivery Date Initial Mismatch Initial Mismatch
</TABLE>
<PAGE>
SCHEDULE 2(2)
REPAYMENT SCHEDULE SUMMARY
<TABLE>
<S> <C> <C>
Repayment Repayment Instalment (principal and interest) Repayment Instalment
Date Outstanding US$ (principal only) US$
Tranche 1A and Tranche 1B Tranche 2
Delivery Date Initial Mismatch
</TABLE>
<PAGE>
SIGNATORIES
THE BORROWER
ENCORE LEASING LIMITED
By: ......................
Name: ......................
Title: ......................
THE AGENT
NATIONAL WESTMINSTER BANK PLC
By: ......................
Name: ......................
Title: ......................
THE SECURITY AGENT
NATIONAL WESTMINSTER BANK PLC
By: ......................
Name: ......................
Title: ......................
BF53816.04
<PAGE>
APPENDIX B
FORM OF LEASE AGREEMENT
<PAGE>
APPENDIX B
Dated [ ] 199[ ]
1. ENCORE LEASING LIMITED
(as Lessor)
- and -
2. [ILFC (BERMUDA) 7, LTD]
[ILFC IRELAND 2 LIMITED] [ALTERNATIVE LESSEE]
(as [ ] Lessee)
- and -
3. [ILFC (BERMUDA) 6, LTD.]
(as [ ] Option Holder)
AIRCRAFT LEASE AGREEMENT NO. 1995-[ ]
relating to
the AIRBUS A3[ ] AIRCRAFT bearing
Manufacturer's Serial No. [ ]
Registration Mark [ ]
WILDE SAPTE
London
<PAGE>
TABLE OF CONTENTS
Clause Heading Page
1. DEFINITIONS AND INTERPRETATION .......................... 2
1.1 Definitions ....................................... 2
1.2 Interpretation .................................... 15
2. AGREEMENT TO LEASE ..................................... 15
3. REPRESENTATIONS AND WARRANTIES ......................... 16
3.1 Representations and Warranties by the Lessor .... 16
3.2 Repetition of Representations and Warranties ..... 16
3.3 Representations and Warranties by the
[ ] Lessee ................................... 16
3.4 Repetition of Representations and Warranties ..... 16
3.5 Representations and Warranties by the [ ]
Option Holder ..................................... 17
3.6 Repetition of Representations and Warranties ..... 17
3.7 Survival of Representations and Warranties ........ 17
3.8 No Prejudice ...................................... 17
4. CONDITIONS PRECEDENT .................................. 17
4.1 Lessor's Conditions Precedent .................. 18
4.2 [ ] Lessee's Conditions Precedent . 18
4.3 Waiver or Deferral of Conditions Precedent ....... 18
5. DELIVERY AND ACCEPTANCE ............................... 19
6. DISCLAIMERS AND EXCLUSIONS, LESSOR'S COVENANTS ......... 20
6.1 Disclaimers and Exclusions .................... 20
6.2 Lessor's Covenants ........................... 22
6.3 Unfair Contract Terms Act 1977 ................... 23
7. RENT, SECURITY DEPOSITS AND MAINTENANCE RESERVES ....... 24
7.1 Rent ........................................ 24
7.2 Adjustments .................................... 24
7.3 [ ] Lessee Rental Collateral Account .......... 24
7.4 [ ] Lessee Security Deposit Collateral Account. 25
7.5 [ ] Lessee Maintenance Reserve Collateral
Account .......................................... 27
8. PAYMENTS ............................................... 28
8.1 Lessor's Account ................................. 28
8.2 Unconditional Obligations ....................... 28
8.3 Interest on Overdue Amounts ...................... 30
8.4 Time of the essence ............................. 30
8.5 Banking Days ..................................... 30
8.6 Conclusive Certification ......................... 31
<PAGE>
9. TITLE, REGISTRATION AND SUB-LEASING .................... 31
9.1 Title to the Aircraft during Lease Period ....... 31
9.2 Registration .................................... 31
9.3 Airworthiness Certificate ........................ 34
9.4 Sub-Leasing ...................................... 35
9.4.1 General Principle ............................ 35
9.4.2 Sub-Leasing Criteria ........................ 35
9.5 Quiet Enjoyment and Security Assignment ......... 39
9.6 Protection of Lessor's Rights ................... 40
9.7 Amendment of Approved Sub-Leases ................ 40
9.8 Treaties and Agreements .......................... 40
9.9 Geneva Convention ............................... 40
10. OPERATIONAL UNDERTAKINGS .............................. 41
10.1 Compliance with Laws ............................ 41
10.2 Operation ....................................... 43
10.3 Cost of Operation ............................... 44
10.4 Pledging of Credit .............................. 44
10.5 Non-discrimination ............................. 44
10.6 Liens ........................................... 44
10.7 Outgoings ....................................... 45
11. MAINTENANCE OF AIRCRAFT ..............................45
11.1 General Obligation .............................45
11.2 Specific Obligations ...........................45
11.3 Removal and Replacement of Engines and Parts ...46
11.3.1 Replacement of Parts ........................46
11.3.2 Removal of Engines ..........................47
11.3.3 Interchange of Engines and Parts within
the same fleet ..............................47
11.3.4 Pooling of Engines and Parts ..............48
11.4 Modifications ............................49
11.5 Notice of Location ...........................50
11.6 Transfer of Title ..............................50
11.7 Substitute Engines ............................51
11.8 Performance of Work by Third Parties ...........52
11.9 Information Regarding Maintenance Programme .....52
12. INFORMATION AND INSPECTION ...................... 52
12.1 Authorisations .................................52
12.2 Accounts .......................................52
12.3 Notice of Litigation ............................53
12.4 Insignia ........................................53
12.5 Information and Records .........................55
12.6 Notice of Partial Loss ..........................55
12.7 Inspection ......................................56
12.8 Notice of Default ...............................57
13. ACTS OR OMISSIONS OF THIRD PARTIES ....................57
14. INSURANCE .............................................59
14.1 Obligation to Insure ............................59
14.2 Types of Insurance ..............................60
14.3 Terms of Hull Insurance .........................61
14.4 Terms of Liability Insurance ....................63
14.5 Renewal .........................................64
14.6 Information .....................................64
14.7 Negative Undertakings ...........................65
14.8 Failure to Insure ...............................65
14.9 Application of Insurance Proceeds ...............66
14.10 Amendments to Insurances ........................66
14.11 Additional Insurance - Limit on Hull in favour
of the [ ] Lessee ................66
14.12 Self Insurance ..................................67
14.13 Reinsurance .....................................67
14.14 Currency ........................................68
<PAGE>
15. LOSS, DAMAGE AND REQUISITION ..........................68
15.1 Total Loss of Aircraft or Airframe .............68
15.2 Total Loss of an Engine .........................70
15.3 Other Loss or Damage ............................72
15.4 Requisition for Hire ...........................72
16. TERMINATION PROVISIONS ................................73
16.1 Termination Events ..............................73
16.2 Lessor's Rights .................................79
17. REDELIVERY ............................................80
17.1 Redelivery ......................................80
17.2 Redelivery Condition of Aircraft ................81
18. MANDATORY PREPAYMENT ..................................82
19. PURCHASE OPTION ......................................83
20. TRANSFER OF TITLE .....................................86
21. PRIORITIES AND INDEMNITIES AGREEMENT ..................87
22. ADDITIONAL AMOUNTS ....................................87
23. ASSIGNMENT ...........................................88
24. LESSOR'S RIGHT OF SET-OFF .............................88
25. PRESERVATION OF INDEMNITIES ...........................88
26. MISCELLANEOUS ........................................ 89
26.1 Lessor's Right to Remedy ...................... 89
26.2 Delay in Enforcement, Waivers etc .............. 89
26.3 Invalidity ..................................... 89
26.4 Counterparts ................................... 89
26.5 Further Assurances ............................. 90
26.6 Entire Agreement ............................... 90
27. NOTICES .............................................. 90
28. GOVERNING LAW AND JURISDICTION ....................... 93
SCHEDULE 1 - Details of Aircraft ............................. 95
SCHEDULE 2 - Representations and Warranties by the Lessor ... 96
SCHEDULE 3 - Part I - Representations and Warranties by the
[ ] Lessee ............................ 99
SCHEDULE 3 - Part II - Representations and Warranties by
the [ ] Option Holder .................. 102
SCHEDULE 4 - Part I - Conditions Precedent to the Obligations
of the Lessor .................................. 105
SCHEDULE 4 - Part II - Conditions Precedent to the
Obligations of the [ ] Lessee ....... 109
SCHEDULE 5 - Acceptance Certificate ......................... 111
SCHEDULE 6 - Part I - Rent ................................. 113
SCHEDULE 6 - Part II - Rent ................................ 114
SCHEDULE 6 - Part III - Termination Sum Calculation ........ 116
SCHEDULE 7 - Mandatory Lease Provisions ..................... 119
SCHEDULE 8 - Quiet Enjoyment Covenant to Approved Sub-Lessee
from the Lessor and the Security Agent ........ 138
SCHEDULE 9 - Part I - Certificate of Insurance .............. 143
SCHEDULE 9 - Part II - Form of Brokers Letter of Undertaking. 154
SCHEDULE 10 - Return Acceptance Supplement .................. 157
<PAGE>
THIS AIRCRAFT LEASE AGREEMENT is dated [ ] 199[ ]
and is made BETWEEN:-
(1) ENCORE LEASING LIMITED, a company organised and existing
under the laws of the Cayman Islands and having its
registered office at P.O. Box 2003, George Town, Grand
Cayman, Cayman Islands, B.W.I. (the "Lessor").
(2) [ILFC (BERMUDA) 7, LTD] [ILFC IRELAND 2 LIMITED]
[ALTERNATIVE LESSEE], a company incorporated in [Bermuda]
[Ireland] [ ] having its registered office at [29
Richmond Road, Hamilton, HM-AX, Bermuda] [AIG House, Merrion
Road, Dublin 4, Ireland] [ ] (the "[
] Lessee").
(3) [ILFC (BERMUDA) 6, LTD] [other Option Holder], a company
incorporated in [Bermuda] [ ] having
its registered office at [29 Richmond Road, Hamilton, HM-AX,
Bermuda] [ ] (the "[ ] Option
Holder").
WHEREAS:-
(A) The Guarantor and the Seller have entered into the Purchase
Agreement which covers, inter alia, the manufacture and sale
of the Aircraft and the giving of Warranties by the Seller.
(B) The Guarantor, the Lessor and the Seller have agreed that
certain of the Guarantor's rights and obligations under the
Purchase Agreement shall be assigned and transferred to the
Lessor pursuant to the Purchase Agreement Assignment.
(C) The Agent and the Security Agent together with, inter alia,
the parties hereto have entered into the Facility Agreement
to enable the Lessor to finance the acquisition of certain
Airbus aircraft including the Aircraft.
(D) The Guarantor has requested the Lessor:-
(i) to lease the Aircraft to the [ ]
Lessee, which the Lessor agrees to do in consideration
of, and subject to the covenants, terms and conditions
contained in this Agreement; and
(ii) to grant the [ ] Option Holder
an option to purchase the Aircraft subject to and in
accordance with the provisions of this Agreement.
(E) The [ ] Lessee
will then contemporaneously sub-lease the Aircraft pursuant
to an Approved Sub-Lease.
<PAGE>
NOW IT IS AGREED:-
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, including the Recitals, unless otherwise
stated herein or unless the context otherwise requires terms
defined in the Facility Agreement or defined therein by
reference therein to another document shall bear the
meanings given therein; and references to the "Borrower" in
the Facility Documents and Operative Documents are to the
Lessor; and the following words and expressions shall have
the meanings respectively attributed to them below:-
"Acceptance Certificate" means the certificate signed by the
[ ] Lessee and given by the [ ]
Lessee to the Lessor pursuant to Clause 5, in or
substantially in the form of Schedule 5;
"Agreement" means this Agreement, its Schedules and
Appendices;
"AIG" means American International Group, Inc. a corporation
duly organised and existing under the laws of Delaware whose
address and principal place of business is at 70 Pine
Street, New York, N.Y. 10270, U.S.A.;
"Aircraft" means the Airframe together with the Engines
whether or not any of the Engines may from time to time be
installed on the Airframe together with the Technical
Records;
"Aircraft Operative Documents" means, in respect of the
Aircraft, each of (i) the Loan Supplement, the Notice of
Drawdown, the Bill of Sale, the BFE Bill of Sale, the
relevant Purchase Agreement (to the extent that it relates
to the Aircraft and the Warranties relating to the
<PAGE>
Aircraft), the Engine Agreement (to the extent that it
relates to the Engines Warranties relating to the Aircraft),
this Agreement, the Acceptance Certificate, each of the
Aircraft Security Documents and (ii) (a) any other document,
instrument or memorandum annexed to any of the documents
referred to in (i) above, (b) any notice or acknowledgement
referred to in or required pursuant to the terms of any of
the documents referred to in (i) above and (c) any document,
instrument or memorandum (x) which arises following a
restructuring in accordance with the terms of the Facility
Agreement and/or the Priorities and Indemnities Agreement of
any or all of the arrangements contemplated by any of the
documents referred to in (i) above or (y) which the
Guarantor or the [ ] Lessee agrees
constitutes an Aircraft Operative Document or (z) which is
entered into in substitution for or which amends or augments
or varies all or any part of any of the documents referred
to in this definition (including this part (ii)(c)(z)) in
each case in accordance with the terms of this Agreement;
"Aircraft Secured Obligations" means, in relation to the
Aircraft, from time to time, any and all monies, liabilities
and obligations of the Lessor and/or the [ ]
Lessee and/or the [ ] Parent and/or the Guarantor
for the payment of money (including, without limitation, the
Termination Sum in respect of the Aircraft and any obligation
or liability to pay damages) which are at the relevant time due
and owing to any one or more of the Lenders, the Agent and/or the
Security Agent and/or the Lessor under any of the Facility
Documents with respect to the Aircraft and/or any of the
Aircraft Operative Documents;
"Aircraft Security Documents" means, in respect of the
Aircraft, each of (i) the Facility Agreement, the Priorities
and Indemnities Agreement, the General Security Assignment,
the Deed of Assignment and Charge (if and when entered
into), the Mortgage, the Guarantee and Indemnity (Lessor),
the Assignment of Guarantee and Indemnity (Lessor), the [
] Lessee Sub-Lease Collateral Charge, the Assignment of [
] Lessee Sub-Lease Collateral Charge, the Sub-Lease Security
Assignment, the Deed of Assignment of General Terms
Agreements Re Engine Warranties, the Purchase Agreement
Assignment, the Charge Over Shares of [ ]
Lessee, the Charge Over Shares of Borrower, the Power of
Attorney and the [ ] Option Holder's Power of
Attorney (ii) any other instrument, document or memorandum
annexed to any of the documents referred to in (i) above,
(b) any notice or acknowledgement referred to in or required
pursuant to the terms of any of the documents referred to in
(i) above and (c) any document, instrument or memorandum (w)
which arises following a restructuring of any or all of the
arrangements contemplated by any of the documents referred
to in (i) above or (x) which the Guarantor or the [
] Lessee agrees constitutes an Aircraft Security
Document or (y) which secures the obligations of one or more
of the Obligors and/or the Lessor under any of the Aircraft
Operative Documents or (z) which is entered into in
substitution for or which amends or augments or varies all
or any part of any of the documents referred to in this
definition (including this part (ii)(c)(z)) in each case in
accordance with the terms of this Agreement;
"Airframe" means the airframe more particularly identified
in Schedule 1 hereto excluding the Engines but including all
Parts installed in or on the airframe at the Delivery Date
(or which, having been removed therefrom, remain the
property of the Lessor pursuant to the terms of this
<PAGE>
Agreement), and all substitutions, renewals and replacements
from time to time made in or to or installed in or on the
said airframe in accordance with the terms and conditions of
this Agreement including any Parts which are from time to
time detached from the airframe but remain the property of
the Lessor;
"Applicable Law" includes, without limitation all applicable
(i) law, bye-laws, statutes, decrees, acts, codes,
legislation, treaties, conventions and similar instruments
and, in respect of any of the foregoing, any instrument
passed in substitution therefor or re-enactment thereof or
for the purposes of consolidation thereof with any other
instrument or instruments; (ii) judgments, orders,
determinations or awards of any court, arbitral body,
tribunal or other person; and (iii) rules, regulations,
directives, guidelines, guidance, permits, authorisations,
approvals, certificates, requests, policies, requirements
and consents of, registrations and filings with, exemptions
by, or notifications to or by any person, which either have
the force of law or, if not, with which banks or other
financial institutions are required to comply or with which
it is customary for any such bank or other such financial
institution to comply;
Approved Maintenance Contractor" means the [ ]
Lessee or a contractor approved by the Aviation Authority
for carrying out the work for which it is contracted;
"Approved Sub-Lease" means any contract for the sub-lease,
hire or bailment of the Aircraft into which the [
] Lessee is entitled to enter in accordance with the
provisions of Clause 9;
"Approved Sub-Lessee" means the operator from time to time
of the Aircraft under an Approved Sub-Lease;
"Aviation Authority" means any Government Entity which under
the laws of the State of Registration may from time to
time:-
(i) have control or supervision of civil aviation in the
State of Registration; or
(ii) have jurisdiction over the registration, airworthiness
or operation of, or other matters relating to, the
Aircraft;
["Bermuda Lessee" means ILFC (Bermuda) 7, Ltd., a company
incorporated in Bermuda having its registered office at 29
Richmond Road, Hamilton, HM-AX Bermuda;]
["Bermuda Option Holder" means ILFC (Bermuda) 6, Ltd., a
company incorporated in Bermuda having its registered office
at 29 Richmond Road, Hamilton, HM-AX Bermuda;]
["Bermuda Parent" means ILFC (Bermuda) 5, Ltd., a company
incorporated in Bermuda having its registered office at 29
Richmond Road, Hamilton, HM-AX Bermuda;]
"Bill of Sale" means the bill of sale executed or to be
executed by the Seller in favour of the Lessor relating to
the Aircraft substantially in the form of Appendix J to the
Facility Agreement;
"CAA" means the Civil Aviation Authority of the United
Kingdom or any successor thereto under the laws of the
United Kingdom;
<PAGE>
"Certificate of Airworthiness" shall have the meaning set
out in Clause 9.3;
"Compulsory Acquisition" means, in relation to the Aircraft,
Airframe or any Engine, its requisition for title or other
compulsory acquisition of title (but excluding requisition
for use or hire);
"Damage Notification Threshold" means, [in the case of wide-
bodied aircraft, the lesser of five million dollars (US$
5,000,000) and twenty-five per cent. (25%) of the Required
Insured Value,] [in the case of narrow-bodied aircraft, the
lesser of three million dollars (US$ 3,000,000) and twenty-
five per cent. (25%) of the Required Insured Value];
"Default" means, in relation to an Approved Sub-Lease, any
event which, upon the giving of notice, the lapse of time
and/or a relevant determination, would constitute an event
of default (howsoever described) in an Approved Sub-Lease;
"Delivery" means the sale and transfer of title to the
Aircraft to the Lessor pursuant to the Purchase Agreement
and the Purchase Agreement Assignment;
"Delivery Date" means the date on which Delivery shall
occur;
"DGAC" means the Direction Generale de l'Aviation Civile of
France;
"Engine" or "Engines" means (a) each of the engines
described in Schedule 1, whether or not from time to time
installed on the Airframe or any other airframe but which,
having been removed from the Airframe, remain the property
of the Lessor in accordance with this Agreement or (b) any
other engine which may from time to time be installed upon
or attached to the Airframe which becomes the property of
the Lessor in accordance with this Agreement and (c) insofar
as the same belong to the Lessor, any and all appliances,
instruments or accessories or other equipment or Parts of
whatever nature from time to time relating to an engine
referred to in (a) and (b) above whether or not installed on
or attached to such engine and (d) insofar as the same
belong to the Lessor, all substitutions, replacements or
renewals from time to time made on or to any item referred
to in (a), (b) and (c) above in accordance with this
Agreement;
"Engine Manufacturer" means [CFM International Inc.]
[General Electric Company] [IAE International Aero Engines
AG] [Rolls Royce plc] [United Technologies Corporation,
Pratt & Whitney Group], a company duly organised and
existing under the laws of [ ], solely in its
capacity as original manufacturer of each Engine;
"Engine Seller" means [CFM International, Inc.] [General
Electric Company] [IAE International Aero Engines AG] [Rolls
Royce plc] [United Technologies Corporation, Pratt & Whitney
Group] ;
"Excluded Lessor's Lien" means any Lien to the extent the
same arises in respect of (i) a debt, liability or other
obligation (whether financial or otherwise) imposed on the
Lessor or any person claiming through or under the Lessor as
purchaser of the Aircraft pursuant to the Purchase Agreement
<PAGE>
Assignment or arising from the operation, maintenance,
insurance, repair, modification and storage of the Aircraft,
any Engine or any Parts by the [ ] Lessee
or any Approved Sub-Lessee, (ii) any Lien created pursuant
to any of the Facility Documents and/or the Aircraft
Operative Documents, (iii) any Lien arising as a result of
Taxes in respect of which the liability to pay the same, or
the amount of the same, is being disputed by the Lessor or
any person claiming through or under the Lessor in good
faith and in a manner effectively staying the enforcement of
such Lien, (iv) any Lien arising by Applicable Law where
such Lien does not arise as a result of an act or omission
of the Lessor or any person claiming through or under the
Lessor, unless such act or omission is permitted or
contemplated by any of the Facility Documents or any of the
Aircraft Operative Documents or arises as a result of a
breach by any of the Obligors of its respective obligations
under any of the Facility Documents or any of the Aircraft
Operative Documents or (v) any Lien arising solely by reason
of a Change in Law; and "Excluded Lessor's Liens" shall be
construed accordingly;
"Expiry Date" means, in respect of the leasing of the
Aircraft pursuant to this Agreement, the tenth (10th)
anniversary of the Delivery Date of the Aircraft or such
earlier date upon which the leasing of the Aircraft pursuant
to this Agreement terminates howsoever in accordance with
the provisions of this Agreement;
"F.A.A." means the Federal Aviation Administration of the
Department of Transportation or any successor thereto under
the laws of the U.S.A.;
"Facility Agreement" means the aircraft facility agreement
dated [ ] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd and (10) International Lease Finance
Corporation; and
"Guarantor" means International Lease Finance Corporation, a
corporation duly organised and existing under the laws of
the State of California whose address and principal place of
business is at 1999 Avenue of the Stars, 39th Floor, Los
Angeles, California 90067, U.S.A.;
"Habitual Base" means the country in which the Aircraft is
habitually based for the time being;
"Incipient Event" means any condition, event or circumstance
which with the giving of notice or lapse of time or both
and/or the making of any relevant determination would, if
such notice was given, or such time had elapsed or both
and/or such relevant determination had been made at the time
of occurrence of such condition, event or circumstance,
constitute a Termination Event;
"Indemnitees" means each of the Lessor, the Security Agent,
the Agent and the Lenders including, any of their respective
successors, permitted assigns and permitted transferees and
any shareholders, directors, officers, servants, agents and
employees of any thereof;
<PAGE>
"Insurances" means any and all contracts or policies of
insurance and reinsurance required to be effected and
maintained in accordance with this Agreement including, but
not limited to, Clause 14 and Schedule 9;
"Insurers" and "Insurance Broker" have the respective
meanings given to them in Clause 14;
["Irish Lessee" means ILFC Ireland 2 Limited, a company
incorporated in Ireland having its registered office at AIG
House, Merrion Road, Dublin 4, Ireland;]
["Irish Parent" means ILFC Ireland 3 Limited, a company
incorporated in Ireland having its registered office at AIG
House, Merrion Road, Dublin 4, Ireland;]
"JAA" means the Joint Aviation Authority or any successor
thereto;
"LBA" means the Federal Office of Civil Aeronautics of
Germany or any successor thereto under the laws of Germany;
"Lease Period" means the period commencing on the Delivery
Date and continuing up to and including the Expiry Date;
"[ ] Lessee Rental Collateral Account" means the
existing Dollar account in the name of the [ ]
Lessee with [Coutts & Co (Cayman) Limited] [Ulster Bank
Limited] [Alternative Lessee's account] or such other Dollar
account outside the United Kingdom as the Lessor and the
Security Agent may reasonably require the
[ ] Lessee to establish following a Trigger Event
for the purpose of compliance by the [ ] Lessee
with Clause 7.3 of this Agreement and Clause 7.3 of each of
the Other Lease Agreements to which the [ ]
Lessee is or is to be a party;
"[ ] Lessee Maintenance Reserve Collateral Account"
means the existing Dollar account in the name of the [
] Lessee with [Coutts & Co (Cayman) Limited] [Ulster
Bank Limited] [Alternative Lessee's account] or such other
Dollar account outside the United Kingdom as the Lessor and
the Security Agent may reasonably require the [
] Lessee to establish following a Trigger Event for the
purpose of compliance by the [ ] Lessee with
Clause 7.5 of this Agreement and Clause 7.5 of each of the
Other Lease Agreements to which the [ ] Lessee is or
is to be a party;
"[ ] Lessee Security Deposit Collateral Account" means
the existing Dollar account in the name of the [
] Lessee with [Coutts & Co (Cayman) Limited] [Ulster Bank
Limited] [Alternative Lessee's account] or such other Dollar
account outside the United Kingdom as the Lessor and the
Security Agent may reasonably require the [
] Lessee to establish following a Trigger Event, for the
purpose of compliance by the [ ] Lessee with
Clause 7.4 of this Agreement and Clause 7.4 of each of the
Other Lease Agreements to which the [ ]
Lessee is or is to be a party;
"Lessor's Lien" means any Lien created by or through the
Lessor over the Aircraft, any Engine or any Parts or
exercised, asserted or claimed (other than by any of the
Obligors) against the Aircraft, any Engine or any Part in
respect of a debt, liability or other obligation (whether
financial or otherwise) of the Lessor or any person claiming
<PAGE>
through or under the Lessor but excluding Excluded Lessor's
Liens;
"Lien" means any encumbrance or security interest
whatsoever, howsoever created or arising including (without
prejudice to the generality of the foregoing) any right of
ownership, security, mortgage, pledge, charge, lease (save
for Approved Sub-Leases), lien, statutory right in rem,
hypothecation, title retention arrangement, attachment,
levy, claim, right of possession or detention or right of
set-off (but excluding any right of set-off arising in
favour of a banker and by way of operation of law) or
security interest whatsoever, howsoever created or arising
or any right or arrangement having a similar effect to any
of the above;
"Maintenance Programme" means the maintenance and repair
programme of the [ ] Lessee or any Approved
Sub-Lessee or its agent, as approved by the Aviation
Authority;
"Maintenance Reserve Amount" means, the amount which is from
time to time standing to the credit of the [ ] Lessee
Maintenance Reserve Collateral Account and which represents
the Maintenance Reserves;
"Maintenance Reserves" means the airframe reserves and
engine reserves payable by an Approved Sub-Lessee to the [
] Lessee pursuant to an Approved Sub-Lease and
which become the property of the [ ]
Lessee;
"Mandatory Lease Provisions" shall have the meaning set out
in Clause 9.4.2(a);
"Mandatory Prepayment Event" means any of the events
described in Clause 18;
"Manufacturer" means Airbus Industrie GIE of 1 Rond Point
Maurice Bellonte, 31707 Blagnac, Cedex, France;
"Modification" shall have the meaning set out in Clause
11.4.1;
"Notice of Purchase" shall have the meaning set out in
Clause 19.1;
"Obligors" means any or all of the Bermuda Lessee, the Irish
Lessee, [the [ ] Lessee,] any [other] Alternative
Lessee, any Additional Lessee, the Bermuda Parent, the Irish
Parent, any other Parent, the Bermuda Option Holder, any
other Option Holder and where the context so permits, the
Guarantor and "Obligor" means any one of them;
"Option Notice" shall have the meaning set out in Clause
19.3;
"Other Aircraft" means any one or more (as the context may
require) of the other Airbus A300, A310, A320, A321, A330 or
A340 Aircraft which have been or which are to be financed
pursuant to the Facility Agreement;
"Other Lease Agreements" means each lease agreement entered
into or to be entered into by the Lessor, any Lessee and any
Option Holder in substantially the same terms as herein set
out and in respect of one of the Other Aircraft;
<PAGE>
"Parts" means in relation to the Aircraft, all modules,
appliances, parts, accessories, auxiliary power unit,
instruments, furnishings and other equipment of whatsoever
nature including, without limitation, the Buyer Furnished
Equipment and any service bulletin kits or the like but
excluding complete Engines or engines and equipment
(including but not limited to in-flight entertainment and
telecommunications equipment) which is from time to time
attached to the Airframe and leased to the [
] Lessee other than primarily for the purpose of
financing the acquisition of such equipment in circumstances
where such equipment, that at any time of
determination are incorporated or installed in or attached
to the Airframe or any Engine or, having been removed
therefrom, title to which remains vested in the Lessor in
accordance with the provisions of this Agreement; and "Part"
shall have a corresponding meaning;
"Permitted Liens" means:-
(a) any Lien for Taxes or other governmental or statutory
charges or levies not yet assessed or, if assessed, not
yet due and payable or, if due and payable, which the [
] Lessee or, where relevant, an Approved
Sub-Lessee is disputing or contesting in good faith by
appropriate proceedings (and for the payment of which
adequate reserves are available, or when required in
order to pursue such proceedings, an adequate bond has
been provided) so long as such proceedings, or the
continued existence of such Lien, do not at that time
involve any danger of the sale, forfeiture or loss of
the Airframe, any Engine or any Parts or any interest
therein; or
(b) any Lien for the fees or charges of any airport or air
navigation authority arising in the ordinary course of
business by statute or by operation of law, in each
case for amounts the payment of which either is not yet
due and payable or, if due and payable, is being
disputed or contested in good faith by appropriate
proceedings (and for the payment of which adequate
reserves are available, or when required in order to
pursue such proceedings, an adequate bond has been
provided) so long as such proceedings, or the continued
existence of such Lien, do not at that time involve any
danger of the sale, forfeiture or loss of the Airframe,
any Engine or any Parts or any interest therein; or
(c) any Lien for the fees or charges of any supplier,
mechanic, workman, repairer, employee or like lien
arising in the ordinary course of business by statute
or by operation of law, in each case for amounts (i)
the payment of which is not yet due and payable, or
(ii) which are not overdue for payment having regard to
the custom of the relevant trade, in circumstances
where no assertive or enforcement action against the
Aircraft has yet been taken by the relevant supplier,
mechanic, workman, repairer, employee or holder of like
lien or by any successor or assign of each of them
("the Claimant"), or (iii) if due and payable is being
disputed or contested in good faith with the Claimant
by appropriate proceedings (and for the payment of
which adequate reserves are available, or when required
in order to pursue such proceedings, an adequate bond
has been provided) so long as such proceedings, or the
continued existence of such Lien, do not at that time
involve any danger of the sale, forfeiture or loss of
<PAGE>
the Airframe, any Engine or any Parts or any interest
therein; or
(d) Liens (other than Liens for Taxes) arising out of
judgments or awards against the [ ]
Lessee or any Approved Sub-Lessee with respect to which
at the time an appeal is being presented in good faith
and with respect to which there shall have been secured
a stay of execution pending such appeal (and for the
payment of which adequate reserves are available, or
when required in order to pursue such proceedings, an
adequate bond has been provided) so long as such
judgment or award, or the continued existence of such
Lien, do not at that time involve any danger of the
sale, forfeiture or loss of the Airframe, any Engine or
any Parts or any interest therein; or
(e) the rights of the [ ] Lessee under
any of the Facility Documents and the Aircraft
Operative Documents; or
(f) the rights of the Option Holder under any of the
Facility Documents, the Aircraft Operative Documents
and the Second Mortgage; or
(g) the rights of the Lessor under any of the Facility
Documents, the Aircraft Operative Documents and the
Second Mortgage; or
(h) Excluded Lessor's Liens; or
(i) any Lien created by the Lessor pursuant to the Second
Mortgage; or
(j) the rights of others under agreements or arrangements
to the extent expressly permitted by the provisions of
Clause 11.3; or
(k) any other Lien created with the prior written consent
of the Lessor and the Security Agent;
"Prohibited Country" means Iraq for so long as the Iraq and
Kuwait (United Nations Sanctions) (No. 2) Order 1990 remains
in effect, the Republics of Serbia and Montenegro for so
long as the Serbia and Montenegro (United Nations
Prohibition of Flights) Order 1992 remains in effect, Libya,
for so long as the Libya (United Nations Prohibition of
Flights) Order 1992 remains in effect and any country to
which the export and/or use of A3[ ] aircraft is not
permitted under (i) the Export of Goods Control Order 1992,
(ii) the United States Export Administration Act 1979 (as
amended) or any successor legislation and/or the Export
Administration Regulations promulgated thereunder, (iii) any
similar or corresponding legislation then in effect in
France, Spain or Germany, (unless knowledge of any non-
applicability of such legislation or regulations referred to
in (i), (ii) or (iii) above is in the public domain), or
(iv) any other United Nations Sanctions Orders the effect of
which prohibits or restricts the export and/or use of A3[ ]
aircraft to such country;
"Purchase Date" shall have the meaning set out in Clause
19.1;
"Redelivery" shall have the meaning set out in Clause 17.1;
<PAGE>
"Relevant Event" means any Incipient Event, Termination
Event, Mandatory Prepayment Event or any other event as a
result of which the Termination Sum could become or becomes
due and payable;
"Rent" means, in respect of each Rental Payment Date, the
aggregate of the following amounts:-
(i) the aggregate of the amount in Dollars set out opposite
such date in the Columns headed "Principal Component of
Rent" and "Fixed Interest Component of Rent" in Part I
of Schedule 6 as the same may be varied in accordance
with the provisions of Clause 7.2;
(ii) the amount in Dollars set out opposite such date in the
Column headed "Principal Component of Rent" in Part II
of Schedule 6 as the same may be varied in accordance
with the provisions of Clause 7.2; and
(iii) the amount of interest calculated in accordance
with paragraph (c) of Part II of Schedule 6 as the
same may be varied in accordance with the
provisions of Clause 7.2;
"Rental Payment Date" means each of the twenty (20) dates
for payment of an instalment of Rent under this Agreement as
set forth in Column 1 in Part I of Schedule 6;
"Required Insured Value" means the higher of the market
value of the Aircraft and 110% of the principal outstanding
from time to time in respect of the Credits relating to the
Aircraft;
"Return Acceptance Supplement" means the supplement to be
produced substantially in the form of Schedule 10;
"Secured Obligations" means together (i) any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether or not
for the payment of money, and including, without limitation,
any obligation or liability to pay damages) which are now or
which may at any time and from time to time hereafter be
due, owing, payable or incurred or expressed to be due,
owing, payable or incurred from or by any of the Obligors
and/or the Lessor to any one or more of the Lenders, the
Agent and/or the Security Agent under any of the Facility
Documents and/or any of
the Operative Documents, together with any and all of the
obligations of the Lessor arising by operation of law after
the Lenders have made payment of any Tax Liability and/or
any Loss and/or Expense suffered or incurred by the Lessor
for which none of the Lessees has reimbursed the Lessor in
accordance with the terms of the Facility Agreement and/or
any other Operative Document and/or any Facility Document
(i) to account, pay and remit to the Lenders any and all
payments received by the Lessor from any of the Lessees in
respect of such reimbursements and (ii) to transfer to the
Lenders and allow the Lenders to exercise, in each case as
subrogee, the Lessor's rights and remedies against any or
all of the Lessees and/or the Guarantor in respect of such
reimbursements and any and all such monies, liabilities and
obligations of the Lessor shall form part of the Secured
Obligations whether or not the Lessor is personally liable
for the same and whether or not any recourse may be had with
respect thereto against the Lessor and/or its assets, and
(ii) the Secured Obligations (as that term is defined in the
1994 Facility Agreement);
<PAGE>
"Security Deposit" means any security deposit payable by the
Approved Sub-Lessee to the [ ] Lessee pursuant
to an Approved Sub-Lease;
"Seller" means AVSA S.A.R.L. a societe a responsabilite
limitee duly organised and existing under the laws of the
French Republic and having its registered office at 2, Rond
Point Maurice Bellonte, 31700 Blagnac, Cedex, France
together with its successors and assigns, solely in its
capacity as seller of the Aircraft under the Purchase
Agreement and the Purchase Agreement Assignment;
"State of Registration" means the state or territory in
which the Aircraft may from time to time be registered
pursuant to the provisions of Clause 9.4.2(b), or, if the
Aircraft is not on sub-lease to an Approved Sub-Lessee,
Bermuda, the Cayman Islands, Ireland, the United Kingdom or
the United States of America;
"Sub-Lease Rentals" means the sub-lease rentals paid by an
Approved Sub-Lessee pursuant to an Approved Sub-Lease;
"Suitable Replacement Engine" has the meaning given to it in
Clause 15.2;
"Surviving Engine" means an Engine which, at the time when a
Total Loss occurs with respect to the Airframe, is not
installed on the Airframe and/or such Engine does not suffer
a Total Loss;
"Technical Records" means in relation to the Aircraft, all
technical data, manuals, computer records, logbooks and
other records (whether kept or to be kept in compliance with
any law or regulation or any requirement from time to time
of the Aviation Authority or otherwise) relating to the
Aircraft, any Engine or any Parts;
"Termination Event" means any of the events or circumstances
described in Clause 16.1;
"Termination Sum" at a particular date, means the amount
calculated for that date in accordance with the provisions
of Part III of Schedule 6;
"Third Party Event" has the meaning set out in Clause 13.1;
"Total Loss" means any of the following in relation to the
Aircraft, Airframe and/or as the context may require, any
Engine and "Total Loss Date" means the date set forth in
parenthesis after each Total Loss:-
(a) its actual total loss or destruction, damage beyond
repair, or being rendered permanently unfit for normal
use (the date on which such loss, destruction, damage
or rendition occurs or, if the date of loss or
destruction is not known, the date on which the
Aircraft, Airframe or relevant Engine was last heard
of);
(b) its constructive, compromised, arranged or agreed total
loss (the earliest of (i) the date on which such loss
is agreed or compromised or arranged by the Insurers,
(ii) the date on which the Insurers make payment of the
full amount of the Total Loss Proceeds on the basis of
a Total Loss, and (iii) one hundred and eighty (180)
days from the date such event occurs);
<PAGE>
(c) its Compulsory Acquisition (the date on which
Compulsory Acquisition takes effect);
(d) its requisition for use for a period of over one
hundred and eighty (180) consecutive days or, if less,
the period to the date when the proceeds of insurance
are paid to the Security Agent or the Lessor (the
earlier of the date on which the Insurers make payment
of the full amount of the Total Loss Proceeds on the
basis of a Total Loss and one hundred and eighty (180)
days from the date such event occurs); and
(e) its sequestration, detention, seizure or any similar
event, other than a Compulsory Acquisition, in any case
resulting in loss of possession by the [
] Lessee or any Approved Sub-Lessee, as the case may
be, for a period over one hundred and eighty (180)
consecutive days or, if less, the period to the date
when the proceeds of insurance are paid to the Security
Agent or the Lessor (the earlier of the date on which
the Insurers make payment of the full amount of the
Total Loss Proceeds on the basis of a Total Loss and
one hundred and eighty (180) days from the date such
event occurs);
"Total Loss Payment Date" means the date which is the
earliest of:-
(a) the first Banking Day which falls after the expiry of
one hundred and eighty (180) days from the Total Loss
Date;
(b) the date on which the Security Agent receives the
proceeds of the policies effected pursuant to Clause 14
in respect of the relevant Total Loss; and
(c) the last day of the Lease Period;
"Total Loss Proceeds" means to the extent of the Required
Insured Value, the proceeds of the Insurances or any
compensation for requisition of title or similar capital
payment, arising in respect of a Total Loss;
"Value Date" means the Drawdown Date and each Rental Payment
Date;
"Wet Lease" means a charter or an agreement which allows
another person to have the use of the Aircraft for a
particular flight or for a period of time (not exceeding
twelve (12) months including any optional extensions
thereof) on the basis that the wet-lessor retains
responsibility in all respects for the technical operation,
maintenance and repair of the Aircraft throughout the term
of the said charter or agreement; and
"1994 Lease Agreements" means any one or more (as the
context may require) of the lease agreements entered into or
to be entered into by Bravo Leasing Limited (as lessor) and
any 1994 Lessee (as lessee) and ILFC (Bermuda) 6, Ltd. (as [
] Option Holder) in respect of one of the 1994 Facility
Aircraft.
1.2 Interpretation
Clauses 1.3 and 1.4 of the Facility Agreement shall apply to
this Agreement as if set out herein in full and as if
references therein to "this Facility Agreement" were to
<PAGE>
"this Agreement" and references to "the Borrower" were to
"the Lessor".
2. AGREEMENT TO LEASE
2.1 The Lessor agrees to lease to the [ ]
Lessee, and the [ ] Lessee agrees to take
on lease from the Lessor, the Aircraft, upon and subject to
the terms and conditions of this Agreement, for a period
commencing upon the Delivery Date and ending on the Expiry
Date.
2.2 The [ ] Lessee hereby irrevocably
and unconditionally waives, to the extent permitted by
Applicable Law,
any and all rights which it may now have or which may at any
time hereafter be conferred upon it, by Applicable Law or
otherwise, to terminate, cancel, quit or surrender this
Agreement, except in accordance with the express terms
hereof or as otherwise agreed in writing by the Lessor.
3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties by the Lessor
The Lessor acknowledges that each of the [ ]
Lessee and the [ ] Option Holder has entered,
or will be entering, into this Agreement and the other
Aircraft Operative Documents to which it is, or will be, a
party in full reliance on representations by the Lessor in
the terms set out in Schedule 2 and the Lessor now warrants
to the [ ] Lessee and the [
] Option Holder that such representations are, at the
date hereof by reference to facts and circumstances then
prevailing, true and accurate.
3.2 Repetition of Representations and Warranties
The representations and warranties referred to in Clause 3.l
shall be deemed to be repeated on, and by reference to facts
and circumstances at, the Delivery Date and in respect of
the representations and warranties set out in paragraphs
(A), (B), (F), (G), (H), (I) and (J) of Schedule 2 on and as
of each Rental Payment Date.
3.3 Representations and Warranties by the [ ]
Lessee
The [ ] Lessee acknowledges that the Lessor
has entered, or will be entering, into this Agreement and
the other Aircraft Operative Documents to which it is, or
will be, a party in full reliance on representations by the
[ ] Lessee in the terms set out in Part I of
Schedule 3 and the [ ] Lessee now warrants to
the Lessor that such representations are, at the date hereof
by reference to facts and circumstances then prevailing,
true and accurate.
3.4 Repetition of Representations and Warranties
The representations and warranties referred to in Clause 3.3
shall be deemed to be repeated on, and by reference to facts
and circumstances at, the Delivery Date and in respect of
the representations and warranties set out in paragraphs
(A), (B), (F), (G), (H), (I) and (J) of Part I of Schedule 3
on and as of each Rental Payment Date.
<PAGE>
3.5 Representations and Warranties by the [ ]
Option Holder
The [ ] Option Holder acknowledges that the
Lessor has entered, or will be entering, into this Agreement
and the other Aircraft Operative Documents to which it is,
or will be, a party in full reliance on representations by
the [ ] Option Holder in the terms set out
in Part II of Schedule 3 and the [ ] Option Holder now
warrants to the Lessor that such representations are, at the
date hereof by reference to facts and circumstances then
prevailing, true and accurate.
3.6 Repetition of Representations and Warranties
The representations and warranties referred to in Clause 3.5
shall be deemed to be repeated on, and by reference to facts
and circumstances at, the Delivery Date and in respect of
the representations and warranties set out in paragraphs
(A), (B), (F), (G), (H), (I) and (J) of Part II of Schedule
3 on and as of each Rental Payment Date.
3.7 Survival of Representations and Warranties
The representations and warranties referred to in Clauses
3.1, 3.3 and 3.5 and the rights of the respective parties in
respect thereof shall survive the execution and delivery of
this Agreement and the Delivery Date.
3.8 No Prejudice
The respective rights and remedies of the Lessor, the [
] Lessee and the [ ] Option Holder in
relation to any misrepresentation or breach of warranty on
the part of the Lessor, the [ ] Lessee or the
[ ] Option Holder, as the case may be, shall
not be prejudiced by any investigation by or on behalf of
the Lessor, the [ ] Lessee or the [
] Option Holder, as the case may be, into
the affairs of the Lessor, the [ ]
Lessee or the [ ] Option Holder, as the case
may be, by the performance of this Agreement, or by any
other act or thing which may be done or omitted to be done
by the Lessor, the [ ] Lessee or the [
] Option Holder, as the case may be, under this
Agreement and which would or might, but for this Clause 3.8,
prejudice such rights and remedies.
4. CONDITIONS PRECEDENT
4.1 Lessor's Conditions Precedent
The Lessor's obligation to lease the Aircraft to the [
] Lessee under this Agreement is subject to the
fulfilment to the satisfaction of the Lessor and the Agent,
not later than 3.00 p.m. (London time) on the Delivery Date
(or by such later time as the Lessor and the Agent may agree
to in respect of any specified conditions precedent), of the
following conditions:-
4.1.1 the Lenders shall have made available the Credits in
respect of the Aircraft;
<PAGE>
4.1.2 the representations and warranties referred to in
Clauses 3.3 and 3.5 are true and accurate in all
material respects as if made with reference to the
facts and circumstances subsisting on the Delivery
Date;
4.1.3 no Relevant Event shall have occurred and be continuing
or would arise by reason of the leasing of the Aircraft
hereunder taking place;
4.1.4 the Aircraft shall be free and clear of all Liens other
than Permitted Liens and shall not have suffered a
Total Loss or other loss or damage in excess of five
hundred thousand Dollars (US$500,000) and Delivery of
the Aircraft shall have occurred under and in
accordance with the terms of the Purchase Agreement
Assignment; and
4.1.5 the Lessor or its duly authorised representative shall
have received all the documents and evidence specified
in Part I of Schedule 4 in form and substance
satisfactory to the Lessor, the Security Agent and the
Agent.
4.2 [ ] Lessee's Conditions Precedent
The [ ] Lessee's obligations to lease the
Aircraft from the Lessor shall be subject to the prior
satisfaction, or waiver in writing by the [
] Lessee to the extent not so satisfied, of the conditions
precedent set out in Part II of Schedule 4.
4.3 Waiver or Deferral of Conditions Precedent
4.3.1 The conditions specified in Clause 4.1 are inserted for
the sole benefit of the Lessor and accordingly:-
(a) if any of the conditions precedent referred to in
Clause 4.1 are waived or deferred by the Lessor, the
Lessor may attach to such waiver or deferral such
requirements and further or
other conditions as it thinks fit in its sole
discretion, and the [ ] Lessee or the [
] Option Holder, as the case may be,
shall fulfil, or procure fulfilment of, all such
requirements or further or other conditions as may be
notified by the Lessor to the [ ] Lessee or the
[ ] Option Holder, as the case may be,
in accordance with the terms of such notification; and
(b) if the Lessor agrees with the [ ] Lessee
or the [ ] Option Holder, as the case
may be, to accept the Aircraft from the Seller on terms
(express or otherwise) that any condition may be
fulfilled after the Delivery Date, the [
] Lessee or the [ ] Option Holder,
as the case may be, shall (unless the Lessor shall have
expressly otherwise agreed in writing) procure that
such condition is fulfilled within such period after
the Delivery Date as the Lessor and the [ ] Lessee
or the [ ] Option Holder, as the case
may be, may agree, and the Lessor shall be entitled to
treat any failure by the [ ] Lessee
or the [ ] Option Holder, as the case
may be, so to procure as a Termination Event.
<PAGE>
4.3.2 The conditions specified in Clause 4.2 are inserted for
the sole benefit of the [ ] Lessee
and accordingly if any of the conditions precedent
referred to in Clause 4.2 are waived or deferred by the
[ ] Lessee, the [ ]
Lessee may attach to such waiver or deferral such
requirements and further or other conditions as it
thinks fit in its sole discretion, and the Lessor shall
fulfil, or procure fulfilment of, all such requirements
or further or other conditions as may be notified by
the [ ] Lessee to the Lessor, in
accordance with the terms of such notification.
5. DELIVERY AND ACCEPTANCE
Subject to Clause 4, immediately (but conditional) upon
Delivery the Aircraft shall be accepted by the [
] Lessee at the location of Delivery (which shall be outside
the United Kingdom) and shall become subject to and governed
by this Agreement, the Lease Period shall commence and the [
] Lessee or its duly authorised representative
shall thereupon deliver to the Lessor the Acceptance
Certificate. As between the Lessor and the [ ]
Lessee the execution and delivery of the Acceptance
Certificate by the [ ] Lessee or its duly
authorised representative pursuant to this Clause 5 shall
evidence and constitute irrevocable, final and conclusive
proof that the [ ] Lessee has
unconditionally accepted the Aircraft for all purposes
hereof.
The [ ] Lessee acknowledges that the Lessor
has agreed to purchase the Aircraft pursuant to the Purchase
Agreement Assignment at the request of the [ ]
Lessee and the [ ] Option Holder and for the
sole purpose of leasing the Aircraft to the [ ]
Lessee pursuant to this Agreement and accordingly the [
] Lessee acknowledges that the Lessor shall have no
responsibility whatsoever in respect of the condition of the
Aircraft at Delivery and that the [ ] Lessee
shall not be entitled for any reason whatsoever to refuse to
accept the leasing of the Aircraft under this Agreement once
the Lessor is obliged to accept title to the Aircraft under
the Purchase Agreement Assignment. The Lessor shall not be
liable for any Loss resulting directly or indirectly from
any defect or alleged defect in the Aircraft or any failure
or alleged failure of the Aircraft to comply with the
Purchase Agreement Assignment.
If, after delivery of the Aircraft, the Aircraft is subject
to a post-delivery modification period, the [
] Lessee will procure that a certified executed copy of any
reacceptance certificate which is required to be executed by
the Approved Sub-Lessee under any Approved Sub-Lease is
delivered to the Security Agent within five (5) Business
Days of the completion of the post-delivery modifications.
Title to the Aircraft shall remain vested with the Lessor
throughout the Lease Period. Immediately and automatically
upon acceptance of the Aircraft by the [ ]
Lessee pursuant hereto, the [ ] Lessee shall
become liable to make payments of the Rent to the Lessor in
accordance herewith.
<PAGE>
6. DISCLAIMERS AND EXCLUSIONS, LESSOR'S COVENANTS
6.1 Disclaimers and Exclusions
6.1.1 Each of the [ ] Lessee and the [
] Option Holder acknowledges and agrees that:-
(a) this Clause 6.1 has been the subject of full discussion
and negotiation between the parties and the Rent has
been calculated in the light of such discussions and
negotiation;
(b) the Aircraft has been designed, manufactured, assembled
and constructed without reference to or involvement of
the Lessor, the Agent, the Security Agent or any of the
Lenders, and that the [ ] Lessee and
the Guarantor alone have selected the Aircraft for
purchase by the Lessor and leasing by the Lessor to the
[ ] Lessee hereunder;
(c) neither the Lessor nor the Agent, the Security Agent
nor any of the Lenders has made or given nor shall be
deemed to have made or given any representation,
warranty or covenant, express or implied (whether
statutory or otherwise), as to
the airworthiness, value, quality, durability,
condition, design, operation, description,
merchantability, fitness for use or purpose or
suitability of the Aircraft or the Engines or any Part,
as to the absence of latent or other defects, whether
or not discoverable, as to the absence of any
infringement of any patent, trademark, copyright or
other proprietary interest or as to title to the
Aircraft (except in the case of the Lessor as stated in
Clause 6.2) or any other representation or warranty
whatsoever, express or implied, with respect to the
Aircraft, all of which are hereby excluded; and
(d) the Lessor is leasing the Aircraft "as is, where is,
and with all faults", and that the [ ]
Lessee's acceptance of the Aircraft from the Lessor
shall be conclusive evidence (except as against the
Manufacturer and/or the Seller and/or the Engine Seller
and/or the Engine Manufacturer and/or the supplier or
manufacturer of any Parts) that the Aircraft is
complete, in good order and condition, of merchantable
quality, fit for any purpose for which it may be
intended or required and in every way satisfactory.
6.1.2 Save as otherwise expressly provided by this Agreement
each of the [ ] Lessee and the [ ] Option
Holder hereby waives as between itself and the Lessor all
its rights, express or implied (whether statutory or
otherwise), against the Lessor or the Aircraft (except
rights arising out of any act or omission of the Lessor
which is a breach by the Lessor of its obligations to the [
] Lessee or the [ ] Option Holder
under this Agreement, any of the Facility Documents or any
of the other Aircraft Operative Documents) relating to the
matters referred to in Clause 6.1.1.
6.1.3 The Lessor shall be under no obligation to provide to
the [ ] Lessee or the [ ] Option
Holder or to any other person a replacement aircraft
during any period when the Aircraft is unavailable for
use for any reason whatever nor, except where and to
the extent that the unavailability for use arises
solely as a result of the breach by the Lessor of its
obligations to the [ ] Lessee or the [
<PAGE>
] Option Holder under this Agreement, any of the
Facility Documents or any of the other Aircraft
Operative Documents, otherwise to compensate the [
] Lessee or the [ ] Option
Holder in respect of such unavailability for use.
6.1.4 Without prejudice to the generality of Clauses 6.1.1
and 6.1.2, the Lessor shall be under no liability to
the [ ] Lessee or the [ ]
Option Holder whatever and howsoever arising, and from
whatever cause, and whether in contract or tort or
both, in respect of any loss (consequential or
otherwise), liability, damage or delay of, or to, or in
connection with the Aircraft, any person or property
whatsoever, whether on board the Aircraft or elsewhere
and irrespective of whether such loss, liability,
damage or delay shall arise from any action or omission
of the Lessor (other than any action or omission of
the Lessor which is a breach by the Lessor of its
obligations to the [ ] Lessee or
the [ ] Option Holder under this
Agreement, any of the Facility Documents and any of the
other Aircraft Operative Documents). For the purpose of
this Clause "delay" shall include delay to the Aircraft
whether in respect of delivery under this Agreement or
thereafter or delay of any nature whatsoever.
6.2 Lessor's Covenants
6.2.1 The Lessor covenants with the [ ]
Lessee that throughout the Lease Period so long as no
Termination Event shall have occurred and be
continuing, neither the Lessor nor any person lawfully
claiming through the Lessor will interfere with the
quiet enjoyment of the Aircraft by the [ ]
Lessee or by any Approved Sub-Lessee, except as
provided in Clause 6.2.2 or unless the Lessor is
required so to do by Applicable Law (including, but not
limited to, any ruling or recommendation of the
Aviation Authority). The [ ] Lessee
acknowledges that the covenant by the Lessor contained
in this Clause 6.2.1 is the sole covenant by the Lessor
to the [ ] Lessee in respect of quiet
enjoyment and is in substitution for, and to the
exclusion of, any other covenant for quiet enjoyment
which may have otherwise been given or implied at law
or otherwise, all of which are hereby expressly
excluded, and waived by the [ ]
Lessee.
6.2.2 The Lessor represents, warrants and undertakes that it
will acquire and have on the Delivery Date such title
to the Aircraft as may be transferred to it under the
Purchase Agreement and the Purchase Agreement
Assignment, free and clear of Lessor's Liens. The
Lessor undertakes with the [ ] Lessee
and the [ ] Option Holder that throughout
the Lease Period the Lessor shall not without the prior
written consent of the [ ] Lessee
knowingly create any Lessor's Liens and to the extent
permitted by Applicable Law the Lessor shall promptly
take such actions as may be necessary to discharge or
prevent the creation of any such Lessor's Lien.
6.2.3 Without prejudice to the provisions of Clause 9.1 of
the Priorities and Indemnities Agreement, the Lessor
will take such steps as may be necessary or desirable
<PAGE>
and, in either case, reasonably available to the Lessor
in connection with (if such is possible) the
preservation of such title as may have been passed to
the Lessor in respect of the Aircraft under, inter
alia, the Purchase Agreement Assignment save that the [
] Lessee agrees with the Lessor that,
where it is possible for it to do so, and where
requested by the Lessor, the [ ]
Lessee will, at its own cost, discharge or procure the
discharge of the Lessor's obligations under this Clause
6.2.3 on the Lessor's behalf.
6.2.4 The Lessor agrees to inform the [ ]
Lessee forthwith if it shall come to its knowledge that
the Lessor's title to the Aircraft or the [
] Lessee's quiet enjoyment is or will be prejudiced
or imperilled.
6.2.5 The Lessor represents and warrants to the [
] Lessee and the [ ] Option Holder
that, save for the Aircraft Operative Documents and the
Second Mortgage the Lessor has not executed any
instrument, or entered into any arrangements, whereby
such title to the Aircraft as was transferred to the
Lessor by the Seller pursuant to the Purchase Agreement
and the Purchase Agreement Assignment has been
encumbered by a Lien or disposed of by the Lessor.
6.2.6 The Lessor covenants with the [ ]
Lessee and the [ ] Option Holder that
throughout the Lease Period the Lessor shall pay when
due all Taxes payable by the Lessor (other than any
Taxes in respect of which the Lessor is entitled to an
indemnity from the [ ] Lessee under any
of the Facility Documents or any of the Operative
Documents which the Lessor shall pay when the Lessor
has received such indemnity) the non-payment of which
would result in a Lien against the Aircraft, unless the
liability to pay, or the amount of, such Taxes is being
disputed by the Lessor in good faith and in a manner
effectively preventing the exercise of such Lien.
6.2.7 During the Lease Period, without prejudice to the
rights of any Approved Sub-Lessee under any Assignment
of Warranty and Support Rights and/or Assignment of
Rights Engines (as those terms are defined in any
Approved Sub-Lease), so long as no Termination Event
shall have occurred and be continuing, the Lessor will
extend to the [ ] Lessee or for so
long as the Aircraft is subject to an Approved Sub-
Lease, the relevant Approved Sub-Lessee, the benefit of
all manufacturer's or supplier's warranties and
indemnities given to the Guarantor and assigned to the
Lessor. The [ ] Lessee or, as the case
may be, the Approved Sub-Lessee shall be entitled
during the Lease Period to take such action upon any
such warranty or indemnity in the name of the Lessor
against any such manufacturer or supplier as the [
] Lessee or the Approved Sub-Lessee, as the
case may be, shall see fit, but subject to the [
] Lessee or the Approved Sub-Lessee, as the case
may be, first ensuring that the Lessor is indemnified
to the Lessor's reasonable satisfaction against all
costs and expenses thereby incurred or to be incurred.
<PAGE>
6.3 Unfair Contract Terms Act 1977
Without prejudice to the indemnities in favour of the Lessor
by the [ ] Lessee contained in any of the Facility
Documents and/or any of the Operative Documents, nothing in
this Clause 6 shall afford to the Lessor any wider exclusion
of any liability of the Lessor to any person for death or
personal injury than the Lessor may effectively exclude
having regard to the provisions of the Unfair Contract Terms
Act 1977.
7. RENT, SECURITY DEPOSITS AND MAINTENANCE RESERVES
7.1 Rent
The [ ] Lessee shall during the Lease Period
on each Rental Payment Date pay to the Lessor the Rent for
the lease of the Aircraft payable on such Rental Payment
Date.
7.2 Adjustments
Schedule 6 has been prepared on the assumption that the
Delivery Date will be [ ] and on the basis of
the other assumptions set out in Clause 5.4.2 of the
Facility Agreement. If the Delivery Date is not such date
or any of the assumptions set out in Clause 5.4.2 of the
Facility Agreement are incorrect, the Lessor shall prepare
substitute schedules showing new actual amounts calculated
by reference to the actual Delivery Date, if any, and
calculated on the same basis and assumptions (other than the
assumption that the Delivery Date will be 1st January 1995
and such other assumptions which may have become incorrect)
as were used for the purposes of the preparation of Schedule
6. Upon the Lessor and the [ ] Lessee
agreeing to such substitute schedules, such substitute
schedules shall become for all purposes Schedule 6 and shall
be binding on the parties with effect from the Delivery Date
and all Rent and Termination Sums shall be paid in
accordance with such substituted schedules.
7.3 [ ] Lessee Rental Collateral Account
7.3.1 The [ ] Lessee shall:-
(i) on the date hereof, in respect of the initial Approved
Sub-Lessee; and
(ii) on the date the relevant Approved Sub-Lease is entered
into, in respect of any subsequent Approved Sub-Lessee
give notice to the Approved Sub-Lessee (in the form set out
in Annex 1 to the Sub-Lease Security Assignment), with a
copy of such notice to the Lessor and the Security Agent,
specifying that all rental payments payable under the
Approved Sub-Lease after the date of notice from the
Security Agent of the occurrence of a Trigger Event are to
be remitted to the [ ] Lessee Rental Collateral Account,
and use all reasonable endeavours to procure the issue by
the Approved Sub-Lessee of an acknowledgement of notice of
the [ ] Lessee Rental Collateral Account being charged
to the Lessor in the form set out in Annex 2 to the
Sub-Lease Security Assignment.
7.3.2 Upon the occurrence of a Trigger Event the [
] Lessee shall promptly:-
(a) procure that any and all payments of rent under the
Approved Sub-Lease payable after the date of the
<PAGE>
Trigger Event are (i) paid by the Approved Sub-Lessee
directly to the [ ] Lessee Rental Collateral
Account and (ii) all amounts remitted to the [ ]
Lessee Rental Collateral Account are held pursuant to
and in accordance with the [ ] Lessee Sub-Lease
Collateral Charge; and
(b) on the Banking Day immediately succeeding the Trigger
Event and on the Banking Day immediately succeeding
each Rental Payment Date under this Agreement and each
of the Other Lease Agreements to which the [ ]
Lessee is then a party credit the [ ] Lessee
Rental Collateral Account with such additional amount
(if any) as may be necessary to ensure compliance with
Clause 3 of the [ ] Lessee Sub-Lease Collateral
Charge.
7.3.3 The [ ] Lessee shall take such action as
the Lessor and the Security Agent may reasonably
require to procure and facilitate compliance by an
existing Approved Sub-Lessee with the notice referred
to in Clause 7.3.1.
7.3.4 The [ ] Lessee undertakes to procure
that each Approved Sub-Lease entered into after the
date of a Trigger Event shall oblige the Approved Sub-
Lessee to make all rental payments thereunder to the [
] Lessee Rental Collateral Account whilst a Trigger
Event is subsisting.
7.3.5 Whilst a Trigger Event is subsisting the [
] Lessee undertakes not to withdraw from the [ ]
Lessee Rental Collateral Account all or any part of the
amounts therein relating to the Approved Sub-Lease if
such withdrawal would result in any non-compliance with
the provisions of Clause 3 of the [ ] Lessee
Sub-Lease Collateral Charge or unless the amount so
withdrawn is to be applied in or towards the payment of
Rent as it falls due in partial satisfaction of the
Aircraft Secured Obligations or in or towards
satisfaction in full of the Secured Obligations.
7.4 [ ] Lessee Security Deposit Collateral Account
7.4.1 The [ ] Lessee shall:-
(i) on the date hereof, in respect of the initial Approved
Sub-Lessee; and
(ii) on the date the relevant Approved Sub-Lease is entered
into, in respect of any subsequent Approved Sub-Lessee;
give notice to the Approved Sub-Lessee (in the form set out
in Annex 1 to the Sub-Lease Security Assignment), with a
copy of such notice to the Lessor and the Security Agent,
specifying that all Security Deposits payable under the
Approved Sub-Lease after the date of notice from the
Security Agent of the occurrence of a Trigger Event are to
be remitted to the [ ] Lessee Security Deposit
Account, and use all reasonable endeavours to procure the
issue by the Approved Sub-Lessee of an acknowledgement of
notice of the [ ] Lessee Security Deposit Account
being charged to the Lessor in the form set out in Annex 2
to the Sub-Lease Security Assignment.
7.4.2 If a Trigger Event occurs and whilst the Trigger Event
is subsisting, the [ ] Lessee shall
<PAGE>
promptly remit to the [ ] Lessee Security Deposit
Collateral Account an amount equal to any Security
Deposit received by the [ ] Lessee at
any time under the then existing Approved Sub-Lease.
7.4.3 The [ ] Lessee undertakes to procure
that each Approved Sub-Lease entered into after the
date of a Trigger Event shall oblige the Approved Sub-
Lessee to make any Security Deposit payments thereunder
to the [ ] Lessee Security Deposit Collateral
Account whilst the Trigger Event is subsisting.
7.4.4 Whilst the Trigger Event is subsisting the [
] Lessee undertakes not to withdraw from the [ ]
Lessee Security Deposit Collateral Account all or any
part of the Security Deposit relating to the Approved
Sub-Lease unless:-
(a) the [ ] Lessee is to apply the Security
Deposit (or any part thereof) if and to the extent that
the [ ] Lessee has become entitled or obliged
to apply the same (or to pay an equivalent or greater
amount to the Approved Sub-Lessee) pursuant to the
Approved Sub-Lease or as a matter of law; or
(b) the Approved Sub-Lessee ceases to be entitled to have
all or any part of the Security Deposit applied for its
benefit; or
(c) the [ ] Lessee is to apply the Security
Deposit (or any part thereof) in or towards the full
satisfaction of the Secured Obligations.
7.4.5 The [ ] Lessee shall promptly apply each
amount which it withdraws from the [ ] Lessee
Security Deposit Collateral Account pursuant to Clause
7.4.4(a) or (c) for the purpose described in Clause
7.4.4(a) or (c), as the case may be.
7.5 [ ] Lessee Maintenance Reserve Collateral Account
7.5.1 The [ ] Lessee shall:-
(i) on the date hereof, in respect of the initial Approved
Sub-Lessee; and
(ii) on the date the relevant Approved Sub-Lease is entered
into, in respect of any subsequent Approved Sub-Lessee;
give notice to the Approved Sub-Lessee (in the form set out
in Annex 1 to the Sub-Lease Security Assignment), with a
copy of such notice to the Lessor and the Security Agent,
specifying that all Maintenance Reserves payable under the
Approved Sub-Lease after the date of notice from the
Security Agent of the occurrence of a Trigger Event are to
be remitted to the [ ] Lessee Maintenance Reserve
Collateral Account, and use all reasonable endeavours to
procure the issue by the Approved Sub-Lessee of an
acknowledgement of notice of the [ ] Lessee Maintenance
Reserve Collateral Account being charged to the Lessor in
the form set out in Annex 2 to the Sub-Lease Security
Assignment.
7.5.2 If a Trigger Event occurs and whilst the Trigger Event
is subsisting, the [ ] Lessee shall
promptly remit to the [ ] Lessee Maintenance
Reserve Collateral Account an amount equal to any
<PAGE>
Maintenance Reserves received by the [
] Lessee and not utilised under the terms of the
Approved Sub-Lease.
7.5.3 The [ ] Lessee shall take such
action as the Lessor and the Security Agent may
reasonably require to procure and facilitate compliance
by an existing Approved Sub-Lessee with a notice
referred to in Clause 7.5.1.
7.5.4 The [ ] Lessee undertakes to procure
that each Approved Sub-Lease entered into after the
date of a Trigger Event shall oblige the Approved Sub-
Lessee to make any Maintenance Reserve payments
thereunder to the [ ] Lessee Maintenance Reserve
Collateral Account whilst a Trigger Event is
subsisting.
7.5.5 Whilst a Trigger Event is subsisting, the [
] Lessee undertakes not to withdraw from the [ ]
Lessee Maintenance Reserve Collateral Account all or
any part of the Maintenance Reserve Amount relating to
the Approved Sub-Lease unless:-
(a) the [ ] Lessee is to apply the
Maintenance Reserve Amount (or any part thereof) if and
to the extent that the [ ] Lessee has
become entitled or obliged to apply the same (or to pay
an equivalent or greater amount to the Approved Sub-
Lessee or a third party in or
towards the cost of repairs or maintenance) pursuant
to the Approved Sub-Lease or as a matter of law; or
(b) the Approved Sub-Lessee ceases to be entitled to have
all or any part of the Maintenance Reserve Amount
applied for its benefit; or
(c) the [ ] Lessee is to apply the
Maintenance Reserve Amount in or towards the full
satisfaction of the Secured Obligations.
7.5.6 The [ ] Lessee shall promptly apply
each amount which it withdraws from the Maintenance
Reserves Collateral Account pursuant to Clause 7.5.5(a)
or (c) for the purpose described in Clause 7.5.5(a) or
(c), as the case may be.
8. PAYMENTS
8.1 Lessor's Account
All payments to be made by the [ ] Lessee or
the [ ] Option Holder to the Lessor under this
Agreement, under any other Aircraft Operative Document or
any of the Facility Documents to which the [ ]
Lessee is a party shall be made (unless specifically
otherwise provided in this Agreement or such other Aircraft
Operative Document or any of the Facility Documents) without
prior demand in Dollars and in immediately available funds
before noon (local time in the place of payment) on the due
date for payment thereof by payment of the same, in the case
of Dollar amounts, to the account of the Security Agent at
National Westminster Bank Plc (New York Branch), 175 Water
Street, New York, NY 10038, USA, ABA# 026002749 for the
account of Group Treasury Settlements numbered 00150509
quoting reference "ILFC 1995 - Attention Corporate Banking
<PAGE>
Agency Group, London" or to such account outside the United
Kingdom as the Security Agent may specify in writing to the
[ ] Lessee, and in the case of any other
amounts which pursuant to any provision in this Agreement
the Lessor requires to be paid in any other currency to such
account or accounts outside the United Kingdom as may from
time to time be nominated in writing by the Lessor to the [
] Lessee by not less than five (5) Banking Days
before the relevant due date for payment.
8.2 Unconditional Obligations
The [ ] Lessee's obligation to pay Rent and
any Additional Amounts and to make other payments and to
perform its obligations pursuant to or in connection with
this Agreement or any of the other Aircraft Operative
Documents or any of the Facility Documents to which the [
] Lessee is a party shall be
absolute and unconditional irrespective of any contingency
whatsoever including (but not limited to):-
(a) any right of set-off, counterclaim, recoupment,
defence, deduction, withholding or other right (unless
and to the extent that the law requires any of the same
to be exercised);
(b) any unavailability of the Aircraft for any reason,
including, but not limited to, requisition thereof or
any prohibition or interruption of or other restriction
against the Lessor's, the [ ] Lessee's
or any Approved Sub-Lessee's use, operation or
possession of the Aircraft, any interference with such
use, operation or possession or failure to deliver any
part of the Aircraft or any lack or invalidity of title
or any other defect in the title, airworthiness,
merchantability, fitness for any purpose, condition,
design, or operation of any kind or nature of the
Aircraft, or the ineligibility of the Aircraft for any
particular use or trade, or for registration or
documentation under the laws of any relevant
jurisdiction, or (subject to Clause 15) the Total Loss
of, or any damage to, the Aircraft;
(c) any insolvency, bankruptcy, administration,
reorganisation, arrangement, readjustment of debt,
dissolution, liquidation or similar proceedings by or
against the Lessor or the [ ] Lessee;
(d) any invalidity or unenforceability or lack of due
authorisation of, or other defect in, this Agreement or
any of the Facility Documents or any of the 1994
Facility Documents or any of the other Aircraft
Operative Documents or any of the 1994 Operative
Documents or any particular provision hereof or
thereof;
(e) any failure or delay on the part of any party hereto
duly to perform or comply with its obligations under
this Agreement; and
(f) any other cause which but for this provision would or
might have the effect of terminating or in any way
affecting any obligation of the [ ]
Lessee hereunder (but without prejudice to the rights
of the [ ] Lessee to damages under this
Agreement);
<PAGE>
it being the declared intention of the parties that the
provisions of this Clause 8.2 and the obligations of the [
] Lessee to pay Rent and any Additional Amounts
and to make other payments in accordance with this Agreement
shall survive any frustration and that save as expressly
provided hereunder or under any other Aircraft Operative
Document no monies payable or paid hereunder by the
[ ] Lessee to the Lessor shall in any event or
circumstances be repayable to the [ ] Lessee.
PROVIDED THAT nothing contained in this Clause 8.2 shall
constitute a waiver by the [ ] Lessee of any
right giving rise to a claim by the [ ] Lessee
for damages against the Lessor or any other party to any
Aircraft Operative Document arising out of a breach by the
Lessor or by any other party to an Aircraft Operative
Document of its obligations under this Agreement or any
other Aircraft Operative Document.
8.3 Interest on Overdue Amounts
If any Rent or any other amount payable to the Lessor under
this Agreement is not paid in full for whatsoever reason on
the date such Rent or other amount becomes due and payable
hereunder, then the [ ] Lessee shall pay interest to
the Lessor on such unpaid amount from (and including) the due
date for the payment thereof to (but excluding) the date of
actual payment (after as well as before judgment) at the Default
Rate, save that in respect of any sum payable on demand
interest shall first accrue and be payable at the
Contractual Rate for a period of five (5) Banking Days after
the date of demand demanding such sum. Such interest
whether at the Default Rate or the Contractual Rate shall be
calculated on the basis of a year of three hundred and sixty
(360) days and the actual number of days elapsed and any
interest shall accrue from day to day and shall be due and
payable on the last day of each such period (or, in respect
of interest at the Contractual Rate on the last day of such
five (5) Banking Day period or, if earlier, the date of
payment of the relevant sum which was payable on demand)
and, if not paid, shall, to the extent permitted by
Applicable Law, be compounded on such date.
8.4 Time of the essence
Punctual payment of amounts payable by the [ ]
Lessee and/or the [ ] Option Holder to the
Lessor and performance by the [ ] Lessee and/or
the [ ] Option Holder of each of its respective
obligations under this Agreement shall, subject to any
express periods of grace set out in this Agreement, be of
the essence and shall be conditions of this Agreement.
8.5 Banking Days
If any payment of Rent pursuant to Clause 7 would otherwise
be payable on a day which is not a Banking Day it shall be
due on the succeeding Banking Day unless such Banking Day
falls within the succeeding month in which event such
payment of Rent will be due on the preceding Banking Day in
the same month but no adjustment shall be made in respect of
the amount of Rent. If any other payment would otherwise be
due on a day which is not a Banking Day, it shall, unless
expressly provided to the contrary hereunder, be due on the
succeeding Banking Day.
<PAGE>
8.6 Conclusive Certification
A certificate given by the Lessor as to the amount of any
sum required to be paid to the Lessor under any of the
provisions of this Agreement shall, save as otherwise
provided for in this Agreement, and save in the case of
manifest error, be conclusive evidence of the matters
therein stated for all purposes of this Agreement. Any such
certificate shall contain a reasonable explanation of the
way in which the sum required to be paid was calculated,
together with reasonable supporting evidence.
9. TITLE, REGISTRATION AND SUB-LEASING
9.1 Title to the Aircraft during Lease Period
Title to the Aircraft will be and remain vested in the
Lessor throughout the Lease Period. Neither the [
] Lessee nor the [ ] Option Holder shall
have any right, title or interest in or to the Aircraft
except to the extent of their respective rights expressly
set out in this Agreement (including, but not limited to,
the rights of the [ ] Lessee under Clauses 2
and 6.2 and of the rights of the [ ] Option
Holder under Clauses 19 and 20) and in the Priorities and
Indemnities Agreement, it being understood that any such
proprietary rights of the [ ] Lessee or of the
[ ] Option Holder are subject and subordinate
to the interests of the Lessor as the legal and beneficial
owner of the Aircraft. The [ ] Lessee or the [
] Option Holder, as the case may be, shall, on
all occasions when the ownership of the Aircraft or any part
of it is relevant, inform third parties in writing that
title to the Aircraft is held by the Lessor.
9.2 Registration
9.2.1 The [ ] Lessee shall do or cause to be
done all such steps in each of the following cases at
the cost of the [ ] Lessee:-
(a) as may from time to time be required by Applicable Law
to register and maintain registration of the Aircraft
in the State of Registration; and
(b) as may from time to time be required under the terms of
any agreement, treaty, convention or pact or by any
practice, custom or understanding involving the State
of Registration, the Habitual Base (if the Habitual
Base is a different country from the State of
Registration and as soon as the [ ] Lessee
knows of such Habitual Base) to protect and preserve
the interest of the Lessor in the Aircraft and this
Agreement and the interests of the Security Agent as
assignee of this Agreement pursuant to the General
Security Assignment and whilst the Aircraft is on sub-
lease to an Approved Sub-Lessee, the interest of the
Security Agent under any Sub-Lease Security Assignment
granted by [ ] Lessee within the
jurisdiction of the State of Registration and of the
Habitual Base (if the Habitual Base is a different
country from the State of Registration)
and in each case the Lessor will reasonably co-operate in
respect thereof PROVIDED ALWAYS THAT the [ ]
Lessee shall not be required to do any act or thing or take
any steps in connection with the registration, filing or
recording of any instrument creating or evidencing a
<PAGE>
Lessor's Lien or any Lien created pursuant to any of the
Facility Documents or any of the Aircraft Operative
Documents (except the General Security Assignment insofar as
it relates to the granting of a security assignment of this
Agreement in favour of the Security Agent and any Sub-Lease
Security Assignment).
9.2.2 In particular (without limiting the generality of the
foregoing) the [ ] Lessee shall, at
no expense to the Lessor:-
(a) Registration of the Aircraft:
upon Delivery and throughout the Lease Period procure
that the Aircraft will be duly registered in a State of
Registration with the Aviation Authority and shall
promptly deliver to the Lessor a certified copy of each
certificate of registration relating to the Aircraft
when granted by an Aviation Authority;
(b) Filing of this Agreement and the Sub-Lease Security
Assignment:
to the fullest extent permitted by Applicable Law and
in accordance with the requirements of Applicable Law
from time to time in the State of Registration and in
the Habitual Base (if the Habitual Base is a different
country from the State of Registration and as soon as
the [ ] Lessee knows of such Habitual
Base) the [ ] Lessee will cause this
Agreement, the General Security Assignment and any Sub-
Lease Security Assignment to be kept, filed and
recorded in the State of Registration and the Habitual
Base necessary to protect the rights of the Lessor and
the Security Agent described in Clause 9.2.1(b);
(c) Evidence of registration and filings:
as part of any procedure to register the Aircraft or
file or record this Agreement, the General Security
Assignment and any Sub-Lease Security Assignment,
provide the Lessor with an opinion of independent local
legal counsel issued in favour of the [ ]
Lessee, the Lessor and the Security Agent (who shall be
counsel acceptable to the Lessor and the Security
Agent) in form and substance satisfactory to the Lessor
and the Security Agent on the registrations, filings
and recordings required under this Clause 9.2 and
subsequently not later than five (5) Business Days
after the completion of such registrations, filings and
recordings to provide the Lessor and the Security Agent
with such counsel's confirmation or other evidence
reasonably satisfactory to the Lessor and the Security
Agent that such registrations, filings and recordings
have been made;
(d) No prejudicial treatment:
not do or knowingly permit to be done or omit or
knowingly permit to be omitted any act or thing which
would be likely to jeopardise the respective rights,
title or interest of the Lessor and the Security Agent
described in Clause 9.2.1(b); and
<PAGE>
(e) De-registration:
arrange the de-registration of the Aircraft by any
Aviation Authority prior to its change of registry
pursuant to this Clause 9.2 to the extent required by
Applicable Law or reasonably required by the Lessor or
the Security Agent;
PROVIDED ALWAYS THAT the [ ] Lessee shall not
be required to do any act or thing or take any steps in
connection with the registration, filing or recording of any
instrument creating or evidencing a Lessor's Lien or any
Lien created pursuant to any of the Facility Documents or
any of the Aircraft Operative Documents (except the General
Security Assignment insofar as it relates to the granting of
a security assignment of this Agreement in favour of the
Security Agent and any Sub-Lease Security Assignment).
9.2.3 Whilst and so long as the Aircraft at any time during
the Lease Period is not on sub-lease to an Approved
Sub-Lessee under an Approved Sub-Lease, the [
] Lessee shall procure, at its own expense, that the
Aircraft shall be registered in Bermuda, the Cayman
Islands, Ireland, the United Kingdom, the United States
of America (whilst and so long as a Trigger Event shall
not have occurred and be continuing), or such other
country as may be agreed between the Lessor, the
Security Agent and the [ ] Lessee and
the Lessor (at the [ ] Lessee's expense)
shall take all steps required or recommended by
independent local counsel (who shall be acceptable to
the Lessor and the Security Agent and whose opinion
shall be issued in favour of the [ ] Lessee
and the Lessor and the Security Agent prior to any such
registration) to ensure that the interests of the
Lessor as owner and as lessor shall be fully recognised
and protected to the maximum extent possible under the
laws of the relevant jurisdiction PROVIDED THAT if a
Trigger Event occurs and is continuing when the
Aircraft is registered in the United States of America
the [ ] Lessee shall promptly procure,
at its expense, that the Aircraft shall be deregistered
in the United States of America and re-registered in
one of the other countries contemplated above for so
long as (i) the Trigger Event is continuing or (ii) the
Aircraft is not on sub-lease to an Approved Sub-Lessee.
9.2.4 If the Aircraft is at any time so altered as to make it
necessary or advisable in the opinion of the Lessor and
the Security Agent that this Agreement or any of the
other Aircraft Operative Documents be amended or
supplemented, or that any further registration or
recording be made of any thereof, to protect the
interests of the Lessor and/or the Security Agent
hereunder or thereunder, the [ ] Lessee and/or
the [ ] Option Holder, as the case may
be, shall, at the [ ] Lessee's expense,
promptly execute or procure the execution (as the case
may require) of such amendment or supplement, or effect
or procure the effecting of such registration or
recording.
9.3 Airworthiness Certificate
The [ ] Lessee shall, at no expense to the
Lessor, procure that at all times during the Lease Period
when the Aircraft is the subject of an Approved Sub-Lease or
is otherwise being operated, the Aircraft possesses a valid
certificate of airworthiness in the public transport
(passenger) category as issued by the Aviation Authority (a
<PAGE>
"Certificate of Airworthiness") unless the Aviation
Authority shall have withdrawn such certificates in respect
of all aircraft of the same model as the Aircraft, and shall
require that the Approved Sub-Lessee under any Approved Sub-
Lease possesses all such other certificates, licences,
permits and authorisations as are from time to time required
for the use and operation of the Aircraft for the public
transport of passengers or cargo by any Government Entity
having jurisdiction in any country, state, province or other
applicable sub-division in or over which the Aircraft is
flown including, without limitation, any Aviation Authority
PROVIDED THAT, subject to the provisions of Clause 9.2.3, if
at any time during the Lease Period, when the Aircraft has
not been the subject of an Approved Sub-Lease or has not
been otherwise operated for a continuous period of six
months, and the commercial paper (short term debt)
obligations of the Guarantor are rated below A-1 by Standard
and Poor's Corporation or P1 by Moody's Investor Services,
Inc., or an equivalent by an alternative service of equivalent
standing (if neither Standard and Poor's Corporation nor
Moody's Investor Services, Inc. has assigned any rating) or
if such rating level of the Guarantor is placed on
"creditwatch" (otherwise than with a view to upgrading) or
other negative qualification the [ ] Lessee
shall procure that promptly thereafter and for so long as
such a circumstance subsists during the Lease Period a valid
Certificate of Airworthiness in respect of the Aircraft is
issued by the relevant Aviation Authority.
9.4 Sub-Leasing
9.4.1 General Principle
The Lessor hereby acknowledges and agrees that the [
] Lessee has entered into this Agreement for the
purpose of sub-leasing the Aircraft under and pursuant to
one or more Approved Sub-Leases during the Lease Period; and
accordingly the [ ] Lessee shall not part
with possession of the Aircraft, other than for the purposes
of maintenance, modifications or repairs or otherwise as may
be permitted by this Agreement, or enter into any agreement
for the bailment, lease or any arrangement for the
utilisation of the Aircraft or any part thereof except as
contemplated in and in accordance with the provisions of
Clause 9.4.2 below.
9.4.2 Sub-Leasing Criteria
So long as no Relevant Event has occurred and is continuing,
the [ ] Lessee may sub-lease the Aircraft in
circumstances where possession and operational control
passes to an operator other than the [ ]
Lessee PROVIDED THAT the following requirements shall be
satisfied in relation to a proposed sub-lease (in which case
the sub-lease shall constitute an "Approved Sub-Lease" and
the sub-lessee thereunder shall be an "Approved Sub-
Lessee"):-
(a) the sub-lease shall be written in English and shall
contain or, where applicable, comply with, each of the
provisions (the "Mandatory Lease Provisions") set out
in Schedule 7 by stating a paraphrased or more detailed
form of such Mandatory Lease Provisions or by stating a
provision having the same substantive effect as if such
Mandatory Lease Provisions were contained therein; and
(other than if the sub-lease is the initial sub-lease
of the Aircraft) at the later of (i) the time that the
<PAGE>
sub-lease is entered into and (ii) ten (10) Business
Days before delivery of the Aircraft to a sub-lessee
pursuant to a sub-lease, the [ ] Lessee
shall provide the Lessor and the Security Agent with a
copy, certified as a true copy by a duly authorised
officer of the [ ] Lessee, of the sub-
lease;
(b) the Aircraft shall, unless otherwise agreed by the
Lessor and the Security Agent, be registered in the
jurisdiction of incorporation of the sub-lessee
PROVIDED THAT the Aircraft shall neither be registered
in a country nor located in a Habitual Base which in
either case is a Prohibited Country or the United
States of America;
(c) if required or recommended by external local counsel
referred to in sub-paragraph (h) below, prior to
delivery of the Aircraft under the sub-lease, the sub-
lessee shall provide the Lessor and the Security Agent
with a letter from the Aviation Authority in form and
substance satisfactory to the Lessor and the Security
Agent confirming that the Lessor will be entitled to
de-register the Aircraft and/or the Power of Attorney
in the agreed form or such other form as may be
acceptable to the Security Agent and the Lessor in
respect of the de-registration of the Aircraft in the
State of Registration;
(d) the rent shall be payable no less frequently than
quarterly;
(e) the Insurances required to be maintained pursuant to
Clause 14 and Schedule 9 are in full force and effect
in accordance with the terms thereof and the [
] Lessee or, as the case may be, the sub-lessee
shall have provided to the Lessor and the Security
Agent all such documents, evidence and information
relating to such Insurances which the
[ ] Lessee is required to provide or cause to
be provided under this Agreement;
(f) except to the extent provided in any quiet enjoyment
undertaking given to the sub-lessee pursuant to Clause
9.5, the relevant sub-lease is expressly stated to be
subject and subordinate to this Agreement and the
interests of the sub-lessee are expressly stated
therein to be subject and subordinate to the interests
of the Lessor, the Security Agent, the Agent and the
Lenders;
(g) if a quiet enjoyment undertaking is to be issued by the
Lessor and the Security Agent pursuant to Clause 9.5
the sub-lease term may expire on a date up to sixty
(60) months beyond the Expiry Date of the Lease
PROVIDED THAT if at the time the sub-lease is entered
into a Trigger Event shall not have occurred and be
continuing;
(h) without prejudice to the generality of Clause 9.2.2(c),
the [ ] Lessee shall as a predelivery
requirement under the sub-lease obtain a legal opinion
(issued to the [ ] Lessee, the Lessor and the
Security Agent) from external legal counsel of the jurisdiction
of the State of Registration and/or Habitual Base in
which the Aircraft is proposed to be registered and/or
located acceptable to the Lessor, the Security Agent and the
<PAGE>
[ ] Lessee, in a form and substance satisfactory
to the Lessor and the Security Agent in relation to:
(i) the current Applicable Laws in such State of
Registration and/or Habitual Base and the rules,
regulations and policies of the relevant Aviation
Authority,
(ii) the steps taken or to be taken in such State of
Registration and/or Habitual Base on account of
(aa) the proposed Sub-Lease and (bb) any transfer
of the registration of the Aircraft to the State
of Registration in which the sub-lessee is
incorporated and/or in which the Aircraft is to be
Habitually Based to ensure the continued
recognition, enforceability and priority of the
interests of the Lessor as owner and lessor of the
Aircraft and the interests of the Security Agent
as assignee of this Agreement pursuant to the
General Security Assignment and in relation to any
Sub-Lease Security Assignment subject only to (x)
Liens arising by operation of law or statute in
the jurisdiction of such State of Registration
and/or Habitual Base, (y) the terms of any quiet
enjoyment letter issued by the Lessor and the
Security Agent in favour of the Approved Sub-
Lessee pursuant to Clause 9.5 and (z) Liens
created pursuant to any of the Facility Documents
or any of the Aircraft Operative Documents and
(iii) Taxes arising in such State of Registration
and/or Habitual Base on account of the
Aircraft or the Sub-Lease;
it being understood that the [ ] Lessee
shall use all reasonable endeavours to provide the
Lessor and the Security Agent with sight of the
proposed legal opinion not less than eight (8) Business
Days before the Delivery of the Aircraft under a sub-
lease; and
(i) prior to delivery of the Aircraft under a sub-lease,
the [ ] Lessee shall have taken all steps
required or recommended by such external local counsel
referred to in sub-paragraph (h) above (i) to protect
the Lessor's title to and ownership of the Aircraft and
interest as lessor and the interest of the Security
Agent as assignee of this Agreement and/or of the
sub-lease pursuant to the General Security Assignment
(ii) to ensure all filings or recordings necessary for
the proposed sub-lease, the General Security Assignment
(insofar as it relates to the security assignment of
this Agreement and/or of the sub-lease in favour of the
Security Agent) and any Sub-Lease Security Assignment
(in order to constitute a valid and perfected (aa) sub-
lease, (bb) General Security Assignment (to the extent
of the security assignment of this Agreement and/or of
the sub-lease in favour of the Security Agent contained
therein) and (cc) Sub-Lease Security Assignment, of
record respectively) are made and the [ ]
Lessee shall be responsible for and shall indemnify the
Lessor, the Agent and the Security Agent and each of
the Lenders against all out-of-pocket costs and
expenses (including legal fees) incurred by the Lessor,
the Agent, the Security Agent and each of the Lenders
in connection with the matters referred to in sub-
paragraph (h) above and in this sub-paragraph PROVIDED
<PAGE>
ALWAYS THAT the [ ] Lessee shall not be
required to do any act or thing or take any steps in
connection with the registration, filing or recording
of any instrument creating or evidencing a Lessor's
Lien or any Lien created pursuant to any of the
Facility Documents or any of the Aircraft Operative
Documents (except the General Security Assignment
insofar as it relates to the granting of a security
assignment of this Agreement and/or of the sub-lease in
favour of the Security Agent and any Sub-Lease Security
Assignment);
(j) the leasing of the Aircraft pursuant to any such sub-
lease would not result in more than twenty-five per
cent. (25%) of the Facility Aircraft as at the date of
the Facility Agreement (rounded to the nearest whole
number) having their State of Registration or Habitual
Base in the same country but excluding for the purposes
of such calculation any Facility Aircraft which has its
State of Registration or Habitual Base in such country
is so registered or habitually-based solely as a result
of any Approved Sub-Lessee or any Approved Sub-Lessee
(as that term is defined in each of the Other Lease
Agreements) sub-sub-leasing such Facility Aircraft in
accordance with the terms of the relevant Approved
Sub-Lease or, as the case may be, the relevant Approved
Sub-Lease (as that term is defined in each of the Other
Lease Agreements);
(k) if, at the time of the proposed delivery of the
Aircraft to the sub-lessee under the proposed
sub-lease, the fifth (5th) anniversary of the Delivery
Date has not occurred, the leasing of the Aircraft
pursuant to the sub-lease would not result in the State
of Registration or Habitual Base of the Aircraft being
in the United Kingdom, France, Germany or Spain,
PROVIDED ALWAYS THAT that the [ ] Lessee may
sub-lease the Aircraft notwithstanding the provisions
of this paragraph (k) if the [ ] Lessee has had
to repossess the Aircraft from an existing Approved
Sub-Lessee by reason of default or breach by such
Approved Sub-Lessee;
(l) if, at the time of the proposed delivery of the
Aircraft to the sub-lessee under the proposed
sub-lease, the fifth (5th) anniversary of the Delivery
Date has occurred, and the State of Registration or
Habitual Base of the Aircraft as a result of the
leasing of the Aircraft pursuant to the proposed
sub-lease would be the United Kingdom, France, Germany
or Spain, the leasing of the Aircraft to the sub-lessee
pursuant to the proposed sub-lease would not result in
more than twenty per cent (20%) of the Facility
Aircraft as at the date of the Facility Agreement
(rounded to the nearest whole number) having their
State of Registration or Habitual Base in the same
country but excluding for the purposes of such
calculation any Facility Aircraft which has its State
of Registration or Habitual Base in such country solely
as a result of any Approved Sub-Lessee or any Approved
Sub-Lessee (as that term is defined in each of the
Other Lease Agreements) sub-sub-leasing such Facility
Aircraft in accordance with the terms of the relevant
Approved Sub-Lease or, as the case may be, the relevant
Approved Sub-Lease (as that term is defined in each of
the Other Lease Agreements);
<PAGE>
(m) in respect of any sub-lease which is subsequent to the
initial Approved Sub-Lease the [ ] Lessee
shall comply with the conditions precedent set out in
paragraphs (viii), (ixv) and (xv) of Part I of Schedule
4 as if references in such paragraphs to the "initial
Approved Sub-Lease" were to such subsequent sub-lease.
9.5 Quiet Enjoyment and Security Assignment
The Lessor acknowledges that an Approved Sub-Lessee may
request the [ ] Lessee to procure execution and delivery
of a quiet enjoyment undertaking by the Lessor and the Security
Agent. If the [ ] Lessee requests in writing a quiet
enjoyment undertaking, the Lessor shall provide prior to delivery of
the Aircraft to the Approved Sub-Lessee under the Approved
Sub-Lease a quiet enjoyment undertaking issued by the Lessor
and the Security Agent in favour of the Approved Sub-Lessee
in the form of Schedule 8 which shall be operative until the
earliest of (x) the end of the Lease Period and (y) the
payment in full of the Aircraft Secured Obligations PROVIDED
ALWAYS THAT if at the time the Approved Sub-Lease is entered
into a Trigger Event shall not have occurred and be
continuing, the Approved Sub-Lease and quiet enjoyment
undertaking in relation thereto may continue for a period up
to 60 months beyond the Expiry Date, and PROVIDED FURTHER
THAT at the same time that the quiet enjoyment undertaking
is issued (i) the [ ] Lessee executes and
delivers to the Lessor a Sub-Lease Security Assignment in
favour of the Lessor of the [ ] Lessee's
rights under the Approved Sub-Lease (on terms that the
Approved Sub-Lessee may continue to pay rent and other
amounts to the [ ] Lessee until an Acceleration
Event has occurred) and (ii) the [ ] Lessee procures
that the Approved Sub-Lessee executes and delivers an
acknowledgment immediately after receiving notice of the Security
Assignment, such acknowledgment and notice respectively
being in the forms set out in Annex 1 and Annex 2 of the
Sub-Lease Security Assignment.
9.6 Protection of Lessor's Rights
Notwithstanding anything contained in this Clause 9, the [
] Lessee expressly agrees that it shall remain
primarily liable under this Agreement for the performance of
all the terms of this Agreement to the same extent as if the
Approved Sub-Lease had not occurred. No bailment, lease or
other arrangement for the utilisation of the Aircraft
permitted by this Clause 9 shall in any way discharge or
diminish any of the [ ] Lessee's obligations
to the Lessor under this Agreement.
9.7 Amendment of Approved Sub-Leases
The [ ] Lessee shall provide the Lessor and
the Security Agent with a copy, certified by a duly
authorised officer of the [ ] Lessee as a true
copy, of any amendment or variation to the terms of the
Approved Sub-Lease within fifteen (15) Business Days of such
amendment or variation, and such amendment or variation
shall not cause the Approved Sub-Lease to conflict or be
inconsistent with the Mandatory Lease Provisions.
9.8 Treaties and Agreements
The [ ] Lessee shall do or cause to be done
all acts which may be required under the terms of any other
agreement, treaty, convention or pact involving any state in
<PAGE>
which the [ ] Lessee or any Approved Sub-
Lessee may be incorporated and/or may carry on business as
may be necessary, or as the Lessor may reasonably require
after consultation with the [ ] Lessee, to
perfect and preserve the rights and interests of the Lessor
and the Security Agent in respect of the Aircraft, this
Agreement and any Approved Sub-Lease within the jurisdiction
of any such state.
9.9 Geneva Convention
If, in the State of Registration, there shall be, or be
brought into force, any legislative or other provisions
giving effect to the Geneva Convention or otherwise relating
to recognition of rights in aircraft, the [
] Lessee shall at no cost to the Lessor forthwith do and
join with the Lessor in doing all such acts as may be
necessary to perfect recognition of the Lessor's title to
and interest in the Aircraft and of the interest of the
Security Agent as assignee of this Agreement and any
Approved Sub-Lease pursuant to the General Security
Assignment and interest in relation
to any Sub-Lease Security Assignment in accordance with such
legislative or other provisions.
10. OPERATIONAL UNDERTAKINGS
10.1 Compliance with Laws
The [ ] Lessee undertakes to the Lessor that
it will comply with, or procure compliance with, the
following provisions in respect of the Aircraft:-
(a) the [ ] Lessee shall not, nor knowingly
permit (by action or inaction) any Approved Sub-Lessee
to, maintain, use or operate the Aircraft in violation
of any law or any mandatory rule, regulation or order
of any Government Entity having jurisdiction in any
country, state, province or other political subdivision
in or over which the Aircraft is flown or in violation
of any airworthiness certificate, licence or
registration relating to the Aircraft issued by the
Aviation Authority. In the event that any such law,
rule, regulation, or order requires alteration of the
Aircraft during the Lease Period, the [
] Lessee shall promptly conform or procure conformance
thereto and maintain or procure maintenance of the
Aircraft in accordance with Clause 11.1, PROVIDED THAT
the [ ] Lessee may in good faith contest,
or procure the contest of, the validity or application
of any such law, rules, regulation or order in any
reasonable manner that does not materially adversely
affect the Aircraft, the interest of the Lessor or the
Security Agent therein and PROVIDED FURTHER THAT the
[ ] Lessee shall not be in breach of this
Clause 10.1(a) if the [ ] Lessee cannot
prevent any such violations, or conform or procure
conformance to such laws, rules, regulations or orders
by reason of the occurrence and continuance of an event
described in sub-paragraph (c), (d) or (e) of the
definition of Total Loss (but ignoring the time periods
given in that definition);
(b) the [ ] Lessee shall not cause or
knowingly permit the Aircraft to be operated or located
(i) in any area or for carriage of any goods excluded
<PAGE>
from coverage by any Insurance, except in the case of
requisition by any governmental or other competent
authority (as permitted by this Agreement) where the [
] Lessee obtains, or procures, an
indemnity in lieu of such Insurance from such
Government Entity or other person, in each case
acceptable to the Lessor against the risks and in the
amounts required by Clause 14 and Schedule 9 in respect
of such area or such carriage of any goods or (ii) in
any recognised or threatened area of hostilities unless
fully covered by war risk insurance or unless the Aircraft
is operated or used by any Government Entity or other person,
in each case acceptable to the Lessor and the Security Agent (as
permitted by this Agreement) in circumstances where
such Government Entity or other person, in each case
acceptable to the Lessor and the Security Agent assumes
full liability for any damage, loss, destruction or
failure to return possession of the Aircraft at the end
of the term of such operation or use and for injury to
persons and damage to property of others, PROVIDED THAT
the [ ] Lessee shall not be in breach
of this Clause 10.1(b) if the [ ]
Lessee cannot prevent any such operation or location by
reason of the occurrence and continuance of an event
described in sub-paragraph (c), (d) or (e) of the
definition of Total Loss (but ignoring the time periods
given in that definition);
(c) the [ ] Lessee shall not do or suffer
or permit (by action or inaction) to be done anything
which can or may reasonably be expected to affect
adversely the registration of the Aircraft with the
Aviation Authority;
(d) the [ ] Lessee shall not do or permit to
be done anything which may reasonably be expected to
expose the Aircraft or any Engine or any Part to
forfeiture, impounding, detention, appropriation,
damage or destruction, and shall not abandon the
Aircraft (unless such forfeiture, impounding,
detention, appropriation, damage or destruction is
being contested in good faith by appropriate
proceedings diligently pursued and for the payment of
which adequate reserves are available, or when required
in order to pursue such proceedings, an adequate bond
has been provided so long as such proceedings do not in
turn involve any danger of the sale, forfeiture or loss
of the Aircraft, any Engine or any Part or any interest
therein, or other than to the Insurers of the Aircraft
following a Total Loss in circumstances where liability
to pay the Total Loss Proceeds to the Security Agent
has been unconditionally and irrevocably agreed by the
Insurers) provided that the [ ] Lessee
shall not be in breach of this Clause 10.1(d) if the [
] Lessee cannot prevent any such forfeiture,
impounding, detention, appropriation, damage,
destruction or abandonment solely by reason of the
occurrence of an event described in sub-paragraphs (c),
(d) or (e) of the definition of Total Loss (but
ignoring the time periods given in that definition).
10.2 Operation
10.2.1 The [ ] Lessee shall at all times:-
(a) not knowingly permit the Aircraft to be used to
transport contraband or illegal narcotics or hazardous
<PAGE>
or perilous cargo (other than cargo carried pursuant to
applicable government and carrier regulations); and
(b) use its best endeavours to procure the immediate
release of the Aircraft from any forfeiture, impounding
or detention not constituting a Total Loss of which it
becomes aware.
10.2.2 The Aircraft:-
(a) shall be operated in accordance with the Manufacturer's
approved flight manual and the operations manual for
the Aircraft as approved by the Aviation Authority and
in accordance with the applicable regulations of the
Aviation Authority;
(b) shall be operated by duly qualified pilots and other
aircrew employed or contracted by the [ ]
Lessee or an Approved Sub-Lessee or any sub-sub-lessee
to whom any Approved Sub-Lessee leases the Aircraft in
accordance with the terms of this Agreement, in each
case holding valid licences and other necessary
authorisations as may be required by all Applicable
Laws and regulations; and
(c) shall not be used or operated so that it is or is
likely to be deprived of its Certificate of
Airworthiness.
10.2.3 Save with the Lessor's prior written consent the [
] Lessee shall not do anything which, or omit to
do anything the omission of which, prejudices any right
which the Lessor may have against the Seller, the
Manufacturer, the Engine Seller, the Engine
Manufacturer or any supplier or manufacturer of any of
the Parts under any of the Operative Documents or under
any Applicable Law PROVIDED ALWAYS THAT the [
] Lessee shall have full power to administer
claims against the Seller, the Manufacturer, the Engine
Seller, the Engine Manufacturer or any supplier of
Parts and to settle any such claim if such claim is
made for the benefit of the [ ]
Lessee and/or the Approved Sub-Lessee.
10.3 Cost of Operation
The [ ] Lessee shall promptly pay or procure
that there are promptly paid all rent, fees, duties,
charges, Taxes and other outgoings in respect of any
premises where the Aircraft or any part thereof is based
from time to time if non-payment may give rise
to any risk of the Aircraft being distrained upon or
attached, and will procure that the Aircraft is not
distrained upon or attached for any of the same.
10.4 Pledging of Credit
The [ ] Lessee has no authority to pledge,
and shall not pledge, the credit of the Lessor, the Agent,
the Security Agent or any of the Lenders for any fees, costs
or expenses connected with any maintenance, overhaul,
repairs, replacements or modifications to the Aircraft or
otherwise connected with the use or operation of such
Aircraft. The [ ] Lessee has no
authority to offer the Aircraft as security in any manner
whatsoever provided that the creation or existence of any
Permitted Lien shall not constitute a breach of this Clause
10.4 by the [ ] Lessee.
<PAGE>
10.5 Non-discrimination
At all times while the Aircraft is in the possession of the
[ ] Lessee, the [ ] Lessee
shall not operate, maintain, service, insure or deal with
the Airframe or any of the Engines or any of the Parts in a
manner that discriminates adversely against the Airframe or
any of the Engines or any of the Parts when compared to the
manner in which the [ ] Lessee deals with
similar aircraft or parts within the [ ] Lessee's
fleet.
10.6 Liens
10.6.1 The [ ] Lessee shall not, subject to
Clause 10.6.2, create or knowingly permit to arise or
subsist any Lien (other than Permitted Liens) over the
Aircraft or any part thereof or any insurance proceeds
relating to the Aircraft or any part thereof or
requisition compensation relating to the Aircraft or
any part thereof.
10.6.2 The [ ] Lessee shall promptly pay and
discharge when due, or make adequate provision (by way
of security or otherwise) for all debts, claims,
liabilities or obligations whatsoever (whether incurred
by or imposed upon the [ ] Lessee or any
other person) which may give rise to any Lien described
in Clause 10.6.1.
10.7 Outgoings
The [ ] Lessee shall promptly pay or procure
that there are promptly paid all licence and registration
fees and all Taxes of any nature (together with any
penalties, fines or interest thereon) assessed and demanded
from it or any Approved Sub-Lessee by any government or any
revenue authority (whether of the State of Registration or
otherwise), upon or with respect to the Aircraft or
upon the purchase, ownership, delivery, leasing, possession,
use, operation, return, sale or other disposition thereof or
rentals, income or proceeds received by it or any Approved
Sub-Lessee with respect thereto (excluding only Taxes which
are being contested in good faith by appropriate proceedings
and in respect of which the proviso to paragraph (a) of the
definition of Permitted Lien is fulfilled).
11. MAINTENANCE OF AIRCRAFT
11.1 General Obligation
Throughout the Lease Period the [ ] Lessee
shall, at its expense, maintain and repair, or procure the
maintenance and repair of the Aircraft, Engines and all of
the Parts (i) in accordance with the rules and regulations
of the Aviation Authority and (ii) in accordance with any
other regulations or requirements necessary in order to
maintain a Certificate of Airworthiness for the Aircraft at
all times during the Lease Period (subject to the provisions
of Clause 9.3).
<PAGE>
11.2 Specific Obligations
Without prejudice to Clause 11.1, the [ ] Lessee
agrees that such maintenance and repairs will include, but
will not be limited to, each of the following:-
(a) maintaining in English (except at any time whilst the
Aircraft is registered or habitually based in the
People's Republic of China) and keeping in an up-to-
date status all Technical Records;
(b) maintaining historical records, in English (except at
any time whilst the Aircraft is registered or
habitually based in the People's Republic of China),
for condition-monitored, hard time and life limited
parts, the hours and cycles the Aircraft and Engines
operate and all maintenance and repairs performed on
the Aircraft; and
(c) properly documenting all repairs, modifications and
alterations and the addition or removal of equipment,
systems or components in accordance with the rules and
regulations of the Aviation Authority and reflecting
such items in the Technical Records. In addition, all
repairs, modifications and alterations to the Aircraft
will be accomplished in accordance with the
Manufacturer's structural repair manual (and, if
outside the scope of the Manufacturer's structural
repair manual, then accomplished in accordance with
F.A.A.-approved data).
11.3 Removal and Replacement of Engines and Parts
The [ ] Lessee undertakes to the Lessor that it
shall comply with, and procure compliance with, the
following provisions of this Clause 11.3 in respect of each
Engine and Part:-
11.3.1 Replacement of Parts
(a) In the ordinary course of maintenance, service, repair,
overhaul or testing, the [ ] Lessee may
remove any Part provided that the [ ]
Lessee replaces such Part as promptly as practicable.
All replacement Parts will (i) be free and clear of all
Liens (except Permitted Liens) of any kind or
description, (ii) be in airworthy condition and of at
least equivalent model and modification status at least
equal to the Parts replaced, assuming such replaced
Parts were in the condition and repair required to be
maintained by the terms of this Agreement, and (iii)
have a current "serviceable tag" of the manufacturer or
maintenance facility providing such items to the [
] Lessee, indicating that such Parts are new,
serviceable or overhauled. So long as a substitution
meets the requirements of the Maintenance Programme,
the [ ] Lessee may substitute for
any Part a part that does not meet the requirements of
the foregoing sentence if (i) a complying Part cannot
be procured or installed within the available
groundtime of the Aircraft and (ii) as soon as
practicable, the non-complying part is removed and
replaced by a complying Part.
(b) All parts removed from the Airframe or any Engine will
remain the property of the Lessor and subject to this
Agreement no matter where located, until such time as
such Parts have been replaced by Parts (which have been
incorporated or installed in or attached to the
Airframe or such Engine) which meet the requirements
<PAGE>
for replacement Parts specified above and title to such
replacement Parts has passed to the Lessor in
accordance with the terms of this Agreement and under
the laws of the State of Registration and lex situs.
To the extent permitted by the laws of the State of
Registration and the lex situs it is the intent of the
Lessor and the [ ] Lessee that without further
act and immediately upon any replacement Part becoming
incorporated, installed or attached to the Airframe or
an Engine as provided in Clause 11.3.1, (i) title to
the removed Part will thereupon vest in the [
] Lessee, free and clear of all rights of the
Lessor, (ii) title to the replacement Part will
thereupon vest in the Lessor free and clear of all
rights of the [ ] Lessee and any
third party and (iii) such replacement Part will become
subject to this Agreement and be deemed to be a Part
hereunder to the same extent as the Parts originally
incorporated or installed in or attached to the Airframe
or such Engine.
11.3.2 Removal of Engines
(a) If an Engine is removed for testing, service, repair,
maintenance, overhaul, work, alterations or
modifications, title to such Engine will at all times
remain vested in the Lessor.
(b) The [ ] Lessee will be entitled to
remove any of the Engines from the Aircraft and install
another engine or engines on the Aircraft, provided
that the Lessee complies with each of the following
obligations:
(i) the [ ] Lessee may only install an
engine or engines of the same model as the
replaced Engine or Engines on the Aircraft;
(ii) the insurance requirements set forth in Clause 14
and Schedule 9 are in place;
(iii) the [ ] Lessee ensures that
the identification plates referred to in
Clause 12.4 are not removed from any Engine
upon such Engine being detached from the
Aircraft;
(iv) title to the Engine remains with the [ ]
Lessor free from all Liens (except Permitted
Liens) regardless of the location of the Engine or
its attachment to or detachment from the Aircraft.
11.3.3 Interchange of Engines and Parts within the same fleet
Notwithstanding the foregoing provisions of this Clause
11.3, the [ ] Lessee may, or may permit an Approved
Sub-Lessee, if no Relevant Event or Default, as the case may
be, has occurred and is continuing, to install any Engine or
Part on an aircraft or, in the case of a Part, on an
engine:-
(i) owned and operated by the [ ] Lessee or an
Approved Sub-Lessee free from Liens (except Permitted
Liens); or
(ii) leased or hired to the [ ] Lessee or an
Approved Sub-Lessee pursuant to a lease, hire purchase
<PAGE>
or conditional sale and on terms whereby the [
] Lessee or the Approved Sub-Lessee has full
operational control of that
aircraft (but excluding possession and operation on the
basis of a Wet Lease) or engine; or
(iii) owned by the [ ] Lessee or an Approved
Sub-Lessee and operated by the [ ]
Lessee or an Approved Sub-Lessee on terms that a
Lien in that aircraft or engine, as the case may
be, is held by any other person;
provided that (i) the agreement for such lease, hire,
hire purchase or conditional sale or imposing such
Lien, as the case may be, by its terms expressly or
effectively states that the lessor under such lease,
the hirer under such hire purchase, the seller under
such conditional sale agreement or the holder of such
Lien, as the case may be, will not acquire any right,
title or interest in any Engine by reason of such
Engine being installed on such aircraft or (ii) the
lessor under such lease, the hirer under such hire
purchase, the seller under such conditional sale
agreement or the holder of such Lien, as the case may
be, has confirmed and acknowledged in writing to the
Lessor and the Security Agent, in form and substance
satisfactory to the Lessor and the Security Agent, that
(aa) such Engine will not cease to be the property of
the Lessor and subject to this Agreement and (bb) it
will respect the interest of the Lessor and the
Security Agent in respect of that Engine and that it
will not seek to exercise any rights whatsoever in
relation thereto.
11.3.4 Pooling of Engines and Parts
So long as no Relevant Event or Default has occurred and is
continuing the [ ] Lessee may permit an
Approved Sub-Lessee to lease, let on hire or charter or
otherwise part with possession of an Engine or Part pursuant
to pooling arrangements to which an Approved Sub-Lessee is a
party and which either:-
(a) are arrangements customary in the airline industry and
entered into by an Approved Sub-Lessee in the ordinary
course of its business with the manufacturers or
suppliers of the Engine or Part or any solvent and
reputable commercial air carriers operating A3[ ] or
any derivative thereof; or
(b) do not contemplate transfer of title to or any
proprietary interest in the pooled Engine or Part;
and either provide that the Security Agent shall be the
sole loss payee in respect of any loss or damage to the
Engine or Part or provide for the Lessor to acquire
title to a Suitable
Replacement Engine therefor satisfying the conditions
set out in Clause 11.3.2 and 11.6 if the Engine or Part
is destroyed.
11.4 Modifications
11.4.1 No modification, alteration, addition to, or removal
from, the Aircraft (a "Modification") expected to cost
over five million Dollars (US$5,000,000) in the case of
wide-bodied aircraft or three million Dollars
<PAGE>
(US$3,000,000) in the case of narrow-bodied aircraft or
deviation from the Aircraft's original type design or
configuration shall be made without the prior written
consent of Lessor, which consent will not be
unreasonably withheld. "Modifications" shall not
include airworthiness directives of the Aviation
Authority or F.A.A. or Manufacturer's recommended
service bulletins, for which the Lessor's consent is
not required.
All Modifications incorporated on the Aircraft will be
properly documented in the Technical Records and be
fully approved by the Aviation Authority.
11.4.2 Notwithstanding any other provision of this Agreement,
no Modification will be made which has the effect of
decreasing the utility or value of the Aircraft or
invalidating any warranty contained in the Purchase
Agreement unless such Modification is required by
Applicable Law or by the Aviation Authority.
11.4.3 No Modification will be made by the [
] Lessee if a Relevant Event shall have occurred and be
continuing unless such Modification is required by
Applicable Law or by the Aviation Authority.
11.4.4 Unless otherwise agreed by the Lessor in writing, all
permanent or structural Modifications will forthwith
become a part of the Aircraft and the [ ]
Lessee relinquishes to the Lessor all rights and title
thereto. However, all temporary and non-structural
Modifications will remain the property of the [
] Lessee and, at the Lessor's request, will be
removed from the Aircraft prior to return of the
Aircraft to the Lessor. Notwithstanding the foregoing,
no such removal will be permitted without the Lessor's
permission after the occurrence of a Relevant Event
hereunder and immediately upon the occurrence of a
Relevant Event, without the requirement of any further
acts or notice, all right, title and interest in such
Modifications will immediately vest in the Lessor.
11.4.5 The Lessor will bear no liability whatsoever for the
cost of Modifications of the Aircraft whether in the
event of grounding or suspensions of certification, or
for any other cause.
11.5 Notice of Location
Upon the request of the Lessor following the occurrence and
continuation of a Trigger Event (which request shall not be
made more frequently than semi-annually unless a Relevant
Event has occurred and is continuing) at a time when the
Aircraft is not the subject of an Approved Sub-Lease the [
] Lessee shall provide the Lessor with a
notice specifying in reasonable detail the precise location
of each Engine, including if appropriate the serial number
of the airframe to which such Engine is affixed, or the
actual physical location if not so affixed and the address
and contact details of the maintenance organisation
responsible for such Engine's safekeeping and/or
maintenance.
11.6 Transfer of Title
11.6.1 Notwithstanding the provisions of Clause 11.3.3, the
transfer of title to an Engine then removed from the
<PAGE>
Aircraft may take place if (i) the [ ] Lessee
so elects by giving notice to the Lessor and the
Security Agent and (ii) the engine, or as the case may
be, engines affixed to the Aircraft at the time of
transfer of title are in a condition at least
equivalent to that prescribed for a Suitable
Replacement Engine for the replaced Engine or Engines.
After giving such notice, the [ ] Lessee shall
transfer or procure the transfer of title to any such
engine or, as the case may be, engines then affixed to
the Aircraft to the Lessor (subject only to Permitted
Liens and Lessor's Liens), according to the Applicable
Law of the State of Registration and lex situs, and
such engine or, as the case may be, engines shall upon
such transfer become an Engine or, as the case may be,
Engines and be subject to this Agreement and be deemed
part of the Aircraft for all purposes hereof to the
same extent as if the engine or, as the case may be,
engines had been originally installed on or attached to
the Airframe. The [ ] Lessee shall at its
own expense take all such steps and execute, and
procure the execution, of all such instruments as the
Lessor or the Security Agent may require and which are
necessary to ensure that title so passes to the Lessor
according to the Applicable Law of the State of
Registration and lex situs and that such engine or, as
the case may be, engines shall be subject to the Liens
granted pursuant to the Aircraft Security Documents.
11.6.2
(a) Whenever title to any Engine or Part is being transferred
from the Lessor to the [ ] Lessee pursuant to
this Agreement, such Engine or Part will be transferred in
an "as is, where is" condition without the benefit of any
warranty from the Lessor, other than the warranty that the
Lessor had such title as was passed to it, free and clear of
all rights of the Lessor, the Security Agent, the Agent and
the Lenders and free and clear of any Lessor's Liens and the
replaced Engine, or as the case may be Part, shall no longer
be deemed an Engine or Part hereunder. At the time of such
transfer the Lessor shall, at the [ ] Lessee's
cost, assign to the [ ] Lessee all Warranties of the
Engine Manufacturer pursuant to the Engine Agreement in respect
of any such Engine then subsisting and all subsisting
warranties of any supplier or manufacturer in respect of any
Part.
(b) Whenever title to any engine is being transferred from the
[ ] Lessee or other person to the Lessor pursuant
to Clause 11.6.3 the provisions of Clause 15.2.1(c) relating
to the passing of title shall apply. At the time of such
transfer the [ ] Lessee shall, at its cost,
assign, or procure that such other person assigns, to the
Lessor all subsisting warranties of the engine manufacturer
in respect of any such engine.
11.6.3 Upon the transfer of title pursuant to this Clause
11.6, the [ ] Lessee shall promptly execute and
deliver tothe Lessor or procure the execution and delivery of,
such bills of sale outside the United Kingdom and other
documents, including without limitation and at the [
] Lessee's cost all releases of any security documents in
relation to such Engine or, as the case may be, Engines, and
other instruments as the Lessor shall reasonably request to
evidence (on the public record or otherwise) its interest in
such Engine or, as the case may be, Engines.
<PAGE>
11.7 Substitute Engines
The [ ] Lessee shall have the right at its
option at any time on at least fifteen (15) days prior
written notice to the Lessor, (or, if such prior notice is
impractical in any case, provided such notice is given
within thirty (30) days after such substitution) to
substitute or procure the substitution of an Engine with a
Suitable Replacement Engine provided that the [ ]
Lessee informs the Lessor in writing of all information
reasonably required or requested by the Lessor in respect of
such Suitable Replacement Engine. If a Total Loss shall
have occurred with respect to an Engine Clause 15.2 shall
apply. Immediately upon the effectiveness of any
substitution on the date set forth in such notice and
without further act:-
(a) title to and warranties in the Suitable Replacement
Engine shall thereupon vest in the Lessor (subject only
to Permitted Liens) and such Suitable Replacement
Engine shall be subject to the Liens granted pursuant
to the Security Documents; and
(b) title to the replaced Engine shall thereupon vest in
the
[ ] Lessee, pursuant to and in
accordance with the terms of Clause 11.6.
Upon such substitution the [ ] Lessee shall
promptly execute and deliver to the Lessor or procure the
execution and delivery of, such bills of sale outside the
United Kingdom or other documents, including, without
limitation but at the [ ]
Lessee's cost, all additional security documents in relation
to such Suitable Replacement Engine, and other instruments
as the Lessor shall reasonably request to evidence (on the
public record or otherwise) its interest in the Suitable
Replacement Engine. At the time of such transfer the Lessor
shall, at the [ ] Lessee's cost, assign to
the [ ] Lessee all warranties of the engine
manufacturer in respect of the Suitable Replacement Engine
then subsisting.
11.8 Performance of Work by Third Parties
Whenever maintenance and repair work on the Aircraft or
Engines will be regularly performed by a person other than
the [ ] Lessee, such person will be an
F.A.A., CAA, DGAC, LBA, JAA or Aviation Authority authorised
repair station.
11.9 Information Regarding Maintenance Programme
If requested by the Lessor, the [ ] Lessee
will provide the Lessor with a copy of or information
regarding the Maintenance Programme for the Aircraft.
12. INFORMATION AND INSPECTION
12.1 Authorisations
The [ ] Lessee shall obtain and maintain in
full force and effect all authorisations required from time
to time by the laws or regulations of the State of
Registration to enable the [ ] Lessee to perform its
obligations under the Operative Documents.
<PAGE>
12.2 Accounts
12.2.1 The [ ] Lessee shall:-
(a) as soon as the same become available, but in any event
within one hundred and eighty (180) days after the end
of each of its financial years, deliver to the Lessor
and to the Security Agent its audited financial
statements for such financial year in the same form as
provided to its shareholders in sufficient quantity
that each Lender receives one copy; and
(b) furnish to the Lessor and the Security Agent such
additional financial and other information as to the
affairs of the
[ ] Lessee as the Lessor may from time to time
reasonably request and as shall be in existence
provided that any such request shall not give rise to
any breach of any Applicable Law, stock exchange
requirement, duty arising as a matter of law or express
undertaking or confidentiality.
12.2.2 The [ ] Lessee shall ensure that each set
of financial statements delivered by it pursuant to
Clause 12.2.1 is prepared in accordance with generally
accepted accounting principles in [Bermuda] [Ireland]
[jurisdiction of incorporation of Alternative Lessee]
consistently applied, subject to normal year end
adjustments and give, in conjunction with the notes
thereto, a true and fair view of the state of affairs
of the [ ] Lessee as at the end of the
relevant financial year.
12.3 Notice of Litigation
The [ ] Lessee shall within 30 days notify
the Lessor if any litigation, arbitration or administrative
proceeding is [taking place] [commenced] or is pending, or
to the actual knowledge of its officers, threatened against
it or against any of its assets, which in any such case is
likely to have a material adverse effect on the business,
assets or financial condition of the [ ]
Lessee or its ability to perform its obligations hereunder
and is such as would, if the financial statements were
signed at such date, require disclosure in the financial
statements of the [ ] Lessee or in the notes
thereto.
12.4 Insignia
<PAGE>
12.4.1 The [ ] Lessee shall ensure that, on and as
from the Delivery Date, there is always affixed, and
not removed or in any way obscured, fireproof
identification plates containing the following legends
or any other legend requested by Lessor in writing:-
Airframe Identification Plates
Location: One to be affixed to the Aircraft structure above
the forward entry door adjacent to and not less
prominent than that of the Manufacturer's data
plate and another in a prominent place on the
flight deck.
Size: No smaller than 4" x 6"
Legend: "THIS AIRCRAFT IS OWNED BY ENCORE LEASING LIMITED
("OWNER") AND IS SUBJECT TO A LEASE AGREEMENT
BETWEEN, INTER ALIA, OWNER AND [ILFC (BERMUDA) 7,
LTD.] [ILFC IRELAND 2 LIMITED] [ALTERNATIVE
LESSEE] AND IS MORTGAGED TO NATIONAL WESTMINSTER
BANK PLC, LONDON, ENGLAND, AS SECURITY AGENT".
MANUFACTURER'S SERIAL NO: MANUFACTURER'S SERIAL
NUMBER OF AIRCRAFT
OWNER'S ADDRESS:
[P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
B.W.I.]
Telex: [(0293) 4498]
Fax: [0101 809 949 8340]
Engine Identification Plates
Location: The legend on the plate must be no less prominent
that the Engine data plate and must be visible
from the forward view.
Size: No smaller than 2" x 6"
Legend: "THIS ENGINE IS OWNED BY ENCORE LEASING LIMITED
("OWNER") AND IS SUBJECT TO A LEASE AGREEMENT
BETWEEN, INTER ALIA, OWNER AND [ILFC (BERMUDA) 7,
LTD.] [ILFC IRELAND 2 LIMITED] [ALTERNATIVE
LESSEE] AND IS MORTGAGED TO NATIONAL WESTMINSTER
BANK PLC, LONDON, ENGLAND, AS SECURITY AGENT".
12.4.2 Except for the inscription referred to in Clause
12.4.1, the [ ] Lessee will not and will cause
an Approved Sub-Lessee not to permit the name of any
person to be placed on the Airframe or on any Engine
(whether or not attached to the Airframe) as a
designation that may constitute or appear to suggest a
claim of ownership or claim of any Lien, PROVIDED THAT
nothing herein contained shall prohibit the [
] Lessee (or any person to which possession of the
Airframe is delivered or transferred in accordance with
Clause 13) from placing its customary colours and
insignia on such Airframe so long as such does not
block, hide or in any way obscure the inscription.
12.5 Information and Records
12.5.1 The [ ] Lessee shall promptly
furnish or cause to be furnished to the Lessor all such
information as the Lessor may from time to time
reasonably request (which requests may not be made more
frequently than semi-annually, unless a Relevant Event
has occurred and is continuing) regarding the Aircraft
and Technical Records (including but not limited to,
information as to the [ ] Lessee's
implementation of any service bulletins issued from
time to time by the Manufacturer) and in the case of
the Aircraft, its use, present and anticipated location
and area of operation.
<PAGE>
12.5.2 The [ ] Lessee shall keep or require any
Approved Sub-Lessee from time to time to keep accurate,
complete and current records in English (except at any
time whilst the Aircraft is registered or habitually
based in the People's Republic of China) of all flights
made up by the Aircraft, of all hours and cycles
utilised by each Engine, and of all maintenance and
repairs carried out to the Aircraft. Such records
shall:-
(a) be kept in such manner as the Aviation Authority may
from time to time require;
(b) be kept in the possession of the [ ]
Lessee or such Approved Sub-Lessee, as the case may be;
and
(c) be deemed part of the Technical Records and shall be
the property of the Lessor.
The [ ] Lessee shall permit, or require such
Approved Sub-Lessee as the case may be to permit, the Lessor
or any authorised representative of the Lessor or the
Manufacturer to examine such records upon giving reasonable
notice provided that such examination does not impede the
normal commercial operation of the Aircraft.
12.6 Notice of Partial Loss
The [ ] Lessee shall notify the Lessor as soon
as practicable after becoming aware thereof of any loss,
theft, damage or destruction to the Aircraft or any part
thereof if the potential cost thereof may exceed the Damage
Notification Threshold in respect of the Aircraft.
12.7 Inspection
12.7.1 Whether or not the Aircraft is on sub-lease to an
Approved Sub-Lessee the [ ] Lessee shall
ensure that it or its authorised agents or
representatives inspect the Aircraft, the Technical
Records, the Engines and any of the Parts not then
attached to the Airframe, at least once every two years
throughout the Lease Period. The [ ]
Lessee shall promptly (and in any case within thirty
(30) days) provide a copy of all the inspection reports
relating to the Aircraft, the Technical Records, the
Engines and any of the Parts not then attached to the
Airframe prepared by its authorised technical teams,
free of charge to the Lessor and the Security Agent.
If an inspection report is received by the Lessor or
the Security Agent which shows material defects or
deficiencies in the Aircraft, the [ ] Lessee
shall, as soon as the relevant repairs have been
carried out, promptly (and in any case within thirty
(30) days) provide a further inspection report to the
Lessor and the Security Agent, free of charge,
confirming that the defects or deficiencies have been
corrected. If the Lessor and the Security Agent do not
receive from the [ ] Lessee any of the
biennial inspection reports referred to above, any
reasonable costs incurred by the Lessor and the
Security Agent in undertaking an inspection and/or an
inspection report which should have been made by the [
] Lessee as required herein shall be borne
by the [ ] Lessee.
<PAGE>
12.7.2 [ ] Lessee shall give, and require
any Approved Sub-Lessee to give, permission for the
Lessor, the Security Agent and their nominees at all
reasonable times on reasonable notice to inspect the
Aircraft or any part thereof (which notice, save in the
case of the occurrence and continuation of any Relevant
Event may not be given more frequently than annually)
PROVIDED THAT so long as no Relevant Event has occurred
and is continuing such inspections will be co-ordinated
so as to cause the minimum practicable disturbance to
the operation of the Aircraft and/or the business of
the [ ] Lessee or any Approved Sub-Lessee and/or
their respective personnel. The [ ]
Lessee shall, or shall procure that any Approved Sub-
Lessee shall, as soon as is practicable consistent with
the requirements of the Maintenance Programme effect
such repairs to the Aircraft as shall be shown by the
inspection to be required in order for the terms of
this Agreement to be complied with. The
[ ] Lessee shall provide or procure the provision
of such evidence verifying such repair has been completed.
Neither the Lessor nor the Security Agent shall have any
duty to make any such inspection and shall not incur any
liability or obligation by reason of making or not making
any such inspection. Subject to the provisions of the last
sentence of Clause 12.7.1, the cost of any such inspection
shall be borne by the Lessor and/or the Security Agent
except that if as a result of such an inspection the Lessor
or the Security Agent becomes aware that a Termination Event
or Mandatory Prepayment Event has occurred or if the
inspection is made in the knowledge that a Termination Event
or Mandatory Prepayment Event has occurred and is continuing
then the [ ] Lessee shall reimburse the
Lessor or the Security Agent, as the case may be, for all
reasonable costs and expenses incurred by the Lessor or the
Security Agent or their nominees in conducting such
investigation including, without limitation, any reasonable
fees payable to technical experts and/or out of pocket
expenses.
12.8 Notice of Default
The [ ] Lessee shall forthwith notify the
Lessor if the [ ] Lessee becomes aware of the
occurrence of a Relevant Event or a Default (in respect of
an Approved Sub-Lease) and shall provide the Lessor with
full details of any steps which the [ ] Lessee is taking,
or proposes to take, in order to remedy or mitigate the effect of
such Relevant Event or other such event or default, as the case may be.
13. ACTS OR OMISSIONS OF THIRD PARTIES
13.1 All the obligations of the [ ] Lessee under
this Agreement, under each of the other Aircraft Operative
Documents and under each of the Facility Documents to which
it is a party shall continue in full force and effect
notwithstanding any parting with possession of the Aircraft
by the [ ] Lessee except to the Lessor, the
Security Agent or any agent of either of them.
If:-
(A) the [ ] Lessee parts or has parted
with possession of the Aircraft to an Approved Sub-
Lessee or to an Approved Maintenance Contractor
required or permitted by this Agreement and/or any
other of the Aircraft Operative Documents and/or any of
the Facility Documents; or
<PAGE>
(B) the Aircraft is requisitioned, seized or confiscated by
any person (provided the same does not arise from a
failure by the [ ] Lessee to comply
with the provisions of Clause 10),
the [ ] Lessee shall not, by virtue solely
of any act or omission of such Approved Sub-Lessee or such
Approved Maintenance Contractor or such requisition, seizure
or confiscation (a "Third Party Event") which constitutes a
breach by the Approved Sub-Lessee of its obligations under
the Approved Sub-Lease, be in breach of its obligations
under this Agreement and/or any other of the Aircraft
Operative Documents and/or any of the Facility Documents if
and for so long as each of the following conditions is
fulfilled:-
(a) the relevant Third Party Event does not result in a
breach of any of the [ ] Lessee's
payment obligations pursuant to this Agreement, any other
Aircraft Operative Documents or any of the Facility
Documents to which the [ ] Lessee is a party;
(b) the relevant Third Party Event does not result in a
breach of the [ ] Lessee's obligation to maintain
or procure the maintenance of the Insurances pursuant
to the provisions of Clause 14 and Schedule 9;
(c) the [ ] Lessee shall not have
consented to or acquiesced in or connived in the
occurrence or continuance of such Third Party Event;
(d) the [ ] Lessee promptly (upon
becoming aware of the relevant act or omission) and
diligently takes or procures to be taken steps which a
prudent aircraft lessor would take either:-
(i) if such Third Party Event is remediable, to compel
such other person to remedy the Third Party Event
and use all reasonable efforts to ensure that the
same is actually remedied within a period of
ninety (90) days of the occurrence of the Third
Party Event or (if at the end of such ninety (90)
day period such failure has not been so remedied
but the [ ] Lessee or, as the
case may be, the Guarantor has demonstrated to the
satisfaction of the Lessor and the Agent that
there is a reasonable prospect of remedying such
failure and the [ ] Lessee acting in good
faith is using all reasonable endeavours to remedy
such failure) within such other period as the
Lessor agrees; or
(ii) in default of remedy or if such Third Party Event
is not remediable within such period as
contemplated in sub-paragraph (i), or at all, then
immediately upon the [ ] Lessee receiving
further notice from the Lessor as to the absence
of any remedy (a "Termination Notice") to
repossess the Aircraft and remove the Aircraft
from the register of the then current Aviation
Authority and re-register the Aircraft with the
Aviation Authority selected by the [
] Lessee being either the Aviation Authority of
Bermuda, the Cayman Islands, Ireland, the United
Kingdom or the United States of America subject to
the provisions of Clause 9.2.3; and
<PAGE>
(e) the [ ] Lessee continues to comply
with all its obligations under this Agreement, the
other Aircraft Operative Documents and any of the
Facility Documents, other than obligations with which
it is unable to comply by virtue of such parting with
possession, requisition, seizure or confiscation and for
this purpose the [ ] Lessee shall be
deemed unable to comply with an obligation to procure that
an act is done or not done if the doing or ensuring the not
doing of that act would require possession or control of the
Aircraft.
13.2 If the [ ] Lessee fails (i) to recover
possession of the Aircraft within one hundred and eighty
(180) days of the giving of the Termination Notice, or (ii)
to remove the Aircraft from the register of the then current
Aviation Authority and re-register the Aircraft with the
Aviation Authority of Bermuda, the Cayman Islands, Ireland,
the United Kingdom or, subject to the provisions of Clause
9.2.3, the United States of America as soon as practicable
and in any event within thirty (30) days of the giving of
the Termination Notice, either of such failures shall
constitute a Termination Event.
13.3 The provisions of this Clause 13 shall not be construed in
any matter limiting, qualifying or derogating from the [
] Lessee's indemnity obligations under Clause
21 or elsewhere in this Agreement and/or the other Aircraft
Operative Documents and/or any of the Facility Documents.
14. INSURANCE
14.1 Obligation to Insure
The [ ] Lessee shall at its own expense
during the Lease Period through, if applicable, the
intermediary of such insurance broker of internationally
recognised standing, reputation and creditworthiness as may
be approved by the Lessor and the Security Agent (any such
broker being hereafter called the "Insurance Broker") cause
to be effected and maintained in full force and effect on
each part of the Aircraft the Insurances described in
Schedule 9, with such insurance underwriters and/or
insurance companies in the major international insurance
markets (collectively in this Clause 14 called the
"Insurers") as may be approved by the Lessor and the
Security Agent as their interests may respectively appear
against:-
(a) loss or damage to each part of the Aircraft; and
(b) any liability for injury, damage or claims caused by or
arising out of or in connection with the operation,
storage, maintenance or use of (in each case to the
extent available) each part of the Aircraft and of any
other part not belonging to the Lessor but from time to
time installed on the Airframe (including injury to or
death of passengers and damage to or destruction of
public or private property).
Each policy required to be taken out by this Clause 14.1 is
herein called a required policy.
<PAGE>
14.2 Types of Insurance
The [ ] Lessee shall at its expense and
throughout the Lease Period (without prejudice to the
generality of Clause 14.1) effect and maintain or cause to
be effected and maintained:-
(a) an All Risks Hull Insurance Policy on each part of the
Aircraft in an amount not less than its Required
Insured Value on an agreed value basis;
(b) Hull War Risk and allied perils insurance on the
Aircraft in an amount in Dollars which shall be an
amount not less than the Required Insured Value on an
agreed value basis and shall cover the perils of:-
(i) war, invasion, acts of foreign enemies,
hostilities (whether war be declared or not),
civil war, rebellion, revolution, insurrection,
martial law, military or usurped power or attempts
at usurpation of power;
(ii) strikes, riots, civil commotion or labour disturbances;
(iii) any act of one or more persons, whether or
not agents of a sovereign power, for
political or terrorist purposes and whether
the loss or damage resulting therefrom is
accidental or intentional;
(iv) any malicious acts or acts of sabotage;
(v) confiscation, nationalisation, seizure, restraint,
detention, appropriation, requisition for title or
use of the Aircraft or any part thereof by or
under the order of the State of Registration or
any government (whether civil, military or de
facto) and/or public or local authority;
(vi) hijacking or any unlawful seizure or wrongful
exercise of control of the Aircraft or crew in
flight (including any attempt at such seizure or
control) made by any person or persons on board,
the Aircraft acting without the consent of the [
] Lessee or an Approved Sub-Lessee;
(c) Insurance shall be provided for the Engines and the
Parts whilst not installed on the Airframe for their
replacement cost on an agreed value basis; and
(d) Liability Insurance, being Aircraft Third Party,
Passenger, Baggage, Cargo and Mail and "Airline"
General Third Party Legal Liability (including war and
allied perils under extended coverage endorsement as
per AVN 52) for a Combined Single Limit (bodily injury
property damage) of not less than [$600,000,000 for
narrow-bodied aircraft] [$750,000,000 for wide-bodied
aircraft].
14.3 Terms of Hull Insurance
The [ ] Lessee shall procure that each
insurance policy specified in Clause 14.2(a), (b) and (other
than with respect to the Required Insured Value referred to
in sub-paragraph (a))(c):-
(a) covers at least such risks as are customarily insured
against in respect of international aircraft operations
for an amount not less than the Required Insured Value;
<PAGE>
(b) is in accordance with sound international airline
practice (having regard to the aircraft or engines
involved);
(c) notes the interest of and names as additional insured -
warranted no operational interest - each of the
Indemnitees (but excluding therefrom shareholders,
directors, officers, servants, agents and employees of
any thereof), without liability to pay, but with the
right to pay, premiums and premium instalments;
(d) waives any rights the Insurers may have to set-off or
counterclaim against each of the Indemnitees other than
unpaid premiums in respect of the Aircraft;
(e) contains a provision waiving any and all rights of
subrogation the Insurers have or may acquire against
each of the Indemnitees;
(f) contains a provision that the Insurances shall not be
invalidated with respect to any Indemnitee by any act
or omission (including misrepresentation or non-
disclosure) of any other person or party which results
in the breach of any term, condition or warranty of the
policy PROVIDED THAT the Indemnitee so protected has
not caused, contributed to or knowingly condoned the
said act or omission;
(g) contains a provision requiring the Insurers to provide
the Lessor and the Security Agent with a written notice
of any cancellation of such insurance or any material
modification of such insurance and that such
cancellation or modification shall not be effective as
to the interests and/or benefits of the Indemnitees for
at least thirty (30) days (but seven (7) days or such
other period as is customarily available in respect of
war risks insurance) after the written notice of such
cancellation or modification is received by the Lessor
and the Security Agent;
(h) is primary without right of contribution from any other
insurance maintained by any of the Indemnitees;
(i) provides:-
(i) for all Total Loss Proceeds and for all insurance
proceeds following the occurrence of a Termination
Event or Mandatory Prepayment Event to be paid to
the Security Agent;
(ii) for all insurance proceeds in respect of a partial
loss in respect of repairable damage not exceeding
the Damage Notification Threshold (after
application of deductibles) in any one case to be
paid to the party nominated by the relevant
Approved Sub-Lessee to repair the damage or with
the consent of the Indemnitees to the Approved
Sub-Lessee, or, following the occurrence of an
event of default (howsoever described) under the
relevant Approved Sub-Lease, to the party
nominated by the [ ] Lessee to
repair the damage or with the consent of the
Indemnitees to the [ ] Lessee in
each case to be applied to the cost of
restoration, repair or replacement of the Aircraft
or any part thereof or, following the occurrence
of a Termination Event or Mandatory Prepayment
Event to the Security Agent; and
<PAGE>
(iii) for all insurance proceeds in respect of a
partial loss exceeding the Damage
Notification Threshold to be paid to the
Security Agent;
(j) provides, in the form of AVS 103, in the event of
separate insurances being arranged to cover the "All
Risk" hull insurance and the "War Risk" and related
insurance, that the underwriters subscribing to such
insurances agree to a 50/50 claims funding arrangement
in the event of any dispute as to which insurance is
applicable; and
(k) has a level of deductible in respect of any one claim
of one million Dollars or such other higher amount as
may be agreed from time to time between the [
] Lessee, the Lessor and the Security Agent.
14.4 Terms of Liability Insurance
14.4.1 The [ ] Lessee shall procure that each
insurance policy specified in Clause 14.2(d):-
(a) covers at least such risks as are customarily insured
against in respect of international aircraft operations
and names each of the Indemnitees (and their respective
assigns, directors, officers and employees) as
additional named insured - warranted no operational
interest - for their respective rights and interests
(without liability to pay, but with the right to pay,
premiums and premium instalments) thereunder;
(b) is in accordance with sound international airline
practice (having regard to the type of aircraft and
engines involved);
(c) notes the interest of and names as additional insured -
warranted no operational interest - each of the
Indemnitees
(d) contains a provision waiving any and all rights of
subrogation the Insurers may have or may acquire
against each of the Indemnitees and their respective
assigns, directors, officers and employees;
(e) contains a provision requiring the Insurers to provide
the Lessor and the Security Agent with a written notice
of any cancellation of or any material modification in
such insurance and that such cancellation or
modification shall not be effective as to the interests
and/or benefits of the Indemnitees for at least thirty
(30) days (but seven (7) days or such other period as
may be customarily available as respects war risks
insurance) after the written notice of such
cancellation or material modification is received by
the Lessor and the Security Agent;
(f) is primary without right of contribution from any other
insurance;
(g) contains a severability of interest clause which
provides that the policy or policies shall operate in
all respects (save only for the limit of liability) as
if a separate policy had been issued to each insured
thereunder;
<PAGE>
(h) contains a provision that the Insurances shall not be
invalidated with respect to any insured party and no
claim of any insured party (or of its assigns,
directors, officers or employees) shall be defeated,
prejudiced or otherwise
affected by any act or omission (including
misrepresentation or non-disclosure) of any other
person or party which results in the breach of any
term, condition or warranty of the policy PROVIDED THAT
none of the Indemnitees has caused, contributed to or
knowingly condoned the said act or omission; and
(i) other than in respect of passengers' baggage and in
respect of cargo shall carry no deductibles.
14.4.2 The [ ] Lessee shall procure that the
Indemnitees and their respective assigns, directors,
officers and employees shall continue to be named on
the liability insurance policy relating to the Aircraft
for at least two (2) years after the expiry of the
Lease Period.
14.5 Renewal
Not less than five (5) Business Days before the expiration
or termination date of any insurance required hereunder, the
[ ] Lessee will provide the Lessor and the
Security Agent with telex or fax confirmation from the
Insurance Brokers or, if the Insurances are not placed
through an insurance broker, the Insurers that renewal
certificates of insurance evidencing the renewal or
replacement of such insurance will be issued on the
termination date of the prior certificate. Within seven (7)
days after such renewal, the [ ] Lessee will
furnish its renewed certificates of insurance to the Lessor
and the Security Agent.
14.6 Information
(a) The [ ] Lessee shall provide the
Lessor or shall ensure that the Lessor is provided with
any information reasonably requested by the Lessor from
time to time concerning the Insurances maintained with
respect to the Aircraft. The [ ]
Lessee shall pay or cause to be paid all additional
premiums or surcharges necessary in order to maintain
in full force and effect the Insurances required to be
effected pursuant to this Clause 14 and upon request
shall provide evidence of the payment of such premiums.
(b) The [ ] Lessee will cause its
Insurance Brokers to give a letter of undertaking to
the Lessor and the Security Agent in the form set out
in Part II of Schedule 9 (the "Brokers Letter of
Undertaking") PROVIDED THAT if the
[ ] Lessee has not caused the Insurances
to be effected through the intermediary of Insurance
Brokers each insurance policy shall include provisions
having the same substantive effect as the provisions in
the Brokers Letter of Undertaking.
(c) The [ ] Lessee should forthwith notify
the Lessor and the Security Agent of any event
(including but not limited to a Total Loss) which will
or may give rise to a claim under any required policy
in excess of the Damage Notification Threshold.
<PAGE>
14.7 Negative Undertakings
The [ ] Lessee shall not:-
(a) do or omit to do or permit to be done or left undone
anything whereby any required policy would or might
reasonably be expected to be rendered in whole or in
part invalid or unenforceable and, without prejudice to
the foregoing, not use or keep or knowingly permit the
Aircraft or any part thereof to be used or kept for any
purpose, in any manner or in any place not covered by
the required policies; or
(b) cause or permit the Aircraft or any part thereof to be
employed in any place or in any manner or for any
purpose inconsistent with the terms of or outside the
cover provided by any required policy.
14.8 Failure to Insure
If the [ ] Lessee shall fail to maintain or
procure the maintenance of, insurance as herein provided the
Lessor and/or the Security Agent may, at its option, provide
such insurance without prejudice to any other rights that it
may have hereunder as a consequence of such failure and in
such event the [ ] Lessee shall promptly reimburse
the Lessor and/or the Security Agent (as the case may be)
for the cost thereof.
14.9 Application of Insurance Proceeds
As between (1) the Lessor and (2) [ ]
Lessee, the insurance payments for any property damage or
loss in excess of the Damage Notification Threshold with
respect to the Airframe or any Engine shall be paid and
applied in accordance with the provisions of the Priorities
and Indemnities Agreement.
14.10 Amendments to Insurances
Without prejudice to the foregoing provisions of this Clause
14, if due to changes in aviation insurance market practice
and custom (a) the [ ] Lessee is unable at
any time reasonably to comply with its obligations under
this Clause 14, or (b) the Lessor or the Security Agent is
reasonably of the view that the Insurances afford less
protection to any of the Indemnitees, as the case may be,
than would reasonably be required, then the [
] Lessee shall forthwith notify the Lessor and the Security
Agent (or the Lessor shall forthwith notify the [
] Lessee (or any
Approved Sub-Lessee)) and as soon as practicable thereafter
the insurance broker for the [ ] Lessee (or
any Approved Sub-Lessee) and the insurance broker(s) for the
Lessor and the Security Agent shall meet in good faith to
consider what (if any) changes might be made to the terms
and conditions of the insurances required hereunder in order
to take account of the changes in aviation insurance market
practice and custom. On the basis of the recommendations of
such insurance brokers the Lessor, the Security Agent and
[ ] Lessee (and any Approved Sub-Lessee) will meet as
soon as practicable in order to negotiate in good faith with
a view to reaching agreement on what (if any) amendments
should be made to such provisions and upon such agreement
being reached, the parties will take appropriate steps to
amend the Insurances accordingly.
<PAGE>
14.11 Additional Insurance - Limit on Hull in favour of the [
] Lessee
14.11.1 Nothing herein shall prohibit the [ ]
Lessee from effecting or permitting any Approved Sub-
Lessee to effect additional insurance cover in excess
of that required hereunder provided that such
additional insurance shall not render any required
policy invalid, unenforceable or subject to average or
prejudice the Insurances, recovery thereunder or any
other rights of the Lessor or the Lenders.
14.11.2 Subject to the provisions of Clause 14.1 the [
] Lessee or an Approved Sub-Lessee may carry
hull all risks or hull war and allied perils on the
Aircraft in excess of the Required Insured Value (which
is payable to the Security Agent) only to the extent
such excess insurance which would be payable to the [
] Lessee in the event of a Total Loss does not exceed
[5% on wide-bodied aircraft] [10% on narrow-bodied
aircraft] of the Required Insured Value and only to the
extent that such additional insurance will not
prejudice the insurances required herein or the
recovery by the Lessor thereunder. The [
] Lessee agrees that it, and will procure that any
Approved Sub-Lessee, will not create or permit to exist
any liens or encumbrances over the insurances, or its
interest therein, except as constituted by this
Agreement.
14.12 Self Insurance
Notwithstanding the requirements of this Clause 14 as to the
placement of insurance in the major international insurance
markets through brokers of internationally recognised
standing, reputation and creditworthiness, if so requested
by the [ ] Lessee, the Lessor and the Security
Agent will consider in good faith a proposal that an
Approved Sub-Lessee may provide self insurance (whether
through a captive insurance company or otherwise) in
relation to the hull all risk and/or hull war risks
insurance in relation to the Aircraft.
14.13 Reinsurance
If the Aircraft is registered at any time and from time to
time in a jurisdiction where Insurances in respect of the
Aircraft are required by the Applicable Law, wholly or
substantially, to be placed locally in that jurisdiction,
then unless the Insurers and Insurances are acceptable to
the Lessor and the Security Agent in their absolute
discretion, there shall be reinsurance which shall contain
each of the following terms and will in all other respects
(including amount) be satisfactory to the Lessor:-
(a) the same terms as the original insurance;
(b) provide in the case of any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or
affecting the original insurer that the reinsurer's
liability will be to make such payments as would have
fallen due under the relevant policy of reinsurance if
the original insurer had (immediately before such
bankruptcy, insolvency, liquidation, dissolution or
similar proceedings) discharged its obligations in full
under the original insurance policies in respect of
which the then relevant policy of reinsurance has been
effected; and
<PAGE>
(c) contain a "cut-through" clause in the following form
(or otherwise, satisfactory to the Lessor);
"The Reinsurers and the Reinsured hereby mutually agree
that in the event of any claim arising under the
reinsurances in respect of a total loss or other claim
where, as provided by the Lease Agreement dated [
] and made between [the [ ]
Lessee] and [the Approved Sub-Lessee] such claim is to
be paid to the person named as loss payee of the Total
Loss Proceeds under the primary insurances, the
Reinsurers will in lieu of payment to the original
insurer, its successors in interest and assigns pay to
the person named as loss payee of the Total Loss
Proceeds under the primary insurances effected by the
original insured that portion of any loss due for which
the Reinsurers would otherwise be liable to pay the
original insurer (subject to proof of loss), it being
understood and agreed that any such payment by the
Reinsurers (to the extent of such payment) fully
discharge and release the Reinsurers from any and all
further liability in connection therewith".
Any such reinsurance will be effected and maintained by the
Insurers and the Insurance Broker and in such markets as may
be approved by the Lessor and the Security Agent.
14.14 Currency
All insurance and reinsurances effected pursuant to this
Clause 14 shall be payable in Dollars, save that in the case
of the insurances referred to in Clause 14.2(d) such
insurances may be denominated in another currency (being the
Dollar equivalent at all times of the amounts referred to in
Clause 14.2(d)) if such denomination is (a) required by the
law of the State of Registration; or (b) the normal practice
of airlines in the relevant country; or (c) otherwise agreed
by the Lessor and the Security Agent.
15. LOSS, DAMAGE AND REQUISITION
15.1 Total Loss of Aircraft or Airframe
15.1.1 If a Total Loss of the Airframe, with or without
Engines, (and for the purposes of Clauses 15.1 and 15.3
the Airframe shall not include Parts not a part of the
Airframe) shall occur:-
(a) the leasing of the Aircraft shall cease on the Total
Loss Payment Date; and
(b) without prejudice to the obligations of the [
] Lessee to pay to the Lessor all monies then due or
thereafter to become due under any of the Operative
Documents, the
[ ] Lessee shall, on the Total Loss Payment
Date, pay to the Lessor:-
(i) an amount in Dollars as shall be the aggregate
of:-
(y) all arrears of Rent which remain outstanding
under this Agreement at the Total Loss
Payment Date; and
<PAGE>
(z) the Termination Sum as at the Total Loss
Payment Date; together with
(ii) the Aircraft Secured Obligations less the amount
referred to in Clause 15.1.1(b)(i);
(c) the Total Loss Proceeds received by the Security Agent
shall be distributed in accordance with the provisions
of the Priorities and Indemnities Agreement;
(d) the obligation of the [ ] Lessee to
make payment to the Lessor under this Clause 15.1 shall
apply regardless of whether or not any monies are payable
under the insurances effected by the [ ]
Lessee pursuant to Clause 14 and Schedule 9, regardless
of the amount payable thereunder and regardless of
whether or not the Aircraft was insured provided that
the Lessor will repay to the
[ ] Lessee in accordance with the
Priorities and Indemnities Agreement an amount equal to
the excess received by the Lessor following payment in
respect of the Insurances after receipt by the Lessor
of payment from the [ ] Lessee of the sum
set out in sub-paragraph (b) above;
(e) if a Total Loss shall occur in respect of the Airframe
in circumstances where there is a Surviving Engine or
Surviving Engines subject to irrevocable payment of the
sum set out in sub-paragraph (b) above the Lessor
shall, PROVIDED THAT no Relevant Event has occurred and
is continuing, if required by the [ ]
Lessee, transfer title to each Surviving Engine to the
extent the Lessor has any right, title or interest
therein to the [ ] Lessee subject
always to the rights of the insurers.
15.1.2 If, at any time prior to the Total Loss Payment Date,
the [ ] Lessee unconditionally
regains possession, use, control and operation of the
Airframe after any event within the definition of Total
Loss, and provided that the Aircraft is repaired as
soon as practicable thereafter, the [
] Lessee shall have the right on so unconditionally
regaining possession and on so notifying the Lessor and
the Security Agent, to treat the Airframe as subject to
this Agreement as if the event giving rise to the Total
Loss had never occurred.
15.1.3 If there is a Total Loss of the Aircraft or the
Airframe the terms and conditions of this Agreement
shall remain in full force and effect until the Expiry
Date and the [ ] Lessee shall remain fully
responsible for the due compliance with all its
obligations under this Agreement including without
limitation the insurance obligations set out in Clause
14 and Schedule 9, other than obligations with which
the [ ] Lessee is unable to comply as
a result of the Total Loss.
15.2 Total Loss of an Engine
In the event of a Total Loss of an Engine (which for the
purposes of this Clause 15.2 shall not include Parts not a
part of such Engine) in any case which is not also a Total
Loss of the Airframe:-
<PAGE>
(a) the [ ] Lessee shall as soon as it
has notice thereof notify the Lessor and supply to the
Lessor full details of the Engine and the circumstances
giving rise to such Total Loss;
(b) the [ ] Lessee at its own expense
shall as soon as reasonably practicable provide the
Lessor, or procure that the Lessor shall be provided,
with a Suitable Replacement Engine as replacement for
the Engine which has suffered the Total Loss as soon as
such an engine is reasonably available;
(c) a "Suitable Replacement Engine" shall mean another
engine:-
(i) of the same make and model or an engine of the
same or another manufacturer of equivalent or
improved utility, suitable and approved (by the
Aviation Authority ) for installation and
operational use on the Airframe together with all
parts thereof;
(ii) whilst the Aircraft is the subject of an Approved
Sub-Lease, in a condition and state of maintenance
and with remaining life not less than that
prescribed for an installed Engine on the return
of the Aircraft to the [ ]
Lessee under the relevant Approved Sub-Lease or,
if the Aircraft is not the subject of an Approved
Sub-Lease, in a condition and state of maintenance
and with remaining life not less than that in
which the Engine which has either suffered a Total
Loss or, as the case may be, has been replaced
ought to have been pursuant to this Agreement
(save for defects causing the Total Loss)
immediately prior to such Total Loss or
replacement; and
(iii) which is suitable for installation and use on
the Airframe in conjunction with the other
Engines.
A Suitable Replacement Engine shall be free and clear
of all Liens other than Permitted Liens and the [
] Lessee shall promptly (w) if required by
the Lessor, furnish the Lessor with such evidence as
the Lessor may reasonably require that title to the
Suitable Replacement Engine has been vested in the
Lessor free and clear of all Liens other than Permitted
Liens, (x) cause a supplement hereto, in scope and
substance satisfactory to the Lessor, subjecting such
Suitable Replacement Engine to this Agreement, to be
duly executed by the [ ] Lessee and the [
] Option Holder, (y) furnish the Lessor with
such evidence of the [ ] Lessee's, or
other vendor's title to such Suitable Replacement
Engine and of compliance with the insurance provisions
of Clause 14 and Schedule 9 with respect to such
Suitable Replacement Engine as the Lessor may
reasonably request, and (z) take such other action as
the Lessor may reasonably request in order that title
to such Suitable Replacement Engine be duly and
properly vested in the Lessor and leased hereunder to
the same extent as the Engine replaced thereby. For
all purposes
hereof, each such Suitable Replacement Engine shall be
deemed part of the property leased hereunder, shall be
deemed an "Engine" as defined herein and shall be
deemed part of the Aircraft;
<PAGE>
(d) a Total Loss of an Engine shall not result in any
reduction in the Rent or other sums payable under this
Agreement;
(e) upon compliance by the [ ] Lessee with
the terms of this Clause 15.2, the Lessor shall if
required by the [ ] Lessee transfer
title to each such Engine suffering a Total Loss, to
the extent the Lessor has any right, title or interest
therein.
Upon compliance with the terms of this Clause 15.2, any
insurance proceeds or requisition compensation received by
the Lessor and/or the Security Agent in respect of such
Engine suffering a Total Loss shall be paid forthwith to the
[ ] Lessee.
15.3 Other Loss or Damage
15.3.1 If the Aircraft or any part thereof suffers loss or
damage not constituting a Total Loss of the Airframe
and/or an Engine all the obligations of the [
] Lessee under this Agreement shall continue in full
force and the [ ] Lessee shall at no
expense to the Lessor as soon as practicable and if
applicable consistent with the Maintenance Programme
procure the repair or replacement of all damaged or
lost Parts in accordance with this Agreement.
15.3.2 Subject to no Termination Event or Mandatory Prepayment
Event having occurred and continuing any insurance
proceeds in respect of a partial loss shall be applied
in accordance with the provisions of Clause
14.3(i)(ii). If a Termination Event or a Mandatory
Prepayment Event has occurred and is continuing, any
sum received from the Insurers shall be retained by the
Security Agent and shall be applied in accordance with
the provisions of Clause 17.4 of the Priorities and
Indemnities Agreement to reduce any sums owed by the [
] Lessee to the Lessor in respect of this
Agreement and/or any of the other Aircraft Operative
Documents and/or any of the Facility Documents.
15.4 Requisition for Hire
15.4.1 If the Aircraft is requisitioned for hire by any
Government Entity or other competent authority during
the Lease Period then, unless and until the Airframe
becomes a Total Loss whilst such requisition is
continuing or as a result of such requisition the
leasing of the Aircraft to the [ ] Lessee
under this Agreement shall continue in full force and
effect for the remainder of the Lease Period and the [
] Lessee shall remain fully responsible for
the due compliance with all its obligations under this
Agreement including without limitation the insurance
obligations set out in Clause 14 and Schedule 9, other
than obligations with which the [ ] Lessee
is unable to comply by virtue of such requisition.
15.4.2 The [ ] Lessee shall as soon as
practicable after the end of any requisition for hire,
and whether that requisition shall end during or after
the expiry or termination of the Lease Period, cause
the Aircraft to be put into the condition required by
<PAGE>
this Agreement provided that if prior to or upon the
termination of such requisition for hire the [
] Lessee has served a Notice of Purchase on the
Lessor and paid the sums set out in Clause 19.1 then
this Clause 15.4.2 shall not apply.
15.4.3 The Lessor shall apply any requisition hire or other
compensation received by it as a result of the
requisition for hire of the Aircraft or part thereof in
or towards discharge of the obligations of the [
] Lessee to pay Rent or any other amount then due
to the Lessor pursuant to Clause 7 or any provision of
this Agreement but this provision shall in no way
reduce or prejudice the obligations of the [
] Lessee to pay monies to the Lessor when due under
this Agreement to the extent not satisfied by such
requisition hire or other compensation. The Lessor
shall (provided no Termination Event or Mandatory
Prepayment Event has occurred and is continuing)
promptly release any surplus remaining after such
application, together with such amount of interest as
may have accrued thereon whilst held in the Lessor's
bank account, to the [ ] Lessee.
15.4.4 If any requisition proceeds or other compensation
relating to any requisition for hire of the Aircraft or
part thereof are paid directly to the [ ]
Lessee then such requisition proceeds or other
compensation shall be the property of the [ ]
Lessee.
16. TERMINATION PROVISIONS
16.1 Termination Events
The Lessor and the [ ] Lessee agree that it is
a fundamental term and condition of this Agreement that none
of the following events (each a "Termination Event") shall
occur during the Lease Period and the occurrence of any of
the following events shall constitute (and may be treated by
the Lessor as) a repudiatory breach of this Agreement by the
[ ] Lessee:-
(a) Non-payment: any amount due from the [ ]
Lessee and/or the Guarantor under this Agreement and/or
any of the other Aircraft Operative Documents and/or
any of the Facility Documents to which the [
] Lessee and/or, as the case may be, the Guarantor
is a party, whether of Rent or otherwise is not paid on
the due date therefor and such failure continues for
three (3) Business Days after notice of such failure
has been given by the Lessor and/or the Agent to the [
] Lessee and/or the Guarantor, or in respect of any
sum payable on demand, such failure continues for three
(3) Business Days after notice of such failure has been
given by the Lessor and/or the Agent to the [ ] Lessee
and/or the Guarantor, except where any such failure as
aforesaid arises as a result of the making of such
payment becoming unlawful or illegal by reason of any
Change in Law, in which event Clause 7 of the
Priorities and Indemnities Agreement shall apply; or
(b) Breach of Insurance Obligations: (i) the [
] Lessee fails at any time to procure, renew or
maintain the Insurances in accordance with the
requirements of this Agreement or fails to renew or
<PAGE>
maintain any indemnity provided by a third party
pursuant to the provisions of Clause 10.1(b) or any
Insurer issues any notice of avoidance or cancellation
of any such Insurances or the [ ] Lessee or an
Approved Sub-Lessee commits any breach of or makes any
misrepresentation in respect of any such Insurances,
the result of which is to entitle the relevant Insurer
to avoid the policy or otherwise to be excused or
released from all or any of its indemnity liability
thereunder to any of the insureds described in the
Insurances or (ii) any of the Insurances ceases for any
reason whatsoever to be in full force and effect; or
(c) Uninsured Operation: the [ ] Lessee
uses or operates or knowingly permits or causes to be
used or operated the Aircraft for any purpose in any
place or in any manner outside the cover provided by
any of the Insurances or any indemnity provided by a
third party pursuant to Clause 10.1(b); or
(d) Breach of Other Obligations: if the [ ]
Lessee, the Guarantor (other than in respect of the
Guarantor's covenants under Clause 7.4 of and Schedule
5 to the Facility Agreement) the [ ]
Option Holder or, as the case may be, the [
] Parent fails to observe or perform any of its
respective obligations (other than the obligations
mentioned in Clauses 16.1 (a), (b), (c) and (e)) under
this Agreement and/or any of the other Aircraft
Operative Documents and/or any of the Facility
Documents to which the [ ] Lessee and/or
the Guarantor and/or the [ ] Option
Holder and/or the [ ] Parent, as the case
may be, is a party and in respect of any such failure
which is capable of being remedied, it shall not have
been remedied within thirty (30) days or (if at
the end of such thirty (30) day period such failure
has not been so remedied but the [ ]
Lessee and/or the Guarantor and/or the [
] Option Holder and/or the [ ] Parent
as the case may be, has demonstrated to the
satisfaction of the Lessor and the Security Agent that
there is a reasonable prospect of remedying such
failure and the [ ] Lessee acting in good
faith is using all reasonable endeavours to remedy such
failure) within such other period as the Lessor and the
Security Agent in their opinion agree, after receipt by
the [ ] Lessee, the Guarantor, the [
] Option Holder or the [ ]
Parent, as the case may be, of notice from the
Lessor requiring such remedy, and in respect
of any such failure which is not capable of remedy it
shall, in the opinion of the Lessor and the Security
Agent materially adversely affect the rights of the
Lessor or any of the Lenders under this Agreement or
any other Aircraft Operative Documents or any of the
Facility Documents, except where any such failure
arises as a result of (i) the performance or observance
of any such obligations or undertakings becoming
unlawful or illegal by reason of any Change in Law
(provided that such failure is not a failure to observe
or perform any obligations of Clause 7 of the
Priorities and Indemnities Agreement); or (ii) a breach
by an Approved Sub-Lessee of its obligations under an
Approved Sub-Lease in circumstances where the [
] Lessee is complying in full with the
provisions of Clause 13 PROVIDED ALWAYS THAT the grace
<PAGE>
period referred to in this paragraph (d) shall not
entitle the [ ] Lessee to operate the
Aircraft, or knowingly allow the Aircraft to be
operated, otherwise than in accordance with all
Applicable Laws; or
(e) Breach of the Guarantor's Covenants: the Guarantor
fails to observe or perform any of its covenants under
Clause 7.4 of and Schedule 5 to the Facility Agreement
and in respect of any such failure which is capable of
being remedied, such failure shall not have been
remedied within thirty (30) days or (if at the end of
such thirty (30) day period such failure has not been
so remedied but the Guarantor has demonstrated to the
satisfaction of the Lessor and the Agent that there is
a reasonable prospect of remedying such failure and the
Guarantor acting in good faith is using all reasonable
endeavours to remedy such failure) within such other
period as the Lessor and the Agent in their opinion
agree, after receipt by the Guarantor of notice from
the Lessor requiring such remedy; or
(f) Change of Ownership: AIG ceases to own beneficially,
whether directly or indirectly, at least fifty one
percent (51%) of the issued common stock of the
Guarantor; or
(g) Cross-Default: any Indebtedness (which word shall, for
the purposes of this Clause 16.1(g), have the meaning
set out in Schedule 5 to the Facility Agreement) of the
[ ] Lessee or the Guarantor or the
[ ] Option Holder or the
[ ] Parent (other than Indebtedness to
a Subsidiary of the Guarantor or Indebtedness of the
[ ] Lessee, the
[ ] Option Holder or, as the case
may be, the [ ] Parent to the Guarantor)
exceeding thirty-five million Dollars (US$35,000,000)
in aggregate (or the equivalent thereof, as determined
by the Agent and the Lessor by reference to prevailing
market exchange rates from time to time, in any other
currency):-
(i) is not paid when due (or within any applicable
grace period relating thereto); or
(ii) is declared to be due or otherwise becomes due or
otherwise becomes capable of being declared due
and payable before its stated maturity by reason
of a default or an event of default (howsoever
described) by the [ ] Lessee
and/or the Guarantor and/or the
[ ] Option Holder and/or the
[ ] Parent under the document
relating to that Indebtedness; or
(h) Breach of Collateral Security: the [ ]
Lessee fails upon the occurrence of a Trigger Event to
perform in all material respects its obligations under
the [ ] Lessee Sub-Lease Collateral Charge pursuant
to Clause 7; or
(i) Breach of Representation or Warranty: any
representation, warranty or statement made or deemed to
be made by or on behalf of the [ ]
<PAGE>
Lessee, the Guarantor, the [ ]
Option Holder or the [ ] Parent
in this Agreement and/or any other Operative Document
and/or any of the Facility Documents or which is
contained in any certificate, statement, notice,
opinion or any other document provided by or on behalf
of the [ ] Lessee, the Guarantor,
the [ ] Option Holder or the
[ ] Parent under or in connection
with this Agreement and/or any other Operative
Documents and/or any of the Facility Documents proves
to be incorrect or misleading in any material respect
(as at the date when made, or when deemed to have been
repeated) with reference to the facts and circumstances
subsisting at such date and in the opinion of the
Lessor and the Agent such incorrectness materially
adversely affects the rights under this Agreement
and/or any other Operative Documents and/or any of the
Facility Documents of the Lessor, the Security Agent,
the Agent and/or any of the Lenders; or
(j) Cessation of Business: if the [ ]
Lessee and/or the Guarantor:-
(i) materially changes or threatens to change
materially the nature or scope of its aircraft
operating leasing and aircraft trading business or
aircraft operating leasing ceases to be a core
activity of its business; or
(ii) suspends or threatens to suspend all or a
substantial part of its aircraft operating leasing
and aircraft trading business operations (other
than suspensions of a temporary nature resulting
from (i) a strike or (ii) a similar event not
within the control of the [ ]
Lessee or the Guarantor, as the case may be) which
it now conducts directly or indirectly, or any
Government Entity expropriates all or any
substantial part of its assets; or
(iii) ceases, or threatens to cease, to carry on
all or a substantial part of its aircraft
operating leasing and aircraft trading
business or operations as presently
undertaken at the date of this Agreement,
and as a result of any of the foregoing is or is
likely, in the reasonable opinion of the Lessor or the
Agent, materially and adversely to affect the ability
of the [ ] Lessee or the Guarantor
or the [ ] Option Holder or the
[ ] Parent to perform its
obligations under any of the Facility Documents and/or
any of the Operative Documents; or
(k) Aircraft Ownership: if, during the Lease Period other
than as provided for hereunder the
[ ] Lessee or the [ ]
Option Holder sells or executes any bill of sale in
relation to the Aircraft or any proprietary interest
therein or agrees or purports to do any of the same, or
contests in any legal proceedings the Lessor's
ownership of the Aircraft; or
(l) Adverse Change: any event or series of events occurs
which in the reasonable opinion of the Lessor is likely
to have a material adverse effect on the
<PAGE>
creditworthiness or financial condition of the
Guarantor's Group or the ability of the
[ ] Lessee and the Guarantor
and the [ ] Option Holder and the
[ ] Parent to comply with their
obligations under any of the Facility Documents and/or
any of the Operative Documents to which they are
respectively a party; or
(m) Appointment of Trustee, legal process: an encumbrancer
takes possession of, or a trustee in bankruptcy,
administrator, administrative receiver, examiner,
receiver or similar officer is appointed in respect of
all or a substantial part of the business or assets of
the [ ] Lessee or the Guarantor or
the [ ] Option Holder or the
[ ] Parent or any such substantial
part of the business or assets is placed in judicial
management or distress or any form of execution is
levied or enforced upon or sued out against any such
part of the business or assets and is not discharged
within fourteen (14) days of being levied, enforced or
sued out; or
(n) Insolvency: if the [ ] Lessee
and/or the Guarantor and/or the [
] Option Holder and/or the
[ ] Parent (i) admits in writing its
inability to pay generally its debts as they become
due, (ii) suspends payment of its debts or becomes
unable to pay its debts generally as they fall due,
(iii) suspends or threatens in writing to suspend
making payments or declares a moratorium or seeks a
rescheduling (whether of principal or interest) with
respect to all or any class of its debts (other than
for the purposes of a reconstruction, merger or
amalgamation neither involving nor arising out of the
insolvency of the [ ] Lessee and/or the
Guarantor and/or the [ ] Option
Holder and/or the [ ] Parent
the terms of which have been previously approved by the
Lessor and the Agent), (iv) convenes a meeting of its
creditors or proposes or makes any arrangement or
composition with, or any assignment for the benefit of
its creditors, (v) the [ ] Lessee and/or
the Guarantor and/or the [ ] Option
Holder and/or the [ ] Parent shall
be adjudicated or found bankrupt or insolvent by a
competent court, (vi) a petition for the winding-up or
dissolution of the [ ] Lessee
and/or the Guarantor and/or the [ ]
Option Holder and/or the [ ]
Parent shall be presented and not discharged within
fourteen (14) days (other than a petition demonstrated by the
[ ] Lessee or, as the case may be,
the Guarantor or, as the case may be, the
[ ] Option Holder or, as the
case may be, the [ ] Parent to
the satisfaction of the Lessor to have been made
frivolously or vexatiously or (vii) any order shall be
made by any competent court for its winding up,
liquidation or dissolution; or
(o) Voluntary Winding-Up: if the [ ]
Lessee and/or the Guarantor and/or the
[ ] Option Holder and/or the
[ ] Parent takes any corporate
<PAGE>
action, or other steps are taken or legal proceedings
are commenced for its winding-up, dissolution (other
than for the purposes of and followed by a
reconstruction previously approved in writing by the
Lessor and the Agent, unless during or following such
reconstruction the [ ] Lessee or
the Guarantor or the [ ] Option
Holder or the [ ] Parent becomes or is
declared to be insolvent), administration or re-
organisation or for the appointment of a liquidator,
receiver, administrator, administrative receiver,
trustee or similar officer of it or of any or all of
its assets and revenues; or
(p) Analogous events: if there occurs, in relation to the
[ ] Lessee or the Guarantor or the
[ ] Option Holder or the
[ ] Parent in any country or
territory in which any of them carries on business or
in the jurisdiction of whose courts any part of their
assets are subject, any event which corresponds and has
an analogous effect in law and in result in that
country or territory with any of those mentioned in
paragraphs (m) to (o) inclusive of this Clause 16.1; or
(q) Other Lease Agreements: there occurs any Termination
Event as that term is defined in any of the Other Lease
Agreements or any of the 1994 Lease Agreements, as the
case may be; or
(r) Cancellation Event: there occurs any Cancellation Event
or any Cancellation Event (as that term is defined in
the 1994 Facility Agreement).
16.2 Lessor's Rights
At any time after the occurrence of any Termination Event
which is then continuing the Lessor may, subject to the
[ ] Option Holder's rights pursuant to Clause
19, without limiting or restricting any remedies or rights
under contract, at law or in equity:-
16.2.1 proceed by appropriate court action to enforce
performance by the [ ] Lessee of the
applicable covenants and provisions of this Agreement
or to recover damages for the breach thereof; and/or
16.2.2 by notice to the [ ] Lessee
terminate the Lease Period, whereupon the leasing of
the Aircraft shall be immediately terminated, and
retake possession of the Aircraft (subject to any quiet
enjoyment covenant which may have been given by the
Lessor and the Security Agent to an Approved Sub-
Lessee), and the [ ] Lessee agrees
that the Lessor or its representatives or agents may
for this purpose enter upon any premises belonging to
or in the occupation or under the control of the
[ ] Lessee or the Guarantor where the
Aircraft may be located, and the [ ]
Lessee shall upon such termination (whether or not any
quiet enjoyment covenant has been given to an Approved
Sub-Lessee) pay to the Lessor forthwith:
(a) an amount in Dollars as shall equal the aggregate of:-
(i) all arrears of Rent which remain outstanding under
this Agreement; and
<PAGE>
(ii) the Termination Sum as at the Expiry Date;
together with
(b) the Aircraft Secured Obligations less the amount
referred to in Clause 16.2.2(a); and
(c) any other amounts in the relevant currencies which are
due and payable by the [ ] Lessee
and/or the [ ] Parent and/or the
Guarantor and/or the [ ] Option
Holder under any of the Facility Documents or any of
the Aircraft Operative Documents.
16.3 After termination of the Lease Period pursuant to Clause
16.2, whether or not a quiet enjoyment covenant has been
given by the Lessor and the Security Agent to an Approved
Sub-Lessee, the Lessor shall use its reasonable endeavours
to sell the Aircraft and the Lessor shall apply an amount
equal to (i) the proceeds of such sale of the Aircraft
received by the Lessor together with such of the balance as
is referable to the Aircraft including accrued interest,
remaining on the [ ] Lessee Rental Collateral Account,
the [ ] Lessee Security Deposit Collateral Account and
the [ ] Lessee Maintenance Reserve Collateral Account,
subject to payment of all outstanding liabilities for repair
or maintenance of the Aircraft, less (ii) any costs, fees or
expenses incurred by the Lessor in relation to (a) the
storage, insurance, maintenance of the Aircraft between
Redelivery and sale and (b) its sale or disposition, in
accordance with Clause 17 of the Priorities and Indemnities
Agreement.
17. REDELIVERY
17.1 Redelivery
The [ ] Lessee shall subject to the
provisions of Clause 19, (x) on termination of the Lease
Period and the leasing of the Aircraft pursuant to Clause
16.2 or (y) on the expiry of the leasing of the Aircraft
hereunder by effluxion of time, subject to the rights of an
Approved Sub-Lessee under a subsisting Approved Sub-Lease in
respect of which a quiet enjoyment undertaking has been
given by the Lessor and the Security Agent, redeliver the
Aircraft to the Lessor at such airport as the Lessor shall
reasonably nominate ("Redelivery") PROVIDED ALWAYS THAT
where the Approved Sub-Lessee is entitled under the terms of
the Approved Sub-Lease to the continued use and possession
of the Aircraft on termination of the Lease Period pursuant
to Clause 16.2, the [ ] Lessee's
obligation to redeliver the Aircraft to the Lessor shall
arise at the time at which the Aircraft is redelivered by
the Approved Sub-Lessee to the [ ]
Lessee. Subject to compliance with this Clause 17 at the
time of Redelivery, the Lessor and the
[ ] Lessee shall execute a Return
Acceptance Supplement; it being understood, however, that
this Agreement shall continue in full force and effect until
the [ ] Lessee has satisfied all its
obligations under any of the Facility Documents (including,
but not limited to, Clause 11 of the Priorities and
Indemnities Agreement) and any of the Aircraft Operative
Documents notwithstanding the Redelivery of the Aircraft.
<PAGE>
17.2 Redelivery Condition of Aircraft
The Aircraft at the time of Redelivery shall have been
maintained and repaired in all material respects in
accordance with the Maintenance Programme as if the Aircraft
were to be kept in further service by the
[ ] Lessee, and shall meet the
following requirements:-
(a) the Aircraft shall be in good operating condition
(normal wear and tear excepted) with all of the
Aircraft equipment, components and systems functioning
in accordance with their intended use, irrespective of
deviations or variations authorised by the minimum
equipment list or configuration deviation list, all
pilot and maintenance log book reports and
discrepancies shall be clear and all systems shall be
fully functional and operating within limits and
guidelines established by the relevant manufacturers;
(b) the Aircraft shall be clean by commercial airline
standards;
(c) the Aircraft shall be in the condition required in
order to be fully eligible to receive an immediate
certificate of airworthiness issued by the F.A.A. in
accordance with FAR Part 21 or by the CAA, DGAC or the
JAA or the LBA or any other analogous standards of
another aviation authority approved by the Lessor and
the Security Agent (such approval not to be
unreasonably withheld) and, in addition, be placed on
the operating certificate of a US airline in accordance
with Part 121 of the FARs or of an English, French or
German airline in accordance with the respective
regulations of the CAA, the DGAC, the JAA or the LBA;
(d) the Aircraft shall comply with all outstanding
airworthiness directives and other instructions of the
Aviation Authority and the F.A.A. applicable to the
Aircraft, which have a known date for compliance on or
before the Expiry Date, provided that the necessary
service bulletin and kits are available to the [
] Lessee prior to the Expiry Date (defined as
aforesaid);
(e) the Technical Records shall be updated and maintained
by [ ] Lessee up to the date of Redelivery;
(f) provided that the type certificate for A3[ ] series
aircraft shall have not been withdrawn by the Aviation
Authority, there shall on the date of Redelivery be a
current Certificate of Airworthiness issued by the
State of Registration or at the request of the Lessor a
certificate of airworthiness for export issued by the
State of Registration;
(g) the Aircraft shall be free and clear of all Liens and
Permitted Liens created by or arising through the [
] Lessee or an Approved Sub-Lessee; and
(h) all of the operator's special exterior markings shall
have been removed or painted over by the [
] Lessee.
17.3 If, following a termination of the Lease Period pursuant to
Clause 16.2, the Aircraft shall not be in the condition
specified in Clause 17.2, the Lessor shall be entitled to
require the [ ] Lessee at the
[ ] Lessee's expense to remedy any
<PAGE>
defects or deficiencies in the Aircraft after Redelivery,
and the [ ] Lessee shall promptly comply
with any such requirement. If the [ ]
Lessee fails so to comply the Lessor shall be entitled to
remedy such defects and deficiencies and to recover on
demand from the [ ] Lessee the costs so
incurred, together with interest at the Default Rate from
the date of expenditure by the Lessor of the relevant cost
until the date of recovery thereof from the
[ ] Lessee (as well after as before
judgment).
17.4 Upon the [ ] Lessee becoming bound to
return the Aircraft to the Lessor pursuant to any provision
of this Agreement, the [ ] Lessee shall
(insofar as it is permitted or it is relevant to do so under
Applicable Law of the State of Registration) forthwith at
the [ ] Lessee's own expense and upon
advising the Lessor of its intention to do so and obtaining
the consent of the Lessor with respect to the timing of the
following, take all such steps as may be necessary to cancel
the existing registration of the Aircraft and obtain and
deliver to the Lessor all certificates relating to the
Aircraft required by Applicable Law on any such
cancellation. The [ ] Lessee shall
(whenever such obligation to return arises) reasonably
co-operate with the Lessor, at the Lessor's expense, in any
transfer of or alteration to the registration of the
Aircraft to the name of the Lessor or any person nominated
by the Lessor; it being understood, however, that if the
Lessor repossesses the Aircraft following a termination of
the Lease Period pursuant to Clause 16.2 the costs of such
repossession, deregistration and re-registration of the
Aircraft shall be for the [ ] Lessee's
account.
18. MANDATORY PREPAYMENT
18.1 If (i) pursuant to Clause 13 of the Priorities and
Indemnities Agreement, the Lessor gives notice to the
[ ] Lessee terminating the leasing of
the Aircraft hereunder or (ii) a Mandatory Prepayment Event
shall have occurred, in each case the leasing of the
Aircraft hereunder shall immediately terminate and the [
] Lessee shall pay to the Lessor forthwith upon
such termination:
(a) an amount in Dollars as shall equal the aggregate of:-
(i) all arrears of Rent which remain outstanding under
this Agreement as at the date of such termination;
and
(ii) the Termination Sum as at the date of such
termination; together with
(b) the Aircraft Secured Obligations less the amount
referred to in Clause 18.1(a); and
(c) any other amounts in the relevant currencies which
remain due and payable by the [ ]
Lessee and/or the Guarantor and/or the
[ ] Option Holder and/or the
[ ] Parent under any of the
Facility Documents or any of the Aircraft Operative
Documents.
<PAGE>
18.2 A Mandatory Prepayment Event shall exist for the purposes of
this Agreement if any of the following events shall occur
and be continuing:-
(a) if the guarantee and indemnity obligations of the
Guarantor contained in Clause 10 of the Facility
Agreement have, or the Guarantee and Indemnity (Lessor)
has, for any reason become invalid, ineffective or
unenforceable, in whole or in any material part and the
Security Agent shall have declared that it elects to
treat such invalidity, ineffectiveness or
unenforceability as a Mandatory Prepayment Event; or
(b) if any Loan Event of Termination in respect of any
Advance shall have occurred, and, following the expiry
of any relevant cure period referred to in Clause 25 of
the Priorities and Indemnities Agreement, the Agent
makes any declaration pursuant to Clause 9.2 of the
Facility Agreement; or
(c) a Mandatory Prepayment Event under Clause 18.2(b) of
any or all of the 1994 Lease Agreements.
19. PURCHASE OPTION
19.1 In consideration of the [ ] Option
Holder entering into this Agreement and giving
representations, warranties and covenants hereunder, the
[ ] Option Holder shall be entitled, at
any time during the Lease Period on giving to the Lessor not
less than 10 Business Days prior notice ("Notice of
Purchase") to purchase the Aircraft from the Lessor on the
date specified in such notice (the "Purchase Date") being no
later than the Expiry Date for:-
(a) an amount in Dollars as shall equal the aggregate of:
(i) all arrears of Rent which remain outstanding under
this Agreement as at the Purchase Date; and
(ii) the Termination Sum as at the Purchase Date;
together with
(b) the Aircraft Secured Obligations less the amount
referred to in Clause 19.1(a); and
(c) any other amounts in the relevant currencies which
remain due and payable by the [ ]
Lessee and/or the Guarantor and/or the
[ ] Option Holder and/or the
[ ] Parent under any of the
Facility Documents or any of the Aircraft Operative
Documents,
PROVIDED THAT the [ ] Option Holder
shall not be entitled to purchase the Aircraft pursuant to
this Clause 19.1 if any Cancellation Event and/or Loan Event
of Termination and/or Termination Event shall have occurred
and be continuing unless at the same time (i) the
[ ] Option Holder and each other Option
Holder purchases each of the Other Aircraft pursuant to
Clause 19.1 of each of the Other Lease Agreements to which
the relevant Option Holder is a party, and each of the 1994
Option Holders purchases each of the 1994 Facility Aircraft
pursuant to Clause 19.1 of the 1994 Lease Agreements to
which the relevant 1994 Option Holder is a party and (ii) if
<PAGE>
a Termination Event of the kind described in Clauses
16.1(m), (n), (o) or (p) shall have occurred and be
continuing or the Lessor shall have served a notice
terminating the Lease Period pursuant to Clause 16.2.2
following a Termination Event of the kind described in
Clauses 16.1(m), (n), (o) or (p), the [ ]
Option Holder, each other Option Holder and each 1994 Option
Holder shall be entitled to purchase the Aircraft, the Other
Aircraft and the 1994 Facility Aircraft as described in (i)
above if a trustee in bankruptcy, administrator, examiner,
administrative receiver, receiver or similar officer
appointed in the relevant jurisdiction grants its approval
to such purchases by the [ ] Option
Holder, the other Option Holders and the 1994 Option Holders
or, where required by Applicable Law, the relevant court
grants an order approving or consenting to such purchases by
the [ ] Option Holder, the other Option
Holders and the 1994 Option Holders,
EXCEPT THAT:
(a) if the only Cancellation Event and/or Loan Event of
Termination and/or Termination Event is a List B Event
then the [ ] Option Holder shall be
entitled to exercise its right to purchase the Aircraft
pursuant to this Clause 19.1. If the
[ ] Option Holder exercises its right to
purchase the Aircraft pursuant to this Clause 19.1
following the occurrence of a List B Event, the
[ ] Option Holder shall be entitled to a
credit against the amounts payable under this Clause
19.1 in an amount equal to such proportion of any
surplus then being held by the Security Agent as a
result of the sale of any one or more of the Other
Aircraft in respect of which a List B Event has
occurred as is represented by a fraction the numerator
of which is the amount of the surplus and the
denominator of which is the number of aircraft financed
pursuant to the Facility Agreement in respect of which
a List B Event has occurred and which remain unsold;
(b) if any Termination Event and/or Cancellation Event
and/or Loan Event of Termination shall have occurred
and be continuing, the [ ] Option Holder shall
be entitled to exercise its right to purchase the
Aircraft under this Clause 19.1 if the
[ ] Option Holder is exercising such
right solely in order to enable the [ ]
Option Holder or the Guarantor or the
[ ] Lessee, as the case may be, to
comply with its obligations to the then current
Approved Sub-Lessee if such Approved Sub-Lessee has
exercised an option to purchase the Aircraft under the
relevant Approved Sub-Lease or any document ancillary
thereto.
19.2 Notwithstanding the foregoing, the giving by the
[ ] Option Holder of the Notice of
Purchase shall be without prejudice to the Lessor's
entitlement to exercise its rights under Clause 16.2 at any
time before the Purchase Date.
19.3 Upon not less than five (5) Business Days' prior notice
("[ ] Option Notice") to the Lessor, which
[ ] Option Notice once given shall be
irrevocable, the [ ] Option Holder may
elect to purchase the Aircraft from the Lessor on the Expiry
<PAGE>
Date. If the [ ] Option Notice has been
given, then on the Expiry Date the [ ]
Option Holder shall purchase the Aircraft for the sum of ten
Dollars (US$10) PROVIDED THAT the [ ]
Lessee has paid the Rent payable on the Expiry Date and all
arrears of Rent which remain outstanding under this
Agreement together with any other amounts in relevant
currencies which remain due and payable by the
[ ] Lessee and/or the Guarantor and/or the
[ ] Option Holder and/or the
[ ] Parent under any of the Facility
Documents and/or any of the Aircraft Operative Documents and
PROVIDED FURTHER THAT such purchase shall be subject to the
same terms as the proviso to Clause 19.1.
19.4 Notwithstanding the foregoing, the giving by the
[ ] Option Holder of the
[ ] Option Notice shall be without
prejudice to the Lessor's entitlement to exercise its rights
under Clause 16.2 at any time before the Expiry Date.
19.5 The [ ] Option Holder shall specify in
any notice served by the [ ] Option Holder to
the Lessor under this Clause that such notice is being
served in accordance with this Clause 19.
20. TRANSFER OF TITLE
20.1 Upon satisfaction in full by the [ ] Lessee
of its obligations under Clause 14.1(c) of the Priorities
and Indemnities Agreement and upon payment to the Lessor of:
(a) the sum referred to in Clause 15.1.1(b);
(b) the sum referred to in Clause 16.2.2;
(c) the sum referred to in Clause 18.1;
(d) the sum referred to in Clause 19.1; or
(e) the sum referred to in Clause 19.3;
the Lessor shall, at the cost and expense of the
[ ] Lessee, by execution and delivery of a
bill of sale, transfer to the [ ] Option
Holder or its designee or permitted transferee such right,
title and interest of the Lessor in and to the Aircraft, or,
in the event of a Total Loss, any part of the Aircraft then
remaining, as it acquired from the Seller pursuant to the
Purchase Agreement Assignment, in an "as-is, where-is and
with all faults" condition and without benefit of any
warranty from the Lessor other than the warranty that the
Lessor had such title as was passed to it, free and clear of
all rights of the Lessor, the Security Agent, the Agent and
the Lenders and free and clear of Lessor's Liens. At the
time of such transfer the Lessor shall at the
[ ] Lessee's cost, assign to the
[ ] Option Holder or its designee or
permitted transferee, as the case may be, all subsisting
warranties of (i) the Seller pursuant to the Purchase
Agreement, (ii) the Engine Manufacturer pursuant to the
Engine Agreement and (iii) of any supplier or manufacturer
in respect of any Part (including, without limitation, any
subsisting Warranties (as defined in the Mortgage) of the
Seller in respect of any such Part).
<PAGE>
20.2 Without prejudice to the right of the Lessor to treat the
occurrence of any of the events specified in Clause 16.1 as
a repudiatory breach of this Agreement by the
[ ] Lessee it is expressly agreed and
acknowledged by the Lessor that the [ ]
Option Holder's right to acquire title to the Aircraft
pursuant to Clause 20.1 shall survive the occurrence of a
Termination Event and any election by the Lessor to treat
such occurrence as a repudiatory breach of this Agreement,
PROVIDED ALWAYS THAT such right shall be subject and
subordinate in all respects to the rights of the Lessor to
repossess the Aircraft pursuant to Clause 16.2 and the
rights of the Lessor, the Security Agent, the Agent and the
Lenders under each of the Operative Documents and each of
the Other Operative Documents and subject to the provisions
of Clause 19.
21. PRIORITIES AND INDEMNITIES AGREEMENT
21.1 The [ ] Lessee hereby agrees and
confirms that the indemnities and other payment obligations
set out in the Priorities and Indemnities Agreement in
Clauses 4, 5, 6, 7, 8, 9, 12 and 18 therein shall apply as
against the [ ] Lessee as if set out in this
Agreement mutatis mutandis and subject in each case to all
of the limitations set out in the Priorities and Indemnities
Agreement (including, without limitation, Clause 10
thereof).
21.2 If at any time it becomes unlawful for the
[ ] Lessee to perform or comply with
any or all of its obligations under this Agreement or under
any of the other Aircraft Operative Documents to which it is
a party or this Agreement is or becomes wholly or partly
invalid, or unenforceable due to reasons beyond the Lessor's
control the provisions of Clause 13 of the Priorities and
Indemnities Agreement shall apply.
22. ADDITIONAL AMOUNTS
If, at any time, the Lessor serves a notice (containing such
details as may be required pursuant to Clause 28 of the
Priorities and Indemnities Agreement) on the
[ ] Lessee certifying that the Agent, the
Security Agent or, as the case may be, any of the Lenders
has made a claim upon the Lessor under the Facility
Agreement for a payment, then to the extent that such claim
comprises an Additional Amount the [ ] Lessee,
subject to Clause 10 of the Priorities and Indemnities
Agreement, shall on demand pay to the Lessor to the credit
of the Account or at the [ ] Lessee's
option to the Agent an amount equal to the sum of the
Additional Amounts as certified in such notice and the
provisions of Clause 12 of the Priorities and Indemnities
Agreement shall apply with respect to such payment.
23. ASSIGNMENT
23.1 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement, the [ ]
Lessee may not assign, transfer or part with any of its
rights or obligations under this Agreement except with the
prior written consent of the Majority Lenders (which each
Lender shall have absolute discretion to withhold).
<PAGE>
23.2 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement and in the
circumstances described in the proviso to Clause 24.3 of the
Priorities and Indemnities Agreement, the Lessor may not
assign, transfer or part with any of its rights or
obligations under this Agreement except with the prior
written consent of the Majority Lenders (which each Lender
shall have absolute discretion to withhold) and, unless and
until an Acceleration Event has occurred, of the
[ ] Lessee (which the [ ]
Lessee shall have absolute discretion to withhold).
24. LESSOR'S RIGHT OF SET-OFF
Subject to the Priorities and Indemnities Agreement, at any
time after the occurrence of an Acceleration Event and/or a
Mandatory Prepayment Event the Lessor shall be entitled to
set off or withhold from any sum or sums expressed in this
Agreement or any of the Operative Documents to be due and
payable by the Lessor to the [ ] Lessee any amounts
due or expressed to be due and payable from the [
] Lessee to the Lessor under this Agreement, any of the
other Operative Documents and each of the Other Lease
Agreements.
25. PRESERVATION OF INDEMNITIES
Without prejudice to any right to damages or other claim
which either party may, at any time, have against the other
hereunder or under any of the Aircraft Operative Documents
it is hereby agreed and declared that the indemnities in
favour of the Lessor by the [ ] Lessee
contained in this Agreement shall, subject in each case to
all of the limitations contained therein, continue in full
force and effect notwithstanding any sale or other
disposition of the Aircraft, any Total Loss or any breach of
the terms hereof or thereof by the Lessor (including
fundamental breach), the repudiation by the Lessor or the [
] Lessee of this Agreement or any of the Aircraft
Operative Documents or the expiration of the Lease Period
through effluxion of time or otherwise or the termination of
the hire or sale of the Aircraft hereunder or under any
other circumstance whatsoever.
26. MISCELLANEOUS
26.1 Lessor's Right to Remedy
If the [ ] Lessee fails to comply with any
provision of this Agreement, the Lessor may, without being
in any way obliged to do so or responsible for so doing and
without prejudice to the ability of the Lessor to treat such
failure as a Termination Event, effect compliance on behalf
of the [ ] Lessee, whereupon the [
] Lessee shall indemnify the Lessor in respect of any amount
thereby expended by the Lessor together with all costs and
expenses (including legal costs) in connection therewith.
26.2 Delay in Enforcement, Waivers etc.
All waivers of any right, power or privilege by either party
hereto shall be in writing signed by such party. No failure
or delay on the part of either party in exercising any power
or right hereunder shall operate as a waiver thereof nor
<PAGE>
shall any single or partial exercise of any such right or
power preclude any other or further exercise of any such
right or power. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies
provided by law or in equity.
26.3 Invalidity
If any term or provision of this Agreement or the
application thereof to any person or circumstance shall to
any extent be invalid or unenforceable the remainder of this
Agreement or application of such term or provision to
persons or circumstances other than those as to which it is
already invalid or unenforceable shall not be affected
thereby and each term and provision of this Agreement shall
otherwise be valid and shall be enforceable to the fullest
extent permitted by law.
26.4 Counterparts
This Agreement may be executed in several counterparts and
any single counterpart or set of counterparts, signed in
either case by all of the parties, shall be deemed to be an
original, and all taken together shall constitute one and
the same instrument.
26.5 Further Assurances
The [ ] Lessee agrees from time to time, and,
save as expressly provided herein or in any other Operative
Document, at the [ ] Lessee's expense, to do
and perform such other and further acts and execute and
deliver any and all such other instruments as may be
required by law or reasonably requested by the Lessor to
establish, maintain and protect the rights and remedies of
the Lessor and to carry out and effect the intent and
purpose of this Agreement and the other Operative Documents.
26.6 Entire Agreement
This Agreement, in conjunction with the Operative Documents
and the Second Mortgage and any written agreements of even
date or subsequent date herewith between the Lessor and the
[ ] Lessee, constitutes the entire agreement
between the parties hereto in relation to the leasing of the
Aircraft by the Lessor to the [ ] Lessee, and
supersedes all previous proposals, agreements and other
written and oral communications in relation thereto.
27. NOTICES
27.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
(a) in order to be valid be in English and in writing;
(b) be deemed to have been duly served on, given to or made
in relation to a party if it is:
(i) left at the address of that party set out herein
or at such other address as that party may notify
to the other parties hereto in writing from time
to time or to any officer of the addressee; or
(ii) posted by first class airmail postage prepaid in
an envelope addressed to that party at such
address; or
<PAGE>
(iii) sent by facsimile to the facsimile number of
that party set out herein or to such other
number as that party may notify to the other
parties hereto from time to time;
(c) be sufficient if:-
(i) executed under the seal of the party giving,
serving or making the same; or
(ii) signed or sent on behalf of the party giving,
serving or making the same by any attorney,
director, secretary, agent or other duly
authorized representative of such party;
(d) be effective:-
(i) in the case of a letter, when left at the address
referred to in Clause 27.1(b)(i) or delivered in
person to any officer of the addressee or (as the
case may be) seven (7) Business Days after being
deposited in the post first class airmail postage
prepaid in an envelope addressed to the addressee
at the address referred to in Clause 27.1(b)(i);
and
(ii) in the case of a facsimile transmission, when
receipt is confirmed by return facsimile or by
telephone (or on actual receipt if not so
confirmed);
27.2 For the purposes of this Clause 27, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
(a) if to the Lessor to:
ENCORE LEASING LIMITED
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
B.W.I.
Telephone No: 0101 809 949 7942
Facsimile No: 0101 809 949 8340
Attention: Trust Services
with a copy to the Security Agent at:-
NATIONAL WESTMINSTER BANK PLC
Corporate Banking Agency Group
7th Floor, 135 Bishopsgate
London EC2M 3UR
Telephone No: 0171 375 5738/5931/5929
Facsimile No: 0171 375 5854
Attention: Head of Corporate Banking Agency Group
<PAGE>
(b) if to the [ ] Lessee to:-
[ILFC (BERMUDA) 7, LTD.
29 Richmond Road,
Hamilton, HM-AX,
Bermuda]
Telephone No: 0101 809 295 2121
Facsimile No: 0101 809 292 6735/2276
Attention: [Mr. T. Leishman]
[ILFC Ireland 2 Limited
AIG House,
Merrion Road,
Dublin 4, Ireland
Telephone No: 353 1 283 7775
Facsimile No: 353 1 283 7774
Attention: Mr. D. Kent]
[ALTERNATIVE LESSEE]
Telephone No: [ ]
Facsimile No: [ ]
Telex No: [ ]
Attention: [ ]
with a copy to the Guarantor at:
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars
39th Floor
Los Angeles
CA 90067
United States of America
Telephone No: 1 310 788 1999
Facsimile No: 1 310 788 1990
Attention: Legal Department and Chief Financial
Officer
(c) if to the [ ] Option Holder to:-
[ILFC (BERMUDA) 6, LTD.
29 Richmond Road,
Hamilton, HM-AX,
Bermuda]
Telephone No: [0101 809 295 2121]
Facsimile No: [0101 809 292 6735/2276]
Attention: [Mr. T. Leishman]
with a copy to the Guarantor.
<PAGE>
28. GOVERNING LAW AND JURISDICTION
28.1 This Agreement and each of the Ancillary Documents shall be
governed and construed in accordance with English law.
28.2 Each of the parties hereto irrevocably agrees for the
benefit of each other that the courts of England shall have
jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out
of or in connection with this Agreement and/or the Ancillary
Documents and, for such purposes, irrevocably submits to the
jurisdiction of such courts.
28.3 Each party irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause
28.2 being nominated as the forum to hear and determine any
suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Agreement
and/or the Ancillary Documents and agrees not to claim that
any such court is not a convenient or appropriate forum in
each case whether on the grounds of venue or forum non
conveniens or any similar grounds or otherwise.
28.4 The submission to the jurisdiction of the courts referred to
in Clause 28.2 shall not (and shall not be construed so as
to) limit the right of any party to take proceedings against
any other party in any other court of competent jurisdiction
nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not.
28.5 To the extent that any party or any of the property of any
party is or becomes entitled at any time to any immunity on
the grounds of sovereignty or otherwise from any legal
action, suit or proceeding, from set-off or counterclaim,
from the jurisdiction of any competent court, from service
of process, from attachment prior to judgment, from
attachment in aid of execution, or from execution prior to
judgment, or other legal process in any jurisdiction, the
relevant party for itself and its property does hereby
irrevocably and unconditionally waive, and agrees not to
plead or claim, any such immunity with respect to its
obligations, liabilities or any other matter under or
arising out of or in connection with any of the Facility
Documents and/or the Aircraft Operative Documents or the
subject matter hereof or thereof.
<PAGE>
SCHEDULE 1
Details of Aircraft
One (1) Airbus A3[ ] aircraft
Manufacturer's serial number [ ]
[ ] registration mark [ ]
[ ] series engines,
serial numbers [ ]
<PAGE>
SCHEDULE 2
Representations and Warranties by the Lessor
(A) it is a company duly incorporated and validly existing under
the laws of Cayman Islands and having full power, authority
and legal right to own its property and carry on its
business as presently conducted;
(B) it has the power and capacity to execute and deliver, and to
perform its obligations under, this Agreement and each of
the other Aircraft Operative Documents to which it is or
will be a party and all necessary corporate, shareholder and
other action has been taken to authorise the execution,
delivery and performance of the same;
(C) it has taken all necessary legal action to authorise the
person or persons to execute and deliver this Agreement and
the other Aircraft Operative Documents and the Facility
Documents to which it is or is to be a party to execute and
deliver the same and thereby bind the Lessor to all the
terms and conditions hereof and thereof and to act for and
on behalf of the Lessor as contemplated hereby and thereby;
(D) this Agreement and each of the other Aircraft Operative
Documents and the Facility Documents to which it is a party,
constitute legal, valid and binding obligations of the
Lessor enforceable in accordance with their terms subject to
the qualifications thereupon contained in the legal opinions
to be provided to the Lessor and the Lenders in accordance
with the provisions of Clauses 3.2.1 and 3.2.2 of the
Facility Agreement (in respect of the Facility Documents)
and Part I of Schedule 7 to the Facility Agreement and Part
I of Schedule 4 to this Agreement (in respect of the
Aircraft Operative Documents);
(E) the execution and delivery of, the performance of its
obligations under, and compliance with the provisions of,
this Agreement and each of the other Aircraft Operative
Documents and the Facility Documents to which it is or will
be a party will not (i) contravene any existing Applicable
Law to which the Lessor is subject, (ii) conflict with, or
result in any breach of any of the terms of, or constitute a
default under, any document, instrument or agreement to
which the Lessor is a party or is subject or by which it or
any of its assets may be bound, (iii) contravene or conflict
with any provision of its constitutional documents, or (iv)
result in the creation or imposition of, or oblige it to
create, any Lien on or over any of its assets other than
those created pursuant to the Facility Documents and the
Aircraft Operative Documents;
(F) every consent, licence, registration and/or qualification
required by the Lessor to enable it to carry on its business
has been duly obtained or made and is in full force and
effect and there has been no default in the observance or
performance of any of the conditions or restrictions (if
any) imposed on, or in connection with, any such consent,
licence, registration and/or qualification which could have
a material adverse effect on the business, assets or
financial condition of the Lessor or its ability to perform
its obligations hereunder;
<PAGE>
(G) every consent, registration, licence and/or qualification
required by the Lessor to authorise, or required by it in
connection with, the execution, delivery, legality,
validity, priority, enforceability, admissibility in
evidence or effectiveness of this Agreement and each of the
other Aircraft Operative Documents to which it is a party or
the performance by it of any of its obligations under this
Agreement and each of the other Aircraft Operative Documents
to which it is a party has been duly obtained or made and is
in full force and effect and there has been no default in
the observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection with, any
such consent, registration, licence and/or qualification
which could have a material adverse effect on the business,
assets or financial condition of the Lessor or the legality,
validity, priority, enforceability, admissibility in
evidence or effectiveness of any of the Facility Documents
or the Aircraft Operative Documents;
(H) no litigation, arbitration or administrative proceeding is
taking place, pending or, to the actual knowledge of its
officers, threatened against it, or against any of its
assets, which in any such case could have a material adverse
effect on the business, assets or financial condition of the
Lessor or its ability to perform its obligations under any
of the Facility Documents or the Aircraft Operative
Documents to which it is or is to be a party;
(I) the Lessor has not taken any corporate action nor, to its
knowledge or the knowledge of its officers, have any steps
been taken or legal proceedings been started for winding-up,
dissolution or re-organisation or for the appointment of a
receiver or administrative receiver, or an administrator,
trustee or similar officer of it or of any or all of its
assets;
(J) the obligations of the Lessor under this Agreement and the
other Aircraft Operative Documents and the Facility
Documents are, or will upon execution hereof and thereof by
the Lessor be direct, general and unconditional obligations
of the Lessor and rank, or will rank, at least pari passu
with all other present and future unsecured and
unsubordinated obligations of the Lessor save for
obligations mandatorily preferred by law;
(K) it has not, prior to entering into the Facility Documents,
or, as the case may be, any of the Operative Documents
engaged in any business or transaction or entered into any
other contract or agreement with any person or otherwise
created or incurred any liability to any person, other than
any such transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been necessary solely
in order for the Lessor to establish itself as a company
duly incorporated and validly existing under the laws of the
Cayman Islands or (ii) have occurred pursuant to any
Facility Document or Operative Document;
(L) no Loan Event of Termination has occurred and is continuing.
<PAGE>
SCHEDULE 3
Part I
Representations and Warranties by the [ ] Lessee
(A) it is a company duly incorporated and validly existing under
the laws of [Bermuda] [Ireland] [ ] having full
power, authority and legal right to own its property and
carry on its business as presently conducted;
(B) it has the power and capacity to execute and deliver, and to
perform its obligations under, this Agreement and each of
the other Aircraft Operative Documents to which it is or
will be a party and all necessary corporate, shareholder and
other action has been taken to authorise the execution,
delivery and performance of the same;
(C) it has taken all necessary legal action to authorise the
person or persons to execute and deliver this Agreement and
the other Aircraft Operative Documents and the Facility
Documents to which it is or is to be a party to execute and
deliver the same and thereby bind the [ ]
Lessee to all the terms and conditions hereof and thereof
and to act for and on behalf of the [ ]
Lessee as contemplated hereby and thereby;
(D) this Agreement and each of the other Aircraft Operative
Documents and the Facility Documents to which it is a party,
constitute legal, valid and binding obligations of the [
] Lessee enforceable in accordance with their
terms subject to the qualifications thereupon contained in
the legal opinions to be provided to the Lessor and the
Lenders in accordance with the provisions of Clauses 3.2.1
and 3.2.2 of the Facility Agreement (in respect of the
Facility Documents) and Part I of Schedule 7 to the Facility
Agreement and Part I of Schedule 4 to this Agreement (in
respect of the Aircraft Operative Documents);
(E) the execution and delivery of, the performance of its
obligations under, and compliance with the provisions of,
this Agreement and each of the other Aircraft Operative
Documents and the Facility Documents to which it is or will
be a party will not (i) contravene any existing Applicable
Law to which the [ ] Lessee is subject, (ii)
conflict with, or result in any breach of any of the terms
of, or constitute a default under, any document, instrument
or agreement to which the [ ] Lessee is a
party or is subject or by which it or any of its assets may
be bound, (iii) contravene or conflict with any provision of
its constitutional documents, or (iv) result in the creation
or imposition of, or oblige it to create, any Lien on or
over any of its assets other than those created pursuant to
the Facility Documents and the Aircraft Operative Documents;
(F) every consent, licence, registration and/or qualification
required by the [ ] Lessee to enable it to
carry on its business has been duly obtained or made and is
in full force and effect and there has been no default in
the observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection with, any
such consent, licence, registration and/or qualification
which could have a material adverse effect on the business,
assets or financial condition of the [ ]
Lessee or its ability to perform its obligations hereunder;
<PAGE>
(G) every consent, registration, licence and/or qualification
required by the [ ] Lessee to authorise, or
required by it in connection with, the execution, delivery,
legality, validity, priority, enforceability, admissibility
in evidence or effectiveness of this Agreement and each of
the other Aircraft Operative Documents to which it is a
party or the performance by it of any of its obligations
under this Agreement and each of the other Aircraft
Operative Documents to which it is a party has been duly
obtained or made and is in full force and effect and there
has been no default in the observance or performance of any
of the conditions or restrictions (if any) imposed on, or in
connection with, any such consent, registration, licence
and/or qualification which could have a material adverse
effect on the business, assets or financial condition of the
[ ] Lessee or the legality, validity, priority,
enforceability, admissibility in evidence or effectiveness
of any of the Facility Documents or the Aircraft Operative
Documents;
(H) no litigation, arbitration or administrative proceeding is
taking place, pending or, to the actual knowledge of its
officers, threatened against it, or against any of its
assets, which in any such case could have a material adverse
effect on the business, assets or financial condition of the
[ ] Lessee or its ability to perform its
obligations under any of the Facility Documents and/or to
which it is or is to be a party;
(I) the [ ] Lessee has not taken any corporate
action nor, to its knowledge or the knowledge of its
officers, have any steps been taken or legal proceedings
been started for winding-up, dissolution or re-organisation
or for the appointment of a receiver or administrative
receiver, or an administrator, examiner, trustee or similar
officer of it or of any or all of its assets;
(J) the obligations of the [ ] Lessee under this
Agreement and the other Aircraft Operative Documents and the
Facility Documents are, or will upon execution hereof and
thereof by the [ ] Lessee be direct, general
and unconditional obligations of the [ ] Lessee
and rank, or will rank, at least pari passu with all other
present and future unsecured and unsubordinated obligations
of the [ ] Lessee save for obligations
mandatorily preferred by law;
(K) it has not, prior to entering into the Facility Documents,
or, as the case may be, any of the Operative Documents
engaged in any business or transaction or entered into any
other contract or agreement with any person or otherwise
created or incurred any liability to any person, other than
any such transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been necessary solely
in order for the [ ] Lessee to establish
itself as a company duly incorporated and validly existing
under the laws of [Bermuda] [Ireland] [ ] or (ii)
have occurred pursuant to any Facility Document or Operative
Document [or (iii) have occurred in connection with the 1994
Facility].
<PAGE>
SCHEDULE 3
Part II
Representations and Warranties by the [ ] Option
Holder
(A) it is a company duly incorporated and validly existing under
the laws of [Bermuda] [ ] having full power,
authority and legal right to own its property and carry on
its business as presently conducted;
(B) it has the power and capacity to execute and deliver, and to
perform its obligations under, this Agreement and each of
the other Aircraft Operative Documents to which it is or
will be a party and all necessary corporate, shareholder and
other action has been taken to authorise the execution,
delivery and performance of the same;
(C) it has taken all necessary legal action to authorise the
person or persons to execute and deliver this Agreement and
the other Aircraft Operative Documents and the Facility
Documents to which it is or is to be a party to execute and
deliver the same and thereby bind the [ ]
Option Holder to all the terms and conditions hereof and
thereof and to act for and on behalf of the [ ]
Option Holder as contemplated hereby and thereby;
(D) this Agreement and each of the other Aircraft Operative
Documents and the Facility Documents to which it is a party,
constitute legal, valid and binding obligations of the [
] Option Holder enforceable in accordance with their
terms subject to the qualifications thereupon contained in
the legal opinions to be provided to the Lessor and the
Lenders in accordance with the provisions of Clauses 3.2.1
and 3.2.2 of the Facility Agreement (in respect of the
Facility Documents) and Part I of Schedule 7 to the Facility
Agreement and Part I of Schedule 4 to this Agreement (in
respect of the Aircraft Operative Documents);
(E) the execution and delivery of, the performance of its
obligations under, and compliance with the provisions of,
this Agreement and each of the other Aircraft Operative
Documents and the Facility Documents to which it is or will
be a party will not (i) contravene any existing Applicable
Law to which the [ ] Option Holder is subject,
(ii) conflict with, or result in any breach of any of the
terms of, or constitute a default under, any document,
instrument or agreement to which the [ ] Option Holder is
a party or is subject or by which it or any of its assets
may be bound, (iii) contravene or conflict with any
provision of its constitutional documents, or (iv) result in
the creation or imposition of, or oblige it to create, any
Lien on or over any of its assets other than those created
pursuant to the Facility Documents and the Aircraft
Operative Documents;
(F) every consent, licence, registration and/or qualification
required by the [ ] Option Holder to enable it to
carry on its business has been duly obtained or made and is
in full force and effect and there has been no default in
the observance or performance of any of the conditions or
restrictions (if any) imposed on, or in connection with, any
such consent, licence, registration and/or qualification
which could have a material adverse effect on the business,
assets or financial condition of the [ ]
Option Holder or its ability to perform its obligations
hereunder;
<PAGE>
(G) every consent, registration, licence and/or qualification
required by the [ ] Option Holder to authorise, or
required by it in connection with, the execution, delivery,
legality, validity, priority, enforceability, admissibility
in evidence or effectiveness of this Agreement and each of
the other Aircraft Operative Documents to which it is a
party or the performance by it of any of its obligations
under this Agreement and each of the other Aircraft
Operative Documents to which it is a party has been duly
obtained or made and is in full force and effect and there
has been no default in the observance or performance of any
of the conditions or restrictions (if any) imposed on, or in
connection with, any such consent, registration, licence
and/or qualification which could have a material adverse
effect on the business, assets or financial condition of the
[ ] Option Holder or the legality, validity,
priority, enforceability, admissibility in evidence or
effectiveness of any of the Facility Documents or the
Aircraft Operative Documents;
(H) no litigation, arbitration or administrative proceeding is
taking place, pending or, to the actual knowledge of its
officers, threatened against it, or against any of its
assets, which in any such case could have a material adverse
effect on the business, assets or financial condition of the
[ ] Option Holder or its ability to perform
its obligations under any of the Facility Documents and/or
to which it is or is to be a party;
(I) the [ ] Option Holder has not taken any
corporate action nor, to its knowledge or the knowledge of
its officers, have any steps been taken or legal proceedings
been started for winding-up, dissolution or re-organisation
or for the appointment of a receiver or administrative
receiver, or an administrator, trustee or similar officer of
it or of any or all of its assets;
(J) the obligations of the [ ] Option Holder under
this Agreement and the other Aircraft Operative Documents
and the Facility Documents are, or will upon execution
hereof and thereof by the [ ] Option Holder be
direct, general and unconditional obligations of the [
] Option Holder and rank, or will rank, at least pari
passu with all other present and future unsecured and
unsubordinated obligations of the [ ] Option
Holder save for obligations mandatorily preferred by law;
(K) it has not, prior to entering into the Facility Documents,
or, as the case may be, any of the Operative Documents
engaged in any business or transaction or entered into any
other contract or agreement with any person or otherwise
created or incurred any liability to any person, other than
any such transactions, contracts, agreements or liabilities
or acquisitions of assets as (i) have been necessary solely
in order for the [ ] Option Holder to
establish itself as a company duly incorporated and validly
existing under the laws of [Bermuda] [ ] or (ii)
have occurred pursuant to any Facility Document or Operative
Document [or (iii) have occurred in connection with the 1994
Facility].
<PAGE>
SCHEDULE 4
Part I
Conditions Precedent to the Obligations of the Lessor
(A) Delivery of the Aircraft to the Lessor shall have occurred
in accordance with the Purchase Agreement Assignment.
(B) The Lessor or its duly authorised representative shall have
received each of the following:
(i) this Agreement, duly executed and delivered by the [
] Lessee and the [ ] Option
Holder;
(ii) each of the other Aircraft Operative Documents duly
executed and delivered by the relevant parties thereto;
(iii) an Acceptance Certificate duly executed by and on
behalf of the [ ] Lessee;
(iv) a Director's or Secretary's certificate of the [
] Lessee attaching thereto, and certifying as
true copies of the originals:-
(i) the [Memorandum of Association and Bye-laws]
[Memorandum and Articles of Association]
[ ] of the [ ] Lessee;
(ii) the resolutions of the board of the [
] Lessee approving the entry into by the [
] Lessee of the Facility Documents and the
Aircraft Operative Documents to which the [
] Lessee is a party; and
(iii) the power of attorney appointing those
authorised to sign on behalf of the [
] Lessee the Facility Documents and the
Aircraft Operative Documents to which the
[ ] Lessee is a party;
or, as the case may be, a Director's certificate that
such documents have remained unchanged and in full
force and effect since the form of those documents
provided to the Agent pursuant to the Facility
Agreement or to the Lessor pursuant to a previous Other
Lease Agreement to which the [ ] Lessee
is a party;
(v) a Director's or Secretary's certificate of the
[ ] Option Holder attaching thereto, and
certifying as true copies of the originals:-
(a) the [Memorandum of Association and Bye-laws]
[ ] of the [ ] Option
Holder;
(b) the resolutions of the board of the
[ ] Option Holder approving the
entry into by the [ ] Option Holder
of the Facility Documents and the Aircraft
Operative Documents to which the [ ]
Option Holder is a party; and
(c) the power of attorney appointing those authorised
to sign on behalf of the [ ] Option
Holder the Facility Documents and the Aircraft
Operative Documents to which the [ ]
Option Holder is a party;
or, as the case may be, a Director's certificate that
such documents have remained unchanged and in full
force and effect since the form of those documents
provided to the Agent pursuant to the Facility
Agreement or to the Lessor pursuant to a previous Other
Lease Agreement to which the [ ] Option
Holder is a party;
<PAGE>
(vi) a certificate duly executed by the [ ]
Lessee conclusively acknowledging that all of the [
] Lessee's conditions precedent set out in
Part II of Schedule 4 have been satisfied or waived;
(vii) a commercial invoice for the Aircraft issued by
the Seller specifying the net Final Contract Price
(as defined in the Purchase Agreement);
(viii) a certificate of the insurance broker or, if the
Insurances are not placed through an insurance
broker, the insurers of the initial Approved Sub-
Lessee and letter of undertaking from such broker
in respect of the insurances addressed to the
Lessor in each case in the agreed and annexed form
or in such other form and substance acceptable to
the Lessor and Security Agent;
(ix) in respect of the initial Approved Sub-Lease, a copy,
certified as a true copy by a duly authorised officer
of the [ ] Lessee of each of the
following:
(a) the Approved Sub-Lease;
(b) the Approved Sub-Lessee's operating licence or its
equivalent (if any) in any relevant jurisdiction;
(c) the Approved Sub-Lessee's air operator's
certificate issued by the Aviation Authority
authorising the Approved Sub-Lessee to fly
aircraft of the same type and specification as the
Aircraft for the purposes of public transport;
(d) in relation to the Aircraft, the Certificate of
Airworthiness in the public transport (passenger)
category issued by the Aviation Authority;
(e) the certificate of registration issued by the
Aviation Authority in respect of the Aircraft;
(x) a legal opinion from Maples & Calder, Cayman Islands
counsel to the Lenders and the [ ]
Lessee;
(xi) a legal opinion from [Appleby, Spurling & Kempe] [A & L
Goodbody] [ ], [Bermuda] [Irish]
[ ] counsel to the [Lenders]
[Guarantor];
<PAGE>
(xii) a legal opinion from Buchalter, Nemer, Fields &
Younger, California counsel to the Lenders;
(xiii) a legal opinion from Wilde Sapte, English counsel
to the Lenders;
(xiv) a legal opinion from Counsel to the [Lenders] [the
Guarantor] in the jurisdiction of incorporation of
the [ ] Option Holder;
(xv) a legal opinion, in form and substance acceptable to
the Lessor and the Security Agent, of the relevant
external counsel of the jurisdiction in which the
Aircraft pursuant to the Approved Sub-Lease is to be
registered and/or habitually based, issued in favour of
the Lessor and the Security Agent in relation to the
matters referred to in Clauses 9.2.2(c) and 9.4.2(h);
and
(xvi) any and all other licences, consents, approvals or
authorisations which any of the legal opinions
referred to in (x) to (xv) inclusive above state
are required in connection with any of the
Facility Documents and/or the Aircraft Operative
Documents to which the [ ] Lessee
and the [ ] Option Holder is
respectively a party.
(C) The Lessor shall be satisfied that the Approved Sub-Lessee
has obtained any necessary licences for the importation of
the Aircraft into the State of Registration and that all
applicable customs and duties in respect of the sale of the
Aircraft to, and the acquisition of the Aircraft by, the
Lessor have been discharged by the Approved Sub-Lessee.
(D) Each of the representations and warranties contained in
Schedule 3, Part I and Schedule 3, Part II shall remain true
and accurate on the Delivery Date as if given on that date
by reference to the facts and circumstances then existing.
<PAGE>
SCHEDULE 4
Part II
Conditions Precedent to the Obligations of the [ ]
Lessee
(A) The [ ] Lessee or its duly authorised agent
shall have received each of the following:
(i) this Agreement, duly executed by the Lessor;
(ii) an original of each of the other Aircraft Operative
Documents to which it is a party and a certified copy
of each of the other Aircraft Operative Documents to
which it is not a party (other than the Purchase
Agreement, the Engine Agreement and the Support
Agreements) and the Second Mortgage, duly executed by
the Lessor;
(iii) a Secretary's certificate of the Lessor setting
out the specimen signatures of those persons
authorised to sign the Facility Documents and the
Aircraft Operative Documents to which the Lessor
is a party and attaching thereto, and certifying
as true copies of the originals:-
(a) the Memorandum and Articles of Association of the
Lessor;
(b) the resolutions of the board of the Lessor
approving the entry into by the Lessor of the
Facility Documents and the Aircraft Operative
Documents to which the Lessor is a party; and
(c) the power of attorney appointing those authorised
to sign on behalf of the Lessor the Facility
Documents and the Aircraft Operative Documents to
which the Lessor is a party;
or, as the case may be, a Director's certificate of the
Lessor that such documents have remained unchanged and
in full force and effect since the form of those
documents provided to the [ ] Lessee
pursuant to the Facility Agreement or a previous Other
Lease Agreement.
(iv) a legal opinion from Maples & Calder, Cayman Islands
Counsel to the Lenders and the [ ]
Lessee; and
(v) any and all other licences, consents, approvals or
authorisations which the legal opinion referred to in
(iv) above states are required in connection with any
of the Facility Documents and the Aircraft Operative
Documents to which the Lessor is a party;
(vi) an acceptance certificate from the Approved Sub-Lessee
under the initial Approved Sub-Lease, duly executed by
the Approved Sub-Lessee.
(B) Each of the representations and warranties contained in
Schedule 2 shall remain true and accurate on the Delivery
Date as if given on that date by reference to the facts and
circumstances then existing.
<PAGE>
SCHEDULE 5
Acceptance Certificate
(Manufacturer's Serial Number [ ])
[date]
Attention:
This Acceptance Certificate is executed and delivered pursuant to
Clause 5 of an aircraft lease agreement no. 1995-[ ] dated
[ ] (the "Agreement") between (1) Encore Leasing
Limited as lessor (the "Lessor"), and (2) [ILFC (Bermuda) 7,
Ltd.] [ILFC Ireland 2 Limited] [Alternative Lessee] as lessee
(the "[ ] Lessee") and (3) [ILFC (Bermuda) 6, Ltd.]
[ ] as option holder. Words and expressions defined
in the Agreement shall, except where the context otherwise
requires, have the same respective meanings when used in this
Acceptance Certificate.
The [ ] Lessee hereby irrevocably and
unconditionally confirms and agrees that:-
(a) on the date hereof the Aircraft more particularly described
in the Schedule hereto was irrevocably and unconditionally
accepted by the [ ] Lessee on behalf of the
Lessor as "Buyer" pursuant to the Purchase Agreement and the
Purchase Agreement Assignment and as the Lessor's duly
authorised agent;
(b) on the date hereof the Aircraft more particularly described
in the Schedule hereto was irrevocably and unconditionally
accepted on lease by the [ ] Lessee, the Lease
Period has commenced and henceforward the Aircraft will be
subject to the terms and conditions of the Agreement;
(c) the representations and warranties set out in Schedule 3 of
the Agreement are true, accurate and fully observed as if
the same had been made and given on and as of the date
hereof with respect to the facts and circumstances
subsisting as of the date hereof;
(d) no Relevant Event has occurred and is continuing;
(e) the nameplates required to be affixed to the Aircraft
pursuant to Clause 12.4.1 have been duly affixed in
compliance with such Clause; and
(f) the Expiry Date is [ ].
<PAGE>
Schedule to the Acceptance Certificate
One (1) Airbus A3[ ] aircraft, (Manufacturer's Serial
Number [ ])
Registration Mark [ ]
and [two (2)][four (4)] [ ] aircraft engines.
Airframe Serial No. Engine Serial Nos.
For and on behalf of
[ILFC (Bermuda) 7, Ltd.]
[ILFC Ireland 2 Limited]
[Alternative Lessee]
By:
Name:
Title:
<PAGE>
SCHEDULE 6
Part I
Rent
RENTAL PAYMENT PRINCIAPL FIXED TOTAL RENT
DATE COMPONENT OF INTEREST PAYABLE
RENT COMPONENT
OF RENT
[ten years of semi-annual
dates to match the dates
to be inserted in Loan
Supplement]
<PAGE>
SCHEDULE 6
Part II
Rent
(a) The amount payable on any Rental Payment Date under Part II
of Schedule 6 shall be the Principal Component of Rent set
out opposite that Rental Payment Date in paragraph (b) below
together with the amount of interest notified by the Lessor
as payable on that Rental Payment Date in accordance with
paragraph (c) below.
(b) Rental Payment Date Principal Component of Rent
[ten years of semi-annual dates
to match the dates to be inserted
in Loan Supplement]
(c) Two Banking Days before each Value Date the Lessor shall
notify the [ ] Lessee of the amount of interest
payable under this Part II of Schedule 6 on the Rental
Payment Date immediately succeeding that Value Date prior to
the termination howsoever of the leasing of the Aircraft to
the [ ] Lessee. The interest in respect of each
Value Date shall be calculated in accordance with Clause
[ ] of the Facility Agreement except that the amount in
respect of which interest is payable shall be the
Outstanding Principal Component of Rent shown opposite the
Value Date in column 2 of the table set out below.
Value Date Outstanding Principal
Component of Rent
[ten years of semi-annual dates
to match the dates to be
inserted in Loan Supplement]
"Value Date" means the Drawdown Date and each Rental Payment
Date.
<PAGE>
SCHEDULE 6
Part III
Termination Sum Calculation
The Termination Sum shall be calculated as follows:-
(a) If the Expiry Date is a Rental Payment Date the Termination
Sum shall be the aggregate of:-
(i) the aggregate of all the amounts set out in Part I of
Schedule 6 in the column headed "Principal Component of
Rent" from and including the amount set out therein
opposite that Rental Payment Date together with the
amount set out opposite that Rental Payment Date in the
column headed Interest Component of Rent; and
(ii) the aggregate of:
(aa) the amount set out in the column headed
"Outstanding Balance of Rent" opposite that Rental
Payment Date in the table below
Rental Payment Date Outstanding Balance of
Rent
[ten years of semi-annual
dates to match the dates to
be inserted in Loan
Supplement]
and
(bb) the amount of interest notified in accordance with
paragraph (c) of Part II of Schedule 6 as payable on
that Rental Payment Date.
(b) If the Expiry Date is not a Rental Payment Date the
Termination Sum shall be the aggregate of:-
(i) the aggregate of all the amounts set out in Part I of
Schedule 6 in the column headed Principal Component of
Rent from and including the Rental Payment Date
immediately succeeding the Expiry Date together with an
amount calculated as follows:-
A x C
---
B
Where A equals the amount shown in the column
headed Interest Component of Rent
opposite the immediately succeeding
Rental Payment Date;
B equals the total number of days in the
Interest Period;
C equals the total number of days elapsed in
the Interest Period excluding the Expiry
Date; and
<PAGE>
(ii) the amount set out opposite the Interest Period in
which the Expiry Date falls in the table below together
with an amount calculated as follows:-
A x C
---
B
Where A equals the amount notified in accordance
with paragraph (c) of Part II of
Schedule 6 as payable on the immediately
succeeding Rental Payment Date
B equals the number of days in the Interest
Period
C equals the total number of days elapsed in
the Interest Period excluding the Expiry
Date.
Interest Period (in each case Outstanding Principal
from and including the first Component of Rent
date to and including the last date)
[ten years of semi-annual dates to
match the dates to be inserted
in Loan Supplement]
For the avoidance of doubt it is understood and agreed that
if the Expiry Date is the Rental Payment Date on the tenth
anniversary of the Delivery Date the Termination Sum shall
be nil.
<PAGE>
SCHEDULE 7
Mandatory Lease Provisions
1.1 Rent
(a) In relation to any Approved Sub-Lease of the Aircraft,
"Applicable Minimum Rent" means in respect of each six
month period ending on a Rental Payment Date an amount
which is not less than the aggregate of:-
(i) the amount appearing under the column designated
as "Fixed Interest Component of Rent" in Part I of
Schedule 6 shown opposite the relevant Rental
Payment Date stipulated in Part I of Schedule 6;
and
(ii) the amount of interest (if any) notified to the
[ ] Lessee in accordance with
paragraph (c) of Part II of Schedule 6 as being
payable on the first Rental Payment Date as
referred to in sub-paragraph (i) above which falls
after the date on which the Aircraft is to be
delivered to the Approved Sub-Lessee pursuant to
the Approved Sub-Lease, provided that it shall be
assumed that for the purposes of determining the
Applicable Minimum Rent, if no amount of interest
has been notified, an amount equal to the amount
of interest last notified in accordance with
paragraph (c) of Part II of Schedule 6 will be
payable on each Rental Payment Date thereafter.
(b) "rent" may include any periodic amount of an income
nature payable by the Approved Sub-Lessee under an
Approved Sub-Lease (notwithstanding that such amount is
not described therein as rent), provided that there is
no obligation imposed upon the [ ]
Lessee by the Approved Sub-Lease to refund all or any
part of such amount (except to the extent that it
represents (i) a refund of any tax credit received and
utilised by the [ ] Lessee or (ii) an
overpayment in relation to the actual period during
which the Approved Sub-Lessee shall have had use or
possession of the Aircraft), provided further that if
the Approved Sub-Lease provides for adjustment of rent
instalments by reference to interest rate fluctuation,
the rent for any period shall be deemed to be the
amount which would result if LIBOR throughout the term
of the Approved Sub-Lease were a rate equal to LIBOR
for a period of six months determined on the date of
the Approved Sub-Lease (or, if such date is not a
Banking Day, on the immediately preceding Banking Day).
1.2 All rent under an Approved Sub-Lease of an Aircraft shall be
denominated and payable in Dollars (save that rentals may be
payable in another freely convertible currency, in amounts
calculated by converting the prescribed Dollar amount into
such currency by reference to the actual exchange rate on
the date of payment or on such earlier date as may be
specified in the Approved Sub-Lease in order to afford the
Approved Sub-Lessee a sufficient period to arrange payment
following such calculation) unless the Lessor agrees
otherwise in relation to such Approved Sub-Lease.
1.3 Subject to the provisions of paragraphs 1.5 and 1.6, the
rent payable under any Approved Sub-Lease of an Aircraft
shall at no time be less than the Applicable Minimum Rent
for the Aircraft for the same period (determined on a
proportionate basis, if the Approved Sub-Lease provides for
rent to be payable on a basis other than semi-annually),
PROVIDED THAT if the Approved Sub-Lease provides for rent
instalments which are to vary in accordance with an agreed
schedule, the amount to be compared with the Applicable
Minimum Rent shall be calculated as the semi-annual
equivalent of the monthly or, as the case may be, the
quarterly rental instalments payable throughout the period
of the Approved Sub-Lease.
1.4 The Approved Sub-Lease shall be a net lease and the Approved
Sub-Lessee's obligation to pay Rent and make other payments
in accordance with the Approved Sub-Lease will be absolute
and unconditional under any and all circumstances and
regardless of other events save for performance of the
Lessor's obligations under any quiet enjoyment undertaking
provided to the Approved Sub-Lessee.
1.5 If the [ ] Lessee so requests, the Rent
payable in respect of the initial period of up to six (6)
months in respect of the initial Approved Sub-Lease may be
lower than the Applicable Minimum Rent PROVIDED THAT:
(i) the Aircraft is subject to post-delivery modifications;
<PAGE>
(ii) the Rent payable by the Approved Sub-Lessee may be
reduced by being pro rated on a daily basis for such
period (not to exceed 1 calendar month) as the Aircraft
is subject to post-delivery modifications; and
(iii) in any event the Rent payable in respect of the
initial six month period shall be an amount equal
to or greater than five-sixths of the Applicable
Minimum Rent.
1.6 The Rent payable in respect of the initial period of up to
six (6) months in respect of any Approved Sub-Lease in
replacement of the initial Approved Sub-Lease may be lower
than the Applicable Minimum Rent PROVIDED THAT
(i) the Lease Period of such Approved Sub-Lease is
scheduled to continue for at least three (3) years; or
(ii) the [ ] Lessee first obtains the consent
of the Lessor and the Security Agent, such consent not
to be unreasonably withheld or delayed.
2. Reserves
In those Approved Sub-Leases where the [ ]
Lessee requires the payment of airframe and engine reserves
(collectively the "Reserves") the Approved Sub-Lessee shall
pay to the [ ] Lessee supplemental Rent, based
on the Approved Sub-Lessee's use of the Aircraft during the
Lease Period, in the form of the Reserves on a per flight
hour basis.
3. Disclaimer
3.1 The Approved Sub-Lessee shall, on delivery of the Aircraft,
expressly acknowledge to the [ ] Lessee that
no condition, warranty or representation, express or implied
whether statutory or otherwise is or has been given by or on
behalf of the [ ] Lessee in respect of the
Aircraft including as to description, airworthiness,
condition, workmanship, merchantability, fitness for any
purpose or design of the Aircraft (if the Approved Sub-
Lessee so requires and if the Applicable Law limits the
extent to which such acknowledgement may be given, such
acknowledgement may be qualified so that it is given only to
the extent permitted by Applicable Law). Delivery by the
Approved Sub-Lessee to the [ ] Lessee of an estoppel
and acceptance certificate in the form agreed between the [
] Lessee and the Approved Sub-Lessee will be conclusive
proof as between the [ ] Lessee and the Approved
Sub-Lessee that the Aircraft or any part thereof is without
defect whether or not discoverable at delivery and in every
way satisfactory to the Approved Sub-Lessee.
3.2 Without prejudice to the disclaimer in paragraph 3.1 the
Approved Sub-Lessee's obligation to accept delivery of the
Aircraft may be conditional on the Approved Sub-Lessee
having satisfied itself by inspection as to the condition
thereof or as to compliance with any specific criteria prior
to the execution of the estoppel and acceptance certificate
referred to in paragraph 3.1.
3.3 The [ ] Lessee may warrant or undertake
to the Approved Sub-Lessee that the Aircraft will comply
with certain specific factual criteria, provided such
warranty or undertaking is satisfied or discharged by the
Approved Sub-Lessee's acceptance of the Aircraft upon the
<PAGE>
execution of the estoppel and acceptance certificate
referred to in paragraph 3.1 (or, if the Approved Sub-Lessee
agrees to accept delivery notwithstanding non-compliance,
provided the [ ] Lessee undertakes to rectify such
non-compliance (or provide appropriate compensation) within
an agreed period after delivery).
3.4 The [ ] Lessee will cause the disclaimer
and exclusion provisions of Clause 6 of this Agreement to be
made known to any Approved Sub-Lessee and will procure that
the Approved Sub-Lessee confirms to the [ ]
Lessee, prior to commencement of the sub-leasing, that the
Approved Sub-Lessee accepts and agrees to be bound by the
provisions of Clause 6 of this Agreement.
4. Operational Undertakings
4.1 The Approved Sub-Lessee shall undertake that throughout the
period of the Approved Sub-Lease the Approved Sub-Lessee
shall:-
(a) Compliance with Laws
comply with all Applicable Laws and regulations from
time to time in force in any country to, from, in or
over which the Aircraft is flown (if the [
] Lessee so requires this undertaking may be
qualified so that the Approved Sub-Lessee will not be
in breach of this undertaking by virtue of an alleged
breach of law or regulation if the Approved Sub-Lessee
is contesting in good faith by appropriate proceedings
the applicability to it of such law or regulation,
provided that adequate resources for the payment of any
amounts which may arise in connection with such
proceedings have been provided by the Approved Sub-
Lessee and such proceedings or such non-compliance or
continued non-compliance with such laws or regulations
do not give rise to any likelihood of the Aircraft or
any interest in the Aircraft being sold, forfeited or
otherwise lost);
(b) Registration of the Aircraft
the Approved Sub-Lessee at its sole cost and expense
will:-
(i) register and maintain registration of the Aircraft
at the register of the Aircraft in the State of
Registration;
(ii) from time to time take all other steps then
required by Applicable Law (including the Geneva
Convention if applicable) or by practice, custom
or understanding or as the [ ] Lessee
may reasonably request to protect and perfect the
Lessor's interest in the Aircraft as owner and as
lessor, the [ ] Lessee as lessor and
the Security Agent's interest as assignee under
any Sub-Lease Security Assignment.
To the extent permitted by Applicable Law and in
accordance with the requirements of the Applicable
Law from time to time the Approved Sub-Lessee at
its sole cost and expense will cause the Approved
Sub-Lease to be kept filed and recorded in the
State of Registration and in any other offices as
is necessary to protect the Lessor's, the [
] Lessee's and the Security Agent's
rights described in (i) and (ii) above.
<PAGE>
(c) Non-forfeiture
not do or permit to be done anything which might expose
the Aircraft to condemnation, destruction, seizure or
confiscation if the Approved Sub-Lessee so requires,
this undertaking may be qualified so that:-
(aa) it does not extend to any act or omission
giving rise to exposure to such penalty,
forfeiture or detention where such act or
omission (or an earlier act or omission the
consequences of which would be to cause such
act or omission to give rise to such penalty,
forfeiture or detention when such exposure
would not otherwise have arisen from such act
or omission) (i) occurred prior to the
leasing of the Aircraft to the Approved Sub-
Lessee, or (ii) was an act of the [
] Lessee, the Lessor or the Security
Agent (other than an act relating to the
maintenance, repair, management, control,
leasing, condition, use or operation of the
Aircraft or of any other aircraft or engine
operated by the Approved Sub-Lessee, and
consented to by the [ ]
Lessee or permitted under the Approved Sub-
Lease or taken as a result of the occurrence
and continuance of an event of default under
the Approved Sub-Lease); and/or
(bb) it does not extend to any act or omission
giving rise to a penalty, forfeiture or
detention which is being contested in good
faith by appropriate proceedings (provided
that (i) adequate resources have been made
available by the Approved Sub-Lessee for any
payment which may arise or be required in
connection with such penalty, forfeiture or
detention, or proceedings taken in respect
thereof, and (ii) such proceedings, or such
penalty, forfeiture or detention, or the
continued existence thereof, do not give rise
to any likelihood of the assets to which such
penalty, forfeiture or detention relates or
any interest in such assets being sold,
forfeited or otherwise lost);
(d) No Liens (other than Permitted Liens)
not create or agree to create any Lien (other than
a Permitted Lien) in respect of the Aircraft or
the Approved Sub-Lease, and promptly discharge all
obligations which may give rise to such Lien (if
the Approved Sub-Lessee so requires, this
undertaking may be qualified so that it does not
extend (i) to any Lien arising as a result of (aa)
any act or omission occurring prior to the leasing
of the Aircraft to the Approved Sub-Lessee, or
(bb) any act of the [ ] Lessee,
the Lessor or the Security Agent (other than an
act relating to the maintenance, repair,
management, control, leasing, condition, use or
operation of the Aircraft or of any other aircraft
or engine operated by the Approved Sub-Lessee or
permitted under the Approved Sub-Lease or taken as
<PAGE>
a result of the occurrence and continuance of an
event of default under the Approved Sub-Lease)
and/or (ii) to any alleged Lien the validity of
which is being, or to any obligation which may
give rise to such a Lien but the applicability of
which is being, challenged in good faith by
appropriate proceedings (provided that (aa)
adequate resources have been made available by the
Approved Sub-Lessee for any payment which may
arise or be required in connection with such
proceedings or such obligation, and (bb) such
proceedings, or such obligation, or the continued
existence thereof, do not give rise to any
likelihood of the Aircraft or the Approved Sub-
Lease or any interest in either of them being
sold, forfeited or otherwise lost);
(e) Inspection
permit but not oblige the [ ]
Lessee, the Lessor and the Security Agent or their
respective nominees to inspect/survey the Aircraft on
reasonable notice, not disturbing the normal commercial
or maintenance operation thereof;
(f) Costs of Operation
pay all costs directly or indirectly incurred in
connection with the operation of the Aircraft during
the period of the Approved Sub-Lease; and the
obligations and liabilities of the Approved Sub-Lessee
arising prior to return of the Aircraft to the [
] Lessee will continue in full force and
effect notwithstanding termination howsoever of the
Approved Sub-Lease;
(g) No Violation of Insurance Policies
not use or permit the Aircraft to be used in any manner
or for any purpose which is not covered by the
insurance policies that the Sub-Lessee is required to
carry and maintain under the Approved Sub-Lease.
5. Sub-Sub-leasing
The Approved Sub-Lessee will not part with possession of the
Aircraft (except for maintenance and repair) at any time
without the prior written consent of the [ ] Lessee, the
grant or refusal of which will be either in the absolute
discretion of the [ ] Lessee or upon terms that the [
] Lessee's consent shall not be
unreasonably withheld, PROVIDED ALWAYS THAT if any sub-sub-
lease would involve the Aircraft being registered or
habitually based outside the country of the Approved Sub-
Lessee, the Approved Sub-Lease shall stipulate that it shall
be reasonable for the [ ] Lessee to
withhold its consent, unless (i) the Lessor and the Security
Agent are satisfied (with the support of an independent
local legal opinion) that their respective interests as
owner of the Aircraft and as assignee of the Sub-Lease
Security Assignment would be fully recognised and protected
in the jurisdiction in which the Aircraft is proposed to be
based, (ii) neither the State of Registration nor the
Habitual Base (if the Habitual Base is a different country
from the State of Registration) is a Prohibited Country and
(iii) the [ ] Lessee certifies to the
Lessor and the Security Agent that the terms of the sub-sub-
lease neither conflict nor are inconsistent with the terms
of the Approved Sub-Lease.
<PAGE>
Any such sub-sub-lease shall be for a period not exceeding
twelve (12) months and for the purpose of determining the
period of any sub-sub-lease there shall be included any
additional or extended period or periods contemplated by the
documents entered into by the Approved Sub-Lessee and the
sub-sub-lessee in respect of the sub-sub-leasing of the
Aircraft.
Any such sub-sub-lease will be subject and subordinate to
the Approved Sub-Lease and shall prohibit further derivative
sub-leasing by the sub-sub-lessee. The Approved Sub-Lessee
will continue to be responsible for performance of its
obligations under the Approved Sub-Lease during any period
of sub-sub-lease.
The Approved Sub-Lessee may enter into a Wet Lease provided
that (i) the Aircraft shall remain registered in the State
of Registration of the Approved Sub-Lessee; (ii) the
Aircraft shall neither be habitually based nor operated in a
Prohibited Country and (iii) the Approved Sub-Lessee retains
at all times full responsibility for the Insurances.
6. Maintenance
Throughout the period of the Approved Sub-Lease the Approved
Sub-Lessee shall maintain and repair the Aircraft, Engines
and all of the Parts in accordance with (i) the Maintenance
Programme, (ii) the rules and regulations of the Aviation
Authority, (iii) in accordance with any other regulations or
requirements necessary in order to (a) maintain a
Certificate of Airworthiness for the Aircraft at all times
and upon return of the Aircraft to the [ ]
Lessee on the return date stipulated in the Approved Sub-
Lease to obtain, at the election of the [ ]
Lessee, a Certificate of Airworthiness issued by the FAA in
accordance with FAR Part 21 or by the CAA or the DGAC or the
JAA or the LBA or any other analogous standards of another
aviation authority approved by the Lessor and the Security
Agent (such approval not to be unreasonably withheld) and
(b) enable the Aircraft to be placed on the operating
certificate of a U.S. airline in accordance with Part 121 of
the Federal Aviation Regulations (or any legislative re-
enactment or modification thereof) or of an English or
French airline in accordance with the respective regulations
of the CAA, the DGAC, the JAA or the LBA.
7. Engine and Part Installation
The provisions in the Approved Sub-Lease relating to
treatment of engines and parts shall correspond and comply
in all material respects with those stated in Clause 11 of
this Agreement.
8. Indemnities
The Approved Sub-Lessee shall undertake to indemnify the [
] Lessee (upon terms acceptable to the [
] Lessee) at all times in respect of any and all
losses or liabilities ("Liabilities") arising from the
maintenance, repair, management, control, leasing,
condition, use or operation of the Aircraft during the
period of the Approved Sub-Lease, provided that such
indemnities shall not be qualified as to any period of
validity.
<PAGE>
9. Insurance
The insurance obligations of the Approved Sub-Lessee shall,
mutatis mutandis correspond and comply in all material
respects with those stated in Clause 14 of and Schedule 9 to
this Agreement, references therein to the Lessor, the [ ]
Lessee and the Lease meaning the [ ]
Lessee, the Approved Sub-Lessee and the Approved Sub-Lease
respectively.
10. Representations and Warranties
The Approved Sub-Lessee shall represent and warrant to the [
] Lessee:
(a) concerning the Approved Sub-Lessee's corporate standing
or legal status;
(b) that the Approved Sub-Lease has been duly authorised
and executed by the Approved Sub-Lessee; and
(c) that the Approved Sub-Lease constitutes legal, valid
and binding obligations of the Approved Sub-Lessee (if
the [ ] Lessee so requires, this
representation and warranty may be qualified by
reference to the qualifications in the legal opinion
relating to the Approved Sub-Lease).
11. Return of Aircraft
The return obligations of the Approved Sub-Lessee shall
correspond and comply in all material respects with the
following provisions:-
(a) Date of Return
The Approved Sub-Lessee will be obligated to return the
Aircraft, Engines, Parts and Technical Records to the [
] Lessee on the expiry date, (as that
term is defined in the Approved Sub-Lease) ("Expiry")
unless a Total Loss of the Aircraft occurred prior to
the Expiry and the Approved Sub-Lease was terminated
earlier. If the Approved Sub-Lessee is in default
under the Approved Sub-Lease by failing to return the
Aircraft on the Expiry or if a termination event of the
kind described in paragraph 12 of this Schedule 7
occurs prior to Expiry and the [ ] Lessee
repossesses the Aircraft, the return requirements
nonetheless must be met on the date the Aircraft is
actually returned to the [ ] Lessee or
repossessed by the [ ] Lessee.
(b) Technical Reporting
Prior to the Expiry, the Approved Sub-Lessee will
provide the [ ] Lessee with technical
information reasonably requested by the [ ]
Lessee regarding the Aircraft.
(c) Return Location
The Approved Sub-Lessee at its expense will return the
Aircraft, Engines, Parts and Technical Records to the [
] Lessee at [PLACE OF RETURN] or to
such other airport as may be mutually agreed to by the
Approved Sub-Lessee and the [ ]
Lessee.
<PAGE>
(d) Aircraft Inspection
(i) During the maintenance checks performed
immediately prior to the proposed redelivery and
at the actual return of the Aircraft, the [
] Lessee and/or its representatives
will have an opportunity to inspect the Aircraft,
the Technical Records;
(ii) Immediately prior to the proposed redelivery of
the Aircraft, the Approved Sub-Lessee will carry
out for the [ ] Lessee and/or the [
] Lessee's representatives a
demonstration flight of the Aircraft for a period
of not less than one (1) hour.
(e) Certificate of Airworthiness Matters
The Aircraft will possess a current Certificate of
Airworthiness issued by the Aviation Authority
(although the Certificate of Airworthiness may later be
substituted by the export certificate of airworthiness
if requested by the [ ] Lessee).
(f) General Condition of Aircraft at Return
(i) The Aircraft, Engines and Parts will have been
maintained and repaired in accordance with the
Maintenance Programme, the rules and regulations
of the Aviation Authority and the Approved Sub-
Lease.
(ii) The Technical Records (including records and
manuals) will have been maintained in accordance
with the rules and regulation of the Aviation
Authority and the Approved Sub-Lease.
(iii) The Aircraft will be airworthy, clean by
international commercial airline standards
and ready for flight.
(iv) The Aircraft will be in the same working order and
condition as at delivery to the Approved Sub-
Lessee (reasonable wear and tear from normal
flight operations excepted), with all pilot
discrepancies and deferred maintenance items
cleared. All Aircraft equipment, components and
systems will be operating in accordance with their
intended use and within limits approved by
Manufacturer and the Aviation Authority.
(v) The Aircraft will be returned with the Engines
installed and with the same equipment as at
delivery to the Approved Sub-Lessee, subject only
to those replacements, additions and modifications
permitted under the Approved Sub-Lease.
(vi) All airworthiness directives and other
instructions of the Aviation Authority applicable
to the Aircraft and requiring compliance (either
by means of repetitive inspections, modifications
or terminating action) prior to return of the
Aircraft to the [ ] Lessee will
have been performed on the Aircraft.
<PAGE>
(g) Checks Prior to Return
Immediately prior to the return of the Aircraft to the
[ ] Lessee, the Approved Sub-Lessee at
its expense will do each of the following:-
(i) If the term of the Sub-Lease is one year or
greater or if a "C" check or equivalent must be
performed within six (6) months after return of
the Aircraft to the Lessee, perform a full and
complete zonal, systems and structural check ("C"
or its equivalent) and the corresponding lower
checks ("A" and "B" or equivalent) in accordance
with Manufacturer's maintenance planning document
or the Maintenance Programme sufficient to clear
the Aircraft until the next full and complete
zonal, systems and structural check. Any
discrepancies revealed during such inspection will
be corrected in accordance with Manufacturer's
maintenance and repair manuals.
(ii) If the Aircraft was delivered to the Approved Sub-
Lessee in the Approved Sub-Lessee's livery, remove
the Approved Sub-Lessee's exterior markings by
stripping or scuff/sanding (as necessary) the
paint from the Airframe in accordance with
Manufacturer's maintenance and repair manuals.
(iii) Repaint the cockpit and replace placards if
reasonably required by the [
] Lessee.
(iv) In accordance with Manufacturer's structural
repair manual, permanently repair damage to the
Aircraft incurred during the term of the Approved
Sub-Lessee that exceeds Manufacturer's limits.
(v) Perform full and complete borescope on each Engine
and its modules in accordance with the Engine
Manufacturer's maintenance manual, with the [
] Lessee or its representatives
entitled to be present. The Approved Sub-Lessee
will correct any discrepancies in accordance with
the guidelines set out by the Engine Manufacturer
which may be discovered during such inspection.
(vi) In accordance with Manufacturer's maintenance
manual, accomplish a power assurance run on the
Engines and record and evaluate the Engine
performance, with the [ ] Lessee and/or
its representative entitled to be present. The
performance of each Engine will be within the
limits specified in the Engine Manufacturer's
maintenance manual.
(h) Part Lives
The condition of the Aircraft and installed systems
upon return to the [ ] Lessee will be
as follows:
(i) the Aircraft will have at least six (6) months of
operation until the next "D" check, heavy "C"
check or equivalent based on the customary
utilisation of an aircraft of the same type as the
Aircraft;
<PAGE>
(ii) if the Approved Sub-Lease requires that a "C"
check or equivalent be performed prior to return
the Aircraft will have zero (0) revenue hours
consumed since the last "C" check or equivalent.
If the Approved Sub-Lease does not require that a
"C" check or equivalent be performed prior to
return, the Aircraft will have sufficient hours
remaining until the next scheduled or required "C"
check or equivalent to enable the Aircraft to
operate for at least six (6) months based on the
customary utilisation of an aircraft of the same
type as the Aircraft;
(iii) based on the higher of (x) the customary
utilisation of an aircraft of the same type
in the Lessee's fleet and (y) the hours/cycle
ratio of [A300: [ ] hours/[ ]
cycles - A310: [ ] hours/[ ]
cycles - A320: 1500 hours/1200 cycles - A321:
[ ] hours/[ ] cycles - A330:
2000 hours/1500 cycles - A340: 2200
hours/1500 cycles] for the Aircraft, each
Engine will have sufficient hours/cycles
(whichever is the more limiting factor)
remaining on the Engine's most restrictive
hour/cycle limited component to operate for a
period of six (6) months. Based on the
customary utilisation of an aircraft of the
same type as the Aircraft, each Engine will
also have sufficient hours/cycles (whichever
is the more limiting factor) remaining to
operate a period of six (6) months until its
next anticipated full performance shop visit;
(iv) the installed auxiliary power unit will be
serviceable;
(v) based on the higher of (x) the customary
utilisation of an aircraft of the same type in the
Lessee's fleet and (y) the hours/cycle ration of
[A300: [ ] hours/[ ] cycles - A310:
[ ] hours/[ ] cycles - A320: 1500
hours/1200 cycles - A321: [ ]
hours/[ ] cycles - A330: 2000 hours/1500
cycles - A340: 2200 hours/1500 cycles] for the
Aircraft, the installed main and nose landing gear
components and their associated actuators and
parts will be cleared of all inspections for a
period of six (6) months and will have at least
six (6) months of landings remaining until the
next inspection, overhaul or schedule removal;
(vi) based on the higher of (x) the customary
utilisation of an aircraft of the same type in the
Lessee's fleet and (y) the hours/cycle ratio of
[A300: [ ] hours [ ] cycles - A310:
[ ] hours/[ ] cycles - A320: 1500
hours/1200 cycles - A321: [ ]
hours/[ ] cycles - A330: 2000 hours/1500
cycles - A340: 2200 hours/1500 cycles] for the
Aircraft, each hard time and life-limited
component or Part of the Aircraft will have
sufficient hours and cycles (whichever is
applicable) remaining to operate at least six (6)
months until its next schedule overhaul or
removal; and
<PAGE>
(vii) each component or Part which has a calendar
limit (including emergency equipment) will
have (i) at least six (6) months calendar
time remaining to operate or (ii) one hundred
per cent. (100%) of its total approved life,
whichever is less.
(i) Export and Deregistration of Aircraft
At the [ ] Lessee's request, the
Approved Sub-Lessee will (i) assist in providing an
export certificate of airworthiness or its equivalent
from the State of Registration so that the Aircraft can
be exported to the country designated by the [
] Lessee, (ii) assist with de-registration of
the Aircraft from the register of aircraft in the State
of Registration and (iii) perform any other acts
reasonably required by the [ ] Lessee in
connection with the foregoing.
(j) Return Acceptance Certificate
Upon return of the Aircraft in accordance with the
terms of this Approved Sub-Lease, the Approved Sub-
Lessee will prepare and execute two (2) return
acceptance supplement certificates substantially in the
form of Schedule 10.
12. Lease Termination Events
12.1 The [ ] Lessee shall be expressly
entitled by the Approved Sub-Lease to terminate the leasing
of the Aircraft to the Approved Sub-Lessee, and to repossess
the same, at any time after the expiration of the agreed
grace period or remedy period, if any of the following
events occur:
(i) the Approved Sub-Lessee fails to pay any amount which
has become due and payable by it under the Approved
Sub-Lease; or
(ii) the Approved Sub-Lessee fails to obtain or maintain any
of the insurances which the Approved Sub-Lessee is
obliged by the Approved Sub-Lease to obtain or maintain
(no grace/remedy periods shall be permitted by this
event); or
(iii) the Approved Sub-Lessee fails to comply with or
observe or perform any of its other obligations
under the Approved Sub-Lease (if the Approved Sub-
Lessee so requires this provision may be
restricted to material obligations); or
(iv) the Approved Sub-Lessee (i) suspends payment on its
debts or other obligations, (ii) is unable to or admits
inability to pay its debts or other obligations as they
fall due, (iii) is adjudicated or becomes bankrupt or
insolvent or (iv) proposes or enters into any composi-
tion or other arrangement for the benefit of its
creditors generally; or any proceedings, resolutions,
filings or other steps are instituted with respect to
the Approved Sub-Lessee relating to the bankruptcy,
liquidation, reorganisation or protection from
creditors of the Approved Sub-Lessee or a substantial
part of the Approved Sub-Lessee's property, it being
understood that if such were instituted by the Approved
Sub-Lessee the same would be an immediate event of
<PAGE>
default under the Approved Sub-Lease or if such were
instituted by another person the same would be an Event
of Default under the Approved Sub-Lease if not
dismissed, remedied or relinquished within ninety (90)
days; it being understood that the provisions of this
sub-paragraph (iv) may be modified by reference to the
insolvency laws of the jurisdiction of incorporation of
the Approved Sub-Lessee; or
(v) any licence, consent, certificate or approval required
for the operation of the Aircraft by the Approved Sub-
Lessee is revoked, cancelled, suspended, withdrawn,
withheld or not renewed (such event a "De-
registration") and such De-registration will or may
have a material adverse effect on the Approved Sub-
Lessee's ability to perform its obligations under the
Approved Sub-Lease or jeopardise the interests of the
Lessor as owner, the [ ] Lessee as
lessor or the Security Agent in the Aircraft (if the
Approved Sub-Lessee so requires, this event may be
qualified so that it does not extend to any De-
registration which arises from an act or omission which
is not an act or omission of the Approved Sub-Lessee
and, if the Approved Sub-Lessee so requires, this
undertaking may be further qualified so that it does
not extend to any De-registration which is being
contested in good faith by appropriate proceedings
provided that (i) an adequate bond has been provided
and such proceedings do not involve any danger of the
detention, interference with the use or operation,
sale, forfeiture or loss of the Aircraft and such De-
registration continues for a period of thirty (30) days
from the occurrence of De-registration provided that
such thirty (30) day grace period will not apply if
there is a danger of detention, interference with the
use or operation, sale, forfeiture or loss of the
Aircraft); or
(vi) the Approved Sub-Lessee takes any steps to prejudice
the existence, validity, enforceability or priority of
the rights of the Lessor as the owner/lessor of the
Aircraft, or of the Security Agent as the assignee
under the Sub-Lease Security Assignment; or
(vii) the Approved Sub-Lease becomes wholly or partly
invalid, illegal or unenforceable (if the Approved
Sub-Lessee so requires, this provision may be
qualified so that it does not apply where the
Approved Sub-Lessee promptly enters into
substitute arrangements which are legal, valid and
enforceable against the Approved Sub-Lessee and
which have the same commercial effect as the
Approved Sub-Lease, and/or, if the Approved Sub-
Lessee so requires, this provision may be
qualified so that it extends to partial
invalidity, illegality or unenforceability only
where such partial invalidity, illegality or
unenforceability would materially adversely affect
the interests of the Lessor in the Aircraft, the
rights of the Security Agent under the Sub-Lease
Security Assignment, the rights of the [
] Lessee under the Approved Sub-Lease or the
Approved Sub-Lessee's ability to perform its
obligations under the Approved Sub-Lease); or
(viii) where the Approved Sub-Lessee is a United Kingdom
or Irish company or a company incorporated in a
<PAGE>
jurisdiction having analogous laws relating to
administrator/examiner type procedures, if the [
] Lessee becomes aware of any
circumstances which lead the [ ]
Lessee or its professional advisers in its
reasonable opinion to believe that a petition for
an administration order under Section 9 of the UK
Insolvency Act 1986 (or its equivalent in other
relevant jurisdictions in the case of other
Approved Sub-Lessees affected by similar laws) is
likely to be presented to a court in respect of
the Approved Sub-Lessee.
12.2 The Approved Sub-Lease shall not contain provisions stating
that the Approved Sub-Lessee is to be entitled to specified
remedies or compensation in the event of breach or default
by the Lessor of its obligations under the Approved Sub-
Lease, unless such provisions (i) provide no greater
remedies than the remedies to which the Approved Sub-Lessee
would have been entitled under Applicable Law; or (ii)
provide solely for agreed compensation in the event that
delivery of the Aircraft is delayed for reasons not related
to non-fulfilment of conditions precedent by the Approved
Sub-Lessee.
13. Purchase Option
A purchase option may be granted to an Approved Sub-Lessee,
provided that the minimum price payable by the Approved Sub-
Lessee pursuant to any such purchase option shall be such
amount as shall equal the aggregate of (y) the principal
amount outstanding in respect of the Credits relating to the
Aircraft at the time of the exercise of the purchase option
and (z) six months interest on such outstanding principal
amount calculated at the relevant LASU rates in respect of
the principal amount outstanding under Tranche 1 of the
Credits and at the US Dollar six months (Telerate) LIBOR
prevailing at the time the Approved Sub-Lease is signed plus
the Margin in respect of the principal amount outstanding
under Tranche 2 of the Credits, or such other amount as may
be agreed by the Lessor and the Security Agent.
14. Contractual Exclusion of Recourse
The Guarantor shall be a party to the Approved Sub-Lease as
a co-primary obligor (or, alternatively, the Approved Sub-
Lease must be accompanied by a full performance guarantee
and indemnity of the Guarantor). The Approved Sub-Lessee
shall expressly agree that its recourse and remedies in
respect of the obligations and liabilities of the [
] Lessee (except in respect of the quiet enjoyment
obligation of the [ ] Lessee) or in respect
of any breach or non performance of the same, shall be
exclusively to the Guarantor, and that the Approved Sub-
Lessee shall not be entitled to any recourse to or remedies
against the [ ] Lessee.
15. The Guarantor as Agent of the [ ] Lessee
15.1 The [ ] Lessee and the [ ]
Option Holder shall each appoint the Guarantor as its agent
to give and receive all notices and other communications
referred to in or pursuant to the Approved Sub-Lease to
undertake such other action (including, without limitation,
the giving and issuing of consents, certificates and other
instruments) as may be necessary under or in connection with
this Agreement. Such agency shall, in each case, terminate
automatically upon the occurrence of an Acceleration Event.
<PAGE>
15.2 The Approved Sub-Lessee shall at all times be entitled to
treat any notice, consent, certificate or other instrument
issued or executed by the Guarantor as binding upon the [
] Lessee, and shall not be bound to enquire
whether the Guarantor has consulted with the [
] Lessee or obtained the consent of the [ ]
Lessee in relation to the execution or issue of the same.
15.3 The [ ] Lessee agrees that service by the
Approved Sub-Lessee upon the Guarantor of any notice,
consent, certificate or other instrument issued or to be
issued from time to time pursuant to this Approved Sub-Lease
shall be deemed to constitute service of the same upon the [
] Lessee.
15.4 The foregoing provisions of this paragraph 15 shall not be
deemed to modify or detract from any of the obligations
assumed by, or covenants or undertakings given by, the
Approved Sub-Lessee in or pursuant to the Approved Sub-
Lease.
15.5 Where any provision of the Approved Sub-Lease imposes an
obligation on the [ ] Lessee, the Approved Sub-
Lessee will accept performance of such obligation (in
accordance with the terms of such obligation) by the
Guarantor on behalf of the [ ] Lessee.
16. Payments into Rental, Security Deposit and [ ] Lessee
Maintenance Reserve Collateral Accounts
Any Approved Sub-Lease entered into subsequent to the
occurrence of a Trigger Event shall require the Approved
Sub-Lessee to make (i) all rental payments to the -
[ ] Lessee's [ ] Lessee Rental Collateral
Account, (ii) all security deposit payments to the
[ ] Lessee's [ ] Lessee Security
Deposit Collateral Account and (iii) all maintenance reserve
payments to the [ ] Lessee Maintenance Reserve
Collateral Account and the Approved Sub-Lessee shall
acknowledge to the Lessor any notice it receives of each of
the above-mentioned collateral accounts being charged to the
Lessor.
17. Assignment
No assignment, novation, transfer, mortgage or other charge
may be made by the Approved Sub-Lessee of any of its rights
with respect to the Aircraft, Engine or Part of this
Approved Sub-Lease.
18. Governing Law
The [ ] Lessee shall use reasonable
endeavours to procure that the governing law of the Approved
Sub-Lease shall be English law, French law, German law,
Irish law or the law of any specified State of the United
States of America. However, the governing law may be the
law of another country if the legal opinion (of counsel
qualified in such country) attached to the Approved Sub-
Lease states that the Approved Sub-Lease constitutes binding
and enforceable obligations of the Approved Sub-Lessee under
such law (such opinion may be subject to qualifications
acceptable to the Lessor, the Security Agent and their
respective advisers).
19. Additional Documents
Any ancillary documents or letter agreements entered into by
the [ ] Lessee with the Approved Sub-Lessee
shall not contain any provisions which conflict with or
qualify the provisions of this Schedule.
<PAGE>
SCHEDULE 8
Quiet Enjoyment Covenant to Approved Sub-Lessee
from the Lessor and the Security Agent
From: Encore Leasing Limited
National Westminster Bank Plc
as Security Agent
To: [Name of Approved Sub-Lessee] (the "Approved Sub-Lessee")
Dated 19
Dear Sirs
[ ] Aircraft
Manufacturer's Serial Number [ ] (the "Aircraft")
Aircraft Sub-Lease Agreement (the "Sub-Lease") dated [ ]
19[ ]
between [name of Intermediate Lessor] and the Approved Sub-Lessee
1. In consideration of your issuing to us an Acknowledgement (a
copy of which is annexed hereto) in respect of the Sub-
Lease, we confirm to you that from the date hereof until
[insert relevant date in compliance with Clause 9.5] neither
we nor any person lawfully claiming through us will
interfere with the quiet possession and use of the Aircraft
by the Approved Sub-Lessee throughout the term of the Sub-
Lease so long as the Approved Sub-Lessee performs its
obligations under the Sub-Lease and the Acknowledgement of
the Approved Sub-Lessee. The issue of this letter to you
shall not operate as an assumption by us of any obligation
of [name of Intermediate Lessor] except its obligation not
to interfere with your quiet possession and use of the
Aircraft.
2. The foregoing undertaking is not to be construed as
restricting the rights of the Security Agent to dispose of
the Aircraft in certain circumstances to such persons and on
such terms as we consider appropriate. However, if the
Security Agent becomes entitled to exercise such rights
during the term of the Sub-Lease and provided that the
Approved Sub-Lessee complies with its obligations under the
Sub-Lease and the Acknowledgement of the Approved Sub-
Lessee, the Security Agent will (subject to any requirements
or restrictions imposed by Applicable Law) dispose of the
Aircraft expressly subject to the Sub-Lease and on terms
that the purchaser issues an undertaking to the Approved
Sub-Lessee that it will not interfere with the quiet
possession and use of the Aircraft by the Approved Sub-
Lessee throughout the remaining term of the Sub-Lease, so
long as the Approved Sub-Lessee performs its obligations
under the Sub-Lease.
3. The rights conferred by this letter are granted only to the
Approved Sub-Lessee and do not extend to any assignee,
successor or sub-lessee of the Approved Sub-Lessee.
Please countersign this letter in order to confirm your agreement
to the arrangements contained herein.
............................
Encore Leasing Limited
............................
National Westminster Bank Plc
Agreed and accepted
............................
[Name of Approved Sub-Lessee]
<PAGE>
ANNEX
ACKNOWLEDGEMENT OF ASSIGNMENT
(Manufacturer's Serial Number [ ])
To: Encore Leasing Limited
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
(as Borrower)
and: National Westminster Bank Plc
(as Security Agent)
Dated
Dear Sirs
We acknowledge receipt of a Notice of Assignment dated
[ ] 199[ ] (the "Assignment Notice") relating to
(i) a Sub Lease Security Assignment (the "Sub-Lease Security
Assignment") between [Lessee] (the "Lessee") and International
Lease Finance Corporation (together the "Assignors") and the
Borrower, (ii) a General Security Assignment pursuant to which all
the Borrower's right, title and interest in, to and under the Sub-
Lease Security Assignment were assigned to the Security Agent,
(iii) a [ ] Lessee Sub-Lease Collateral Charge
between the Lessee and the Borrower (the "[ ] Lessee Sub-
Lease Collateral Charge"), and (iv) an Assignment of [Bermuda
Lessee and Irish] [ ] Lessee Sub-Lease Collateral
Charge between the Borrower and the Security Agent. We acknowledge
the Assignment Notice as adequate notice of the assignment of (a)
all the rights, title and interest of the Assignors under the
Aircraft Lease Agreement dated [ ] 199[ ] and made
between International Lease Finance Corporation and ourselves (as
amended) ("the Lease"), (b) the assignment by the Borrower of all
of its right, title and interest in, to and under the Sub-Lease
Security Assignment, (c) the assignment of all the rights, title
and interest of the Lessee in the Accounts and the Assigned Cash
(as defined in the [ ] Lessee Sub-Lease Collateral
Charge) and (d) the assignment of all the rights, title and
interest of the Borrowers in the [ ] Lessee Sub-
Lease Collateral Charge.
In consideration of payment to us of one Dollar (US$1) [and the
issue to us of a quiet enjoyment letter from yourselves receipt of
which we hereby acknowledge], we hereby agree as follows:-
1. If the Security Agent issues to us a notice (a "Default
Notice") that your rights as assignee have become exercisable,
we agree that you shall not be responsible in any way
whatsoever in the event that the exercise by the Assignors of
any right or power may thereafter be adjudged improper or to
constitute a breach or repudiation of the Lease by the
Assignors or either of them, and after issue by the Security
Agent of any Default Notice we shall (a) pay to the Security
Agent at such account as the Security Agent may nominate all
rentals and other amounts from time to time payable by us
under the Lease; (b) to the exclusion of the Assignors,
perform, observe and comply with all our other undertakings
and obligations under the Lease in favour of the Security
Agent and for the benefit of the Security Agent as if the
Security Agent were named as lessor therein; and (c) if you so
request, enter into a lease with the Security Agent's nominee,
on the same terms (mutatis mutandis) as the Lease.
<PAGE>
2. We agree that following the issue of a Default Notice the
Security Agent shall have the benefit of Clause [ ] of the
Lease (Disclaimer and Exclusion) and agree that we are bound
by the terms of such clause, as though the same was set out
herein in full mutatis mutandis.
3. We acknowledge and agree that the issue of the quiet enjoyment
letter to us referred to above shall not operate as a
assumption by the Borrower or the Security Agent of any
obligation of either of the Assignors under the Lease except
their respective obligation not to interfere with our quiet
enjoyment of the Aircraft.
4. Without prejudice to the foregoing, following notification
from the Security Agent that a Trigger Event has occurred
(and only following such notification) we will pay all
monies under the Lease in respect of Rent, the Security
Deposit, and the Maintenance Reserves to the following
Accounts:-
(a) all payments of rental, to the [ ] Lessee Rental
Collateral Account Number [ ] in the name of the
Lessee with [ ]
("Depositee");
(b) all payments of maintenance reserves, to the
[ ] Lessee Maintenance Reserve Collateral
Account number [ ] in the name of the Lessee with
the Depositee;
(c) all payments of security deposit, to the [ ]
Lessee Security Deposit Collateral Account number
[ ] in the name of the Lessee with the
Depositee
or to such other account or accounts as the Security Agent may
from time to time notify us.
Yours faithfully
.......................................................................
For and on behalf of
[APPROVED SUB-LESSEE]
<PAGE>
SCHEDULE 9
Part I
Certificate of Insurance
Part 1
Reference is made to Aircraft Lease Agreement dated as of [DATE
OF LEASE (MONTH, DAY, YEAR)] between the [ ]
Lessee and the Lessor (the "Lease").
To:
ENCORE LEASING LIMITED
P.O. Box 2003 Facsimile No: 1 809 929 8340
George Town
Grand Cayman
Cayman Islands
B.W.I.
[ILFC (BERMUDA) 7, LTD.
[Clarendon House Facsimile No: 1 809 292 6735/2276
Church Street
Hamilton
Bermuda]
[ILFC IRELAND 2 LIMITED
AIG House Facsimile No:1 353 1 283 7774
Merrion Road
Dublin 4
Ireland]
[ALTERNATIVE LESSEE]
Facsimile No:
NATIONAL WESTMINSTER BANK PLC
Corporate Banking Agency Group Facsimile No: 0171 375 5854
7th Floor, 135 Bishopsgate
London EC2M 3UR
[FULL CORPORATE NAME OF
APPROVED SUB-LESSEE] Facsimile No:
[TYPE OF AIRCRAFT]
Manufacturer's Serial No. [ ]
Registration Marks:
(the "Aircraft")
The following security has subscribed to the insurance and/or
reinsurance policies:
[LIST COMPANIES & PERCENTAGES]
THIS IS TO CERTIFY THAT, as [Insurance Brokers] [Insurers], we
have [effected] [issued] Fleet Insurance in respect of aircraft
owned or operated by the [ ] Lessee (including the
Aircraft) as specified below.
<PAGE>
AIRCRAFT HULL ALL RISKS
COVERING:
All risks of physical loss or damage to the Aircraft from any
cause subject only to the exclusions as specified below.
Required Insured Value of Aircraft: the higher of the market
value and 110% of the aggregate amount of principal outstanding
from time to time under the Facility Agreement in respect of the
Advance on an agreed value basis
EXCLUSIONS:
Loss of use, delay, grounding or other consequential loss.
Wear, tear and gradual deterioration (including ingestion damage
caused by stones, grit, sand, ice etc. resulting in progressive
deterioration but not including sudden ingestion causing engine
shut-down, which is covered).
Mechanical breakdown (but subsequent damage outside the unit
affected is covered).
War and Allied Perils as per AVN 48B.
DEDUCTIBLES:
US$1,000,000 each and every loss. Not applicable to Total
Loss/Constructive Total Loss or Arranged Total Loss.
GEOGRAPHICAL COVERAGE:
Worldwide.
AVIATION AND AIRLINE GENERAL THIRD PARTY LIABILITY
COVERING:
Aircraft Third Party, Passenger, Baggage, Cargo and Mail
Liability and Airline General Third Party Liability (including
Premises, Hangarkeepers and Products Liability) for combined
single limit of not less than [US$600,000,000 for narrow-bodied
aircraft] [US$750,000,000 for wide-bodied aircraft] (or such
higher amount as the [ ] Lessee may carry on any
other aircraft in its fleet) for any one accident/occurrence (but
in the aggregate in relation to Products Liability), extended to
cover the [ ] Lessee's liability under the Lease
to the extent of the risks covered by the policy; including war
and allied perils under Extended Coverage Endorsement as per AVN
52; subject only to exclusions as specified below.
EXCLUSIONS:
Damage to the Assured's own property.
Radioactive Contamination as per AVN 38.
Noise and Pollution as per AVN 46B.
Liability to employees arising out of employees' liability,
workmen's compensation or similar regulations.
GEOGRAPHICAL LIMITS:
Worldwide.
<PAGE>
HULL WAR AND ALLIED PERILS
COVERING:
Hull War Risks as per RJM Airline One, but including (i)
confiscation or requisition (including by State of Registration),
(ii) hijacking or other unlawful seizure or wrongful exercise of
control of the Aircraft or crew in flight (including any attempt
at such seizure or control) and including "All Risks"
Continuation Clause and Extortion Risks (including expenses) and
covering claims excluded from Hull All Risks Policy while
Aircraft outside Assured's control by reason of perils insured
under this policy.
Required Insured Value of Aircraft: the higher of the market
value and 110% of the aggregate amount of principal outstanding
from time to time under the Loan Agreement on an agreed value
basis.
EXCLUSIONS:
War (declared or not) between any of the five major powers.
Hostile nuclear detonation.
Debt or failure to provide bond or security.
Repossession or attempted repossession by title holder or arising
out of contractual agreement.
Delay, loss of use or other consequential loss
DEDUCTIBLE:
US$1,000,000
GEOGRAPHICAL LIMITS:
Worldwide.
<PAGE>
AIRCRAFT SPARES ALL RISKS INSURANCE:
COVERING:
All risks of physical loss or damage to Aircraft Parts or spares
or Engines at all times when removed from the Aircraft from
whatever cause, subject only to the exclusions specified below,
including the risks set down in AVN 48B other than paragraphs (a)
and (b) thereof (but including paragraph (a) in respect of
transit risks) for limits of:
US$[ ] any one location.
US$[ ] any one sending.
and covering replacement cost.
EXCLUSIONS:
[Loss or damage during fitting or while under process.]
Wear, tear and mechanical breakdown.
Loss or damage while carried in the Aircraft as a spare parts
kit.
Mysterious disappearance or unexplained shortage upon inventory.
DEDUCTIBLE:
US$[ ] each and every loss.
GEOGRAPHICAL COVERAGE:
Worldwide.
INSURANCE REQUIRED BY MANUFACTURER:
The [ ] Lessee will carry the insurance required
by Manufacturer set forth in the Purchase Agreement.
CONTRACTUAL INDEMNITY
The [ ] Lessee has insurance coverage for the
indemnities agreed to by the [ ] Lessee pursuant to
Clause [9.1] of the Priorities and Indemnities Agreement.
PERIOD OF COVERAGE (ALL POLICIES)
From Delivery Date of Aircraft to [EXPIRY DATE]
<PAGE>
Part 2
SPECIAL ENDORSEMENTS
Each of the following special terms and endorsements apply to all
policies (save where specifically stated):
1. Insurers recognise that the [ ] Lessee and
the Lessor have agreed that a Total Loss of the Airframe
will constitute a Total Loss of the Aircraft.
2. Describe amount of any hull all risks or hull war and allied
perils on the Aircraft which the [ ] Lessee
is carrying in excess of the Required Insured Value (which
excess insurance would be payable to the [
] Lessee). Such excess insurance may not exceed [5% on
wide-bodied aircraft] [10% on narrow-bodied aircraft] of the
Required Insured Value.
3. In the event of Total Loss of the Aircraft, Insurers agree
to pay the Security Agent the Total Loss Proceeds based
solely upon the Lessor's and the Security Agent's (and not
the [ ] Lessee's) execution of the
appropriate form of release/discharge document. [Power of
Attorney by Indemnitees in favour of the Security Agent to
sign discharge of settlement payment of Total Loss Proceeds
on behalf of all the Indemnitees in favour of the Insurers.]
4. Loss Payable Clause
4.1 All Total Loss Proceeds shall be paid in full to the
Security Agent or as the Security Agent shall direct without
any deduction or deductions whatsoever;
4.2 All insurance recoveries in respect of any Total Loss in
excess of the Required Insured Value shall be paid in full
to the [ ] Lessee or the Approved Sub-
Lessee, as the case may be, or as the [ ]
Lessee or the Approved Sub-Lessee shall direct without any
deduction or deductions whatsoever;
4.3 All other recoveries in respect of a partial loss in respect
of repairable damage not exceeding the Damage Notification
Threshold or the equivalent thereof in any other currency
(exclusive of any deductible) in any one case to be paid to
the party nominated by the relevant Approved Sub-Lessee to
repair the damage or with the consent of the Indemnitees to
the Approved Sub-Lessee, or, following the occurrence of an
event of default (howsoever described) under the relevant
Approved Sub-Lease, to the party nominated by the [
] Lessee to repair the damage or with the consent of
the Indemnitees to the [ ] Lessee, in each
case to be applied to the cost of restoration, repair or
replacement of the Aircraft or any part thereof or,
following the occurrence of a Termination Event or a
Mandatory Prepayment Event, to the Security Agent;
4.4 All other recoveries exceeding [five million Dollars
US$5,000,000 in the case of wide-bodied aircraft] and [three
million Dollars US$3,000,000 in the case of narrow-bodied
aircraft] or the equivalent thereof in any other currency
(exclusive of any deductible) shall be paid in full to the
Security Agent or as the Security Agent shall direct without
deduction or deductions whatsoever.
5. [The requirements of Clause 14 of the Aircraft Lease
Agreement No. [ ] dated [ ] 199 between
(1) Encore Leasing Limited, (2) [ILFC (Bermuda) 7, Ltd.]
[ILFC Ireland 2 Limited] [Alternative Lessee] and (3) [ILFC
(Bermuda) 6, Ltd.] [ ] are covered subject to the
provisions of AVN 67B.]
<PAGE>
AVN 67B
AIRLINE
FINANCE/LEASE CONTRACT
ENDORSEMENT
_______________________________
It is noted that the Contract Party(ies) have an interest in
respect of the Equipment under the Contract(s). Accordingly,
with respect to losses occurring during the period from the
Effective Date in respect of the said interest of the Contract
Party(ies) and in consideration of the Additional Premium it is
confirmed that the Insurance afforded by the Policy is in full
force and effect and it is further agreed that the following
provisions are specifically endorsed to the Policy:-
1. Under the Hull and Aircraft Spares Insurances
1.1 In respect of any claim on Equipment that becomes payable on
the basis of a Total Loss, settlement (net of any relevant
Policy Deductible) shall be made to, or to the order of the
Contract Party(ies).(1) In respect of any other claim,
settlement (net of any relevant policy deductible) shall be
made with such party(ies) as may be necessary to repair the
Equipment unless otherwise agreed after consultation between
the Insurers and the Insured and, where necessary under the
terms of the Contract, the Contract Party(ies).
- ----------------
(1) See Loss Payable Clause Endorsement
1.2 The Insurers shall be entitled to the benefit of salvage in
respect of any property for which a claims settlement has
been made
Such payments shall only be made provided the same are in
compliance with all Applicable Laws and regulations.
2. Under the Legal Liability Insurance
2.1 Subject to the provisions of this Endorsement, the Insurance
shall operate in all respect as if a separate policy had
been issued covering each party insured hereunder, but this
provision shall not operate to include any claim howsoever
arising in respect of loss or damage to the Equipment
insured under the Hull or Spares Insurance of the Insured.
Notwithstanding the foregoing the total liability of
Insurers in respect of any and all Insureds shall not exceed
the limits of liability stated in the Policy.
2.2 The Insurance provided hereunder shall be primary and
without right of contribution from any other insurance which
may be available to the Contract Party(ies).
2.3 This endorsement does not provide coverage for the Contract
Party(ies) with respect to claims arising out of their legal
liability as manufacturer, repairer, or servicing agent of
the Equipment.
3. Under ALL Insurances
3.1 The Contract Party(ies) are included as Additional
Insured(s).
3.2 The cover afforded to each Contract Party by the Policy in
accordance with this Endorsement shall not be invalidated by
any act or omission (including misrepresentation and non-
disclosure) of any other person or party which results in a
breach of any term, condition or warranty of the Policy
PROVIDED THAT the Contract Party so protected has not
caused, contributed to or knowingly condoned the said act or
omission.
<PAGE>
3.3 The provisions of this Endorsement apply to the Contract
Party(ies) solely in their capacity as
financier(s)/lessor(s) in the identified Contract(s) and not
in any other capacity. Knowledge that any Contract Party
may have or acquire or actions that it may take or fail to
take in that other capacity (pursuant to any other contract
or otherwise) shall not be considered as invalidating the
cover afforded by this Endorsement.
3.4 The Contract Party(ies) shall have no responsibility for
premium and Insurers shall waive any right of set-off or
counterclaim against the Contract Party(ies), except in
respect of outstanding premium in respect of the Equipment.
3.5 Upon payment of any loss or claim to or on behalf of any
Contract Party(ies), Insurers shall to the extent and in
respect of such payment be thereupon subrogated to all legal
and equitable rights of the Contract Party(ies) indemnified
hereby (but not against any Contract Party). Insurers shall
not exercise such rights without the consent of those
indemnified, such consent not to be unreasonably withheld.
At the expense of Insurers, such Contract Party(ies) shall
do all things reasonably necessary to assist the Insurers to
exercise said rights.
3.6 Except in respect of any provision for Cancellation or
Automatic Termination specified in the Policy or any
endorsement thereof, cover provided by this Endorsement may
only be cancelled or materially altered in a manner adverse
to the Contract Party(ies) by the giving of not less than
Thirty (30) days notice in writing to the Appointed Broker.
Notice shall be deemed to commence from the date such notice
is given by the Insurers. Such notice will NOT howsoever be
given at normal expiry date of the Policy or any
endorsement.
EXCEPT AS SPECIFICALLY VARIED OR PROVIDED BY THE TERMS OF THIS
ENDORSEMENT:-
1. THE CONTRACT PARTY(IES) ARE COVERED BY THE POLICY SUBJECT TO
ALL TERMS, CONDITIONS, LIMITATIONS, WARRANTIES, EXCLUSIONS
AND CANCELLATION PROVISIONS THEREOF
2. THE POLICY SHALL NOT BE VARIED BY ANY PROVISIONS CONTAINED
IN THE CONTRACT(S) WHICH PURPORT TO SERVE AS AN ENDORSEMENT
OR AMENDMENT TO THE POLICY.
<PAGE>
SCHEDULE IDENTIFYING TERMS USED IN THIS
ENDORSEMENT
____________________________________________________
1. Equipment (Specify details of any aircraft, engines or parts
to be covered):
2. Policy Deductible applicable to physical damage to the
Equipment.
[Insert all applicable policy deductions.]
3. (a) Contract Party(ies): Approved Sub-Lessee, [ ]
Lessee, Lessor, Security Agent and each of its Lenders;
AND (b), in addition, in respect of Legal Liability
Insurances:
4. Contract(s):
5. Effective Date (being the date that the Equipment attaches
to the Policy or a specific date thereafter):
6. Additional Premium:
7. Appointed Broker:
<PAGE>
SCHEDULE 9
Part II
Form of Brokers Letter of Undertaking
To: Encore Leasing Limited
[ ] Facsimile No:
National Westminster Bank Plc
Date
Dear Sirs,
Lease Agreement dated [ ] between Encore
Leasing Limited and [ILFC Bermuda 7 Ltd.] [ILFC Ireland 2
Limited] [Alternative Lessee] and [ ] Option
Holder in respect of one Airbus A3[ ] Aircraft
Manufacturer's Serial Number: [ ] Registration
Marks: [ ] (the "Lease")
Capitalised words and expressions used herein shall have the same
meanings as those given to them in the Lease or incorporated by
reference therein.
We confirm that insurance has been effected for the account of
[the [ ] Lessee] [the Approved Sub-Lessee]
covering all aircraft owned or operated by them, including the
above-mentioned aircraft (the "Aircraft"). [Also confirm, if
applicable, the amount of any hull all risks or hull war and
allied perils on the Aircraft which [the [ ]
Lessee] [the Approved Sub-Lessee] is carrying in excess of the
Agreed Value (which excess insurance would be payable to [the
[ ] Lessee] [the Approved Sub-Lessee]). Such
excess insurance may not exceed [5% on wide-bodied Aircraft] [10%
on narrow-bodied aircraft] of the Required Insurance Value.]
Pursuant to instructions received from [the [ ]
Lessee] [the Approved Sub-Lessee] and in consideration of your
approving the arrangement of [the [ ] Lessee's]
[the Approved Sub-Lessee] "Fleet Policy" (under which the above-
mentioned Aircraft is insured) through the intermediary of
ourselves as Brokers in connection with the insurance the
("Insurance") mentioned in our Certificate of Insurance
(Reference No. [ ] dated [ ] and
attached hereto), we undertake as follows:
1. in relation to the All Risks Hull Insurance and Hull, War
Risks and Allied Perils Insurance to hold to the order of
the Lessor and the Security Agent the insurance slips or
contracts and any policies which may be issued or any
policies substituted (with your consent) therefor (but only
insofar as the same relate to the Aircraft only) and the
benefit of such Insurances, but subject to our requirements
to operate the fleet policy of the relevant operator insofar
as it relates to any other aircraft insured thereunder.
<PAGE>
2. promptly to advise the Lessor and the Security Agent:-
(a) if any underwriter insurer cancels or gives notice of
cancellation of any Insurances at least thirty (30)
days (or such lesser period as may be available in the
case of Hull, War and Allied Perils) before such
cancellation is to take effect in respect of the
Aircraft.
(b) of any material alteration in, or termination of, any
such Insurances to the detriment of the Lessor, the
Security Agent or the Lenders;
(c) of any default in the payment of any premium;
(d) of any act omission or event of which they have
knowledge or not notified and which might invalidate or
render unenforceable in whole or in part any
Insurances;
(e) of any failure to receive instructions to renew all or
any of the Insurances at least thirty (30) days prior
to their expiry; and
(f) of our cessation as insurance brokers to [the
[ ] Lessee] [the Approved Sub-Lessee];
3. to supply to the Lessor and the Security Agent at the same
time as [the [ ] Lessee] [the Approved Sub-Lessee]
certified copies of the original and each renewal
certificate of insurance and, as the case may be,
reinsurance substantially in the form of Part I of Schedule
9 of the Lease, in respect of each policy and in each case
stating, inter alia:-
(a) the insured value of the Aircraft, stating such to be
on an agreed value basis (other than with respect to
Engines not installed on the Airframe which will be
insured on a replacement cost basis) and the limit of
liability cover as applicable; and
(b) the requirements of Clause 14 and Schedule 9 of the
Lease are covered by the Insurances; and
(c) the geographical limits of the Insurances; and
(d) the period of cover, including the specific date and
time of commencement and expiry thereof; and
(e) listing the named and each additional insured; and
(f) that the first loss deductibles are not more than one
million Dollars (US$1,000,000); and
(g) the lead underwriters, but not the names of any
syndicate.
Yours faithfully,
............................
For and on behalf of
[Insurance Brokers]
<PAGE>
SCHEDULE 10
Return Acceptance Supplement
Dated [ ]
Relating to Aircraft Lease Agreement
dated [ ]
between
ENCORE LEASING LIMITED
and
[ILFC (BERMUDA) 7, LTD.]
[ILFC IRELAND 2 LIMITED]
[ALTERNATIVE LESSEE]
This Return Acceptance Supplement is executed by the parties
hereto to confirm that on the date of this Return Acceptance
Supplement at time the following described aircraft (the
"Aircraft"):
Manufacturer ......................... Airbus
Model .................................A3[ ]
Manufacturer's Serial No ..............[ ]
Aircraft Hours and Cycles ............ (see Attachment I)
including the following described [two (2)] [four (4)]
aircraft engines installed thereon:
Manufacturer Model
Manufacturer's Serial No
was delivered by the [ ] Lessee to the Lessor and was
accepted by the Lessor under and subject to the Aircraft Lease
Agreement identified above (the "Lease"). The terms used in this
Return Acceptance Supplement shall have the same meaning as in
the Lease.
The [ ] Lessee and the Lessor hereby confirm that
on the date and time hereof the Aircraft was duly accepted by
Lessor as of such date and time and in the condition required by
the Lease.
The [ ] Lessee and the Lessor hereby confirm the
return delivery by the [ ] Lessee and receipt by
the Lessor
of the Aircraft Documentation together with the records,
documents, manuals, authorisations, drawings, revisions and data
applicable to the Aircraft, obtained or developed or caused to be
developed by the [ ] Lessee during the Lease
Period described on the Attachment II hereto and a part hereof,
on 199[ ]/200[ ] at
.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Supplement to be executed in their respective
corporate names by their duly authorised representatives as of
the day and year first above written.
______________________________ _____________________________
[ILFC (BERMUDA) 7, LTD.] ENCORE LEASING LIMITED
[ILFC IRELAND 2 LIMITED]
[ALTERNATIVE LESSEE]
By ______________________ By ________________________
Name _____________________ Name _______________________
Title _____________________ Title ______________________
<PAGE>
ATTACHMENT "Aircraft Hours and Cycles"
ATTACHMENT I
AIRCRAFT HOURS AND CYCLES
AS OF ________________
Airbus MODEL A3[ ]
REGISTRATION MARKINGS [_______] UNIT NUMBER __________ SERIAL
NUMBER [ ]
A. AIRFRAME
. Aircraft Total Time (Hours) _______
Aircraft Total Landings (Cycles) _______
Hours/Cycles since last "A" Check _______
Hours/Cycles since last "C" Check _______
B. ENGINES
Hours/Cycles
to Next
Hours/Cycles Replacement
Serial Engine Total Since Last Lowest Life
Position Number Cycles Hours Shop Visit Limited Part
1
2
[3]
[4]
C. APU
Hours/Cycles
to Next
Total Hours Replacement
Serial Hours/ Since [Last Lowest life
Number Cycles Shop Visit] Limited Part
D. LANDING GEAR
Total Hours/Cycles Hour/Cycles
Serial Hours/ Since Last to Next
Position Number Cycles Overhaul Overhaul
Nose Landing Gear
Right Main Gear
Left Main Gear
<PAGE>
ATTACHMENT II
AIRCRAFT DOCUMENTATION
1. All historical records for Aircraft and engines.
2. APU historical records and schedule of overhaul (if
applicable).
3. Maintenance and inspection programme-planning manual
including work task cards.
4. Airframe and engines current inspection status and operating
times including structural sampling inspection records of
inspections performed on other of the [ ] Lessee's
aircraft where credit for such inspections were applied
against the Aircraft.
5. Current status of auxiliary power unit inspection and
operating times.
6. List and status of time and cycle controlled components -
Aircraft and engines.
7. List of installed components (LRU's) showing the [ ]
Lessee's available data regarding part number, serial
number, manufacturer and accumulated time and cycles.
8. List and status of life limited parts - Aircraft and
engines.
9. Summary and control status of the Aviation Authority's
Airworthiness Directives for Aircraft including engines,
auxiliary power unit and equipment and the method of
incorporation (i.e. repetitive inspections, interim fix or
terminating action) and the date of incorporation.
10. List of manufacturer's service bulletins incorporated and
method of incorporation for airframe, engines and, on
special request, for specific equipment.
11. List of modifications and/or alterations (excluding
manufacturer's service bulletins if accomplished pursuant to
the manufacturer's instructions) accomplished on the
Aircraft, engines, and, on special request, for specific
equipment, upon request and where reasonably required, one
copy of individual modifications, engineering instructions
and associated drawings.
12. List of the Aviation Authority's Supplemental Type
Certificates (STC's) and foreign aviation authority approved
modifications incorporated, together with a copy of each
certificate.
<PAGE>
13. DGAC approved Airplane Flight Manual and the Aviation
Authority's approved Flight Manual (if available).
14. Flight (operations) manual currently used by present
operator.
15. Weight and balance document, including last weighting
report.
16. Weight and balance supplement - equipment list.
17. Wiring diagram manual, including wiring diagram equipment
lists.
18. Approved maintenance manuals as amended by the [ ]
Lessee - Aircraft and engines.
19. Illustrated parts catalogue - airframe and engine.
20. Cross-reference parts catalogue, as applicable, (listing of
Aircraft manufacturer's part numbers corresponding to parts
manufacturers' and current operators' part numbers for the
same parts).
21. Flight test records - last flight accomplished prior to
redelivery.
22. Inventory list of Aircraft loose equipment.
23. Letter detailing any major incident and/or accidents
involving the Aircraft (if none, the letter should so
state).
24. All records initiated by the [ ] Lessee required
to comply with their aviation regulatory authorities.
25. List of current equipment in passenger and flight crew
compartments and/or current interior arrangement diagram.
<PAGE>
IN WITNESS WHEREOF the parties have executed this Aircraft Lease
Agreement on the date first above written:
The Lessor
ENCORE LEASING LIMITED )
By ........................ )
Name: ..................... )
Title: .................... )
[ILFC (BERMUDA) 7, LTD.] )
[ILFC IRELAND 2 LIMITED] )
[ALTERNATIVE LESSEE] )
By ........................ )
Name: ..................... )
Title: .................... )
[ILFC (BERMUDA) 6, LTD.] )
By ........................ )
Name: ..................... )
Title: .................... )
<PAGE>
APPENDIX C
FORM OF PURCHASE AGREEMENT ASSIGNMENT
(INCLUDING AIRFRAME WARRANTIES)
<PAGE>
APPENDIX C
Dated 199[ ]
INTERNATIONAL LEASE FINANCE CORPORATION
(Assignor)
- and -
ENCORE LEASING LIMITED
(Borrower)
=================================================================
PURCHASE AGREEMENT ASSIGNMENT NO.1995-[ ]
in respect of
One (1) Airbus A[ ]
Aircraft bearing Manufacturer's
Serial Number [ ]
=================================================================
<PAGE>
TABLE OF CONTENTS
Clause Heading Page Number
1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . 2
2. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . 5
3. LIABILITY OF THE ASSIGNOR AND THE BORROWER. . . . . . . . 6
4. ASSIGNOR'S CONTINUING RIGHTS AND OBLIGATIONS. . . . . . . 7
5. AGENCY. . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. AGENCY TERMINATION. . . . . . . . . . . . . . . . . . . . 8
7. PAYMENT ON THE DELIVERY DATE. . . . . . . . . . . . . . . 9
8. DELIVERY, TITLE AND RISK. . . . . . . . . . . . . . . . . 10
9. ASSIGNMENT OF RIGHTS. . . . . . . . . . . . . . . . . . . 11
10. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 12
11. AUTHORISATIONS . . . . . . . . . . . . . . . . . . . . . 12
12. GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . . 12
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 14
14. FURTHER INSTRUMENTS . . . . . . . . . . . . . . . . . . . 16
15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 17
16. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . 17
ANNEX I - CERTIFICATE OF ACCEPTANCE
ANNEX II - CONSENT AND AGREEMENT
ANNEX III - AIRBUS INDUSTRIE WARRANTY
ANNEX IV - EXTRACTS OF PURCHASE AGREEMENT
<PAGE>
THIS ASSIGNMENT is made the day
of 199[ ]
BETWEEN:-
(1) INTERNATIONAL LEASE FINANCE CORPORATION, a corporation
incorporated under the laws of the State of California and
having its principal place of business at 1999 Avenue of the
Stars, 39th Floor, Los Angeles, CA 90067 (the "Assignor");
and
(2) ENCORE LEASING LIMITED, a company incorporated under the
laws of the Cayman Islands and having its registered office
at P.O. Box 2003, George Town, Grand Cayman, Cayman Islands,
BWI (the "Borrower").
WHEREAS:-
(A) On 10th November 1988 the Assignor and the Seller entered
into a purchase agreement and a general terms agreement and
on [ ] 199[ ] the Assignor and
the Seller entered into [a supplemental agreement amending
and supplementing the terms of the Purchase Agreement in
relation to the Aircraft (the "Purchase Agreement
Supplemental Agreement")] (hereinafter collectively the
"Purchase Agreement")
(B) The Purchase Agreement covers, inter alia, the sale by the
Seller and the purchase and acceptance by the Assignor of [
]Airbus A [ ] aircraft.
(C) The [ ] Lessee is a wholly owned indirect
subsidiary of the Assignor.
(D) Pursuant to the Facility Agreement, the Lenders have agreed
to make the Credits available to the Borrower in order to
enable the Borrower to acquire title to, and the benefit of
the Warranties in respect of, the Aircraft directly from the
Seller and thereupon the Borrower will lease the Aircraft to
the [ ] Lessee pursuant to the Lease Agreement.
(E) It is a condition precedent to the Borrower entering into
the Lease Agreement that the Assignor enters into this
Assignment whereby the Assignor transfers to the Borrower
certain of the Assignor's rights under the Purchase
Agreement relating or applying to the Aircraft upon the
terms and subject to the conditions set forth herein.
(F) Pursuant to the Approved Sub-Lease, the Assignor has agreed
to assign to the Approved Sub-Lessee certain warranty and
other related rights and the Assignor has assigned such
rights to the Approved Sub-Lessee pursuant to the Assignment
of Warranty and Support Rights.
NOW THEREFORE in consideration of the mutual covenants herein
contained THIS ASSIGNMENT WITNESSES AS FOLLOWS:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Assignment (including the Recitals and the Annexes),
words and expressions used herein shall, unless otherwise
<PAGE>
defined herein or except where the context otherwise
requires, have the meanings given to them in the Facility
Agreement.
1.2 In this Assignment (including the Recitals and the Annexes),
the following terms shall have the following meanings:-
"AIRCRAFT" means the Airframe together with the Engines
whether or not any of the Engines may from time to time be
installed on the Airframe together with the Technical
Records;
"AIRCRAFT PURCHASE PRICE" means the net final invoice price
for the Aircraft (including any Buyer Furnished Equipment)
after deduction of all credit memoranda of the Seller
and/or the Manufacturer which net final invoice price, shall
be US$[ ] ([ ] million
Dollars);
"AIRFRAME" means the Airbus A[ ] airframe with
manufacturer's serial number [ ] including all Parts
installed in or on the airframe at the Delivery Date (or
which, having been removed therefrom, remain the property of
the Borrower pursuant to the terms of the Lease Agreement),
and all substitutions, renewals and replacements from time
to time made in or to or installed in or on the said
airframe in accordance with the terms and conditions of the
Lease Agreement including any Parts which are for the time
being detached from the airframe but remain the property of
the Borrower;
"APPROVED SUB-LEASE" means an aircraft lease agreement dated
[ ] 199[ ] between the Approved Sub-Lessee
and the Assignor, as amended and supplemented by a
supplemental agreement dated [ ]
199[ ] between the Assignor, the [ ] Lessee and
the Approved Sub-Lessee;
"APPROVED SUB-LESSEE" means [ ];
"ASSIGNED PROPERTY" means all of the property assigned in
Clauses 2.1(a) and 2.1(b);
"ASSIGNMENT" means this Assignment together with the
Recitals and Annexes hereto;
"ASSIGNMENT OF WARRANTY AND SUPPORT RIGHTS" means an
agreement dated [ ] 199[ ] between the Assignor
and the Approved Sub-Lessee pursuant to which the Assignor
assigned to the Approved Sub-Lessee, with effect from the
dates specified therein, the benefit of the Warranty and
Support Rights;
"CERTIFICATE OF ACCEPTANCE" means the certificate of
acceptance referred to in [Clause 8] of the Purchase
Agreement in the form set out in Annex I hereto, duly
completed with respect to the Aircraft and executed by the
Assignor as agent for the Borrower;
"CONSENT AND AGREEMENT" means the consent of the Seller to
this Assignment and the agreement of the Assignor and the
Borrower to the terms thereof in the form set out in Annex
II hereto;
"DELIVERY DATE" means the date on which the Certificate of
Acceptance is signed and issued to the Seller and the Bill
of Sale is executed and delivered to the Borrower;
<PAGE>
"ENGINE" or "ENGINES" means (a) each of the [
] engines with manufacturer's serial
numbers [ ] and [ ]
whether or not from time to time during the Lease Period
installed on the Airframe or any other airframe but which,
having been removed from the Airframe, remain the property
of the Borrower in accordance with the Lease Agreement or
(b) any other engine which may from time to time be
installed upon or attached to the Airframe which becomes the
property of the Borrower in accordance with the Lease
Agreement and (c) insofar as the same belong to the
Borrower, any and all appliances, instruments or accessories
or other equipment or Parts of whatever nature from time to
time relating to an engine referred to in (a) and (b) above
whether or not installed on or attached to such engine and
(d) insofar as the same belong to the Borrower, all
substitutions, replacements or renewals from time to time
made on or to any item referred to in (a), (b) and (c) above
in accordance with the Lease Agreement;
"EXPECTED DELIVERY DATE" means the date on which the
Aircraft is expected to be available for purchase by the
Borrower and bailment by the Borrower to the [
] Lessee;
"FACILITY AGREEMENT" means the aircraft facility agreement
dated [ ] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd and (10) International Lease Finance
Corporation;
"GENERAL TERMS AGREEMENT" means the general terms agreement
dated as of [10th November, 1988] between the Assignor and
AVSA S.A.R.L. referred to in Recital (A);
"LEASE AGREEMENT" means the lease agreement No. [ ] dated [
] 199[ ] between the Borrower as
lessor, the [ ] Lessee as lessee and the [
] Option Holder;
"MANUFACTURER WARRANTY" means the warranty relating to the
Aircraft as the same will be provided by the Manufacturer as
manufacturer of the Aircraft as confirmation of transfer of
title to the Aircraft, being in the form set out in Annex
III hereof duly completed with respect to the Aircraft and
executed by the Manufacturer through its duly authorised
representative;
"PARTS" means in relation to the Aircraft, all modules,
appliances, parts, accessories, auxiliary power unit,
instruments, furnishings and other equipment of whatsoever
nature including, without limitation, the Buyer Furnished
Equipment and any service bulletin kits or the like but
excluding complete Engines or engines and equipment
(including but not limited to in-flight entertainment and
telecommunications equipment) which is from time to time
attached to the Airframe and leased to the Lessee other than
primarily for the purpose of financing the acquisition of
such equipment in circumstances where such equipment, that
at any time of determination are incorporated or installed
in or attached to the Airframe or any Engine or, having been
<PAGE>
removed therefrom, title to which remains vested in the
Borrower in accordance with the provisions of the Lease
Agreement; and "Part" shall have a corresponding meaning;
"PRE-DELIVERY PAYMENTS" means the aggregate of all payments
made by the Assignor in respect of the Aircraft pursuant to
[Clause 6] of the Purchase Agreement prior to the Delivery
Date;
"TECHNICAL RECORDS" means in relation to the Aircraft, all
technical data, manuals, computer records, logbooks and
other records (whether kept or to be kept in compliance with
any law or regulation or any requirement for the time being
of the Aviation Authority or otherwise) relating to the
Aircraft, any Engine or any Parts; and
"WARRANTY AND SUPPORT RIGHTS" means each of:
(a) the benefit of the rights with respect to the Aircraft
under [Clause 12] (Warranties and Service Life Policy)
of the General Terms Agreement;
(b) the rights with respect to the Aircraft under [Clause
13] (Patent Indemnity) of the General Terms Agreement;
(c) the rights with respect to the Aircraft under the
Product Support Agreement [(Exhibit E)] applicable to
the Purchase Agreement;
(d) the benefit of various support allowances with respect
to the Aircraft more particularly referred to in the
Assignment of Warranty and Support Rights.
1.3 Clauses 1.3 and 1.4 of the Facility Agreement shall be
deemed to be incorporated, mutatis mutandis, herein as if
references therein to "this Facility Agreement" and the
"Guarantor" were references to "this Assignment" and the
"Assignor" respectively.
2. ASSIGNMENT
2.1 Subject to the terms and conditions of this Assignment, the
Assignor does hereby unconditionally, irrevocably and
absolutely assign and agree to assign as legal and
beneficial owner to the Borrower:-
(a) all of its right, title and interest (present and
future) in, to, under and in respect of the right to
accept delivery of, acquire possession of and take
title to the Aircraft and to be named the "Buyer" in
both the Bill of Sale and the Manufacturer Warranty
("Title") and in the invoice or similar document to be
delivered by the Seller pursuant to the Purchase
Agreement [and the Purchase Agreement Supplemental
Agreement] including, without limitation, the right to
compel performance by each of the Seller and the
Manufacturer of their respective obligations in respect
of the Aircraft corresponding to the rights assigned
under this Clause 2.1(a) and the right to claim damages
in respect thereof; and
(b) subject to the rights, title and interest of the
Approved Sub-Lessee in, to, under and in respect of the
Warranty and Support Rights pursuant to the Assignment
of Warranty and Support Rights, all of the Assignor's
<PAGE>
right, title and interest (present and future) in, to,
under and in respect of [Clause 12] (Warranties and
Service Life Policy) and [Clause 13] (Patent Indemnity)
of the General Terms Agreement insofar as they relate
to the Aircraft including, without limitation, the
right to compel performance by the Seller of its
obligations in respect of the Aircraft corresponding to
the rights assigned under this Clause 2.1(b) and the
right to claim damages in respect thereof and subject
to any conditions set out therein. Such Sections of
the General Terms Agreement are attached hereto in the
form of Annex IV.
2.2 Upon satisfaction in full of all the amounts referred to in
Clause 19 of the Lease Agreement and upon the [ ]
Option Holder or designee or permitted transferee taking
title to the Aircraft pursuant to Clause 20 of the Lease
Agreement the Borrower shall at the cost of the Assignor and
at the request of the Assignor re-assign to the Assignor or
as it may direct, without recourse or warranty (but free and
clear of any Lessor's Liens), such right, title and
interest, if any, as the Borrower may then have in and to
the Assigned Property referred to in Clause 2.1(b) and shall
execute such documents as the Assignor may reasonably
require in order to effect such assignment.
3. LIABILITY OF THE ASSIGNOR AND THE BORROWER
3.1 The Borrower shall have no obligation or liability under the
Purchase Agreement by reason of or arising out of this
Assignment, provided however that to the extent that the
Borrower exercises any rights under the Purchase Agreement
or makes any claim with respect to the Aircraft or goods and
services relating thereto, the terms and conditions of the
Purchase Agreement shall apply to and be binding upon the
Borrower and the Borrower shall be subject to all
obligations, restrictions, limitations and conditions of the
Purchase Agreement with respect to the exercise of such
rights or making such claims to the same extent as if the
Borrower had been named "Buyer" thereunder.
3.2 The assignments referred to in Clause 2.1(a) and 2.1(b)
shall not constitute a novation under the Purchase Agreement
and, save as otherwise provided hereby, the Assignor shall
not be discharged from any of the obligations undertaken by
it in the Purchase Agreement.
3.3 Notwithstanding this Assignment, the Assignor shall remain
fully liable to the Seller to perform all the obligations
and duties of the "Buyer" under the Purchase Agreement
including but not limited to the obligation to pay the
Aircraft Purchase Price, and the exercise by the Borrower of
any of the rights assigned hereunder shall not release the
Assignor from any of its duties or obligations to the Seller
under the Purchase Agreement, save to the extent that such
exercise by the Borrower shall constitute performance of
such duties and obligations.
3.4 The Assignor will procure from the Seller on the Delivery
Date the Consent and Agreement in the form attached hereto
as Annex II. In addition the Assignor shall, at its cost,
cause the existence of this Assignment to be notified to the
Seller by huissier (bailiff) in accordance with the
provisions of Article 1690 of the French Civil Code.
<PAGE>
4. ASSIGNOR'S CONTINUING RIGHTS AND OBLIGATIONS
The parties hereby agree, and stipulate in favour of the
Seller, that, save to the extent rights are hereby assigned
to the Borrower or have been assigned to the Approved
Sub-Lessee pursuant to the Assignment of Warranty and
Support Rights, all other terms of the Purchase Agreement
shall continue to apply and have full effect as between the
Assignor and the Seller and nothing herein shall modify in
any way the rights of the Seller under the Purchase
Agreement or subject the Seller to any liability to which it
would not otherwise be subject nor require the Seller to
transfer title to the Aircraft or possession thereof prior
to receipt of payment in full of the Aircraft Purchase
Price.
5. AGENCY
5.1 The Borrower hereby appoints the Assignor (with power to
appoint the [ ] Lessee or, as the case may be, the
Approved Sub-Lessee as its substitute, which appointment
shall be notified to the Seller in accordance with the
provisions of Clause 13, PROVIDED ALWAYS THAT any such
substitute shall expressly in writing agree to be bound by
the terms of this Assignment in relation to such agency and
PROVIDED FURTHER THAT the Assignor shall remain fully liable
to the Borrower in respect of the actions and/or inactions
of any such substitute) its sole agent to exercise on behalf
of the Borrower all the rights assigned to the Borrower
under Clause 2.1(b) and to sign and issue the Certificate of
Acceptance and such other documents as are necessary to
effect transfer of Title to the Borrower.
5.2 The Assignor hereby agrees with the Borrower for the benefit
of itself and such persons to release and defend, indemnify
and hold harmless the Borrower, its officers, directors,
agents, representatives and employees (i) from and against
all liabilities, damages, losses, costs and expenses for all
injuries to and death of persons and (ii) for loss of or
damage to tangible property of third parties not employed by
the Assignor or claiming through or by reason of the death
or injury of any such employee, arising out of or in
connection with any aircraft (including the Aircraft) during
any inspection, test or flight thereof.
5.3 Until the agency created by this Clause 5 is terminated in
the manner contemplated by Clause 6, the Assignor (or, as
the case may be, its substitute) shall be entitled to
enforce the rights referred to in Clause 5.1 without
reference to the Borrower and to retain when made any
recovery or benefit resulting from the enforcement of any
such rights and shall pay, and hereby indemnifies the
Borrower against, all costs, expenses and charges incurred
in connection with the enforcement of any such rights.
5.4 If the Assignor and the Borrower shall at any time be in
dispute as to which of them is the beneficiary of any right
under the Purchase Agreement, the Seller shall be entitled
to perform the corresponding obligations exclusively in
favour of the Assignor until:-
(a) the agency created pursuant to this Clause 5 shall have
been terminated in accordance with Clause 6 (after
which time the Seller shall perform the corresponding
obligations exclusively in favour of the Borrower); or
<PAGE>
(b) both the Assignor and the Borrower notify the Seller in
writing of their agreement as to which of them is the
beneficiary of such right (after which time the Seller
shall perform the corresponding obligations in favour
of the party nominated in such notice).
5.5 Other than as provided in Clause 5.1 above, the Assignor
shall not be entitled to appoint any third party as agent to
exercise on its behalf any of its rights or powers resulting
from this Clause.
6. AGENCY TERMINATION
6.1 Should an Acceleration Event occur, then the agency created
by Clause 5 shall terminate forthwith.
6.2 The Seller shall not be deemed to have knowledge of any
termination of the agency powers of the Assignor referred to
in Clause 5 unless and until the Seller shall have received
from the Borrower and/or from the Security Agent written
notice of such termination in accordance with the provisions
of Clause 13.
7. PAYMENT ON THE DELIVERY DATE
7.1 Subject to:-
(a) the terms and conditions of this Assignment;
(b) the Credits having been made available to the Borrower
under the Loan Agreement; and
(c) the Certificate of Acceptance having been duly signed
by the Assignor (acting as agent of the Borrower),
the Borrower shall on the Delivery Date pay to the Seller
the Aircraft Purchase Price (without deducting any amount in
respect of the Predelivery Payments).
7.2 If:-
(a) subject to the proviso to Clause 9.4 of the Priorities
and Indemnities Agreement, the Credits have not been
made available on the Expected Delivery Date for
whatsoever reason; or
(b) the Borrower does not pay to the Seller the Aircraft
Purchase Price or the Seller does not deliver the Bill
of Sale and executed Consent and Agreement or does not
procure delivery of the Manufacturer Warranty to the
Borrower pursuant to the Purchase Agreement and this
Assignment on the Expected Delivery Date,
then this Assignment shall, unless otherwise agreed by the
Borrower, be automatically terminated, whereupon the rights
subject to this Assignment shall be deemed re-assigned by
the Borrower to the Assignor without the requirement for any
further action (other than any notice required to be given
to the Seller) and the Borrower shall thereafter have no
further obligation to the Assignor or the Seller hereunder
(but without prejudice to any rights which any party may
have against any other party in respect of any previous
breach by such other party of its obligations).
<PAGE>
7.3 The total amount to be paid by the Borrower to the Seller
pursuant to this Clause 7 shall be paid to Credit Lyonnais
N.Y. Branch Account No. 01-183631-001-00 or to such other
account as the Seller may specify, for further transfer to
the Seller's account at Credit Lyonnais Account No.
60258H-37.
7.4 The Assignor shall pay to the Seller any amounts (other than
those to be paid by the Borrower pursuant to this Clause 7)
remaining to be paid by the "Buyer" under the Purchase
Agreement in respect of the Aircraft when the same are
invoiced, provided that the Assignor agrees for the benefit
of the Seller that the payment of any such amounts which are
invoiced on the Delivery Date may be satisfied by the Seller
by application of the Predelivery Payments.
8. DELIVERY, TITLE AND RISK
8.1 Upon and subject to the terms and conditions of this
Assignment and upon payment of the Aircraft Purchase Price
by the Borrower pursuant to Clause 7.1, Title shall vest in
the Borrower on the Delivery Date free and clear of all
Liens arising from the acts or acquiescence of the Assignor.
Thereupon, the Seller shall immediately deliver to the
Borrower both the Bill of Sale and the Manufacturer
Warranty.
8.2 Simultaneously with such transfer of Title:-
(a) all risks in respect of the Aircraft, its loss or
damage thereto, shall pass directly from the Seller to
the Borrower; and
(b) the physical delivery of the Aircraft by the Seller to
the Assignor or its duly authorised representative as
agent of the Borrower shall take place at the works of
Aerospatiale in Toulouse, France.
Simultaneously with delivery by the Seller to the Assignor,
the Assignor or its duly authorised representative as agent
of the Borrower shall deliver the Aircraft to the [
] Lessee pursuant to the terms of the Lease Agreement and
the [ ] Lessee shall thenceforth assume all risks
in respect of the Aircraft, its loss or damage thereto all
in accordance with the relevant provisions of the Lease
Agreement.
9. ASSIGNMENT OF RIGHTS
9.1 Subject to Clauses 5.5.2 and 13 of the Priorities and
Indemnities Agreement, the Assignor may not further sell,
assign or otherwise transfer any of its rights hereunder
without the prior written consent of the Lenders (which the
Lenders shall have absolute discretion to withhold) and the
Seller (which the Seller may not unreasonably withhold).
9.2 Subject to Clauses 5.5.2 and 13 of the Priorities and
Indemnities Agreement and the circumstances described in the
proviso to Clause 24.3 of the Priorities and Indemnities
Agreement, the Borrower may not sell, assign or otherwise
transfer any of its rights hereunder without the prior
written consent of (i) the Security Agent acting on the
instructions of the Majority Lenders and, prior to the
occurrence of an Acceleration Event, the Assignor (which the
Assignor and the Lenders shall have absolute discretion to
withhold) and (ii) the Seller (which the Seller shall not
unreasonably withhold).
<PAGE>
10. REPRESENTATIONS AND WARRANTIES
10.1 The Assignor does hereby represent and warrant that:-
(a) true and complete copies of [Clauses 12 and 13] of the
General Terms Agreement are attached at Annex IV and
that there are no provisions in the other Sections of
the Purchase Agreement which are relevant in relation
to the property assigned by Clause 2.1(b) of this
Assignment;
(b) the Purchase Agreement is in full force and effect and
constitutes legal, valid and binding obligations of the
Assignor enforceable in accordance with its terms
subject to the qualifications contained in the legal
opinions to be provided to the Agent, the Security
Agent, the Lenders and the Borrower in accordance with
Schedule 7 to the Facility Agreement;
(c) the Assignor is not in default of any of its
obligations under the Purchase Agreement in so far as
they relate to the Aircraft;
(d) the Assignor has not created or allowed to subsist, and
throughout the Security Period will not create or allow
to subsist, any Lien over the whole or any part of the
rights, title and interest hereby assigned with respect
to the Aircraft and/or the Purchase Agreement other
than pursuant to the Assignment of Warranty and Support
Rights, this Assignment and/or any of the other
Aircraft Operative Documents and/or any of the 1994
Facility Documents and/or any of the 1994 Operative
Documents;
(e) the Assignor has not exercised any right to acquire any
title (legal or beneficial) to the Aircraft pursuant to
the Purchase Agreement or any other agreement;
(f) upon the transfer of Title to the Aircraft to the
Borrower, the Borrower will acquire such title to the
Aircraft as would have been conveyed to the Assignor
under the Purchase Agreement but for the execution of
this Assignment and the Aircraft will be free and clear
of all Liens arising from the acts or acquiescence of
the Assignor and/or any other person or entity other
than the Seller; and
(g) the transactions contemplated under this Assignment
form and will form part of its private and commercial
acts as opposed to governmental and/or public acts.
10.2 The Assignor hereby undertakes that it shall duly and
punctually perform in all material respects its duties and
obligations under the Purchase Agreement in so far as they
relate to the Aircraft.
10.3 The Borrower covenants with the Assignor that it shall not
transfer, assign, pledge, dispose of or otherwise deal
voluntarily (and for the avoidance of doubt, the provisions
concerning voluntary transfer set out in the final sentence
of Clause 29.8 of the Priorities and Indemnities Agreement
shall apply for the purposes of this Clause 10.3) with the
Assigned Property other than pursuant to the Assignment of
Warranty and Support Rights or in accordance with the terms
<PAGE>
of and/or in connection with the enforcement or preservation
or the attempted enforcement or preservation of its rights,
interest and remedies under this Assignment and/or any of
the Facility Documents and/or any of the other Operative
Documents.
10.4 Each of the Assignor and the Borrower for itself hereby
undertakes that it shall not enter into any agreement with
the Seller which would materially adversely amend, modify,
rescind, cancel or terminate the Purchase Agreement in
respect of the Assigned Property without the prior written
consent of the other and of the Security Agent.
10.5 Each of the parties hereto represents and warrants for
itself that it shall, on the Delivery Date, have obtained
all authorisations required to be obtained pursuant to
Clause 11 and that such authorisations shall be valid on the
Delivery Date.
11. AUTHORISATIONS
The parties shall take all steps required to obtain, prior
to the Delivery Date, any and all authorisations, licences,
rulings, consents, approvals and such other actions which
are necessary or advisable for them to obtain in order to
permit them to perform this Assignment and all other
agreements and instruments required hereunder or in
connection herewith.
12. GOVERNING LAW AND JURISDICTION
12.1 This Assignment shall be governed by and construed in
accordance with the laws of the State of New York.
12.2 Each of the parties hereto irrevocably agrees that the
courts of the State of New York shall have jurisdiction to
hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection
with this Assignment and, for such purposes, irrevocably
submits to the jurisdiction of such courts.
12.3 Each party irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause
12.2 being nominated as the forum to hear and determine any
suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Assignment
and agrees not to claim that any such court is not a
convenient or appropriate forum in each case whether on the
grounds of venue or forum non conveniens or any similar
grounds or otherwise.
12.4 For the purpose of any suit, action, proceeding or
settlement of dispute in the courts of the State of New York
(whether under this Assignment or under the Deed of
Assignment of General Terms Agreement), each of the Assignor
and the Borrower hereby designates, appoints and empowers an
agent to accept service of process in respect of any such
suit, action, proceeding or settlement of dispute the
identity of which is as follows and hereby confirms that
such agent is willing to accept service of such process on
its behalf in respect of this Assignment and the Deed of
Assignment of General Terms Agreement:-
<PAGE>
Assignor: AIG Funding, Inc.,
70 Pine Street
New York
N.Y. 270
USA
Attention: William N Dooley, President
Borrower: MeesPierson Inc.
445 Park Avenue
New York
NY 10022
USA
Attention: General Counsel
If, for any reason, such agent no longer serves as agent of
the Assignor or, as the case may be, the Borrower to receive
service of process in New York in respect of this Assignment
and/or the Deed of Assignment of General Terms Agreement,
the Assignor or, as the case may be, the Borrower, shall
promptly appoint another such agent acceptable to the other
party hereto and advise such other party thereof.
12.5 The submission to the jurisdiction of the courts referred to
in Clause 12.2 shall not (and shall not be construed so as
to) limit the right of either party to take proceedings
against the other party in any other court of competent
jurisdiction nor shall the taking of proceedings in any one
or more jurisdictions preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not.
12.6 To the extent that the Borrower or the Assignor or any of
the property of the Borrower or the Assignor is or becomes
entitled at any time to any immunity on the grounds of
sovereignty or otherwise from any legal action, suit or
proceeding, from set-off or counterclaim, from the
jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment
in aid of execution, or from execution prior to judgment, or
other legal process in any jurisdiction, each of the
Borrower and the Assignor for itself and its property does
hereby irrevocably and unconditionally waive, and agrees not
to plead or claim, any such immunity with respect to its
obligations, liabilities or any other matter under or
arising out of or in connection with this Assignment or the
subject matter hereof.
13. NOTICES
13.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
(a) in order to be valid be in English and in writing;
(b) be deemed to have been duly served on, given to or made
in relation to a party if it is:-
(i) left at the address of that party set out herein
or at such other address as that party may notify
to the other party hereto in writing from time to
time or to any officer of the addressee; or
(ii) posted by first class airmail postage prepaid in
an envelope addressed to that party at such
address; or
<PAGE>
(iii) sent by facsimile to the facsimile number of
that party set out herein or to such other
number as that party may notify to the other
party hereto from time to time.
(c) be sufficient if:-
(i) executed under the seal of the party giving,
serving or making the same; or
(ii) signed or sent on behalf of the party giving,
serving or making the same by any attorney,
director, secretary, agent or other duly
authorised representative of such party;
(d) be effective:-
(i) in the case of a letter, when left at the address
referred to in Clause 13.1(b)(i) or delivered in
person to any officer of the addressee or (as the
case may be) seven (7) Business Days after being
deposited in the post first class airmail postage
prepaid in an envelope addressed to the addressee
at the address referred to in Clause 13.1(b)(i);
(ii) in the case of a facsimile transmission, when
receipt is confirmed by return facsimile or by
telephone (or on actual receipt if not so
confirmed).
13.2 For the purposes of this Clause 13, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
(a) if to the Assignor to:-
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars
39th Floor
Los Angeles
CA 90067
USA
Tel: 0101 310 788 1999
Facsimile No: 0101 310 788 1990
Attention: Legal Department and Chief Financial Officer
(b) if to the Borrower to:
ENCORE LEASING LIMITED
PO Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Tel: 809 949 7942
Facsimile No: 809 949 8340
Attention: Trust Services
with a copy to the Security Agent to:
<PAGE>
NATIONAL WESTMINSTER BANK PLC
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
England
Tel: 0171 375 5738/5931/5929
Facsimile No: 0171 375 5854
Attention: Head of Corporate Banking Agency Group
(c) If to the Seller to:
AVSA S.A.R.L.
2 Rond Point Maurice Bellonte
31700 Blagnac
FRANCE
Tel: 010 3361 30 40 12
Facsimile No: 010 3361 30 40 11
Attention: Le Gerant
14. FURTHER INSTRUMENTS
Each of the parties hereto agrees that at any time and from
time to time, and at the full cost of the Assignor, it shall
promptly and duly execute and deliver any and all such
further instruments and documents and take such further
action as may be reasonably necessary in order to give full
effect to this Assignment and the rights and powers herein
granted.
15. MISCELLANEOUS
15.1 No term or provision of this Assignment may be amended,
waived, discharged or terminated orally, but only by written
instrument signed by or on behalf of the parties hereto.
15.2 Any provision of this Assignment which is or becomes
invalid, illegal or unenforceable in any jurisdiction shall
as to such jurisdiction be ineffective to the extent of such
invalidity, illegality or unenforceability without
invalidating the remaining provisions hereof, and any such
invalidity, illegality or unenforceability shall not render
such provision invalid, illegal or unenforceable in any
other jurisdiction.
15.3 No failure to exercise and no delay in exercising on the
part of the Borrower any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege prevent
any further or other exercise of any right, power or
privilege whether hereunder or otherwise. The rights and
remedies provided in this Assignment are cumulative and not
exclusive of any rights or remedies provided at law.
15.4 Section 93 and Section 103 of the Law of Property Act 1925
shall not apply to this Assignment nor shall any analogous
provisions applicable under New York law.
15.5 This Assignment may be executed in any number of
counterparts and by different parties hereto on separate
counterparts each of which when executed and delivered shall
constitute an original but all counterparts shall together
constitute but one and the same instrument.
<PAGE>
16. CONFIDENTIALITY
16.1 Each party hereto shall use all reasonable endeavours to
ensure that its respective officers, directors, employees
and agents shall keep secret and confidential and not,
without the prior written consent of the other party hereto
and the Seller, disclose to any third party the terms of
this Assignment or any of the information, reports or
documents supplied by or on behalf of the other party hereto
or the Seller, save that such party shall be entitled to
disclose any such terms, information, reports or documents:-
(i) in connection with any proceedings arising out of or in
connection with this Assignment to the extent that such
party may consider necessary to protect its interest;
or
(ii) to any potential assignee or transferee of all or any
of such party's rights under this Assignment or any
other person proposing to enter into contractual
arrangements with such party in relation to or in
connection with the transactions contemplated by this
Assignment subject to it obtaining an undertaking from
such potential assignee or other person in the terms
similar to this Clause 16.1; or
(iii) if required to do so by an order of a court of
competent jurisdiction whether in pursuant of any
procedure for discovering documents or otherwise;
or
(iv) pursuant to any law or regulation having the force of
law (including, without limitation, SEC filing
requirements); or
(v) to any fiscal, monetary, tax, governmental or other
competent authority; or
(vi) to its auditors, legal or other professional advisers;
or
(vii) to any of the Export Credit Agencies; or
(viii) in any manner contemplated by this Assignment.
16.2 In addition, either party shall be entitled to disclose or
use any such information, reports or documents if the
information contained therein shall have emanated in
conditions free from confidentiality bona fide from some
person other than the relevant party hereto and such party
would, but for the preceding provisions of this Clause 16
have been free to disclose or use the same.
16.3 Each party may, notwithstanding any other provision of this
Clause 16, release to any potential assignee or transferee
(permitted in each case pursuant hereto), or other person
proposing to enter into contractual arrangements with such
party in relation to or in connection with the transactions
contemplated by this Assignment, a copy of any of this
Assignment PROVIDED THAT each such potential assignee or
transferee or other person confirms in writing to the other
party to this Assignment that it is bound by the terms of
this Clause 16 as if it had been a party to this Assignment.
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Assignment
to be executed and delivered (in three originals) on their behalf
by their Officers thereunto duly authorised on this day and this
year hereinbefore written.
INTERNATIONAL LEASE FINANCE CORPORATION
By: ..........................
Title: .....................................
In the presence of:-
SIGNED SEALED and DELIVERED )
by )
attorney-in-fact for and on behalf of )
ENCORE LEASING LIMITED )
in the presence of:- )
<PAGE>
ANNEX I
CERTIFICATE OF ACCEPTANCE
In accordance with the terms of that certain Airbus A[ ]
Purchase Agreement dated [as of 10th November 1988] and that
certain general terms agreement dated [10th November 1988] and
made between AVSA S.A.R.L. ("AVSA") and International Lease
Finance Corporation ("ILFC") (hereinafter collectively the
"Agreement") the acceptance inspection relating to the AIRBUS A[
] aircraft (the "Aircraft"), manufacturer's
serial number [ ] with [two (2)] [
] series propulsion systems installed
thereon, serial numbers [ ] (position 1) and
[ ] (position 2) has taken place at Toulouse,
France on the [ ] day of [ ]
199[ ].
In view of said inspection having been carried out with
satisfactory results ILFC as duly authorised representative and
agent of Encore Leasing Limited hereby accepts delivery of the
Aircraft (and of all the technical documentation associated with
the Aircraft delivery) as being in conformity with the provisions
of the Purchase Agreement.
This acceptance shall not constitute a waiver of Encore Leasing
Limited's warranty rights relating to the Aircraft set forth in
the Agreement or act as a limitation on such rights.
ILFC specifically recognises that it has waived any right it may
have at law or otherwise to revoke this acceptance of the
Aircraft.
RECEIPT AND ACCEPTANCE OF THE
ABOVE-DESCRIBED AIRCRAFT
ACKNOWLEDGED
[ILFC]
as duly authorised representative and
agent of Encore Leasing Limited
By:
Title:
Date:
<PAGE>
ANNEX II
CONSENT AND AGREEMENT
1. The undersigned, AVSA S.A.R.L., a societe a responsabilite
limitee organised and existing under the laws of the
Republic of France ("the Seller"), hereby acknowledges
notice of, consents to and agrees to be bound by all of the
terms of the Purchase Agreement Assignment attached hereto
(herein called the "Assignment"), the defined terms therein
(or defined by reference therein to another document) being
hereinafter used with the same respective meanings.
2. The Seller hereby confirms to the Borrower that:-
2.1 all representations, warranties, indemnities and agreements
of the Seller under the relevant sections of the Purchase
Agreement referred to in Clauses 2.1(a) and 2.1(b) of the
Assignment with respect to the Aircraft shall (subject to
the terms and conditions thereof and of the Assignment and
to the rights, title and interest of the Approved Sub-Lessee
in, to, under and in respect of the Warranty and Support
Rights pursuant to the Assignment of Warranty and Support
Rights) enure to the benefit of the Borrower to the same
extent as if originally named the "Buyer" therein; and
2.2 the Borrower shall not be liable for any of the obligations
or duties of the Assignor under the Purchase Agreement, nor,
except as provided therein, shall the Assignment give rise
to any duties or obligations whatsoever on the part of the
Borrower owing to the Seller except for the Borrower's
agreement in the Assignment that in exercising any right
under the Purchase Agreement with respect to the Aircraft
(other than the right to take title pursuant to Clause 8.1
of the Assignment) or making any claims with respect to the
Aircraft or other goods and services delivered and to be
delivered pursuant to the Purchase Agreement and the subject
of the Assignment, the terms and conditions of such Purchase
Agreement shall apply to, and be binding upon, the Borrower
to the same extent as the Assignor.
3. The Seller hereby represents and warrants that:-
3.1 it is a societe a responsabilite limitee duly organised and
existing in good standing under the laws of the French
Republic;
3.2 the making and performance of the Purchase Agreement and
this Consent and Agreement have been duly authorised by all
necessary corporate or other action on the part of the
Seller, do not require any approval of the Seller's
stockholders, do not contravene the charter of the Seller or
any indenture, credit agreement or other contractual
agreement to which the Seller is a party or by which it is
bound and, to the best of the knowledge, information and
belief of the Seller, do not contravene any law, rule or
regulation binding upon the Seller; and
<PAGE>
3.3 the Purchase Agreement constituted as of the date thereof,
and at all times thereafter to and including the date of
this Consent and Agreement constitutes a valid and binding
obligation of the Seller.
4. The present consent is given subject to the following
conditions:-
4.1 nothing herein or in the Assignment shall modify in any way
the rights of the Seller under the Purchase Agreement or
subject the Seller to any liability to which it would not
otherwise be subject;
4.2 if the Assignor and the Borrower shall at any time be in
dispute as to which of them is the beneficiary of any
particular right or interest under the Purchase Agreement,
the Seller shall be entitled to perform the corresponding
obligations exclusively in favour of the Assignor (or its
substitute agent appointed in accordance with the provisions
of Clause 5.1 of the Assignment) until:-
(a) the agency created pursuant to Clause 5 of the
Assignment shall have been terminated in accordance
with Clause 6 of the Assignment (after which time the
Seller shall perform the corresponding obligations
exclusively in favour of the Borrower); or
(b) both the Assignor and the Borrower notify the Seller in
writing of their agreement as to which of them is the
beneficiary of such right (after which time the Seller
shall perform the corresponding obligations in favour
of the party nominated in such notice);
4.3 the Assignor shall not be discharged from any of its
obligations under the Purchase Agreement except insofar as
such obligations are performed by the Borrower, and nothing
herein shall be construed so as to give such discharge;
4.4 the Seller shall not be deemed to have knowledge of any
termination of the agency referred to in Clause 5.1 of the
Assignment unless and until the Seller shall have received
the written notice required by Clause 6.2 of the Assignment;
4.5 the Seller shall be fully entitled to rely upon anything
said or done or omitted by the Assignor (or its substitute
appointed in accordance with the provisions of Clause 5.1 of
the Assignor) as agent pursuant to Clause 5 of the
Assignment until termination of the agency referred to
therein;
4.6 the Assignor and the Borrower shall agree to the terms of
this Consent and Agreement.
5. Provided always that the conditions contained in Clause 4
hereof have been fulfilled:-
5.1 then, upon receipt by the Seller in respect of the Aircraft
on the Delivery Date of:-
(a) the Certificate of Acceptance duly signed by the
Assignor acting as the agent of the Borrower; and
(b) payment by the Borrower of the Aircraft Purchase Price;
<PAGE>
5.2 the Seller undertakes to each of the Borrower and the
Assignor:-
(a) immediately to transfer title to the Aircraft to the
Borrower; and
(b) to deliver to the Borrower the Bill of Sale and procure
the delivery of the Manufacturer Warranty.
6. The Assignor shall and hereby does agree to indemnify and
hold harmless the Seller from and against any and all costs
and out of pocket expenses incurred by the Seller (i) in the
preparation, negotiation and execution of this Consent and
Agreement, the Assignment, the Mortgage and the consent and
agreement to the Mortgage and (ii) in relation to the
enforcement of any rights transferred by the Assignment to
the Borrower to the extent that such costs and out-of-pocket
expenses would not have been incurred but for the entering
into of this Consent and Agreement, the Assignment, the
Mortgage and the consent and agreement to the Mortgage.
7. Each of the Seller, the Assignor and the Borrower agrees
that the Assignment shall not constitute nor be construed as
constituting a novation of the obligations under the
Purchase Agreement.
8. This Consent and Agreement shall be deemed to constitute the
consent of the Seller required by [Clause 15.1] of the
Purchase Agreement.
9. The illegality or invalidity of any part of this Consent and
Agreement shall not be deemed to prejudice the
enforceability of the remainder which shall be severable
therefrom.
10. Except as expressly contained in the Assignment, the Seller
shall not assume nor be deemed to have assumed any
additional obligation whatsoever under the Purchase
Agreement by virtue of the Assignment, and the Seller shall
be bound to perform only those obligations which would have
existed had the Assignment never been executed.
11. The Seller shall incur no obligation or liability whatsoever
by reason of the Lease Agreement and the Loan Agreement or
any of the transactions contemplated therein and the
Assignor shall indemnify and hold harmless the Seller
against and in respect of all and any such obligations or
liabilities or the consequences thereof so incurred save to
the extent that the Seller has a corresponding liability or
obligation under the Purchase Agreement.
12. The Seller agrees that no breach or default on the part of
the Assignor of any of the provisions of the Purchase
Agreement, to the extent that the Purchase Agreement relates
to aircraft which do not form part of any of the Aircraft
financed and delivered to the Borrower pursuant to the
Facility Agreement, shall impair, prejudice or vitiate any
of the rights available to the Borrower or the Security
Agent in respect of the Purchase Agreement relative to any
of the Aircraft.
13. This consent is given subject to the agreement and
acceptance of the Assignor and the Borrower that the benefit
of and/or the obligations under, the Assignment may not be
further assigned or transferred or otherwise parted with
(other than, in respect of the agency created pursuant to
<PAGE>
the provisions of Clause 5.1 of the Assignment, to a
substitute appointed in accordance with the provisions of
Clause 5.1 of the Assignment) without the prior consent of
the Seller (which consent shall not be unreasonably denied),
provided always that:-
(i) subject to Clauses 5.5.2 and 13 of the Priorities and
Indemnities Agreement and the circumstances described
in the proviso to Clause 2.4.3 of the Priorities and
Indemnities Agreement the Borrower may not sell, assign
or otherwise transfer any of its rights under the
Assignment without the prior written approval of (a)
the Security Agent (acting on the instructions of the
Majority Lenders and, prior to the occurrence of an
Acceleration Event, the Assignor which the Lenders and
the Assignor shall have absolute discretion to
withhold) and (b) the Seller (which the Seller shall
not unreasonably withhold); and
(ii) subject to Clauses 5.5.2 and 13 of the Priorities and
Indemnities Agreement the Assignor may not sell, assign
or otherwise transfer any of its rights under the
Assignment without (a) the prior written approval of
the Lenders (which the Lenders shall have absolute
discretion to withhold) and (b) the Seller (which the
Seller shall not unreasonably withhold).
14. This Consent and Agreement shall be governed by and
construed in accordance with the laws of the State of New
York.
15. The Seller irrevocably agrees that any suit, legal action or
proceedings ("Proceedings") in connection with this Consent
and Agreement may be brought in the courts of England which
shall have jurisdiction to settle any disputes arising out
of or in connection with this Consent and Agreement.
16. The Assignor shall, at its cost, arrange for the Assignment
and the Mortgage to be properly served on the relevant party
or parties by huissier (bailiff) in accordance with the
provisions of Article 1690 of the French Civil Code.
17. Nothing contained in this Consent and Agreement shall limit
the right of any party to take Proceedings against another
party in any other court of competent jurisdiction, nor
shall the taking of Proceedings in one or more jurisdictions
preclude the taking of Proceedings in one or more other
jurisdictions whether concurrently or not.
18. This Consent and Agreement may be executed in any number of
counterparts and by different parties hereto on separate
counterparts each of which when executed as delivered shall
constitute an original but all counterparts shall together
constitute but one and the same instrument.
Dated:
AVSA S.A.R.L.
By: .................................
Title: ....................
We hereby agree to the terms of this We hereby agree to the
letter including without limitation terms of this letter.
to the generality of the foregoing,
the indemnities contained herein.
INTERNATIONAL LEASE FINANCE CORPORATION ENCORE LEASING LIMITED
By: .............................. By: .................
Title: ........................... Title: ..............
<PAGE>
ANNEX III
AIRBUS INDUSTRIE WARRANTY
Airbus Industrie hereby warrants to the aforesaid Buyer, its
successors and assigns that the AVSA Bill of Sale dated [
] 199[ ] and relating to the Aircraft with MSN [
] conveys to the said Buyer good, legal and valid title to the
Aircraft, free and clear of all liens, claims, charges,
encumbrances and rights of others save that in relation to the
buyer furnished equipment (supplied to AVSA, S.A.R.L. by
International Lease Finance Corporation) Airbus Industrie
warrants only such title as was conveyed to AVSA S.A.R.L. by
International Lease Finance Corporation pursuant to a bill of
sale dated [ ] and that Airbus Industrie
will warrant and defend such title forever against all claims and
demands whatsoever.
IN WITNESS WHEREOF Airbus Industrie has caused this warranty to
be executed by its duly authorised representative this [ ]
day of 199[ ].
In ....................
AIRBUS INDUSTRIE G.I.E.
By: ..............................................
Title: .........................................
Signature:...............................................
<PAGE>
ANNEX IV
EXTRACTS OF GENERAL TERMS AGREEMENT
<PAGE>
APPENDIX D
FORM OF ENGLISH LAW AIRCRAFT MORTGAGE
<PAGE>
APPENDIX D
Dated 199[ ]
ENCORE LEASING LIMITED
(as Borrower)
- and -
NATIONAL WESTMINSTER BANK PLC
(as Security Agent)
DEED OF ASSIGNMENT
AND
AIRCRAFT MORTGAGE NO. 1995-[ ]
in respect of One
Airbus A [ ] Aircraft
Manufacturer's Serial No. [ ]
<PAGE>
TABLE OF CONTENTS
Clause Heading Page Number
1. DEFINITIONS AND INTERPRETATION.........................1
2. COVENANT TO PAY........................................5
3. MORTGAGE...............................................5
4. ASSIGNMENT.............................................5
5. RELEASE OF SECURITY AND SALE BY THE BORROWER...........7
6. REPRESENTATIONS AND WARRANTIES.........................7
7. UNDERTAKINGS...........................................8
8. DEFAULT AND REMEDIES...................................9
9. POWERS OF RECEIVER....................................11
10. APPLICATION OF FIRST AIRCRAFT PROCEEDS................12
11. THIRD PARTIES.........................................13
12. WAIVER................................................13
13. NOTICES...............................................13
14. FURTHER ASSURANCE.....................................15
15. POWER OF ATTORNEY.....................................16
16. INVALIDITY OF ANY PROVISION...........................16
17. DELEGATION OF POWERS..................................16
18. NO SUBSTITUTION AND RIGHT TO CONSOLIDATE..............17
19. CONTINUING SECURITY...................................17
20. VARIATION OF UNDERLYING DOCUMENTS.....................18
21. INDEMNIFICATION.......................................19
22. ASSIGNMENT............................................19
23. CAPACITY OF THE SECURITY AGENT........................20
24. LAW AND JURISDICTION..................................20
25. COUNTERPARTS..........................................21
26. SURVIVAL OF INDEMNITIES...............................21
27. CONFIDENTIALITY.......................................21
SCHEDULE 1 - AIRCRAFT DETAILS..................................23
SCHEDULE 2 - NOTICES OF ASSIGNMENT (A) NOTICE OF ASSIGNMENT TO
THE SELLER........................................24
(B) CONSENT AND AGREEMENT OF THE SELLER..........25
(C) NOTICE OF ASSIGNMENT TO ENGINE MANUFACTURER..26
(D) CONSENT AND AGREEMENT OF ENGINE MANUFACTURER.27
(E) NOTICE OF ASSIGNMENT TO INTERNATIONAL LEASE
FINANCE CORPORATION..........................28
SCHEDULE 3 - EXTRACT OF FACILITY AGREEMENT - CLAUSE 1.1........30
<PAGE>
THIS DEED OF ASSIGNMENT AND AIRCRAFT MORTGAGE is made on
the day of 199[ ]
BETWEEN:-
(1) ENCORE LEASING LIMITED, a company incorporated under the
laws of the Cayman Islands and having its registered office
at P.O. Box 2003, George Town, Grand Cayman, Cayman Islands,
BWI (the "Borrower"); and
(2) NATIONAL WESTMINSTER BANK PLC, a banking institution
established under the laws of England and having its
registered office at 41 Lothbury, London EC2P 2BP as
security agent for and on behalf of itself, the Agent and
each of the Lenders (the "Security Agent" which definition
shall include its successors, permitted assigns and
permitted transferees).
NOW THIS DEED WITNESSETH as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 Words and expressions used herein shall, unless otherwise
defined herein, have the meanings ascribed to them in the
Facility Agreement (a copy of Clause 1.1 of the Facility
Agreement being attached hereto as Schedule 3).
1.2 In this Deed:-
"[ ] LESSEE" means [ ];
"AIRCRAFT" means the Airframe together with the Engines
(whether or not any of the Engines may from time to time be
installed on the Airframe) together with the Technical
Records;
"AIRFRAME" means the airframe more particularly identified
in Schedule 1 hereto including all Parts installed in or on
the airframe at the Delivery Date (or which, having been
removed therefrom, remain the property of the Borrower
pursuant to the terms of the Lease Agreement), and all
substitutions, renewals and replacements from time to time
made in or to or installed in or on the said airframe in
accordance with the terms and conditions of the Lease
Agreement including any Parts which are for the time being
detached from the airframe but remain the property of the
Borrower;
"APPROVED SUB-LEASE" means any contract for the sub-lease,
hire or bailment of the Aircraft into which the Lessee is
entitled to enter in accordance with the provisions of
Clause 9 of the Lease Agreement;
"APPROVED SUB-LESSEE" means [ ] and any other
operator from time to time and for the time being of the
Aircraft under an Approved Sub-Lease;
"ASSIGNED PROPERTY" means the whole benefit of and all of
the respective right, title and interest (present and
future, actual or contingent and including, without
limitation, the right to receive monies in respect thereof
and the right to bring claims in respect thereof) of the
Borrower in, to and under the Purchase Agreement Assignment
(insofar as the same relates to the Warranties), the Deed of
Assignment of General Terms Agreement Re Engine Warranties
and the Requisition Proceeds;
<PAGE>
"ENGINE" or "ENGINES" means, (a) each of the engines
described in Schedule 1, whether or not from time to time
during the Security Period installed on the Airframe or any
other airframe and (b) any other engine which may, from time
to time, be installed upon or attached to the Airframe and
which becomes the property of the Borrower in accordance
with the terms of the Lease Agreement and (c) insofar as the
same belongs to the Borrower any and all appliances,
instruments or accessories or other equipment or Parts of
whatever nature from time to time relating to an engine
referred to in (a) or (b) above, whether or not installed on
or attached to such engine and (d) insofar as the same
belongs to the Borrower all substitutions, replacements or
renewals from time to time made on or to any item referred
to in (a), (b) or (c) above in accordance with the Lease
Agreement;
"ENGINE AGREEMENT" means the general terms agreement no. [
] between the Engine Manufacturer and the
Guarantor providing, inter alia, for the post-delivery
support and warranty coverage for the Engines, including any
amendments, modifications, letter agreements and supplements
thereto, to the extent that such amendments, modifications,
letter agreements and supplements relate to the Engines;
"ENGINE MANUFACTURER" means [ ];
"FACILITY AGREEMENT" means the aircraft facility agreement
dated [ ] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd and (10) International Lease Finance
Corporation;
"LEASE AGREEMENT" means the aircraft lease agreement No.
1995-[ ] dated 199[ ] and made between
the Borrower as lessor, the [ ] Lessee as lessee and
the [ ] Option Holder and providing, inter
alia, for the leasing of the Aircraft by the Borrower to the
[ ] Lessee;
"PARTS" means, in relation to the Aircraft, all modules,
appliances, parts, accessories, auxiliary power unit,
instruments, furnishings and other equipment of whatsoever
nature including, without limitation, the Buyer Furnished
Equipment and any service bulletin kits or the like but
excluding complete Engines or engines and equipment
(including, but not limited to, in-flight entertainment and
telecommunications equipment) which is from time to time
attached to the Airframe and leased to the Alternative
Lessee other than primarily for the purpose of financing the
acquisition of such equipment in circumstances where such
equipment, that at any time of determination is incorporated
or installed in or attached to the Airframe or any Engine
or, having been removed therefrom, title to which remains
vested in the Borrower in accordance with the provisions of
the Lease Agreement; and "Part" shall have a corresponding
meaning;
<PAGE>
"PURCHASE AGREEMENT" means the purchase agreement dated
[10th November, 1988] relating to [ ] Airbus A[
] Aircraft and the general terms agreement dated 10th
November, 1988 together with the exhibits thereto and letter
agreements made between the Seller and the Guarantor (as the
same may have been or may be amended and/or supplemented
from time to time by any change orders or letter agreements
entered into in accordance with its provisions) and made
between the Seller as seller and the Guarantor as buyer
providing for inter alia the purchase by the Guarantor from
the Seller of the Aircraft [as amended and supplemented in
relation to the Aircraft by a Supplemental Agreement dated [
] made between the Seller and the
Guarantor];
"RECEIVER" means any receiver or receiver and manager
appointed by the Security Agent hereunder or under any
applicable law;
"REQUISITION PROCEEDS" means any monies and/or compensation
received directly by the Borrower and/or the Security Agent
in its capacity as mortgagee in respect of the Compulsory
Acquisition of the Aircraft or any requisition for hire or
use of the Aircraft;
"SECURITY PERIOD" means the period commencing on the date
hereof and terminating on the earlier of (i) the discharge
of this Deed in accordance with its terms and (ii) the date
upon which the Secured Obligations shall have been
discharged in full; and
"WARRANTY AND SUPPORT RIGHTS" means each of:
(a) the benefit of the rights with respect to the Aircraft
under [Clause 12] (Warranties and Service Life Policy)
of the General Terms Agreement;
(b) the rights with respect to the Aircraft under [Clause
13] (Patent Indemnity) of the General Terms Agreement;
(c) the rights with respect to the Aircraft under the
Product Support Agreement [(Exhibit E)] applicable to
the Purchase Agreement;
(d) the benefit of various support allowances with respect
to the Aircraft more particularly referred to in the
Assignment of Warranty and Support Rights.
<PAGE>
1.3 In this Deed unless the context otherwise requires or there
is express provision to the contrary:-
1.3.1 Clause headings are inserted for convenience only
and shall not affect the construction of this Deed
and unless otherwise specified, all references to
Clauses and the Schedules are to Clauses of and
the Schedules to this Deed;
1.3.2 words denoting the singular number shall include
the plural and vice versa;
1.3.3 references to persons include any individual,
firm, company, corporation, government, state,
international organisation or agency, European
Union institution, committee, department,
authority or other body incorporated or
unincorporated of any of the foregoing (whether
having separate legal personality or not) or any
association or partnership of two or more of the
foregoing;
1.3.4 references to assets include property, rights and
assets of every description;
1.3.5 references to this Deed or any other document or
any provision hereof or thereof are to be
construed as references to this Deed or such other
document or such provision as amended, novated,
supplemented or replaced from time to time
(whether before or after the date hereof) by
agreement between the parties hereto or thereto as
the case may be;
1.3.6 references to any provision of any statute or
subordinate legislation include references to any
statute or subordinate legislation replacing,
modifying or consolidating the same;
1.3.7 the words "other" and "otherwise" shall not be
construed ejusdem generis with any foregoing words
where a wider construction is possible;
1.3.8 references to the "winding-up" of a person also
include the amalgamation, reconstruction,
reorganisation, administration, dissolution,
liquidation, merger or consolidation of that
person, and any equivalent or analogous procedure
under the law of any jurisdiction in which that
person is incorporated, domiciled or resident or
carries on business or has assets; and
<PAGE>
1.3.9 the words "including" and "in particular" shall be
construed as being by way of illustration or
emphasis only and shall not be construed as, nor
shall they take effect as, limiting the generality
of the foregoing words.
1.4 References to any person or party to this Deed or any of the
Facility Documents and/or any of the other Operative
Documents shall be taken to include any person or party who
has from time to time become an assignee or transferee of
such person or party in accordance with the provisions of
this Deed or, as the case may be, any of the Facility
Documents and/or any of the other Operative Documents, and
shall include successors to such person or party or to any
such assignee or transferee.
2. COVENANT TO PAY
Subject to the terms of Clause 3.2, the Borrower hereby
acknowledges to the Security Agent the liability of the
Borrower and/or the 1994 Borrower and/or the Lessees and/or
the 1994 Lessees and/or the Guarantor and/or the Parents
and/or the 1994 Parents to each of the Lenders, the Agent
and/or the Security Agent and/or the 1994 Secured Parties in
respect of the Secured Obligations and covenants with the
Security Agent that it shall pay to the Lenders, the
Security Agent, the Agent and/or the 1994 Secured Parties
(as the case may be) all monies constituting the Secured
Obligations owed by the Borrower as and when they become
due.
3. MORTGAGE
3.1 As a continuing security for the punctual payment and
discharge of the Secured Obligations, the Borrower as legal
and beneficial owner, by way of first priority legal
mortgage, hereby unconditionally and irrevocably legally
assigns and agrees legally to assign (subject to the
provisions of Clause 5) and mortgage to the Security Agent
as trustee for and on behalf of itself, the Agent and each
of the Lenders all its right, title and interest (present
and future, actual and contingent) in, to and under the
Aircraft.
3.2 The Borrower hereby acknowledges to the Security Agent that
the amount secured by this Deed is all monies constituting
the Secured Obligations and, accordingly, hereby covenants
with the Security Agent to the extent permitted by law that
the property hereby assigned and mortgaged is so assigned
and mortgaged for the full discharge of the Secured
Obligations. Notwithstanding the foregoing, the liability
of the Borrower hereunder in respect of the Secured
Obligations and in respect of any fees, costs and expenses
incurred upon enforcement and realisation of the security
hereby constituted (including, without limitation, the
remuneration of any Receiver) shall be limited to the same
extent as provided for in Clause 5.12 of the Facility
Agreement as if that Clause were contained herein mutatis
mutandis.
4. ASSIGNMENT
4.1 In consideration of the Lenders entering into the Facility
Agreement and as a continuing security for the Secured
<PAGE>
Obligations, the Borrower hereby unconditionally and
irrevocably as legal and beneficial owner, assigns and
agrees to assign absolutely by way of security to the
Security Agent the whole benefit of and all of its right,
title and interest (present and future, actual and
contingent) in, to and under the Assigned Property.
4.2 The Borrower shall as soon as possible after execution of
this Deed give notice to the Guarantor, the Seller and the
Engine Manufacturer substantially in the forms set out in
Schedule 2 hereto, and to the [ ] Lessee in the form set
out in Annex 1 to the General Security Assignment, and shall
procure that the Guarantor, the Seller and the Engine
Manufacturer shall acknowledge and consent to the content of
such notices, and that the [ ] Lessee acknowledges such
notice in the form of Annex 2 to the General Security
Assignment, in each case as promptly as practicable.
4.3 The Security Agent agrees that so long as no Acceleration
Event shall have occurred, the Borrower to the exclusion of
the Security Agent shall be entitled (i) to receive the
Requisition Proceeds and apply the same in accordance with
Clause 17.2 of the Priorities and Indemnities Agreement and
(ii) to exercise the rights in relation to the Warranties
and the Engine Warranties.
4.4 Each of the Borrower and the Security Agent hereby confirms
expressly for the benefit of the Seller and the Engine
Manufacturer that nothing in this Deed shall subject the
Seller and/or the Engine Manufacturer to any obligation or
liability to which it would not otherwise be subject under
the Purchase Agreement or, as the case may be, the Engine
Agreement or, as the case may be, the Purchase Agreement
Assignment and/or the Deed of Assignment of General Terms
Agreement Re Engine Warranties or modify in any respect the
Seller's and/or the Engine Manufacturer's contractual rights
or liabilities thereunder, whether in respect of the
Warranties, the Engine Warranties or otherwise.
4.5 Without in any way releasing the Borrower from any of its
duties or obligations under the Purchase Agreement and/or
the Purchase Agreement Assignment and/or the Engine
Agreement, and/or the Deed of Assignment of General Terms
Agreement Re Engine Warranties, the Security Agent hereby
confirms expressly for the benefit of the Seller and the
Engine Manufacturer that in exercising any rights or making
any claim under the Purchase Agreement and/or the Purchase
Agreement Assignment and/or the Engine Agreement and/or the
Deed of Assignment of General Terms Agreement Re Engine
Warranties (including, without limitation, in respect of the
Warranties and/or, as the case may be, the Engine
Warranties) the terms and conditions of the Purchase
Agreement and/or the Purchase Agreement Assignment and/or
the Engine Agreement and/or the Deed of Assignment of
General Terms Agreement Re Engine Warranties (including,
without limitation, the Standard Warranty, Service Life
Policy, Vendor Warranties, Interface Commitment and Patent
Indemnities ([Clauses 12 and 13] of the General Terms
Agreement comprising part of the Purchase Agreement) and
([Exhibit B] to the Engine Agreement) shall apply to, and be
binding on, the Security Agent.
4.6 Each of the Borrower and the Security Agent confirms
expressly for the benefit of the Seller and the Engine
Manufacturer that the Seller and the Engine Manufacturer
shall not be deemed to have knowledge of the occurrence of
an Acceleration Event nor shall they be deemed to have
<PAGE>
knowledge that the Aircraft is no longer subject to the
Lease Agreement, unless and until:-
4.6.1 the Seller shall have received written notice
thereof from the Security Agent addressed to the
Seller (a) if by mail, to the Seller at 2 Rond
Point, Maurice Bellonte, 31700 Blagnac, France or
(b) if by facsimile, to the Seller at facsimile
no. 010 3361 304011 (in either case marked or
designated for the attention of Le Gerant) or to
such other address, facsimile number or person as
the Seller shall have designated by notice in
writing to the Security Agent; and/or
4.6.2 the Engine Manufacturer shall have received
written notice thereof from the Security Agent
addressed to the Engine Manufacturer (a) if by
mail, to the Engine Manufacturer at [PO BOX 15514,
CINCINNATI, OH 45215-6301] or (b) if by facsimile,
to the Engine Manufacturer at facsimile no.
[513-243-1345] (in either case marked or
designated for the attention of [COMMERCIAL
CONTRACTS DIRECTOR]) or to such other address,
facsimile number or person as the Engine
Manufacturer shall have designated by notice in
writing to the Security Agent,
and the Seller or, as the case may be, the Engine
Manufacturer shall be entitled conclusively to rely upon
such notice without enquiring as to the accuracy of, or the
entitlement of the Security Agent to give, any such notice.
4.7 To the extent the Security Agent exercises any right or
asserts any claim under the Purchase Agreement and/or the
Purchase Agreement Assignment and/or the Engine Agreement
and/or the Deed of Assignment of General Terms Agreement Re
Engine Warranties (in respect of the Warranties and/or, as
the case may be, the Engine Warranties), the Seller and/or,
as the case may be, the Engine Manufacturer shall deal
solely and exclusively with the Security Agent as "BUYER"
under the Purchase Agreement and/or as "AIRLINE" under the
Engine Agreement.
5. RELEASE OF SECURITY AND SALE BY THE BORROWER
Without prejudice to the provisions of Clause 14.1 of the
Priorities and Indemnities Agreement, upon payment and
discharge in full of the Secured Obligations, and upon the [
] Option Holder taking title to the Aircraft pursuant to
Clause 20 of the Lease Agreement the Security Agent shall
upon the request of the Borrower but at no cost to the
Security Agent forthwith do such acts and execute such
documents as may be necessary and requested by the Borrower
to release, re-assign and discharge this Deed insofar as it
relates to the Aircraft and, re-assign without recourse or
warranty (but free and clear of any Security Interest
created by the Security Agent) and release from the charge
hereby created all such right, title and interest, if any,
the Security Agent may then have in and to the Assigned
Property.
6. REPRESENTATIONS AND WARRANTIES
6.1 The Borrower represents and warrants to the Security Agent
that:-
<PAGE>
6.1.1 it will on the Delivery Date have such title to
and ownership of the Aircraft as is then conveyed
to it by the Seller under the Purchase Agreement
Assignment free and clear of all Security
Interests created by or arising through it (other
than this Deed, any other Aircraft Operative
Document, the Second Mortgage, the 1994 Facility
Documents, the 1994 Operative Documents and any
Permitted Liens (other than Lessor's Liens);
6.1.2 it has, on the date hereof, all necessary power,
has taken all necessary corporate action and has
obtained all necessary consents and approvals, and
has taken all action necessary or required by
applicable law in the Cayman Islands, to enable it
to execute, deliver and perform this Deed; and
6.1.3 it has not previously created or granted, or
permitted any other person to create or grant any
Security Interest over its right, title and
interest in, to and under the whole or any part of
the Aircraft and/or the Assigned Property other
than pursuant to any of the Aircraft Operative
Documents, the Second Mortgage, the 1994 Facility
Documents and the 1994 Operative Documents.
6.2 The Security Agent represents and warrants, expressly for
the benefit of the Seller and the Engine Manufacturer, that
it has been furnished with adequate excerpts of the Purchase
Agreement containing the Warranties, Service Life Policy and
Patent Indemnities ([Clauses 12 and 13] of the General Terms
Agreement comprising part of the Purchase Agreement) and of
the Engine Agreement containing the Engine Warranties
([Exhibit B] to the Engine Agreement).
7. UNDERTAKINGS
7.1 The Borrower undertakes with the Security Agent to the
extent permitted by applicable law that throughout the
Security Period:-
7.1.1 it shall not create or grant, or permit any other
person to create or grant, any Security Interest
over any of its right, title and interest in, to
and under the Aircraft or any part thereof and/or
the Assigned Property or any part thereof other
than Permitted Liens (excluding therefrom Lessor's
Liens) or otherwise pursuant to any of the
Aircraft Operative Documents or the Second
Mortgage or the 1994 Facility Documents or the
1994 Operative Documents;
7.1.2 it shall not sell, transfer or otherwise dispose
of the Aircraft or any part thereof and/or the
Assigned Property or any part thereof other than
in accordance with the terms of the Aircraft
Operative Documents;
7.1.3 promptly after it becomes aware of the same, it
will give written notice to the Security Agent of
the occurrence of any Cancellation Event, any
Termination Event, any Mandatory Prepayment Event
or any Loan Event of Termination or any condition,
<PAGE>
event or circumstance which, with the giving of
notice, the lapse of time, the making of any
relevant determination or any combination of any
thereof, would constitute a Cancellation Event,
Termination Event, Mandatory Prepayment Event or,
as the case may be, a Loan Event of Termination;
and
7.1.4 promptly, upon the request of the Security Agent
at no cost to the Security Agent following a
Termination Event which is continuing and the
service of a notice pursuant to Clause 16.2 of the
Lease Agreement, it will execute all such
documents or agreements and take all such steps as
are within its power and as are required in order
to de-register the Aircraft from registration
with, and export the Aircraft from, the State of
Registration.
8. DEFAULT AND REMEDIES
8.1 Without prejudice to the Security Agent's other rights under
this Deed or by virtue of applicable law upon the occurrence
of an Acceleration Event which is continuing, and at any
time thereafter, the Security Agent may by written notice to
the Borrower and the [ ] Lessee declare the security
constituted by this Deed to become enforceable and such
notice shall be conclusive for the purposes of this Deed and
this Deed shall thereupon become immediately enforceable and
thereafter the Security Agent shall be entitled, without
notice or further demand, immediately to put into force and
exercise all the powers and remedies possessed by it
according to applicable law as assignee of the Assigned
Property and/or as mortgagee of the Aircraft and in
particular, but without limitation:-
8.1.1 to apply to any authority in the country in which
the Aircraft or any part thereof is located for an
enforcement and attachment order in respect of the
Aircraft;
8.1.2 to apply to any court of competent authority for
an order for foreclosure absolute so as to vest
all the Borrower's right, title and interest in
the Aircraft in the Security Agent absolutely;
8.1.3 to take possession of the Aircraft (subject to the
rights of quiet enjoyment of any person other than
the [ ] Lessee) and to enter upon any land
or premises where the Aircraft may be located
without being liable to the Borrower or the [
] Lessee for or by reason of such entry;
8.1.4 to sell, call in, collect and convert into money
the Aircraft (subject to the rights of quiet
enjoyment of any person other than the [ ]
Lessee) and/or the Assigned Property to the extent
that it is entitled to do so with all such powers
in that respect as are conferred by applicable law
and by way of extension thereof such sale, calling
in, collection and conversion may be made by
public or private contract at any place in the
world with or without notice to the Borrower,
without being liable to account for any loss of or
deficiency in the consideration therefor and so
<PAGE>
that the Security Agent shall have power in its
absolute discretion to postpone any such sale or
to proceed to a forced sale without being liable
for any loss resulting therefrom, and for the
purposes of this sub-clause the Security Agent may
(in its sole discretion) by written notice appoint
the [ ] Lessee its
non-exclusive agent to sell the Aircraft and/or
the Assigned Property on terms satisfactory to the
Security Agent;
8.1.5 to repair and keep in repair the Aircraft;
8.1.6 to insure the Aircraft against loss or damage in
terms reasonably consistent with those set out in
Clause 14 of and Schedule 9 to the Lease
Agreement;
8.1.7 to settle, arrange, compromise or submit to
arbitration any accounts, claims, questions or
disputes whatsoever which may arise in connection
with or in any way relating to the Aircraft, the
Assigned Property and/or the Secured Obligations
(but subject to the rights of any Approved
Sub-Lessee in respect of the Warranty and Support
Rights and in respect of the Engine Warranties)
and execute releases or other discharges in
relation thereto;
8.1.8 to bring, take, defend, compromise, submit to
arbitration or discontinue any actions, suits or
proceedings whatsoever, civil or criminal, in
relation to the Aircraft and/or the Assigned
Property (but subject to the rights of any
Approved Sub-Lessee in respect of the Warranty and
Support Rights and in respect of the Engine
Warranties);
8.1.9 to lay up the Aircraft for such term and generally
in such manner and upon such conditions and
stipulations as the Security Agent shall think
fit;
8.1.10 to execute and do all such acts, deeds and things
as the Security Agent may consider necessary or
proper for or in relation to any of the purposes
aforesaid; and
8.1.11 to appoint (either before or after the Security
Agent shall have entered into or taken possession
of the property assigned or mortgaged pursuant to
this Deed or any part thereof) an administrator or
agent to execute documents, enforce its rights
under this Deed and otherwise to act on behalf of
the Security Agent in connection with this Deed or
to appoint a Receiver of all or any part of the
Aircraft and/or the Assigned Property (but subject
to the rights of any Approved Sub-Lessee in
respect of the Warranty and Support Rights and in
respect of the Engine Warranties) upon such terms
as to remuneration and otherwise as the Security
Agent shall deem fit and the Security Agent may
from time to time remove any agent or Receiver so
appointed and appoint another in his stead and to
fix (at or after the time of his appointment) the
reasonable remuneration of any such agent or
Receiver and, at the Security Agent's discretion,
<PAGE>
direct payment thereof out of the proceeds of
enforcement of this Deed. A Receiver so appointed
shall be the agent of the Borrower and the
Borrower shall be liable for such Receiver's
actions and defaults to the exclusion of liability
on the part of the Security Agent. Nothing herein
contained shall render the Security Agent liable
to any such Receiver for his remuneration, costs,
charges or expenses or otherwise,
and if pursuant to the foregoing powers and remedies the
Security Agent shall sell the Aircraft, neither the new
owner nor any other person shall be under any obligation to
continue the term of the Lease Agreement PROVIDED THAT any
such sale shall be subject to the terms of any covenant of
quiet enjoyment given by the Security Agent to any person
other than the [ ] Lessee and shall be subject to the
rights of any Approved Sub-Lessee in respect of the Warranty
and Support Rights and in respect of the Engine Warranties.
8.2 Without limiting, and in addition to, the powers conferred
upon the Security Agent (and any Receiver appointed pursuant
to Clause 8.1.11) by the applicable laws of the Cayman
Islands or of any other jurisdiction, the Security Agent may
at any time after this Deed has become enforceable in
accordance with the terms hereof exercise against the
Aircraft any of the rights, powers, privileges or
discretions conferred from time to time by the applicable
laws of the State of Registration and/or of the place where
the Aircraft is habitually based upon a mortgagee of
property such as the Aircraft.
8.3 Notwithstanding anything contained in this Deed, the
principal monies hereby secured shall be deemed to have
become due for the purposes of Section 101 of the Law of
Property Act, 1925 (and the statutory powers of sale and of
appointing a receiver shall cease) immediately after
execution of this Deed. Neither Section 93 nor Section 103
nor Section 109(6) nor Section 109 (8) of the Law of
Property Act, 1925 nor any laws having equivalent effect in
the jurisdiction in which the Aircraft is situated (whether
at the time of creation of this Deed, the occurrence of an
Acceleration Event or otherwise) and/or the State of
Registration and/or the place where the Aircraft is
habitually based shall apply and the statutory powers of
sale and of appointing a receiver shall become immediately
exercisable by the Security Agent without demand or notice
of any kind to the Borrower.
9. POWERS OF RECEIVER
9.1 Any Receiver appointed under Clause 8.1.11 shall have all
the powers conferred on a Receiver by applicable law and by
way of addition to but without limiting those powers:-
9.1.1 the Receiver shall have all the powers given to
the Security Agent hereunder of taking possession
of, calling in, collecting, converting into money
and selling, and dealing with the Aircraft and/or
the Assigned Property or any part thereof and
generally shall be entitled to the same protection
and to exercise the same powers and discretions as
are given to the Security Agent hereunder and
shall also have such other of the powers and
discretions given to the Security Agent hereunder
<PAGE>
as the Security Agent may from time to time confer
on him;
9.1.2 the remuneration of the Receiver may be fixed by
the Security Agent (and may be or include a
commission calculated by reference to the gross
amount of all money received or otherwise), and
shall be payable out of the proceeds of
enforcement of this Deed and shall be secured on
the Aircraft and/or the Assigned Property;
9.1.3 the Receiver shall have power to make any payment
and incur any expenditure which the Security Agent
is by this Deed expressly or impliedly authorised
to make or incur. Any reasonable expenses
incurred by the Receiver in the exercise of any of
his powers hereunder may be paid or retained by
him out of any monies coming into his hands as
receiver or may be paid to the Security Agent, in
which case they shall be treated as expenses
properly incurred by the Security Agent;
9.1.4 the Receiver shall in the exercise of his powers,
authorities and discretions conform with the
reasonable directions from time to time made and
given by the Security Agent;
9.1.5 the Security Agent may at any time require
reasonable security to be given for the due
performance of the Receiver's duties as receiver
and such security may, in the Security Agent's
discretion, be given out of the proceeds of
enforcement of this Deed and/or be secured on the
Aircraft and/or the Assigned Property under this
Deed; and
9.1.6 the Security Agent may from time to time determine
what funds the Receiver shall be at liberty to
keep in hand with a view to the performance of his
duties as receiver.
9.2 Neither the Security Agent nor the Receiver shall be liable
to account as a mortgagee in possession of the Aircraft
and/or the Assigned Property and neither the Security Agent
nor any Receiver shall be liable for any loss arising from
or in connection with the realisation of the Aircraft, the
Assigned Property or otherwise for any act, neglect, default
or omission for which a mortgagee in possession might be
liable as such, save in circumstances where there has been
gross negligence or wilful misconduct on the part of the
Security Agent or the Receiver, as the case may be.
9.3 The foregoing powers of a Receiver shall be in addition to
any statutory or other powers of a receiver duly appointed
under Section 109 of the Law of Property Act, 1925 (as
amended) and the equivalent thereof under the laws of the
Cayman Islands and the Receiver shall in any event have and
be entitled to exercise all the rights, powers and remedies
conferred upon the Security Agent by this Deed and by
applicable law with respect to the Aircraft.
10. APPLICATION OF FIRST AIRCRAFT PROCEEDS
All monies and other proceeds of any enforcement or
realisation of the security constituted hereby which are
<PAGE>
received by or held to the order of any Receiver or the
Security Agent shall be applied in or towards reduction of
the Secured Obligations in the manner and order of priority
set out in Clause 17 of the Priorities and Indemnities
Agreement.
11. THIRD PARTIES
11.1 No person dealing with the Security Agent or any Receiver
shall be concerned to enquire whether an Acceleration Event
has occurred or whether the power which the Security Agent
or such Receiver is purporting to exercise has become
exercisable or whether any money remains due on the security
of this Deed or otherwise as to the propriety or regularity
of any sale or other dealing by the Security Agent or such
Receiver with the Aircraft and all the protections to
purchasers conferred by applicable law shall apply to such
persons dealing with the Security Agent or such Receiver.
11.2 The receipt of the Security Agent or any Receiver for any
purchase monies shall effectively discharge the purchaser
who shall not be concerned with the manner of application of
the same.
12. WAIVER
No failure to exercise and no delay in exercising on the
part of the Security Agent, the Agent, the Lenders or any of
them or any Receiver any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege preclude
the further exercise of such one or any other right, power
or privilege whether hereunder or otherwise. The rights and
remedies herein provided are cumulative and not exclusive of
any rights or remedies provided by applicable law.
13. NOTICES
13.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
13.1.1 in order to be valid be in English and in writing;
13.1.2 be deemed to have been duly served on, given to or
made in relation to a party if it is:-
(a) left at the address of that party set out
herein or at such other address as that
party may notify to the other party hereto
in writing from time to time; or
(b) posted by first-class postage prepaid mail
in an envelope addressed to that party at
such address; or
(c) sent by facsimile to the facsimile number of
that party set out herein or to such other
number as that party may notify to the other
party hereto from time to time.
13.1.3 be sufficient if:-
(a) executed under the seal of the party giving,
serving or making the same; or
<PAGE>
(b) signed or sent on behalf of the party
giving, serving or making the same by any
attorney, director, secretary, agent or
other duly authorised representative of
such party.
13.1.4 be effective:-
(a) in the case of a letter, when left at the
address referred to in sub-Clause 13.1.2(a)
or delivered in person to any officer of the
addressee or (as the case may be) seven (7)
Business Days after being deposited in the
post first- class postage prepaid in an
envelope addressed to the addressee at the
address referred to in sub-Clause 13.1.2(a);
(b) in the case of a facsimile transmission,
when receipt is confirmed by return
facsimile or by telephone (or on actual
receipt if not so confirmed).
13.2 For the purposes of this Clause 13, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
(a) if to the Borrower to:-
Encore Leasing Limited
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Tel: 809 949 7942
Facsimile: 809 949 8340
Attention: Trust Services
(b) if to the Security Agent to:-
National Westminster Bank Plc
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
England
Tel: 0171-375-5738/5929/5931
Facsimile No: 0171-375-5854
Attention: Head of Corporate Banking
Agency Group
13.3 Any notice to be given by the Borrower to the Lenders or any
of them may be given by serving such notice on the Lender
care of the Security Agent.
13.4 Nothing herein contained shall affect the right to serve
process in any other manner permitted by law.
<PAGE>
14. FURTHER ASSURANCE
14.1 The Borrower covenants with the Security Agent that it shall
from time to time and at all times whether before or after
the security constituted by this Deed shall have become
enforceable, at the request of and at no cost to the
Security Agent, take such actions and execute such
additional documents as the Security Agent may reasonably
require to perfect or give full effect to this Deed or for
securing the rights hereunder of the Security Agent and
shall (at no cost to the Security Agent) if and when the
State of Registration ratifies the Convention on the
International Recognition of Rights in Aircraft signed at
Geneva, Switzerland on the 19th June, 1948 do, and procure
that the [ ] Lessee does all things necessary in the
State of Registration to perfect the recognition of this
Deed PROVIDED THAT the Borrower shall not be required to do
any act in connection with the registration, filing or
recording of this Deed in the State of Registration or the
Habitual Base whilst the Aircraft is on lease to an Approved
Sub-Lessee and the interests of the Borrower as owner of the
Aircraft are fully preserved and protected in such State of
Registration or, as the case may be, Habitual Base.
14.2 The Borrower shall, at the request of but at no cost to the
Security Agent, upon a change of the State of Registration
taking place, execute in favour of the Security Agent a deed
amending or supplementing this Deed and/or a mortgage and/or
any other document required by the Security Agent for the
purpose of preserving the security intended to be created
hereby in such form as the Security Agent may reasonably
request, PROVIDED ALWAYS THAT any such request of the
Security Agent shall not be inconsistent with the rights of
the Borrower and/or the Security Agent under Clause 9.4.2 of
the Lease Agreement.
15. POWER OF ATTORNEY
15.1 The Borrower hereby irrevocably and by way of security
appoints the Security Agent and/or any Receiver for the time
being holding office jointly and severally (with power of
sole signature) to be its Attorney (with power to appoint
substitute attorneys and to revoke the appointment thereof
at any time) for and on its behalf and in its name and as
its act and deed:-
15.1.1 to execute, seal and deliver and otherwise perfect
any such document as is mentioned in Clauses 14.1
and 14.2;
15.1.2 to do all such acts and execute, deliver and
perfect all such documents as the Borrower itself
could do or execute with reference to or in
connection with any of the matters dealt with in
this Deed or any of the other Aircraft Operative
Documents or any documents contemplated by or
entered into pursuant hereto or thereto or which
may be required or deemed proper for any of the
purposes of the security constituted by this Deed
or any of the other Aircraft Operative Documents
or any documents contemplated by or entered into
pursuant hereto or thereto and to use its name in
the exercise of all or any of the powers conferred
by this Deed or the Aircraft Security Documents or
any documents contemplated by or entered into
pursuant hereto or thereto upon the Security Agent
and/or the Receiver,
<PAGE>
PROVIDED ALWAYS THAT such power shall not be exercisable by
or on behalf of the Security Agent until an Acceleration
Event has occurred and is continuing.
15.2 The power of attorney hereby granted is as regards the
Security Agent and any Receiver (and as the Borrower hereby
acknowledges) granted irrevocably and for value as part of
the security granted by this Deed and/or any of the other
Aircraft Operative Documents.
16. INVALIDITY OF ANY PROVISION
Any provision of this Deed which is or becomes invalid,
illegal or unenforceable in any jurisdiction shall as to
such jurisdiction be ineffective to the extent of such
invalidity, illegality or unenforceability without
invalidating the remaining provisions hereof, and any such
invalidity, illegality or unenforceability shall not render
such provision invalid, illegal or unenforceable in any
other jurisdiction.
17. DELEGATION OF POWERS
The Security Agent shall be entitled at any time and as
often as it may deem expedient to delegate all or any of the
powers and discretions vested in it by or in connection with
this Deed in such manner, upon such terms and to such
persons as the Security Agent in its absolute discretion may
think fit.
18. NO SUBSTITUTION AND RIGHT TO CONSOLIDATE
This Deed and the security hereby created shall be in
addition to and not in substitution for or derogation of any
other security (whether given by the Borrower or otherwise)
from time to time hereafter held by the Security Agent or
the 1994 Security Agent in respect of or in connection with
any or all of the monies, obligations and liabilities hereby
secured and shall continue in full force and effect
notwithstanding the invalidity or unenforceability of any of
the obligations of the Borrower and/or the 1994 Borrower
and/or the Lessees and/or the 1994 Lessees and/or the
Guarantor and/or the Parents and/or the 1994 Parents under
or in respect of any of the Facility Documents and/or any of
the Operative Documents and/or any of the 1994 Facility
Documents and/or any of the 1994 Operative Documents and any
time or indulgence which may be granted to the Borrower
and/or the 1994 Borrower and/or the Lessees and/or the 1994
Lessees and/or the Guarantor and/or the Parents and/or the
1994 Parents or any other matter which might otherwise
exonerate the Borrower and/or the 1994 Borrower and/or the
Lessees and/or the 1994 Lessees and/or the Guarantor and/or
the Parents and/or the 1994 Parents.
19. CONTINUING SECURITY
19.1 The Security created by this Deed is in addition to and not
in substitution for and shall not in any way be prejudiced
or affected by, and shall be without prejudice to, any other
security or guarantee now or hereafter held by the Security
Agent, the Agent, the Lenders and the 1994 Secured Parties
or any of them for all or any part of the Secured
Obligations and may be enforced without the Security Agent,
<PAGE>
the Agent, the Lenders and the 1994 Secured Parties or any
of them first having recourse to any such security or
guarantee and without taking any steps or proceedings
against any of the Borrower or any other person in respect
of the Secured Obligations. Without prejudice to the
generality of the foregoing, the Security Agent, the Agent,
each Lender and each of the 1994 Secured Parties need not
before the Security Agent or the 1994 Security Agent
exercises any of the rights, powers or remedies conferred
upon it by this Deed or by law (i) take action or obtain
judgment against any of the Borrower or any other person in
any court or otherwise, (ii) make or file a claim or proof
in a winding up, liquidation, bankruptcy, insolvency,
dissolution, reorganisation or amalgamation of, or other
analogous event of or with respect to, the Borrower or any
other person, or (iii) enforce or seek to enforce a payment
or performance of, or the recovery of, any of the monies,
obligations and liabilities hereby secured or any other
security or guarantee for all or any of the Secured
Obligations.
19.2 The Security created by this Deed shall not be discharged,
impaired or otherwise affected by:-
(i) any failure by the Security Agent, the Agent, the
Lenders and the 1994 Secured Parties or any of them to
take or enforce any other security or guarantee taken
or agreed to be taken for all or any of the Secured
Obligations or under or pursuant to any of the Facility
Documents and the 1994 Secured Parties and/or any of
the Operative Documents and/or any of the 1994 Facility
Documents and/or any of the 1994 Operative Documents or
otherwise;
(ii) any time or other indulgence given or agreed to be
given by the Security Agent, the Agent, the Lenders and
the 1994 Secured Parties or any of them to the Borrower
or any other person in respect of the Secured
Obligations or in respect of the Borrower's or such
other person's obligations under any security or
guarantee relating thereto;
(iii) any amendment, modification, variation,
supplement, novation, re-statement or replacement
or all or any part of the Secured Obligations
and/or any of the Facility Documents and/or any of
the Operative Documents and/or any of the 1994
Facility Documents and/or any of the 1994
Operative Documents;
(iv) any release or exchange of any security or guarantee
now or hereafter held by the Security Agent, the Agent,
the Lenders and the 1994 Secured Parties or any of them
for all or any part of the Secured Obligations; or
(v) any other act, fact, matter, event, circumstance,
omission or thing (including without limitation the
invalidity, unenforceability or illegality of any of
the Secured Obligations or the bankruptcy, liquidation,
winding up, insolvency, dissolution, reorganisation or
amalgamation of, or other analogous event of or with
respect to, the Borrower or any other person) which,
but for this provision, might operate to impair or
discharge the rights of the Security Agent, the Agent,
the Lenders and the 1994 Secured Parties or any of them
under this Deed and/or under any of the Facility
<PAGE>
Documents and/or any of the Operative Documents and/or
any of the 1994 Facility Documents and/or any of the
1994 Operative Documents or which, but for this
provision, might constitute a legal or equitable
discharge of the security hereby created.
19.3 Any settlement or discharge between the Security Agent, the
Agent, the Lenders and the 1994 Secured Parties or any of
them and the Borrower and/or any other person shall be
conditional upon no security or payment of the Security
Agent, the Agent, the Lenders and the 1994 Secured Parties
or any of them by the Borrower or any other person, being
avoided or set aside or ordered to be refunded or reduced by
virtue of any provision or enactment relating to the
bankruptcy, liquidation, winding up, insolvency,
dissolution, reorganisation, amalgamation, or other
analogous event or proceedings for the time being in force.
20. VARIATION OF UNDERLYING DOCUMENTS
The Security Agent or the 1994 Security Agent may in its
discretion (i) grant time or other indulgence or make any
other arrangement in respect of any of the monies and
liabilities hereby secured or of any other security therefor
or of any other company or companies, person or persons not
parties hereto or (ii) vary any provision of any of the
Facility Documents and/or any of the Operative Documents
and/or any of the 1994 Facility Documents and/or any of the
1994 Operative Documents without prejudice to this security,
and the security created by this Deed shall not be in any
way discharged or impaired by reason of any other
circumstance which might (but for this provision) constitute
a legal or equitable discharge of such security.
21. INDEMNIFICATION
The Security Agent and any attorney, manager, agent or other
person appointed by the Security Agent or any Receiver
hereunder shall be entitled to be indemnified out of the
proceeds of any realisation of the security hereby created
in respect of all liabilities and expenses reasonably
incurred by it, him or them in the execution of any powers,
authorities or discretions vested in it, him or them hereby
or pursuant hereto.
22. ASSIGNMENT
22.1 This Deed shall be binding upon and enure to the benefit of
each of the parties hereto and their respective successors
and permitted assigns. Subject to the provisions of Clauses
5.5.2 and 13 of the Priorities and Indemnities Agreement and
the circumstances described in the proviso to Clause 24.3 of
the Priorities and Indemnities Agreement the Borrower may
not assign any or all of its rights or transfer (or purport
to transfer) any or all of its obligations under or pursuant
to this Deed or in respect of the Aircraft or the Engines
(other than pursuant to the Second Mortgage) without the
prior written consent of the Security Agent (acting on the
instructions of the Majority Lenders) and, prior to the
occurrence of an Acceleration Event, the Guarantor (which
the Lenders and the Guarantor shall have absolute discretion
to withhold and the Seller in respect of any assignment or
transfer of the Warranties). The Security Agent may not
assign any or all of its rights or transfer (or purport to
<PAGE>
transfer) any or all of its obligations under or pursuant to
this Deed or in respect of the Aircraft or the Engines
PROVIDED ALWAYS THAT, subject to the prior written consent
of the Seller or, as the case may be, the Engine
Manufacturer in respect of any assignment or transfer of the
Warranties, or, as the case may be, the Engine Warranties,
the Security Agent shall be entitled to assign or transfer
the benefit of this Deed in accordance with the provisions
of the Lenders' Agreement.
22.2 Any assignee who acquires an interest or, as the case may
be, a part of an interest under this Deed in accordance with
this Clause shall acquire such interest or, as the case may
be, such part of an interest in the same manner and to the
same extent as the person from whom it acquired such
interest or, as the case may be, such part of an interest.
22.3 For the purposes of this Deed, the terms "BORROWER",
"GUARANTOR", "[ ] PARENT", "[ ] OPTION
HOLDER", "[ ] LESSEE", "AGENT", "SECURITY AGENT" and
"LENDER" shall, where the context so admits, include their
respective successors and permitted assigns.
23. CAPACITY OF THE SECURITY AGENT
23.1 The Security Agent shall hold legal title to the property
mortgaged and/or assigned pursuant to this Deed as security
agent for and on behalf of itself, the Agent and the Lenders
and the 1994 Secured Parties.
23.2 The Borrower, the Agent, the Lenders and the 1994 Secured
Parties acknowledge that the Security Agent is entitled and
authorised to exercise all such rights, powers, authorities
and discretions in relation to the property mortgaged and/or
assigned pursuant to this Deed as if the Security Agent were
beneficially entitled thereto (including, without
limitation, the grant of an indemnity to any person or
persons appointed as a receiver pursuant hereto).
24. LAW AND JURISDICTION
24.1 This Deed shall be governed by and construed in accordance
with English law.
24.2 The Borrower hereby irrevocably agrees for the benefit of
the Security Agent that the courts of England shall have
jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out
of or in connection with this Deed and, for such purposes,
irrevocably submits to the jurisdiction of such courts.
24.3 The Borrower hereby irrevocably waives any objection which
it might now or hereafter have to the courts referred to in
Clause 24.2 being nominated as the forum to hear and
determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this
Deed and agrees not to claim that any such court is not a
convenient or appropriate forum in each case whether on the
grounds of venue or forum non conveniens or any similar
grounds or otherwise.
24.4 The submission to the jurisdiction of the courts referred to
in Clause 24.2 shall not (and shall not be construed so as
to) limit the right of the Security Agent to take
proceedings against the Borrower in any other court of
<PAGE>
competent jurisdiction nor shall the taking of proceedings
by the Security Agent in any one or more jurisdictions
preclude the taking of proceedings by the Security Agent in
any other jurisdiction, whether concurrently or not.
24.5 To the extent that the Borrower or any of the property of
the Borrower is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any competent court,
from service of process, from attachment prior to judgment,
from attachment in aid of execution, or from execution prior
to judgment, or other legal process in any jurisdiction, the
Borrower for itself and its property does hereby irrevocably
and unconditionally waive, and agrees not to plead or claim,
any such immunity with respect to its obligations,
liabilities or any other matter under or arising out of or
in connection with any of this Deed or the subject matter
hereof.
25. COUNTERPARTS
This Deed may be executed in any number of counterparts and
by different parties hereto or separate counterparts each of
which when executed and delivered shall constitute an
original but all counterparts together constitute but one
and the same instrument.
26. SURVIVAL OF INDEMNITIES
The indemnities in favour of the Lenders, the Security Agent
and/or the Agent contained in this Deed shall continue in
full force and effect in accordance with their terms
notwithstanding any breach by the Security Agent, the Agent
and/or the Lenders and notwithstanding repayment of the
Secured Obligations in full.
27. CONFIDENTIALITY
27.1 Each party hereto shall use all reasonable endeavours to
ensure that its respective officers, directors, employees
and agents shall keep secret and confidential and not,
without the prior written consent of the other party hereto
and, insofar as such information relates to the Warranties,
the Engine Warranties, the Seller or the Engine
Manufacturer, disclose to any third party the terms of this
Deed or any of the information, reports or documents
supplied by or on behalf of the other party hereto or the
Seller or the Engine Manufacturer, as applicable, save that
any such party shall be entitled to disclose any such terms,
information, reports or documents:-
(i) in connection with any proceedings arising out of or in
connection with this Deed to the extent that such party
may consider necessary to protect its interest; or
(ii) to any potential assignee or transferee of all or any
of such party's rights under this Deed or any other
person proposing to enter into contractual arrangements
with such party in relation to or in connection with
the transactions contemplated by this Deed, subject to
it obtaining an undertaking from such potential
assignee or other person in the terms similar to this
Clause 27.1; or
<PAGE>
(iii) if required to do so by an order of a court of
competent jurisdiction whether pursuant to any
procedure for discovering documents or otherwise;
or
(iv) pursuant to any law or regulation having the force of
law (including, without limitation, SEC filing
requirements); or
(v) to any fiscal, monetary, tax, governmental or other
competent authority; or
(vi) to its auditors, legal or other professional advisers;
or
(vii) to any of the Export Credit Agencies; or
(viii) in any manner contemplated by any of this Deed.
27.2 In addition, any party shall be entitled to disclose or use
any such information, reports or documents if the
information contained therein shall have emanated in
conditions free from confidentiality bona fide from some
person other than the relevant party hereto and such party
would, but for the preceding provisions of this Clause 27
have been free to disclose or use the same.
27.3 Each party may, notwithstanding any other provision of this
Clause 27, release to any potential assignee or transferee
(permitted in each case pursuant hereto), or other person
proposing to enter into contractual arrangements with such
party in relation to or in connection with the transactions
contemplated by this Deed, a copy of any of this Deed,
PROVIDED THAT each such potential assignee or transferee or
other person confirms in writing to the other party to this
Deed that it is bound by the terms of this Clause 27 as if
it had been a party to this Deed.
IN WITNESS whereof the Borrower has caused this Deed to be
executed as a deed and it is intended to be and is hereby
delivered the day and year first above written.
<PAGE>
SCHEDULE 1
AIRCRAFT DETAILS
AIRFRAME One (1) Airbus A[ ] aircraft bearing
manufacturer's serial number [ ].
ENGINES [Two (2)] [ ] engines
bearing manufacturer's serial numbers [ ] and [
].
<PAGE>
SCHEDULE 2
NOTICES OF ASSIGNMENT
(A) NOTICE OF ASSIGNMENT TO THE SELLER
To: AVSA S.A.R.L.
2 Rond Point Maurice Bellonte
31700 Blagnac
France
[ ] , 199[ ]
ONE AIRBUS A[ ]AIRCRAFT
MANUFACTURER'S SERIAL NO. [ ]
We hereby give you notice that by a deed of assignment and
aircraft mortgage no. 1995-[ ] dated [ ], 199[ ] (the
"Deed") and made between Encore Leasing Limited (the "Borrower")
and National Westminster Bank Plc in its capacity as Security
Agent (the "Security Agent"), a copy of which is attached hereto,
we have assigned and agreed to assign absolutely by way of
security to the Security Agent all our right, title and interest
in and to the Purchase Agreement Assignment (insofar as the same
relates to the Warranties) dated [ ] 199[ ]
and made between ourselves and International Lease Finance
Corporation.
Until you are notified by the Security Agent of the occurrence of
an Acceleration Event, you will continue to deal directly with
International Lease Finance Corporation in relation to the
matters covered by the Purchase Agreement Assignment in
International Lease Finance Corporation's capacity as agent for
and on behalf of the Security Agent.
This Notice and the instructions herein contained are irrevocable
for the Security Period. Please acknowledge receipt of this
Notice to the Security Agent by signing the enclosed Consent and
Agreement.
Terms defined in the Deed (including terms defined therein by
reference to another document) shall have the same meanings
herein.
For and on behalf of ENCORE LEASING LIMITED
Name: ................................................
Title: ................................................
<PAGE>
(B) CONSENT AND AGREEMENT OF THE SELLER
(Manufacturer's Serial Number [ ])
AVSA S.A.R.L. (the "Seller"), hereby acknowledges notice of and
consents to all of the terms of the deed of assignment and
aircraft mortgage no. 1995-[ ] dated [ ] 199[ ] (the
"Deed") insofar as the same constitutes an assignment of the
warranties and made between Encore Leasing Limited (the
"Borrower") and National Westminster Bank Plc in its capacity as
Security Agent, (the "Security Agent") a copy of which is
attached hereto, and hereby confirms to the Borrower and the
Security Agent that the Standard Warranty, Service Life Policy,
Vendor Warranties, Interface Commitment and Patent Indemnity of
the Seller under the Purchase Agreement, to the extent the same
relate to the Aircraft (but not further or otherwise), shall
subject to the rights (if any) of the Approved Sub-Lessee in
respect of the Warranty and Support Rights, enure to the benefit
of the Security Agent to the same extent as if originally named
"BUYER" of the Aircraft in the Purchase Agreement and to the
benefit of the Borrower (but only to the extent provided in the
Deed), provided always that until the Seller is notified by the
Security Agent of the occurrence of an Acceleration Event, the
Seller will continue to deal directly with International Lease
Finance Corporation in its capacity as the agent for and on
behalf of the Security Agent in relation to the rights assigned
pursuant to the Deed and PROVIDED FURTHER that the Seller shall
not owe any liability or obligation under the Purchase Agreement,
the Purchase Agreement Assignment and the Warranties more than
once in total.
The Seller agrees that no breach or default on the part of
International Lease Finance Corporation of any of the provisions
of the Purchase Agreement, to the extent that the Purchase
Agreement relates to aircraft which do not form part of any of
the Aircraft financed and delivered to the Borrower pursuant to
the Facility Agreement, shall impair, prejudice or vitiate any of
the rights available to the Borrower or the Security Agent in
respect of the Purchase Agreement relative to any of the Aircraft
(as that term is defined in the Facility Agreement).
This Consent and Agreement is made subject to and with the
benefit of the provisions of Clauses 4.4, 4.5, 4.6 and 6.2 of the
Deed.
Terms defined in the Deed (including terms defined therein by
reference to another document) shall have the same respective
meanings when used herein.
This Consent and Agreement shall be governed by the laws of the
State of New York, including all matters of construction,
validity and performance, and without reference to conflicts of
laws principles.
Dated:
AVSA S.A.R.L.
By: ........................................
Title: Attorney-in-Fact
<PAGE>
(C) NOTICE OF ASSIGNMENT TO ENGINE MANUFACTURER
To: [ ].
[ ] , 199[ ]
ONE AIRBUS A[ ]AIRCRAFT
MANUFACTURER'S SERIAL NO. [ ]
We hereby give you notice that by a deed of assignment and
aircraft mortgage no. [ ] dated [ ], 199[ ] (the
"Deed") and made between [Encore] Leasing Limited (the
"Borrower") and National Westminster Bank Plc in its capacity as
Security Agent (the "Security Agent"), a copy of which is
attached hereto, we have assigned and agreed to assign absolutely
to the Security Agent all our right, title and interest in and to
the Deed of Assignment of General Terms Agreement Re Engine
Warranties (insofar as the same relates to the Engine Warranties)
dated [ ] 199[ ] and made between
ourselves and International Lease Finance Corporation.
Until you are notified by the Security Agent of the occurrence of
an Acceleration Event, you will continue to deal directly with
International Lease Finance Corporation in relation to the
matters covered by the Deed of Assignment of General Terms
Agreement Re Engine Warranties in International Lease Finance
Corporation's capacity as agent for and on behalf of the Security
Agent.
This Notice and the instructions herein contained are
irrevocable. Please acknowledge receipt of this Notice to the
Security Agent by signing the enclosed Consent and Agreement.
Terms defined in the Deed (including terms defined therein by
reference to another document) shall have the same meanings
herein.
For and on behalf of
ENCORE LEASING LIMITED
Name: ...........................
Title: ...........................
<PAGE>
(D) CONSENT AND AGREEMENT OF ENGINE MANUFACTURER
(Manufacturer's Serial Number [ ])
[ ], a [ ] Corporation
("[ ]"), hereby acknowledges notice of and consents to the
assignment, as contained in a deed of assignment and aircraft
mortgage no.[ ] dated [ ], 199[ ] (the "Deed") and
made between [Encore] Leasing Limited (the "Borrower") and
National Westminster Bank Plc in its capacity as Security Agent
(the "Security Agent") of the Engine Warranties and hereby
confirms to the Borrower and the Security Agent that the Engine
Warranties, shall, subject to the rights (if any) of the Approved
Sub-Lessee in respect of the Engine Warranties, enure to the
benefit of the Security Agent to the same extent as if originally
named "AIRLINE" in relation to the Engine Agreement and to the
benefit of the Borrower (but only to the extent provided in the
Deed), provided always that until [ ] is notified by the
Security Agent of the occurrence of an Acceleration Event [ ]
will continue to deal directly with International Lease Finance
Corporation in its capacity as the agent for and on behalf of the
Security Agent in relation to the rights assigned pursuant to the
Deed PROVIDED FURTHER that [ ] shall not owe any liability or
obligation under the Engine Agreement and the Engine Warranties
more than once in total.
This Consent and Agreement is made subject to and with the
benefit of the provisions of Clauses 4.4, 4.5, 4.6 and 6.2 of the
Deed.
Terms defined in the Deed (including terms defined therein by
reference to another document) shall have the same respective
meanings when used herein.
This Consent and Agreement shall be governed by the laws of New
York, including all matters of construction, validity and
performance, and without reference to conflicts of laws
principles.
Dated:
[ ].
By: ..................................
Title: ..........................
<PAGE>
(E) NOTICE OF ASSIGNMENT TO
INTERNATIONAL LEASE FINANCE CORPORATION
To: International Lease Finance Corporation
[ ] , 199[ ]
ONE AIRBUS A[ ]AIRCRAFT
MANUFACTURER'S SERIAL NO.[ ]
We hereby give you notice that by a deed of assignment and
aircraft mortgage no. [ ] dated [ ], 199[ ] (the
"Deed") and made between Encore Leasing Limited (the "Borrower")
and National Westminster Bank Plc in its capacity as Security
Agent (the "Security Agent"), a copy of which is attached hereto,
the Borrower assigned and agreed to assign absolutely to the
Security Agent all of the Borrower's right, title and interest in
and to the Purchase Agreement Assignment (insofar as the same
relates to the Warranties) and the Deed of Assignment of General
Terms Agreement Re Engine Warranties each dated [
] 199[ ] and made between the Borrower and International
Lease Finance Corporation.
Until you are notified to the contrary by the Security Agent you
will continue to deal directly with the Borrower in relation to
matters covered by the Purchase Agreement and the Purchase
Agreement Assignment (insofar as the same relate to the Aircraft)
and the Engine Agreement and the Deed of Assignment of General
Terms Agreement Re: Engine Warranties (insofar as the same relate
to the Engines).
This Notice and the instructions herein contained are
irrevocable. Please acknowledge receipt of this Notice to the
Security Agent by signing the enclosed duplicate of this Notice.
Terms defined in the Deed (including terms defined therein by
reference to another document) shall have the same meanings
herein.
For and on behalf of
ENCORE LEASING LIMITED
Name: ..................................
Title: ..........................
<PAGE>
..........................................
.................................... For and on behalf of
NATIONAL WESTMINSTER BANK PLC as Security Agent
We acknowledge receipt of the foregoing notice.
.................................................................
.................................... For and on behalf of
INTERNATIONAL LEASE FINANCE CORPORATION
Dated: , 199[ ]
<PAGE>
SCHEDULE 3
EXTRACT OF FACILITY AGREEMENT - CLAUSE 1.1
DEFINITIONS
1.1 In this Facility Agreement, each of the other Facility
Documents and each of the Operative Documents (including, in
each case, as appropriate, the Recitals, the Schedules and
the Annexes thereto) except where the context otherwise
requires or there is express provision to the contrary, the
following words and expressions shall have the following
meanings:-
"ACCELERATION EVENT" means (i) a Cancellation Event in
respect of which the Agent has served a notice in accordance
with the provisions of Clause 8.1 having the effect set out
in Clause 8.2.2 or (ii) in relation to a Lease Agreement, a
Termination Event in respect of which the Borrower has
served a notice in accordance with the provisions of Clause
16.2.2 of that Lease Agreement (and for the purposes of this
definition where such a Termination Event refers to an
opinion of "the Lessor" or depends upon "the Lessor's"
consideration or determination of whether such event has
occurred or has or would have certain consequences, then
irrespective of the opinion of "the Lessor" or "the
Lessor's" consideration or determination at that time with
respect to such event, such event shall for the purposes of
this definition be deemed to have occurred if the Security
Agent is of the relevant opinion or considers or determines
that the relevant event has occurred or the Agent, the
Security Agent or any of the Lenders would suffer the
relevant consequences) or (iii) an Acceleration Event (as
that term is defined in the 1994 Facility Agreement);
"ACCEPTANCE CERTIFICATE" means, in respect of an Aircraft,
the certificate signed by the relevant Lessee and given by
the relevant Lessee to the Borrower pursuant to Clause 5 of
the relevant Lease Agreement, in or substantially in the
form of Schedule 5 to the relevant Lease Agreement;
"ACCOUNT" means the Dollar account number 272275BX of the
Borrower in the Cayman Islands with Coutts & Co. (Cayman)
Limited of Coutts House, West Bay Road, PO Box 707, George
Town, Grand Cayman, Cayman Islands, BWI and which may be
charged and assigned to the Security Agent pursuant to the
Deed of Assignment and Charge or such other account in
London as the Borrower may from time to time designate by
not less than ten (10) Business Days notice to the Security
Agent and the Guarantor;
"ADDITIONAL AMOUNTS" means all those amounts that are
expressed to be payable by the Bermuda Lessee or, as the
case may be, the Irish Lessee or, as the case may be, any
other Alternative Lessee to the Security Agent, the Agent or
any of the Lenders pursuant to the Priorities and
Indemnities Agreement;
"ADDITIONAL LESSEE" means any additional sub-lessee which is
nominated in the relevant Utilisation Notice in accordance
with the provisions of Clause 4.2.1 for insertion into the
structure between the relevant Lessee or, as the case may
be, another additional lessee and the relevant Approved
Sub-Lessee or, as the case may be, another additional lessee
in respect of the delivery of a particular Aircraft and
which is accepted by the Lead Managers in accordance with
the provisions of Clause 4.2.3;
"ADVANCE" means, in respect of a Utilisation, the aggregate
of the sums to be advanced by each of the Lenders to the
Borrower by way of loan in respect of that Utilisation;
<PAGE>
"AFFECTED LENDER" shall have the meaning given thereto in
Clause 5.11.3;
"AIG" means American International Group, Inc. a corporation
duly organised and existing under the laws of Delaware whose
principal place of business is at 70 Pine Street, New York,
N.Y. 10270, USA;
"AIG GROUP COMPANY" means AIG and any person of which or in
which AIG owns, directly or indirectly, 50% or more of:-
(a) the combined voting power of all classes of stock
having general voting power under ordinary
circumstances to elect a majority of the board of
directors of such person, if it is a corporation;
(b) the capital interest or profits interest or such
person, if it is a partnership, joint venture or
similar entity; or
(c) the beneficial interest of such person, if it is a
trust, association or other unincorporated
organisation;
"AIRCRAFT" means, as the context may require, any or all of
the Facility Aircraft nominated by the Bermuda Lessee or, as
the case may be, the Irish Lessee in a Utilisation Notice to
be the subject matter of a Utilisation;
"AIRCRAFT OPERATIVE DOCUMENTS" means, in respect of an
Aircraft, each of (i) the relevant Loan Supplement, the
relevant Notice of Drawdown, the relevant Bill of Sale, the
relevant BFE Bill of Sale, the relevant Purchase Agreement
(to the extent that it relates to that Aircraft and the
Warranties relating to that Aircraft), the relevant Engine
Agreement (to the extent that it relates to the Engines
Warranties relating to that Aircraft), the relevant Lease
Agreement, the relevant Acceptance Certificate, each of the
Aircraft Security Documents and (ii) (a) any other document,
instrument or memorandum annexed to any of the documents
referred to in (i) above, (b) any notice or acknowledgement
referred to in or required pursuant to the terms of any of
the documents referred to in (i) above and (c) any document,
instrument or memorandum (x) which arises following a
restructuring in accordance with the terms of this Facility
Agreement and/or the Priorities and Indemnities Agreement of
any or all of the arrangements contemplated by any of the
documents referred to in (i) above or (y) which the
Guarantor or the relevant Lessee agrees constitutes an
Aircraft Operative Document or (z) which is entered into in
substitution for or which amends or augments or varies all
or any part of any of the documents referred to in this
definition (including this part (ii)(c)(z)) in each case in
accordance with the terms of this Facility Agreement;
"AIRCRAFT PROCEEDS" means, in relation to an Aircraft or any
Engine:-
(a) any Final Disposition Proceeds;
(b) any and all other proceeds of enforcement of the
Security Documents relating to such Aircraft;
(c) any Total Loss Proceeds;
(d) any Requisition Proceeds; and
<PAGE>
(e) any and all other amounts (other than in respect of
fees) received by the Borrower, the Agent, the Security
Agent or any Lender from any of the Obligors (whether
directly or through the Borrower);
"AIRCRAFT PURCHASE PRICE" means, in respect of an Aircraft,
the net final invoice price for that Aircraft (including any
Buyer Furnished Equipment) after deduction of all credit
memoranda of the Seller and/or the Manufacturer and any
capitalised interest which net final invoice price, in the
event that it exceeds the figure set out opposite such
Aircraft in the column entitled "Assumed Maximum Aircraft
Purchase Price" in Schedule 4 Part I, has been approved by
the Lead Managers and the Export Credit Agencies;
"AIRCRAFT SECURITY DOCUMENTS" means, in respect of an
Aircraft, each of (i) this Facility Agreement, the
Priorities and Indemnities Agreement, the relevant General
Security Assignment, the Deed of Assignment and Charge, the
relevant Mortgage, the Guarantee and Indemnity (Lessor), the
Deed of Assignment of Guarantee and Indemnity (Lessor), the
relevant Sub-Lease Collateral Charge, the relevant
Assignment of Sub-Lease Collateral Charge, the relevant
Sub-Lease Security Assignment, the relevant Deed of
Assignment of General Terms Agreements Re Engine Warranties,
the relevant Purchase Agreement Assignment, the Charge Over
Shares of Borrower, such other Charge Over Shares as relates
to the relevant Lessee, the relevant Power of Attorney (if
any), the relevant Option Holder's Power of Attorney, (ii)
(a) any other instrument, document or memorandum annexed to
any of the documents referred to in (i) above, (b) any
notice or acknowledgement referred to in or required
pursuant to the terms of any of the documents referred to in
(i) above and (c) any document, instrument or memorandum (w)
which arises following a restructuring of any or all of the
arrangements contemplated by any of the documents referred
to in (i) above or (x) which the Guarantor or the relevant
Lessee agrees constitutes an Aircraft Security Document or
(y) which secures the obligations of any one or more of the
Obligors under any of the Aircraft Operative Documents or
(z) which is entered into in substitution for or which
amends or augments or varies all or any part of any of the
documents referred to in this definition (including this
part (ii)(c)(z)) in each case in accordance with the terms
of this Facility Agreement;
"AIRFRAME" means, in respect of an Aircraft, the airframe
more particularly identified in Schedule 1 to the relevant
Lease Agreement including all Parts installed in or on the
airframe at the Delivery Date (or which, having been removed
therefrom, remain the property of the Borrower pursuant to
the terms of that Lease Agreement), and all substitutions,
renewals and replacements from time to time made in or to or
installed in or on the said airframe in accordance with the
terms and conditions of that Lease Agreement including any
Parts which are for the time being detached from the
airframe but remain the property of the Borrower;
"ALTERNATIVE LESSEE" means, in respect of the delivery of a
specific Aircraft, such person as the Lead Managers and the
Guarantor may agree in accordance with the provisions of
Clause 4.2.3 shall take that Aircraft on lease from the
Borrower and being in each case a wholly-owned indirect
subsidiary of the Guarantor;
"ALTERNATIVE LESSEE MAINTENANCE RESERVE COLLATERAL ACCOUNT"
means, in respect of an Alternative Lessee, such Dollar
<PAGE>
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Alternative Lessee
to establish at the time the Alternative Lessee enters into
the relevant Alternative Lessee Sub-Lease Collateral Charge
for the purpose of compliance by the Alternative Lessee with
Clause 7.5 of each of the Lease Agreements to which the
Alternative Lessee is to be a party;
"ALTERNATIVE LESSEE RENTAL COLLATERAL ACCOUNT" means, in
respect of an Alternative Lessee, such Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Alternative Lessee to
establish at the time the Alternative Lessee enters into the
relevant Alternative Lessee Sub-Lease Collateral Charge for
the purpose of compliance by the Alternative Lessee with
Clause 7.3 of each of the Lease Agreements to which the
Alternative Lessee is to be a party;
"ALTERNATIVE LESSEE SECURITY DEPOSIT COLLATERAL ACCOUNT"
means, in respect of an Alternative Lessee, such Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Alternative Lessee
to establish at the time the Alternative Lessee enters into
the relevant Alternative Lessee Sub-Lease Collateral Charge
for the purpose of compliance by the Alternative Lessee with
Clause 7.4 of each of the Lease Agreements to which the
Alternative Lessee is to be a party;
"ALTERNATIVE LESSEE SUB-LEASE COLLATERAL CHARGE" means, in
respect of an Alternative Lessee, the deed of assignment and
charge relating to, inter alia, Maintenance Reserves,
Security Deposits and Sub-Lease Rentals in relation to any
of the Aircraft of which that Alternative Lessee is to be
the Lessee to be entered into between the relevant
Alternative Lessee and the Borrower substantially in the
form of the Irish Lessee Sub-Lease Collateral Charge;
"ANCILLARY DOCUMENTS" means the fees letter agreements dated
of even date herewith and made between the Guarantor and the
Agent or, as the case may be, between the Guarantor and the
Borrower;
"APPROVED SUB-LEASE" means, in respect of an Aircraft, any
contract for the sub-lease, hire or bailment of that
Aircraft into which the relevant Lessee is entitled to enter
in accordance with the provisions of Clause 9 of the
relevant Lease Agreement;
"APPROVED SUB-LESSEE" means, in respect of an Aircraft, the
operator for the time being of that Aircraft under an
Approved Sub-Lease;
"ASSIGNMENT OF ALTERNATIVE LESSEE SUB-LEASE COLLATERAL
CHARGE" means any deed of assignment entered into from time
to time between the Borrower and the Security Agent in
respect of an Alternative Lessee Sub-Lease Collateral Charge
substantially in the form of the Assignment of Bermuda
Lessee and Irish Lessee Sub-Lease Collateral Charge mutatis
mutandis;
"ASSIGNMENT OF BERMUDA LESSEE AND IRISH LESSEE SUB-LEASE
COLLATERAL CHARGES" means the agreement so entitled of even
date herewith between the Borrower and the Security Agent;
"ASSIGNMENT OF SUB-LEASE COLLATERAL CHARGE" means any one of
the Assignment of Bermuda Lessee and Irish Lessee Sub-Lease
Collateral Charges and any Assignment of Alternative Lessee
<PAGE>
Sub-Lease Collateral Charge and "Assignments of Sub-Lease
Collateral Charges" shall have a corresponding meaning;
"AVAILABILITY PERIOD" means the period from the date hereof
up to and including 30th April 1996 or such later date as
the parties hereto may agree, subject to earlier termination
as provided for in this Facility Agreement;
"AVIATION AUTHORITY" means, in respect of an Aircraft, any
Government Entity which under the laws of the State of
Registration may from time to time:-
(i) have control or supervision of civil aviation in the
State of Registration; or
(ii) have jurisdiction over the registration, airworthiness
or operation of, or other matters relating to, that
Aircraft;
"BANK TRANSFEREE" shall have the meaning given thereto in
Clause 14.3;
"BANKING DAY" means a day (other than a Saturday, Sunday or
holiday scheduled by law) on which banks are open for the
transaction of domestic and foreign exchange business and
otherwise for the transaction of business of the nature
required by this Facility Agreement, the other Facility
Documents and the Operative Documents, as applicable, in
London and New York City and also in relation to a day on
which a payment is required, in the place where such payment
is to be made in accordance with this Facility Agreement,
any of the other Facility Documents or any of the Operative
Documents, as applicable;
"BASLE PAPER" means any provision or provisions of the paper
entitled "International Convergence of Capital Measurement
and Capital Standards" dated July 1988 prepared by the Basle
Committee on Business Regulations and Supervisory Practices
either (i) which, prior to the date hereof, have been
implemented or (ii) in respect of which, prior to the date
hereof, an announcement of the date of implementation or of
the intention to implement after the date of this Facility
Agreement has been made, such implementation or announcement
(as the case may be) being made pursuant to any notice,
directive or guideline applicable to banks generally by the
Bank of England, the Banque de France, the Deutsche
Bundesbank, the Federal Reserve Bank of New York or other
applicable authority, government, department, committee or
agency (which under the laws of any jurisdiction in which a
Lender has an office for the time being has control or
supervision of banking regulation) in each case whether or
not having the force of law but in respect of which
compliance by banks or other financial institutions in the
relevant jurisdiction generally is customary;
"BERMUDA LESSEE MAINTENANCE RESERVE COLLATERAL ACCOUNT"
means the existing Dollar account in the name of the Bermuda
Lessee approved by the Security Agent or such other Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Bermuda Lessee to
establish following a Trigger Event, for the purpose of
compliance by the Bermuda Lessee with Clause 7.5 of each of
the Lease Agreements to which the Bermuda Lessee is to be a
party;
<PAGE>
"BERMUDA LESSEE RENTAL COLLATERAL ACCOUNT" means the
existing Dollar account in the name of the Bermuda Lessee
approved by the Security Agent or such other Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Bermuda Lessee to establish
following a Trigger Event for the purpose of compliance by
the Bermuda Lessee with Clause 7.3 of each of the Lease
Agreements to which the Bermuda Lessee is to be a party;
"BERMUDA LESSEE SECURITY DEPOSIT COLLATERAL ACCOUNT" means
the existing Dollar account in the name of the Bermuda
Lessee approved by the Security Agent or such other Dollar
account outside the United Kingdom as the Borrower and the
Security Agent may reasonably require the Bermuda Lessee to
establish following a Trigger Event for the purpose of
compliance by the Bermuda Lessee with Clause 7.4 of each of
the Lease Agreements to which the Bermuda Lessee is to be a
party;
"BERMUDA LESSEE SUB-LEASE COLLATERAL CHARGE" means, in
respect of the Bermuda Lessee, the deed of assignment and
charge relating to, inter alia, Maintenance Reserves,
Security Deposits and Sub-Lease Rentals in relation to any
of the Aircraft of which the Bermuda Lessee is to be the
Lessee of even date herewith between the Bermuda Lessee and
the Borrower;
"BFE BILL OF SALE" means, in respect of an Aircraft, the
bill of sale executed or to be executed by the Guarantor in
favour of the Seller substantially in the form of Appendix I
pursuant to which title to the Buyer Furnished Equipment is
transferred from the Guarantor to the Seller;
"BILL OF SALE" means, in respect of an Aircraft, the bill of
sale executed or to be executed by the Seller in favour of
the Borrower relating to that Aircraft substantially in the
form of Appendix J evidencing the transfer of title to that
Aircraft from the Seller to the Borrower;
"BORROWER CONSTITUTIONAL DOCUMENTS" means the Certificate of
Incorporation and Memorandum and Articles of Association of
the Borrower;
"BRITISH CREDITS" shall, in respect of an Advance, have the
meaning given to that term in the relevant Loan Supplement;
"BUSINESS DAY" means a day (other than a Saturday or Sunday
or holiday scheduled by law) on which banks are open for the
transaction of domestic and foreign exchange business and
otherwise for the transaction of business of the nature
required by this Facility Agreement, the other Facility
Documents and the Operative Documents, as appropriate, in
London, Paris, Frankfurt, Luxembourg, Los Angeles, New York
City, Bermuda and the Cayman Islands and, when used in
respect of an Aircraft of which the Irish Lessee is or is to
be the Lessee, Dublin and, when used in respect of an
Aircraft of which an Alternative Lessee is or is to be the
Lessee, the city in which such Alternative Lessee has its
principal place of business;
"BUYER FURNISHED EQUIPMENT" means, in respect of an
Aircraft, the buyer furnished equipment relating to that
Aircraft supplied by the Guarantor to the Seller prior to
the Delivery Date or, as the case may be, during any post
delivery modification period relating to the relevant
Aircraft and more particularly described in the Schedule to
the BFE Bill of Sale;
<PAGE>
"CANCELLATION EVENT" means the occurrence of any of the
events or circumstances referred to in Clause 8.1;
"CHANGE IN LAW" means in each case after the date of this
Facility Agreement, the implementation, introduction,
abolition, withdrawal or variation of any applicable law,
regulation, practice or concession or official directive,
ruling, request, notice, guideline, statement of policy or
practice statement by the Bank of England, the Banque de
France, the Deutsche Bundesbank, the Federal Reserve Bank of
New York, the European Union or any central bank, tax,
fiscal, governmental, local, international, national or
other competent authority or agency (whether or not having
the force of law but in respect of which compliance by banks
or other financial institutions in the relevant jurisdiction
is generally customary) or any change in any interpretation,
or the introduction or making of any new or further
interpretation, or any new or different interpretation by
any court, tribunal, governmental, revenue, international,
national, fiscal or other competent authority or the
compliance by banks or other financial institutions with any
new or different request or direction (in either case
whether or not having the force of law but in respect of
which compliance by banks or other financial institutions in
the relevant jurisdiction is generally customary) from any
central bank, fiscal, governmental, revenue, international,
national, monetary or other authority PROVIDED ALWAYS THAT
in respect of a Lender, any such implementation,
introduction, abolition, withdrawal or variation, change in
interpretation or new or different interpretation in
relation to any applicable law or regulation and/or
practice, concession, directive, ruling, request, notice,
guideline, statement of policy or practice statement having
effect in the jurisdiction in which the relevant Lender has
its Lending Office after the date of this Facility Agreement
shall not constitute a Change in Law if, prior to the date
of this Facility Agreement, such implementation,
introduction, abolition, withdrawal or variation, change in
interpretation or new or different interpretation had been
announced generally to banks and other financial
institutions in the jurisdiction in which the relevant
Lender has its Lending Office by way of the publication of
any Act of Parliament, statute or statutory instrument or
the publication or delivery or issue of any notice,
directive or guideline applicable to banks generally by the
relevant central bank, a European Union institution or other
applicable authority, government, department, committee or
agency (which under the laws of the jurisdiction in which
the relevant Lender has its Lending Office for the time
being has control or supervision of banking regulations);
"CHARGE OVER SHARES OF ADDITIONAL LESSEE" means any deed of
charge entered into from time to time between the relevant
Parent and the Security Agent in relation to the shares of
any Additional Lessee substantially in the form of the
Charge Over Shares of Irish Lessee;
"CHARGE OVER SHARES OF ALTERNATIVE LESSEE" means any deed of
charge entered into from time to time between the relevant
Parent and the Security Agent in relation to the shares of
any Alternative Lessee substantially in the form of the
Charge Over Shares of Irish Lessee;
"CHARGE OVER SHARES OF BERMUDA LESSEE" means the agreement
so entitled of even date herewith and made between the
Bermuda Parent and the Security Agent and relating to the
shares of the Bermuda Lessee;
<PAGE>
"CHARGE OVER SHARES OF BORROWER" means the agreement so
entitled of even date herewith and made between the Trustee
and the Security Agent and relating to the shares of the
Borrower;
"CHARGE OVER SHARES OF IRISH LESSEE" means the agreement so
entitled of even date herewith and made between the Irish
Parent and the Security Agent and relating to the shares of
the Irish Lessee;
"CHARGES OVER SHARES" means together the Charge Over Shares
of Bermuda Lessee, the Charge Over Shares of Irish Lessee,
the Charge Over Shares of Borrower, any Charge Over Shares
of Alternative Lessee and any Charge Over Shares of
Additional Lessee and "Charge Over Shares" shall have a
corresponding meaning;
"COLLATERAL" means, in respect of an Aircraft, collectively
the "Assigned Property" as defined in the General Security
Assignment, the "Assigned Property" as defined in the
Mortgage, and the "Assigned Cash" and "Accounts" as defined
in the relevant Sub-Lease Collateral Charge and the
"Assigned Cash" and "Account" as defined in the Deed of
Assignment and Charge;
"COMMITMENT" means, in relation to a Lender, at any time the
amount described as such set out opposite the name of such
Lender in Schedule 1 or, as the case may be, the Schedule to
the relevant Transfer Certificate, as the same may be
cancelled or reduced pursuant to the terms of this Facility
Agreement (including, without limitation, the terms of
Clauses 2.5.2 and 2.5.3) less the amount of such Lender's
Relevant Proportion of any Advances made before such time;
"COMPULSORY ACQUISITION" means, in respect of an Aircraft or
an Engine, its requisition for title or other compulsory
acquisition of title (but excluding requisition for use or
hire) of such Aircraft or Engine, as the case may be;
"CONTRACTUAL RATE" means, in relation to an Interest Period
or other relevant period in respect of the outstanding
amount of the Credits relating to an Advance, the percentage
rate of interest per annum obtained by the application of
the following formula:-
[A x X%] + [B x Y%] + [C x Z%]
------------------------------
A + B + C
where
A = the principal amount outstanding in respect of Tranche
1A at the time of the application of the formula;
B = the principal amount outstanding in respect of Tranche
1B at the time of the application of the formula;
C = the principal amount outstanding in respect of Tranche
2 at the time of the application of the formula;
X% = the rate of interest per annum in respect of Tranche 1A
as set out in the relevant Loan Supplement;
Y% = the rate of interest per annum in respect of Tranche 1B
as set out in the relevant Loan Supplement; and
<PAGE>
Z% = the rate of interest per annum in respect of Tranche 2
for the relevant Interest Period or other relevant
period as calculated in accordance with the provisions
of Clause 5.3.2;
"CORPORATION TAX" means corporation tax chargeable under the
United Kingdom Income and Corporation Taxes Act 1988 and any
Tax on the net income, profits or gains of companies imposed
by any country other than the United Kingdom or Tax of a
similar nature enacted in addition to or substitution for
any of the same;
"COUTTS REPRESENTATIVE" means Coutts & Co (Cayman) Limited,
a company incorporated in the Cayman Islands having its
registered office at Coutts House, West Bay Road, PO Box
707, George Town, Grand Cayman, Cayman Islands, BWI;
"COUTTS REPRESENTATIVE'S INDEMNITY" means the letter of
indemnity to be given by the Security Agent in favour of
Coutts & Co. (Cayman) Limited;
"CREDITS" means, in respect of an Advance, together the
British Credits, the French Credits and the German Credits
or (as the context may require) the aggregate principal
amount of the British Credits, the French Credits and the
German Credits owing to the Lenders in respect of the
relevant Advance from time to time and "Credit" shall have a
corresponding meaning;
"DECLARATION OF TRUST" means the declaration of trust to be
entered into by the Trustee and dated of even date herewith;
"DEED OF ASSIGNMENT AND CHARGE" means the deed of assignment
and charge relating to the Account of even date herewith
between the Borrower and the Security Agent;
"DEED OF ASSIGNMENT OF GENERAL TERMS AGREEMENT RE ENGINE
WARRANTIES" means, in respect of an Aircraft, the deed of
assignment of the relevant Engine Agreement in so far as it
relates to the Engine Warranties in respect of the Engines
relating to that Aircraft to be entered into between the
Guarantor and the Borrower substantially in the form of
Appendix G;
"DEED OF ASSIGNMENT OF GUARANTEE AND INDEMNITY (LESSOR)"
means the deed of assignment relating to the Guarantee and
Indemnity (Lessor) of even date herewith between the
Borrower and the Security Agent;
"DEFAULT INTEREST PERIOD" means, in relation to the
determination of Default Rate LIBOR, each period (not
exceeding six months) as the Agent, or as the case may be,
the Borrower, selects in its absolute discretion, the first
such period commencing on the date of the relevant default
and each subsequent period commencing on the last day of the
preceding period for so long as the relevant default
continues;
"DEFAULT RATE" means (i) at any time prior to the relevant
Advance being made, the aggregate of (a) Default Rate LIBOR,
(b) the Margin and (c) one per cent. (1%) per annum and (ii)
at any time after the relevant Advance has been made, then
in respect of all amounts relating to that Advance, (a) in
relation to the British Credits and the French Credits, the
rate of interest per annum equal to whichever shall be the
higher of one per cent. (1%) per annum above the Contractual
<PAGE>
Rate and one per cent. (1%) per annum above Default Rate
LIBOR, and (b) in relation to the German Credits, the rate
of interest per annum equal to whichever shall be the higher
of one per cent. (1%) per annum above the Contractual Rate,
one per cent. (1%) per annum above Default Rate LIBOR and
one per cent. (1%) per annum above the applicable funding
cost incurred by the German Lenders if the German Credits or
a part thereof are at the relevant time funded in any
currency other than Dollars, and in all cases comprised in
(i) and (ii) above shall be calculated on the basis of a
three hundred and sixty (360) day year, accrue from day to
day and shall be payable in respect of each Default Interest
Period;
"DEFAULT RATE LIBOR" means the rate per annum which is
conclusively (save for manifest error) certified by the
Agent to be the rate (rounded upwards to the nearest one
sixteenth of one per cent. (1/16%)) for deposits in Dollars
in an amount substantially equal to the sum in default for a
period comparable to the Default Interest Period which
appears on the Telerate Page 3750 (or its successor or
replacement page) as of 11.00 a.m. London time on the first
day of the relevant Default Interest Period provided that if
such rate does not appear on Telerate Page 3750 (or its
successor or replacement page) Default Rate LIBOR for the
relevant Default Interest Period shall be the rate per
annum, certified by the Agent as the arithmetic mean
(rounded upwards to the nearest one sixteenth of one per
cent. (1/16%)) of the respective rates per annum notified to
the Agent at which the Reference Banks are offered Dollar
deposits by prime banks in the London Interbank Euro
Currency Market in an amount substantially equal to the sum
in default and for a period having a duration equal to or as
close as practicable to the Default Interest Period at or
about 11.00 a.m. (London time) on the first day of the
relevant Default Interest Period provided that (a) if one of
the Reference Banks does not provide such rates, Default
Rate LIBOR in relation to such Default Interest Period shall
be determined on the basis of the rate notified by the
Reference Bank providing such rate, and (b) if neither of
the Reference Banks provides such a rate, then Default Rate
LIBOR in relation to such Default Interest Period shall be
the rate per annum certified by the Agent (acting upon the
instructions from each Lender) as the arithmetic mean
(rounded upwards to the nearest one sixteenth of one per
cent. (1/16%)) of the cost to each of the Lenders of funding
(whether in Dollars or in any other currency) an amount
substantially equal to that Lender's Relevant Proportion of
the sum in default for a period having a duration equal to
or as close as practicable to such Default Interest Period
at or about 11.00 a.m. (London time) on the first day of
such Default Interest Period;
"DELIVERY DATE" means, in respect of an Aircraft, the date
upon which that Aircraft is delivered to the relevant Lessee
pursuant to the relevant Lease Agreement which date shall be
a Banking Day;
"DOLLARS" and "US$" means the lawful currency for the time
being of the United States of America;
"DRAWDOWN DATE" means, in respect of an Advance, the
Delivery Date for the relevant Aircraft;
"ENGINE" or "ENGINES" means, in respect of an Aircraft, (a)
each of the engines described in Schedule 1 of the relevant
Lease Agreement, whether or not from time to time during the
<PAGE>
relevant Lease Period installed on the Airframe or any other
airframe but which, having been removed from the Airframe,
remains the property of the Borrower in accordance with the
terms of the relevant Lease Agreement or (b) any other
engine which may from time to time be installed upon or
attached to the Airframe which becomes the property of the
Borrower in accordance with the relevant Lease Agreement and
(c) insofar as the same belong to the Borrower, any and all
appliances, instruments or accessories or other equipment or
Parts of whatever nature from time to time relating to an
engine referred to in (a) and (b) above whether or not
installed on or attached to such engine and (d) insofar as
the same belong to the Borrower, all substitutions,
replacements or renewals from time to time made on or to any
item referred to in (a), (b) and (c) above in accordance
with the terms of the relevant Lease Agreement;
"ENGINE AGREEMENTS" means together (a) the general terms
agreement dated 22 June 1984 between CFM International S.A.
and the Guarantor, (b) the general terms agreement dated 1
November 1985 between General Electric Company and the
Guarantor, (c) the general terms agreement dated 9 December
1992 between IAE International Aero Engines AG and the
Guarantor, (d) the Consolidated JT8D-200 Series/PW2000
Series/PW4000 Series Propulsion System/Engine Support
Proposal dated 11 May 1988 between United Technologies
Corporation, Pratt & Whitney Group and the Guarantor and (e)
the letter agreement dated 9th February 1990 between Rolls
Royce plc and the Guarantor, including, in each case, any
amendment, modification, letter agreements and supplements
thereto and "Engine Agreement" shall mean any one of them;
"ENGINE MANUFACTURERS" means CFM International S.A., General
Electric Company, IAE International Aero Engines AG, United
Technologies Corporation, Pratt & Whitney Group and Rolls
Royce plc;
"ENGINE WARRANTIES" means, in respect of the Engines
relating to an Aircraft, the warranties, including the
conditions and limitations applicable thereto, as set forth
in (i) Exhibit B to the Engine Agreement between CFM
International S.A. and the Guarantor, (ii) Exhibit B to the
Engine Agreement between General Electric Company and the
Guarantor, (iii) Clauses 4.1 and 4.2 of the Engine Agreement
between IAE International Aero Engines AG and the Guarantor,
(iv) the engine sales warranty and service policy benefits
set out in the Engine Agreement between United Technologies
Corporation, Pratt & Whitney Group and the Guarantor or, as
the case may be, (v) the Rolls Royce Trent Warranty CE35
within the DEG1828 Agreement dated 11th October 1990 between
the Guarantor and Rolls Royce plc, together with, in each
case, the patent indemnities set forth in the relevant
Engine Agreement and any and all rights of the Guarantor
under the relevant Engine Agreement to compel performance of
the same and the right to claim damages in respect thereof
but only insofar as such warranties, indemnities and rights
arise in respect of the Engines relating to the relevant
Aircraft;
"EXCLUDED LESSOR'S LIEN" means, in relation to an Aircraft,
any Lien to the extent the same arises in respect of (i) a
debt, liability or other obligation (whether financial or
otherwise) imposed on the Borrower or any person claiming
through or under the Borrower as purchaser of that Aircraft
pursuant to the relevant Purchase Agreement Assignment or
arising from the operation, maintenance, insurance, repair,
modification and storage of that Aircraft, any Engine or any
<PAGE>
Parts by the relevant Lessee or any Additional Lessee of
that Aircraft or any Approved Sub-Lessee, (ii) any Lien
created pursuant to any of the Facility Documents and/or the
relevant Aircraft Operative Documents, (iii) any Lien
arising as a result of Taxes in respect of which the
liability to pay the same, or the amount of the same, is
being disputed by the Borrower or any person claiming
through or under the Borrower in good faith and in a manner
effectively staying the enforcement of such Lien, (iv) any
Lien arising by Applicable Law where such Lien does not
arise as a result of an act or omission of the Borrower or
any person claiming through or under the Borrower, unless
such act or omission is permitted or contemplated by any of
the Facility Documents or any of the relevant Aircraft
Operative Documents or arises as a result of a breach by any
of the Obligors of its respective obligations under any of
the Facility Documents or any of the relevant Aircraft
Operative Documents or (v) any Lien arising solely by reason
of a Change in Law; and "Excluded Lessor's Liens" shall be
construed accordingly;
"EXPENSES" means any and all out-of-pocket costs and
expenses (including, without limitation, reasonable or
otherwise capped legal fees and expenses, accountants' fees
and expenses, insurance and other advisers' fees and
expenses, experts' fees and translation fees but excluding
all Taxes), as well as any Value Added Tax thereon, which
may be reasonably incurred or sustained by the Security
Agent, the Agent, any of the Lenders and/or the Borrower in
connection with any of the Facility Documents and/or any of
the Security Documents and/or any of the other Operative
Documents or in connection with the performance and/or
enforcement or preservation and/or attempted enforcement or
preservation of their respective rights and/or duties
hereunder or thereunder PROVIDED ALWAYS THAT the reference
to such out-of-pocket costs and expenses being "reasonably"
incurred or sustained (and in particular to legal fees and
expenses being "reasonable or otherwise capped") shall not
apply when such out-of-pocket costs and expenses are
incurred or sustained in connection with the enforcement or
preservation and/or attempted enforcement or preservation of
rights and/or duties;
"EXPIRY DATE" means, in respect of the leasing of an
Aircraft pursuant to a Lease Agreement, the tenth (10th)
anniversary of the Delivery Date of that Aircraft or such
earlier date upon which the leasing of that Aircraft
pursuant to that Lease Agreement terminates howsoever in
accordance with the provisions of that Lease Agreement;
"EXPORT CREDIT AGENCIES" means each of the export credit
agencies of (1) Her Britannic Majesty's Government
represented by the Export Credits Guarantee Department (2)
Germany represented by Hermes
Kreditversicherungsaktiengesellschaft and (3) the French
Republic represented by Compagnie Francaise d'Assurance pour
le Commerce Exterieur;
"FACILITY" means the term loan facility made available by
the Lenders to the Borrower on the terms and subject to the
conditions of this Facility Agreement;
"FACILITY AGREEMENT" means this aircraft facility agreement;
"FACILITY AIRCRAFT" means, as the context may require, any
or all of the Airbus A300-600R, A310-300, A320, A321, A330
and A340 Airframes with their installed Engines currently
<PAGE>
scheduled to be sold and delivered by the Seller to the
Guarantor during 1995 pursuant to the Purchase Agreements
and referred to in Schedule 4 Part I;
"FACILITY AMOUNT" shall have the meaning ascribed thereto in
Clause 2.1;
"FACILITY DOCUMENTS" means each of (i) the Facility
Agreement, the Priorities and Indemnities Agreement, each of
the Charges Over Shares and the other documents, instruments
and agreements relating thereto referred to in Clause
3.2.1(a)(xiii), (xiv) and (xv), the Ancillary Documents, the
Guarantee and Indemnity (Lessor), the Deed of Assignment of
Guarantee and Indemnity (Lessor), the Deed of Assignment and
Charge, each of the Sub-Lease Collateral Charges, each of
the Assignments of Sub-Lease Collateral Charges, the
Declaration of Trust, the Management Agreement, the Borrower
Constitutional Documents, the Lenders' Agreement, the
Interlender Agreement, the MeesPierson Comfort Letter, the
Coutts Representative's Indemnity and the Management
Agreement Side Letter, (ii)(a) any other document,
instrument or memorandum annexed to any of the documents
referred to in (i) above and (b) any notice or
acknowledgement referred to in or required pursuant to the
terms of any of the documents referred to in (i) above and
(c) any document, instrument or memorandum (x) which arises
following a restructuring in accordance with the terms of
this Facility Agreement and/or the Priorities and
Indemnities Agreement of any or all of the arrangements
contemplated by any of the documents referred to in (i)
above or (y) which the Guarantor or any of the Lessees
agrees constitutes a Facility Document or (z) which is
entered into in substitution for or which amends or augments
or varies all or any part of any of the documents referred
to in this definition (including this part (ii)(c)(z)) in
each case in accordance with the terms of this Facility
Agreement;
"FINAL DISPOSITION" means, in relation to an Aircraft or an
Engine:-
(a) the sale by the Borrower or the Security Agent as
mortgagee against immediate payment in cash or for
other consideration, whether through an agent on its
behalf or otherwise, of all its right, title and
interest in and to such Aircraft or such Engine (as the
case may be) (including, without limitation, a sale to
the relevant Lessee and/or the relevant Option Holder
and/or the Guarantor whether pursuant to the terms of
the relevant Lease Agreement or otherwise howsoever);
or
(b) completion by delivery of such Aircraft or such Engine
(as the case may be) to the purchaser or lessee, as the
case may be, of a sale, lease or other disposition by
or on behalf of the Borrower or the Security Agent as
mortgagee pursuant to a conditional sale, hire
purchase, full pay-out finance lease or other
arrangement involving the retention by or on behalf of
the Borrower or the Security Agent as mortgagee of
title to, or a security or similar interest in, such
Aircraft or such Engine (as the case may be);
"FINAL DISPOSITION PROCEEDS" means, in relation to an
Aircraft or an Engine, the aggregate amount of:-
(a) all consideration (whether cash or otherwise) received
and retained by or on behalf of the Borrower or the
Security Agent as mortgagee upon or as a result of the
Final Disposition of such Aircraft or such Engine (as
the case may be);
<PAGE>
(b) any cash received and retained as a result of the sale
by the Borrower or the Security Agent as mortgagee of
its right, title and interest in and to any agreement
for the Final Disposition of such Aircraft or such
Engine in a manner contemplated by paragraph (b) of the
definition of Final Disposition or any non-cash
consideration received by either of them as a result of
the Final Disposition of such Aircraft or any such
Engine (as the case may be); and
(c) any non-refundable deposit paid to or for the account
of the Borrower or the Security Agent as mortgagee by a
person acquiring or proposing to acquire such Aircraft
or any such Engine (as the case may be) under a
contract or offer to purchase or otherwise acquire it
which has been withdrawn, terminated or cancelled or
has lapsed;
"FRENCH CREDITS" shall, in respect of an Advance, have the
meaning given to that term in the relevant Loan Supplement;
"GENERAL SECURITY ASSIGNMENT" means, in respect of an
Aircraft, the general security assignment relating to the
Lease Agreement and the Sub-Lease Security Assignment in
each case for that Aircraft to be entered into between the
Borrower and the Security Agent substantially in the form of
Appendix E;
"GERMAN CREDITS" shall, in respect of an Advance, have the
meaning given to that term in the relevant Loan Supplement;
"GOVERNMENT ENTITY" means (i) any national government,
political sub-division thereof, or local jurisdiction
therein; and/or (ii) any board, commission, department,
division, organ, instrumentality, court or agency thereof,
howsoever constituted; and/or (iii) any person who is a
member thereof or who is controlled directly or indirectly
thereby (and for these purposes "control" shall mean the
power to direct its management and its policies whether
through the ownership of voting capital, by contract or
otherwise);
"GUARANTEE AND INDEMNITY (LESSOR)" means the guarantee and
indemnity of even date herewith between the Guarantor and
the Borrower;
"GUARANTEED OBLIGATIONS" means any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether or not
for the payment of money, and including, without limitation,
any obligation or liability to pay damages and including any
interest which, but for the application of bankruptcy or
insolvency laws, would have accrued on the amounts in
question), and without regard as to whether any of the
Guaranteed Obligations may, for the purposes of applicable
law, be recharacterised as other than lease rental
obligations which are now or which may at any time and from
time to time hereafter be due, owing, payable or incurred or
be expressed to be due, owing, payable or incurred from or
by any or all of the Obligors to the Agent, the Security
Agent and/or any of the Lenders under or in connection with
<PAGE>
any of the Facility Documents and/or any of the Operative
Documents and references to "Guaranteed Obligations"
includes references to any part thereof;
"GUARANTOR'S GROUP" means the Guarantor and its
Subsidiaries;
"HABITUAL BASE" means, in respect of an Aircraft, the
country in which such Aircraft is habitually based for the
time being;
"HYPOLUX" means Hypobank International S.A. of 4, rue
Alphonse Weicker, L-2099 Luxembourg-Kirchberg;
"INDEBTEDNESS" means (other than in Schedule 5) any
obligation (whether incurred as principal or as surety) for
the payment or repayment of money, whether present or
future, actual or contingent;
"INDEMNITEES" means together the Agent, the Security Agent
and each Lender together with their respective officers and
employees and "Indemnitee" shall mean any one of them;
"INSURANCES" means, in relation to an Aircraft, any and all
contracts or policies of insurance and reinsurance required
to be effected and maintained in accordance with the
relevant Lease Agreement including, but not limited to, the
provisions of Clause 14 of and Schedule 9 to that Lease
Agreement;
"INSURERS" means, in respect of the Insurances such
insurance underwriters and/or insurance companies in the
major international insurance markets as may be approved by
the Borrower and the Security Agent;
"INTEREST PERIOD" means, in respect of an Advance, each
period commencing on the Delivery Date of the relevant
Aircraft or, as the case may be, a Repayment Date (and
including that day) and ending on the next subsequent
Repayment Date (but excluding that day);
"INTERLENDER AGREEMENT" means the agreement so entitled to
be entered into between (1) the Lenders, the Agent and the
Security Agent and (2) the Lenders, the Agent and the
Security Agent (as those terms are defined in the 1994
Facility Agreement);
"IRISH LESSEE MAINTENANCE RESERVE COLLATERAL ACCOUNT" means
the existing Dollar account in the name of the Irish Lessee
approved by the Security Agent or such other Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Irish Lessee to establish
following a Trigger Event, for the purpose of compliance by
the Irish Lessee with Clause 7.5 of each of the Lease
Agreements to which the Irish Lessee is to be a party;
"IRISH LESSEE RENTAL COLLATERAL ACCOUNT" means the existing
Dollar account in the name of the Irish Lessee approved by
the Security Agent or such other Dollar account outside the
United Kingdom as the Borrower and the Security Agent may
reasonably require the Irish Lessee to establish following a
Trigger Event for the purpose of compliance by the Irish
Lessee with Clause 7.3 of each of the Lease Agreements to
which the Irish Lessee is to be a party;
"IRISH LESSEE SECURITY DEPOSIT COLLATERAL ACCOUNT" means the
existing Dollar account in the name of the Irish Lessee
<PAGE>
approved by the Security Agent or such other Dollar account
outside the United Kingdom as the Borrower and the Security
Agent may reasonably require the Irish Lessee to establish
following a Trigger Event for the purpose of compliance by
the Irish Lessee with Clause 7.4 of each of the Lease
Agreements to which the Irish Lessee is to be a party;
"IRISH LESSEE SUB-LEASE COLLATERAL CHARGE" means, in respect
of the Irish Lessee, the deed of assignment and charge
relating to, inter alia, Maintenance Reserves, Security
Deposits and Sub-Lease Rentals in relation to any of the
Aircraft of which the Irish Lessee is to be the Lessee of
even date herewith between the Irish Lessee and the
Borrower;
"LEASE AGREEMENT" means, in respect of an Aircraft, the
lease agreement relating to that Aircraft to be entered into
between the Borrower as lessor, the relevant Lessee as
lessee and the relevant Option Holder substantially in the
form of Appendix B;
"LEASE PERIOD" means, in respect of an Aircraft, the period
commencing on the Delivery Date of that Aircraft and
continuing up to and including the Expiry Date;
"LENDERS' AGREEMENT" means the agreement so entitled of even
date herewith and made between the Agent, the Security Agent
and each of the Lenders;
"LENDING OFFICE" means, in relation to a Lender, its branch
or office at the address specified against its name in
Schedule 1 or specified in the Transfer Certificate whereby
such Lender becomes a party hereto or such other branch or
office determined in accordance with the provisions of this
Facility Agreement and/or the Priorities and Indemnities
Agreement;
"LESSEE" means, in respect of an Aircraft, as the case may
be the Bermuda Lessee, the Irish Lessee or an Alternative
Lessee nominated as such in the Utilisation Notice and
accepted by the Lead Managers and the Guarantor in
accordance with the provisions of Clause 4.2.3 and "Lessees"
shall have a corresponding meaning;
"LESSOR'S LIEN" means, in relation to an Aircraft, any Lien
created by or through the Borrower over that Aircraft, any
Engine or any Parts or exercised, asserted or claimed (other
than by any of the Obligors) against that Aircraft, any
Engine or any Parts in respect of a debt, liability or other
obligation (whether financial or otherwise) of the Borrower
or any person claiming through or under the Borrower but
excluding Excluded Lessor's Liens;
"LIBOR" means, in respect of an Interest Period or other
relevant period, the rate per annum which is conclusively
(save for manifest error) certified by the Agent to be the
rate (rounded upwards to the nearest one sixteenth of one
per cent. (1/16%)) for deposits of Dollars in an amount
substantially equal to the relevant Advance or other
relevant amount for a period equal to, or as close as
practicable to, the relevant Interest Period or other
relevant period which appears on the Telerate Page 3750 (or
its successor or replacement page) as at 11.00 a.m. (London
time) two (2) London Banking Days prior to the commencement
of the relevant Interest Period or other relevant period or
if such rate does not appear on the Telerate Page 3750 (or
its successor or replacement page), LIBOR for the relevant
<PAGE>
Interest Period or other relevant period shall be the rate
per annum, conclusively (save for manifest error) certified
by the Agent as the arithmetic mean (rounded upwards if
necessary to the nearest one sixteenth of one per cent.
(1/16%)), of the respective rates per annum notified to the
Agent at which the Reference Banks are offered Dollar
deposits by prime banks in the London Interbank Euro
Currency Market in an amount substantially equal to the
relevant Advance or other relevant amount and for a period
having a duration equal to or as close as practicable to
such Interest Period or such other relevant period, as the
case may be, at or about 11.00 a.m. (London time) two (2)
London Banking Days prior to the commencement of such
Interest Period or other relevant period provided that if
one of the Reference Banks does not provide such rates,
LIBOR in relation to such Interest Period or such other
relevant period shall be determined on the basis of the rate
notified by the Reference Bank providing such rate;
"LIEN" means, in relation to an Aircraft, any encumbrance or
security interest whatsoever, howsoever created or arising
including (without prejudice to the generality of the
foregoing) any right of ownership, security, mortgage,
pledge, charge, lease (save for any Approved Sub-Lease),
lien, statutory right in rem, hypothecation, title retention
arrangement, attachment, levy, claim, right of possession or
detention or right of set-off (but excluding any right of
set-off arising in favour of a banker and by way of
operation of law) or security interest whatsoever, howsoever
created or arising or any right or arrangement having a
similar effect to any of the above;
"LIST A EVENT" means in respect of any of the Aircraft, (x)
any of (i) the Termination Events set out in Clauses
16.1(a), (e) (insofar as the same relates to the Guarantor's
financial covenants), (f), (g), (h), (m), (n), (o) and (p)
of the relevant Lease Agreement and (ii) the Cancellation
Events set out in Clauses 8.1.1, 8.1.3 (insofar as the same
relates to the Guarantor's financial covenants), 8.1.5,
8.1.6, 8.1.8, 8.1.9, 8.1.10 and 8.1.11 of this Facility
Agreement and (y) any List A Event (as that term is, or will
be, defined in the 1994 Facility Agreement);
"LIST B EVENT" means in respect of any of the Aircraft, (y)
any Termination Event and/or Cancellation Event which is not
a List A Event and each Loan Event of Termination and (z)
any List B Event (as that term is, or will be defined in the
1994 Facility Agreement);
"LOAN SUPPLEMENT" means, in respect of an Aircraft, the loan
supplement relating to that Aircraft to be entered into
between the Borrower, the Agent and the Security Agent
substantially in the form of Appendix A;
"LOAN EVENT OF TERMINATION" means, in respect of an Advance,
each of the events set out in Clause 9;
"LONDON BANKING DAY" means a day (other than a Saturday,
Sunday or holiday scheduled by law) on which banks are open
for business in London;
"LOSSES" means any losses, demands, liabilities, claims,
actions, proceedings, penalties, fines, damages, adverse
judgments, orders or other sanctions;
"MAINTENANCE RESERVE AMOUNT" means, in respect of an
Aircraft, such part of the amount which is from time to time
<PAGE>
standing to the credit of the Bermuda Lessee Maintenance
Reserve Collateral Account or, as the case may be, the Irish
Lessee Maintenance Reserve Collateral Account or, as the
case may be, an Alternative Lessee Maintenance Reserve
Collateral Account which represents the Maintenance Reserves
in respect of that Aircraft;
"MAINTENANCE RESERVES" means, in respect of an Aircraft, the
airframe reserves and engine reserves payable from time to
time by an Approved Sub-Lessee to the relevant Lessee
pursuant to the terms of the relevant Approved Sub-Lease and
which become the property of the relevant Lessee;
"MAJORITY LENDERS" means (i) in relation to any decision,
discretion, action or inaction under any of the Facility
Documents and/or any of the Operative Documents in respect
of which any of the Lead Managers must follow the
instructions of the relevant Export Credit Agency under the
relevant Support Agreement, all of the Lead Managers and
(ii) in relation to any other decision, discretion, action
or inaction under any of the Facility Documents and/or any
of the Operative Documents the Lenders the aggregate of
whose Commitments (in respect of the Unutilised Facility)
or, as the case may be, Relevant Proportions of Advances
already made and which remain outstanding, at the relevant
time, is equal to or exceeds sixty-six and two thirds per
cent. (66 2/3%) of the aggregate of the Total Commitments
or, as the case may be, the Advances;
"MANAGEMENT AGREEMENT" means the Agreement so entitled of
even date herewith and made between the Trustee, the
Manager, the Borrower, the Coutts Representative, the
Security Agent and the Guarantor;
"MANAGEMENT AGREEMENT SIDE LETTER" means the letter
agreement entered into or to be entered into by MeesPierson
(Cayman) Limited, the Security Agent and the Guarantor;
"MANAGER" means MeesPierson (Cayman) Limited of P.O. Box
2003, George Town, Grand Cayman, Cayman Islands, BWI in its
capacity as manager of the Borrower;
"MANDATORY LEASE PROVISIONS" means, in respect of a Lease
Agreement, each of the provisions set out in Schedule 7 to
that Lease Agreement;
"MANDATORY PREPAYMENT EVENT" means, in respect of a Lease
Agreement, the occurrence of any of the events referred to
in Clause 18 of such Lease Agreement;
"MANUFACTURER" means Airbus Industrie G.I.E. of 1 Rond Point
Maurice Bellonte, Blagnac 31707, France;
"MARGIN" means nought point seven per cent. (0.7%) per
annum;
"MEESPIERSON COMFORT LETTER" means the letter agreement
entered or to be entered into between MeesPierson N.V. and
the Bermuda Lessee, the Irish Lessee, the Guarantor, the
Bermuda Option Holder, the Lenders, the Agent and the
Security Agent;
"MORTGAGE" means, in respect of an Aircraft, the deed of
assignment and first priority English law mortgage relating
to that Aircraft to be entered into between the Borrower and
the Security Agent substantially in the form of Appendix D;
<PAGE>
"NOTICE OF DRAWDOWN" means, in respect of an Advance, the
notice of drawdown to be given by the Borrower to the Agent
substantially in the form of Schedule 6;
"OBLIGORS" means any or all of the Bermuda Lessee, the Irish
Lessee, any Alternative Lessee, any Additional Lessee, the
Bermuda Parent, the Irish Parent, any other Parent, the
Bermuda Option Holder, any other Option Holder and where the
context so permits, the Guarantor, and "Obligor" means any
one of them;
"OPERATIVE DOCUMENTS" means each of (i) the Loan
Supplements, the Notices of Drawdown, the Bills of Sale, the
BFE Bills of Sale, the Purchase Agreements (to the extent
that they relate to the Aircraft and the Warranties), the
Engine Agreements (to the extent that they relate to the
Engines Warranties), the Lease Agreements, the Acceptance
Certificates, each of the Security Documents and (ii) (a)
any other document, instrument or memorandum annexed to any
of the documents referred to in (i) above, (b) any notice or
acknowledgement referred to in or required pursuant to the
terms of any of the documents referred to in (i) above and
(c) any document, instrument or memorandum (x) which arises
following a restructuring in accordance with the terms of
this Facility Agreement and/or the Priorities and
Indemnities Agreement of any or all of the arrangements
contemplated by any of the documents referred to in (i)
above or (y) which the Guarantor or any relevant Lessee
agrees constitutes an Operative Document or (z) which is
entered into in substitution for or which amends or augments
or varies all or any part of any of the documents referred
to in this definition (including this part (ii)(c)(z)) in
each case in accordance with the terms of this Facility
Agreement;
"OPTION HOLDER" means, in respect of an Aircraft, as the
case may be the Bermuda Option Holder or such other person
nominated as such in the Utilisation Notice and accepted by
the Lead Managers and the Guarantor in accordance with the
provisions of Clause 4.2.3 being in each case a wholly-owned
indirect subsidiary of the Guarantor and "Option Holders"
shall have a corresponding meaning;
"OPTION HOLDER'S POWER OF ATTORNEY" means, in respect of an
Aircraft, the power of attorney concerning, inter alia, the
discharge of the relevant Second Mortgage to be granted by
the relevant Option Holder in favour of the Borrower, the
Agent and the Security Agent in the form of Appendix K or in
such other form as the Agent and the Security Agent may
reasonably require;
"PARENT" means as the case may be the Bermuda Parent or the
Irish Parent or such other person nominated as such in a
Utilisation Notice and accepted by the Lead Managers and the
Bermuda Lessee or, as the case may be, the Irish Lessee in
accordance with the provisions of Clause 4.2.3 and being in
each case a wholly-owned subsidiary of the Guarantor and
"Parents" shall have a corresponding meaning;
"PARTS" means, in respect of an Aircraft, all modules,
appliances, parts, accessories, auxiliary power unit,
instruments, furnishings and other equipment of whatsoever
nature including, without limitation, the Buyer Furnished
Equipment and any service bulletin kits or the like but
excluding complete Engines or engines and equipment
(including, but not limited to, in-flight entertainment and
telecommunications equipment) which is from time to time
<PAGE>
attached to the Airframe and leased to the relevant Lessee
other than primarily for the purpose of financing the
acquisition of such equipment in circumstances where such
equipment, that at any time of determination are
incorporated or installed in or attached to the Airframe or
any Engine or, having been removed therefrom, title to which
remains vested in the Borrower in accordance with the
provisions of the Lease Agreement; and "Part" shall have a
corresponding meaning;
"PERMITTED LIENS" means, in relation to an Aircraft:-
(a) any Lien for Taxes or other governmental or statutory
charges or levies not yet assessed or, if assessed, not
yet due and payable or, if due and payable, which the
relevant Lessee or, where relevant, an Approved
Sub-Lessee is disputing or contesting in good faith by
appropriate proceedings (and for the payment of which
adequate cash reserves are available, or when required
in order to pursue such proceedings, an adequate bond
has been provided) so long as such proceedings, or the
continued existence of such Lien, do not at that time
involve any danger of the sale, forfeiture or loss of
the Airframe, any Engine or any Parts or any interest
therein; or
(b) any Lien for the fees or charges of any airport or air
navigation authority arising in the ordinary course of
business by statute or by operation of law, in each
case for amounts the payment of which either is not yet
due and payable or, if due and payable, is being
disputed or contested in good faith by appropriate
proceedings (and for the payment of which adequate cash
reserves are available, or when required in order to
pursue such proceedings, an adequate bond has been
provided) so long as such proceedings, or the continued
existence of such Lien, do not at that time involve any
danger of the sale, forfeiture or loss of the Airframe,
any Engine or any Parts or any interest therein; or
(c) any Lien for the fees or charges of any supplier,
mechanic, workman, repairer, employee or like lien
arising in the ordinary course of business by statute
or by operation of law, in each case for amounts (i)
the payment of which is not yet due and payable, or
(ii) which are not overdue for payment having regard to
the custom of the relevant trade, in circumstances
where no assertive or enforcement action against the
Aircraft has yet been taken by the relevant supplier,
mechanic, workman, repairer, employee or holder of like
lien or by any successor or assign of each of them
("the Claimant"), or (iii) if due and payable is being
disputed or contested in good faith with the Claimant
by appropriate proceedings (and for the payment of
which adequate cash reserves are available, or when
required in order to pursue such proceedings, an
adequate bond has been provided) so long as such
proceedings, or the continued existence of such Lien,
do not at that time involve any danger of the sale,
forfeiture or loss of the Airframe, any Engine or any
Parts or any interest therein; or
(d) Liens (other than Liens for Taxes) arising out of
judgments or awards against the relevant Lessee or any
Approved Sub-Lessee with respect to which at the time
an appeal is being presented in good faith and with
respect to which there shall have been secured a stay
<PAGE>
of execution pending such appeal (and for the payment
of which adequate cash reserves are available, or when
required in order to pursue such proceedings, an
adequate bond has been provided) so long as such
judgment or award, or the continued existence of such
Lien, do not at that time involve any danger of the
sale, forfeiture or loss of the Airframe, any Engine or
any Parts or any interest therein; or
(e) the rights of the relevant Lessee under any of the
Facility Documents and the relevant Aircraft Operative
Documents; or
(f) the rights of the relevant Option Holder under any of
the Facility Documents, the relevant Aircraft Operative
Documents and the Second Mortgage; or
(g) the rights of the Borrower under any of the Facility
Documents, the relevant Aircraft Operative Documents
and the Second Mortgage; or
(h) Excluded Lessor's Liens; or
(i) any Lien created by the Borrower pursuant to the Second
Mortgage; or
(j) the rights of others under agreements or arrangements
to the extent expressly permitted by the provisions of
Clause 11.3 of the relevant Lease Agreement; or
(k) any other Lien created with the prior written consent
of the Borrower and the Security Agent;
"POTENTIAL CANCELLATION EVENT" means any event which with
any one or more of the lapse of time, the giving of notice,
or the making of a determination, could become a
Cancellation Event were a notice to be given by the Agent to
the Guarantor pursuant to Clause 8.1;
"POWER OF ATTORNEY" means, in respect of an Aircraft, any
power of attorney concerning, inter alia, the
de-registration of the relevant Aircraft to be granted by
the Approved Sub-Lessee in accordance with the provisions of
the relevant Lease Agreement in favour of the Borrower, the
Agent and the Security Agent in the form of Appendix H or in
such other form as the Agent and the Security Agent may
reasonably require;
"PRIORITIES AND INDEMNITIES AGREEMENT" means the priorities
and indemnities agreement of even date herewith between (1)
the Bermuda Lessee, (2) the Irish Lessee, (3) the Guarantor,
(4) the Bermuda Option Holder, (5) the Borrower, (6) the
Lenders, (7) the Agent and (8) the Security Agent;
"PROCEEDS ACCOUNT" means the account of the Security Agent
with National Westminster Bank Plc designated by the
Security Agent and notified to the other parties hereto as
the account to which any Aircraft Proceeds will be credited
or such other account as the Security Agent may designate
from time to time by notice to the other parties hereto;
"PROHIBITED COUNTRY" means, in relation to an Aircraft, Iraq
for so long as The Iraq and Kuwait (United Nations
Sanctions) (No. 2) Order, 1990 remains in effect, the
Republics of Serbia and Montenegro for so long as the Serbia
and Montenegro (United Nations Prohibition of Flights) Order
1992 remains in effect, Libya, for so long as the Libya
<PAGE>
(United Nations Prohibition of Flights) Order 1992 remains
in effect and any country to which the export and/or use of
A300/A310/A320/A321/A330/A340 aircraft (as the case may be)
is not permitted under (i) the Export of Goods Control Order
1992, (ii) the United States Export Administration Act 1979
(as amended) or any successor legislation and/or the Export
Administration Regulations promulgated thereunder, (iii) any
similar or corresponding legislation then in effect in
France, Spain or Germany, (unless knowledge of any
non-applicability of such legislation or regulations
referred to in (i), (ii) or (iii) above is in the public
domain) or (iv) any subsequent United Nations Sanctions
Orders the effect of which prohibits or restricts the export
to and/or use of A300/A310/A320/A321/A330/A340 aircraft (as
the case may be) in such country;
"PURCHASE AGREEMENT ASSIGNMENT" means, in respect of an
Aircraft, the purchase agreement assignment relating to the
relevant Purchase Agreement insofar as it relates to the
title to and the Warranties in respect of that Aircraft to
be entered into between the Guarantor and the Borrower
substantially in the form of Appendix C;
"PURCHASE AGREEMENTS" means together (i) each of the five
aircraft purchase agreements relating to A300, A310, A320,
A330 and A340 Aircraft respectively, between the Seller and
the Guarantor each dated 10th November 1988, and (ii) the
aircraft purchase agreement relating to A321 Aircraft
between the Seller and the Guarantor dated 14th February
1990 (each such aircraft purchase agreement incorporating
the General Terms Agreement dated 10th November 1988)
whereby the Seller agreed to sell and the Guarantor agreed
to purchase, inter alia, each of the Facility Aircraft,
together with the exhibits thereto and letter agreements
made between the Seller and the Guarantor, as any or all of
such aircraft purchase agreements may have been or may be
hereafter amended and/or supplemented from time to time by
any change orders or letter agreements entered into in
accordance with their respective provisions and "Purchase
Agreement" shall mean any one of them;
"REFERENCE BANKS" means National Westminster Bank Plc and
Banque Paribas, London Branch;
"RELEVANT AIRCRAFT" means, in respect of a Lessee, such of
the Facility Aircraft as are from time to time leased to
such Lessee pursuant to a Lease Agreement between such
Lessee as lessee, the Borrower as lessor and the relevant
Option Holder;
"RELEVANT LEASE PAYMENTS" means, in respect of a Lease
Agreement, all or any of the following which are payable by
the relevant Lessee pursuant to any provision of that Lease
Agreement, namely (i) Rent and Termination Sums, (ii) all
sums payable pursuant to Clause 22 of that Lease Agreement,
(iii) default interest on any of the foregoing, and (iv) all
sums payable pursuant to Clauses 5.2 and 5.3 of the
Priorities and Indemnities Agreement in relation to any of
the foregoing and default interest thereon;
"RELEVANT LOAN PAYMENT" shall have the meaning given thereto
in Clause 5.6.7(a);
"RELEVANT PROPORTION" means, with respect to any Lender and
an Advance, at any time, the proportion which such Lender's
share of the Credits bears to the total amount of the
Credits at such time;
<PAGE>
"RENT" means, in respect of each Rental Payment Date under a
Lease Agreement, the aggregate of the following amounts:-
(i) the aggregate of the amount in Dollars set out opposite
such date in the Columns headed "Principal Component of
Rent" and "Fixed Interest Component of Rent" in Part I
of Schedule 6 to that Lease Agreement as the same may
be varied in accordance with the provisions of Clause
7.2 of that Lease Agreement;
(ii) the amount in Dollars set out opposite such date in the
Column headed "Principal Component of Rent" in Part II
of Schedule 6 to that Lease Agreement as the same may
be varied in accordance with the provisions of Clause
7.2 of that Lease Agreement; and
(iii) the amount of interest calculated in accordance
with paragraph (c) of Part II of Schedule 6 to
that Lease Agreement as the same may be varied in
accordance with the provisions of Clause 7.2 of
that Lease Agreement;
"RENTAL PAYMENT DATE" means, in respect of a Lease
Agreement, each of the twenty (20) dates for payment of an
instalment of Rent under that Lease Agreement as set forth
in Column 1 in Part I of Schedule 6 to that Lease Agreement;
"REPAYMENT DATE" means, in relation to an Advance, each
repayment date as set forth in Column 1 of Schedule 2(1) to
the relevant Loan Supplement PROVIDED ALWAYS THAT if any
Repayment Date would otherwise fall on a day which is not a
Banking Day, such Repayment Date shall be deemed to fall on
the next succeeding Banking Day unless such next succeeding
Banking Day falls in the next calendar month, in which event
such Repayment Date shall be deemed to fall on the
immediately preceding Banking Day;
"REPAYMENT INSTALMENT" means, in relation to an Advance,
with respect to each Repayment Date, the amount of Dollars
due and payable on such Repayment Date, as determined in
accordance with Clauses 5.2.8 and 5.4.1 and as set out in
the relevant Loan Supplement;
"REPRESENTATIVES" means the Agent and the Security Agent;
"REQUIRED INSURED VALUE" means, in relation to an Aircraft,
the higher of the market value of that Aircraft and 110% of
the principal amount outstanding in respect of the relevant
Credits from time to time;
"REQUISITION PROCEEDS" means, in relation to an Aircraft,
any monies and/or other compensation received directly by
the Borrower and/or the Security Agent in its capacity as
mortgagee in respect of the Compulsory Acquisition of such
Aircraft or the requisition for use or hire of such
Aircraft;
"SCHEDULED DELIVERY MONTH" means, in respect of any
Aircraft, the month in which that Aircraft is scheduled to
be delivered as set out in Schedule 4 Part I as the same may
be varied by any notice delivered by the Guarantor to the
Agent under Clause 2.5.1;
"SECOND MORTGAGE" means, in respect of an Aircraft, the
second priority English law mortgage relating to that
Aircraft to be entered into between the Borrower and the
<PAGE>
relevant Option Holder in such form as may be agreed between
the relevant Option Holder, the Borrower and the Security
Agent;
"SECURED OBLIGATIONS" means together (a) any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether or not
for the payment of money, and including, without limitation,
any obligation or liability to pay damages) which are now or
which may at any time and from time to time hereafter be
due, owing, payable or incurred or expressed to be due,
owing, payable or incurred from or by the Borrower or any of
the Obligors to any one or more of the Lenders, the Agent
and/or the Security Agent under any of the Facility
Documents and/or any of the Operative Documents, together
with any and all of the obligations of the Borrower arising
by operation of law after the Lenders have made payment of
any Tax Liability and/or any Loss and/or Expense suffered or
incurred by the Borrower for which none of the Lessees has
reimbursed the Borrower in accordance with the terms of this
Facility Agreement and/or any other Operative Document
and/or any Facility Document (i) to account, pay and remit
to the Lenders any and all payments received by the Borrower
from any of the Lessees in respect of such reimbursements
and (ii) to transfer to the Lenders and allow the Lenders to
exercise, in each case as subrogee, the Borrower's rights
and remedies against any or all of the Lessees and/or the
Guarantor in respect of such reimbursements and any and all
such monies, liabilities and obligations of the Borrower
shall form part of the Secured Obligations whether or not
the Borrower is personally liable for the same and whether
or not any recourse may be had with respect thereto against
the Borrower and/or its assets, and (b) the Secured
Obligations (as that term is defined in the 1994 Facility
Agreement);
"SECURED PARTIES" means the Lenders, the Agent and/or the
Security Agent;
"SECURITY DEPOSIT" means, in respect of an Aircraft, any
security deposit payable by an Approved Sub-Lessee to the
relevant Lessee pursuant to the relevant Approved Sub-Lease;
"SECURITY DOCUMENTS" means each of (i) this Facility
Agreement, the Priorities and Indemnities Agreement, the
General Security Assignments, the Deed of Assignment and
Charge, the Mortgages, the Guarantee and Indemnity (Lessor),
the Deed of Assignment of Guarantee and Indemnity (Lessor),
the Sub-Lease Collateral Charges, the Assignments of
Sub-Lease Collateral Charges, the Sub-Lease Security
Assignments, the Deeds of Assignment of General Terms
Agreements Re Engine Warranties, the Purchase Agreement
Assignments, the Charges Over Shares, the Powers of Attorney
(if any), the Option Holder's Powers of Attorney (ii) (a)
any other instrument, document or memorandum annexed to any
of the documents referred to in (i) above, (b) any notice or
acknowledgement referred to in or required pursuant to the
terms of any of the documents referred to in (i) above and
(c) any document, instrument or memorandum (w) which arises
following a restructuring of any or all of the arrangements
contemplated by any of the documents referred to in (i)
above or (x) which the Guarantor or any relevant Lessee
agrees constitutes a Security Document or (y) which secures
the obligations of any of the Obligors and/or the Borrower
under any of the Operative Documents or (z) which is entered
into in substitution for or which amends or augments or
<PAGE>
varies all or any part of any of the documents referred to
in this definition (including this part (ii)(c)(z)) in each
case in accordance with the terms of this Facility
Agreement;
"SECURITY INTEREST" means any encumbrance or security
interest whatsoever, howsoever created or arising, including
(without prejudice to the generality of the foregoing) any
right of ownership, security, mortgage, charge, pledge,
lien, right of possession or detention, statutory right in
rem, hypothecation, lease, title retention, attachment,
levy, claim, right of set-off (but excluding any right of
set-off arising in favour of a banker and by way of
operation of law) or any right or arrangement having a
similar effect to any of the above;
"SECURITY PERIOD" means the period commencing on the date
hereof and ending on the date upon which the Secured
Obligations shall have been satisfied in full;
"SELLER" means AVSA S.A.R.L., a French societe a
responsabilite limitee, duly organised and existing under
the laws of the Republic of France and having its registered
office at 2 Rond Point Maurice-Bellonte 31700 Blagnac,
France together with its successors and assigns;
"STATE OF REGISTRATION" means, in relation to an Aircraft,
the United States of America, Bermuda, the Cayman Islands,
Ireland or the United Kingdom or any other state or
territory in which that Aircraft may for the time being be
registered pursuant to an Approved Sub-Lease;
"SUB-LEASE COLLATERAL CHARGE" means any one of the Bermuda
Lessee Sub-Lease Collateral Charge, the Irish Lessee
Sub-Lease Collateral Charge and any Alternative Lessee
Sub-Lease Collateral Charge and "Sub-Lease Collateral
Charges" shall have a corresponding meaning;
"SUB-LEASE RENTALS" means, in respect of an Aircraft, the
rentals payable by an Approved Sub-Lessee pursuant to the
relevant Approved Sub-Lease;
"SUB-LEASE SECURITY ASSIGNMENT" means, in respect of an
Aircraft in relation to which a quiet enjoyment covenant is
to be given to the Approved Sub-Lessee by the Borrower and
the Security Agent, the security assignment relating to the
Approved Sub-Lease of that Aircraft to be entered into
between the relevant Lessee and the Borrower substantially
in the form of Appendix F;
"SUBSIDIARY" means any person of which or in which the
Guarantor and its other Subsidiaries own directly or
indirectly 50% or more of:-
(a) the combined voting power of all classes of stock
having general voting power under ordinary
circumstances to elect a majority of the board of
directors of such person, if it is a corporation;
(b) the capital interest or profits interest of such
person, if it is a partnership, joint venture or
similar entity; or
(c) the beneficial interest of such person, if it is a
trust, association or other unincorporated
organisation;
<PAGE>
PROVIDED HOWEVER that so long as (i) the Guarantor continues
to own not more than fifty per cent. (50%) of Pacific Ocean
Leasing, Ltd., and (ii) Pacific Ocean Leasing, Ltd. does not
materially alter the manner in which it conducts the
business in which it is currently engaged, Pacific Ocean
Leasing, Ltd. shall not be considered a Subsidiary within
the foregoing definition for the purposes of this Facility
Agreement;
"SUPPORT AGREEMENTS" means, in relation to a Utilisation,
together (i) the Support Agreement to be entered into
between (1) Her Britannic Majesty's Government represented
by the Export Credits Guarantee Department and (2) the
British Lenders and (ii) the Promesse de Garantie and the
Police d'Assurance Credit to be entered into between (1) the
French Republic represented by Compagnie Francaise
d'Assurance pour le Commerce Exterieur and (2) the French
Lenders and (iii) the Finanzkreditgarantie-Erklarung to be
entered into between (1) Germany represented by Hermes
Kreditversicherungsaktiengesellschaft and (2) the German
Lenders;
"TAX" means all present and future taxes, charges, imposts,
duties, levies, deductions, withholdings or fees of any kind
whatsoever, or any amount payable on account of or as
security for any of the foregoing, payable at the instance
of or imposed by any statutory, governmental, international,
state, federal, provincial, local or municipal authority,
agency, body or department whatsoever or any central bank or
monetary agency or European Union institution, in each case
in England or elsewhere, together with any penalties,
additions, whether fines, surcharges or interest relating
thereto; and "Taxes" and "Taxation" shall be construed
accordingly;
"TAX LIABILITY" means in respect of any person:-
(a) any liability or any increase in the liability of that
person to make any payment or payments of or in respect
of Tax;
(b) the loss or setting off against income, profits or
gains or against any liability to make a payment or
payments of or in respect of Tax of any relief,
allowance, deduction or credit in respect of Tax ("a
Relief") which would otherwise have been available to
that person; and
(c) the loss or setting off against any liability to make a
payment or payments of or in respect of Tax of a right
to repayment of Tax which would otherwise have been
available to that person,
and in any case falling within (b) or (c) above the amount
that is to be treated as a Tax Liability shall be determined
as follows:-
(i) in a case which falls within (b) above and where the
Relief that was the subject of the loss or setting off
was or would have been a deduction from or offset
against Tax, the Tax Liability shall be the amount of
that Relief;
(ii) in a case which falls within (b) above and which
involves the loss of a Relief which would otherwise
have been available as a deduction from or offset
against gross income, profits or gains the Tax
<PAGE>
Liability shall be the amount of Tax which would (on
the basis of the Tax rates current at the date of the
loss and assuming that the person has sufficient gross
income, profits or gains to utilise the Relief) have
been saved but for the loss of the Relief;
(iii) in a case which falls within (b) above and which
involves the setting off of a Relief which would
otherwise have been available as a deduction from
or offset against gross income, profits or gains,
the Tax Liability shall be the amount of Tax which
has been or will be saved in consequence of the
setting off;
(iv) in a case which falls within (c) above, the Tax
Liability shall be the amount of the repayment
that would have been obtained but for the loss or
setting off;
For the purposes of this definition any question of whether
or not any relief, allowance, deduction, credit or right to
repayment of Tax has been lost or set off, and, if so, the
date on which that loss or set off took place, shall be
certified by the relevant Lender or, as the case may be, the
Representative and the provisions of Clause 21 shall apply
to such certificate;
"TECHNICAL RECORDS" means, in respect of an Aircraft, all
technical data, manuals, computer records, logbooks and
other records (whether kept or to be kept in compliance with
any law or regulation or any requirement for the time being
of the Aviation Authority or otherwise) relating to that
Aircraft, any Engine or any Parts;
"TERMINATION EVENT" means, in relation to a Lease Agreement,
any of the events set out in Clause 16 of that Lease
Agreement (and for the purposes of this definition where
such a Termination Event refers to an opinion of "the
Lessor" or depends upon "the Lessor's" consideration or
determination of whether such event has occurred or has or
would have certain consequences, then irrespective of the
opinion of "the Lessor" or "the Lessor's" consideration or
determination at that time with respect to such event, such
event shall for the purposes of this definition be deemed to
have occurred if the Agent is of the relevant opinion or
considers or determines that the relevant event has occurred
or the Agent, the Security Agent or any of the Lenders would
have or suffer the relevant consequences);
"TERMINATION SUM" means in relation to an Aircraft and for a
particular date, the amount calculated for that date in
accordance with the provisions of Part III of Schedule 6 to
the relevant Lease Agreement;
"TOTAL COMMITMENTS" means the aggregate from time to time of
all the Commitments;
"TOTAL LOSS", "TOTAL LOSS DATE", "TOTAL LOSS PAYMENT DATE"
and "TOTAL LOSS PROCEEDS" in relation to an Aircraft shall
have the meaning given thereto in the relevant Lease
Agreement;
"TRANCHE 1A" shall, in relation to a Utilisation, have the
meaning given thereto in Clause 4.3.4;
"TRANCHE 1B" shall, in relation to a Utilisation, have the
meaning given thereto in Clause 4.3.4;
<PAGE>
"TRANCHE 2", "TRANCHE 2 INITIAL" and "TRANCHE 2 MISMATCH"
shall, in relation to a Utilisation, have the meaning given
thereto in Clause 4.3.4;
"TRANSACTION" means, in relation to any person, the
transaction comprising each of the Facility Documents and
each of the Operative Documents entered into by that person;
"TRANSFER CERTIFICATE" means a certificate in the form of
Schedule 2, signed by or on behalf of the transferring
Lender, each of the Obligors, the Borrower, the Agent and
the person who is a party thereto as transferee;
"TRIGGER EVENT" means the commercial paper (short term debt)
obligations of the Guarantor being or becoming rated below
A2 by Standard and Poor's Corporation or P2 by Moody's
Investor Service, Inc., or an equivalent by an alternative
service of equivalent recognition (if neither Standard and
Poor's Corporation nor Moody's Investor Service, Inc. has
assigned any rating) or the placing on "creditwatch"
(otherwise than with a view to upgrading) of, or other
negative qualification upon, such rating level of the
Guarantor;
"TRUSTEE" means MeesPierson (Cayman) Limited of P.O. Box
2003, George Town, Grand Cayman, Cayman Islands, BWI in its
capacity as trustee of the trust created pursuant to the
Declaration of Trust;
"UNUTILISED FACILITY" means, at any time, the lesser of (i)
the Total Commitments and (ii) one billion three hundred and
seventy-five million Dollars (US$1,375,000,000) as such
amount may have been reduced by (a) the amount of each
Advance made before such time and (b) the amount of each
reduction made to the Facility Amount pursuant to Clause
2.5.2 or 2.5.3;
"UTILISATION" means each utilisation of the Facility
pursuant to Clause 4 or, as the context may require, the
amount referred to in a Utilisation Notice as being that
part of the Facility Amount in Dollars allocated by the
Guarantor for financing of the Aircraft referred to in that
Utilisation Notice;
"UTILISATION DATE" means, in relation to a Utilisation, the
Business Day upon which the Advance relating to that
Utilisation is made available to the Borrower in accordance
with the terms and subject to the conditions of this
Facility Agreement;
"UTILISATION DOCUMENTATION" means, in respect of a
Utilisation, all documents entered into by the relevant
parties to give effect to the financing of the Aircraft the
subject matter of the Utilisation as specified in Clause
4.5;
"UTILISATION NOTICE" means any notice given by the Bermuda
Lessee or, as the case may be, the Irish Lessee pursuant to
Clause 4.1 and substantially in the form of Schedule 3;
"VALUE ADDED TAX" or "VAT" means value added tax as provided
for in the United Kingdom Value Added Tax Act 1994 and
legislation (whether delegated or otherwise) supplemental
thereto or in any primary or subordinate legislation
promulgated by the European Union or any body or agency
thereof and any Tax similar or equivalent to value added tax
imposed by any country other than the United Kingdom and any
<PAGE>
similar or turnover tax replacing or introduced in addition
to any of the same;
"WARRANTIES" means, in respect of an Aircraft, the Standard
Warranty, Service Life Policy, Vendor Warranties, Interface
Commitment and Patent Indemnity given, assigned or extended
by the Seller under or pursuant to Clauses 12 and 13 of and
as defined in the Purchase Agreement relating to that
Aircraft with respect to the Aircraft, Airframe and any
Parts (but not further or otherwise) and any and all rights
of the relevant Lessee and/or the Borrower under the
Purchase Agreement and/or the Purchase Agreement Assignment
in each case relating to that Aircraft to compel performance
of the same;
"1994 BORROWER" means the Borrower as that term is defined
in the 1994 Facility Agreement;
"1994 FACILITY" means the term loan facility made available
pursuant to the 1994 Facility Agreement by the banks and
financial institutions named therein;
"1994 FACILITY AGREEMENT" means the Facility Agreement dated
28th January 1994 and made between (1) the banks and
financial institutions named therein, (2) the Agent, (3) the
Security Agent, (4) Bravo Leasing Limited, (5) ILFC
(Bermuda) 4, Ltd., (6) the Bermuda Parent, (7) the Bermuda
Option Holder and (8) the Guarantor as amended and
supplemented by a Supplemental Agreement dated 7th November
1994 and made between the parties to the said Facility
Agreement, the Irish Lessee, the Irish Parent and
MeesPierson (Cayman) Limited as the same may have been or
may be further amended and/or supplemented from time to
time;
"1994 FACILITY AIRCRAFT" means any one or more (as the
context may require) of the Airbus aircraft which have been
or which are to be financed pursuant to the 1994 Facility
Agreement;
"1994 GUARANTOR" means the Guarantor as that term is defined
in the 1994 Facility Agreement;
"1994 LENDERS" means the Lenders as that term is defined in
the 1994 Facility Agreement;
"1994 LESSEE" means ILFC (Bermuda) 4, Ltd., ILFC Ireland 2
Limited and any other person who accedes to the 1994
Facility Agreement on the basis that such person shall have
the same rights and obligations in respect of an aircraft
that it leases from the Lessor as ILFC Bermuda 4, Ltd. and
"1994 Lessees" shall mean all of them;
"1994 OBLIGORS" means the 1994 Lessees, the 1994 Option
Holders, the 1994 Parents and the 1994 Guarantor;
"1994 OPERATIVE DOCUMENTS" means the Operative Documents as
that term is defined in the 1994 Facility Agreement as the
same may have been or may be further amended and/or
supplemented from time to time;
<PAGE>
"1994 OPTION HOLDER" means any Option Holder as that term is
defined in the 1994 Facility Agreement and "1994 Option
Holders" shall mean all of them;
"1994 PARENTS" means ILFC (Bermuda) 5, Ltd,. ILFC Ireland 3
Limited and any other person who accedes to the 1994
Facility Agreement on the basis that such person shall have
the same rights and obligations thereunder as ILFC (Bermuda)
5, Ltd. has and "1994 Parents" shall mean all of them;
"1994 SECURED PARTIES" means the Lenders, the Agent and/or
the Security Agent as each of those terms is defined in the
1994 Facility Agreement and "1994 Secured Party" means any
one of them;
"1994 SECURITY AGENT" means the Security Agent as that term
is defined in the 1994 Facility Agreement;
"1994 SECURITY DOCUMENTS" means Security Documents as that
term is defined in the 1994 Facility Agreement as the same
may have been or may be further amended and/or supplemented
from time to time.
<PAGE>
SIGNED SEALED and DELIVERED )
by )
attorney-in-fact for and on behalf of )
ENCORE LEASING LIMITED )
in the presence of:- )
SIGNED by )
NATIONAL WESTMINSTER BANK PLC )
as Security Agent )
acting through its authorised signatory )
)
in the presence of:- )
<PAGE>
APPENDIX E
FORM OF GENERAL SECURITY ASSIGNMENT
<PAGE>
APPENDIX E
DATED 1994
(1) ENCORE LEASING LIMITED
(AS BORROWER)
- AND -
(2) NATIONAL WESTMINSTER BANK PLC
(AS SECURITY AGENT)
=================================================================
GENERAL SECURITY ASSIGNMENT NO. 1995-[ ]
IN RESPECT OF
ONE AIRBUS A[ ] AIRCRAFT
MANUFACTURER'S SERIAL NUMBER [ ]
=================================================================
<PAGE>
TABLE OF CONTENTS
Clause Heading Page
1. DEFINITIONS AND INTERPRETATION .................... 1
2. ASSIGNMENT ........................................ 3
3. CONTINUING SECURITY ............................... 4
4. REPRESENTATIONS AND COVENANTS ..................... 5
5. CONSOLIDATION/POWER OF SALE ...................... 7
6. MONIES RECEIVED ................................... 7
7. APPOINTMENT OF ATTORNEY ........................... 8
8. MISCELLANEOUS ..................................... 8
9. GOVERNING LAW AND JURISDICTION .................... 9
10. NOTICES ...........................................10
ANNEX 1 - NOTICE OF ASSIGNMENT .............................13
ANNEX 2 - ACKNOWLEDGEMENT OF ASSIGNMENT.....................15
<PAGE>
THIS GENERAL SECURITY ASSIGNMENT is made by way of Deed this
day of 199[ ].
BETWEEN:-
(1) ENCORE LEASING LIMITED a company incorporated under the laws
of the Cayman Islands and having its registered office at
P.O. Box 2003, George Town, Grand Cayman, Cayman Islands,
BWI (the "Borrower"); and
(2) NATIONAL WESTMINSTER BANK PLC a banking institution
established under the laws of England whose registered
office is at 41 Lothbury, London EC2P 2BP as security agent
for and on behalf of itself, the Agent and each of the
Lenders (the "Security Agent").
WHEREAS:-
(A) The Borrower has agreed to purchase the Aircraft pursuant to
the Purchase Agreement Assignment.
(B) The Borrower has agreed to lease the Aircraft to [
] (the "[ ] Lessee"), upon and subject
to the terms and conditions of the Lease Agreement.
(C) In order to assist the Borrower to purchase the Aircraft,
the Lenders have agreed to make a loan available to the
Borrower upon and subject to the terms and conditions of the
Facility Agreement.
(D) It is a condition precedent to the obligations of the
Lenders under the Facility Agreement that, as security for
the Secured Obligations, the Borrower executes and delivers
this Assignment.
NOW THIS ASSIGNMENT WITNESSETH AND IT IS HEREBY AGREED as
follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Assignment (including the Recitals and Annexes),
words and expressions used herein shall, unless otherwise
defined herein or except where the context otherwise
requires, have the same respective meanings given to them in
the Facility Agreement.
1.2 In this Assignment (including the Recitals and Annexes) the
following words and expressions shall have the following
meanings:-
"AIRCRAFT" means the A3[ ] Airbus aircraft with
manufacturer's serial number [ ] as more particularly
described in the relevant Deed of Assignment and Mortgage;
"ASSIGNED PROPERTY" means, collectively, the Lease Property
and the Sub-Lease Assignment Property;
"ASSIGNMENT" means this general security assignment together
with the Recitals and the Annexes hereto;
"FACILITY AGREEMENT" means the aircraft facility agreement
dated [ ] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd and (10) International Lease Finance
Corporation; and
"LEASE AGREEMENT" means the aircraft lease agreement no.
1995-[ ] dated 199[ ] and made between
the Borrower as lessor, the [ ] Lessee as lessee
and the [ ] Option Holder and providing, inter
alia, for the leasing of the Aircraft by the Borrower to the
[ ] Lessee;
<PAGE>
"LEASE PROPERTY" means the whole benefit of the Lease
Agreement and all of the right, title and interest, present
and future, actual or contingent of the Borrower in, to and
under the Lease Agreement including, without limitation, (a)
the Relevant Lease Payments and (b) all claims, rights and
remedies of the Borrower arising out of or in connection
with a breach of or default (including, without limitation,
the right to terminate the leasing of the Aircraft pursuant
to the Lease Agreement as a result thereof and all damages
and compensation payable for or in respect thereof) under or
in connection with the Lease Agreement;
"LOAN SUPPLEMENT" means the loan supplement No. 1995-[ ]
dated 199[ ] and made between the
Borrower, the Agent and the Security Agent;
"SECURITY PERIOD" means the period commencing on the date
hereof and terminating on the date upon which all of the
Secured Obligations have been paid, performed and satisfied
in full;
"SUB-LEASE SECURITY ASSIGNMENT" means the sub-lease security
assignment dated [ ] 199[ ] and made
between the [ ] Lessee and the Borrower; and
"SUB-LEASE ASSIGNMENT PROPERTY" means the whole benefit of
the Sub-Lease Security Assignment and all of the right,
title and interest, present and future, actual or contingent
of the Borrower, in and under the Sub-Lease Security
Assignment including, without limitation, (a) any payments
made or to be made under the Sub-Lease Security Assignment
and (b) all claims, rights and remedies of the Borrower
arising out of or in connection with a breach of or default
(including, without limitation, all damages and compensation
payable for or in respect thereof) under or in connection
with the Sub-Lease Security Assignment.
1.3 Clauses 1.3 and 1.4 of the Facility Agreement shall be
deemed to be incorporated, mutatis mutandis, herein as if
references therein to "this Agreement" were references to
"this Assignment".
2. ASSIGNMENT
2.1 The Borrower as legal and beneficial owner hereby assigns
and agrees to assign absolutely all of its right, title and
interest in, to and under the Assigned Property to and in
favour of the Security Agent in order to secure the full and
punctual payment, performance and discharge of all of the
Secured Obligations.
2.2 If all of the Secured Obligations shall have been fully and
finally paid, performed and discharged, the Security Agent
shall, at the request of the Borrower, but at no cost to the
Security Agent, re-assign to the Borrower, without recourse
or warranty (but free and clear of any Security Interest
created by the Borrower), such right, title and interest, if
any, as the Security Agent may then have in and to the
Assigned Property and shall execute such documents as the
Borrower may reasonably require in order to effect such
re-assignment.
2.3 Without prejudice to Clause 5.12 of the Facility Agreement
and otherwise notwithstanding any provision of any of the
<PAGE>
Facility Documents and/or any of the Operative Documents
and/or any of the 1994 Facility Documents and/or the 1994
Operative Documents, the Borrower shall at all times remain
liable to perform all obligations expressed to be assumed by
it under or in respect of the Assigned Property including,
without limitation, all of its obligations to the [
] Lessee under the Lease Agreement and nothing herein
contained and no exercise by the Security Agent, the Agent,
the Lenders, the 1994 Secured Parties or any of them of any
rights under this Assignment and/or any of the Facility
Documents and/or any other Operative Document and/or any of
the 1994 Facility Documents and/or any of the 1994 Operative
Documents shall constitute or be deemed to constitute an
assumption or acceptance by the Security Agent, the Agent,
the Lenders, the 1994 Secured Parties or any of them of any
obligation of the Borrower or any other person.
3. CONTINUING SECURITY
3.1 The security created by this Assignment shall not be
satisfied and shall not be released or discharged by any
intermediate payment, performance, discharge or satisfaction
of any part of the Secured Obligations and shall be a
continuing security and shall extend to cover any sum or
sums of money or other liabilities and obligations which
shall for the time being constitute the balance of the
Secured Obligations until all of the Secured Obligations
shall have been paid, performed and discharged in full.
3.2 The security created by this Assignment is in addition to
and not in substitution for, and shall not in any way be
prejudiced or affected by, and shall be without prejudice
to, any other security or guarantee now or hereafter held by
the Security Agent, the Agent, the Lenders, the 1994 Secured
Parties or any of them for all or any part of the Secured
Obligations and may be enforced without the Security Agent,
the Agent, the Lenders, the 1994 Secured Parties or any of
them first having recourse to any such security or guarantee
and without taking any steps or proceedings against any of
the Borrower or any other person in respect of the Secured
Obligations. Without prejudice to the generality of the
foregoing, the Security Agent, the Agent, each Lender and
each of the 1994 Secured Parties need not before the
Security Agent exercises any of the rights, powers or
remedies conferred upon it by this Assignment or by law (i)
take action or obtain judgment against the Borrower or any
other person in any court or otherwise, (ii) make or file a
claim or proof in a winding-up, liquidation, bankruptcy,
insolvency, dissolution, reorganisation or amalgamation of,
or other analogous event of or with respect to, the Borrower
or any other person, or (iii) enforce or seek to enforce the
payment or performance of, or the recovery of, any of the
monies, obligations and liabilities hereby secured or any
other security or guarantee for all or any of the Secured
Obligations.
3.3 The security created by this Assignment shall not be
discharged, impaired or otherwise affected by:-
3.3.1 any failure by the Security Agent, the Agent, the
Lenders, the 1994 Secured Parties or any of them
to take or enforce any other security or guarantee
taken or agreed to be taken for all or any of the
Secured Obligations or under or pursuant to any of
the Facility Documents and/or any of the Operative
<PAGE>
Documents and/or any of the 1994 Facility
Documents and/or any of the 1994 Operative
Documents;
3.3.2 any time or other indulgence given or agreed to be
given by the Security Agent, the Agent, the
Lenders, the 1994 Secured Parties or any of them
to the Borrower or any other person in respect of
the Secured Obligations or in respect of the
Borrower's or such other person's obligations
under any security or guarantee relating thereto;
3.3.3 any amendment, modification, variation,
supplement, novation, restatement or replacement
of all or any part of the Secured Obligations
and/or any of the Facility Documents and/or any of
the Operative Documents and/or any of the 1994
Facility Documents and/or any of the 1994
Operative Documents;
3.3.4 any release or exchange of any security or
guarantee now or hereafter held by the Security
Agent, the Agent, the Lenders, the 1994 Secured
Parties or any of them for all or any part of the
Secured Obligations; or
3.3.5 any other act, fact, matter, event, circumstance,
omission or thing (including without limitation
the invalidity, unenforceability or illegality of
any of the Secured Obligations or the bankruptcy,
liquidation, winding-up, insolvency, dissolution,
reorganisation or amalgamation of, or other
analogous event of or with respect to, the
Borrower or any other person) which, but for this
provision, might operate to impair or discharge
the rights of the Security Agent, the Agent, the
Lenders, the 1994 Secured Parties or any of them
under this Assignment and/or any of the Facility
Documents and/or any of the other Operative
Documents and/or any of the 1994 Facility
Documents and/or any of the 1994 Operative
Documents to or which, but for this provision,
might constitute a legal or equitable discharge of
the security hereby created.
3.4 Any settlement or discharge between the Security Agent, the
Agent, the Lenders, the 1994 Secured Parties or any of them
and the Borrower and/or any other person shall be
conditional upon no security or payment to the Security
Agent, the Agent, the Lenders, the 1994 Secured Parties or
any of them by the Borrower or any other person being
avoided or set aside or ordered to be refunded or reduced by
virtue of any provision or enactment relating to bankruptcy,
liquidation, winding-up, insolvency, dissolution,
reorganisation, amalgamation or other analogous event or
proceedings for the time being in force.
4. REPRESENTATIONS AND COVENANTS
4.1 The Borrower hereby represents, warrants and covenants to
the Security Agent that it has not heretofore pledged,
assigned or created any Security Interest on or over, and
that throughout the Security Period it will not pledge,
assign or create any Security Interest in or over, the
Assigned Property save for the Security Interest constituted
by this Assignment or by any of the other Aircraft Operative
<PAGE>
Documents and/or any of the 1994 Facility Documents and/or
any of the 1994 Operative Documents.
4.2 The Borrower hereby covenants and undertakes, to the extent
permitted by any applicable law, (subject to the limited
recourse provisions of Clause 5.12 of the Facility
Agreement) throughout the Security Period that:-
4.2.1 the Borrower shall, at no cost to the Security
Agent, from time to time promptly sign, seal,
execute, acknowledge, deliver, file and register
all such additional documents, instruments,
agreements, certificates, consents and assurances
and do all such other acts and things as may be
reasonably necessary or as the Security Agent may
reasonably request from time to time in order to
perfect the Security Interest granted or intended
to be granted by this Assignment or to establish,
maintain, protect or preserve the rights of the
Security Agent, the Agent, the Lenders, the 1994
Secured Parties or any of them under this
Assignment or to enable any of them to obtain the
full benefits of this Assignment and to exercise
and enforce the rights and remedies under this
Assignment and/or in respect of the Assigned
Property;
4.2.2 the Borrower shall not purport to transfer,
assign, pledge, dispose of or otherwise deal with
the Assigned Property and shall not purport to
create or incur any Security Interest in or over
the Assigned Property other than Permitted Liens
but excluding Lessor's Liens and save for the
assignment and the Security Interest constituted
by or contemplated by this Assignment;
4.2.3 the Borrower shall, at no cost to the Security
Agent, promptly furnish to the Security Agent such
information and reports with respect to the
Assigned Property as the Security Agent may from
time to time reasonably require and which are in
its possession or are reasonably available to or
within the knowledge of the Borrower;
4.2.4 no right of set-off, counterclaim or defence with
respect to the Assigned Property shall be
exercisable by the Borrower against the Security
Agent, the Agent, the Lenders, or any of them;
4.2.5 the Borrower shall deliver on the date of this
Assignment (v) to the Security Agent, an original
executed counterpart of this Assignment executed
by the Borrower, (w) to the [ ]
Lessee a notice of assignment in the form set out
in Annex 1 and shall procure the [
] Lessee's acknowledgement and agreement
thereto in the form of Annex 2, (x) to the
Approved Sub-Lessee notice of assignment in the
form set out in Annex 1 to the Sub- Lease Security
Assignment and shall procure the Approved Sub-
Lessee's acknowledgement and agreement thereto in
the form of Annex 2 to the Sub-Lease Security
Assignment;
4.2.6 all cash, proceeds, cheques, drafts, orders and
other instruments for the payment of money
received by the Borrower on account of any
<PAGE>
Assigned Property shall promptly be delivered in
the form received (properly endorsed, but without
recourse, for collection where required) to the
Security Agent and the Borrower agrees not to
co-mingle any such collections or proceeds with
its other funds or property and agrees to hold as
security the same upon trust for the Security
Agent on behalf of the Security Agent until
delivered;
4.2.7 no provision of the Lease Agreement or the Sub-
Lease Security Assignment may be amended, changed,
waived, discharged, terminated or otherwise varied
without the prior written consent of the Security
Agent and any consent, certificate, approval,
option, requirement, request, opinion,
consideration or discretion to be made, given or
exercised by the Borrower under the Lease
Agreement and/or the Sub-Lease Security Assignment
shall be subject to the prior written consent of
the Security Agent;
4.2.8 save as provided in the Lease Agreement, no
provision of the Approved Sub-Lease may be varied
so as to conflict or be inconsistent with the
Mandatory Lease Provisions without the prior
written consent of the Security Agent;
4.2.9 the Borrower shall promptly after receipt by the
Borrower from or on behalf of the [
] Lessee of any notice or other document in
relation to or in connection with the Lease
Agreement, or the Sub-Lease Security Assignment
or, as the case may be, the Approved Sub-Lease or
any of the other Operative Documents and/or any of
the 1994 Operative Documents deliver a true and
accurate copy of the same to the Security Agent.
5. CONSOLIDATION/POWER OF SALE
Section 93 and Section 103 of the Law of Property Act 1925
shall not apply to this Assignment.
6. MONIES RECEIVED
All monies and proceeds received by the Security Agent
pursuant to, or by virtue of this Assignment and forming
part of the Assigned Property shall be applied by the
Security Agent in accordance with the provisions of Clause
17 of the Priorities and Indemnities Agreement.
7. APPOINTMENT OF ATTORNEY
7.1 The Borrower hereby by way of security for the full and
punctual payment, performance and discharge of the Secured
Obligations, irrevocably appoints the Security Agent to be
its true and lawful attorney (with full power of
substitution and delegation) for and on behalf of the
Borrower and in its name or in the name of the Security
Agent and as the Borrower's act and deed (i) to sign,
execute, seal, deliver, acknowledge, file and register and
otherwise perfect any such assurance, document, instrument,
agreement, certificate and consent and do all such other
acts and things as are mentioned in Clause 4.2.1 and 4.2.5
<PAGE>
and (ii) to sign, seal, execute, deliver, acknowledge, file
and register all such assurances, documents, instruments,
agreements, certificates and consents and do all such acts
and things as the Borrower itself could do in relation to
the Assigned Property or in relation to any matter dealt
with in this Assignment and in any such case which the
Security Agent may reasonably deem to be necessary in order
to give full effect to the purpose of this Assignment
PROVIDED THAT the Security Agent shall not exercise the
authority conferred on it in this Clause 7.1 unless an
Acceleration Event shall have occurred. No action taken or
omitted to be taken by the Security Agent pursuant to this
Clause 7.1 shall give rise to any defence, counterclaim or
set-off in favour of the Borrower or affect in any manner
whatsoever any of the Secured Obligations.
7.2 The Security Agent shall not have any obligation whatsoever
to exercise any powers hereby conferred upon it or to make
any demand or enquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or
notice or take any other action whatsoever with respect to
the Assigned Property.
8. MISCELLANEOUS
8.1 Any provision of this Assignment which is or becomes
invalid, illegal or unenforceable in any jurisdiction shall
as to such jurisdiction be ineffective to the extent of such
invalidity, illegality or unenforceability without
invalidating the remaining provisions hereof, and any such
invalidity, illegality or unenforceability shall not render
such provision invalid, illegal or unenforceable in any
other jurisdiction.
8.2 This Assignment shall be binding on and enure to the benefit
of the parties hereto and their respective successors,
permitted assigns and permitted transferees provided that,
subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement and the circumstances
described in the proviso to Clause 24.3 of the Priorities
and Indemnities Agreement that the Borrower may not assign
or transfer or purport to assign or transfer any or all of
its rights and/or obligations under this Assignment without
the prior written consent of the Security Agent, acting on
the instructions of the Lenders and, prior to the occurrence
of an Acceleration Event, the Guarantor (which the Lenders
and the Guarantor shall have absolute discretion to
withhold). The Security Agent may not assign or transfer
any or all of its rights and/or obligations under this
Assignment other than in accordance with the provisions of
the Lenders' Agreement.
8.3 No failure to exercise and no delay in exercising on the
part of the Security Agent, the Agent, the Lenders, the 1994
Secured Parties or any of them any right, power or privilege
hereunder and/or under any of the Facility Documents and/or
any of the other Operative Documents and/or any of the 1994
Facility Documents and/or any of the 1994 Operative
Documents shall operate as a waiver thereof nor shall any
single or partial exercise of any right, power or privilege
prevent any further or other exercise of any other right,
power or privilege whether hereunder or otherwise. The
rights and remedies provided in this Assignment are
cumulative and not exclusive of any rights or remedies
provided by law.
<PAGE>
8.4 A certificate in writing signed by an officer of the
Security Agent and certifying the amount required from time
to time in discharge of those of the Secured Obligations as
are then due and payable and/or the total amount of the
Secured Obligations due from the Borrower and/or the 1994
Borrower and/or the Obligors and/or the 1994 Obligors to the
Security Agent and/or the Agent and/or the Lenders and/or
the 1994 Secured Parties shall be conclusive evidence of the
matters so certified in the absence of manifest error. Any
such certificate shall contain a reasonable explanation of
the way in which the sum required was calculated, provided
that in providing such a reasonable explanation the Security
Agent shall not be required to disclose any document and/or
information relating to its, the Agent's, any Lender's or
any 1994 Secured Party's business or affairs which it, the
Agent, such Lender or such 1994 Secured Party, as
appropriate, considers (in each case in its bona fide
opinion) to be of a confidential nature.
8.5 This Assignment may be executed by the parties hereto in
separate counterparts and any single counterpart or set of
counterparts executed and delivered by the parties hereto
shall constitute one and the same instrument.
9. GOVERNING LAW AND JURISDICTION
9.1 This Agreement shall be governed by and construed in
accordance with English law.
9.2 The Borrower hereby irrevocably agrees for the benefit of
the Security Agent that the courts of England shall have
jurisdiction to hear and determine any suit, action or
proceeding, and to settle any disputes, which may arise out
of or in connection with this Assignment and, for such
purposes, irrevocably submits to the jurisdiction of such
courts.
9.3 The Borrower hereby irrevocably waives any objection which
it might now or hereafter have to the courts referred to in
Clause 9.2 being nominated as the forum to hear and
determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this
Assignment and agrees not to claim that any such court is
not a convenient or appropriate forum in each case whether
on the grounds of venue or forum non conveniens or any
similar grounds or otherwise.
9.4 The submission to the jurisdiction of the courts referred to
in Clause 9.2 shall not (and shall not be construed so as
to) limit the right of the Security Agent to take
proceedings against the Borrower in any other court of
competent jurisdiction nor shall the taking of proceedings
by the Security Agent in any one or more jurisdictions
preclude the taking of proceedings by the Security Agent in
any other jurisdiction, whether concurrently or not.
9.5 To the extent that the Borrower or any of the property of
the Borrower is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from any
legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any competent court,
from service of process, from attachment prior to judgment,
from attachment in aid of execution, or from execution prior
to judgment, or other legal process in any jurisdiction, the
Borrower for itself and its property does hereby irrevocably
and unconditionally waive, and agrees not to plead or claim,
<PAGE>
any such immunity with respect to its obligations,
liabilities or any other matter under or arising out of or
in connection with any of this Assignment or the subject
matter hereof.
10. NOTICES
10.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
10.1.1 in order to be valid be in English and in writing;
10.1.2 be deemed to have been duly served on, given to or
made in relation to a party if it is:-
(a) left at the address of that party set out
herein or at such other address as that party
may notify to the other party hereto in
writing from time to time; or
(b) posted by first-class postage prepaid mail in
an envelope addressed to that party at such
address; or
(c) sent by facsimile to the facsimile number of
that party set out herein or to such other
number as that party may notify to the other
party hereto from time to time;
10.1.3 be sufficient if:-
(a) executed under the seal of the party giving,
serving or making the same; or
(b) signed or sent on behalf of the party giving,
serving or making the same by any attorney,
director, secretary, agent or other duly
authorised representative of such party;
10.1.4 be effective:-
(a) in the case of a letter, when left at the
address referred to in sub-Clause 10.1.2(a)
or delivered in person to any officer of the
addressee or (as the case may be) seven (7)
Business Days after being deposited in the
post first- class postage prepaid in an
envelope addressed to the addressee at the
address referred to in sub-Clause 10.1.2(a);
and
(b) in the case of a facsimile transmission, when
receipt is confirmed by return facsimile or
by telephone.
<PAGE>
10.2 For the purposes of this Clause 10, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
(a) if to the Borrower to:-
Encore Leasing Limited
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Tel: 0101 809 949 7942
Facsimile No: 0101 809 949 8340
Attention: Trust Services
(b) if to the Security Agent to:-
National Westminster Bank Plc
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London
EC2M 3UR
England
Tel: (171) 375 5738/5931/5929
Facsimile No: (171) 375 5854
Attention: Head of Corporate Banking
Agency Group
10.3 Nothing herein contained shall affect the right to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF this Deed has been executed by the parties
hereto and is intended to be and is hereby delivered on the date
first above written.
THE BORROWER
SIGNED, SEALED and DELIVERED by )
)
Attorney-in-Fact for and on behalf of )
ENCORE LEASING LIMITED )
in the presence of:- )
THE SECURITY AGENT
SIGNED by )
NATIONAL WESTMINSTER )
BANK PLC acting through its authorised )
signatory in the presence of:- )
<PAGE>
ANNEX 1
NOTICE OF ASSIGNMENT
(Manufacturer's Serial Number [ ])
To: [Lessee]
[Address]
Dated:
199[ ]
[Encore] Leasing Limited (the "Borrower") and National
Westminster Bank Plc as security agent for and on behalf of
itself, the Agent and the Lenders (the "Security Agent") hereby
give you notice that (i) by a General Security Assignment No.
1995-[ ] dated 199[ ] (the "Assignment"), and made
between the Borrower and the Security Agent (a copy of which is
attached hereto) the Borrower has assigned and agreed to assign
absolutely, inter alia, to the Security Agent the Assigned
Property and (ii) by a deed of assignment and aircraft mortgage
no. 1995-[ ] dated [ ], 199[ ] (the "Deed") and made
between the Borrower and the Security Agent (a copy of which is
attached hereto), the Borrower assigned and agreed to assign
absolutely to the Security Agent all of the Borrower's right,
title and interest in and to the Requisition Proceeds, the
Purchase Agreement Assignment (insofar as the same relates to the
Warranties) and the Deed of Assignment of General Terms Agreement
Re Engine Warranties each dated [ ] 199[ ] and
made between the Borrower and International Lease Finance
Corporation.
Terms defined in the Assignment (including terms defined therein
by reference to another document, instrument or agreement) shall
have the same respective meanings herein.
You are hereby irrevocably instructed and authorised to pay all
Relevant Lease Payments and all other amounts payable by you
pursuant to any provision of, or otherwise in relation to, the
Assigned Property which are payable in Dollars to National
Westminster Bank Plc (New York Branch), 175 Water Street, New
York, NY 10038, USA, ABA # 026002749 for the account of Group
Treasury Settlements number 00150509 quoting reference "ILFC -
attention Corporate Banking Agency Group, London" and for further
credit to the account of the Borrower prior to noon New York time
on the due date for payment thereof, or to such other account as
the Security Agent may from time to time specify by at least five
(5) Banking Days' prior written notice and all Relevant Lease
Payments and all other amounts payable by you pursuant to any
provision of, or otherwise in relation to, the Assigned Property
which are payable in a currency other than Dollars to such
account as the Security Agent may from time to time specify and
not otherwise.
Until you are notified to the contrary by the Security Agent you
will continue to deal directly with the Borrower in relation to
the Requisition Proceeds and in relation to matters covered by
the Purchase Agreement and the Purchase Agreement Assignment
(insofar as the same relate to the Aircraft) and the Engine
Agreement and the Deed of Assignment of General Terms Agreement
Re: Engine Warranties (insofar as the same relate to the
Engines).
You are requested to sign the acknowledgement of this notice
enclosed herewith and return the same to the Security Agent.
Dated:
ENCORE LEASING LIMITED NATIONAL WESTMINSTER BANK PLC
(as Security Agent)
By: By:
Name: Name:
Title: Title:
<PAGE>
ANNEX 2
ACKNOWLEDGEMENT OF ASSIGNMENT
(Manufacturer's Serial Number [ ])
To: NATIONAL WESTMINSTER BANK PLC
41 Lothbury
London EC2P 2BP
(as Security Agent)
Dated: 199[ ]
We hereby acknowledge receipt of a notice of assignment in
respect of (i) the General Security Assignment No. 1995-[ ] (the
"Assignment") dated 199[ ] and made between
[Encore] Leasing Limited (the "Borrower"), and National
Westminster Bank Plc as Security Agent on behalf of itself, the
Agent and the Lenders and the accompanying copy of the Assignment
and (ii) the Deed of Assignment and Aircraft Mortgage No. 1995-[ ]
(the "Deed") dated 199[ ] and made between the
Borrower and the Security Agent and the accompanying copy of the
Deed. Terms defined in the Assignment (including terms defined
therein by reference to another document, instrument or
agreement) have the same meaning in this acknowledgement.
We irrevocably and unconditionally (i) consent to the assignment
and agree to be bound thereby and in particular (without
prejudice to the generality of the foregoing) we agree to pay all
Relevant Lease Payments and any and all other amounts payable by
us pursuant to any provision of, or otherwise in relation to, the
Assigned Property which are payable in Dollars to National
Westminster Bank Plc (New York Branch), 175 Water Street, New
York, NY 10038, USA ABA # 026002749 for the account of Group
Treasury Settlements numbered 00150509 quoting reference "ILFC -
Attention Corporate Banking Agency Group London" and for further
credit to the account of the Borrower prior to noon New York time
on the due date for payment thereof, or to such other account as
the Security Agent may from time to time specify by at least five
(5) Banking Days' prior written notice and all Relevant Lease
Payments and all other amounts payable by us pursuant to any
provision of, or otherwise in relation to, the Assigned Property
which are payable in a currency other than Dollars to such
account as the Security Agent may from time to time specify and
not otherwise and (ii) confirm that we have not previously
received notice of any other assignment of the Lease Property
and/or the Sub-Lease Assignment Property.
[Lessee]
By:
Name:
Title:
<PAGE>
APPENDIX F
FORM OF SUB-LEASE SECURITY ASSIGNMENT
<PAGE>
APPENDIX F
Dated 199[ ]
[LESSEE]
- and -
INTERNATIONAL LEASE FINANCE CORPORATION
(as Assignors)
- and -
ENCORE LEASING LIMITED
(as Borrower)
==============================================================
SUB-LEASE SECURITY ASSIGNMENT NO. 1995-[ ]
in respect of One Airbus [ ]
Manufacturer's Serial Number [ ]
==============================================================
<PAGE>
TABLE OF CONTENTS
Clause Heading Page Number
1. DEFINITIONS AND INTERPRETATION ............2
2. ASSIGNMENT ................................2
3. CONTINUING SECURITY .......................5
4. REPRESENTATIONS AND COVENANTS .............6
5. CONSOLIDATION/POWER OF SALE ...............8
6. ASSIGNOR'S RIGHTS .........................8
7. APPOINTMENT OF ATTORNEY ...................8
8. MISCELLANEOUS .............................9
9. GOVERNING LAW AND JURISDICTION ............10
10. NOTICES ...................................11
ANNEX 1 - NOTICE OF ASSIGNMENT TO LESSEE ...........15
ANNEX 2 - ACKNOWLEDGEMENT OF ASSIGNMENT
FROM LESSEE ...........................18
<PAGE>
THIS SECURITY ASSIGNMENT is made by way of Deed this ___________
day of _________________ 199[__].
BETWEEN:-
(1) [LESSEE], a company incorporated under the laws of
[________] and having its registered office at
[___________________________] (the "First Assignor");
(2) INTERNATIONAL LEASE FINANCE CORPORATION, a corporation
incorporated under the laws of the State of California,
having its principal office at 1999 Avenue of the Stars,
39th Floor, Los Angeles, California 90067, USA (the "Second
Assignor") (the First Assignor and the Second Assignor are
together referred to as the "Assignors" and each as an
"Assignor"); and
(3) ENCORE LEASING LIMITED, a company incorporated under the
laws of the Cayman Islands and having its registered office
at P.O. Box 2003, George Town, Grand Cayman, Cayman Islands,
BWI (the "Borrower").
WHEREAS:-
(A) The Borrower has agreed to purchase the Aircraft pursuant to
the Purchase Agreement Assignment.
(B) The Borrower has agreed to lease the Aircraft to the First
Assignor upon and subject to the terms and conditions of the
Lease Agreement.
(C) The First Assignor has agreed to sub-lease the Aircraft to
the Approved Sub-Lessee upon and subject to the terms of the
Approved Sub-Lease and the Approved Sub-Lessee has required
the Borrower and the Security Agent to provide quiet
enjoyment covenants to the Approved Sub-Lessee in accordance
with Clause 9.5 of the Lease Agreement.
(D) It is a condition of the Lease Agreement and the giving of
the quiet enjoyment covenants by the Borrower and the
Security Agent that, as security for the Secured
Obligations, the Assignors execute and deliver this
Assignment.
NOW THIS ASSIGNMENT WITNESSETH AND IT IS HEREBY AGREED as
follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Assignment (including the Recitals and the Annexes),
words and expressions used herein shall, unless otherwise
defined herein or except where the context otherwise
requires, have the meanings given to them in the Facility
Agreement.
<PAGE>
1.2 In this Assignment (including the Recitals and the Annexes)
the following words and expressions shall have the following
meanings:-
"AIRCRAFT" means the Airframe together with the Engines
whether or not any of the Engines may from time to time be
installed on the Airframe together with the Technical
Records;
"AIRFRAME" means the Airbus A[________] airframe with
manufacturers serial number [_____] including all Parts
installed in or on the airframe at the Delivery Date (or
which, having been removed therefrom, remain the property of
the Borrower pursuant to the terms of the Lease Agreement),
and all substitutions, renewals and replacements from time
to time made in or to or installed in or on the said
airframe in accordance with the terms and conditions of the
Lease Agreement including any Parts which are for the time
being detached from the airframe but remain the property of
the Borrower;
"APPROVED SUB-LEASE" means the sub-lease agreement dated
[__________] 199[__] entered into between the Second
Assignor and the Approved Sub-Lessee as the same is amended
and supplemented by a supplemental agreement dated
[__________] 199[__] between the First Assignor, the Second
Assignor and the Approved Sub-Lessee, providing for, inter
alia, the sub-leasing of the Aircraft to the Approved
Sub-Lessee on the terms and conditions therein specified;
"APPROVED SUB-LESSEE" means [____________________], a
company incorporated under the laws of [___________] and
having its principal place of business at
[_________________________________];
"ASSIGNED PROPERTY" means the whole benefit of the Approved
Sub-Lease and all of the right, title and interest, present
and future, actual or contingent of each Assignor in and to
the Approved Sub-Lease including without limitation (a) the
Relevant Sub-Lease Payments and (b) all claims, rights and
remedies of each Assignor arising out of or in connection
with a breach of or default (including, without limitation,
all damages and compensation payable for or in respect
thereof) under or in connection with the Approved Sub-Lease;
"ASSIGNMENT" means this security assignment together with
the Recitals and the Annexes hereto;
"ENGINE" or "ENGINES" means (a) each of the engines
described in Schedule 1 of the Lease Agreement whether or
not from time to time during the Lease Period installed on
the Airframe or any other airframe but which, having been
removed from the Airframe, remain the property of the
Borrower in accordance with the Lease Agreement or (b) any
other engine which may from time to time be installed upon
or attached to the Airframe which becomes the property of
the Borrower in accordance with the Lease Agreement and (c)
insofar as the same belong to the Borrower, any and all
appliances, instruments or accessories or other equipment or
Parts of whatever nature from time to time relating to an
engine referred to in (a) and (b) above whether or not
installed on or attached to such engine and (d) insofar as
the same belong to the Borrower, all substitutions,
replacements or renewals from time to time made on or to any
item referred to in (a), (b) and (c) above in accordance
with the Lease Agreement;
<PAGE>
"FACILITY AGREEMENT" means the aircraft facility agreement
dated [__] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd and (10) International Lease Finance
Corporation; and
"LEASE AGREEMENT" means the aircraft lease agreement no.
1995- [__] dated ______________ 199[__] and made between
the Borrower, the [___________] Option Holder and the First
Assignor, providing for, inter alia, the leasing of the
Aircraft by the Borrower to the First Assignor;
"PARTS" means in relation to the Aircraft, all modules,
appliances, parts, accessories, auxiliary power unit,
instruments, furnishings and other equipment of whatsoever
nature including, without limitation, the Buyer Furnished
Equipment and any service bulletin kits or the like but
excluding complete Engines or engines and equipment
(including but not limited to in-flight entertainment and
telecommunications equipment) which is from time to time
attached to the Airframe and leased to the First Assignor
other than primarily for the purpose of financing the
acquisition of such equipment in circumstances where such
equipment, that at any time of determination are
incorporated or installed in or attached to the Airframe or
any Engine or, having been removed therefrom, title to which
remains vested in the Borrower in accordance with the
provisions of the Lease Agreement; and "Part" shall have a
corresponding meaning;
"RELEVANT SUB-LEASE PAYMENTS" means all or any of the
following which are payable by the Approved Sub-Lessee
pursuant to any provision of the Approved Sub-Lease, namely
(i) Sub-Lease Rentals, (ii) the Maintenance Reserve Amount,
(iii) the Security Deposit and (iv) default interest on any
of the foregoing;
"SECURED OBLIGATIONS" means any and all monies, liabilities
and obligations (whether actual or contingent, whether now
existing or hereafter arising, whether or not for the
payment of money, and including, without limitation, any
obligation or liability to pay damages) which are now or
which may at any time and from time to time hereafter be
due, owing, payable or incurred or be expressed to be due,
owing payable or incurred from or by any one or more of the
Obligors and/or any one or more of the 1994 Obligors to the
Borrower and/or the 1994 Borrower and/or the Agent and/or
the Security Agent and/or any of the Lenders and/or any of
the 1994 Secured Parties under or in connection with any of
the Facility Documents and/or any of the Operative Documents
and/or any of the 1994 Facility Documents and/or any of the
1994 Operative Documents to which any one or more of the
Obligors and/or any one or more of the 1994 Obligors is or
is to be a party;
"SECURITY PERIOD" means the period commencing on the date
hereof and terminating on the date upon which all of the
Secured Obligations have been paid, performed and satisfied
in full;
<PAGE>
"TECHNICAL RECORDS" means in relation to the Aircraft, all
technical data, manuals, computer records, logbooks and
other records (whether kept or to be kept in compliance with
any law or regulation or any requirement for the time being
of the Aviation Authority or otherwise) relating to the
Aircraft, any Engine or any Parts.
1.3 Clauses 1.3 and 1.4 of the Facility Agreement shall be
deemed to be incorporated, mutatis mutandis, herein as if
references therein to "this Facility Agreement" and the
"Lessee" were references to "this Assignment" and the
"Assignors" respectively.
2. ASSIGNMENT
2.1 Each Assignor as legal and beneficial owner hereby assigns
and agrees to assign absolutely by way of security the
Assigned Property to and in favour of the Borrower in order
to secure the full and punctual payment, performance and
discharge of all of the Secured Obligations, PROVIDED ALWAYS
THAT each Assignor shall jointly and severally keep the
Borrower fully and effectually indemnified from and against
all actions, losses, claims, proceedings, costs, demands and
liabilities which may be suffered by the Borrower by reason
of the failure of either of the Assignors to perform any of
its respective obligations pursuant to the Approved
Sub-Lease.
2.2 Upon the payment and discharge in full of the Secured
Obligations, the Borrower shall at the request and cost of
either Assignor, re-assign to such Assignor, without
recourse or warranty (but free and clear of any Security
Interest created by the Borrower), such right, title and
interest, if any, as the Borrower may then have in and to
the Assigned Property and shall execute such documents as
such Assignor may reasonably require in order to effect such
re-assignment.
3. CONTINUING SECURITY
3.1 The security created by this Assignment shall not be
satisfied and shall not be released or discharged by any
intermediate payment, performance, discharge or satisfaction
of any part of the Secured Obligations and shall be a
continuing security and shall extend to cover any sum or
sums of money or other liabilities and obligations which
shall for the time being constitute the balance of the
Secured Obligations until all of the Secured Obligations
shall have been paid, performed and discharged in full.
3.2 The security created by this Assignment is in addition to
and not in substitution for, and shall not in any way be
prejudiced or affected by, and shall be without prejudice
to, any other security or guarantee now or hereafter held by
the Borrower or any other party for all or any part of the
Secured Obligations and may be enforced without the Borrower
or such other party first having recourse to any such
security or guarantee and without taking any steps or
proceedings against either of the Assignors or any other
person in respect of the Secured Obligations. Without
prejudice to the generality of the foregoing, the Borrower
or any other party need not before it exercises any of the
rights, powers or remedies conferred upon it by this
Assignment or by law (i) take action or obtain judgment
against any of either of the Assignors or any other person
in any court or otherwise, (ii) make or file a claim or
<PAGE>
proof in a winding-up, liquidation, bankruptcy, insolvency,
dissolution, reorganisation or amalgamation of, or other
analogous event of or with respect to, either of the
Assignors or any other person, or (iii) enforce or seek to
enforce the payment or performance of, or the recovery of,
any of the moneys, obligations and liabilities hereby
secured or any other security or guarantee for all or any of
the Secured Obligations.
3.3 The security created by this Assignment shall not be
discharged, impaired or otherwise affected by:-
3.3.1 any failure by the Borrower or any other party to
take or enforce any other security or guarantee
taken or agreed to be taken for all or any of the
Secured Obligations or under or pursuant to any of
the Facility Documents and/or any of the Operative
Documents and/or any of the 1994 Facility
Documents and/or any of the 1994 Operative
Documents or otherwise; or
3.3.2 any time or other indulgence given or agreed to be
given by the Borrower or any other party to either
of the Assignors or any other person in respect of
the Secured Obligations or in respect of such
Assignor's or such other person's obligations
under any security or guarantee relating thereto;
or
3.3.3 any amendment, modification, variation,
supplement, novation, restatement or replacement
of all or any part of the Secured Obligations
and/or any of the Facility Documents and/or any of
the Operative Documents and/or any of the 1994
Facility Documents and/or any of the 1994
Operative Documents; or
3.3.4 any release or exchange of any security or
guarantee now or hereafter held by the Borrower or
any other party for all or any part of the Secured
Obligations; or
3.3.5 any other act, fact, matter, event, circumstance,
omission or thing (including without limitation
the invalidity, unenforceability or illegality of
any of the Secured Obligations or the bankruptcy,
liquidation, winding-up, insolvency, dissolution,
reorganisation or amalgamation of, or other
analogous event of or with respect to, either of
the Assignors or any other person) which, but for
this provision, might operate to impair or
discharge the rights of the Borrower or any other
party under this Assignment and/or under any of
the Facility Documents and/or any of the 1994
Facility Documents and/or any of the 1994
Operative Documents and/or any of the other
Operative Documents or which, but for this
provision, might constitute a legal or equitable
discharge of the security hereby created.
3.4 Any settlement or discharge between the Borrower or any
other party and either of the Assignors and/or any other
person shall be conditional upon no security or payment to
the Borrower or such other party by such Assignor or such
other person being avoided or set aside or ordered to be
refunded or reduced by virtue of any provision or enactment
relating to bankruptcy, liquidation, winding-up, insolvency,
<PAGE>
dissolution, reorganisation, amalgamation or other analogous
event or proceedings for the time being in force.
4. REPRESENTATIONS AND COVENANTS
4.1 Each Assignor hereby jointly and severally represents,
warrants and covenants to the Borrower that it has not
heretofore pledged, assigned or created any Security
Interest, and that throughout the Security Period it will
not pledge, assign or create, on or over the Assigned
Property or any part thereof save for the Security Interest
constituted by this Assignment or by any of the other
Aircraft Operative Documents and/or any of the 1994 Facility
Documents and/or any of the 1994 Operative Documents.
4.2 Each Assignor hereby jointly and severally covenants and
undertakes, to the extent permitted by any applicable law,
throughout the Security Period that:-
4.2.1 each Assignor shall, at the cost of the Second
Assignor, from time to time promptly sign, seal,
execute, acknowledge, deliver, file and register
all such additional documents, instruments,
agreements, certificates, consents and assurances
and do all such other acts and things as may be
reasonably necessary or as the Borrower may
reasonably request from time to time in order to
perfect the Security Interest granted or intended
to be granted by this Assignment or to establish,
maintain, protect or preserve the rights of the
Borrower, the 1994 Borrower, the Secured Parties,
the 1994 Secured Parties, or any of them under
this Assignment or to enable it to obtain the full
benefits of this Assignment and to exercise and
enforce the rights and remedies under this
Assignment and/or in respect of the Assigned
Property;
4.2.2 neither Assignor shall purport to transfer,
assign, pledge, dispose of or otherwise deal with
the Assigned Property and shall not purport to
create or incur any Security Interest in or upon
the Assigned Property save for this Assignment and
the Security Interest constituted by or
contemplated by this Assignment or by the
[RELEVANT] Sub-Lease Collateral Charge or by any
of the 1994 Facility Documents and/or any of the
1994 Operative Documents;
4.2.3 each Assignor shall, at the cost of the Second
Assignor, promptly furnish to the Borrower such
information and reports with respect to the
Assigned Property as the Borrower may from time to
time reasonably require and which are in its
possession or are reasonably available to or
within the knowledge of either Assignor;
4.2.4 no right of set-off, counterclaim or defence with
respect to the Assigned Property shall be
exercisable by either of the Assignors against the
Borrower, the 1994 Borrower, the Secured Parties,
the 1994 Secured Parties, or any of them;
4.2.5 each Assignor shall deliver, as soon as possible
after the date of this Assignment (y) to the
Borrower, an original executed counterpart of this
Assignment executed by such Assignor, and (z) to
<PAGE>
the Approved Sub-Lessee a notice of assignment in
the form set out in Annex 1 and shall procure the
Approved Sub-Lessee's acknowledgement and
agreement thereto in the form of Annex 2;
4.2.6 all cash, proceeds, cheques, drafts, orders and
other instruments for the payment of money
received by either of the Assignors on account of
any Assigned Property shall promptly be delivered
in the form received (properly endorsed, but
without recourse, for collection where required)
to the Borrower and each Assignor agrees not to
co-mingle any such collections or proceeds with
its other funds or property and agrees to hold as
security the same upon trust for the Borrower
until so delivered;
4.2.7 save as provided in the Lease Agreement, no
provision of the Approved Sub-Lease may be varied
so as to conflict or be inconsistent with the
Mandatory Lease Provisions without the prior
written consent of the Borrower and the Security
Agent;
4.2.8 each Assignor shall promptly after receipt by such
Assignor from or on behalf of the Approved
Sub-Lessee of any notice or other document in
relation to or in connection with the Approved
Sub-Lease deliver a true and accurate copy of the
same to the Borrower and the Security Agent.
4.3 The Borrower covenants with each Assignor that it shall not
transfer, assign, pledge, dispose of or otherwise deal
voluntarily (and for the avoidance of doubt, the provisions
concerning voluntary transfer set out in the final sentence
of Clause 29.8 of the Priorities and Indemnities Agreement
shall apply for the purposes of this Clause 4.3) with the
Assigned Property other than in accordance with the terms of
and/or in connection with the enforcement or preservation or
the attempted enforcement or preservation of its rights,
interests and remedies under this Assignment and/or any of
the Facility Documents and/or any of the Operative
Documents.
5. CONSOLIDATION/POWER OF SALE
Section 93 and Section 103 of the Law of Property Act 1925
shall not apply to this Assignment.
6. ASSIGNOR'S RIGHTS
The Borrower hereby agrees that, notwithstanding the
assignment herein contained and the terms of Clauses 4.1 and
4.2 of this Assignment, unless and until an Acceleration
Event has occurred each Assignor shall continue to be
entitled to exercise its rights and powers under the
Approved Sub-Lease and, in particular, but without
limitation, shall be entitled to receive and retain any and
all Relevant Sub-Lease Payments, PROVIDED ALWAYS THAT at any
time following the occurrence of an Acceleration Event the
Borrower shall be entitled to notify the Approved Sub-Lessee
that the Borrower's rights as assignee have become
exercisable and thereafter all such rights and powers shall
be exercisable by the Borrower to the exclusion of each of
the Assignors.
<PAGE>
7. APPOINTMENT OF ATTORNEY
7.1 Each of the Assignors hereby by way of security for the full
and punctual payment, performance and discharge of the
Secured Obligations, irrevocably appoints the Borrower to be
its true and lawful attorney (with full power of
substitution and delegation) for and on behalf of such
Assignor and in its name or in the name of the Borrower and
as such Assignors' act and deed (i) to sign, execute, seal,
deliver, acknowledge, file and register and otherwise
perfect any such assurance, document, instrument, agreement,
certificate and consent and do all such other acts and
things as are mentioned in Clause 4.2.1 and 4.2.5 and (ii)
to sign, seal, execute, deliver, acknowledge, file and
register all such assurance, documents, instruments,
agreements, certificates and consents and do all such acts
and things as such Assignor itself could do in relation to
the Assigned Property or in relation to any matter dealt
with in this Assignment and in any such case which the
Borrower may reasonably deem to be necessary in order to
give full effect to the purpose of this Assignment PROVIDED
THAT the Borrower shall not exercise the authority conferred
on it in this Clause 7.1 unless an Acceleration Event shall
have occurred. No action taken or omitted to be taken by
the Borrower pursuant to this Clause 7.1 shall give rise to
any defence, counterclaim or set-off in favour of either of
the Assignors or affect in any manner whatsoever any of the
Secured Obligations.
7.2 The Borrower shall not have any obligation whatsoever to
exercise any powers hereby conferred upon it or to make any
demand or enquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or
notice or take any other action whatsoever with respect to
the Assigned Property.
8. MISCELLANEOUS
8.1 Any provision of this Assignment which is or becomes
invalid, illegal or unenforceable in any jurisdiction shall
as to such jurisdiction be ineffective to the extent of such
invalidity, illegality or unenforceability without
invalidating the remaining provisions hereof, and any such
invalidity, illegality or unenforceability shall not render
such provision invalid, illegal or unenforceable in any
other jurisdiction.
8.2 This Assignment shall be binding on and enure to the benefit
of the parties hereto and their respective successors,
permitted assigns and permitted transferees provided that,
subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement, neither Assignor may
assign or transfer nor purport to assign or transfer any or
all of its respective rights and/or obligations under this
Assignment without the prior written consent of the Lenders.
Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement and the circumstances
described in the proviso to Clause 24.3 of the Priorities
and Indemnities Agreement, the Borrower may not assign or
transfer any or all of its respective rights and/or
obligations under this Assignment without the prior written
consent of the Security Agent acting on the instructions of
the Majority Lenders and, prior to the occurrence of an
Acceleration Event, the Guarantor (which the Lenders and the
Guarantor shall have absolute discretion to withhold).
<PAGE>
8.3 No failure to exercise and no delay in exercising on the
part of the Borrower, the 1994 Borrower, the Secured
Parties, the 1994 Secured Parties, or any of them any right,
power or privilege hereunder or under any Facility Document
and/or any Operative Document and/or any 1994 Facility
Document and/or any 1994 Operative Document shall operate as
a waiver thereof nor shall any single or partial exercise of
any right, power or privilege prevent any further or other
exercise of any other right, power or privilege whether
hereunder or otherwise. The rights and remedies provided in
this Assignment are cumulative and not exclusive of any
rights or remedies provided by law.
8.4 A certificate in writing signed by an officer of the
Borrower and certifying the amount required from time to
time in discharge of those of the Secured Obligations as are
then due and payable and/or the total amount of the Secured
Obligations due from either and/or both of the Assignors
shall be conclusive evidence of the matters so certified in
the absence of manifest error. Any such certificate shall
contain a reasonable explanation of the way in which the sum
required was calculated, provided that in providing such a
reasonable explanation the Borrower shall not be required to
disclose any document and/or information relating to its
business or affairs which it considers (in its bona fide
opinion) to be of a confidential nature.
8.5 This Assignment may be executed by the parties hereto in
separate counterparts and any single counterpart or set of
counterparts executed and delivered by all the parties
hereto shall constitute one and the same instrument.
9. GOVERNING LAW AND JURISDICTION
9.1 This Assignment shall be governed by and construed in
accordance with the laws of England.
9.2 Each of the parties hereto irrevocably agrees that the
courts of England shall have jurisdiction to hear and
determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this
Assignment and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
9.3 Each party irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause
9.2 being nominated as the forum to hear and determine any
suit, action or proceeding, and to settle any disputes,
which may arise out of or in connection with this Assignment
and agrees not to claim that any such court is not a
convenient or appropriate forum in each case whether on the
grounds of venue or forum non conveniens or any similar
grounds or otherwise.
9.4 The submission to the jurisdiction of the courts referred to
in Clause 9.2 shall not (and shall not be construed so as
to) limit the right of either party to take proceedings
against the other party in any other court of competent
jurisdiction nor shall the taking of proceedings in any one
or more jurisdictions preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not.
9.5 To the extent that either of the Assignors or the Borrower
or any of the property of either of the Assignors or the
Borrower is or becomes entitled at any time to any immunity
on the grounds of sovereignty or otherwise from any legal
<PAGE>
action, suit or proceeding, from set-off or counterclaim,
from the jurisdiction of any competent court, from service
of process, from attachment prior to judgment, from
attachment in aid of execution, or from execution prior to
judgment, or other legal process in any jurisdiction, each
of the Assignors and the Borrower for itself and its
property does hereby irrevocably and unconditionally waive,
and agrees not to plead or claim, any such immunity with
respect to its obligations, liabilities or any other matter
under or arising out of or in connection with this
Assignment or the subject matter hereof.
10. NOTICES
10.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
10.1.1 in order to be valid be in English and in writing;
10.1.2 be deemed to have been duly served on, given to or
made in relation to a party if it is:-
(a) left at the address of that party set out herein
or at such other address as that party may notify
to the other party hereto in writing from time to
time; or
(b) posted by first-class postage prepaid mail in an
envelope addressed to that party at such address;
or
(c) sent by facsimile to the facsimile number of that
party set out herein or to such other number as
that party may notify to the other party hereto
from time to time;
10.1.3 be sufficient if:-
(a) executed under the seal of the party giving,
serving or making the same; or
(b) signed or sent on behalf of the party giving,
serving or making the same by any attorney,
director, secretary, agent or other duly
authorised representative of such party;
10.1.4 be effective:-
(a) in the case of a letter, when left at the address
referred to in sub-Clause 10.1.2(a) or delivered
in person to any officer of the addressee or (as
the case may be) seven (7) Business Days after
being deposited in the post first-class postage
prepaid in an envelope addressed to the addressee
at the address referred to in sub-Clause
10.1.2(a); and
(b) in the case of a facsimile transmission, when
receipt is confirmed by return facsimile or by
telephone.
10.2 For the purposes of this Clause 10, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
<PAGE>
(a) if to the Borrower to:-
Encore Leasing Limited
P.O. Box 2003, George Town
Grand Cayman
Cayman Island BWI
Tel: 1 809 949 7942
Facsimile: 1 809 949 8340
Attention: Trustee Services
With a copy to the Security Agent:-
National Westminster Bank Plc
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
England
Tel: 0171 375 5738/5931/5929
Facsimile: 0171 375 5854
Attention: Head of Corporate Banking Agency Group
(b) if to the First Assignor to:-
[___________________________________
____________________________________
____________________________________]
Tel: [_________________]
Facsimile: [_________________]
Attention: [_________________]
With a copy to:-
International Lease Finance Corporation
1999 Avenue of the Stars
39th Floor
Los Angeles
CA 90067
United States
Tel: 1 310 788 1999
Facsimile: 1 310 788 1990
Attention: Legal Department and Chief Financial Officer
(c) if to the Second Assignor to:-
International Lease Finance Corporation
1999 Avenue of the Stars
39th Floor
Los Angeles
CA 90067
United States
Tel: 1 310 788 1999
Facsimile: 1 310 788 1990
Attention: Legal Department and Chief Financial Officer
10.3 Nothing herein contained shall affect the right to serve
process in any other manner permitted by law.
IN WITNESS WHEREOF this Deed has been executed by the parties
hereto and is intended to be and is hereby delivered on the date
first above written.
<PAGE>
THE FIRST ASSIGNOR
SIGNED, SEALED and DELIVERED )
by )
Attorney-in-fact )
for and on behalf of )
[LESSEE] )
in the presence of:- )
THE SECOND ASSIGNOR
SIGNED, SEALED and DELIVERED )
by )
Attorney-in-fact )
for and on behalf of )
INTERNATIONAL LEASE FINANCE )
CORPORATION )
in the presence of:- )
THE BORROWER
SIGNED by )
ENCORE LEASING LIMITED )
acting through its )
authorised signatory )
)
in the presence of:- )
<PAGE>
ANNEX 1
NOTICE OF ASSIGNMENT
(Manufacturer's Serial Number [_____________])
FROM: [_____________] (the "Lessee")
International Lease Finance Corporation (the "Guarantor")
Encore Leasing Limited (the "Borrower")
National Westminster Bank Plc (as Security Agent)
TO: [Approved Sub-Lessee]
Dated: _______________
Dear Sirs,
We hereby give you notice that:-
(i) by a Sub-Lease Security Assignment dated [________________]
199[__] (the "Assignment") (a copy of which is attached)
between the Lessee and the Guarantor (together the
"Assignors") and the Borrower, the Assignors have assigned
absolutely to the Borrower all their respective rights,
title and interest in and to the Aircraft Lease Agreement
(the "Lease") dated [_______________] 199[__] made between
International Lease Finance Corporation and yourselves (as
amended) relating to one Airbus A[_______] MSN [___]
together with [__________________ installed engines (the
"Aircraft");
(ii) by a General Security Assignment dated [______] 199[__] the
Borrower has assigned to the Security Agent, inter alia, all
of its right, title and interest in, to and under, the
Assignment on the terms and conditions of the attached copy
of the General Security Assignment;
(iii) by a [__________] Lessee Sub-Lease Collateral Charge
dated [________________] 1994 (the "[_________________]
Lessee Sub-Lease Collateral Charge") between the
Lessee and the Borrower, the Lessee has assigned
absolutely to the Borrower all its right, title and
interest in and to the Accounts and Assigned Cash (as
those terms are defined in the [_____________] Lessee
Sub-Lease Collateral Charge); and
(iv) by an Assignment of [___________] [Bermuda Lessee and Irish
Lessee] [____________] Lessee Sub-Lease Collateral Charge
dated [______________] 1994 between the Borrower and the
Security Agent, the Borrower assigned all its right, title
and interest in and to the [Bermuda Lessee and Irish Lessee]
[________]Sub-Lease Collateral Charge to the Security Agent.
Capitalised expressions not specifically defined herein shall
have the meanings given to them in the [Bermuda Lessee and Irish
Lessee] [____________] Sub-Lease Collateral Charge.
<PAGE>
Henceforth all monies that may be payable by you under the Lease
shall continue to be paid to the bank account specified in the
Lease unless and until the Security Agent otherwise directs,
whereupon you are authorised and required to comply with the
Security Agent's directions. Notwithstanding the foregoing
sentence, you shall continue to perform your obligations under
the Lease in favour of the Assignors and for the benefit of the
Assignors until such time as the Security Agent may issue to you
a Default Notice (as defined in the enclosed Acknowledgement).
Without prejudice to the foregoing after the Security Agent has
notified you that a Trigger Event has occurred all monies that
may be payable by you under the Lease in respect of Rent, the
Security Deposit and the Maintenance Reserves shall be paid as
follows:-
(a) all payments of rental, to the [_______] Lessee Rental
Collateral Account Number [________________] in the name of
the Lessee with [_____________________] ("Depositee");
(b) all payments of maintenance reserves, to the [_______]
Lessee Maintenance Reserve Collateral Account number
[____________] in the name of the Lessee with the Depositee;
(c) all payments of security deposit, to the [________] Lessee
Security Deposit Collateral Account number [_____________]
in the name of the Lessee with the Depositee
until the Security Agent otherwise directs, whereupon you are
authorised and required to comply with the Security Agent's
directions.
This notice and the instructions herein contained are
irrevocable. Please acknowledge receipt of this notice to the
Borrower and the Security Agent on the enclosed Acknowledgement.
You are hereby authorised to assume the obligations expressed to
be assumed by you under such Acknowledgement to the effect that,
so far as the same would otherwise be incompatible therewith,
your obligations to the Assignors under the Lease will be
modified accordingly.
Yours faithfully,
For and on behalf of [LESSEE]
For and on behalf of INTERNATIONAL LEASE FINANCE CORPORATION
For and on behalf of ENCORE LEASING LIMITED
For and on behalf of NATIONAL WESTMINSTER BANK PLC (AS SECURITY
AGENT)
<PAGE>
ANNEX 2
ACKNOWLEDGEMENT OF ASSIGNMENT
(Manufacturer's Serial Number [ ])
To: Encore Leasing Limited
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
(as Borrower)
and: National Westminster Bank Plc
(as Security Agent)
Dated: ______________
Dear Sirs:
We acknowledge receipt of a Notice of Assignment dated
[_____________] 199[__] (the "Assignment Notice") relating to (i)
a Sub Lease Security Assignment (the "Sub-Lease Security
Assignment") between [Lessee] (the "Lessee") and International
Lease Finance Corporation (together the "Assignors") and the
Borrower, (ii) a General Security Assignment pursuant to which
all the Borrower's right, title and interest in, to and under the
Sub-Lease Security Assignment were assigned to the Security
Agent, (iii) a [_____________] Lessee Sub-Lease Collateral Charge
between the Lessee and the Borrower (the "[___________] Lessee
Sub-Lease Collateral Charge"), and (iv) an Assignment of [Bermuda
Lessee and Irish] [____________] Lessee Sub-Lease Collateral
Charge between the Borrower and the Security Agent. We
acknowledge the Assignment Notice as adequate notice of the
assignment of (a) all the rights, title and interest of the
Assignors under the Aircraft Lease Agreement dated [____________]
199[__] and made between International Lease Finance Corporation
and ourselves (as amended) ("the Lease"), (b) the assignment by
the Borrower of all of its right, title and interest in, to and
under the Sub-Lease Security Assignment, (c) the assignment of
all the rights, title and interest of the Lessee in the Accounts
and the Assigned Cash (as defined in the [_____________] Lessee
Sub-Lease Collateral Charge and (d) the assignment of all the
rights, title and interest of the Borrowers in the [___________]
Lessee Sub-Lease Collateral Charge.
In consideration of payment to us of one Dollar (US$1) [and the
issue to us of a quiet enjoyment letter from yourselves receipt
of which we hereby acknowledge], we hereby agree as follows:-
1. If the Security Agent issues to us a notice (a "Default
Notice") that your rights as assignee have become
exercisable, we agree that you shall not be responsible in
any way whatsoever in the event that the exercise by the
Assignors of any right or power may thereafter be adjudged
improper or to constitute a breach or repudiation of the
Lease by the Assignors or either of them, and after issue by
the Security Agent of any Default Notice we shall (a) pay to
the Security Agent at such account as the Security Agent may
nominate all rentals and other amounts from time to time
payable by us under the Lease; (b) to the exclusion of the
Assignors, perform, observe and comply with all our other
undertakings and obligations under the Lease in favour of
the Security Agent and for the benefit of the Security Agent
as if the Security Agent were named as lessor therein; and
(c) if you so request, enter into a lease with the Security
Agent's nominee, on the same terms (mutatis mutandis) as the
Lease.
<PAGE>
2. We agree that following the issue of a Default Notice the
Security Agent shall have the benefit of Clause [____] of
the Lease (Disclaimer and Exclusion) and agree that we are
bound by the terms of such clause, as though the same was
set out herein in full mutatis mutandis.
3. We acknowledge and agree that the issue of the quiet
enjoyment letter to us referred to above shall not operate
as a assumption by the Borrower or the Security Agent of any
obligation of either of the Assignors under the Lease except
their respective obligation not to interfere with our quiet
enjoyment of the Aircraft.
4. Without prejudice to the foregoing, following notification
from the Security Agent that a Trigger Event has occurred
(and only following such notification) we will pay all
monies under the Lease in respect of Rent, the Security
Deposit, and the Maintenance Reserves to the following
Accounts:-
(a) all payments of rental, to the [__________] Lessee Rental
Collateral Account Number [________] in the name of the
Lessee with [______________] ("Depositee");
(b) all payments of maintenance reserves, to the
[_____________________] Lessee Maintenance Reserve
Collateral Account number [__________] in the name of the
Lessee with the Depositee;
(c) all payments of security deposit, to the [__________] Lessee
Security Deposit Collateral Account number [___________] in
the name of the Lessee with the Depositee
or to such other account or accounts as the Security Agent may
from time to time notify us.
Yours faithfully
................................
For and on behalf of
[APPROVED SUB-LESSEE]
<PAGE>
APPENDIX G
FORM OF DEED OF ASSIGNMENT OF GENERAL TERMS AGREEMENT
RE ENGINE WARRANTIES
<PAGE>
APPENDIX G
Dated 199[ ]
INTERNATIONAL LEASE FINANCE CORPORATION
(Assignor)
- and -
ENCORE LEASING LIMITED
(Borrower)
================================================================
ASSIGNMENT OF GENERAL TERMS
AGREEMENT RE ENGINE WARRANTIES NO. 1995-[ ]
in respect of One (1) Airbus A[ ]
Aircraft bearing Manufacturer's
Serial Number [ ]
=================================================================
<PAGE>
TABLE OF CONTENTS
Clause Heading Page
Number
1. DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . 2
2. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . 3
3. LIABILITY OF THE ASSIGNOR AND THE BORROWER . . . . . . 4
4. ENGINE MANUFACTURER'S LIABILITY . . . . . . . . . . . .5
5. AGENCY. . . . . . . . . . . . . . . . . . . . . . . . .6
6. AGENCY TERMINATION. . . . . . . . . . . . . . . . . . .6
7. ASSIGNMENT OF RIGHTS. . . . . . . . . . . . . . . . . .7
8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 7
9. DELIVERY. . . . . . . . . . . . . . . . . . . . . . . 8
10. AUTHORISATIONS . . . . . . . . . . . . . . . . . . . . 9
11. GOVERNING LAW AND JURISDICTION . . . . . . . . . . . . 9
12. NOTICES. . . . . . . . . . . . . . . . . . . . . . . 10
13. FURTHER INSTRUMENTS. . . . . . . . . . . . . . . . . .12
14. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . .12
ANNEX I - CONSENT AND AGREEMENT. . . . . . . . . . . .14
<PAGE>
THIS ASSIGNMENT is made the day of
199[ ]
BETWEEN:-
(1) INTERNATIONAL LEASE FINANCE CORPORATION, a corporation
incorporated under the laws of the State of California and
having its principal place of business at 1999 Avenue of the
Stars, 39th Floor, Los Angeles, CA 90067 (the "Assignor");
and
(2) ENCORE LEASING LIMITED, a company incorporated under the
laws of the Cayman Islands and having its registered office
at P.O. Box 2003, George Town, Grand Cayman, Cayman Islands,
BWI (the "Borrower").
WHEREAS:-
(A) On [DATE] the Assignor and [ENGINE MANUFACTURER] (the
"Engine Manufacturer") entered into General Terms Agreement
No. 1995-[ ] [which includes the Engine Product
Support Plan at Exhibit B, insofar as such Support Plan
relates to the Engine Warranties but excluding any and all
letter agreements attached thereto] (the "Engine
Agreement").
(B) Pursuant to the Engine Agreement, the Assignor has the
benefit of the Engine Warranties.
(C) [ ] (the "[ ] Lessee") is a wholly
owned indirect subsidiary of the Assignor.
(D) Pursuant to the Facility Agreement, the Lenders have agreed
to make the Credits available to the Borrower in order to
enable the Borrower to acquire title to the Aircraft and
thereupon the Borrower will lease the Aircraft to the
[ ] Lessee pursuant to the Lease Agreement.
(E) It is a condition precedent to the Borrower entering into
the Lease Agreement that the Assignor enters into this
Assignment whereby the Assignor transfers to the Borrower
certain of the Assignor's rights under the Engine Agreement
relating or applying to the Engines upon the terms and
subject to the conditions set forth herein.
(F) Pursuant to the Approved Sub-Lease, the Assignor has agreed
to assign to the Approved Sub-Lessee certain warranty and
other related rights and the Assignor has assigned such
rights to the Approved Sub-Lessee pursuant to the Assignment
of Rights (Engines).
NOW THEREFORE in consideration of the mutual covenants herein
contained THIS ASSIGNMENT WITNESSES AS FOLLOWS:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Assignment (including the Recitals and the Annexes),
words and expressions used herein shall, unless otherwise defined
herein or except where the context otherwise requires, have the
meanings given to them in the Facility Agreement.
1.2 In this Assignment (including the Recitals and the Annexes)
the following words and expressions shall have the following
meanings:-
"AIRCRAFT" means the Airbus A [ ] airframe
bearing manufacturer's serial number [ ] together with
the Engines whether or not any of the Engines may from time
to time be installed thereon together with the Technical
Records;
"APPROVED SUB-LEASE" means an aircraft lease agreement dated
as of [ ] 199[ ] between the Approved
Sub- Lessee and the Assignor [as amended and supplemented by
a supplemental agreement dated 1994
between the Assignor, the [ ] Lessee and the
Approved Sub-Lessee];
"APPROVED SUB-LESSEE" means [ ];
<PAGE>
"ASSIGNED PROPERTY" means all of the property assigned in
Clause 2.1;
"ASSIGNMENT" means this Assignment together with the
Recitals and Annexes hereto;
"ASSIGNMENT OF RIGHTS (ENGINES)" means the agreement dated
199[ ] between the Assignor and the Approved
Sub-Lessee pursuant to which the Assignor assigned and
transferred to the Approved Sub-Lessee all of the Assignor's
rights and interest in and to and in and under the Engine
Warranties during the term of the Approved Sub-Lease for so
long as the Approved Sub-Lessee is not in default
thereunder;
"CONSENT AND AGREEMENT" means the consent of the Engine
Manufacturer to this Assignment and the agreement of the
Assignor and the Borrower to the terms thereof in the form
set out in Annex I hereto;
"DELIVERY DATE" means the date on which the transfer of
title to the Aircraft to the Borrower shall occur in
accordance with the terms of the Purchase Agreement
Assignment;
"ENGINE" or "ENGINES" means collectively the [
] engines bearing manufacturer's
serial numbers [ ] and [
] respectively and all and any parts sold by the Engine
Manufacturer to the Seller therewith and therefor and
incorporated in, installed on or attached to any such engine
on the Delivery Date;
"ENGINE WARRANTIES" means the Engine Manufacturer's new
engine warranty, ultimate life warranty, new parts warranty
and campaign change warranty as set forth in the Engine
Manufacturer's Product Support Plan which forms a part of
the Engine Agreement, as limited by the applicable terms of
the Engine Agreement; together with any and all rights of
the Assignor under the Engine Agreement to compel
performance of the same and the right to claim damages in
respect thereof; and
"FACILITY AGREEMENT" means the aircraft facility agreement
dated [ ] December, 1994 between (1) the banks and
financial institutions named therein, (2) National
Westminster Bank Plc (as Agent), (3) National Westminster
Bank Plc (as Security Agent), (4) Encore Leasing Limited,
(5) ILFC (Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7)
ILFC (Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd and (10) International Lease Finance
Corporation; and
"LEASE AGREEMENT" means the aircraft lease agreement No.
1995-[ ] dated 199[ ] and made between
the Borrower as lessor, the [ ] Lessee as lessee and
the [ ] Option Holder and providing, inter
alia, for the leasing of the Aircraft by the Borrower to the
[ ] Lessee.
1.3 Clauses 1.3 and 1.4 of the Facility Agreement shall be
deemed to be incorporated, mutatis mutandis, herein as if
reference therein to "this Facility Agreement" and the
"Guarantor" were references to "this Assignment" and the
"Assignor" respectively.
<PAGE>
2. ASSIGNMENT
2.1 Subject to the terms and conditions of this Assignment, the
Assignor does hereby unconditionally, irrevocably and
absolutely assign and agree to assign as legal and
beneficial owner to the Borrower, but subject to the rights
and interest of the Approved Sub-Lessee in, to and under the
Engine Warranties pursuant to the Assignment of Rights
(Engines), all of its right, title and interest (present
and future) in, to, under and in respect of the Engine
Warranties to the extent that such Engine Warranties relate
to the Engines.
2.2 Upon satisfaction in full of all the amounts referred to in
Clause 19 of the Lease Agreement and upon the [ ]
Option Holder taking title to the Aircraft pursuant to
Clause 20 of the Lease Agreement the Borrower shall at the
request and cost of the Assignor re-assign to the Assignor
or as it may direct, without recourse or warranty but free
and clear of any Security Interest created by the Borrower,
such right, title and interest, if any, as the Borrower may
then have in and to the Assigned Property and shall execute
such documents as the Assignor may reasonably require in
order to effect such assignment.
2.3 The Borrower covenants with the Assignor that it shall not
transfer, assign, pledge, dispose of or otherwise deal
voluntarily (and for the avoidance of doubt, the provisions
concerning voluntary transfer set out in the final sentence
of Clause 29.8 of the Priorities and Indemnities Agreement
shall apply for the purposes of this Clause 2.3) with the
Assigned Property other than pursuant to the Assignment of
Rights (Engines) or in accordance with the terms of and/or
in connection with the enforcement or preservation or the
attempted enforcement or preservation of its rights,
interests and remedies under this Assignment and/or any of
the Facility Documents and/or any of the Operative
Documents.
3. LIABILITY OF THE ASSIGNOR AND THE BORROWER
3.1 The Borrower shall have no obligation or liability under the
Engine Agreement by reason of or arising out of this
Assignment, provided however that to the extent that the
Borrower exercises any rights under the Engine Agreement or
makes any claim with respect to the Engines or goods and
services relating thereto, the terms and conditions of the
Engine Agreement shall apply to and be binding upon the
Borrower and the Borrower shall be subject to all
obligations, restrictions, limitations and conditions of the
Engine Agreement with respect to the exercise of such rights
or making such claims to the same extent as if the Borrower
had been named "Airline" thereunder.
3.2 The assignments referred to in Clause 2.1 shall not
constitute a novation under the Engine Agreement and, save
as otherwise provided hereby, the Assignor shall not be
discharged from any of the obligations undertaken by it in
the Engine Agreement.
3.3 Notwithstanding this Assignment, the Assignor shall remain
fully liable to the Engine Manufacturer to perform all the
obligations and duties of the "Airline" under the Engine
Agreement, and the exercise by the Borrower of any of the
rights assigned hereunder shall not release the Assignor
from any of its duties or obligations to the Engine
<PAGE>
Manufacturer under the Engine Agreement, save to the extent
that such exercise by the Borrower shall constitute
performance of such duties and obligations.
3.4 The Assignor will procure from the Engine Manufacturer on
the Delivery Date the Consent and Agreement in the form
attached hereto as Annex I.
3.5 The Borrower agrees that it will not, without the prior
written consent of the Engine Manufacturer, disclose,
directly or indirectly, to any third party, any of the terms
of the Engine Warranties disclosed to it by the Engine
Manufacturer PROVIDED, HOWEVER, that (1) the Borrower may
use, retain and disclose such information to its special
counsel and public accountants and/or the parties from time
to time to any of the Facility Documents and/or Operative
Documents who shall not further disclose such terms, (2) the
Borrower may disclose such information as required by
applicable laws, governmental regulations, subpoena, or
other written demand under colour of legal right, but it
shall first, as soon as practicable upon receipt of such
demand and to the extent permitted by applicable laws,
furnish a copy thereof to the Assignor and the Engine
Manufacturer, and the Borrower shall afford the Assignor and
the Engine Manufacturer reasonable opportunity, at the
moving party's cost and expense, to obtain a protective
order or other assurance reasonably satisfactory to the
Engine Manufacturer of confidential treatment of the
information required to be disclosed and (3) the Borrower
may disclose such information to any bona fide potential
purchaser of the Aircraft and/or Engines (subject to the
execution by such prospective purchaser of a written
confidentiality statement setting forth the same or
substantially similar terms as those referred to in this
paragraph).
4. ENGINE MANUFACTURER'S LIABILITY
4.1 The Assignor and the Borrower hereby confirm expressly for
the benefit of the Engine Manufacturer that nothing in this
Assignment shall subject the Engine Manufacturer to any
obligation or liability to which it would not otherwise be
subject under the Engine Agreement or modify in any respect
the Engine Manufacturer's contractual rights thereunder, or
subject the Engine Manufacturer to any multiple or duplicate
liability or obligation under the Engine Agreement. No
further assignments for security purposes are permitted
without the express written consent of the Engine
Manufacturer except that the Borrower may without such
written consent assign its rights, title and interest
(present and future to the extent such future rights, title
or interest relate to the Engines) in and to the Engine
Warranties pursuant to a Deed of Assignment and First
Priority Mortgage No. [ ] to be entered into between the
Borrower and the Security Agent without such written
consent.
4.2 Without in any way releasing the Assignor from any of its
duties or obligations under the Engine Agreement, the
Borrower hereby confirms expressly for the benefit of the
Engine Manufacturer that in exercising any rights or making
any claim in respect of the Engines under the Engine
Agreement including, without limitation, the Engine
Warranties, the terms and conditions of the Engine
Agreement, including, without limitation, Article Thirteen
(Limitation of Liabilities) of the Engine Agreement shall
<PAGE>
apply to, and be binding on the Borrower to the same extent
as the Assignor.
5. AGENCY
5.1 The Borrower hereby appoints the Assignor (with power to
appoint the [ ] Lessee or, as the case may be, any
Approved Sub-Lessee as its substitute PROVIDED ALWAYS THAT
any such substitute shall expressly in writing agree to be
bound by the terms of this Assignment in relation to such
agency and PROVIDED FURTHER THAT the Assignor shall remain
fully liable to the Borrower in respect of the actions
and/or inactions of any such substitute) its sole agent to
exercise on behalf of the Borrower all the rights assigned
to the Borrower under Clause 2.1.
5.2 Until the agency created by this Clause 5 is terminated in
the manner contemplated by Clause 6, the Assignor (or, as
the case may be, its substitute) shall be entitled to
enforce the rights referred to in Clause 5.1 without
reference to the Borrower and to retain when made any
recovery or benefit resulting from the enforcement of any
such rights and shall pay, and hereby indemnifies the
Borrower against, all costs, expenses and charges incurred
in connection with the enforcement of any such rights.
5.3 If the Assignor and the Borrower shall at any time be in
dispute as to which of them is the beneficiary of any right
under the Engine Agreement, the Engine Manufacturer shall be
entitled to perform the corresponding obligations
exclusively in favour of the Assignor until:-
(a) the agency created pursuant to this Clause 5 shall have
been terminated in accordance with Clause 6 (after
which time the Engine Manufacturer shall perform the
corresponding obligations exclusively in favour of the
Borrower); or
(b) both the Assignor and the Borrower notify the Engine
Manufacturer in writing of their agreement as to which
of them is the beneficiary of such right (after which
time the Engine Manufacturer shall perform the
corresponding obligations in favour of the party
nominated in such notice).
5.4 Other than as provided in Clause 5.1 above, the Assignor
shall not be entitled to appoint any third party as agent to
exercise on its behalf any of its rights or powers resulting
from this Clause.
6. AGENCY TERMINATION
6.1 Should an Acceleration Event occur, then the agency created
by Clause 5 shall terminate forthwith.
6.2 The Engine Manufacturer shall not be deemed to have
knowledge of any termination of the agency powers of the
Assignor referred to in Clause 5 unless and until the Engine
Manufacturer shall have received from the Borrower and/or
the Security Agent written notice of such termination.
6.3 The Assignor and the Borrower confirm expressly for the
benefit of the Engine Manufacturer that the Engine
<PAGE>
Manufacturer shall not be deemed to have knowledge of the
occurrence of any Acceleration Event, nor shall it be deemed
to have knowledge that the Aircraft is no longer subject to
the Lease Agreement, unless and until the Engine
Manufacturer shall have received written notice thereof in
accordance with the provisions contained in Clause 12 and
the Engine Manufacturer shall be entitled conclusively to
rely upon any such notice without enquiring as to the
accuracy of, or the entitlement of the Borrower to give, any
such notice.
7. ASSIGNMENT OF RIGHTS
7.1 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement, the Assignor may not
further sell, assign or otherwise transfer any of its rights
hereunder without the prior written consent of the Lenders
(which the Lenders shall have absolute discretion to
withhold) and the Engine Manufacturer (which shall not be
unreasonably withheld).
7.2 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement and the circumstances
described in the proviso to Clause 24.3 of the Priorities
and Indemnities Agreement, the Borrower may not sell, assign
or otherwise transfer any of its rights hereunder without
the prior written consent of the Security Agent acting on
the instructions of the Majority Lenders and, prior to the
occurrence of an Acceleration Event, the Assignor (which the
Lenders and the Assignor shall have absolute discretion to
withhold).
8. REPRESENTATIONS AND WARRANTIES
8.1 The Assignor does hereby represent and warrant that:-
(a) the Engine Agreement is in full force and effect and
constitutes legal, valid and binding obligations of the
Assignor enforceable in accordance with its terms
subject to the qualifications contained in the legal
opinions to be provided to the Agent, the Security
Agent, the Lenders and the Borrower in accordance with
Schedule 7 to the Facility Agreement and/or Schedule 4
Part I to the Lease Agreement;
(b) the Assignor is not in default of any of its
obligations under the Engine Agreement in so far as
they relate to the Engines;
(c) the Assignor has not created or allowed to subsist, and
throughout the Security Period it will not create or
allow to subsist, any Security Interest on or over, the
whole or any part of the rights, title and interest
hereby assigned with respect to the Engines and/or the
Engine Agreement other than pursuant to the Assignment
of Rights (Engines), this Assignment or by any of the
other Aircraft Operative Document and/or any of the
1994 Facility Documents and/or any of the 1994
Operative Documents; and
(d) the transactions contemplated under this Assignment
form and will form part of its private and commercial
acts as opposed to governmental and/or public acts.
<PAGE>
8.2 The Assignor hereby undertakes that it shall:-
(a) duly and punctually perform all of its duties and
obligations under the Engine Agreement in so far as
they relate to the Engines; and
(b) use all reasonable endeavours to obtain the execution
by the Engine Manufacturer of the Consent and Agreement
as soon as reasonably practicable after the Delivery
Date.
8.3 Each of the Assignor and the Borrower for itself hereby
undertakes that it shall not enter into any agreement with
the Engine Manufacturer which would amend, modify, rescind,
cancel or terminate the Engine Agreement in respect of the
Engines or any of them without the prior written consent of
the other.
8.4 Each of the parties hereto represents and warrants for
itself that it shall, on the Delivery Date, have obtained
all authorisations required to be obtained pursuant to
Clause 10 and that such authorisations shall be valid on the
Delivery Date.
9. DELIVERY
If the Borrower does not pay to the Seller the Aircraft
Purchase Price or the Seller does not deliver the Bill of
Sale on the Delivery Date then this Assignment shall, unless
otherwise agreed by the Borrower, be automatically
terminated, whereupon the rights subject to this Assignment
shall be deemed re-assigned by the Borrower to the Assignor
without the requirement for any further action (other than
any notice required to be given to the Engine Manufacturer)
and the Borrower shall thereafter have no further obligation
to the Assignor or the Engine Manufacturer hereunder (but
without prejudice to any rights which any party may have
against any other party in respect of any previous breach by
such other party of its obligations).
10. AUTHORISATIONS
The parties shall take all steps required to obtain, prior
to the Delivery Date, any and all authorisations, licences,
rulings, consents, approvals and such other actions which
are necessary or advisable for them to obtain in order to
permit them to perform this Assignment and all other
agreements and instruments required hereunder or in
connection herewith.
11. GOVERNING LAW AND JURISDICTION
11.1 This Assignment shall be governed by and construed in
accordance with the laws of [England] [New York].
11.2 Each of the parties hereto irrevocably agrees that the
courts of England shall have jurisdiction to hear and
determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this
Assignment and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
11.3 Each party irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause
11.2 being nominated as the forum to hear and determine any
suit, action or proceeding, and to settle any disputes,
<PAGE>
which may arise out of or in connection with this Assignment
and agrees not to claim that any such court is not a
convenient or appropriate forum in each case whether on the
grounds of venue or forum non conveniens or any similar
grounds or otherwise.
11.4 The submission to the jurisdiction of the courts referred to
in Clause 11.2 shall not (and shall not be construed so as
to) limit the right of either party to take proceedings
against the other party in any other court of competent
jurisdiction nor shall the taking of proceedings in any one
or more jurisdictions preclude the taking of proceedings in
any other jurisdiction, whether concurrently or not.
11.5 To the extent that the Borrower or the Assignor or any of
the property of the Borrower or the Assignor is or becomes
entitled at any time to any immunity on the grounds of
sovereignty or otherwise from any legal action, suit or
proceeding, from set-off or counterclaim, from the
jurisdiction of any competent court, from service of
process, from attachment prior to judgment, from attachment
in aid of execution, or from execution prior to judgment, or
other legal process in any jurisdiction, each of the
Borrower and the Assignor for itself and its property does
hereby irrevocably and unconditionally waive, and agrees not
to plead or claim, any such immunity with respect to its
obligations, liabilities or any other matter under or
arising out of or in connection with this Assignment or the
subject matter hereof.
12. NOTICES
12.1 Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:-
(a) in order to be valid be in English and in writing;
(b) be deemed to have been duly served on, given to or made
in relation to a party if it is:-
(i) left at the address of that party set out herein
or at such other address as that party may notify
to the other party hereto in writing from time to
time or to any officer of the addressee; or
(ii) posted by first class airmail postage prepaid in
an envelope addressed to that party at such
address; or
(iii) sent by facsimile to the facsimile number of
that party set out herein or to such other
number as that party may notify to the other
party hereto from time to time.
(c) be sufficient if:-
(i) executed under the seal of the party giving,
serving or making the same; or
(ii) signed or sent on behalf of the party giving,
serving or making the same by any attorney,
director, secretary, agent or other duly
authorised representative of such party;
<PAGE>
(d) be effective:-
(i) in the case of a letter, when left at the address
referred to in Clause 12.1(b)(i) or delivered in
person to any officer of the addressee or (as the
case may be) seven (7) Business Days after being
deposited in the post first class airmail postage
prepaid in an envelope addressed to the addressee
at the address referred to in Clause 12.1(b)(i);
(ii) in the case of a facsimile transmission, when
receipt is confirmed by return facsimile or by
telephone (or on actual receipt if not so
confirmed).
12.2 For the purposes of this Clause 12, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:-
(a) if to the Assignor to:-
INTERNATIONAL LEASE FINANCE CORPORATION
1999 Avenue of the Stars
39th Floor
Los Angeles
CA 90067
USA
Tel: 0101 310 788 1999
Facsimile No: 0101 310 788 1990
Attention: Legal Department and Chief Financial Officer
(b) if to the Borrower to:-
ENCORE LEASING LIMITED
P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Tel: 0101 809 949 7942
Facsimile No: 0101 809 949 8340
Attention: Trust Services
with a copy to the Security Agent:-
NATIONAL WESTMINSTER BANK PLC
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
England
Tel: 0171 375 5738/5931/5929
Facsimile No: 0171 375 5854
Attention: Head of Corporate Banking Agency Group
<PAGE>
(c) if to the Engine Manufacturer to:-
[
]
Tel: [ ]
Facsimile No: [ ]
Attention: [ ]
13. FURTHER INSTRUMENTS
Each of the parties hereto agrees that at any time and from
time to time, and at the full cost of the Assignor, it shall
promptly and duly execute and deliver any and all such
further instruments and documents and take such further
action as may be reasonably necessary in order to give full
effect to this Assignment and the rights and powers herein
granted.
14. MISCELLANEOUS
14.1 No term or provision of this Assignment may be amended,
waived, discharged or terminated orally, but only by written
instrument signed by or on behalf of the parties hereto.
14.2 Any provision of this Assignment which is or becomes
invalid, illegal or unenforceable in any jurisdiction shall
as to such jurisdiction be ineffective to the extent of such
invalidity, illegality or unenforceability without
invalidating the remaining provisions hereof, and any such
invalidity, illegality or unenforceability shall not render
such provision invalid, illegal or unenforceable in any
other jurisdiction.
14.3 No failure to exercise and no delay in exercising on the
part of the Borrower any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or
partial exercise of any right, power or privilege prevent
any further or other exercise of any right, power or
privilege whether hereunder or otherwise. The rights and
remedies provided in this Assignment are cumulative and not
exclusive of any rights or remedies provided at law.
14.4 Section 93 and Section 103 of the Law of Property Act 1925
shall not apply to this Assignment nor shall any analogous
provisions applicable under New York law.
14.5 This Assignment may be executed in any number of
counterparts and by different parties hereto on separate
counterparts each of which when executed and delivered shall
constitute an original but all counterparts shall together
constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Assignment
to be executed and delivered (in three originals) on their behalf
by their Officers thereunto duly authorised on this day and this
year hereinbefore written.
INTERNATIONAL LEASE FINANCE CORPORATION
By: .........................................................
Title: ..................................................
In the presence of:-
SIGNED by )
ENCORE LEASING LIMITED )
acting through its authorised signatory )
)
in the presence of:- )
<PAGE>
ANNEX I
CONSENT AND AGREEMENT
(Manufacturer's Serial Number [ ])
1. The undersigned, [ ], a
company organised and existing under the laws of [
] (the "Engine
Manufacturer"), hereby acknowledges notice of, consents to
and agrees to be bound by all of the terms of the Assignment
of General Terms Agreement Re Engine Warranties No. 1995-[ ]
dated 199[ ] attached hereto
(herein called the "Assignment"), the defined terms therein
being hereinafter used with the same respective meanings.
2. The Engine Manufacturer hereby confirms to the Borrower
that:-
2.1 all representations, warranties, indemnities and
agreements of the Engine Manufacturer under the
relevant sections of the Engine Agreement with respect
to the Engines shall (subject to the terms and
conditions thereof and of the Assignment and to the
rights and interest of the Approved Sub-Lessee in, to
and under the Engine Warranties pursuant to the
Assignment of Rights (Engines)) enure to the benefit of
the Borrower to the same extent as if originally named
the "Airline" therein; and
2.2 the Borrower shall not be liable for any of the
obligations or duties of the Assignor under the Engine
Agreement, nor, except as provided therein, shall the
Assignment give rise to any duties or obligations
whatsoever on the part of the Borrower owing to the
Engine Manufacturer except for the Borrower's agreement
in the Assignment that in exercising any right under
the Engine Agreement with respect to the Engines or
making any claims with respect to the Engines or other
goods and services delivered and to be delivered
pursuant to the Engine Agreement and the subject of the
Assignment, the terms and conditions of such Engine
Agreement shall apply to, and be binding upon, the
Borrower to the same extent as the Assignor.
3. The Engine Manufacturer hereby represents and warrants
that:-
3.1 it is a company existing in good standing under the
laws of [ ];
3.2 the making and performance of the Engine Agreement and
this Consent and Agreement have been duly authorised by
all necessary corporate or other action on the part of
the Engine Manufacturer, do not require any approval of
the Engine Manufacturer's stockholders, do not
<PAGE>
contravene the charter of the Engine Manufacturer or
any indenture, credit agreement or other contractual
agreement to which the Engine Manufacturer is a party
or by which it is bound and, to the best of the
knowledge, information and belief of the Engine
Manufacturer, do not contravene any law, rule or
regulation binding upon the Engine Manufacturer; and
3.3 the Engine Agreement constituted as of the date
thereof, and at all times thereafter to and including
the date of this Consent and Agreement constitutes a
valid and binding obligation of the Engine
Manufacturer.
4. The present consent is given subject to the following
conditions:-
4.1 nothing herein or in the Assignment shall modify in any
way the rights of the Engine Manufacturer under the
Engine Agreement or subject the Engine Manufacturer to
any liability to which it would not otherwise be
subject;
4.2 if the Assignor and the Borrower shall at any time be
in dispute as to which of them is the beneficiary of
any particular right or interest under the Engine
Agreement, the Engine Manufacturer shall be entitled to
perform the corresponding obligations exclusively in
favour of the Assignor (or its substitute agent
appointed in accordance with the provisions of Clause
5.1 of the Assignment) until:-
(a) the agency created pursuant to Clause 5 of the
Assignment shall have been terminated in
accordance with Clause 6 of the Assignment (after
which time the Engine Manufacturer shall perform
the corresponding obligations exclusively in
favour of the Borrower); or
(b) both the Assignor and the Borrower notify the
Engine Manufacturer in writing of their agreement
as to which of them is the beneficiary of such
right (after which time the Engine Manufacturer
shall perform the corresponding obligations in
favour of the party nominated in such notice);
4.3 the Assignor shall not be discharged from any of its
obligations under the Engine Agreement except insofar
as such obligations are performed by the Borrower, and
nothing herein shall be construed so as to give such
discharge;
4.4 the Engine Manufacturer shall not be deemed to have
knowledge of any termination of the agency referred to
in Clause 5.1 of the Assignment unless and until the
Engine Manufacturer shall have received the written
notice required by Clause 6.2 of the Assignment;
4.5 the Engine Manufacturer shall be fully entitled to rely
upon anything said or done or omitted by the Assignor
(or its substitute appointed in accordance with the
provisions of Clause 5.1 of the Assignor) as agent
pursuant to Clause 5 of the Assignment until
termination of the agency referred to therein;
<PAGE>
4.6 the Assignor and the Borrower shall agree to the terms
of this Consent and Agreement.
5. The Assignor shall and hereby does agree to indemnify and
hold harmless the Engine Manufacturer from and against any
and all costs and out of pocket expenses incurred by the
Engine Manufacturer (i) in the preparation, negotiation and
execution of this Consent and Agreement, the Assignment and
the Mortgage and (ii) in relation to the enforcement of any
rights transferred by the Assignment to the Borrower to the
extent that such costs and out-of-pocket expenses would not
have been incurred but for the entering into of this Consent
and Agreement, the Assignment and the Mortgage.
6. Each of the Engine Manufacturer, the Assignor and the
Borrower agrees that the Assignment shall not constitute nor
be construed as constituting a novation of the obligations
under the Engine Agreement.
7. The illegality or invalidity of any part of this Consent and
Agreement shall not be deemed to prejudice the
enforceability of the remainder which shall be severable
therefrom.
8. Except as expressly contained in the Assignment, the Engine
Manufacturer shall not assume nor be deemed to have assumed
any additional obligation whatsoever under the Engine
Agreement by virtue of the Assignment, and the Engine
Manufacturer shall be bound to perform only those
obligations which would have existed had the Assignment
never been executed.
9. The Engine Manufacturer shall incur no obligation or
liability whatsoever by reason of the Lease Agreement and
the Loan Agreement or any of the transactions contemplated
therein and the Assignor shall indemnify and hold harmless
the Engine Manufacturer against and in respect of all and
any such obligations or liabilities or the consequences
thereof so incurred save to the extent that the Engine
Manufacturer has a corresponding liability or obligation
under the Engine Agreement.
10. This consent is given subject to the agreement and
acceptance of the Assignor and the Borrower that the benefit
of and/or the obligations under, the Assignment may not be
further assigned or transferred or otherwise parted with
(other than, in respect of the agency created pursuant to
the provisions of Clause 5.1 of the Assignment, to a
substitute appointed in accordance with the provisions of
Clause 5.1 of the Assignment) without the prior consent of
the Engine Manufacturer (which the Engine Manufacturer shall
have full power to withhold).
11. The Engine Manufacturer agrees that no breach or default on
the part of the Assignor of any of the provisions of the
Engine Agreement, to the extent that the Engine Agreement
relates to any engines which do not form part of any of the
Aircraft financed or to be financed pursuant to the Facility
Agreement, shall impair, prejudice or vitiate any of the
rights available to the Borrower or the Security Agent in
respect of the Engine Agreement relative to any of the
Aircraft.
12. This Consent and Agreement shall be governed by and
construed in accordance with the laws of [England] [New
York].
<PAGE>
13. The Engine Manufacturer irrevocably agrees that any suit,
legal action or proceedings ("Proceedings") in connection
with this Consent and Agreement may be brought in the courts
of New York which shall have jurisdiction to settle any
disputes arising out of or in connection with this Consent
and Agreement.
14. Nothing contained in this Consent and Agreement shall limit
the right of any party to take Proceedings against another
party in any other court of competent jurisdiction, nor
shall the taking of Proceedings in one or more jurisdictions
preclude the taking of Proceedings in one or more other
jurisdictions whether concurrently or not.
15. Section 93 and Section 103 of the Law of Property Act 1925
shall not apply to this Consent and Agreement [nor any
analogous provisions applicable under New York law].
16. This Consent and Agreement may be executed in any number of
counterparts and by different parties hereto on separate
counterparts each of which when executed as delivered shall
constitute an original but all counterparts shall together
constitute but one and the same instrument.
Dated:
[ ]
By: .........................................................
Title: ..................................................
We hereby agree to the terms of this We hereby agree to the terms
letter including without limitation to of this letter.
the generality of the foregoing, the
indemnities contained herein.
INTERNATIONAL LEASE FINANCE CORPORATION ENCORE LEASING LIMITED
By: ...................... By: ....................
Title: ..................... Title: ...................
<PAGE>
APPENDIX H
FORM OF APPROVED SUB-LESSEE'S POWER OF ATTORNEY
<PAGE>
APPENDIX H
POWER OF ATTORNEY NO. 1995-[ ]
Dated: __________, 199[_]
[__________], a company organised and existing under the laws of
[__________] and having its registered office at
[__________________________________] (the "Grantor") hereby
agrees as follows:-
WHEREAS
A. The Grantor, [___________________________] ("Lessor") a
company incorporated under the laws of [__________________]
[and the Guarantor (as defined below)], are parties to a
Sub-Lease Agreement dated [_______________] 199[__] between
the Lessor as lessor, the Grantor as lessee and [the
Guarantor (as defined below)] (the "Sub-Lease") pursuant to
which the Lessor has agreed to lease to the Grantor, on the
terms and subject to the conditions set out in the
Sub-Lease, one Airbus A3[________] aircraft having
manufacturer's serial number [______] and [________]
Registration Mark [______] and [_______] engines installed
thereon having manufacturer's serial numbers [_______],
[[________], [________]] and [________] as those engines may
from time to time be replaced pursuant to the terms of the
Sub-Lease (such aircraft and engines collectively the
"Aircraft"). The Lessor has taken the Aircraft on lease
from Encore Leasing Limited (the "Owner") pursuant to a
lease agreement dated [_________________] 199[___] (the
"Head Lease") made between the Owner as lessor, the Lessor
as lessee and [ILFC (Bermuda) 6, Ltd.]
[______________________] (the "Option Holder").
B. Inter alios, the Lessor, [the Bermuda Lessee] [the Irish
Lessee] [Alternative Lessee] the Owner, the Option Holder,
the Guarantor (as defined below), the Lenders (as defined
below) and National Westminster Bank Plc in its capacity as
agent (the "Agent") and security agent (the "Security
Agent") for and on behalf of itself and the Lenders have
entered into a priorities and indemnities agreement (the
"Priorities and Indemnities Agreement") dated [ ] December,
1994 in connection with the financing of the Owner's
acquisition of the Aircraft by the Lenders pursuant to
which, inter alios, the Lessor, the Owner, the Option
Holder, the Guarantor (as defined below), the Lenders, the
Agent and the Security Agent have agreed, inter alia, the
priority of the Lessor's and the Option Holder's rights
under the Head Lease and the application of the proceeds of
the exercise of any of the rights of the Agent, the Security
Agent and/or the Lenders under any of the Security Documents
(as defined in the Priorities and Indemnities Agreement).
The Lessor has assigned by way of security its rights, title
and interest in, to and under the Sub-Lease to the Owner
pursuant to a Sub-Lease Security Assignment (the "Sub-Lease
Security Assignment") dated [_____________________] 199[]
between the Lessor and the Owner and the Owner has assigned
its rights in the Sub-Lease Security Assignment to the
Security Agent pursuant to a General Security Assignment
dated [_________________] 199[ ] between the Owner and the
Security Agent (the "General Security Assignment").
<PAGE>
C. It is a condition of the Priorities and Indemnities
Agreement that each Secured Party (as defined below)
receives from the Grantor a duly executed Power of Attorney
in the form of this Power of Attorney.
1. In this Power of Attorney, the following expressions
shall bear the following meanings:-
(a) "Guarantor" means International Lease Finance
Corporation;
(b) "Lenders" means National Westminster Bank Plc and
[_____________________________], Banque Paribas,
National Westminster Bank Plc (Paris Branch) and
[_____________________], Bayerische Hypotheken-
und Wechsel-Bank A.G., Kreditanstalt fur
Wiederaufbau and [_________________] and their
successors, permitted assigns and permitted
transferees from time to time and "Lender" means
any of them; and
(c) "Secured Party" means each of the Owner and the
Security Agent for and on behalf of itself, the
Agent and each of the Lenders and the Agent for
and on behalf of itself and each of the Lenders
jointly and severally.
2. The Grantor hereby confers an irrevocable and
unconditional power of attorney in favour of each
Secured Party jointly and severally (with the right of
substitution and re-substitution, and with the right to
revoke any substitution or re-substitution granted)
upon the earlier of (i) the date upon which the Lessor
(or the Security Agent as assignee pursuant to the
General Security Assignment) terminates the Sub-Lease
PROVIDED THAT at such time the Lessor is obliged to pay
the Termination Sum (as that term is defined in the
Head Lease) and has failed to pay the same when due or
the leasing of the Aircraft pursuant to the Head Lease
has expired by effluxion of time; and (ii) the expiry
by effluxion of time of the leasing of the Aircraft by
the Grantor pursuant to the Sub-Lease in circumstances
where the leasing of the Aircraft under the Head Lease
has terminated or expired by effluxion of time:-
(a) to release, terminate and void any and all of the
interest of the Grantor in the Aircraft;
(b) to consent to the transfer (to any registry inside
or outside [________]) of the registration of the
Aircraft and all other engines, accessories or
items in use at the time of such transfer thereon
or therein or otherwise held or used in
substitution or replacement therefor in whatsoever
manner free of any right, title or interest of the
Grantor, such transfer to be on such terms and
conditions as may be determined by any of the
Secured Parties in its absolute discretion;
(c) to represent the Grantor wheresoever and
whatsoever in all matters and affairs in
connection with the registration, deregistration
or re- registration of the Aircraft (including on
the [________] Civil Aircraft Register) and/or any
interest of the Grantor registered in any personal
property security register including any interest
under the Lease; or
(d) to remove the Aircraft from [_______] and to apply
for and obtain permits, licences or approvals with
respect to any of the above matters so that the
Secured Party is empowered to do and perform all
things which the Grantor is now or would hereafter
be entitled and empowered to do and perform,
without any exception, in relation to those
matters, all for the account of the Grantor; or
<PAGE>
(e) to sign, seal (if appropriate), deliver or execute
any and all documents, agreements, applications,
consents or other instruments of whatsoever nature
as any of the Secured Parties considers in its
absolute discretion necessary or desirable in
connection with any or all of the matters referred
to in (a) to (d) inclusive above.
3. Each Secured Party is authorised to delegate to such
person or persons as it may choose the exercise of any
or all of the powers conferred on that Secured Party
hereunder.
4. Without limiting the generality of any other
indemnification heretofore or hereafter provided by the
Grantor, the Grantor shall ratify and confirm
whatsoever any of the Secured Parties shall lawfully do
or cause to be done.
5. The powers conferred by the Grantor in this Power of
Attorney are irrevocable and unconditional and are
granted for value and secure proprietary interests in
and the performance of obligations owed to the
respective donees and shall not terminate unless and
until the Termination Sum (as that term is defined in
the Head Lease) and any and all other amounts
outstanding, or which may become outstanding, in
relation to the Aircraft from the Lessor and/or the
Option Holder and/or the Guarantor to the Owner, the
Agent, the Security Agent or any of the Lenders under
the Facility Documents and the Operative Documents (as
those terms are defined in the Head Lease) have been
satisfied in full.
6. No failure or delay on the part of any of the Secured
Parties to exercise, and no delay in exercising any
right, power or privilege under this Power of Attorney
shall operate as a waiver thereof, nor shall the
exercise of any right, power or privilege under this
Power of Attorney preclude any other or further
exercise thereof or the exercise of any other right,
power or privilege.
7. The powers as set out in this Power of Attorney shall
become effective from the date hereof.
8. This Power of Attorney shall be governed by and
construed in accordance with the laws of [England].
SIGNED as a DEED, )
SEALED and DELIVERED )
by [APPROVED )
SUB-LESSEE] )
acting through its )
authorised signatory )
)
in the presence of:- )
BF52843.04
<PAGE>
APPENDIX I
FORM OF BFE BILL OF SALE
<PAGE>
APPENDIX I
FORM OF BFE BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned, International Lease Finance Corporation, a
corporation incorporated under the laws of the State of
California (the "Seller"), is the owner of the full legal and
beneficial title to the buyer furnished equipment specified in
the attached schedule ("BFE").
THAT for and in consideration of payment to the Seller of the
sum of [ ] United States Dollars (U.S.$[ )],
the Seller does this [ ] day of [ ] 1995 grant,
convey, transfer, bargain and sell, deliver and set over, all of
its right, title and interest in and to the BFE unto AVSA,
S.A.R.L., a French societe a responsabilite limitee (the
"Buyer").
THAT the Seller hereby warrants to the Buyer, its successors and
assigns, that there is hereby conveyed to the Buyer on the date
hereof good title to the BFE free and clear of all mortgages,
charges, pledges, liens, statutory rights in rem, rights of
possession, attachment or detention, rights of set-off, title
retention arrangements, rights of ownership, hypothecations,
leases, levies, claims or any encumbrances or security interests
whatsoever, howsoever created or arising or any right or
arrangement having a similar effect to any of the above and that
the Seller will warrant and defend such title forever against all
claims and demands whatsoever.
THAT this Bill of Sale is and shall be governed by and construed
in accordance with the laws of England.
IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be
executed by its duly authorised officer this [ ] day of [
], 1995.
INTERNATIONAL LEASE FINANCE CORPORATION
By: ___________________________
Title: ________________________
AGREED and ACCEPTED this [ ] day of [ ], 1995
AVSA, S.A.R.L.
By: ___________________________
Title: ________________________
<PAGE>
SCHEDULE TO BFE BILL OF SALE
NATURE, QUANTITY, VENDOR AND PART NUMBER IN RESPECT OF
BFE
<PAGE>
APPENDIX J
FORM OF AIRCRAFT BILL OF SALE
<PAGE>
Appendix J
FORM OF AIRCRAFT BILL OF SALE
Know all men by these presents that AVSA, a societe a
responsabilite limitee (the "Seller"), is the owner of the
title to the following airframe (the "Airframe"), the
attached engines as specified (the "Engines") and all appliances,
components, parts, instruments, accessories, furnishings, modules
and other equipment of any nature incorporated therein, installed
thereon or attached thereto on the date hereof (the "Parts"):
Manufacturer of Airframe: Manufacturer of Engines:
AIRBUS INDUSTRIE G.I.E. [ ]
Model: AIRBUS A3[ ] Model: [ ]
Manufacturer's Serial No: [ ] Serial Nos: [ ] [ ]
[ ] [ ]
Registration Letters: [ ]
The Airframe, Engines and Parts are hereafter together referred
to as the "Aircraft".
For and in consideration of the payment by Encore Leasing Limited
(the "Buyer") to the Seller of the sum of [ ] US
Dollars (US$[ ]) the Seller does this [ ] day of
[ ] 1995 sell, transfer and deliver all of its
above described rights, title and interest to the Aircraft to the
Buyer and to its successors and assigns forever.
The Seller hereby warrants to the Buyer, its successors and
assigns that it has on the date hereof good and lawful right to
sell, deliver and transfer title to the Aircraft to the Buyer and
that there is hereby conveyed to the Buyer on the date hereof
good, legal and valid title to the Aircraft, free and clear of
all liens, claims, charges, encumbrances and rights of others,
(save only that in relation to the buyer furnished equipment
(supplied to the Seller by International Lease Finance
Corporation) the Seller hereby conveys to the Buyer such title to
such buyer furnished equipment as was transferred to the Seller
by International Lease Finance Corporation pursuant to a bill of
sale dated [ ] 1995, and free and clear of all liens,
claims, charges and encumbrances and rights of others created by
the Seller) and that the Seller will warrant and defend such
title forever against all claims and demands whatsoever.
THAT this Bill of Sale is and shall be governed by and construed
in accordance with the laws of England.
IN WITNESS WHEREOF the undersigned has caused this instrument to
be executed by its duly authorised representative this [ ]
day of [ ] 1995
In [ ]..............
AVSA, S.A.R.L.
By:_____________________________
Title:__________________________
Signature:______________________
<PAGE>
APPENDIX K
FORM OF OPTION HOLDER'S POWER OF ATTORNEY
<PAGE>
APPENDIX K
OPTION HOLDER'S POWER OF ATTORNEY NO. 1995-[ ]
Dated: 199[ ]
[ILFC (BERMUDA) 6, LTD.], [ ] a company
organised and existing under the laws of [Bermuda] [ ] and
having its registered office at [29 Richmond Road, Hamilton,
HM-AX, Bermuda] [ ] (the "Grantor") hereby agrees as
follows:-
WHEREAS
A. The Grantor and [ ] (the "[ ]
Lessee"), a company incorporated under the laws of [Bermuda]
[Ireland] and Encore Leasing Limited (the "Lessor"), a company
incorporated under the laws of the Cayman Islands are
parties to a Lease Agreement dated [ [199[ ] (the
"Lease") pursuant to which the Lessor has agreed to lease
to the [ ] Lessee, on the terms and subject to
the conditions set out in the Lease, one Airbus A3 [ ]
aircraft having manufacturer's serial number [ ] and
[ ] Registration Mark [ ] and [ ] engines
installed thereon having manufacturer's serial numbers
[ ], [[ ], [ ]] and [ ] as those
engines may from time to time be replaced pursuant to the
terms of the Lease (such aircraft and engines collectively
the "Aircraft"). Pursuant to and in accordance with the
terms of the Lease, the Lessor has granted the Grantor an
option to purchase the Aircraft.
B. The Lessor has granted a Second Mortgage dated [ ] in
favour of the Grantor (the "Second Mortgage") in order to
secure the Lessor's obligations to pass title to the
Aircraft to the Grantor in accordance with the provisions of
the Lease.
<PAGE>
C. Inter alios, the Lessor, the [Bermuda Lessee] [Irish Lessee]
[Alternative Lessee], the Grantor, the Guarantor (as defined
below), the Lenders (as defined below) and National
Westminster Bank Plc in its capacity as agent (the "Agent")
and security agent (the "Security Agent") for and on behalf
of itself and the Lenders have entered into a priorities and
indemnities agreement (the "Priorities and Indemnities
Agreement") dated [ ] December, 1994 in connection
with the financing of the Lessor's acquisition of the
Aircraft by the Lenders pursuant to which, inter alios,
the [ ] Lessee, the Lessor, the Grantor,
the Guarantor (as defined below), the Lenders, the Agent and
the Security Agent have agreed, inter alia, the
subordination of the Second Mortgage to the mortgage granted
by the Lessor to the Security Agent (as defined below).
D. It is a condition of the Priorities and Indemnities
Agreement that the Security Agent, the Agent and the Lessor
(as defined below) receive from the Grantor a duly executed
Power of Attorney in the form of this Power of Attorney.
1. In this Power of Attorney, the following expressions shall
bear the following meanings:-
(a) "Guarantor" means International Lease Finance
Corporation;
(b) "Lenders" means National Westminster Bank Plc and
[ ] Banque Paribas, National Westminster
Bank Plc (Paris Branch) and [ ],
Bayerische Hypotheken-und Wechsel-Bank A.G.,
Kreditanstalt fur Wiederaufbau and [ ] and
their successors, permitted assigns and permitted
transferees from time to time and "Lender" means any of
them; and
(c) "Secured Party" means each of (i) the Security Agent
for and on behalf of itself, the Agent and each of the
Lenders (ii) the Agent for and on behalf of itself and
each of the Lenders and (iii) the Lessor jointly and
severally.
2. The Grantor hereby confers an irrevocable and unconditional
power of attorney in favour of each Secured Party jointly
and severally (with the right of substitution and
re-substitution, and with the right to revoke any
substitution or re-substitution granted) upon the earlier of
(i) the date upon which the Lessor (or the Security Agent as
assignee pursuant to the General Security Assignment dated [
] 199[ ] and made between the Lessor and the
Security Agent) terminates the Lease PROVIDED THAT at such
time the [ ] Lessee is obliged to pay the
Termination Sum (as that term is defined in the Lease) and
has failed to pay the same when due or the leasing of the
Aircraft pursuant to the Lease has expired by effluxion of
time; and (ii) the expiry by effluxion of time of the
leasing of the Aircraft by the [ ] Lessee
pursuant to the circumstances where the leasing of the
Aircraft under the Lease has terminated or expired by
effluxion of time:-
<PAGE>
(a) to release, discharge, re-assign, de-register,
terminate and void and all of the interest of the
Grantor in the Aircraft [include details of Second
Mortgage];
(b) to represent the Grantor wheresoever and whatsoever in
all matters and affairs in connection with the matters
referred to in 2(a) above and/or any interest of the
Grantor registered in any personal property security
register; or
(c) to apply for and obtain permits, licences or approvals
with respect to any of the above matters so that the
Secured Party is empowered to do and perform all things
which the Grantor is now or would hereafter be entitled
and empowered to do and perform, without any exception,
in relation to those matters, all for the account of
the Grantor; or
(d) to sign, seal (if appropriate), deliver or execute any
and all documents, agreements, applications, consents
or other instruments of whatsoever nature as any of the
Secured Parties considers in its absolute discretion
necessary or desirable in connection with any or all of
the matters referred to in (a) to (c) inclusive above.
3. Each Secured Party is authorised to delegate to such person
or persons as it may choose the exercise of any or all of
the powers conferred on that Secured Party hereunder.
4. Without limiting the generality of any other indemnification
heretofore or hereafter provided by the Grantor, the Grantor
shall ratify and confirm whatsoever any of the Secured
Parties shall lawfully do or cause to be done.
5. The powers conferred by the Grantor in this Power of
Attorney are irrevocable and unconditional and are granted
for value and secure proprietary interests in and the
performance of obligations owed to the respective donees and
shall not terminate unless and until the Termination Sum (as
that term is defined in the Lease) and any and all other
amounts outstanding, or which may become outstanding, in
relation to the Aircraft from the [ ] Lessee
and/or the [Bermuda/Irish] Lessee and/or any Alternative
Lessee and/or any Additional Lessee and/or any Option Holder
and/or the Grantor to the Lessor, the 1994 Borrower, the
Agent, the Security Agent or any of the Lenders or any of
the 1994 Secured Parties under any of the Facility Documents
and/or any of the Operative Documents and/or any of the 1994
Facility Documents and/or any of the 1994 Operative
Documents (as those terms are defined in the Lease) have
been satisfied in full.
6. No failure or delay on the part of any of the Secured
Parties to exercise, and no delay in exercising any right,
power or privilege under this Power of Attorney shall
operate as a waiver thereof, nor shall the exercise of any
right, power or privilege under this Power of Attorney
preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
7. The powers as set out in this Power of Attorney shall become
effective from the date hereof.
<PAGE>
8. Unless otherwise defined herein, words and expressions used
in this Power of Attorney shall have the meanings set out in
the Lease.
9. This Power of Attorney shall be governed by and construed in
accordance with the laws of [England].
SIGNED as a DEED, )
SEALED and DELIVERED )
by [ILFC (BERMUDA) )
6, LTD] [ ] )
acting through its )
authorised signatory )
in the presence of:
The British Lenders
NATIONAL WESTMINSTER BANK PLC
By: ___/s/ P. Bull___
Name: P. Bull
Title: Director of Leasing & Asset Finance
CANADIAN IMPERIAL BANK OF COMMERCE
By: ___/s/ J.E. Richards___
Name: J. E. Richards
Title: Officer
MIDLAND BANK PLC
By: __/s/ M. Harris___
Name: M. Harris
Title: Corporate Banking Manager
<PAGE>
THE BANK OF NOVA SCOTIA
By: __/s/ William Swords____
Name: W. Swords
Title: Relationship Manager
THE SUMITOMO TRUST & BANKING CO., LTD.
By: __/s/ J. McNeill___
Name: J. McNeill
Title: Attorney-in-Fact
BAYERISCHE HYPOTHEKEN-UND WECHEL-BANK AG
By: __/s/ J. Bullock__ ___/s/ S. Tracy__
Name: J. Bullock S. Tracy
Title: Assistant Manager Officer
CIBC INC.
By: __/s/ N. Bowyen__
Name: N. Bowyen
Title: Manager
The French Lenders
BANQUE PARIBAS
By: __/s/ S. Ries__
Name: S. Ries
Title: V.P. Aerospace Group
<PAGE>
NATIONAL WESTMINSTER BANK PLC (PARIS BRANCH)
By: __/s/ P. Bull___
Name: P. Bull
Title: Director of Leasing & Asset Finance
BANQUE INDOSUEZ
By: __/s/ S. Ries
Name: S. Ries
Title: Attorney-in-Fact
BANQUE NATIONALE DE PARIS
By: __/s/ MP Peltre__
Name: MP Peltre
Title: Manager
CREDIT FONCIER DE FRANCE
By: __/s/ S. Ries__
Name: S. Ries
Title: Attorney-in-Fact
CREDIT NATIONAL
By: __/s/ B. Lecey__
Name: B. Lecey
Title: Head of Asset Finance
ROYAL BANK OF CANADA S.A.
By: __/s/ S. Ries__
Name: S. Ries
Title: Attorney-in-Fact
SOCIETE GENERALE
By: __/s/ S. Ries__
Name: S. Ries
Title: Attorney-in-Fact
<PAGE>
THE FUJI BANK, LIMITED
By: __/s/ MH Percy__
Name: M.H. Percy
Title: Attorney-in-Fact
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: __/s/ AM Dumortier__
Name: AM Dumortier
Title: Director
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: __/s/ K. Herremann__
Name: K. Herremann
Title: General Joint Manager
The German Lenders
BAYERISCHE HYPOTHEKEN-UND WECHSEL-BANK AG
By: __/s/ Thomas Christopheson___ __/s/ H. P. Mathe___
Name: T. Christopheson H.P. Mathe
Title: Vice President Assistant Vice President
KREDITANSTALT FUR WIEDERAUFBAU
By: __/s/ C. Spaab__
Name: C. Spaab
Title: Vice President
BAYERISCHE LANDESBANK GIROZENTRALE
By: __/s/ H. P. Mathe__
Name: H. P. Mathe
Title: Attorney-in-Fact
<PAGE>
COMMERZBANK AG
By: __/s/ Thomas Christopheson__
Name: T. Christopheson
Title: Attorney-in-Fact
LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE
By: __/s/ P. Bull__
Name: P. Bull
Title: Attorney-in-Fact
NATIONAL WESTMINSTER BANK AG
By: __/s/ P. Bull___
Name: P. Bull
Title: Attorney-in-Fact
The Agent
NATIONAL WESTMINSTER BANK PLC
By: __/s/ P. Bull__
Name: P. Bull
Title: Director of Leasing & Asset Finance
The Security Agent
NATIONAL WESTMINSTER BANK PLC
By: __/s/ P. Bull__
Name: P. Bull
Title: Director of Leasing & Asset Finance
<PAGE>
The Borrower
ENCORE LEASING LIMITED
By: __/s/ F. Rae___
Name: F. Rae
Title: Attorney-in-Fact
The Bermuda Lessee
ILFC (BERMUDA) 7, LTD.
By: __/s/ Alan H. Lund__
Name: A. Lund
Title: Director
The Irish Lessee
ILFC IRELAND 2 LIMITED
By: __/s/ N. Sommerville__
Name: N. Sommerville
Title: Director
The Bermuda Parent
ILFC (BERMUDA) 5, LTD.
By: __/s/ Alan H. Lund__
Name: A. Lund
Title: Director
The Irish Parent
ILFC IRELAND 3 LIMITED
By: __/s/ N. Sommerville__
Name: N. Sommerville
Title: Director
The Bermuda Option Holder
ILFC (BERMUDA) 6, LTD.
By: __/s/ Alan H. Lund__
Name: A. Lund
Title: Director
The Guarantor
INTERNATIONAL LEASE FINANCE CORPORATION
By: __/s/ Alan H. Lund__
Name: A. Lund
Title: Senior Vice President
BF49487.05
<PAGE>
EXHIBIT 10.20
GUARANTEE AND INDEMNITY
Dated 14 December, 1994
INTERNATIONAL LEASE FINANCE CORPORATION
as Guarantor
and
ENCORE LEASING LIMITED
as Borrower
GUARANTEE AND INDEMNITY (LESSOR)
relating to
in respect of certain Airbus A300, A310, A320, A321
A330 and A340 Aircraft
WILDE SAPTE
--
LONDON
<PAGE>
INDEX
Page
Clause Heading
1. DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . 2
2. GUARANTEE AND INDEMNITY . . . . . . . . . . . . . . . . . 3
3. DEMANDS AND CERTIFICATES. . . . . . . . . . . . . . . . . 4
4. TIME AND INDULGENCE . . . . . . . . . . . . . . . . . . . 5
5. CONTINUING SECURITY . . . . . . . . . . . . . . . . . . . 6
6. NO COMPETITION. . . . . . . . . . . . . . . . . . . . . . 6
7. GUARANTOR'S OBLIGATIONS . . . . . . . . . . . . . . . . . 7
8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 8
9. PAYMENTS AND TAXES. . . . . . . . . . . . . . . . . . . . 9
10. ADDITIONAL SECURITY . . . . . . . . . . . . . . . . . . . 10
11. ACKNOWLEDGEMENT AND DECLARATION . . . . . . . . . . . . . 11
12. ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . 12
13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 12
14. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 15
15. JUDGMENT CURRENCY . . . . . . . . . . . . . . . . . . . . 16
SCHEDULE - Form of Demand by the Borrower. . . . . . . . . . . 18
<PAGE>
THIS GUARANTEE AND INDEMNITY is made this 14 day of December,
1994 BETWEEN:
1. INTERNATIONAL LEASE FINANCE CORPORATION, a corporation
incorporated under the laws of the State of California,
having its principal office at 1999 Avenue of the Stars,
39th Floor, Los Angeles, California 90067, USA (the
"Guarantor" which expression shall include its
successors); and
2. ENCORE LEASING LIMITED, a company incorporated under the
laws of the Cayman Islands and having its registered
office at P.O. Box 2003, George Town, Grand Cayman, Cayman
Islands, BWI (the "Borrower" which expression shall
include its successors, permitted assigns and permitted
transferees from time to time).
WHEREAS:
(A) The Bermuda Parent and the Irish Parent are direct
Subsidiaries of the Guarantor and any other Parent will be
a direct Subsidiary of the Guarantor.
(B) Each of the Bermuda Lessee and the Bermuda Option Holder
is a direct Subsidiary of the Bermuda Parent, the Irish
Lessee is a direct subsidiary of the Irish Parent and any
Alternative Lessee and any Additional Lessee will be a
wholly owned indirect subsidiary of the Guarantor.
(C) By the Facility Agreement, the Lenders have agreed to make
available to the Borrower the facilities referred to
therein on the terms and subject to the conditions
contained therein to enable the Borrower to purchase the
Aircraft for the purpose of leasing the Aircraft to the
relevant Lessee in each case pursuant to a Lease Agreement
upon the terms and subject to the conditions contained in
such Lease Agreement.
(D) Pursuant to the Priorities and Indemnities Agreement of
even date herewith and made between the Bermuda Lessee,
the Irish Lessee, the Guarantor, the Bermuda Option
Holder, the Borrower, the Lenders, the Agent and the
Security Agent, the Bermuda Lessee and the Irish Lessee
have agreed, inter alia, to indemnify the Borrower on the
terms and subject to the conditions contained therein.
(E) It is a condition precedent to the obligations of the
Borrower under the Facility Documents and each of the
Lease Agreements that the Guarantor executes and delivers
this Guarantee and Indemnity.
<PAGE>
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Guarantee (including the Recitals and the
Schedule) words and expressions used herein shall, unless
otherwise defined herein or except where the context
otherwise requires, have the meanings given to them in the
Facility Agreement.
1.2 In this Guarantee and Indemnity (including the Recitals
and the Schedule) the following words and expressions
shall have the following meanings:
"FACILITY AGREEMENT" means the aircraft facility agreement
of even date herewith between (1) the banks and financial
institutions named therein, (2) National Westminster Bank
Plc (as Agent), (3) National Westminster Bank Plc (as
Security Agent), (4) Encore Leasing Limited, (5) ILFC
(Bermuda) 7, Ltd., (6) ILFC Ireland 2 Limited, (7) ILFC
(Bermuda) 5, Ltd., (8) ILFC Ireland 3 Limited, (9) ILFC
(Bermuda) 6, Ltd. and (10) International Lease Finance
Corporation relating to the financing of the Aircraft;
"GUARANTEED AGREEMENTS" means each of the Facility
Documents and each of the Operative Documents to which any
one or more of the Obligors is or will be a party;
"GUARANTEED OBLIGATIONS" means any and all monies,
liabilities and obligations (whether actual or contingent,
whether now existing or hereafter arising, whether or not
for the payment of money, and including, without
limitation, any obligation or liability to pay damages and
including any interest which, but for the application of
bankruptcy or insolvency laws, would have occurred on the
amounts in question) and without regard as to whether any
such monies, liabilities and obligations may, for the
purposes of applicable law, be recharacterised as other
than lease rental obligations, which are now or which may
at any time and from time to time hereafter be due, owing,
payable or incurred or be expressed to be due, owing,
payable or incurred from or by any one or more of the
Obligors to the Borrower under or in connection with any
of the Guaranteed Agreements to which the Borrower is or,
as the case may be, will when the same are entered into,
be a party and references to "Guaranteed Obligations"
include references to any part thereof;
<PAGE>
"LIABILITY" means a liability, loss, charge, claim,
proceeding, damage, judgment, enforcement, penalty, fine,
fee, cost or expense of whatsoever nature including,
without limitation, attorney's fees and costs incurred
after the commencement of or in connection with any
bankruptcy or other insolvency proceeding; and
"OBLIGORS" means any or all of the Bermuda Lessee, the
Irish Lessee, any Alternative Lessee, any Additional
Lessee, the Bermuda Parent, the Irish Parent, any other
Parent, the Bermuda Option Holder, any other Option Holder
and "Obligor" means any one of them.
1.3 Clauses 1.3 and 1.4 of the Facility Agreement shall be
deemed to be incorporated, mutatis mutandis, herein as if
references therein to "this Facility Agreement" were
references to "this Guarantee and Indemnity".
2. GUARANTEE AND INDEMNITY
2.1 In consideration of the Borrower entering into the
Facility Documents and the Operative Documents to which it
is or is to be a party:
2.1.1 the Guarantor unconditionally and irrevocably:
(a) guarantees to the Borrower the due and
punctual observance and performance by each
of the Obligors of all the terms,
conditions, covenants and obligations on
the part of each of the Obligors contained
in the Guaranteed Agreements to which the
Borrower is or, as the case may be, will
when the same are entered into, be a party;
and
(b) promises to pay or cause to be paid on
demand by the Borrower upon the Guarantor
each and every sum of money, and in the
same currency which any one or more of the
Obligors has agreed or is obliged or
liable, or from time to time becomes
obliged or liable, to pay to the Borrower
in respect of any of the Guaranteed
Obligations and fails to pay when due;
<PAGE>
2.1.2 the Guarantor hereby unconditionally and
irrevocably agrees as a primary obligation to
indemnify the Borrower on demand on a full
indemnity basis and hold the Borrower harmless
against each and every Liability from time to
time suffered or incurred by the Borrower in
connection with or as a direct or indirect
result of any of the warranties and
representations on the part of any one or more
of the Obligors made or to be made in, or in
respect of, the Guaranteed Agreements being
untrue or inaccurate in any respect whatsoever
when made or deemed to be made;
2.1.3 the Guarantor hereby unconditionally and
irrevocably agrees as a primary obligation to
indemnify the Borrower on demand on a full
indemnity basis and hold the Borrower harmless
against each and every breach, default or
failure by any one or more of the Obligors duly
and punctually to perform and observe any of the
Guaranteed Obligations and against each and
every Liability from time to time suffered or
incurred by the Borrower in connection with or
as a direct or indirect result of any such
breach, default or failure by any one or more of
the Obligors to perform and observe any of the
Guaranteed Obligations;
2.1.4 the Guarantor hereby unconditionally and
irrevocably agrees as a primary obligation to
indemnify the Borrower on demand on a full
indemnity basis and hold the Borrower harmless
against each and every Liability from time to
time suffered or incurred by the Borrower as a
result of any of the Guaranteed Agreements being
or becoming void, voidable or unenforceable for
any reason whatsoever, whether or not known to
the Borrower, the amount of each such indemnity
being the amount which the Borrower would have
otherwise been entitled to recover from any one
or more of the Obligors at any time under or in
respect of the Guaranteed Agreements so
affected; and
2.1.5 in addition to its liabilities under Clauses
2.1.1, 2.1.2, 2.1.3 and 2.1.4, the Guarantor
shall pay or cause to be paid to the Borrower on
demand interest at the Default Rate (both before
and after judgment) accruing on a day to day
basis, and on the basis of a 360 day year, on
each amount (or any part thereof) for the time
being due to the Borrower under this Guarantee
and Indemnity and unpaid from the date of demand
on the Guarantor for payment until payment is
made (but excluding the day on which value for
any payment made is received by the Borrower).
<PAGE>
3. DEMANDS AND CERTIFICATES
3.1 In order to make any demand under this Guarantee and
Indemnity in respect of the Guaranteed Obligations or any
other amount payable by the Guarantor under this Guarantee
and Indemnity, the Borrower shall serve upon the Guarantor
a notice in writing substantially in the form of the
Schedule.
3.2 Any certificate from any director, officer or authorised
person of the Borrower contained in any demand, notice or
other communication given or made by the Borrower under
this Guarantee and Indemnity in relation to the amount of
the Guarantor's liability in relation to the Guaranteed
Obligations or any other amount payable by the Guarantor
under this Guarantee and Indemnity shall be conclusive and
binding on the Guarantor in the absence of manifest error.
4. TIME AND INDULGENCE
4.1 The Borrower shall be at liberty at all times and from
time to time, whether before or after any demand for
payment under this Guarantee and Indemnity and without
discharging or in any way affecting the Guarantor's
liability hereunder, to do all or any of the following:
4.1.1 terminate or amend any of the Guaranteed
Agreements in any manner whatsoever;
4.1.2 grant to any one or more of the Obligors or to
any other person any time or indulgence;
4.1.3 terminate the leasing of any of the Aircraft in
accordance with the terms of the Lease Agreement
relating to that Aircraft;
4.1.4 deal with, exchange, renew, vary, release,
modify or abstain from perfecting or enforcing
any securities, guarantees or rights which the
Borrower may now or hereafter have from or
against any one or more of the Obligors or any
other person in respect of the respective
obligations of such other person under or in
respect of the Guaranteed Agreements or the
transactions contemplated thereby;
4.1.5 compound with, discharge or vary the liability
of any one or more of the Obligors or any other
person or guarantor to the Borrower, or concur
in, accept or vary any compromise, arrangement
or settlement with any one or more of the
Obligors or any other person or guarantor or
concur in or vary any deed of arrangement or
deed of assignment for the benefit of creditors
of any such person;
<PAGE>
4.1.6 omit to prove or fail to maintain any right of
proof for or to claim or enforce payment of any
dividend or composition; and
4.1.7 take or omit to take any security from any one
or more of the Obligors or any other person or
guarantor in respect of the obligations of any
one or more of the Obligors under or in respect
of the Guaranteed Agreements or the transactions
contemplated thereby whether contemporaneously
with this Guarantee and Indemnity or otherwise.
5. CONTINUING SECURITY
5.1 This Guarantee and Indemnity shall be a continuing
security and accordingly:
5.1.1 shall not be discharged by any partial payment
(except, subject to Clauses 11.1.1 and 11.1.2,
to the extent of such partial payment) by any
one or more of the Obligors or any other person
under or in respect of any of the Guaranteed
Agreements;
5.1.2 shall extend to cover the balance due at any
time from any one or more of the Obligors to the
Borrower under or in respect of any of the
Guaranteed Agreements or the transactions
contemplated thereby;
5.1.3 shall be in addition to and not in substitution
for or derogation of any other security which
the Borrower may at any time hold in respect of
the obligations of any one or more of the
Obligors under or in respect of any of the
Guaranteed Agreements or the transactions
contemplated thereby; and
5.1.4 except to the extent that the Borrower expressly
waives in writing the Guarantor's obligations
under this Guarantee and Indemnity, shall not be
discharged or in any way affected by any action
taken or not taken by the Borrower.
6. NO COMPETITION
6.1 From the date or dates upon which any demand is properly
made against the Guarantor under this Guarantee and
Indemnity until such time as the Borrower has received,
and is entitled to retain, payment of the Guaranteed
Obligations in full, the Guarantor shall not:
<PAGE>
6.1.1 claim any set-off or counterclaim against any
one or more of the Obligors in respect of any
payment by the Guarantor hereunder or in respect
of any outstanding actual or contingent
liability between the Guarantor and any one or
more of the Obligors; or
6.1.2 make or enforce any claim or right (including a
right of subrogation or contribution) against
any one or more of the Obligors or prove in
competition with the Borrower in the event of
the liquidation or winding-up of any one or more
of the Obligors in respect of any payment by the
Guarantor hereunder or in respect of any
outstanding actual or contingent liability
between the Guarantor and any one or more of the
Obligors; or
6.1.3 in competition with the Borrower claim the
benefit of any security or guarantee now or
hereafter held by the Borrower for any money or
liabilities due or incurred by any one or more
of the Obligors to the Borrower or any share
therein.
7. GUARANTOR'S OBLIGATIONS
7.1 The Guarantor's obligations under this Guarantee and
Indemnity are those of a primary obligor and exist
irrespective of any total or partial invalidity,
illegality or unenforceability of any of the Guaranteed
Agreements and/or the Guaranteed Obligations. The
Guarantor agrees as a separate and independent stipulation
that if any sum arising under any liability under the
guarantees contained herein is not or would not be
recoverable on the footing of a guarantee whether by
reason of any legal limitation, disability or incapacity
on or of any one or more of the Obligors or any other act
or circumstance whether known to the Borrower or not
(including without limiting the generality of the
foregoing the winding up of any one or more of the
Obligors, the loss for any reason whatsoever by any one or
more of the Obligors of its corporate status or existence,
or any other fact or circumstance which would or might
otherwise constitute a legal or equitable discharge of or
defence to the Guarantor) such sum shall nevertheless be
recoverable from the Guarantor as a sole and principal
debtor and shall be paid or caused to be paid by the
Guarantor upon demand by the Borrower. The Borrower shall
not be obliged before making demand under or taking steps
to enforce this Guarantee and Indemnity:
<PAGE>
7.1.1. to take action or obtain judgment against any
one or more of the Obligors or any other person
in any court or tribunal; nor
7.1.2 to make or file any claim in a bankruptcy or
liquidation of any one or more of the Obligors;
nor
7.1.3 to exercise diligence against any one or more of
the Obligors or any other person under any of
the Guaranteed Agreements or the transactions
contemplated thereby.
7.2 The Guarantor waives and agrees not to enforce or claim
the benefit of any and all rights it has or may from time
to time have as surety under any applicable law which is
or may be inconsistent with any of the provisions of this
Guarantee and Indemnity.
7.3 The Guarantor hereby waives: (1) notice of acceptance
hereof; (2) notice of any financial accommodations made or
extended under the Guaranteed Agreements or of the
creation or of the existence of any Guaranteed
Obligations; (3) notice of the amount of the Guaranteed
Obligations, subject, however, to the Guarantor's right to
make inquiry of the Borrower to ascertain the amount of
the Guaranteed Obligations at any reasonable time; (4)
notice of any adverse change in the financial condition of
any one or more of the Obligors or of any other fact that
might increase the Guarantor's risk hereunder; (5) except
as expressly required under any of the Guaranteed
Agreements, notice of any event of default under the
Guaranteed Agreements; and (6) all other notices (except
if such notice is specifically required to be given to the
Guarantor hereunder or under any Guaranteed Agreements)
and demands to which the Guarantor might otherwise be
entitled.
8. REPRESENTATIONS AND WARRANTIES
The Guarantor acknowledges that the Borrower has entered
into the Facility Documents to which it is a party and
will, when the same are executed, enter into the Operative
Documents to which it will be a party in full reliance on
the representations and warranties by the Guarantor in the
terms set out in Clause 6.3 of the Facility Agreement and
the rights of the Borrower in respect thereof shall
survive the execution and delivery of the Guarantee and
Indemnity.
<PAGE>
9. PAYMENTS AND TAXES
9.1 PAYMENTS
9.1.1. All sums payable by the Guarantor pursuant to or
in connection with this Guarantee and Indemnity
shall be paid in full without any set-off or
counterclaim whatsoever and free and clear of
all deductions or withholdings whatsoever save
only as may be required by law.
9.1.2 If any deduction or withholding is required by
law in respect of any payment due to the
Borrower pursuant to or in connection with this
Guarantee and Indemnity, the Guarantor shall:
(a) ensure or procure that the deduction or
withholding is made and that it does not
exceed the minimum legal requirement
therefor;
(b) pay, or procure the payment of, the full
amount deducted or withheld to the relevant
Taxation or other authority in accordance
with the applicable law;
(c) increase the payment in respect of which
the deduction or withholding is required so
that the net amount received by the
Borrower after the deduction or withholding
(and after taking account of any further
deduction or withholding which is required
to be made which arises as a consequence of
the increase) shall be equal to the amount
which the Borrower would have been entitled
to receive in the absence of any
requirement to make a deduction or
withholding; and
(d) promptly deliver or procure the delivery to
the Borrower of appropriate receipts
evidencing the deduction or withholding
which has been made;
PROVIDED THAT if the Borrower determines that it
has received, realised, utilised and retained a
Tax benefit by reason of any deduction or
withholding in respect of which the Guarantor
has made an increased payment or paid a
compensating sum under this Clause 9.1.2, the
Borrower shall, provided it has received all
amounts which are then due and payable by the
Guarantor under any of the provisions of this
Guarantee and Indemnity, the other Facility
Documents and the Operative Documents, pay to
the Guarantor on demand (to the extent that the
Borrower can do so without prejudicing the
amount of that benefit and the right of the
Borrower to obtain any other benefit, relief or
allowance which may be available to it) such
amount, if any, as the Borrower in its absolute
discretion shall determine will leave the
Borrower in no worse position than the Borrower
would have been in if the deduction or
withholding had not been required;
<PAGE>
PROVIDED FURTHER THAT:
(i) if the Borrower has made a payment to the
Guarantor pursuant to Clause 9.1.2 on
account of any Tax benefit and it
subsequently transpires that the Borrower
did not receive that Tax benefit, or
received a lesser Tax benefit, the
Guarantor shall pay on demand to the
Borrower such sum as the Borrower may
determine being necessary to restore the
after-Tax position of the Borrower to that
which it would have been had no adjustment
under this proviso (i) been necessary; and
(ii) the Borrower shall not be obliged to make
any payment under Clause 9.1.2, by doing
so, it would contravene the terms of any
applicable law or any notice, direction or
requirement of any governmental or
regulatory authority (whether or not having
the force of law).
10. ADDITIONAL SECURITY
This Guarantee and Indemnity is in addition to and is not
to prejudice, or be prejudiced by, any other guarantee or
security for the obligations of any one or more of the
Obligors or any other person under the Guaranteed
Agreements or otherwise now or hereafter held by the
Borrower and it shall not be necessary for the Borrower
before claiming payment under this Guarantee and Indemnity
to resort to or seek to enforce any other guarantee or
security in respect of the said obligations of any one or
more of the Obligors or any other person.
11. ACKNOWLEDGEMENT AND DECLARATION
11.1 The Guarantor agrees, acknowledges and declares that:
11.1.1 if any payment received by the Borrower in
respect of monies owing or due and payable by
any one or more of the Obligors to the Borrower
shall on the subsequent insolvency or
liquidation of the relevant Obligor be avoided
under any laws relating to insolvency or
liquidation, such payment shall not be
considered as discharging or diminishing the
liability of the Guarantor under this Guarantee
and Indemnity and this Guarantee and Indemnity
shall continue to apply as if such payment had
at all times remained owing by the relevant
Obligor;
<PAGE>
11.1.2 this Guarantee and Indemnity shall remain the
property of the Borrower and notwithstanding
that all monies and liabilities due or incurred
by each of the Obligors to the Borrower which
are guaranteed hereunder shall have been paid or
discharged the Borrower shall be entitled not to
discharge this Guarantee and Indemnity or any
security held by the Borrower for the
obligations of the Guarantor hereunder for a
period of seven (7) months after the last of
such monies and liabilities have been paid or
discharged and in the event of bankruptcy;
winding-up or any similar proceedings being
commenced in respect of any one or more of the
Obligors the Borrower shall be at liberty not to
discharge this Guarantee and Indemnity or any
security held by the Borrower for the
obligations of the Guarantor hereunder for and
during such further period as the Borrower may
reasonably determine;
11.1.3 for the purpose of enabling the Borrower to sue
any one or more of the Obligors and/or any other
guarantor of the liabilities which are
guaranteed by this Guarantee and Indemnity or to
prove in its or their liquidation or in any
similar proceedings for any monies due and
unpaid by any one or more of the Obligors to the
Borrower, the Borrower may at any time, place
and keep for such time as it may think fit any
monies received hereunder, or under any of such
other guarantees or from any other person, to
the credit of an interest bearing securities
realised account or accounts without any
obligation on the part of the Borrower to apply
the same or any part thereof in or towards the
discharge of the indebtedness and liabilities of
any one or more of the Obligors to the Borrower;
and
11.1.4 The Guarantor is currently informed of the
financial condition of each of the Obligors and
of all other circumstances which a diligent
inquiry would reveal and which bear upon the
risk of non-payment of the Guaranteed
Obligations and that the Guarantor will continue
to keep informed of the financial condition of
each of the Obligors and of all other
circumstances which bear upon the risk of non-
payment or non-performance of the Guaranteed
Obligations.
12. ASSIGNMENT
12.1 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement, the Guarantor may
not assign or transfer any of its rights or obligations
under this Guarantee and Indemnity without the prior
written consent of each of the Lenders (which the Lenders
shall have absolute discretion to withhold).
<PAGE>
12.2 Subject to the provisions of Clauses 5.5.2 and 13 of the
Priorities and Indemnities Agreement and the circumstances
described in the proviso to Clause 24.3 of the Priorities
and Indemnities Agreement, the Borrower may not assign or
transfer any of its rights or obligations under this
Guarantee and Indemnity without the prior written consent
of the Security Agent acting on the instructions of the
Majority Lenders and, prior to the occurrence of an
Acceleration Event, the Guarantor (which the Lenders and
the Guarantor shall have absolute discretion to withhold)
provided that the Borrower may assign its rights under the
Guarantee and Indemnity to the Security Agent in
accordance with the terms of the Deed of Assignment of
Guarantee and Indemnity (Lessor).
13. MISCELLANEOUS
13.1 The terms and conditions of this Guarantee and Indemnity
shall not be amended, modified or varied otherwise than by
an instrument in writing executed by or on behalf of the
parties hereto.
13.2 No failure or delay on the part of the Borrower in
exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power preclude any
other or further exercise of any such right or power. The
rights and remedies provided herein are cumulative and not
exclusive of any rights or remedies provided by law.
13.3 The Guarantor agrees from time to time, and at the
Guarantor's expense, to execute and deliver any and all
such documents, instruments, certificates, consents and do
all such other acts and things as may be required by law
or requested by the Borrower to give effect to the terms
of this Guarantee and Indemnity.
13.4 If any of the provisions of this Guarantee and Indemnity
becomes invalid, illegal or unenforceable in any respect
under any applicable law, neither the validity, legality
or enforceability of the remaining provisions hereof nor
the validity, legality and enforceability of such
provision under the laws of any other jurisdiction shall
be in any way be affected or impaired.
13.5 This Guarantee and Indemnity may be executed in any number
of counterparts each of which when executed and delivered
shall constitute an original, but all the counterparts
shall together constitute but one and the same instrument.
<PAGE>
13.6 COMMUNICATIONS
Unless otherwise expressly provided herein, all notices,
requests, demands or other communications to or upon the
respective parties hereto shall:
13.6.1 in order to be valid be in English and in
writing;
13.6.2 be deemed to have been duly served on, given to
or made in relation to a party if it is:
(a) left at the address of that party set out
herein or at such other address as that
party may notify to the other party hereto
in writing from time to time; or
(b) posted by first-class postage prepaid mail
in an envelope addressed to that party at
such address; or
(c) sent by facsimile to the facsimile number
of that party set out herein or to such
other number as that party may notify to
the other party hereto from time to time.
13.6.3 be sufficient if:
(a) executed under the seal of the party
giving, serving or making the same; or
(b) signed or sent on behalf of the party
giving, serving or making the same by any
attorney, director, secretary, agent or
other duly authorised representative of
such party;
13.6.4 be effective:
(a) in the case of a letter, when left at the
address referred to in sub-Clause 13.6.2(a)
or delivered in person to any officer of
the addressee or (as the case may be) seven
(7) Business Days after being deposited in
the post first-class postage prepaid in an
envelope addressed to the addressee at the
address referred to in sub-Clause
13.6.2(a); and
(b) in the case of a facsimile transmission,
when receipt is confirmed by return
facsimile or by telephone.
<PAGE>
13.7 For the purposes of Clause 13.6, all notices, requests,
demands or other communications shall be given or made by
being addressed as follows:
(a) Guarantor:
Address: 1999 Avenue of the Stars
39th Floor
Los Angeles
California 90067
USA
Facsimile No.: 0101 310 788 1990
Tel. No.: 0101 310 788 1999
Attention: Legal Department and
Chief Financial Officer
(b) Borrower: Encore Leasing Limited
Address: P.O. Box 2003
George Town
Grand Cayman
Cayman Islands
BWI
Facsimile No.: 1 809 949 8340
Tel. No.: 1 809 949 7942
Attention: Trust Services
All notices to the Borrower shall be copied to the
Security Agent at:
National Westminster Bank Plc
Corporate Banking Agency Group
7th Floor
135 Bishopsgate
London EC2M 3UR
England
Facsimile No.: 0171 375 5854
Tel. No.: 0171 375 5738/5931/5929
Attention: Head of Corporate Banking Agency
Group
Nothing herein contained shall affect the right to serve
process in any other manner permitted by law.
<PAGE>
13.8 ENTIRE AGREEMENT
This Guarantee and Indemnity and any letter agreements of
even date herewith between the Guarantor and the Borrower,
constitute the entire agreement between the parties hereto
in relation to this Guarantee and Indemnity and supersede
all previous proposals, agreements and other written and
oral communications in relation thereto.
14. GOVERNING LAW
14.1 This Guarantee and Indemnity shall be governed by, and
construed in accordance with English law.
14.2 For the exclusive benefit of the Borrower, the Guarantor
irrevocably agrees that the courts of England shall have
jurisdiction to hear and determine any suit, action, or
proceeding, and to settle any disputes which may arise out
of or in connection with this Guarantee and Indemnity
("Proceedings") and the Guarantor irrevocably submits to
the jurisdiction of such courts.
14.3 The submission to the jurisdiction of the courts referred
to in Clause 14.2 shall not (and shall not be construed so
as to) limit the right of either party to take Proceedings
in any other court of competent jurisdiction nor shall the
taking of Proceedings in any one or more jurisdiction
preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not.
14.4 The Guarantor irrevocably waives (and irrevocably agrees
not to raise) any objection which it may have now or
hereafter to the laying of the venue of any Proceedings in
the courts of England and any claim that any such
Proceedings have been brought in an inconvenient forum and
further irrevocably agrees that a judgment in any
Proceedings brought in the courts of England shall be
conclusive and binding upon it and may be enforced in the
courts of any other jurisdiction.
14.5 To the extent that the Guarantor or any of the property of
the Guarantor is or becomes entitled at any time to any
immunity on the grounds of sovereignty or otherwise from
any legal action, suit or proceeding, from set-off or
counterclaim, from the jurisdiction of any competent
court, from service of process, from attachment prior to
judgment, from attachment in aid of execution, or from
execution prior to judgment, or other legal process in any
jurisdiction, the Guarantor for itself and its property
does hereby irrevocably and unconditionally waive, and
agrees not to plead or claim, any such immunity with
respect to its obligations, liabilities or any other
matter under or arising out of or in connection with this
Guarantee and Indemnity or the subject matter hereof or
thereof.
<PAGE>
15. JUDGMENT CURRENCY
No payment to the Borrower under this Guarantee and
Indemnity or pursuant to any judgment or order of any
court or otherwise shall operate to discharge the
obligations of the Guarantor in respect of which it was
made unless and until payment in full shall have been
received in the currency in which the amount in question
is expressed to be payable under the Guaranteed Agreements
(the "Contractual Currency") and the Guarantor shall
indemnify the Borrower to the extent that the amount of
any such payment shall on actual conversion into the
Contractual Currency (and after payment of the costs of
such conversion) fall short of the amount of the relevant
obligation expressed in the Contractual Currency for which
purpose the Borrower shall have a further and separate
cause of action against the Guarantor for the recovery of
such sum as shall after conversion into the Contractual
Currency be equal to the amount of the shortfall.
IN WITNESS whereof this Guarantee and Indemnity has been executed
by the duly authorised representatives of the parties hereto on
the date first above written.
<PAGE>
THE GUARANTOR
SIGNED BY A. LUND SENIOR VICE PRESIDENT )
INTERNATIONAL LEASE FINANCE CORPORATION )
acting through its duly authorized ) /s/ Alan H. Lund
signatory in the presence of: ) /s/ V. Westcott
V. Westcott, Trainee Solicitor )
THE BORROWER
SIGNED BY F. RAE )
ENCORE LEASING LIMITED )
acting through its duly ) /s/ David O'Brien
authorised signatory )
in the presence of: David O'Brien )
Trainee Solicitor )
<PAGE>
SCHEDULE
FORM OF DEMAND BY THE BORROWER
From: Encore Leasing Limited
To: International Lease Finance Corporation
1999 Avenue of the Stars
39th Floor
Los Angeles
California 90067
USA
Attention: [ ]
Date: [ ]
Dear Sir,
DEMAND UNDER GUARANTEE AND INDEMNITY DATED [ ] DECEMBER 1994 AND
MADE BETWEEN INTERNATIONAL LEASE FINANCE CORPORATION AND ENCORE
LEASING LIMITED ("THE GUARANTEE AND INDEMNITY")
Words and expressions defined in the Guarantee and Indemnity
shall have the same meaning in this Demand.
We hereby demand immediate payment of the sum of [ ] being
an amount due and payable [under Clause * of the Guarantee and
Indemnity] [by the [SPECIFY OBLIGOR] under the Guaranteed
Agreements which the [SPECIFY OBLIGOR] has failed to pay in
accordance with the terms of the Guaranteed Agreements].
Please make payment of the amount demanded hereby to the Security
Agent's account with National Westminster Bank Plc account number
[ ] Federal Funds ABA No. [ ] quoting reference [ ].
Interest will continue to accrue pursuant to the terms of the
Guaranteed Agreements on the amount demanded until payment in
full.
We hereby reserve all our rights under the Guaranteed Documents
and our rights under the Guarantee and Indemnity to make further
demands on you from time to time pursuant to and in accordance
with the terms of the Guarantee and Indemnity.
Yours faithfully
___________________
For and on behalf of
ENCORE LEASING LIMITED
BF52154.04
<PAGE>
EXHIBIT 10.21
$450,000,000 REVOLVING CREDIT AGREEMENT
DATED AS OF
FEBRUARY 2, 1995
AMONG
INTERNATIONAL LEASE FINANCE CORPORATION
UNION BANK OF SWITZERLAND
LOS ANGELES BRANCH
AND
THE OTHER BANKS (AS DEFINED HEREIN)
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . 1
Section 1.1. Terms Generally. . . . . . . . . . . . . . 1
Section 1.2. Specific Terms . . . . . . . . . . . . . . 1
SECTION 2. BID LOANS AND BID NOTES . . . . . . . . . . . . 14
Section 2.1. Making of Bid Loans. . . . . . . . . . . . 14
Section 2.2. Procedure for Bid Loans. . . . . . . . . . 14
Section 2.3. Funding of Bid Loans . . . . . . . . . . . 16
Section 2.4. Bid Notes. . . . . . . . . . . . . . . . . 17
SECTION 3. COMMITTED LOANS AND NOTES . . . . . . . . . . . 17
Section 3.1. Agreement to Make Committed Loans. . . . . 17
Section 3.2. Procedure for Committed Loans. . . . . . . 17
Section 3.3. Maturity of Committed Loans. . . . . . . . 19
Section 3.4. Committed Notes. . . . . . . . . . . . . . 19
SECTION 4. INTEREST AND FEES . . . . . . . . . . . . . . . 19
Section 4.1. Interest Rates . . . . . . . . . . . . . . 19
Section 4.2. Interest Payment Dates . . . . . . . . . . 20
Section 4.3. Setting and Notice of Committed Loan
Rates. . . . . . . . . . . . . . . . . . . 20
Section 4.4. Facility Fee . . . . . . . . . . . . . . . 21
Section 4.5. Agent's Fees . . . . . . . . . . . . . . . 21
Section 4.6. Computation of Interest and Fees . . . . . 21
SECTION 5. REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS . . . . . . . . . . . . . . . . . . 22
Section 5.1. Voluntary Termination or Reduction of
the Commitments. . . . . . . . . . . . . . 22
Section 5.2. Voluntary Prepayments. . . . . . . . . . . 22
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF;
TAXES . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1. Making of Payments . . . . . . . . . . . . 23
Section 6.2. Pro Rata Treatment; Sharing. . . . . . . . 23
Section 6.3. Set-off. . . . . . . . . . . . . . . . . . 24
Section 6.4. Taxes, etc.. . . . . . . . . . . . . . . . 24
<PAGE>
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR
ABSOLUTE RATE LOANS, LIBOR RATE LOANS AND CD
RATE LOANS. . . . . . . . . . . . . . . . . . . 26
Section 7.1. Increased Costs. . . . . . . . . . . . . . 26
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair . . . . . . . . . . . 27
Section 7.3. Changes in Law Rendering Certain Loans
Unlawful . . . . . . . . . . . . . . . . . 28
Section 7.4. Funding Losses . . . . . . . . . . . . . . 28
Section 7.5. Discretion of Banks as to Manner of
Funding. . . . . . . . . . . . . . . . . . 29
Section 7.6. Conclusiveness of Statements; Survival
of Provisions. . . . . . . . . . . . . . . 29
SECTION 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . 29
Section 8.1. Organization, etc. . . . . . . . . . . . . 29
Section 8.2. Authorization; Consents; No Conflict . . . 30
Section 8.3. Validity and Binding Nature. . . . . . . . 30
Section 8.4. Financial Statements . . . . . . . . . . . 30
Section 8.5. Litigation and Contingent Liabilities. . . 31
Section 8.6. Employee Benefit Plans . . . . . . . . . . 31
Section 8.7. Investment Company Act . . . . . . . . . . 31
Section 8.8. Public Utility Holding Company Act . . . . 31
Section 8.9. Regulation U . . . . . . . . . . . . . . . 32
Section 8.10. Information. . . . . . . . . . . . . . . . 32
Section 8.11. Compliance with Applicable Laws, etc.. . . 32
Section 8.12. Insurance. . . . . . . . . . . . . . . . . 32
Section 8.13. Taxes. . . . . . . . . . . . . . . . . . . 33
Section 8.14. Use of Proceeds. . . . . . . . . . . . . . 33
Section 8.15. Pari Passu . . . . . . . . . . . . . . . . 33
Section 8.16. Ownership and Liens. . . . . . . . . . . . 33
<PAGE>
SECTION 9. COVENANTS . . . . . . . . . . . . . . . . . . . 33
Section 9.1. Reports, Certificates and Other
Information. . . . . . . . . . . . . . . . 33
Section 9.2. Existence. . . . . . . . . . . . . . . . . 35
Section 9.3. Nature of Business . . . . . . . . . . . . 36
Section 9.4. Books, Records and Access. . . . . . . . . 36
Section 9.5. Insurance. . . . . . . . . . . . . . . . . 36
Section 9.6. Repair . . . . . . . . . . . . . . . . . . 36
Section 9.7. Taxes. . . . . . . . . . . . . . . . . . . 36
Section 9.8. Compliance . . . . . . . . . . . . . . . . 36
Section 9.9. Merger, Purchase and Sale. . . . . . . . . 37
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio. . . 37
Section 9.11. Fixed Charge Coverage Ratio. . . . . . . . 38
Section 9.12. Consolidated Tangible Net Worth. . . . . . 38
Section 9.13. Restricted Payments. . . . . . . . . . . . 38
Section 9.14. Liens. . . . . . . . . . . . . . . . . . . 38
Section 9.15. Leases . . . . . . . . . . . . . . . . . . 41
Section 9.16. Use of Proceeds. . . . . . . . . . . . . . 41
Section 9.17. Transactions with Related Parties. . . . . 41
Section 9.18. Securitization . . . . . . . . . . . . . . 41
SECTION 10. CONDITIONS TO LENDING . . . . . . . . . . . . . 42
Section 10.1. Conditions Precedent to All Loans. . . . . 42
Section 10.2. Conditions to the Availability of the
Commitments. . . . . . . . . . . . . . . . 42
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT. . . . . . . 44
Section 11.1. Events of Default. . . . . . . . . . . . . 44
Section 11.2. Effect of Event of Default . . . . . . . . 46
<PAGE>
SECTION 12. THE AGENT . . . . . . . . . . . . . . . . . . . 46
Section 12.1. Authorization. . . . . . . . . . . . . . . 46
Section 12.2. Indemnification. . . . . . . . . . . . . . 47
Section 12.3. Action on Instructions of the Required
Banks. . . . . . . . . . . . . . . . . . . 47
Section 12.4. Payments . . . . . . . . . . . . . . . . . 48
Section 12.5. Exculpation. . . . . . . . . . . . . . . . 49
Section 12.6. Credit Investigation . . . . . . . . . . . 49
Section 12.7. UBS and Affiliates . . . . . . . . . . . . 50
Section 12.8. Resignation. . . . . . . . . . . . . . . . 50
SECTION 13. GENERAL . . . . . . . . . . . . . . . . . . . . 50
Section 13.1. Waiver; Amendments . . . . . . . . . . . . 50
Section 13.2. Notices. . . . . . . . . . . . . . . . . . 51
Section 13.3. Computations . . . . . . . . . . . . . . . 52
Section 13.4. Assignments; Participations. . . . . . . . 52
Section 13.5. Costs, Expenses and Taxes. . . . . . . . . 55
Section 13.6. Indemnification. . . . . . . . . . . . . . 55
Section 13.7. Regulation U . . . . . . . . . . . . . . . 56
Section 13.8. Extension of Termination Dates; Removal
of Banks; Substitution of Banks. . . . . . 56
Section 13.9. Captions . . . . . . . . . . . . . . . . . 58
Section 13.10. Governing Law; Severability. . . . . . . . 58
Section 13.11. Counterparts; Effectiveness. . . . . . . . 59
Section 13.12. Further Assurances . . . . . . . . . . . . 59
Section 13.13. Successors and Assigns . . . . . . . . . . 59
Section 13.14. Waiver of Jury Trial . . . . . . . . . . . 59
Section 13.15. Amendment of 1993 Agreement. . . . . . . . 59
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I Schedule of Banks (Sections 1.2 and 13.8)
Schedule II Fees and Margins (Sections 1.2, 4.4 and 4.6)
Exhibit A Form of Notice of Competitive Bid Borrowing
(Sections 1.2 and 2.2)
Exhibit B Form of Bid (Sections 1.2 and 2.2)
Exhibit C Form of Committed Loan Request (Section 3.2)
Exhibit D Form of Bid Note (Section 1.2)
Exhibit E Form of Committed Note (Section 1.2)
Exhibit F Fixed Charge Coverage Ratio (Sections 1.2 and
9.11)
Exhibit G Form of Opinion of O'Melveny & Myers, Counsel for
the Company (Section 10.2.5)
Exhibit H Form of Opinion of the General Counsel of the
Company (Section 10.2.5)
Exhibit I Form of Assignment and Assumption Agreement
(Section 13.4.1)
Exhibit J Form of Request For Extension of Termination Date
(Section 13.8)
<PAGE>
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as
of February 2, 1995, among INTERNATIONAL LEASE FINANCE
CORPORATION, a California corporation (herein called the
"Company"), the financial institutions listed on the signature
pages hereof (herein, together with their respective successors
and assigns, collectively called the "Banks" and individually
each called a "Bank") and UNION BANK OF SWITZERLAND, acting
through its Los Angeles Branch (herein, in its individual
capacity, together with its successors and assigns, called
"UBS"), as agent for the Banks (herein, in such capacity,
together with its successors and assigns in such capacity, called
the "Agent").
W I T N E S S E T H:
WHEREAS, the Company has requested the Banks to lend up
to $450,000,000 to the Company on a revolving basis to enable the
Company to support its commercial paper program and for other
general corporate purposes;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein contained, the parties hereto agree
as follows:
SECTION 1. CERTAIN DEFINITIONS.
Section 1.1. Terms Generally. The definitions
ascribed to terms in this Section 1 and elsewhere in this
Agreement shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine
and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". The words "hereby", "herein", "hereof", "hereunder"
and words of similar import refer to this Agreement as a whole
(including any exhibits and schedules hereto) and not merely to
the specific section, paragraph or clause in which such word
appears. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of and Exhibits
and Schedules to this Agreement unless the context shall
otherwise require.
Section 1.2. Specific Terms. When used herein, the
following terms shall have the following meanings:
<PAGE>
Absolute Rate means a rate of interest per annum,
expressed as a percentage to four decimal places and set forth in
a Bid for a particular Bid Loan amount and a particular Loan
Period.
Absolute Rate Loan means any Loan which bears interest
at an Absolute Rate.
Affiliate means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with such Person. A
Person shall be deemed to control another Person if such first
Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other
Person, whether through ownership of stock, by contract or
otherwise.
Agent - see Preamble.
Aggregate Commitment means $450,000,000, as reduced by
any reduction in the Commitments made from time to time pursuant
to Section 5.1 or 13.8.
Agreement - see Preamble.
AIG means American International Group, Inc.
Assessment Rate means, at any time, the then current
rate as determined by the Agent after consultation with the
Reference Banks, for the lowest annual assessment payable by
banks to the FDIC (or any successor) for the FDIC's or such
successor's insuring dollar deposits in the United States and,
when used with respect to a Loan Period for a CD Rate Loan, shall
mean such rate as in effect from time to time during such Loan
Period.
Assignee - see Section 13.4.1.
Authorized Officer of the Company means any of the
Chairman of the Board, the President, the Executive Vice
President and Chief Financial Officer, the Treasurer, the
Controller and the Assistant Controller of the Company.
Available Commitment - see Section 2.2(a).
Bank - see Preamble.
Bank Parties - see Section 13.6.
<PAGE>
Base LIBOR means, with respect to any Loan Period for a
LIBOR Rate Loan, the rate per annum determined by the Agent to be
the arithmetic mean (rounded to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of
the respective rates of interest communicated by the Reference
Banks to the Agent as the rate at which Dollar deposits are
offered to the Reference Banks by leading banks in the London
interbank deposit market at approximately 11:00 a.m., London
time, on the second full Business Day preceding the first day of
such Loan Period in an amount substantially equal to the amount
of such LIBOR Rate Loan for such Reference Banks and for a period
equal to such Loan Period.
Base Rate means a fluctuating interest rate per annum,
as shall be in effect from time to time, which rate per annum
shall be equal to the higher of (i) the Prime Rate and (ii) one
half of one percent per annum above the Federal Funds Rate.
Base Rate Loan means any Loan which bears interest at
the Base Rate.
Bid means one or more offers by a Bank to make one or
more Bid Loans, submitted to the Agent by telephone no later than
the Submission Deadline and promptly confirmed in writing on the
same day on a duly completed and executed form substantially
similar to Exhibit B, personally delivered or transmitted by
facsimile to the Agent.
Bid Borrowing - see Section 2.2(a).
Bid Loan means a Loan in Dollars that is an Absolute
Rate Loan or a LIBOR Rate Loan made pursuant to Section 2.
Bid Note means a promissory note of the Company, sub-
stantially in the form of Exhibit D, duly completed, evidencing
Bid Loans made to the Company, as such note may be amended,
modified or supplemented or supplanted pursuant to Section 13.4.1
from time to time.
Business Day means any day of the year on which banks
are open for commercial banking business in the city of New York
and in Los Angeles and, if the applicable Business Day relates to
the determination of LIBOR for any LIBOR Rate Loan any such
Business Day on which dealings in deposits in Dollars are
transacted in the London interbank market.
Capitalized Lease means any lease under which any
obligations of the lessee are, or are required to be, capitalized
on a balance sheet of the lessee in accordance with generally
accepted accounting principles in the United States.
<PAGE>
Capitalized Rentals means, as of the date of any
determination, the amount at which the obligations of the lessee,
due and to become due under all Capitalized Leases under which
the Company or any Subsidiary is a lessee, are reflected as a
liability on a consolidated balance sheet of the Company and its
Subsidiaries.
CD Base Rate means with respect to any Loan Period for
a CD Rate Loan the average of the bid rates (rounded to the
nearest 1/100 of 1% or, if there is no nearest 1/100 of 1%, to
the next higher 1/100 of 1%) quoted at 10:00 a.m., New York City
time (or as soon thereafter as is practicable), on the first
Business Day of such Loan Period by two or more New York
certificate of deposit dealers of recognized standing, selected
by the Agent, for the purchase at face value of 30-day, 60-day,
90-day or 180-day, as the case may be, certificates of deposit
sold by the Reference Banks in the secondary market in an amount
substantially equal to the amount of such CD Rate Loan.
CD Rate means, with respect to any Loan Period, the
rate per annum determined pursuant to the following formula,
which rate shall change during such Loan Period as and when the
Reserve Percentage or the Assessment Rate shall change:
CDBR
CD Rate = -------- + AR + ARM
1 - RP
where:
CDBR = CD Base Rate for such Loan Period for a CD
Rate Loan
AR = Assessment Rate
ARM = The applicable rate margin with respect to CD
Rate Loans set forth in Schedule II hereto
RP = Reserve Percentage
<PAGE>
CD Rate Loan means any Loan that bears interest at the
CD Rate.
Code means the Internal Revenue Code of 1986, as
amended.
Commitments means the Banks' commitments to make
Committed Loans hereunder; and Commitment as to any Bank means
the amount set forth opposite such Bank's name on Schedule I (as
reduced in accordance with Section 5.1, or as periodically
revised in accordance with Section 13.4 or Section 13.8).
Committed Loan means a Loan in Dollars that is a Base
Rate Loan, CD Rate Loan or LIBOR Rate Loan made pursuant to
Section 3.
Committed Loan Request - see Section 3.2(a).
Committed Note means a promissory note of the Company,
substantially in the form of Exhibit E, duly completed,
evidencing Committed Loans to the Company, as such note may be
amended, modified or supplemented or supplanted pursuant to
Section 13.4.1 from time to time.
Company - see Preamble.
Consolidated Indebtedness means, as of the date of any
determination, the total amount of Indebtedness, less the amount
of current and deferred income taxes and rentals received in
advance of the Company and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted
accounting principles in the United States.
Consolidated Tangible Net Worth means, as of the date
of any determination, the total of shareholders' equity
(including capital stock, additional paid-in capital and retained
earnings after deducting treasury stock), less the sum of the
total amount of goodwill, organization expenses, unamortized debt
issue costs (determined on an after tax basis), deferred assets
other than prepaid insurance and prepaid taxes, the excess of
cost of shares acquired over book value of related assets,
surplus resulting from any revaluation write-up of assets
subsequent to September 30, 1994 and such other assets as are
properly classified as intangible assets, all determined in
accordance with generally accepted accounting principles in the
United States consolidating the Company and its Subsidiaries.
Dollar, and $, refer to the lawful money of the United
States.
ERISA means the Employee Retirement Income Security Act
of 1974, as amended.
ERISA Affiliate means any corporation, trade or
business that is, along with the Company or any Subsidiary, a
member of a controlled group of corporations or a controlled
group of trades or businesses, as described in sections 414(b)
and 414(c), respectively, of the Code or section 4001 of ERISA.
<PAGE>
Eurodollar Reserve Percentage means for any day in any
Loan Period for any LIBOR Rate Loan that percentage in effect on
such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor thereto) or other U.S.
government agency for determining the reserve requirement
(including, without limitations, any marginal, basic,
supplemental or emergency reserves) for a member bank of the
Federal Reserve System in New York City with deposits exceeding
one billion dollars in respect of eurocurrency funding
liabilities. LIBOR shall be adjusted automatically on and as of
the effective date of any change in the Eurodollar Reserve
Percentage.
Event of Default means any of the events described in
Section 11.1.
Existing Litigation - see Section 10.1.3.
FASB 13 means the Statement of Financial Accounting
Standards No. 13 (Accounting for Leases) as in effect on the date
hereof.
FDIC means the Federal Deposit Insurance Corporation.
Federal Funds Rate means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors
of the Federal Reserve System (including any such successor
publication, "H.15(519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day such rate is
not yet published in H.15(519), the rate for such day will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or
any successor publication, published by the Federal Reserve Bank
of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption
"Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such day is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to
9:00 a.m., New York City time, on such day by each of three
leading brokers of Federal funds transactions in New York City,
selected by the Agent. The rate for any day which is not a
Business Day shall be the rate for the immediately preceding
Business Day.
Fixed Charge Coverage Ratio on the last day of any
quarter of any fiscal year of the Company means the ratio for the
period of four fiscal quarters ending on such day of earnings to
combined fixed charges and preferred stock dividends referred to
in Paragraph (d)(1)(i) of Item 503 of Regulation S-K of the
Securities and Exchange Commission, as amended from time to time,
and determined pursuant to Paragraphs (d)(2) through (d)(10) of
such Item 503 with the Company as "registrant" (such ratio for
the four fiscal quarters ended September 30, 1994 is attached
hereto as Exhibit F); provided, however that if the Required
Banks in their sole discretion determine that amendments to
Regulation S-K subsequent to the date hereof substantially modify
the provisions of such Item 503, "Fixed Charge Coverage Ratio"
shall have the meaning determined by this definition without
regard to any such amendments.
<PAGE>
Funding Date means the date on which any Loan is
scheduled to be disbursed.
Funding Office means, with respect to any Bank, any
office or offices of such Bank or Affiliate or Affiliates of such
Bank through which such Bank shall fund or shall have funded any
Loan. A Funding Office may be, at such Bank's option, either a
domestic or foreign office of such Bank or a domestic or foreign
office of an Affiliate of such Bank.
Governmental Authority means any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
Guaranties by any Person means all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any property or assets constituting
security therefor, (b) to advance or supply funds (i) for the
purchase or payment of such Indebtedness or obligation or (ii) to
maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, (c) to lease property
or to purchase securities or other property or services primarily
for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation or (d) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof; provided, however, that the
obligation described in clause (c) shall not include
(i) obligations of a buyer under an agreement with a seller to
purchase goods or services entered into in the ordinary course of
such buyer's and seller's businesses unless such agreement
requires that such buyer make payment whether or not delivery is
ever made of such goods or services and (ii) remarketing
agreements where the remaining debt on an aircraft does not
exceed the aircraft's net book value, determined in accordance
with industry standards, except that clause (c) shall apply to
the amount of remaining debt under a remarketing agreement that
exceeds the net book value of the aircraft. For the purposes of
all computations made under this Agreement, a Guaranty in respect
of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness
for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend
shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
<PAGE>
Indebtedness of any Person means and includes all
obligations of such Person which in accordance with generally
accepted accounting principles in the United States shall be
classified upon a balance sheet of such Person as liabilities of
such Person, and in any event shall include all:
(a) obligations of such Person for borrowed money or
which have been incurred in connection with the acquisition
of property or assets (other than security and other
deposits on flight equipment),
(b) obligations secured by any Lien or other charge
upon property or assets owned by such Person, even though
such Person has not assumed or become liable for the payment
of such obligations,
(c) obligations created or arising under any
conditional sale, or other title retention agreement with
respect to property acquired by such Person, notwithstanding
the fact that the rights and remedies of the seller, lender
or lessor under such agreement in the event of default are
limited to repossession or sale of property,
(d) Capitalized Rentals of such Person under any
Capitalized Lease,
(e) obligations evidenced by bonds, debentures, notes
or other similar instruments, and
(f) Guaranties by such Person to the extent required
pursuant to the definition thereof.
Indemnified Liabilities - see Section 13.6.
Investment means any investment, made in cash or by
delivery of any kind of property or asset, in any Person, whether
(i) by acquisition of (x) shares of stock or similar interest,
(y) Indebtedness, or (z) other obligation or security or (ii) by
loan, advance or capital contribution, or otherwise. For
purposes of this Agreement, Investment shall exclude any notes
receivable and any finance or sales- type leases entered into by
the Company or any of its Subsidiaries in the ordinary course of
business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto
and minus the amount of any portion of such Investment repaid to
such Person in cash as a return of capital, but without any other
adjustment for increases or decreases in value, or write- ups,
write-downs or write-offs with respect to such Investment.
<PAGE>
LIBOR means with respect to any Loan Period the rate
per annum (rounded to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next higher 1/16 of 1%), determined
pursuant to the following formula:
Base LIBOR
-----------------------------------
LIBOR = (1 - Eurodollar Reserve Percentage)
LIBOR Rate means (i) with respect to Committed Loans
that are LIBOR Rate Loans, LIBOR plus the applicable rate margin
set forth in Schedule II and (ii) with respect to Bid Loans that
are LIBOR Rate Loans, LIBOR plus or minus the rate margin set
forth in a Bid for a particular Bid Loan amount and a particular
Loan Period.
LIBOR Rate Loan means any Loan which bears interest at
a LIBOR Rate.
Lien means any mortgage, pledge, lien, security
interest or other charge, encumbrance or preferential
arrangement, including the retained security title of a
conditional vendor or lessor.
Litigation Actions means all litigation, claims and
arbitration proceedings, proceedings before any Governmental
Authority or investigations which are pending or, to the
knowledge of the Company, threatened against, or affecting, the
Company or any Subsidiary.
Loan Period means (i) with respect to any Absolute Rate
Loan, the period commencing on such Loan's Funding Date and
ending not less than 14 days thereafter nor more than 183 days
thereafter as specified in the Bid Loan Request related to such
Bid Loan, (ii) with respect to any LIBOR Rate Loan, the period
commencing on such Loan's Funding Date and ending 1, 2, 3 or 6
months thereafter as selected by the Company pursuant to
Section 3.2(a) or specified in the Bid Loan Request, as the case
may be and (iii) with respect to any CD Rate Loan, the period
commencing on such Loan's Funding Date and ending 30, 60, 90 or
180 days thereafter as selected by the Company pursuant to
Section 3.2(a); provided, however, that
(a) if a Loan Period would otherwise end on a day
which is not a Business Day, such Loan Period shall end on
the next succeeding Business Day (unless, in the case of a
LIBOR Rate Loan, such next succeeding Business Day would
fall in the next succeeding calendar month, in which case
such Loan Period shall end on the next preceding Business
Day);
<PAGE>
(b) in the case of a Loan Period for any LIBOR Rate
Loan, if there exists no day numerically corresponding to
the day such Loan was made in the month in which the last
day of such Loan Period would otherwise fall, such Loan
Period shall end on the last Business Day of such month; and
(c) on the date of the making of any Loan by a Bank,
the Loan Period for such Loan shall not extend beyond the
then-scheduled Termination Date for such Bank.
Loans means, collectively, the Bid Loans and the
Committed Loans and, individually, any Bid Loan or Committed
Loan.
Material Adverse Effect shall mean (i) any material
adverse effect on the business, properties, condition (financial
or otherwise) or operations, present or prospective, of the
Company and its Subsidiaries, taken as a whole since any stated
reference date or from and after the date of determination, as
the case may be, (ii) any material adverse effect on the ability
of the Company to perform its obligations hereunder and under the
Notes or (iii) any adverse effect on the legality, validity,
binding effect or enforceability of any material provision of
this Agreement or any Note.
Multiemployer Plan has the meaning assigned to such
term in section 3(37) of ERISA.
New Litigation - see Section 10.1.3.
Notes means, collectively, the Bid Notes and the
Committed Notes; and Note means any individual Bid Note or
Committed Note.
Notice of Competitive Bid Borrowing - see
Section 2.2(a).
Notice Office means the New York Branch of UBS which,
as of the date hereof, is 299 Park Avenue, New York, New York
10071-0026, Attn: James Broadus, Telecopy Number (212) 821-3259;
Telephone (212) 821-3227.
Operating Lease means any lease other than a
Capitalized Lease; provided, however, that leases with an
original term of less than one year shall not be Operating
Leases.
<PAGE>
Operating Lease Rental of an Operating Lease means, as
of the date of any determination thereof, the net present value
of the aggregate unpaid amount due at such date and to become due
from the Company or any Subsidiary, on a consolidated basis, as
lessee under such Operating Lease discounted at such lessee's
incremental borrowing rate or if the interest rate implicit in
such Operating Lease can be practically determined and is
smaller, at such interest rate, such present value and interest
rate being determined in accordance with standard financial
practice and such borrowing rate being determined in accordance
with FASB 13, excluding from such aggregate amount all amounts
which are in excess of the minimum aggregate unpaid amount due at
such date and to become due from such lessee under such Operating
Lease assuming that such lessee would take or fail to take all
actions with respect to all termination, renewal, purchase and
other options as would produce the least amount becoming due
under such Operating Lease, and "Operating Lease Rentals" means,
as of the date of any determination, the aggregate Operating
Lease Rental of all Operating Leases as of such date.
Participant - see Section 13.4.2.
Payment Office means the New York Branch of UBS which,
as of the date hereof, is at 299 Park Avenue, New York, New York
10071-0026, Attn: James Broadus.
PBGC means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
Percentage means as to any Bank the ratio, expressed as
a percentage, that such Bank's Commitment as set forth opposite
such Bank's name on Schedule I, as periodically revised in
accordance with Section 13.4 or 13.8, bears to the Aggregate
Commitment or, if the Commitments have been terminated, the
ratio, expressed as a percentage, that the aggregate principal
amount of such Bank's outstanding Loans bears to the aggregate
principal amount of all outstanding Loans.
Permitted Acquisitions means purchases or other
acquisitions, or Investments by acquisition of shares of stock,
for which cumulatively and in the aggregate since the date hereof
the Company has not given consideration in value exceeding
$100,000,000.
Person means an individual or a corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
<PAGE>
Plan means, at any date, any employee pension benefit
plan (as defined in section 3(2) of ERISA) which is subject to
Title IV of ERISA (other than a Multiemployer Plan) and to which
the Company or any ERISA Affiliate may have any liability,
including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
Prime Rate means the rate of interest publicly
announced from time to time by the New York Branch of UBS as its
prime commercial lending rate.
Reference Banks means UBS, The Bank of Nova Scotia,
Commerzbank AG and The Bank of New York.
Related Party means, for purposes of Section 9.17 only,
any Person (other than a Subsidiary):
(i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under
common control with, the Company,
(ii) which beneficially owns or holds five percent or
more of the equity interest of the Company, or
(iii) twenty percent or more of the equity interest of
which is beneficially owned or held by the Company or a
Subsidiary.
The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Reportable Event has the meaning assigned to such term
in section 4043 of ERISA.
Required Banks means Banks having an aggregate
Percentage of 66 2/3% or more.
<PAGE>
Reserve Percentage means for any day, that percentage,
expressed as a decimal, which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including any marginal, supplemental or emergency
reserve requirements) for a member bank of the Federal Reserve
System in New York City with deposits exceeding one billion
dollars in respect of new non-personal time deposits in dollars
in New York City having a maturity comparable to the relevant
Loan Period and in an amount of $100,000 or more. The CD Rate
shall be adjusted automatically on and as of the effective date
of any change in the Reserve Percentage.
Significant Subsidiary means any Subsidiary which is so
defined pursuant to Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission.
Submission Deadline - see Section 2.2(b).
Subsidiary means any Person of which or in which the
Company and its other Subsidiaries own directly or indirectly 50%
or more of:
(a) the combined voting power of all classes of stock
having general voting power under ordinary circumstances to
elect a majority of the board of directors of such Person,
if it is a corporation,
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar
entity, or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organization;
provided, however, that so long as (i) the Company continues to
own not more than 50% of Pacific Ocean Leasing, Ltd., and
(ii) Pacific Ocean Leasing, Ltd. does not materially alter the
manner in which it conducts the business in which it is currently
engaged, Pacific Ocean Leasing, Ltd. shall not be considered a
Subsidiary within the foregoing definition for purposes of this
Agreement.
Successor Bank - see Section 13.8(c).
Taxes with respect to any Person means income, excise
and other taxes, and all assessments, imposts, duties and other
governmental charges or levies, imposed upon such Person, its
income or any of its properties, franchises or assets by any
Governmental Authority.
Terminating Bank - see Section 13.8(c).
<PAGE>
Termination Date means, with respect to any Bank, the
earliest to occur of (i) the date that is 364 days after the date
of this Agreement or such later date as may be agreed to by such
Bank pursuant to Section 13.8(a), (ii) the date on which the
Commitments shall terminate pursuant to Section 11.2 or the
Commitments shall be reduced to zero pursuant to Section 5.1 and
(iii) the date specified as such Bank's Termination Date pursuant
to Section 13.8(b), or, if in any case (other than clause (ii)
above) such day is not a Business Day, the next succeeding
Business Day; in all cases, subject to the provisions of
Section 13.8(d).
UBS - see Preamble.
Unmatured Event of Default means any event which if it
continues uncured will, with lapse of time or notice or lapse of
time and notice, constitute an Event of Default.
Wholly-owned Subsidiary means any Person of which or in
which the Company and its other Wholly-owned Subsidiaries own
directly or indirectly 100% of:
(a) the issued and outstanding shares of stock (except
shares required as directors' qualifying shares),
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar
entity, or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organization.
SECTION 2. BID LOANS AND BID NOTES.
Section 2.1. Making of Bid Loans. On the terms and
subject to the conditions of this Agreement, each Bank, severally
and for itself alone, may (but is not obligated to) make Bid
Loans to the Company from time to time on or after the date
hereof and prior to the date which is the fourteenth day
preceding such Bank's Termination Date in amounts equal to such
Bank's Bids that have been accepted as provided in
Section 2.2(c); provided that the aggregate principal amount of
all outstanding Loans shall not at any time exceed the then
Aggregate Commitment.
<PAGE>
Section 2.2. Procedure for Bid Loans.
(a) Bid Loan Request. Whenever the Company desires to
incur a competitive bid borrowing (a "Bid Borrowing"), it shall
give the Agent written notice (or telephonic notice promptly
confirmed in writing), such notice to be delivered to the Agent
at its Notice Office no later than 12:00 Noon (New York City
time), at least three Business Days prior to any proposed LIBOR
Rate Loan and at least one Business Day prior to any proposed
Absolute Rate Loan. Each such notice shall be substantially in
the form of Exhibit A hereto (each a "Notice of Competitive Bid
Borrowing"), and shall specify in each case (i) the date of such
proposed Bid Borrowing (which shall be a Business Day), (ii) the
aggregate amount of the proposed Bid Borrowing, (iii) whether the
proposed Bid Borrowing is to be an Absolute Rate Loan or a LIBOR
Rate Loan and the Loan Period, (iv) the maturity date for
repayment of each Bid Loan to be made as part of such borrowing
(which maturity date shall not be earlier than one month after
the date of any proposed LIBOR Rate Loan or 14 days after the
date of any proposed Absolute Rate Loan or later than the
earliest to occur of (x) six months after the date of such
proposed Bid Loan, (y) the Termination Date and (z) if the
proposed Bid Loan has an interest rate that is the LIBOR Rate,
the last day of the proposed Loan Period), (v) the interest
payment date or dates relating thereto, (vi) the account of the
Company to which the proceeds of such Bid Borrowing are to be
credited and (vii) any other terms to be applicable to such Bid
Borrowing. The Agent shall promptly give each Bank written
notice (or telephonic notice promptly confirmed in writing) of
each such request for a Bid Borrowing received by it from the
Company. Each Notice of Competitive Bid Borrowing shall
contemplate Bid Loans in a minimum aggregate principal amount of
$10,000,000 or a higher integral multiple of $1,000,000, not to
exceed, however, the excess of the then Aggregate Commitment over
the aggregate principal amount of all outstanding Loans,
calculated as of the relevant Funding Date, assuming that the
Company will pay, when due, all Loans maturing on or prior to
such Funding Date (the "Available Commitment").
(b) Bidding Procedure. Each Bank shall, if in its
sole discretion it elects to do so, irrevocably offer to make one
or more Bid Loans to the Company as part of such proposed Bid
Borrowing at a rate or rates of interest specified by such Bank
in its sole discretion and determined by such Bank independently
of each other Bank, by notifying by telephone confirmed in
writing to the Agent at its Notice Office (which shall give
prompt notice thereof to the Company), before 10:00 a.m. (New
York City time) on the date (the "Submission Deadline") that is
(x) in the case of a proposed Absolute Rate Loan, the same day as
the date of such proposed Bid Loan and (y) in the case of a
proposed LIBOR Rate Loan, two Business Days before, the date of
such proposed Bid Loan, of the minimum amount and maximum amount
of each Bid Loan that such Bank would be willing to make as part
of such proposed Bid Borrowing (which amounts may, subject to the
proviso in Section 2.1, exceed such Bank's Commitment), the rate
or rates of interest therefor and such Bank's lending office with
respect to such Bid Loan; provided that if the Agent in its
capacity as a Bank shall, in its sole discretion, elect to make
any such offer, it shall notify the Company of such offer before
8:30 a.m. (New York City time) on the Submission Deadline.
<PAGE>
(c) Acceptance of Bids. The Company shall, in turn,
before 10:30 a.m. (New York City time) on the Submission
Deadline, either:
(i) cancel such proposed Bid Borrowing by giving the
Agent notice to that effect, or
(ii) accept (such acceptance to be irrevocable) one or
more of the offers made by any Bank or Banks pursuant to
clause (b) above by giving notice (in writing or by
telephone confirmed in writing) to the Agent of the amount
of each Bid Loan (which amount shall be equal to or greater
than the minimum amount, and equal to or less than the
maximum amount, notified to the Company by the Agent on
behalf of such Bank for such Bid Borrowing pursuant to
clause (b) above) to be made by such Bank as part of such
Bid Borrowing, and reject any remaining offers made by any
Bank pursuant to clause (b) above by giving the Agent notice
to that effect; provided that for any maturity date
acceptance of offers may only be made on the basis of
ascending Absolute Rates (in the case of an Absolute Rate
Loan) or floating rates (in the case of a LIBOR Rate Loan),
in each case commencing with the lowest rate so offered and
only as to offers made in conformity with the terms hereof;
provided further, however, if offers are made by two or more
Banks at the same rate or rates and acceptance of all such
equal offers would result in a greater principal amount of
Bid Loans being accepted than the aggregate principal amount
requested by the Company, the Company shall have the right
to accept one or more of such equal offers in their entirety
and reject the other equal offer or offers or to allocate
acceptance among all such equal offers (but giving effect to
the minimum and maximum amounts specified for each such
offer pursuant to clause (b) above), as the Company may
elect in its sole discretion. For the avoidance of doubt,
the Company may accept offers whose aggregate principal
amount is greater than or less than the requested aggregate
amount as specified in the related Notice of Competitive Bid
Borrowing, subject to the proviso in Section 2.1.
(d) Cancellation of Bid Borrowing. If the Company
notifies the Agent that such proposed Bid Borrowing is cancelled
pursuant to clause (c)(i) above, the Agent shall give prompt
notice thereof to the Banks and such Bid Borrowing shall not be
made.
(e) Notification of Acceptance. If the Company
accepts one or more of the offers made by any Bank or Banks
pursuant to clause (c)(ii) above, the Agent shall in turn
promptly notify (x) each Bank that has made an offer as described
in clause (b) above, of the date and aggregate amount of such Bid
Borrowing and whether or not any offer or offers made by such
Bank pursuant to clause (b) above have been accepted by the
Company and (y) each Bank that is to make a Bid Loan as part of
such Bid Borrowing, of the amount of each Bid Loan to be made by
such Bank as part of such Bid Borrowing.
<PAGE>
(f) Reliance. The Agent may rely and act upon notice
given by telephone by individuals reasonably believed by the
Agent to be those designated to the Agent by the Company or by
any Bank in writing from time to time, without waiting for
receipt of written confirmation thereof, and the Company hereby
agrees to indemnify and hold harmless the Agent from and against
any and all losses, costs, expenses, damages, claims, actions or
other proceedings relating to such reliance.
Section 2.3. Funding of Bid Loans. No later than
1:00 p.m. (New York City time) on the date specified in each
Notice of Competitive Bid Borrowing, each Bank will make
available the Bid Loan, if any, to be made by such Bank as part
of the Bid Borrowing requested to be made on such date in the
manner provided below. All amounts shall be made available to
the Agent in Dollars and immediately available funds at the
Payment Office of the Agent and the Agent promptly will make
available to the Company at its account specified in the relevant
Notice of Competitive Bid Borrowing the aggregate of the amounts
so made available in the type of funds received. Unless the
Agent shall have been notified by any Bank which has submitted a
bid pursuant to Section 2.2(b) prior to the date of the proposed
Bid Borrowing that such Bank does not intend to make available to
the Agent its portion, if any, of the Bid Borrowing to be made on
such date, the Agent may assume that such Bank has made such
amount available to the Agent on such date of Bid Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to
the Company a corresponding amount.
Section 2.4. Bid Notes. The Bid Loans of each Bank
shall be evidenced by a Bid Note payable to the order of such
Bank in the original principal amount of the Aggregate
Commitment. Each Bank shall record in its records, or at its
option on the schedule attached to its Bid Note, the date and
amount of each Bid Loan made by such Bank, each repayment
thereof, and the dates on which the Loan Period for such Loan
shall begin and end. The aggregate unpaid principal amount so
recorded shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on such Note. The failure to
so record or any error in so recording any such amount or any
payment thereof shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under such Bid Note to
repay the principal amount of each Bid Loan together with all
interest accruing thereon.
<PAGE>
SECTION 3. COMMITTED LOANS AND NOTES.
Section 3.1. Agreement to Make Committed Loans. On the
terms and subject to the conditions of this Agreement, each Bank,
severally and for itself alone, agrees to make Loans (herein
collectively called "Committed Loans" and individually each
called a "Committed Loan") on a revolving basis from time to time
before such Bank's Termination Date in such Bank's Percentage of
such aggregate amounts as the Company may from time to time
request as provided in Section 3.2; provided that (a) the
aggregate principal amount of all outstanding Committed Loans of
any Bank shall not at any time exceed the amount set forth
opposite such Bank's name on Schedule I (as reduced in accordance
with Section 5.1, 13.4 or 13.8) and (b) the aggregate principal
amount of all outstanding Committed Loans of all Banks plus the
aggregate principal amount of all outstanding Bid Loans of all
Banks shall not at any time exceed the then Aggregate Commitment.
Section 3.2. Procedure for Committed Loans.
(a) Committed Loan Requests. The Company shall give
the Agent irrevocable telephonic notice at the Notice Office
(promptly confirmed in writing on the same day), not later than
10:30 a.m., New York City time, (i) at least three Business Days
prior to the Funding Date in the case of LIBOR Rate Loans,
(ii) at least two Business Days prior to the Funding Date in the
case of CD Rate Loans or (iii) on the Funding Date in the case of
Base Rate Loans, of each requested Committed Loan, and the Agent
shall promptly advise each Bank thereof and, in the case of a
LIBOR Rate Loan or a CD Rate Loan, request each Reference Bank to
notify the Agent of its applicable rate (as contemplated in the
definitions of Base LIBOR and CD Base Rate). Each such notice to
the Agent (a "Committed Loan Request") shall be substantially in
the form of Exhibit C and shall specify (i) the Funding Date
(which shall be a Business Day), (ii) the aggregate amount of the
Loans requested (in an amount permitted under clause (b) below),
(iii) whether each Loan shall be a LIBOR Rate Loan, a CD Rate
Loan or a Base Rate Loan and (iv) except for a Base Rate Loan,
the Loan Period therefor (subject to the limitations set forth in
the definition of Loan Period).
(b) Amount and Increments of Committed Loans. Each
Committed Loan Request shall contemplate Committed Loans in a
minimum aggregate amount of $25,000,000 or a higher integral
multiple of $1,000,000, not to exceed in the aggregate (for all
requested Committed Loans) the Available Commitment.
(c) Funding of Committed Loans.
<PAGE>
(i) Not later than 1:30 p.m., New York City time, on
the Funding Date of a Committed Loan, each Bank shall,
subject to this Section 3.2(c), provide the Agent at its
Notice Office with immediately available funds covering such
Bank's Committed Loan (provided that a Bank's obligation to
provide funds to the Agent shall be deemed satisfied by such
Bank's delivery to the Agent at its Notice Office not later
than 1:30 p.m., New York City time, of a federal reserve
wire confirmation number covering the proceeds of such
Bank's Committed Loan) and the Agent shall pay over such
funds to the Company not later than 2:00 p.m., New York City
time, on such day if the Agent shall have received the
documents required under Section 10 with respect to such
Loan and the other conditions precedent to the making of
such Loan shall have been satisfied not later than
10:00 a.m., New York City time, on such day. If the Agent
does not receive such documents or such other conditions
precedent have not been satisfied prior to such time, then
(A) the Agent shall not pay over such funds to the Company,
(B) the Company's Committed Loan Request related to such
Loan shall be deemed cancelled in its entirety, (C) in the
case of Committed Loan Requests relative to LIBOR Rate Loans
and CD Rate Loans, the Company shall be liable to each Bank
in accordance with Section 7.4(b) and (D) the Agent shall
return the amount previously provided to the Agent by each
Bank on the next following Business Day.
(ii) The Company agrees, notwithstanding its previous
delivery of any documents required under Section 10 with
respect to a particular Loan, immediately to notify the
Agent of any failure by it to satisfy the conditions
precedent to the making of such Loan. The Agent shall be
entitled to assume, after it has received each of the
documents required under Section 10 with respect to a
particular Loan, that each of the conditions precedent to
the making of such Loan has been satisfied absent actual
knowledge to the contrary received by the Agent prior to the
time of the receipt of such documents. Unless the Agent
shall have notified the Banks prior to 10:30 a.m., New York
City time, on the Funding Date of any Loan that the Agent
has actual knowledge that the conditions precedent to the
making of such Loan have not been satisfied, the Banks shall
be entitled to assume that such conditions precedent have
been satisfied.
<PAGE>
(d) Repayment of Loans. If any Bank is to make a
Committed Loan hereunder on a day on which the Company is to
repay (or has elected to prepay, pursuant to Section 5.2) all or
any part of any outstanding Loan held by such Bank, the proceeds
of such new Committed Loan shall be applied to make such
repayment and only an amount equal to the positive difference, if
any, between the amount being borrowed and the amount being
repaid shall be requested by the Agent to be made available by
such Bank to the Agent as provided in Section 3.2(c).
Section 3.3. Maturity of Committed Loans. Except for
a Base Rate Loan, which shall mature on the Termination Date, a
Committed Loan made by a Bank shall mature on the last day of the
Loan Period applicable to such Committed Loan, but in no event
later than the Termination Date for such Bank.
Section 3.4. Committed Notes. The Committed Loans of
each Bank shall be evidenced by a Committed Note payable to the
order of such Bank in the original principal amount of such
Bank's Commitment. Each Bank shall record in its records, or at
its option on the schedule attached to its Committed Note, the
date and amount of each Loan made by such Bank thereunder, each
repayment or prepayment thereof, and, if applicable, the dates on
which the Loan Period for such Loan shall begin and end. The
aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record or any error in so recording
any such amount or any payment thereof shall not, however, limit
or otherwise affect the obligations of the Company hereunder or
under such Committed Note to repay the principal amount of each
Committed Loan together with all interest accruing thereon.
SECTION 4. INTEREST AND FEES.
Section 4.1. Interest Rates. The Company hereby
promises to pay interest on the unpaid principal amount of each
Loan for the period commencing on the Funding Date until such
Loan is paid in full, as follows:
(a) if such Loan is a Bid Loan, at a rate per annum
equal to the Absolute Rate or the LIBOR Rate, as applicable,
offered by the applicable Bank and accepted by the Company
for such Bid Loan;
(b) if such Loan is a Base Rate Loan, at a rate per
annum equal to the Base Rate from time to time in effect;
(c) if such Loan is a Committed Loan that is a LIBOR
Rate Loan, at a rate per annum equal to the LIBOR Rate
applicable to the Loan Period for such Loan; and
<PAGE>
(d) if such Loan is a CD Rate Loan, at a rate per
annum equal to the CD Rate applicable to the Loan Period for
such Loan;
provided, however, that after the maturity of any Loan (whether
by acceleration or otherwise), such Loan shall bear interest on
the unpaid principal amount thereof at a rate per annum
(calculated on the basis of a 360-day year for the actual number
of days involved) equal to the Base Rate from time to time in
effect (but not less than the interest rate in effect for such
Loan immediately prior to maturity) plus 1% per annum.
Section 4.2. Interest Payment Dates. Except for Base
Rate Loans, as to which accrued interest shall be payable on the
last day of each calendar quarter and on the Termination Date,
accrued interest on each Loan shall be payable in arrears on the
last day of the Loan Period therefor and (i) with respect to each
LIBOR Rate Loan with a Loan Period of six months, on the day that
is three months after the first day of such Loan Period (or, if
there is no day in such third month numerically corresponding to
such first day of the Loan Period, on the last Business Day of
such month), (ii) with respect to each CD Rate Loan with a Loan
Period of 180 days, on the day that is 90 days after the first
day of such Loan Period and (iii) with respect to each Absolute
Rate Loan with a Loan Period exceeding 90 days, on the day that
is 90 days after the first day of such Loan Period. After the
maturity of any Loan, accrued interest on such Loan shall be
payable on demand. If any interest payment date falls on a day
that is not a Business Day, such interest payment date shall be
postponed to the next succeeding Business Day and the interest
paid shall cover the period of postponement (except that if the
Loan is a LIBOR Rate Loan and the next succeeding Business Day
falls in the next succeeding calendar month, such interest
payment date shall be the immediately preceding Business Day).
Section 4.3. Setting and Notice of Committed Loan
Rates. The applicable interest rate for each Committed Loan
hereunder shall be determined by the Agent and notice thereof
shall be given by the Agent promptly to the Company and to each
Bank. Each determination of the applicable
interest rate by the Agent shall be conclusive and binding upon
the parties hereto in the absence of demonstrable error.
<PAGE>
In the case of LIBOR Rate Loans and CD Rate Loans, each
Reference Bank agrees to use its best efforts to notify the Agent
in a timely fashion of its applicable rate after the Agent's
request therefor under Section 2.2(a) and Section 3.2(a) (as
contemplated in the definitions of Base LIBOR and CD Base Rate).
If as to any Loan Period any one or more of the Reference Banks
is unable or for any reason fails to notify the Agent of its
applicable rate by 11:30 a.m., New York City time, two Business
Days before the Funding Date with respect to a LIBOR Rate Loan or
by 10:30 a.m., New York City time, on the Funding Date with
respect to a CD Rate Loan, then the applicable LIBOR Rate or CD
Rate, as the case may be, shall be determined on the basis of the
rate or rates of which the Agent is given notice by the remaining
Reference Bank or Banks by such time. If none of the Reference
Banks notifies the Agent of the applicable rate prior to
11:30 a.m., New York City time, two Business Days before the
Funding Date with respect to the LIBOR Rate or by 10:30 a.m.,
New York City time, on the Funding Date with respect to the CD
Rate, then (i) the Agent shall promptly notify the other parties
thereof and (ii) at the option of the Company the Committed Loan
Request delivered by the Company pursuant to Section 3.2(a) with
respect to such Funding Date shall be cancelled or shall be
deemed to have specified a Base Rate Loan.
The Agent shall, upon written request of the Company or
any Bank, deliver to the Company or such Bank a statement showing
the computations used by the Agent in determining the interest
rate applicable to any LIBOR Rate Loan or CD Rate Loan.
Section 4.4. Facility Fee. The Company agrees to pay
to the Agent for the accounts of the Banks pro rata in accordance
with their respective Percentages an annual facility fee computed
by multiplying the average daily amount of the Aggregate
Commitment (whether used or unused) by the applicable percentage
determined with respect to such facility fee in accordance with
Schedule II hereto. Such fee shall be payable quarterly in
arrears on the last Business Day of March, June, September and
December of each year (beginning with the last Business Day of
March, 1995) until the Commitments have expired or have been
terminated and on the date of such expiration or termination
(and, in the case of any Terminating Bank, such Bank's
Termination Date), in each case for the period then ending for
which such facility fee has not previously been paid.
Section 4.5. Agent's Fees. The Company agrees
promptly to pay to the Agent such fees as may be agreed from time
to time by the Company and the Agent.
Section 4.6. Computation of Interest and Fees.
Interest on LIBOR Rate Loans, CD Rate Loans and Base Rate Loans
where the Base Rate is calculated in reference to the Federal
Funds Rate, and facility and utilization fees shall be computed
for the actual number of days elapsed on the basis of a 360-day
year; interest on Base Rate Loans where the Base Rate is
calculated in reference to the Prime Rate shall be computed for
the actual number of days elapsed on the basis of a 365/366 day
year, as the case may be. The interest rate applicable to each
LIBOR Rate Loan, CD Rate Loan and Base Rate Loan, and (to the
extent applicable) after the maturity of any other type of Loan,
the interest rate applicable to such Loan, shall change
simultaneously with each change in the LIBOR Rate, the CD Rate or
the Base Rate, as applicable.
<PAGE>
SECTION 5. REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENTS.
Section 5.1. Voluntary Termination or Reduction of the
Commitments. The Company may at any time on at least 5 days'
prior irrevocable notice received by the Agent (which shall
promptly on the same day or on the next Business Day advise each
Bank thereof) permanently reduce the amount of the Commitments
(such reduction to be pro rata among the Banks according to their
respective Percentages) to an amount not less than the aggregate
principal amount of all outstanding Loans. Any such reduction
shall be in the amount of $5,000,000 or an integral multiple
thereof. Concurrently with any such reduction, the Company shall
prepay the principal of any Committed Loans outstanding to the
extent that the aggregate amount of such Loans outstanding shall
then exceed the Aggregate Commitment, as so reduced. The Company
may from time to time on like irrevocable notice terminate the
Commitments upon payment in full of all Loans, all interest
accrued thereon, all fees and all other obligations of the
Company hereunder; provided, however, that the Company may not at
any time terminate the Commitments if any Bid Loan is outstanding
(unless the holder of each such outstanding Bid Loan has given
its prior written consent to the concurrent repayment of such Bid
Loan).
Section 5.2. Voluntary Prepayments. The Company may
voluntarily prepay Loans (other than Bid Loans, which may only be
prepaid with the prior written consent of the holder thereof)
without premium or penalty, except as may be required pursuant to
subsection (e) below, in whole or in part, provided that (a) each
prepayment shall be in an aggregate principal amount of
$10,000,000 or an integral multiple of $1,000,000 in excess
thereof, (b) except for the prepayment of the aggregate amount of
all Loans outstanding, no such prepayment shall result in there
being less than $10,000,000 in Loans outstanding in the
aggregate, (c) the Company shall give the Agent at its Notice
Office (which shall promptly advise each Bank) not less than
three Business Days' prior notice thereof specifying the Loans to
be prepaid and the date and amount of prepayment, (d) any
prepayment of principal of any Loan shall include accrued
interest to the date of prepayment on the principal amount being
prepaid and (e) any prepayment of a LIBOR Rate Loan or a CD Rate
Loan shall be subject to the provisions of Section 7.4.
SECTION 6. MAKING AND PRORATION OF PAYMENTS;
SET-OFF; TAXES.
Section 6.1. Making of Payments. Except as provided
in Section 3.2(d) all payments (including those made pursuant to
Sections 5.1 and 5.2) of principal of, or interest on, the Loans
and all payments of fees shall be made by the Company to the
Agent in immediately available funds at its Payment Office not
later than 12:00 Noon, New York City time, on the date due; and
funds received after that hour shall be deemed to have been
received by the Agent on the next following Business Day. The
Agent shall promptly remit to each Bank or other holder of a Note
its share (if any) of each such payment. All payments under
Section 7 shall be made by the Company directly to the Persons
entitled thereto.
<PAGE>
Section 6.2. Pro Rata Treatment; Sharing.
(a) Except as required pursuant to Section 7 or
Section 13.8, each payment or prepayment of principal of any
Committed Loans, each payment of interest on the Committed Loans,
and each payment of the facility fee shall be allocated pro rata
among the Banks in accordance with their respective Percentages.
Each payment of principal of any Bid Borrowing shall be allocated
pro rata among the Banks participating in such Bid Borrowing in
accordance with the respective principal amounts of their
outstanding Bid Loans comprising such Bid Borrowing. Each
payment of interest on any Bid Borrowing shall be allocated pro
rata among the Banks participating in such Bid Borrowing in
accordance with the respective amounts of accrued and unpaid
interest on their outstanding Bid Loans comprising such Bid
Borrowing.
(b) If any Bank or other holder of a Committed Loan
shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise) on account of
principal of, interest on or fees or other amounts with respect
to any Committed Loan in excess of the share of payments and
other recoveries (exclusive of payments or recoveries under
Section 7 or pursuant to Section 13.8) such Bank or other holder
would have received if such payment had been distributed pursuant
to the provisions of Section 6.2(a), such Bank or other holder
shall purchase from the other Banks or holders, in a manner to be
specified by the Agent, such participations in the Committed
Loans held by them as shall be necessary so that all such
payments of principal and interest with respect to the Committed
Loans shall be shared by the Banks and other holders pro rata in
accordance with their respective Percentages; provided, however,
that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank or
holder, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
(c) If any Bank or other holder of a Bid Loan shall
obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise) on account of
principal of, interest on or fees or other amounts with respect
to any Bid Loan in excess of the share of payments and other
recoveries (exclusive of payments or recoveries pursuant to
Section 7 or Section 13.8) such Bank or other holder would have
received if such payment had been distributed pursuant to the
provisions of Section 6.2(a), such Bank or other holder shall
purchase from the other Banks or holders participating in such
Bid Borrowing, in a manner to be specified by the Agent, such
participations in the Bid Loans held by them as shall be
necessary so that all such payments of principal and interest
with respect to the Bid Loans shall be shared by the Banks and
other holders participating in such Bid Borrowing in a manner
consistent with Section 6.2(a); provided, however, that if all or
any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank or holder, the purchase shall
be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
<PAGE>
Section 6.3. Set-off. The Company agrees that the
Agent, each holder of a Note, each Assignee and each
Participant has all rights of set-off and bankers' lien provided
by applicable law, and the Company further agrees that at any
time (i) any amount owing by the Company under this Agreement is
due to any such Person or (ii) any Event of Default exists, each
such Person may apply to the payment of any amount payable
hereunder any and all balances, credits, deposits, accounts or
moneys of the Company then or thereafter with such Person.
Section 6.4. Taxes, etc. (a) All payments made by the
Company to the Agent, any Bank, any Assignee or any Participant
under this Agreement and the Notes shall be made without any set-
off or counterclaim, and free and clear of and without deduction
for or on account of any present or future Taxes now or hereafter
imposed (except to the extent that such withholding or deduction
is compelled by law or results from the breach, by the recipient
of a payment, of its agreement contained in Section 6.4(b) or
would not be required if the representation or warranty contained
in Section 6.4(b) were true), excluding any Taxes generally
assessed on the overall net income of the Agent, any Bank, any
Assignee or any Participant, as the case may be, by the
government or other authority of the country in which the Agent,
such Bank, such Assignee or such Participant is incorporated or
in which its Funding Office or the office through which it is
acting is located. If the Company is compelled by law to make
any such deductions or withholdings it will:
(i) pay to the relevant authorities the full amount
required to be so withheld or deducted,
(ii) except to the extent that such withholding or
deduction results from the breach by the recipient of a
payment of its agreement contained in Section 6.4(b) or
would not be required if the representation or warranty
contained in Section 6.4(b) were true, pay such additional
amounts as may be necessary in order that the net amount
received by the Agent, each Bank, each Assignee and each
Participant after such deductions or withholdings (including
any required deduction or withholding on such additional
amounts) shall equal the amount such payee would have
received had no such deductions or withholdings been made,
and
(iii) promptly forward to the Agent (for delivery to
such payee) an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such
authorities.
<PAGE>
Moreover, if any Taxes are directly asserted against the Agent,
any Bank, any Assignee or any Participant, such payee may pay
such Taxes and the Company shall promptly pay such additional
amount (including, without limitation, any penalties, interest or
expenses) as may be necessary in order that the net amount
received by such payee after the payment of such Taxes (including
any Taxes on such additional amount) shall equal the amount such
payee would have received had no such Taxes been asserted. For
purposes of this Section 6.4, a distribution hereunder by the
Agent or any Bank to or for the account of any Bank, Assignee or
Participant shall be deemed to be a payment by the Company. The
Company's agreement under this Section 6.4 shall survive
repayment of the Loans, cancellation of the Notes or any
termination of this Agreement.
(b) In consideration of, and as a condition to, the
Company's undertakings in Section 6.4(a), each Bank (other than a
Bank that is organized and existing under the laws of the United
States of America or any State thereof) agrees to execute and
deliver to the Agent at its Payment Office for delivery to the
Company, before the first scheduled payment date in each year,
two United States Internal Revenue Service Forms 1001 or 4224, or
any successor forms, as appropriate, properly completed and
claiming complete exemption from withholding and deduction of
United States federal Taxes. Each Bank represents and warrants
to the Company that, at the date of this Agreement, or at the
time such Bank becomes a Bank hereunder pursuant to
Section 13.4.1, its Funding Office is entitled to receive
payments of principal and interest hereunder without deduction
for or on account of any Taxes imposed by the United States or
any political subdivision thereof.
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS
FOR ABSOLUTE RATE LOANS, LIBOR RATE
LOANS AND CD RATE LOANS.
Section 7.1. Increased Costs. (a) If (i) Regulation D
of the Board of Governors of the Federal Reserve System or
(ii) after the date hereof, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or any Funding Office of such Bank) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency,
<PAGE>
(A) shall subject any Bank (or any Funding Office of
such Bank) to any tax, duty or other charge with respect to
its LIBOR Rate Loans, its CD Rate Loans, its Notes or its
obligation to make LIBOR Rate Loans or CD Rate Loans, or
shall change the basis of taxation of payments to any Bank
(or any Funding Office of such Bank) of the principal of or
interest on its LIBOR Rate Loans, its CD Rate Loans or any
other amounts due under this Agreement in respect of its
LIBOR Rate Loans, its CD Rate Loans or its obligation to
make LIBOR Rate Loans or CD Rate Loans (except for changes
in the rate of tax on the overall net income of such Bank or
its Funding Office imposed by any Governmental Authority of
the country in which such Bank is incorporated or in which
such Bank's Funding Office is located);
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
additional interest pursuant to Section 4.1), special
deposit, assessment (including any assessment for insurance
of deposits) or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
any Bank (or any Funding Office of such Bank); or
(C) shall impose on any Bank (or any Funding Office of
such Bank) any other condition affecting its LIBOR Rate
Loans, its CD Rate Loans, its Notes or its obligation to
make or maintain LIBOR Rate Loans or CD Rate Loans;
and the result of any of the foregoing is to increase the cost to
(or to impose an additional cost on) such Bank (or any Funding
Office of such Bank) of making or maintaining any LIBOR Rate Loan
or CD Rate Loans, or to reduce the amount of any sum received or
receivable by such Bank (or such Bank's Funding Office) under
this Agreement or under its Notes with respect thereto, then
within 10 days after demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis of such
demand), the Company shall pay directly to such Bank such
additional amount or amounts as will compensate such Bank for
such increased cost or such reduction (without duplication of any
amounts which have been reimbursed pursuant to Section 6.4).
(b) If, after the date hereof, any Bank shall
determine that the adoption, effectiveness or phase-in of any
applicable law, rule, guideline or regulation regarding capital
adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or any Funding Office of such Bank or any Person
controlling such Bank) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of
such Bank or any Person controlling such Bank as a consequence of
its obligations hereunder to a level below that which such Bank
or such controlling Person could have achieved but for such
adoption, change or compliance (taking into consideration such
Bank's or such controlling Person's policies with respect to
capital adequacy), then, from time to time, within 10 days after
demand by such Bank (which demand shall be accompanied by a
statement setting forth the basis of such demand), the Company
shall pay directly to such Bank such additional amount or amounts
as will compensate such Bank or such controlling Person for such
reduction.
<PAGE>
(c) Each Bank shall promptly notify the Company and
the Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation
pursuant to this Section 7.1 and will designate a different
Funding Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in such
Bank's sole judgment, be otherwise disadvantageous to such Bank.
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair. If with respect to the Loan Period for any
LIBOR Rate Loan or CD Rate Loan:
(a) the Agent is advised by two or more Reference
Banks that deposits in Dollars (in the applicable amounts)
are not being offered to such Reference Banks in the
relevant market for such Loan Period, or the Agent otherwise
determines (which determination shall be binding and
conclusive on all parties) that, by reason of circumstances
affecting the LIBOR market or the certificate of deposit
market, adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate or CD Rate; or
(b) the Required Banks advise the Agent that the LIBOR
Rate or CD Rate, as the case may be, as determined by the
Agent will not adequately and fairly reflect the cost to
such Required Banks of maintaining or funding LIBOR Rate
Loans or CD Rate Loans for such Loan Period, or that the
making or funding of LIBOR Rate Loans or CD Rate Loans has
become impracticable as a result of an event occurring after
the date of this Agreement which in such Required Banks'
opinion materially affects LIBOR Rate Loans or CD Rate
Loans,
then (i) the Agent shall promptly notify the other parties
thereof and (ii) so long as such circumstances shall continue, no
Bank shall be under any obligation to make any LIBOR Rate Loan or
CD Rate Loan, as the case may be.
Section 7.3. Changes in Law Rendering Certain Loans
Unlawful. In the event that any change in (including the
adoption of any new) applicable laws or regulations, or in the
interpretation of applicable laws or regulations by any
Governmental Authority or other regulatory body charged with the
administration thereof, should make it (or in the good faith
judgment of such Bank raise a substantial question as to whether
it is) unlawful for a Bank to make, maintain or fund any LIBOR
Rate Loan, then (a) such Bank shall promptly notify each of the
other parties hereto, (b) upon the effectiveness of such event
and so long as such unlawfulness shall continue, the obligation
of such Bank to make LIBOR Rate Loans shall be suspended and any
request by the Company for LIBOR Rate Loans shall, as to such
Bank, be deemed to be a request for a Base Rate Loan, if said
LIBOR Rate Loan is a Committed Loan, or an Absolute Rate Loan if
said LIBOR Rate Loan is a Bid Loan and (c) on the last day of the
current Loan Period for such Bank's LIBOR Rate Loans (or, in any
event, if such Bank so requests on such earlier date as may be
required by the relevant law, regulation or interpretation) such
Bank's Loans which are LIBOR Rate Loans shall cease to be
maintained as LIBOR Rate Loans and shall thereafter bear interest
at a floating rate per annum equal to the Base Rate, if said
LIBOR Rate Loan is a Committed Loan, or at an Absolute Rate,
which Absolute Rate shall be the LIBOR Rate in effect during such
Loan Period, if said LIBOR Rate Loan is a Bid Loan. If at any
time the event giving rise to such unlawfulness shall no longer
exist, then such Bank shall promptly notify the Company and the
Agent.
<PAGE>
Section 7.4. Funding Losses. The Company hereby
agrees that upon demand by any Bank (which demand shall be
accompanied by a statement setting forth the basis for the
calculations of the amount being claimed) the Company will
indemnify such Bank against any net loss or expense which such
Bank may sustain or incur (including, without limitation, any net
loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to
fund or maintain any LIBOR Rate Loan, CD Rate Loan or Absolute
Rate Loan), as reasonably determined by such Bank, as a result of
(a) any payment or mandatory or voluntary prepayment (including,
without limitation, any payment pursuant to Section 7.3 or any
payment resulting from acceleration) of any LIBOR Rate Loan, CD
Rate Loan or Absolute Rate Loan of such Bank on a date other than
the last day of the Loan Period for such Loan or (b) any failure
of the Company to borrow any Loans on the originally scheduled
Funding Date specified therefor pursuant to this Agreement
(including, without limitation, any failure to borrow resulting
from any failure to satisfy the conditions precedent to such
borrowing). For this purpose, all notices to the Agent pursuant
to this Agreement (including, without limitation, all acceptances
of Bids) shall be deemed to be irrevocable.
Section 7.5. Discretion of Banks as to Manner of
Funding. Notwithstanding any provision of this Agreement to the
contrary (but subject to Section 7.1(c)), each Bank shall be
entitled to fund and maintain its funding of all or any part of
its Loans in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had
actually funded and maintained each LIBOR Rate Loan, CD Rate Loan
or Absolute Rate Loan during the Loan Period for such Loan
through the purchase of deposits having a maturity corresponding
to such Loan Period and bearing an interest rate equal to the
rate borne by such Loan for such Loan Period.
Section 7.6. Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of any Bank pursuant
to this Section 7 shall be conclusive absent demonstrable error,
and each Bank may use reasonable averaging and attribution
methods in determining compensation pursuant to Section 7.1 or
7.4. The provisions of this Section 7 shall survive termination
of this Agreement and payment of the Notes.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
To induce the Banks to enter into this Agreement and to
make Loans hereunder, the Company hereby makes the following
representations and warranties to the Agent and the Banks, which
representations and warranties shall survive the execution and
delivery of this Agreement and the Notes and the disbursement of
the initial Loans hereunder:
<PAGE>
Section 8.1. Organization, etc. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California; each corporate
Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation; each other Subsidiary (if any) is an entity duly
organized and validly existing under the laws of the jurisdiction
of its organization; and each of the Company and each Subsidiary
has the power to own its property and to carry on its business as
now being conducted and is duly qualified and in good standing as
a foreign corporation or other entity authorized to do business
in each jurisdiction where, because of the nature of its
activities or properties, such qualification is required, except
where the failure to be so qualified or in good standing could
not reasonably be expected to have a Material Adverse Effect.
Section 8.2. Authorization; Consents; No Conflict.
The execution and delivery by the Company of this Agreement and
the Notes, the borrowings hereunder and the performance by the
Company of its obligations under this Agreement and the Notes
(a) are within the corporate powers of the Company, (b) have been
duly authorized by all necessary corporate action on the part of
the Company, (c) have received all necessary approvals,
authorizations, consents, registrations, notices, exemptions and
licenses (if any shall be required) from Governmental Authorities
and other Persons, except for any such approvals, authorizations,
consents, registrations, notices, exemptions or licenses non-
receipt of which could not reasonably be expected to have a
Material Adverse Effect, (d) do not and will not contravene or
conflict with any provision of (i) law, (ii) any judgment, decree
or order to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound, (iii) the charter,
by-laws or other organizational documents of the Company or any
Subsidiary or (iv) any provision of any agreement or instrument
binding on the Company or any Subsidiary, or any agreement or
instrument of which the Company is aware affecting the properties
of the Company or any Subsidiary, except with respect to (i),
(ii) and (iv) above, for any such contravention or conflict which
could not reasonably be expected to have a Material Adverse
Effect and (e) do not and will not result in or require the
creation or imposition of any Lien on any of the Company's or its
Subsidiaries' properties.
Section 8.3. Validity and Binding Nature. This
Agreement is, and the Notes when duly executed and delivered will
be, legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their
respective 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.
Section 8.4. Financial Statements. The Company's
audited consolidated financial statements as at December 31,
1993, and unaudited consolidated financial statements as at
September 30, 1994, a copy of each of which has been furnished to
each Bank, have been prepared in conformity with generally
accepted accounting principles in the United States applied on a
basis consistent with that of the preceding fiscal year and
fairly present the financial condition of the Company and its
Subsidiaries as at such dates and the results of their operations
for the periods then ended, and since the date of such audited
consolidated financial statements there has been no material
adverse change in the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries taken
as a whole.
<PAGE>
Section 8.5. Litigation and Contingent Liabilities.
All Litigation Actions, taken as a whole, could not reasonably be
expected to have a Material Adverse Effect. Other than any
liability incident to such Litigation Actions or provided for or
disclosed in the financial statements referred to in Section 8.4,
neither the Company nor any Subsidiary has any contingent
liabilities which are material to the business, credit,
operations, financial condition or prospects of the Company and
its Subsidiaries taken as a whole.
Section 8.6. Employee Benefit Plans. Each employee
benefit plan (as defined in Section 3(3) of ERISA) as to which
the Company, or any Subsidiary or any ERISA Affiliate may have
any liability complies in all material respects with all
applicable requirements of law and regulations. During the
twelve-consecutive-month period prior to the execution and
delivery of this Agreement, (i) no steps have been taken to
terminate any Plan and no contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under
section 302(f) of ERISA, (ii) no Reportable Event has occurred
with respect to any Plan and (iii) neither the Company nor any
ERISA Affiliate has either withdrawn or instituted steps to
withdraw from any Multiemployer Plan, except in any such case for
actions which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. No
condition exists or event or transaction has occurred in
connection with any Plan which could reasonably be expected to
result in the incurrence by the Company, any Subsidiary or any
ERISA Affiliate of any material liability, fine or penalty
(imposed by Section 4975 of the Code or Section 502(i) of ERISA
or otherwise). Neither the Company nor any ERISA Affiliate is a
member of, or contributes to, any Multiemployer Plan. Neither
the Company nor any ERISA Affiliate has any contingent liability
with respect to any post retirement benefit under an employee
welfare benefit plan (as defined in section 3(i) of ERISA), other
than liability for continuation coverage described in Part 6 of
Title I of ERISA.
Section 8.7. Investment Company Act. The Company is
not an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.8. Public Utility Holding Company Act.
Neither the Company nor any Subsidiary is a "holding company", or
a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 8.9. Regulation U. Neither the Company nor
any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System).
Section 8.10. Information.
(a) All information with respect to the Company
contained in the December 20, 1994 memorandum furnished by the
Agent to the Banks and all information heretofore furnished by
the Company to the Agent or any Bank is, to the best of the
Company's knowledge after due inquiry, true and accurate in every
material respect as of the date thereof, and none of such
information contains any material misstatement of fact or omits
to state any material fact necessary to make such information not
misleading.
<PAGE>
(b) All information furnished by the Company to the
Agent or any Bank on and after the date hereof shall be, to the
best of the Company's knowledge after due inquiry, true and
accurate in every material respect as of the date of such
information, and none of such information shall contain any
material misstatement of fact or shall omit to state any material
fact necessary to make such information not misleading.
Section 8.11. Compliance with Applicable Laws, etc.
The Company and its Subsidiaries are in material compliance with
the requirements of all applicable laws, rules, regulations, and
orders of all Governmental Authorities (including, without
limitation, all applicable environmental laws). Neither the
Company nor any Subsidiary is in default under any agreement or
instrument to which the Company or such Subsidiary is a party or
by which it or any of its properties or assets is bound, which
default could reasonably be expected to have a Material Adverse
Effect on the business, credit, operations, financial condition
or prospects of the Company and its Subsidiaries taken as a
whole. No Event of Default or Unmatured Event of Default has
occurred and is continuing.
Section 8.12. Insurance. Each of the Company and each
Subsidiary maintains, or, in the case of any property owned by
the Company or any Subsidiary and leased to lessees, has caused
such lessees to maintain, insurance with financially sound and
reputable insurers to such extent and against such hazards and
liabilities as is commonly maintained, or caused to be
maintained, as the case may be, by companies similarly situated.
Section 8.13. Taxes. Each of the Company and each
Subsidiary has filed all tax returns which are required to have
been filed and has paid, or made adequate provisions for the
payment of, all of its Taxes which are due and payable, except
such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by generally accepted
accounting principles have been established and except where
failure to pay such Taxes, individually or in the aggregate,
cannot reasonably be expected to have a Material Adverse Effect.
Section 8.14. Use of Proceeds. The proceeds of the
Loans will be used by the Company to support the Company's
commercial paper program and for other general corporate
purposes.
Section 8.15. Pari Passu. All obligations and
liabilities of the Company hereunder shall rank at least equally
and ratably (pari passu) in priority with all other
unsubordinated, unsecured obligations of the Company to any other
creditor.
Section 8.16. Ownership and Liens. Each of the
Company and each Subsidiary has title to, or valid leasehold
interests in, all of its properties and assets, real and
personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in
Section 8.4 (other than any properties or assets disposed of in
the ordinary course of business) other than such imperfections in
title or leasehold interests which could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and
none of the properties and assets owned by the Company or any of
its Subsidiaries and none of its leasehold interests is subject
to any Lien, except as disclosed in such financial statements or
as may be permitted under this Agreement.
<PAGE>
SECTION 9. COVENANTS.
Until the expiration or termination of the Commitments,
and thereafter until all obligations of the Company hereunder and
under the Notes are paid in full, the Company agrees that, unless
at any time the Required Banks shall otherwise expressly consent
in writing, it will:
Section 9.1. Reports, Certificates and Other
Information. Furnish to the Agent with sufficient copies for
each Bank which the Agent shall promptly furnish to each Bank:
9.1.1. Audited Financial Statements. As soon as
available, and in any event within 95 days after each fiscal
year of the Company, a copy of the audited financial
statements and annual audit report of the Company and its
Subsidiaries for such fiscal year prepared on a consolidated
basis and in conformity with generally accepted accounting
principles in the United States and certified by Ernst &
Young or by another independent certified public accountant
of recognized national standing selected by the Company and
satisfactory to the Required Banks.
9.1.2. Interim Reports. As soon as available, and in
any event within 50 days after each quarter (except the last
quarter) of each fiscal year of the Company, a copy of the
unaudited financial statements of the Company and its
Subsidiaries for such quarter prepared in a manner
consistent with the audited financial statements referred to
in Section 9.1.1, signed by the Company's chief financial
officer and consisting of at least a balance sheet as at the
close of such quarter and statements of earnings and cash
flows for such quarter and for the period from the beginning
of such fiscal year to the close of such quarter.
9.1.3. Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report and of each
set of quarterly statements provided for in this
Section 9.1, a certificate of the Company dated the date of
delivery of such annual report or such quarterly statements
and signed by the Company's chief financial officer, to the
effect that no Event of Default or Unmatured Event of
Default has occurred and is continuing, or, if there is any
such event, describing it and the steps, if any, being taken
to cure it and containing a computation of, and showing
compliance with, each of the financial ratios and
restrictions contained in this Section 9.
9.1.4. Certain Notices. Forthwith upon learning of
the occurrence of any of the following, written notice
thereof, describing the same and the steps being taken by
the Company or the Subsidiary affected with respect thereto:
(i) the occurrence of an Event of Default or an
Unmatured Event of Default;
(ii) the institution of any Litigation Action,
provided that the Company need not give notice of any
new Litigation Action unless such Litigation Action,
together with all other pending Litigation Actions,
could, if adversely determined, reasonably be expected
to have a Material Adverse Effect;
<PAGE>
(iii) the entry of any judgment or decree against
the Company or any Subsidiary if the aggregate amount
of all judgments and decrees then outstanding against
the Company and all Subsidiaries exceeds $10,000,000
after deducting (i) the amount with respect to which
the Company or any Subsidiary is insured and with
respect to which the insurer has not denied coverage in
writing, and (ii) the amount for which the Company or
any Subsidiary is otherwise indemnified if the terms of
such indemnification are satisfactory to the Agent and
the Required Banks;
(iv) the occurrence of a Reportable Event with
respect to any Plan; the institution of any steps by
the Company, any ERISA Affiliate, the PBGC or any other
Person to terminate any Plan; the institution of any
steps by the Company or any ERISA Affiliate to withdraw
from any Plan; the incurrence of any material increase
in the contingent liability of the Company or any
Subsidiary with respect to any post-retirement welfare
benefits; or the failure of the Company or any other
Person to make a required contribution to a Plan if
such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA; provided, however, that no
notice shall be required of any of the foregoing unless
the circumstance could reasonably be expected to have a
Material Adverse Effect; or
(v) the occurrence of a material adverse change
in the business, credit, operations, financial
condition or prospects of the Company and its
Subsidiaries taken as a whole.
9.1.5. SEC Filings. Promptly after the filing or
making thereof, copies of all 8-K's (other than 8-K's
relating solely to the issuance by the Company of securities
pursuant to an effective registration statement), 10-Q's,
10-K's, and other material reports or registration
statements filed by the Company or any Subsidiary with or to
any securities exchange or the Securities and Exchange
Commission.
9.1.6. Other Information. From time to time such
other information concerning the Company and its
Subsidiaries as any Bank or the Agent may reasonably
request.
Section 9.2. Existence. Maintain and preserve, and,
subject to the provisions of clauses (w), (x), (y) and (z) of
Section 9.9, cause each Subsidiary to maintain and preserve, its
respective existence as a corporation or other form of business
organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade
names, franchises and other authority to the extent material and
necessary for the conduct of its respective business in the
ordinary course as conducted from time to time, except as may be
determined by the Board of Directors of the Company in good faith
to wind up and dissolve a Subsidiary that is not necessary or
material to the business of the Company in its ordinary course as
conducted from time to time.
Section 9.3. Nature of Business. Engage, and cause
each Subsidiary to engage, in substantially the same fields of
business as it is engaged in on the date hereof.
<PAGE>
Section 9.4. Books, Records and Access. Maintain, and
cause each Subsidiary to maintain, complete and accurate books
and records in which full and correct entries in conformity with
generally accepted accounting principles in the United States
shall be made of all dealings and transactions in relation to its
respective business and activities. Permit, and cause each
Subsidiary to permit, access by the Agent and each Bank to the
books and records of the Company and such Subsidiary during
normal business hours, and permit, and cause each Subsidiary to
permit, the Agent and each Bank to make copies of such books and
records.
Section 9.5. Insurance. Maintain, and cause each
Subsidiary to maintain, such insurance as is described in
Section 8.12.
Section 9.6. Repair. Maintain, preserve and keep, and
cause each Subsidiary to maintain, preserve and keep, its
material properties in good repair, working order and condition,
and from time to time make, and cause each Subsidiary to make,
all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all
times the efficiency thereof shall be fully preserved and
maintained. In the case of properties leased by the Company or
any Subsidiary to lessees, the Company may satisfy its
obligations related to such properties under the previous
sentence by causing, or by causing each Subsidiary to cause, such
lessees to perform such obligations.
Section 9.7. Taxes. Pay, and cause each Subsidiary to
pay, when due, all of its Taxes, unless and only to the extent
that the Company or such Subsidiary, as the case may be, is
contesting any such Taxes in good faith and by appropriate
proceedings and the Company or such Subsidiary has set aside on
its books such reserves or other appropriate provisions therefor
as may be required by generally accepted accounting principles in
the United States, except where failure to pay such Taxes,
individually or in the aggregate, cannot reasonably be expected
to have a Material Adverse Effect.
Section 9.8. Compliance. Comply, and cause each
Subsidiary to comply, in all material respects with all statutes
and governmental rules and regulations applicable to it; and use
reasonable efforts to cause, and cause each Subsidiary to use
reasonable efforts to cause, each lessee of property owned by the
Company or any Subsidiary to comply in all material respects with
all statutes, governmental rules and regulations applicable to
such property or applicable to such lessee in connection with its
leasing.
<PAGE>
Section 9.9. Merger, Purchase and Sale. Except with
respect to any Permitted Acquisition, not, and not permit any
Subsidiary to:
(a) be a party to any merger or consolidation;
(b) transfer, convey, lease or otherwise dispose of
all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole; or
(c) purchase or otherwise acquire all or substantially
all the assets of any Person unless such purchase or
acquisition is a Permitted Acquisition by the Company.
Notwithstanding the foregoing:
(w) the Company may merge or consolidate with a person
that is a U.S. corporation;
(x) any Wholly-owned Subsidiary may merge into the
Company or into or with any other Wholly-owned Subsidiary;
(y) any Wholly-owned Subsidiary may consolidate with
any other Wholly-owned Subsidiary so long as immediately
thereafter 100% of the voting stock or other ownership
interest of the resulting Person is owned by the Company or
another Wholly-owned Subsidiary; and
(z) any Wholly-owned Subsidiary may sell, transfer,
convey, lease or assign all or a substantial part of its
assets to the Company or another Wholly-owned Subsidiary;
provided, in each of the cases described in preceding
clauses (w), (x), (y) and (z), that immediately thereafter and
after giving effect thereto no Event of Default or Unmatured
Event of Default shall have occurred and be continuing and in the
case of any (i) merger in which the Company is not the surviving
entity or (ii) consolidation to which the Company is a party, the
surviving entity or the Person formed by such consolidation, as
the case may be, shall assume the Company's obligations and
performance of the Company's covenants under this Agreement in a
writing satisfactory in form and substance to the Agent.
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio. Not permit the ratio of
Consolidated Indebtedness to Consolidated Tangible Net
Worth to exceed 600% on and as of the last day of any fiscal year
or 650% at any other time.
Section 9.11. Fixed Charge Coverage Ratio. Not permit
the Fixed Charge Coverage Ratio on the last day of any quarter of
any fiscal year of the Company to be less than 125%.
<PAGE>
Section 9.12. Consolidated Tangible Net Worth. Not
permit the Company's Consolidated Tangible Net Worth to be less
than $1,500,000,000 plus 50% of (a) the cumulative net income
(but without deduction for cumulative net losses) of the Company
and its Subsidiaries determined on a consolidated basis in
accordance with United States generally accepted accounting
principles, (b) the cumulative equity capital contributions from
AIG and (c) the net proceeds from the sale of preferred stock, in
each case for the period from September 30, 1994 to and including
the date of any determination hereunder.
Section 9.13. Restricted Payments. Not declare or pay
any dividends whatsoever or make any distribution on any capital
stock of the Company (except in shares of, or warrants or rights
to subscribe for or purchase shares of, capital stock of the
Company), and not, and not permit any Subsidiary to, make any
payment to acquire or retire shares of capital stock of the
Company, at any time when (i) an Event of Default as described in
Section 11.1 has occurred and is continuing and there are Loans
outstanding hereunder or (ii) an Event of Default as described in
Section 11.1.1 has occurred and is continuing and there are no
Loans outstanding hereunder; provided, however, that
notwithstanding the foregoing, this Section 9.13 shall not
prohibit (x) the payment of dividends on any of the Company's
market auction preferred stock that was sold to the public
pursuant to an effective registration statement under the
Securities Act of 1933 or (y) the payment of dividends within
30 days of the declaration thereof if such declaration was not
prohibited by this Section 9.13.
Section 9.14. Liens. Not, and not permit any
Subsidiary to, create or permit to exist any Lien upon or with
respect to any of its properties or assets of any kind, now owned
or hereafter acquired, or on any income or profits therefrom,
except for
(a) Liens existing on date hereof that are reflected
in the financial statements of the Company dated prior to
the date hereof;
(b) Liens upon or in any property (other than property
acquired for lease to a Person other than the Company or a
Subsidiary) acquired or held by the Company or a Subsidiary
in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness permitted
under Section 9.15 incurred or guaranteed by the Company or
any Subsidiary prior to, at the time of, or within 60 days
after the later of the acquisition, completion of
construction or commencement of full operation of such
property, which Indebtedness was incurred or guaranteed
solely for the purpose of financing the acquisition of such
property or construction or improvements thereon; provided,
however, that in the case of any such acquisition,
construction or improvement, the Lien shall not apply to any
property theretofore owned by the Company or a Subsidiary,
other than, in the case of any such construction or
improvement, any theretofore unimproved real property on
which the property so constructed, or the improvement, is
located;
<PAGE>
(c) Liens securing the Indebtedness of a Subsidiary
owing to the Company or to a Wholly-owned Subsidiary;
(d) Liens on property of a corporation existing at the
time such corporation is merged into or consolidated with
the Company or a Subsidiary or at the time of a purchase,
lease or other acquisition of the properties of a
corporation or firm as an entirety or substantially as an
entirety by the Company or a Subsidiary, provided that any
such Lien shall not extend to or cover any assets or
properties of the Company or such Subsidiary owned by the
Company or such Subsidiary prior to such merger,
consolidation, purchase, lease or acquisition, unless
otherwise permitted under this Section 9.14;
(e) leases or subleases granted to others in the
ordinary and usual course of the Company's business;
(f) easements, rights of way, restrictions and other
similar charges or encumbrances not interfering with the
ordinary conduct of the business of the Company or any
Subsidiary;
(g) banker's Liens arising, other than by contract, in
the ordinary and usual course of the Company's business;
(h) Liens incurred or deposits made in the ordinary
course of business in connection with surety and appeal
bonds, leases, government contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money), provided, however, that the obligation so secured is
not overdue or is being contested in good faith and by
appropriate proceedings diligently pursued;
(i) any replacement or successive replacement in whole
or in part of any Lien referred to in the foregoing
clauses (a) to (h), inclusive, provided, however, that the
principal amount of any Indebtedness secured by the Lien
shall not be increased and the principal repayment schedule
and maturity of such Indebtedness shall not be extended and
(i) such replacement shall be limited to all or a part of
the property which secured the Lien so replaced (plus
improvements and construction on such property), or (ii) if
the property which secured the Lien so replaced has been
destroyed, condemned or damaged and pursuant to the terms of
the Lien other property has been substituted therefor, then
such replacement shall be limited to all or part of such
substituted property;
(j) Liens created by or resulting from any litigation
or other proceeding which is being contested in good faith
by appropriate proceedings, including Liens arising out of
judgments or awards against the Company or any Subsidiary
with respect to which the Company or such Subsidiary is in
good faith prosecuting an appeal or proceedings for review;
or Liens incurred by the Company or any Subsidiary for the
purpose of obtaining a stay or discharge in the course of
any litigation or other proceeding to which the Company or
such Subsidiary is a party;
<PAGE>
(k) carrier's, warehouseman's, mechanic's, landlord's
and materialmen's Liens, Liens for Taxes, assessments and
other governmental charges and other similar Liens, in each
case arising in the ordinary course of business, securing
obligations that are not incurred in connection with the
obtaining of any advance or credit and which are either not
overdue or are being contested in good faith and by
appropriate proceedings diligently pursued;
(l) Liens securing Indebtedness of each of the
Company's Wholly-owned Subsidiaries to be incorporated
outside the United States for the purpose of providing
subsidized financing of the acquisition of Airbus Industrie
aircraft, the repayment obligations of which will be
supported by guaranties issued by certain European
government export credit agencies (the European Credit
Agency Export Finance Program or "ECA Program") and a
Company Guaranty and a pledge of the assets of (including
any rights to or interests in any reserve or security
deposit held by) each such Wholly- owned Subsidiary,
provided that such Liens shall encumber only the assets of
(including any rights to or interests in any reserve or
security deposit held by) each such Wholly-owned Subsidiary,
and provided further, that the aggregate amount of
Indebtedness of all such Wholly-owned Subsidiaries secured
by Liens does not at the time exceed $2 billion during the
1995 fiscal year of the Company and $3 billion thereafter,
minus in either case the amount of outstanding Liens
permitted under Section 9.14(m); and
(m) other Liens securing Indebtedness of the Company
or any Subsidiary in an aggregate amount which, together
with all other outstanding Indebtedness of the Company and
the Subsidiaries secured by Liens not listed in clauses (a)
through (l) of this Section 9.14, does not at the time
exceed 12.5% of the Consolidated Tangible Net Worth of the
Company as shown on its audited consolidated financial
statements as of the end of the fiscal year preceding the
date of determination minus the amount of outstanding Liens
permitted under Section 9.14(l).
Section 9.15. Leases. Not, and not permit any
Subsidiary to, become obligated, as lessee, under any lease of
real or personal property if at the time of entering into such
lease and after giving effect thereto the aggregate Operating
Lease Rentals would exceed 20% of Consolidated Indebtedness.
Section 9.16. Use of Proceeds. Not permit any
proceeds of the Loans to be used, either directly or indirectly,
(a) for the payment of any dividend or for the
repurchase of any of the Company's equity securities;
(b) for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying any margin stock"
within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, as amended from time to time;
(c) for the purpose, whether immediate, incidental or
ultimate, of acquiring directly or indirectly any of the
outstanding shares of voting stock of any corporation which
(i) has announced that it will oppose such acquisition or
(ii) has commenced any litigation which alleges that any
such acquisition violates, or will violate, applicable law;
or
(d) for any other purpose except (i) to support the
Company's commercial paper program or (ii) for general
corporate purposes in the ordinary course of business.
<PAGE>
Section 9.17. Transactions with Related Parties. Not,
and not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement, including, without limitation, the
purchase, sale, lease or exchange of property or the rendering of
any service, with any Related Party, except in the ordinary
course of and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such
Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not a Related Party.
Section 9.18. Securitization. Promptly after the
receipt thereof, apply the proceeds from the securitization of
assets (aircraft lease portfolio securitizations), net of
expenses related to any such securitization, to the repayment of
Indebtedness.
SECTION 10. CONDITIONS TO LENDING.
Section 10.1. Conditions Precedent to All Loans. Each
Bank's obligation to make each Loan is subject to the following
conditions precedent:
10.1.1. No Default. (a) No Event of Default or
Unmatured Event of Default has occurred and is continuing or
will result from the making of such Loan, (b) the
representations and warranties contained in Section 8 are
true and correct in all material respects as of the date of
such requested Loan, with the same effect as though made on
the date of such Loan (it being understood that each request
for a Loan shall automatically constitute a representation
and warranty by the Company that, as at the requested date
of such Loan, (x) all conditions under this Section 10.1.1
shall be satisfied and (y) after the making of such Loan the
aggregate principal amount of all outstanding Loans will not
exceed the Aggregate Commitment).
10.1.2. Documents. The Agent shall have received
(a) a certificate signed by an Authorized Officer of the
Company as to compliance with Section 10.1.1, which
requirement shall be deemed satisfied by the submission of a
properly completed Notice of Competitive Bid Borrowing or
Committed Loan Request and (b) such other documents as the
Agent may reasonably request in support of such Loan.
10.1.3. Litigation. No Litigation Action not
disclosed in writing by the Company to the Agent and the
Banks prior to the date of the last previous Loan hereunder
(or, in the case of the initial Loan, prior to the date of
execution and delivery of this Agreement) ("New Litigation")
has been instituted and no development not so disclosed has
occurred in any other Litigation Action ("Existing
Litigation"), unless the resolution of all New Litigation
and Existing Litigation against the Company and its
Subsidiaries could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
<PAGE>
Section 10.2. Conditions to the Availability of the
Commitments. The obligations of each Bank hereunder are subject
to, and the Banks' Commitments shall not become available until
the date on which each of the following conditions precedent
shall have been satisfied or waived in writing by the Required
Banks:
10.2.1. Revolving Credit Agreement. The Agent shall
have received this Agreement duly executed and delivered by
each of the Banks and the Company and each of the Banks
shall have received a fully executed Committed Note and a
fully executed Bid Note.
10.2.2. Evidence of Corporate Action. The Agent shall
have received certified copies of all corporate actions
taken by the Company to authorize this Agreement and the
Notes.
10.2.3. Incumbency and Signatures. The Agent shall
have received a certificate of the Secretary or an Assistant
Secretary of the Company certifying the names of the officer
or officers of the Company authorized to sign this
Agreement, the Notes and the other documents provided for in
this Agreement to be executed by the Company, together with
a sample of the true signature of each such officer (it
being understood that the Agent and each Bank may conclu-
sively rely on such certificate until formally advised by a
like certificate of any changes therein).
10.2.4. Good Standing Certificates. The Agent shall
have received such good standing certificates of state
officials with respect to the incorporation of the Company,
or other matters, as the Agent or the Banks may reasonably
request.
10.2.5. Opinions of Company Counsel. The Agent shall
have received favorable written opinions of O'Melveny &
Myers, counsel for the Company, in substantially the form of
Exhibit G, and the Corporate Counsel of the Company, in
substantially the form of Exhibit H.
10.2.6. Opinion of Agent's Counsel. The Agent shall
have received a favorable written opinion of Sullivan &
Cromwell, counsel to the Agent, with respect to documents
received by the Agent and the Banks and such legal matters
as the Agent reasonably may require.
10.2.7. Other Documents. The Agent shall have
received such other certificates and documents as the Agent
or the Banks reasonably may require.
10.2.8. Fees. The Agent shall have received for the
account of the Agent, the arrangement fee, as previously
agreed to between the Company and the Agent and the Agent's
fees payable to the Funding Date pursuant to Section 4.5
hereof.
<PAGE>
10.2.9. Material Adverse Change. Since the date of
the audited financial statements identified in Section 8.4
hereof, there shall not have occurred any material adverse
change in the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries
taken as a whole.
10.2.10. Termination of Revolving Credit Facilities.
The Company shall have paid all amounts owing and otherwise
satisfied and discharged all of its obligations arising
under each of the Revolving Credit Agreements, dated as of
June 1, 1993, as amended, among the Company, the Agent and
the banks named therein, and such agreements shall have been
terminated and of no further force and effect, evidence of
which shall have been made available to the Agent.
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT.
Section 11.1. Events of Default. Each of the
following shall constitute an Event of Default under this
Agreement:
11.1.1. Non-Payment of Notes, etc. Default in the
payment when due of any principal of any Loan; or default,
and continuance thereof for five days, in the payment when
due of any interest on any Loan or any fees payable by the
Company hereunder.
11.1.2. Non-Payment of Other Indebtedness for Borrowed
Money. Default in the payment when due (subject to any
applicable grace period), whether by acceleration or
otherwise, of any principal of, interest on or fees incurred
in connection with any other Indebtedness of, or guaranteed
by, the Company or any Significant Subsidiary (except
(i) any such Indebtedness of any Subsidiary to the Company
or to any other Subsidiary and (ii) any Indebtedness
hereunder) and, if a default in the payment of interest or
fees, continuance of such default for five days, in the case
of interest, or 30 days, in the case of fees, or default in
the performance or observance of any obligation or condition
with respect to any such other Indebtedness if the effect of
such default (subject to any applicable grace period) is to
accelerate the maturity of any such Indebtedness or to
permit the holder or holders thereof, or any trustee or
agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity; provided,
however, that the aggregate principal amount of all
Indebtedness as to which there has occurred any default as
described above shall equal or exceed $50,000,000.
<PAGE>
11.1.3. Bankruptcy, Insolvency, etc. The Company or
any Significant Subsidiary becomes insolvent or generally
fails to pay, or admits in writing its inability or refusal
to pay, debts as they become due; or the Company or any
Significant Subsidiary applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or
other custodian for the Company or such Significant
Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence
of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for the Company or
any Significant Subsidiary or for a substantial part of the
property of any thereof and is not discharged within
60 days; or any warrant of attachment or similar legal
process is issued against any substantial part of the
property of the Company or any of its Significant
Subsidiaries which is not released within 60 days of
service; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution,
not under any bankruptcy or insolvency law, of a Significant
Subsidiary), is commenced in respect of the Company or any
Significant Subsidiary, and, if such case or proceeding is
not commenced by the Company or such Significant Subsidiary
it is consented to or acquiesced in by the Company or such
Significant Subsidiary or remains for 60 days undismissed;
or the Company or any Significant Subsidiary takes any
corporate action to authorize, or in furtherance of, any of
the foregoing.
11.1.4. Non-Compliance with this Agreement. Failure by
the Company to comply with or to perform any of the
Company's covenants herein or any other provision of this
Agreement (and not constituting an Event of Default under
any of the other provisions of this Section 11.1) and
continuance of such failure for 30 days (or, if the Company
failed to give notice of such non-compliance or
nonperformance pursuant to Section 9.1.4 within one Business
Day after obtaining actual knowledge thereof, 30 days less
the number of days elapsed between the date the Company
obtained such actual knowledge and the date the Company
gives the notice pursuant to Section 9.1.4, but in no event
less than one Business Day) after notice thereof to the
Company from the Agent, any Bank, or the holder of any Note.
11.1.5. Representations and Warranties. Any
representation or warranty made by the Company herein is
untrue or misleading in any material respect when made or
deemed made; or any schedule, statement, report, notice, or
other writing furnished by the Company to the Agent or any
Bank is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or
certified; or any certification made or deemed made by the
Company to the Agent or any Bank is untrue or misleading in
any material respect on or as of the date made or deemed
made.
<PAGE>
11.1.6. Employee Benefit Plans. The institution by
the Company or any ERISA Affiliate of steps to terminate any
Plan if, in order to effectuate such termination, (i) the
Company or any ERISA Affiliate would be required to make a
contribution to such Plan or would incur a liability or
obligation to such Plan in an amount in excess of
$10,000,000 and (ii) immediately after giving effect to the
payment or satisfaction of such contribution, liability or
obligation (if made or undertaken by the Company or any
Subsidiary) an Event of Default or Unmatured Event of
Default would exist and be continuing; or the institution by
the PBGC of steps to terminate any Plan; or a contribution
failure occurs with respect to a Plan sufficient to give
rise to a lien under Section 302(f) of ERISA securing an
amount in excess of $10,000,000.
11.1.7. Litigation. There shall be entered against
the Company or any Subsidiary one or more judgments or
decrees in excess of $10,000,000 in the aggregate at any one
time outstanding for the Company and all Subsidiaries and
all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days
from the entry thereof, excluding those judgments or decrees
for and to the extent to which the Company or any Subsidiary
is insured and with respect to which the insurer has not
denied coverage in writing or for and to the extent to which
the Company or any Subsidiary is otherwise indemnified if
the terms of such indemnification are satisfactory to the
Required Banks; and
11.1.8. Change of Ownership. AIG shall cease to own
beneficially at least 51% of all of the outstanding shares
of the common stock of the Company.
Section 11.2. Effect of Event of Default. If any Event
of Default described in Section 11.1.3 shall occur, the
Commitments (if they have not theretofore terminated) shall
immediately terminate and all Loans and all interest and other
amounts due hereunder shall become immediately due and payable,
all without presentment, demand or notice of any kind; and, in
the case of any other Event of Default, the Agent may, and upon
written request of the Required Banks shall, declare the
Commitments (if they have not theretofore terminated) to be
terminated and all Loans and all interest and other amounts due
hereunder to be due and payable, whereupon the Commitments (if
they have not theretofore terminated) shall immediately terminate
and all Loans and all interest and other amounts due hereunder
shall become immediately due and payable, all without
presentment, demand or notice of any kind. The Agent shall
promptly advise the Company and each Bank of any such
declaration, but failure to do so shall not impair the effect of
such declaration.
<PAGE>
SECTION 12. THE AGENT.
Section 12.1. Authorization. Each Bank and the holder
of each Note authorizes the Agent to act on behalf of such Bank
or holder to the extent provided herein and in any other document
or instrument delivered hereunder or in connection herewith, and
to take such other action as may be reasonably incidental
thereto. Subject to the provisions of Section 12.3, the Agent
will take such action permitted by any agreement delivered in
connection with this Agreement as may be requested in writing by
the Required Banks or if required under Section 13.1, all of the
Banks. The Agent shall promptly remit in immediately available
funds to each Bank or other holder its share of all payments
received by the Agent for the account of such Bank or holder, and
shall promptly transmit to each Bank (or share with each Bank the
contents of) each notice it receives from the Company pursuant to
this Agreement.
Section 12.2. Indemnification. The Banks agree to
indemnify the Agent in its capacity as such (to the extent not
reimbursed by the Company), ratably according to their respective
Percentages, from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses which
may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out
of this Agreement, or any documents contemplated by or referred
to herein or the transactions contemplated hereby or any action
taken or omitted by the Agent under or in connection with any of
the foregoing; provided that no Bank shall be liable for the
payment to the Agent of any portion of such actions, causes of
action, suits, losses, liabilities, damages and expenses
resulting from the Agent's or its employees' or agents' gross
negligence or willful misconduct. Without limiting the
foregoing, subject to Section 13.5 each Bank agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-
of-pocket expenses (including reasonable counsel fees) incurred
by the Agent in such capacity in connection with the preparation,
execution or enforcement of, or legal advice in respect of rights
or responsibilities under, this Agreement or any amendments or
supplements hereto or thereto to the extent that the Agent is not
reimbursed for such expenses by the Company. All obligations
provided for in this Section 12.2 shall survive repayment of the
Loans, cancellation of the Notes or any termination of this
Agreement.
Section 12.3. Action on Instructions of the Required
Banks. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or
collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but the Agent shall
in all cases be fully protected in acting or refraining from
acting upon the written instructions from (i) the Required Banks,
except for instructions which under the express provisions hereof
must be received by the Agent from all Banks and (ii) in the case
of such instructions, from all Banks. In no event will the Agent
be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or
applicable law. The relationship between the Agent and the Banks
is and shall be that of agent and principal only and nothing
herein contained shall be construed to constitute the Agent a
trustee for any holder of a Note or of a participation therein
nor to impose on the Agent duties and obligations other than
those expressly provided for herein.
<PAGE>
Section 12.4. Payments. (a) The Agent shall be
entitled to assume that each Bank has made its Loan available in
accordance with Section 2.3 or Section 3.2(c), as applicable,
unless such Bank notifies the Agent at its Notice Office prior to
11:00 a.m., New York City time, on the Funding Date for such Loan
that it does not intend to make such Loan available, it being
understood that no such notice shall relieve such Bank of any of
its obligations under this Agreement. If the Agent makes any
payment to the Company on the assumption that a Bank has made the
proceeds of such Loan available to the Agent but such Bank has
not in fact made the proceeds of such Loan available to the
Agent, such Bank shall pay to the Agent on demand an amount equal
to the amount of such Bank's Loan, together with interest thereon
for each day that elapses from and including such Funding Date to
but excluding the Business Day on which the proceeds of such
Bank's Loan become immediately available to the Agent at its
Payment Office prior to 12:00 Noon, New York City time, at the
Federal Funds Rate for each such day, based upon a year of 360
days. A certificate of the Agent submitted to any Bank with
respect to any amounts owing under this Section 12.4(a) shall be
conclusive absent demonstrable error. If the proceeds of such
Bank's Loan are not made available to the Agent at its Payment
Office by such Bank within three Business Days of such Funding
Date, the Agent shall be entitled to recover such amount on
demand from the Company, together with interest thereon for each
day that elapses from and including such Funding Date to but
excluding the Business Day on which such proceeds become
immediately available to the Agent prior to 12:00 Noon,
New York City time, (i) in the case of a Bid Loan, at the rate
per annum applicable thereto and (ii) in the case of a Committed
Loan, at the rate per annum applicable to Base Rate Loans
hereunder, in either case based upon a year of 360 days. Nothing
in this paragraph (a) shall relieve any Bank of any obligation it
may have hereunder to make any Loan or prejudice any rights which
the Company may have against any Bank as a result of any default
by such Bank hereunder.
(b) The Agent shall be entitled to assume that the
Company has made all payments due hereunder from the Company on
the due date thereof unless it receives notification prior to any
such due date from the Company that the Company does not intend
to make any such payment, it being understood that no such notice
shall relieve the Company of any of its obligations under this
Agreement. If the Agent distributes any payment to a Bank
hereunder in the belief that the Company has paid to the Agent
the amount thereof but the Company has not in fact paid to the
Agent such amount, such Bank shall pay to the Agent on demand
(which shall be made by telegram, telex, facsimile or personal
delivery) an amount equal to the amount of the payment made by
the Agent to such Bank, together with interest thereon for each
day that elapses from and including the date on which the Agent
made such payment to but excluding the Business Day on which the
amount of such payment is returned to the Agent at its Payment
Office in immediately available funds prior to 12:00 Noon,
New York City time, at the Federal Funds Rate for each such day,
based upon a year of 360 days. If the amount of such payment is
not returned to the Agent in immediately available funds within
three Business Days after demand by the Agent, such Bank shall
pay to the Agent on demand an amount calculated in the manner
specified in the preceding sentence after substituting the term
"Base Rate" for the term "Federal Funds Rate". A certificate of
the Agent submitted to any Bank with respect to amounts owing
under this Section 12.4(b) shall be conclusive absent
demonstrable error.
<PAGE>
Section 12.5. Exculpation. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters,
and upon this Agreement and any Note, security agreement,
schedule, certificate, statement, report, notice or other writing
which it believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors,
officers, employees or agents shall (i) be responsible for any
recitals, representations or warranties contained in, or for the
execution, validity, genuineness, effectiveness or enforceability
of, this Agreement, any Note or any other instrument or document
delivered hereunder or in connection herewith, (ii) be deemed to
have knowledge of an Event of Default or Unmatured Event of
Default until after having received actual notice thereof from
the Company or a Bank, (iii) be under any duty to inquire into or
pass upon any of the foregoing matters, or to make any inquiry
concerning the performance by the Company or any other obligor of
its obligations or (iv) in any event, be liable as such for any
action taken or omitted by it or them, except for its or their
own gross negligence or willful misconduct. The agency hereby
created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, the Agent in
its individual capacity.
Section 12.6. Credit Investigation. Each Bank
acknowledges, and shall cause each Assignee or Participant to
acknowledge in its assignment or participation agreement with
such Bank, that it has (i) made and will continue to make such
inquiries and has taken and will take such care on its own behalf
as would have been the case had the Loans been made directly by
such Bank or other applicable Person to the Company without the
intervention of the Agent or any other Bank and
(ii) independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has
deemed appropriate, made and will continue to make its own credit
analysis and decisions relating to this Agreement. Each Bank
agrees and acknowledges, and shall cause each Assignee or
Participant to agree and acknowledge in its assignment or
participation agreement with such Bank, that the Agent makes no
representations or warranties about the creditworthiness of the
Company or any other party to this Agreement or with respect to
the legality, validity, sufficiency or enforceability of this
Agreement or any Note.
Section 12.7. UBS and Affiliates. UBS and each of its
successors as Agent shall have the same rights and powers
hereunder as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent, and UBS and
any such successor and its Affiliates may accept deposits from,
lend money to and generally engage, and continue to engage, in
any kind of business with the Company or any Affiliate thereof as
if UBS or such successor were not the Agent hereunder.
<PAGE>
Section 12.8. Resignation. The Agent may resign as
such at any time upon at least 30 days' prior notice to the
Company and the Banks. In the event of any such resignation,
Banks having an aggregate Percentage of more than 50% shall as
promptly as practicable appoint a successor Agent reasonably
acceptable to the Company. If no successor Agent shall have been
so appointed, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation,
then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent reasonably acceptable to the Company, which shall
be a commercial bank organized under the laws of the United
States of America or of any State thereof or under the laws of
another country which is doing business in the United States of
America and having a combined capital, surplus and undivided
profits of at least $1,000,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor agent, such
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from all
further duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as Agent, the provisions
of this Section 12 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement.
SECTION 13. GENERAL.
Section 13.1. Waiver; Amendments. No delay on the
part of the Agent, any Bank, or the holder of any Loan in the
exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them
of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement or the Notes shall in any event
be effective unless the same shall be in writing and signed and
delivered by the Agent and by Banks having an aggregate
Percentage of not less than the aggregate Percentage expressly
designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement or the Notes,
by the Required Banks, and then any amendment, modification,
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No
amendment, modification, waiver or consent (i) shall extend or
increase the amount of the Commitments, extend the due date for
any amount payable hereunder, reduce or waive any fee hereunder,
change the definition of "Required Banks" or Percentage in
Section 1, amend or modify Section 4.1 or change any of the
defined terms used in Section 4.1, amend or modify Section 4.4,
Section 4.6, Section 11.1.1 or Section 11.1.8, modify this
Section 13.1 or otherwise change the aggregate Percentage
required to effect an amendment, modification, waiver or consent
without the written consent of all Banks, (ii) shall waive any of
the conditions precedent specified in Section 10.1 for the making
of any Loan without the written consent of the Bank which is to
make such Loan or (iii) shall extend the scheduled maturity or
reduce the principal amount of, or rate of interest on, or extend
the due date for any amount payable under, any Loan without the
written consent of the holder of the Note evidencing such Loan.
Amendments, modifications, waivers and consents of the type
described in clause (iii) of the preceding sentence with respect
to Bid Loans or Bid Notes may be effected with the written
consent of the holder of such Bid Loans or Bid Notes and no
consent of any other Bank or other holder shall be required in
connection therewith. No provisions of Section 12 shall be
amended, modified or waived without the Agent's written consent.
<PAGE>
Section 13.2. Notices. Except as otherwise expressly
provided in this Agreement, any notice hereunder to the Company,
the Agent, or any Bank or other holder of a Loan shall be in
writing and, if by telegram, telex, facsimile or personal
delivery, shall be deemed to have been given and received when
sent and, if mailed, shall be deemed to have been given and
received three Business Days after the date when sent by
registered or certified mail, postage prepaid, and addressed to
the Company, the Agent, or such Bank (or other holder) at its
address shown below its signature hereto or at such other address
as it may, by written notice received by the other parties to
this Agreement, have designated as its address for such purpose.
The Agent, any Bank or the holder of any Note giving any waiver,
consent or notice to, or making any request upon, the Company
hereunder shall promptly notify the Agent thereof.
Correspondence of the type described in Section 2.2 with respect
to Bid Loans and notices of Committed Loan Requests made by the
Company shall, except as otherwise provided herein, be directed
to the persons specified for such purpose for each party on the
signature pages hereof or in subsequent writings among the
parties. Additional copies of certain notices which any party may
have requested on the signature pages hereof need not be
delivered at the same time as the primary notices to such party,
but the party delivering such primary notices shall use
reasonable efforts to distribute such copies on the same Business
Day as that on which such primary notices were distributed.
Section 13.3. Computations. Where the character or
amount of any asset or liability or item of income or expense is
required to be determined, or any consolidation or other
accounting computation is required to be made, for the purpose of
this Agreement, such determination or calculation shall, at any
time and to the extent applicable and except as otherwise
specified in this Agreement, be made in accordance with generally
accepted accounting principles in the United States applied on a
basis consistent with those in effect as at the date of the
Company's audited financial statements referred to in
Section 8.4. If there should be any material change in generally
accepted accounting principles in the United States after the
date hereof which materially affects the financial covenants in
this Agreement, the parties hereto agree to negotiate in good
faith appropriate revisions of such covenants (it being
understood, however, that such covenants shall remain in full
force and effect in accordance with their existing terms pending
the execution by the Company and the Banks of any such
amendment).
Section 13.4. Assignments; Participations. Each Bank
may assign, or sell participations in, its Loans and its
Commitment to one or more other Persons in accordance with this
Section 13.4 (and the Company consents to the disclosure of any
information obtained by any Bank in connection herewith to any
actual or prospective Assignee or Participant).
<PAGE>
Section 13.4.1. Assignments. Any Bank may with the
written consents of the Company and the Agent (which
consents will not be unreasonably withheld or delayed) at
any time assign and delegate to one or more commercial banks
or other financial institutions (any Person to whom an
assignment and delegation is made being herein called an
"Assignee") all or any fraction of such Bank's Loans and
Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of such assigning
Bank's Loans and Commitment); each such assignment of a
Bank's Commitment, when considered in aggregate with any
simultaneous assignment by such Bank pursuant to the
$1,350,000,000 Revolving Credit Agreement executed by the
parties hereto on the date hereof, shall be in the minimum
aggregate amount of $10,000,000 or in integral multiples of
$1,000,000 in excess thereof; provided that any such
Assignee will comply, if applicable, with the provisions
contained in the first sentence of Section 6.4(b) and shall
be deemed to have made, on the date of the effectiveness of
such assignment and delegation, the representation and
warranty set forth in the second sentence of Section 6.4(b);
and provided further, that the Company and the Agent shall
be entitled to continue to deal solely and directly with
such assigning Bank in connection with the interests so
assigned and delegated to an Assignee until such assigning
Bank and/or such Assignee shall have:
(i) given written notice of such assignment and
delegation, together with payment instructions,
addresses and related information with respect to such
Assignee, substantially in the form of Exhibit I, to
the Company and the Agent;
(ii) provided evidence satisfactory to the Company
and the Agent that, as of the date of such assignment
and delegation, the Company will not be required to pay
any costs, fees, taxes or other amounts of any kind or
nature with respect to the interest assigned in excess
of those payable by the Company with respect to such
interest prior to such assignment;
(iii) paid to the Agent for the account of the
Agent a processing fee of $2,500; and
(iv) provided to the Agent evidence reasonably
satisfactory to the Agent that the assigning Bank has
complied with the provisions of the last sentence of
Section 12.6.
Upon receipt of the foregoing items and the consents of the
Company and the Agent, (x) the Assignee shall be deemed
automatically to have become a party hereto and, to the extent
that rights and obligations hereunder have been assigned and
delegated to such Assignee, such Assignee shall have the rights
and obligations of a Bank hereunder and under the other
instruments and documents executed in connection herewith, and
(y) the assigning Bank, to the extent that rights and obligations
hereunder have been assigned and delegated by it, shall be
released from its obligations hereunder. The Agent may from time
to time (and upon the request of the Company or any Bank after
any change therein shall) distribute a revised Schedule I
indicating any changes in the Banks party hereto or the
respective Percentages of such Banks. Within five Business Days
after the Company's receipt of notice from the Agent of the
effectiveness of any such assignment and delegation, the Company
shall execute and deliver to the Agent (for delivery to the
relevant Assignee) new Notes in favor of such Assignee and, if
the assigning Bank has retained Loans and a Commitment hereunder,
replacement Notes in favor of the assigning Bank (such Notes to
be in exchange for, but not in payment of, the Notes previously
held by such assigning Bank). Each such Note shall be dated the
date of the predecessor Notes. The assigning Bank shall promptly
mark the predecessor Notes "exchanged" and deliver them to the
Company. Any attempted assignment and delegation not made in
accordance with this Section 13.4.1 shall be null and void.
<PAGE>
The foregoing consent requirement shall not be
applicable in the case of, and this Section 13.4.1 shall not
restrict, any assignment or other transfer by any Bank of all or
any portion of such Bank's Loans to any Federal Reserve Bank;
provided that such Federal Reserve Bank shall not be considered a
"Bank" for purposes of this Agreement.
Section 13.4.2. Participations. Any Bank may at any
time sell to one or more commercial banks or other Persons (any
such commercial bank or other Person being herein called a
"Participant") participating interests in any of its Loans, its
Commitment or any other interest of such Bank hereunder;
provided, however, that
(a) no participation contemplated in this
Section 13.4.2 shall relieve such Bank from its Commitment
or its other obligations hereunder;
(b) such Bank shall remain solely responsible for the
performance of its Commitment and such other obligations
hereunder and such Bank shall retain the sole right and
responsibility to enforce the obligations of the Company
hereunder, including the right to approve any amendment,
modification or waiver of any provision of this Agreement
(subject to Section 13.4.2(d) below);
(c) the Company and the Agent shall continue to deal
solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement;
(d) no Participant, unless such Participant is an
affiliate of such Bank, or is itself a Bank, shall be
entitled to require such Bank to take or refrain from taking
any action hereunder, except that such Bank may agree with
any Participant that such Bank will not, without such
Participant's consent, take any actions of the type
described in the third sentence of Section 13.1;
(e) the Company shall not be required to pay any
amount under Sections 4.1, 6.4 or 7.1 that is greater than
the amount which the Company would have been required to pay
had no participating interest been sold;
(f) no Participant may further participate any
interest in any Committed Loan (and each participation
agreement shall contain a restriction to such effect). The
Company acknowledges and agrees that, to the extent
permitted by applicable law, each Participant shall be
considered a Bank for purposes of Sections 7.1, 7.4, 13.5
and 13.6, and by its acceptance of a participation herein,
each Participant agrees to be bound by the provisions of
Section 6.2(b) as if such Participant were a Bank; and
(g) such Bank shall have provided to the Agent
evidence reasonably satisfactory to the Agent that such Bank
has complied with the provisions of the last sentence of
Section 12.6.
<PAGE>
Section 13.5. Costs, Expenses and Taxes. The Company
agrees to pay on demand (a) all out-of-pocket costs and expenses
of the Agent (including the fees and out-of-pocket expenses of
counsel for the Agent (and of local counsel, if any, who may be
retained by said counsel) in an amount not to exceed an amount
separately agreed to between the Agent and the Company), in
connection with the preparation, execution, delivery and
administration of this Agreement, the Notes and all other
instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith and (b) all
out-of-pocket costs and expenses (including reasonable attorneys'
fees and legal expenses and allocated costs of staff counsel)
incurred by the Agent and each Bank in connection with the
enforcement of this Agreement, the Notes or any such other
instruments or documents. Each Bank agrees to reimburse the
Agent for such Bank's pro rata share (based upon its respective
Percentage) of any such costs or expenses incurred by the Agent
on behalf of all the Banks and not paid by the Company other than
any fees and out-of-pocket expenses of counsel for the Agent
which exceed the amount which the Company has agreed with the
Agent to reimburse. In addition, the Company agrees to pay, and
to hold the Agent and the Banks harmless from all liability for,
any stamp or other Taxes which may be payable in connection with
the execution and delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes or the execution and
delivery of any other instruments or documents provided for
herein or delivered or to be delivered hereunder or in connection
herewith. All obligations provided for in this Section 13.5
shall survive repayment of the Loans, cancellation of the Notes
or any termination of this Agreement.
Section 13.6. Indemnification. In consideration of
the execution and delivery of this Agreement by the Agent and the
Banks, the Company hereby agrees to indemnify, exonerate and hold
each of the Banks, the Agent, and each of the officers,
directors, employees and agents of the Banks and Agent (collec-
tively herein called the "Bank Parties" and individually called a
"Bank Party") free and harmless from and against any and all
actions, causes of action, suits, losses, liabilities, damages
and expenses, including, without limitation, reasonable
attorneys' fees and disbursements (collectively herein called the
"Indemnified Liabilities"), incurred by the Bank Parties or any
of them as a result of, or arising out of, or relating to
(i) this Agreement, the Notes or the Loans or (ii) the direct or
indirect use of proceeds of any of the Loans or any credit
extended hereunder, except for any such Indemnified Liabilities
arising on account of such Bank Party's gross negligence or
willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. All obligations provided for
in this Section 13.6 shall survive repayment of the Loans,
cancellation of the Notes or any termination of this Agreement.
Section 13.7. Regulation U. Each Bank represents that
it in good faith is not relying, either directly or indirectly,
upon any margin stock (as such term is defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve
System) as collateral security for the extension or maintenance
by it of any credit provided for in this Agreement.
<PAGE>
Section 13.8. Extension of Termination Dates; Removal
of Banks; Substitution of Banks. (a) Not more than 60 days nor
less than 45 days prior to the then-effective Termination Date,
the Company may, at its option, request all the Banks then party
to this Agreement to extend their scheduled Termination Dates by
an additional 364 days by means of a letter, addressed to each
such Bank and the Agent, substantially in the form of Exhibit J.
Each such Bank electing (in its sole discretion) so to extend its
scheduled Termination Date shall execute and deliver not earlier
than the 30th day nor later than the 20th day prior to the then-
effective Termination Date counterparts of such letter to the
Company and the Agent, whereupon (unless Banks with an aggregate
Percentage in excess of 25% decline to extend their respective
scheduled Termination Dates, in which event the Agent shall
notify all the Banks thereof and no such extension shall occur),
such Bank's scheduled Termination Date shall be extended,
effective only as of the date that is such Bank's then-current
scheduled Termination Date, to the date that is 364 days after
such Bank's then-current scheduled Termination Date. Any Bank
that declines or fails to respond to the Company's request for
such extension shall be deemed to have not extended its scheduled
Termination Date.
(b) With respect to any Bank (i) on account of which
the Company is required to make any deductions or withholdings or
pay any additional amounts, as contemplated by Section 6.4,
(ii) on account of which the Company is required to pay any
additional amounts, as contemplated by Section 7.1, (iii) for
which it is illegal to make a LIBOR Rate Loan, as contemplated by
Section 7.3 or (iv) which has declined to extend such Bank's
scheduled Termination Date and Banks with an aggregate Percentage
in excess of 75% have elected to extend their respective
Termination Dates, the Company may in its discretion, upon not
less than 30 days' prior written notice to the Agent and each
Bank, remove such Bank as a party hereto. Each such notice shall
specify the date of such removal (which shall be a Business Day
and, if such Bank has any outstanding Bid Loans, shall (unless
otherwise agreed by such Bank) be on or after the last day of the
Loan Period for the Bid Loan of such Bank having the latest
maturity date), which shall thereupon become the scheduled
Termination Date for such Bank.
(c) In the event that any Bank does not extend its
scheduled Termination Date pursuant to subsection (a) above or is
the subject of a notice of removal pursuant to
subsection (b) above, then, at any time prior to the Termination
Date for such Bank (a "Terminating Bank"), the Company may, at
its option, arrange to have one or more other commercial banks or
financial institutions (which may be a Bank or Banks and each of
which shall herein be called a "Successor Bank") succeed to all
or a percentage of the Terminating Bank's outstanding Loans, if
any, and rights under this Agreement and assume all or a like
percentage (as the case may be) of such Terminating Bank's
undertaking to make Loans pursuant hereto and other obligations
hereunder (as if (i) in the case of any Bank electing not to
extend its scheduled Termination Date pursuant to subsection
(a) above, such Successor Bank had extended its scheduled
Termination Date pursuant to such subsection (a) and (ii) in the
case of any Bank that is the subject of a notice of removal
pursuant to subsection (b) above, no such notice of removal had
been given by the Company). Such succession and assumption shall
be effected by means of one or more agreements supplemental to
this Agreement among the Terminating Bank, the Successor Bank,
the Company and the Agent. On and as of the effective date of
each such supplemental agreement, each Successor Bank party
thereto shall be and become a Bank for all purposes of this
Agreement and to the same extent as any other Bank hereunder and
shall be bound by and entitled to the benefits of this Agreement
in the same manner as any other Bank.
<PAGE>
(d) On the Termination Date for any Terminating Bank,
such Terminating Bank's Commitment shall terminate and the
Company shall pay in full all of such Terminating Bank's Loans
(except to the extent assigned pursuant to subsection (c) above)
and all other amounts payable to such Bank hereunder (including
any amounts payable pursuant to Section 7.4 on account of such
payment); provided that if an Event of Default or Unmatured Event
of Default exists on the date scheduled as any Terminating Bank's
Termination Date, such Terminating Bank's scheduled Termination
Date shall be extended to the first Business Day thereafter on
which (i) no Event of Default or Unmatured Event of Default
exists (without regard to any waiver or amendment that makes this
Agreement less restrictive for the Company, other than as
described in clause (ii) below) or (ii) the Required Banks (which
for purposes of this subsection (d) shall be determined based
upon the respective Percentages and aggregate Commitments of all
Banks other than any Terminating Bank whose scheduled Termination
Date has been extended pursuant to this proviso) waive or amend
the provisions of this Agreement to cure all existing Events of
Default or Unmatured Events of Default or agree to permit any
borrowing hereunder notwithstanding the existence of any such
event. Notwithstanding the foregoing, any Terminating Bank may,
in its sole discretion, by notice to the Company and the Agent,
terminate such Terminating Bank's Commitment as of such
Terminating Bank's scheduled Termination Date. In the event that
UBS shall become a Terminating Bank, the Required Banks with the
consent of the Company (which consent shall not be unreasonably
withheld) shall appoint another Bank or other Person as Agent,
which shall have all of the rights and obligations of the Agent
upon the effective date of and pursuant to an agreement
supplemental hereto among the Company and the Banks, and
thereupon UBS, as Agent, shall be relieved from its obligations
as Agent hereunder, it being understood that the provisions of
Section 12 shall inure to the benefit of UBS as to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement. If no such successor Agent shall be appointed within
30 days of the Termination Date of the Agent, then the Agent
shall, on behalf of the Banks, appoint a successor Agent in
accordance with the provisions set forth in Section 12.8 for a
resigning Agent.
(e) To the extent that all or a portion of any
Terminating Bank's obligations are not assumed pursuant to
subsection (c) above, the Aggregate Commitment shall be reduced
on the applicable Termination Date and each Bank's percentage of
the reduced Aggregate Commitment shall be revised pro rata to
reflect such Terminating Bank's absence. The Agent shall
distribute a revised Schedule I indicating such revisions
promptly after the applicable Termination Date. Such revised
Schedule I shall be deemed conclusive in the absence of
demonstrable error.
(f) The Agent agrees to use reasonable commercial
efforts to assist the Company in locating one or more commercial
banks or other financial institutions to replace any Terminating
Bank prior to such Terminating Bank's Termination Date.
<PAGE>
Section 13.9. Captions. Section captions used in this
Agreement are for convenience only and shall not affect the
construction of this Agreement.
Section 13.10. Governing Law; Severability. THIS
AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER, GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. All
obligations of the Company and the rights of the Agent, the Banks
and any other holders of the Notes expressed herein or in the
Notes shall be in addition to and not in limitation of those
provided by applicable law. Whenever possible each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 13.11. Counterparts; Effectiveness. This
Agreement may be executed in any number of counterparts and by
the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
Agreement. When counterparts of this Agreement executed by each
party shall have been lodged with the Agent (or, in the case of
any Bank as to which an executed counterpart shall not have been
so lodged, the Agent shall have received telegraphic, telex or
other written confirmation of execution of a counterpart hereof
by such Bank), this Agreement shall become effective as of the
date hereof and the Agent shall so inform all of the parties
hereto.
Section 13.12. Further Assurances. The Company agrees
to do such other acts and things, and to deliver to the Agent and
each Bank such additional agreements, powers and instruments, as
the Agent or any Bank may reasonably require or deem advisable to
carry into effect the purposes of this Agreement or to better
assure and confirm unto the Agent and each Bank their respective
rights, powers and remedies hereunder.
Section 13.13. Successors and Assigns. This Agreement
shall be binding upon the Company, the Banks and the Agent and
their respective successors and assigns, and shall inure to the
benefit of the Company, the Banks and the Agent and the
respective successors and assigns of the Banks and the Agent.
Subject to Section 9.9, the Company may not assign any of its
rights or delegate any of its duties under this Agreement without
the prior written consent of all of the Banks.
<PAGE>
Section 13.14. Waiver of Jury Trial. THE COMPANY, THE
AGENT AND EACH BANK HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT, ANY NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
Section 13.15. Amendment of 1993 Agreement. The
Company, the Agent and the Banks that are parties to the
$283,333,338 Revolving Credit Agreement, dated as of June 1,
1993, as amended (the "1993 Credit Agreement"), among the
Company, the Agent and the banks parties thereto, hereby agree to
amend Section 5.1 of the 1993 Credit Agreement, effective as of
the date hereof, by replacing the phrase "30 days'" in the first
sentence with the phrase "one day's".
Delivered at Los Angeles, California as of the day and
year first above written.
INTERNATIONAL LEASE FINANCE
CORPORATION
By: __/s/ Alan H. Lund___
Name: ALAN H. LUND
Title: Exec. V.P., Co-COO, CFO &
Treasurer
By: __/s/ Pamela S. Hendry___
Name: PAMELA S. HENDRY
Title: Assistant Vice President &
Controller
1999 Avenue of the Stars
39th Floor
Los Angeles, California 90067
Attention: Pam Hendry
Telephone: (310) 788-1999
Facsimile: (310) 788-1990
Telex: 69-1400 INTERLEAS BVHL
<PAGE>
Agent: UNION BANK OF SWITZERLAND,
acting through its Los Angeles
Branch, in its individual
corporate capacity and as
Agent
By: __/s/ Patrick J. McKenna___
Name: PATRICK J. McKENNA
Title: Vice President
By: __/s/ Scott Sommers___
Name: SCOTT SOMMERS
Title: Vice President
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Attention: L. Scott Sommers
Telephone: (213) 489-0600
Facsimile: (213) 489-0697
Telex: 6831878 UBSLSA
Co-Agents: COMMERZBANK AG, LOS ANGELES
BRANCH
By: __/s/ Christian Jagenberg___
Name: CHRISTIAN JAGENBERG
Title: S.V.P. and Manager
By: __/s/ Werner Schmidbauer___
Name: WERNER SCHMIDBAUER
Title: Vice President
660 South Figueroa Street
Suite 1450
Los Angeles, California 90017
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
BAYERISCHE HYPOTHEKEN-UND WECHSEL-
BANK AKTIENGESELLSCHAFT, NEW YORK
BRANCH
By: __/s/ Eugene Atwell___
Name: EUGENE ATWELL
Title: Vice President
By: __/s/ Steve Atwel___
Name: STEVE ATWEL
Title: Vice President
By: __/s/ John Quigley___
Name: JOHN QUIGLEY
Title: Vice President
Financial Square
32 Old Slip, 32nd Floor
New York, New York 10005
Attention: Wolfgang Novotny
Telephone: (212) 440-0789
Facsimile: (212) 440-0741
Telex: 175850
<PAGE>
THE BANK OF NEW YORK
By: __/s/ Elizabeth T. Ying___
Name: ELIZABETH T. YING
Title: Assistant Vice President
10990 Wilshire Boulevard
Suite 1700
Los Angeles, California 90024
Attention: Elizabeth T. Ying
Telephone: (310) 996-8650
Facsimile: (310) 996-8667
THE BANK OF NOVA SCOTIA
By: __/s/ James M. Spanier___
Name: JAMES M. SPANIER
Title: Relationship Manager
101 California Street
48th Floor
San Francisco, California 94111
Attention: James Spanier
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
Telex: 00340602
THE BANK OF TOKYO LIMITED,
NEW YORK AGENCY
By: __/s/ Yukio Yanaka___
Name: YUKIO YANAKA
Title: Senior Vice President &
Manager
1251 Avenue of the Americas
New York, New York 10116-3138
Attention: Michael Irwin
Telephone: (212) 782-4316
Facsimile: (212) 782-6445
THE CHASE MANHATTAN BANK, N.A.
By: __/s/ Sherwood E. Exum, Jr.___
Name: SHERWOOD E. EXUM, JR.
Title: Managing Director
One Chase Manhattan Plaza
New York, New York 10081
Attention: Sherwood E. Exum, Jr.
Telephone: (212) 552-4655
Facsimile: (212) 552-5879
Telex: 62910
<PAGE>
CHEMICAL BANK
By: __/s/ Thomas Delaney___
Name: THOMAS DELANEY
Title: Vice President
270 Park Avenue
New York, New York 10017
Attention: Nikolai Nachamkin
Telephone: (212) 270-1012
Facsimile: (212) 270-1469
DEUTSCHE BANK AG, LOS ANGELES
BRANCH & CAYMAN ISLANDS BRANCH
By: __/s/ Michael U. Hotze___
Name: MICHAEL U. HOTZE
Title: Managing Director
By: __/s/ Christine Lane___
Name: CHRISTINE LANE
Title: Assistant Vice President
550 S. Hope Street
Suite 1850
Los Angeles, California 90071
Attention: David Wagstaff
Telephone: (213) 627-8200
Facsimile: (213) 627-9779
DRESDNER BANK AG, LOS ANGELES
AGENCY & GRAND CAYMAN BRANCH
By: __/s/ Jon M. Bland___
Name: JON M. BLAND
Title: Senior Vice President
By: __/s/ Barbara J. Readick___
Name: BARBARA J. READICK
Title: Vice President
725 South Figueroa Street
Suite 3950
Los Angeles, California 90017-5439
Attention: Barbara J. Readick
Telephone: (213) 489-5720
Facsimile: (213) 627-3819
Telex: 4720286
<PAGE>
FIRST INTERSTATE BANK OF CALIFORNIA
By: __/s/ Thomas J. Helotes___
Name: THOMAS J. HELOTES
Title: Vice President
By: __/s/ Jonathan S. David___
Name: JONATHAN S. DAVID
Title: Assistant Vice President
707 Wilshire Boulevard
U.S. Banking Division, W16-14
Los Angeles, California 90017
Attention: Thomas Helotes
Telephone: (213) 614-4122
Facsimile: (213) 614-2569
THE FUJI BANK, LIMITED
By: __/s/ Nobuhiro Umemura___
Name: NOBUHIRO UMEMURA
Title: Joint General Manager
333 South Grand Avenue
Suite 2500
Los Angeles, California 90071
Attention: Bryan Stapleton
Telephone: (213) 253-4152
Facsimile: (213) 253-4198
THE SANWA BANK LIMITED
By: __/s/ Stephen C. Small___
Name: STEPHEN C. SMALL
Title: Vice President & Area
Manager
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Stephen C. Small
Telephone: (212) 339-6201
Facsimile: (212) 754-1304
Telex: 232423 RCA
SOCIETE GENERALE
By: __/s/ J. Blaine Shaum___
Name: J. BLAINE SHAUM
Title: Regional Manager
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Attention: Maureen Kelly
Telephone: (310) 788-7110
Facsimile: (310) 551-1537
Telex: 188273
<PAGE>
Lead Managers: THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: __/s/ Tomohiro Nozaki___
Name: TOMOHIRO NOZAKI
Title: Senior Vice President and
Joint General Manager
555 West 5th Street
Fifth Floor
Los Angeles, California 90013
Attention: David K. Henry
Telephone: (213) 243-4760
Facsimile: (213) 624-5258
Telex: 67-4 516/DKB-LSA
THE SAKURA BANK LTD.,
LOS ANGELES AGENCY
By: __/s/ Ofusa Sato___
Name: OFUSA SATO
Title: Senior Vice President &
Assistant General Manager
By: _________________________
Name: _______________________
Title: ______________________
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: Robert L. Mann
Telephone: (213) 489-6431
Facsimile: (213) 623-8692
Telex: 67-7185
DAIWA BANK TRUST COMPANY
By: __/s/ Masafumi Asai___
Name: MASAFUMI ASAI
Title: Vice President
75 Rockefeller Plaza
New York, New York 10019
Attention: Masafumi Asai
Telephone: (212) 554-7051
Facsimile: (212) 554-7152
Telex: RCA 276626
<PAGE>
ROYAL BANK OF CANADA
By: __/s/ Michael J. Madnick___
Name: MICHAEL J. MADNICK
Title: Manager
1 Financial Square
Corporate Banking East, U.S.A.
New York, New York 10005-3531
Attention: D.G. Calancie
Telephone: (212) 428-6445
Facsimile: (212) 428-6459
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: __/s/ Elie Khoury___
Name: ELIE KHOURY
Title: Vice President
By: __/s/ Laura Spichiger___
Name: LAURA SPICHIGER
Title: Associate
1211 Avenue of the Americas
24th Floor
New York, New York 10036
Attention: Laura Spichiger
Telephone: (212) 852-6012
Facsimile: (212) 852-6148
Managers: BANCO DI NAPOLI S.p.A.
By: __/s/ Vito Spada___
Name: VITO SPADA
Title: Executive Vice President
By: __/s/ Claude P. Mapes___
Name: CLAUDE P. MAPES
Title: First Vice President
277 Park Avenue
New York, New York 10172
Attention: Claude P. Mapes
Telephone: (212) 872-2435
Facsimile: (212) 872-2426
Telex: 420634
<PAGE>
BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: __/s/ Giulio Giovine___
Name: GIULIO GIOVINE
Title: Vice President
By: __/s/ Carlo Vecchi___
Name: CARLO VECCHI
Title: Senior Vice President
25 West 51st Street
New York, New York 10019
Attention: Adolph Mascaci
Telephone: (212) 581-0710
Facsimile: (212) 765-2978
Telex: 62840
BAYERISCHE LANDESBANK GIROZENTRALE
By: __/s/ Wilfried Freudenberger___
Name: Wilfried Freudenberger
Title: Executive Vice President
and General Manager
By: __/s/ Peter Obermann___
Name: PETER OBERMANN
Title: First Vice President and
Manager Lending Division
560 Lexington Avenue
22nd Floor
New York, New York 10022
Attention: Joanne Cicino
Telephone: (212) 310-9834
Facsimile: (212) 310-9868
Telex: TRT 177130
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, LOS ANGELES AGENCY
By: __/s/ Ken Takahashi___
Name: KEN TAKAHASHI
Title: General Manager
611 West 6th Street
Suite 3800
Los Angeles, California 90017
Attention: John C. Korthuis
Telephone: (213) 614-7156
Facsimile: (213) 622-0378
<PAGE>
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: __/s/ Jose Castello___
Name: JOSE CASTELLO
Title: Senior Vice President
and General Manager
By: _________________________
Name: _______________________
Title: ______________________
505 Sansome Street
San Francisco, CA 94111
Attention: Jose Castello
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 677045 CENT SF
BANK OF HAWAII
By: __/s/ Marcy E. Fleming___
Name: MARCY E. FLEMING
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: Marcy E. Fleming
Telephone: (808) 537-8471
Facsimile: (808) 537-8301
Telex: 7238434
BARCLAYS BANK PLC
By: __/s/ Francis C.Constantinople___
Name: FRANCIS C. CONSTANTINOPLE
Title: Vice President
222 Broadway
New York, New York 10038
Attention: Frank Constantinople
Telephone: (212) 412-7634
Facsimile: (212) 412-5610
FIRST HAWAIIAN BANK
By: __/s/ Robert M. Wheeler III___
Name: ROBERT M. WHEELER III
Title: Vice President
1132 Bishop Street
19th Floor
Honolulu, Hawaii 96813
Attention: Robert M. Wheeler
Telephone: (808) 525-6367
Facsimile: (808) 525-6372
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: __/s/ Michael Grady___
Name: MICHAEL GRADY
Title: Vice President
One First Union Center
301 South College Street, TW-10
Charlotte, NC 28288-0745
Attention: Mike Grady
Telephone: (704) 383-7514
Facsimile: (704) 374-2802
Telex: 684-3115
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: __/s/ Toshinari Iyoda___
Name: TOSHINARI IYODA
Title: Senior Vice President
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Vicente L. Timiraos
Telephone: (213) 893-6442
Facsimile: (213) 488-9840
Telex: 673562
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: __/s/ Donald W. Brown___
Name: DONALD W. BROWN
Title: Branch Manager
By: __/s/ Annette Bergsten___
Name: ANNETTE BERGSTEN
Title: Assistant Vice President
444 South Flower Street
Suite 4550
Los Angeles, California 90071
Attention: Glen Binder
Telephone: (213) 489-3100
Facsimile: (213) 622-2514
Telex: 220045
<PAGE>
Participants: CIBC, INC.
By: __/s/ Stephen D. Reynolds___
Name: STEPHEN D. REYNOLDS
Title: Vice President
425 Lexington Avenue
New York, New York 10017
Attention: Stephen D. Reynolds
Telephone: (212) 856-3566
Facsimile: (212) 856-3613
BANQUE NATIONALE DE PARIS
By: __/s/ Christian Morio___
Name: CHRISTIAN MORIO
Title: Senior Vice President &
Manager
By: __/s/ Tjalling Terpstra___
Name: TJALLING TERPSTRA
Title: Vice President
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attention: Tjalling Terpstra
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
Telex: 6734168 BNPLA
CITICORP USA, INC.
By: __/s/ Stephen P. Zwick___
Name: STEPHEN P. ZWICK
Title: Vice President
399 Park Avenue
12th Floor
New York, New York 10043
Attention: Peter Bickford
Telephone: (212) 559-8146
Facsimile: (212) 935-4285
Telex:
<PAGE>
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By: __/s/ Robert B. Herber___
Name: ROBERT B. HERBER
Title: Vice President
By: __/s/ Pamela D. Ingram___
Name: PAMELA D. INGRAM
Title: Assistant Vice President
609 Fifth Avenue
New York, New York 10017-1021
Attention: Robert B. Herber
Telephone: (212) 745-1581
Facsimile: (212) 745-1556
Telex: 234476/666755 MCI
KREDIETBANK NV
By: __/s/ Robert Snauffer___
Name: ROBERT SNAUFFER
Title: Vice President
By: __/s/ Diane Grimmig___
Name: DIANE GRIMMIG
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Roxanne Cheng
Telephone: (213) 624-0401
Facsimile: (213) 629-5801
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: __/s/ Masahiko Saito___
Name: MASAHIKO SAITO
Title: Assistant General Manager
534 West Sixth Street
Los Angeles, California 90014
Attention: Kenji Oshigane
Telephone: (213) 892-2856
Facsimile: (213) 892-2818
Telex: 215245
THE CHUO TRUST & BANKING CO., LTD
(Los Angeles Agency)
By: __/s/ Shoji Hoshikawa___
Name: SHOJI HOSHIKAWA
Title: Senior Manager
725 South Figueroa Street
Suite 1700
Los Angeles, California 90017
Attention: Shoji Hoshikawa
Telephone: (213) 955-7412
Facsimile: (213) 955-7431
<PAGE>
SCHEDULE I
SCHEDULE OF BANKS
Bank Commitment
(in millions)
Union Bank of Switzerland $ 27.50
Commerzbank AG 25.00
Bayerische Hypotheken-und Wechsel-Bank
Aktiengesellschaft 21.25
The Bank of New York 18.75
The Bank of Nova Scotia 18.75
The Bank of Tokyo Limited 18.75
The Chase Manhattan Bank, N.A. 18.75
Chemical Bank 18.75
Deutsche Bank AG 18.75
Dresdner Bank AG 18.75
First Interstate Bank of California 18.75
The Fuji Bank, Limited 18.75
The Sanwa Bank Limited 18.75
Societe Generale 18.75
The Dai-Ichi Kangyo Bank, Ltd. 15.00
The Sakura Bank Ltd. 15.00
Daiwa Bank Trust Company 12.50
Royal Bank of Canada 12.50
Westdeutsche Landesbank Girozentrale 12.50
Banco di Napoli S.p.A. 10.00
Banca Nazionale del Lavoro, S.p.A. 7.50
Bayerische Landesbank Girozentrale 7.50
The Mitsui Trust & Banking Company, Limited 7.50
Banco Central Hispanoamericano 6.25
Bank of Hawaii 6.25
Barclays Bank PLC 6.25
First Hawaiian Bank 6.25
First Union National Bank of North Carolina 6.25
The Industrial Bank of Japan, Limited 6.25
Istituto Bancario San Paolo di Torino S.p.A. 6.25
CIBC, Inc. 5.00
Banque Nationale de Paris 3.75
Citicorp USA, Inc.. 3.75
DG Bank Deutsche Genossenschaftsbank 3.75
Kredietbank NV 3.75
The Tokai Bank, Ltd. 3.75
The Chuo Trust & Banking Co., Ltd 2.50
<PAGE>
SCHEDULE II
FEES AND MARGINS
(IN BASIS POINTS)
Facility Fee 8.00
Margins:
LIBOR 27.00
CD 39.50
Base --
Competitive Bid Option As Bid by the Banks.
<PAGE>
Exhibit A
FORM OF
NOTICE OF COMPETITIVE BID BORROWING
________________, 19__
Union Bank of Switzerland, as Agent
299 Park Avenue
New York, New York 10171-0026
Attention: James Broadus
Ladies and Gentlemen:
This instrument constitutes a Notice of Competitive Bid
Borrowing under, and as defined by, the $450,000,000 Revolving
Credit Agreement, dated as of February 2, 1995 (as amended,
modified or supplemented, the "Credit Agreement"), among
International Lease Finance Corporation (the "Company"), Union Bank
of Switzerland, in its individual corporate capacity and as Agent,
and certain financial institutions referred to therein. Terms not
otherwise expressly defined herein shall have the meanings set
forth in the Credit Agreement.
The Company hereby requests (a) Bid Loan(s), subject to
the terms of the Credit Agreement, as follows:
(a) Funding Date: ________________, 19__.
(b) Aggregate principal amount of Bid Loans requested:
$____________.
(c) Loan Period(s):(1)
Absolute Rate Loans: ___ days ___ days ___ days
LIBOR Rate Loans: __ months __ months __ months
(d) Account of the Company to be credited: __________
The officer of the Company signing this Notice of
Competitive Bid Borrowing hereby certifies that the following
statements are true on the date hereof and will be true on the
proposed Funding Date:
(a) Before and after giving effect to the Bid Loans
requested hereby, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing
or shall result from the making of such Loan; and
(b) Before and after giving effect to the Bid Loans
requested hereby, the representations and warranties
set forth in Section 8 of the Credit Agreement shall be
true and correct in all material respects as of the
date of such requested Loans with the same effect as
though made on the date of such Bid Loans.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:_________________________
Its:________________________
_______________
(1) The Company may select up to three loan periods per Notice
of Competitive Bid Borrowing.
<PAGE>
Exhibit B
FORM OF
BID FROM [Name of Bank]
(Contact Person:___________)
______________, 19__
Union Bank of Switzerland, as Agent
299 Park Avenue
New York, New York 10171-0026
Attention: James Broadus
Ladies and Gentlemen:
This instrument constitutes a Bid under, and as defined
by, the $450,000,000 Revolving Credit Agreement, dated as of
February 2, 1995 (as amended, modified or supplemented, the
"Credit Agreement"), among International Lease Finance
Corporation (the "Company"), Union Bank of Switzerland in its
individual capacity and as Agent, and certain financial
institutions referred to therein, including the undersigned.
Terms not otherwise expressly defined herein shall have the
meanings set forth in the Credit Agreement.
(1) The Company's related Notice of Competitive Bid
Borrowing, dated _____________, 19__, inviting this Bid has
requested a Bid Loan, subject to the terms and conditions of
the Credit Agreement, in the aggregate principal amount of
$____________ with a Funding Date of _______________, 19__.
(2) The undersigned hereby offers to make the
following Bid Loan(s) on the Funding Date:*
_______________
* $10,000,000 or a higher integral multiple of $1,000,000.
<PAGE>
(a) Loan Period of ___ days ___ months
Principal Amount Interest Rate or
Minimum Maximum LIBOR + Margin
1. $* $* **
2. $* $* **
3. $* $* **
4. $* $* **
(3) The undersigned's lending office for the proposed
Bid Loan is _______________________________.
(4) The undersigned acknowledges that the offer(s) set
forth above, subject to the satisfaction of the applicable
conditions precedent set forth in the Credit Agreement,
irrevocably obligate(s) the undersigned to make the Bid Loan(s)
for which an offer(s) are accepted, in whole or in part, in
accordance with the terms of the Credit Agreement.
Very truly yours,
[NAME OF BANK]
By:__________________________
Its:_________________________
_______________
* $10,000,000 or a higher integral multiple of $1,000,000 for
each interest rate (i.e., Portion) for each Loan Period.
** Specify the interest rate per annum (expressed as a
percentage to four decimal places) in the case of an
Absolute Rate Loan and the margin above or below LIBOR in
the case of a LIBOR Rate Loan.
<PAGE>
Exhibit C
FORM OF
COMMITTED LOAN REQUEST
_________________, 19__
Union Bank of Switzerland, as Agent
299 Park Avenue
New York, New York 10171-0026
Attention: James Broadus
Ladies and Gentlemen:
This constitutes a Committed Loan Request under, and as
defined by, the $450,000,000 Revolving Credit Agreement, dated as
of February 2, 1995 (as amended, modified or supplemented, the
"Credit Agreement"), among International Lease Finance
Corporation (the "Company"), Union Bank of Switzerland, in its
individual capacity and as Agent, and certain financial
institutions referred to therein. Terms not otherwise expressly
defined herein shall have the meanings set forth in the Credit
Agreement.
The Company hereby requests that the Banks make
Committed Loans to it, subject to the terms and conditions of the
Credit Agreement, as follows:
(a) Funding Date: ____________, 19__.
(b) Aggregate principal amount of Committed Loans
requested: $____________.
(c) Loan Period: ___________.
(e) Type of Loans: [LIBOR Rate Loans] [Base Rate
Loans] [CD Rate Loans]
The officer of the Company signing this Committed Loan
Request hereby certifies that:
(a) Before and after giving effect to the Committed Loans
requested hereby, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing
or shall result from the making of such Loans;
(b) Before and after giving effect to the Loans requested
hereby, the representations and warranties set forth in
Section 8 of the Credit Agreement shall be true and
correct in all material respects with the same effect
as though made on the date of such Loans; and
(c) After the making of the Loans requested hereby, the
aggregate principal amount of all outstanding Loans
will not exceed the Aggregate Commitment.
Very truly yours,
INTERNATIONAL LEASE FINANCE CORPORATION
By:_____________________________________
Its:____________________________________
<PAGE>
Exhibit D
FORM OF BID NOTE
$450,000,000 February 2, 1995
International Lease Finance Corporation, a California
corporation (the "Company"), for value received, hereby promises
to pay to the order of (NAME OF BANK) (the "Bank"), at the New
York branch office of Union Bank of Switzerland, as Agent (the
"Agent"), at 299 Park Avenue, New York, New York 10171-0026 on
February __, 1996, or at such other place, to such other person
or at such other time and date as provided for in the
$450,000,000 Revolving Credit Agreement (as amended, modified or
supplemented, the "Credit Agreement"), dated as of February __,
1995, among the Company, the Agent, and the financial
institutions named therein, in lawful money of the United States,
the principal sum of $450,000,000 Dollars or, if less, the
aggregate unpaid principal amount of all Bid Loans made by the
Bank to the Company pursuant to the Credit Agreement. This Bid
Note shall bear interest as set forth in the Credit Agreement for
Bid Borrowings (as defined in the Credit Agreement).
Except as otherwise provided in the Credit Agreement
with respect to LIBOR Rate Loans, if interest or principal on any
loan evidenced by this Note becomes due and payable on a day
which is not a Business Day (as defined in the Credit Agreement)
the maturity thereof shall be extended to the next succeeding
Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is one of the Bid Notes referred to in the
Credit Agreement. This Note is subject to prepayment in whole or
in part, and the maturity of this Note is subject to
acceleration, upon the terms provided in the Credit Agreement.
This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of
California, without reference to principles of conflicts of law.
All Bid Loans made by the Bank to the Company pursuant
to the Credit Agreement and all payments of principal thereof may
be indicated by the Bank upon the grid attached hereto which is a
part of this Note. Such notations shall be rebuttable
presumptive evidence of the aggregate unpaid principal amount of
all Bid Loans made by the Bank pursuant to the Credit Agreement.
INTERNATIONAL LEASE FINANCE CORPORATION
By: _________________________
Title:
<PAGE>
Bid Loans and Payments of Principal
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
</TABLE>
<PAGE>
Exhibit E
FORM OF COMMITTED NOTE
$____________ February 2, 1995
International Lease Finance Corporation, a California
corporation (the "Company"), for value received, hereby promises
to pay to the order of (NAME OF BANK) (the "Bank"), at the New
York branch office of Union Bank of Switzerland, as Agent (the
"Agent"), at 299 Park Avenue, New York, New York 10171-0026 on
February __, 1996, or at such other place, to such other person
or at such other time and date as provided for in the
$450,000,000 Revolving Credit Agreement (as amended, modified or
supplemented, the "Credit Agreement"), dated as of February __,
1995, among the Company, the Agent, and the financial
institutions named therein, in lawful money of the United States,
the principal sum of $ Dollars or, if less, the
aggregate unpaid principal amount of all Committed Loans made by
the Bank to the Company pursuant to the Credit Agreement. This
Committed Note shall bear interest as set forth in the Credit
Agreement for Base Rate Loans, CD Rate Loans and LIBOR Rate Loans
(as defined in the Credit Agreement), as the case may be.
Except as otherwise provided in the Credit Agreement
with respect to LIBOR Rate Loans, if interest or principal on any
loan evidenced by this Note becomes due and payable on a day
which is not a Business Day (as defined in the Credit Agreement)
the maturity thereof shall be extended to the next succeeding
Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is one of the Committed Notes referred to in
the Credit Agreement. This Note is subject to prepayment in
whole or in part, and the maturity of this Note is subject to
acceleration, upon the terms provided in the Credit Agreement.
This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of
California, without reference to principles of conflicts of law.
All Committed Loans made by the Bank to the Company
pursuant to the Credit Agreement and all payments of principal
thereof may be indicated by the Bank upon the grid attached
hereto which is a part of this Note. Such notations shall be
rebuttable presumptive evidence of the aggregate unpaid principal
amount of all Committed Loans made by the Bank pursuant to the
Credit Agreement.
INTERNATIONAL LEASE FINANCE CORPORATION
By_____________________________________
Title:
<PAGE>
Bid Loans and Payments of Principal
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT F
FIXED CHARGE COVERAGE RATIO*
FOR THE PERIOD ENDED SEPTEMBER 30, 1994
12 Months Ended
September 30, 1994
(Dollars in thousands)
Earnings
Net Income . . . . . . . . . . . . . . . . $208,487,000
Add:
Provision for income taxes. . . . . . . . 124,699,000
Fixed charges . . . . . . . . . . . . . . 390,637,000
Less:
Capitalized interest. . . . . . . . . . . (41,909,000)
Earnings as adjusted (A). . . . . . . . . . 681,914,000
Preferred dividend requirements . . . . . . $5,814,000
Ratio of income before provision for
income taxes to net income. . . . . . . 158%
Preferred dividend factor on
pretax basis. . . . . . . . . . . . . 9,197,000
Fixed charges
Interest expense. . . . . . . . . . . . 348,728,000
Capitalized interest. . . . . . . . . . 41,909,000
Estimate of minimum rents under
operating leases representing the
interest factor . . . . . . . . . . . . 0
Fixed charges as adjusted . . . . . . . . . 390,637,000
Fixed charges and preferred
stock dividends (B) . . . . . . . . . . . $399,833,000
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))*. . . . . . . . . . . . . . . . . . 1.71 to 1.00
_______________
* As calculated pursuant to Section 9.11 and the definition of Fixed
Charge Coverage Ratio set forth in Section 1.2.
<PAGE>
Exhibit G
February 2, 1995
To the Banks and the Agent
Referred to Below
c/o Union Bank of Switzerland
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Ladies and Gentlemen:
We have acted as special counsel for International
Lease Finance Corporation (the "Company") in connection with a
$1,350,000,000 Revolving Credit Agreement and a $450,000,000
Revolving Credit Agreement, in each case dated as of February 2,
1995 among the Company, Union Bank of Switzerland acting through
its Los Angeles Branch, in its individual capacity and as Agent,
and certain financial institutions ("Banks") signatory thereto
(collectively, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein as therein defined.
In our capacity as such counsel, we have examined
originals, or copies certified or otherwise identified to our
satisfaction as being true copies of such records, documents or
other instruments as in our judgment are necessary or appropriate
to enable us to render the opinions expressed below. We have
been furnished, and have relied upon, certificates of officers of
the Company with respect to certain factual matters regarding the
Company. As to matters of fact, we have also relied on the
representations and warranties made by the Company in the Credit
Agreement. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have
deemed necessary.
Except with respect to the Company and its
Subsidiaries, in our review and examination we have assumed the
authenticity of documents submitted to us as originals and the
conformity to authentic original documents of all documents
submitted to us as conformed or photostatic copies. For the
purpose of the opinions hereinafter expressed, we have assumed
the due execution and delivery, pursuant to due authorization, of
each document referred to in this opinion by each party thereto
other than the Company and its subsidiaries, that each document
constitutes the legally valid and binding obligation of each such
other party and that such other person is duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization.
<PAGE>
We have investigated such questions of law for the
purpose of rendering this opinion as we have deemed necessary. We
are opining herein as to the effect on the subject transactions
of only United States federal law and the laws of the State of
California.
Upon the basis of the foregoing, we are of the opinion
that:
1. Each of the Company and Interlease Management
Corporation, Interlease Aviation Corporation, Atlantic
International Aviation Holdings, Inc., Aircraft SPC-1, Inc.,
Aircraft SPC-2, Inc. and ILFC Aircraft Holding Corporation has
been duly incorporated and is existing and in good standing under
the laws of the State of California.
2. The Company has the corporate power to own its
properties and conduct its business as described in the Company's
Annual Report on Form 10-K for its fiscal year ended December 31,
1993.
3. The Company has the corporate power and corporate
authority to enter into the Credit Agreement, to make the
borrowings under the Credit Agreement, to execute and deliver the
Notes and to incur the obligations provided for therein, all of
which have been duly authorized by all necessary corporate action
on the part of the Company.
4. No authorizations, consents, approvals,
registrations, filings and licenses with or from any California
or federal court or governmental agency or body are necessary for
the borrowing, the execution and delivery of the Credit Agreement
and the Notes, and the performance by the Company of its
obligations thereunder and under the Notes.
5. The Credit Agreement and the Notes have been duly
executed and delivered by the Company and constitute the legally
valid and binding obligations of the Company enforceable against
the Company in accordance with their respective terms.
6. Neither the execution and delivery of the Credit
Agreement by the Company, nor the performance thereof by the
Company on or prior to the date hereof nor the payment of the
Notes violates the Articles of Incorporation or Bylaws of the
Company, breaches or results in a default under any of the
agreements, instruments, contracts, orders, injunctions or
judgments identified to us in an officer's certificate of the
Company (a copy of which is being delivered to you concurrently
herewith) as agreements, instruments, contracts, orders,
injunctions or judgments binding on the Company or by which its
assets are bound which have provisions relating to the issuance
by the Company of debt and which the breach of, or default under,
would have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, or violates any present federal or
California statute, rule or regulation binding on the Company or
its assets.
7. The making of the Loans and the use of the proceeds
thereof as provided in the Credit Agreement will not violate
Regulation U, G, T or X of the Board of Governors of the Federal
Reserve System.
<PAGE>
8. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
Our opinions in paragraph 5 above as to the validity,
binding effect or enforceability of the Credit Agreement and the
Notes are subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors'
rights generally, general principles of equity, including
(without limitation) concepts of materiality, reasonableness,
good faith and fair dealing and, the possible unavailability of
specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.
Our opinions rendered in paragraphs 4 and 6 above are
based upon our review only of those statutes, rules and
regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Credit Agreement and
the Notes.
In rendering our opinions in paragraph 4 above, we have
assumed that each Bank is a sophisticated financial institution
capable of evaluating the merits and risks relating to the Notes,
and that each Bank has been provided access to such information
relating to the Company as such Bank has requested.
Except as expressly set forth in paragraph 7 above, we
are not expressing any opinion as to the effect of the Agent's or
any Bank's compliance with any state or federal laws or
regulations applicable to the transactions contemplated by the
Company because of the nature of the Agent's or any Bank's
business.
This opinion is furnished to you in connection with the
Company's execution and delivery of the Credit Agreement, is
solely for your benefit and the benefit of your successors and
assigns, and may not be relied upon by, nor may copies be
delivered to, any other person, without our prior written
consent.
Very truly yours,
<PAGE>
Exhibit H
February 2, 1995
To the Banks and the Agent
Referred to Below
c/o Union Bank of Switzerland
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Ladies and Gentlemen:
I am General Counsel for International Lease Finance
Corporation (the "Company") and am rendering this opinion in
connection with a $1,350,000,000 Revolving Credit Agreement and a
$450,000,000 Revolving Credit Agreement, in each case dated as of
February 2, 1995 among the Company, Union Bank of Switzerland
acting through its Los Angeles Branch, in its individual capacity
and as Agent, and certain financial institutions ("Banks")
signatory thereto (collectively, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein as therein
defined.
I have examined originals, or copies certified or
otherwise identified to my satisfaction as being true copies, of
such documents, corporate records, certificates of public
officials and other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or
advisable for purposes of this opinion. I am opining herein as
to the effect on the subject transactions of only United States
federal law and the laws of the State of California.
Upon the basis of the foregoing, I am of the opinion
that:
1. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction in which the ownership or leasing of its
property or the conduct of its business requires it to be so
qualified; provided, however, that the Company may not be so
qualified in certain jurisdictions, the effect of which would not
have a Material Adverse Effect on the Company.
2. To the best of my knowledge, Interlease Aviation
Corporation, ILFC Aircraft Holding Corporation, Interlease
Management Corporation, Aircraft SPC-1, Inc., Aircraft SPC-2,
Inc. and Atlantic International Aviation Holdings, Inc., a wholly
owned subsidiary of Interlease Management Corporation, are the
only domestic Subsidiaries of the Company.
<PAGE>
3. No Subsidiary of the Company nor all of the
Subsidiaries of the Company taken as a whole is a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated
under the Securities Exchange Act of 1934, as amended.
4. There is no pending or, to the best of my
knowledge, threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries which,
individually or in the aggregate, would have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
This opinion is furnished to you in connection with the
Company's execution and delivery of the Credit Agreement, is
solely for your benefit and the benefit of your successors and
assigns, and may not be relied upon by, nor may copies be
delivered to, any other person without my prior written consent.
Very truly yours,
Julie I. Sackman
General Counsel
<PAGE>
Exhibit I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ____________________, 199_
between [ASSIGNOR] (the "Assignor") and [ASSIGNEE] (the
"Assignee").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $450,000,000 Revolving Credit
Agreement dated as of February 2, 1995 (the "Credit Agreement")
among International Lease Finance Corporation (the "Company"),
the Assignor and Union Bank of Switzerland, in its individual
corporate capacity and as Agent (the "Agent"), and certain
financial institutions referred to therein;
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Committed Loans in an aggregate
principal amount at any time outstanding not to exceed
$___________;
WHEREAS, Committed Loans and Bid Loans made by the
Assignor under the Credit Agreement in the respective aggregate
principal amounts of $____________ and $____________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder in
an amount equal to $ * (the "Assigned Amount"), together
with $ * aggregate principal amount outstanding of
Committed Loans and $ ** aggregate principal amount
outstanding of Bid Loans (collectively, the "Assigned Loans"),
and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on the
terms set forth in the Credit Agreement;
_______________
* See Section 13.4.1 for minimum requirements.
** Assignment of Bid Loans is optional.
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein, the parties hereto agree
as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set
forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor under
the Credit Agreement to the extent of the Assigned Amount and the
Assigned Loans, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned
Amount and the Assigned Loans. Upon the execution and delivery
hereof by the Assignor, the Assignee, the Company and the Agent
and the payment of the amounts specified in Section 3 required to
be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a
Commitment in an amount equal to the Assigned Amount, and
(ii) the Commitment of the Assignor shall, as of the date hereof,
be reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in Federal
funds an amount equal to $_________*. It is understood that
facility fees accrued to the date hereof are for the account of
the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor
and the Assignee hereby agrees that if it receives any amount
under the Credit Agreement which is for the account of the other
party hereto, it shall receive the same for the account of such
other party to the extent of such other party's interest therein
and shall promptly pay the same to such other party.
_______________
* Amount should combine principal and face together with accrued
interest and breakage compensation, if any, to be paid by the
Assignee, net of any portion of any fee to be paid by the Assignor
to the Assignee. It may be preferable in an appropriate case
to specify these amounts generically or by formula rather than
as a fixed sum.
<PAGE>
SECTION 4. Consent of the Company and the Agent. This
Agreement is conditioned upon the consent of the Company and the
Agent pursuant to Section 13.8 of the Credit Agreement. The
execution of this Agreement by the Company and the Agent is
evidence of this consent. Pursuant to Section 13.8 the Company
agrees to execute and deliver a Bid Note and a Committed Note,
each payable to the order of the Assignee and evidencing the
assignment and assumption provided for herein. The Company also
agrees to execute replacement Notes in favor of the Assignor if
the Assignor has retained any Commitment.
SECTION 5. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and shall
have no responsibility with respect to, the solvency, financial
condition, or statements of the Company, or the validity and
enforceability of the obligations of the Company in respect of
the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and
financial condition of the Company.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of California.
SECTION 7. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By____________________________
Title:
[ASSIGNEE]
By____________________________
Title:
Consented, and with respect
to Section 4, agreed:
INTERNATIONAL LEASE FINANCE
CORPORATION
By____________________________
Title:
Consented:
UNION BANK OF SWITZERLAND,
as Agent
By____________________________
Title:
By____________________________
Title:
<PAGE>
Exhibit J
FORM OF REQUEST FOR EXTENSION OF
TERMINATION DATE
________________, 19__
[ADDRESSED TO EACH BANK] [ADDRESSED TO THE AGENT]
Attention:
Ladies and Gentlemen:
This instrument constitutes [a notice to the Agent of]
a request for the extension of the Termination Date pursuant to
Section 13.8 of the $450,000,000 Revolving Credit Agreement,
dated as of February 2, 1995 (as amended, modified or
supplemented, the "Credit Agreement"), among International Lease
Finance Corporation (the "Company"), Union Bank of Switzerland,
in its individual corporate capacity and as Agent, and certain
financial institutions referred to therein. Terms not otherwise
expressly defined herein shall have the meanings set forth in the
Credit Agreement.
The Company [hereby requests that you extend your] [has
sent a letter to each Bank that is now a party to the Credit
Agreement asking such Bank to extend its] now scheduled
Termination Date under the Credit Agreement by 364 days.
The officer of the Company signing this instrument
hereby certifies that:
(a) Before and after giving effect to the extension of the
Termination Date requested hereby, no Event of Default or
Unmatured Event of Default shall have occurred and be continuing
[and all Loans payable prior to the date hereof shall have been
paid in full]; and
(b) Before and after giving effect to the extension of the
Termination Date requested hereby, the representations and
warranties set forth in Section 8 of the Credit Agreement shall
be true and correct in all material respects with the same effect
as though made on the date hereof.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:_________________________
Its:________________________
Confirmed and accepted, subject to the terms and conditions of
the Credit Agreement, as of the date first above written:
[NAME OF BANK]
By:____________________________
Its:
<PAGE>
EXHIBIT 10.22
CONFORMED COPY
$1,350,000,000 REVOLVING CREDIT AGREEMENT
DATED AS OF
FEBRUARY 2, 1995
AMONG
INTERNATIONAL LEASE FINANCE CORPORATION
UNION BANK OF SWITZERLAND
LOS ANGELES BRANCH
AND
THE OTHER BANKS (AS DEFINED HEREIN)
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . 1
Section 1.1. Terms Generally. . . . . . . . . . . . . . 1
Section 1.2. Specific Terms . . . . . . . . . . . . . . 1
SECTION 2. BID LOANS AND BID NOTES . . . . . . . . . . . . 14
Section 2.1. Making of Bid Loans. . . . . . . . . . . . 14
Section 2.2. Procedure for Bid Loans. . . . . . . . . . 14
Section 2.3. Funding of Bid Loans . . . . . . . . . . . 16
Section 2.4. Bid Notes. . . . . . . . . . . . . . . . . 17
SECTION 3. COMMITTED LOANS AND NOTES . . . . . . . . . . . 17
Section 3.1. Agreement to Make Committed Loans. . . . . 17
Section 3.2. Procedure for Committed Loans. . . . . . . 17
Section 3.3. Maturity of Committed Loans. . . . . . . . 19
Section 3.4. Committed Notes. . . . . . . . . . . . . . 19
SECTION 4. INTEREST AND FEES . . . . . . . . . . . . . . . 19
Section 4.1. Interest Rates . . . . . . . . . . . . . . 19
Section 4.2. Interest Payment Dates . . . . . . . . . . 20
Section 4.3. Setting and Notice of Committed Loan
Rates. . . . . . . . . . . . . . . . . . . 20
Section 4.4. Facility Fee . . . . . . . . . . . . . . . 21
Section 4.5. Agent's Fees . . . . . . . . . . . . . . . 21
Section 4.6. Utilization Fee. . . . . . . . . . . . . . 21
Section 4.7. Computation of Interest and Fees . . . . . 22
SECTION 5. REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS . . . . . . . . . . . . . . . . . . 22
Section 5.1. Voluntary Termination or Reduction of
the Commitments. . . . . . . . . . . . . . 22
Section 5.2. Voluntary Prepayments. . . . . . . . . . . 23
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF;
TAXES . . . . . . . . . . . . . . . . . . . . . 23
Section 6.1. Making of Payments . . . . . . . . . . . . 23
Section 6.2. Pro Rata Treatment; Sharing. . . . . . . . 23
Section 6.3. Set-off. . . . . . . . . . . . . . . . . . 24
Section 6.4. Taxes, etc.. . . . . . . . . . . . . . . . 24
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR
ABSOLUTE RATE LOANS, LIBOR RATE LOANS AND CD
RATE LOANS. . . . . . . . . . . . . . . . . . . 26
Section 7.1. Increased Costs. . . . . . . . . . . . . . 26
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair . . . . . . . . . . . 28
Section 7.3. Changes in Law Rendering Certain Loans
Unlawful . . . . . . . . . . . . . . . . . 28
Section 7.4. Funding Losses . . . . . . . . . . . . . . 29
Section 7.5. Discretion of Banks as to Manner of
Funding. . . . . . . . . . . . . . . . . . 29
Section 7.6. Conclusiveness of Statements; Survival
of Provisions. . . . . . . . . . . . . . . 29
<PAGE>
SECTION 8. REPRESENTATIONS AND WARRANTIES. . . . . . . . . 30
Section 8.1. Organization, etc. . . . . . . . . . . . . 30
Section 8.2. Authorization; Consents; No Conflict . . . 30
Section 8.3. Validity and Binding Nature. . . . . . . . 31
Section 8.4. Financial Statements . . . . . . . . . . . 31
Section 8.5. Litigation and Contingent Liabilities. . . 31
Section 8.6. Employee Benefit Plans . . . . . . . . . . 31
Section 8.7. Investment Company Act . . . . . . . . . . 32
Section 8.8. Public Utility Holding Company Act . . . . 32
Section 8.9. Regulation U . . . . . . . . . . . . . . . 32
Section 8.10. Information. . . . . . . . . . . . . . . . 32
Section 8.11. Compliance with Applicable Laws, etc.. . . 32
Section 8.12. Insurance. . . . . . . . . . . . . . . . . 33
Section 8.13. Taxes. . . . . . . . . . . . . . . . . . . 33
Section 8.14. Use of Proceeds. . . . . . . . . . . . . . 33
Section 8.15. Pari Passu . . . . . . . . . . . . . . . . 33
Section 8.16. Ownership and Liens. . . . . . . . . . . . 33
SECTION 9. COVENANTS . . . . . . . . . . . . . . . . . . . 34
Section 9.1. Reports, Certificates and Other
Information. . . . . . . . . . . . . . . . 34
Section 9.2. Existence. . . . . . . . . . . . . . . . . 36
Section 9.3. Nature of Business . . . . . . . . . . . . 36
Section 9.4. Books, Records and Access. . . . . . . . . 36
Section 9.5. Insurance. . . . . . . . . . . . . . . . . 36
Section 9.6. Repair . . . . . . . . . . . . . . . . . . 36
Section 9.7. Taxes. . . . . . . . . . . . . . . . . . . 37
Section 9.8. Compliance . . . . . . . . . . . . . . . . 37
Section 9.9. Merger, Purchase and Sale. . . . . . . . . 37
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio. . . 38
Section 9.11. Fixed Charge Coverage Ratio. . . . . . . . 38
Section 9.12. Consolidated Tangible Net Worth. . . . . . 38
Section 9.13. Restricted Payments. . . . . . . . . . . . 38
Section 9.14. Liens. . . . . . . . . . . . . . . . . . . 38
Section 9.15. Leases . . . . . . . . . . . . . . . . . . 41
Section 9.16. Use of Proceeds. . . . . . . . . . . . . . 41
Section 9.17. Transactions with Related Parties. . . . . 42
Section 9.18. Securitization . . . . . . . . . . . . . . 42
<PAGE>
SECTION 10. CONDITIONS TO LENDING . . . . . . . . . . . . . 42
Section 10.1. Conditions Precedent to All Loans. . . . . 42
Section 10.2. Conditions to the Availability of the
Commitments. . . . . . . . . . . . . . . . 43
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT. . . . . . . 44
Section 11.1. Events of Default. . . . . . . . . . . . . 44
Section 11.2. Effect of Event of Default . . . . . . . . 46
SECTION 12. THE AGENT . . . . . . . . . . . . . . . . . . . 47
Section 12.1. Authorization. . . . . . . . . . . . . . . 47
Section 12.2. Indemnification. . . . . . . . . . . . . . 47
Section 12.3. Action on Instructions of the Required
Banks. . . . . . . . . . . . . . . . . . . 48
Section 12.4. Payments . . . . . . . . . . . . . . . . . 48
Section 12.5. Exculpation. . . . . . . . . . . . . . . . 49
Section 12.6. Credit Investigation . . . . . . . . . . . 50
Section 12.7. UBS and Affiliates . . . . . . . . . . . . 50
Section 12.8. Resignation. . . . . . . . . . . . . . . . 50
SECTION 13. GENERAL . . . . . . . . . . . . . . . . . . . . 51
Section 13.1. Waiver; Amendments . . . . . . . . . . . . 51
Section 13.2. Notices. . . . . . . . . . . . . . . . . . 51
Section 13.3. Computations . . . . . . . . . . . . . . . 52
Section 13.4. Assignments; Participations. . . . . . . . 52
Section 13.5. Costs, Expenses and Taxes. . . . . . . . . 55
Section 13.6. Indemnification. . . . . . . . . . . . . . 56
Section 13.7. Regulation U . . . . . . . . . . . . . . . 56
Section 13.8. Extension of Termination Dates; Removal
of Banks; Substitution of Banks. . . . . . 56
Section 13.9. Captions . . . . . . . . . . . . . . . . . 59
Section 13.10. Governing Law; Severability. . . . . . . . 59
Section 13.11. Counterparts; Effectiveness. . . . . . . . 59
Section 13.12. Further Assurances . . . . . . . . . . . . 59
Section 13.13. Successors and Assigns . . . . . . . . . . 59
Section 13.14. Waiver of Jury Trial . . . . . . . . . . . 59
Section 13.15. Amendment of 1993 Agreement. . . . . . . . 60
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I Schedule of Banks (Sections 1.2
and 13.8)
Schedule II Fees and Margins (Sections 1.2, 4.4
and 4.6)
Exhibit A Form of Notice of Competitive Bid
Borrowing (Sections 1.2 and 2.2)
Exhibit B Form of Bid (Sections 1.2 and 2.2)
Exhibit C Form of Committed Loan Request
(Section 3.2)
Exhibit D Form of Bid Note (Section 1.2)
Exhibit E Form of Committed Note (Section 1.2)
Exhibit F Fixed Charge Coverage Ratio
(Sections 1.2 and 9.11)
Exhibit G Form of Opinion of O'Melveny & Myers,
Counsel for the Company (Section 10.2.5)
Exhibit H Form of Opinion of the General Counsel
of the Company (Section 10.2.5)
Exhibit I Form of Assignment and Assumption
Agreement (Section 13.4.1)
Exhibit J Form of Request For Extension of
Termination Date (Section 13.8)
<PAGE>
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated
as of February 2, 1995, among INTERNATIONAL LEASE FINANCE
CORPORATION, a California corporation (herein called the
"Company"), the financial institutions listed on the signature
pages hereof (herein, together with their respective successors
and assigns, collectively called the "Banks" and individually
each called a "Bank") and UNION BANK OF SWITZERLAND, acting
through its Los Angeles Branch (herein, in its individual
capacity, together with its successors and assigns, called
"UBS"), as agent for the Banks (herein, in such capacity,
together with its successors and assigns in such capacity,
called the "Agent").
W I T N E S S E T H:
WHEREAS, the Company has requested the Banks to lend up
to $1,350,000,000 to the Company on a revolving basis to enable
the Company to support its commercial paper program and for other
general corporate purposes;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein contained, the parties hereto agree
as follows:
SECTION 1. CERTAIN DEFINITIONS.
Section 1.1. Terms Generally. The definitions
ascribed to terms in this Section 1 and elsewhere in this
Agreement shall apply equally to both the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine
and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". The words "hereby", "herein", "hereof", "hereunder"
and words of similar import refer to this Agreement as a whole
(including any exhibits and schedules hereto) and not merely to
the specific section, paragraph or clause in which such word
appears. All references herein to Sections, Exhibits and
Schedules shall be deemed references to Sections of and Exhibits
and Schedules to this Agreement unless the context shall
otherwise require.
Section 1.2. Specific Terms. When used herein, the
following terms shall have the following meanings:
Absolute Rate means a rate of interest per annum,
expressed as a percentage to four decimal places and set forth in
a Bid for a particular Bid Loan amount and a particular Loan
Period.
<PAGE>
Absolute Rate Loan means any Loan which bears interest
at an Absolute Rate.
Affiliate means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with such Person. A
Person shall be deemed to control another Person if such first
Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of such other
Person, whether through ownership of stock, by contract or
otherwise.
Agent - see Preamble.
Aggregate Commitment means $1,350,000,000, as reduced
by any reduction in the Commitments made from time to time
pursuant to Section 5.1 or 13.8.
Agreement - see Preamble.
AIG means American International Group, Inc.
Assessment Rate means, at any time, the then current
rate as determined by the Agent after consultation with the
Reference Banks, for the lowest annual assessment payable by
banks to the FDIC (or any successor) for the FDIC's or such
successor's insuring dollar deposits in the United States and,
when used with respect to a Loan Period for a CD Rate Loan, shall
mean such rate as in effect from time to time during such Loan
Period.
Assignee - see Section 13.4.1.
Authorized Officer of the Company means any of the
Chairman of the Board, the President, the Executive Vice
President and Chief Financial Officer, the Treasurer, the
Controller and the Assistant Controller of the Company.
Available Commitment - see Section 2.2(a).
Bank - see Preamble.
Bank Parties - see Section 13.6.
Base LIBOR means, with respect to any Loan Period for a
LIBOR Rate Loan, the rate per annum determined by the Agent to be
the arithmetic mean (rounded to the nearest 1/16 of 1% or, if
there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of
the respective rates of interest communicated by the Reference
Banks to the Agent as the rate at which Dollar deposits are
offered to the Reference Banks by leading banks in the London
interbank deposit market at approximately 11:00 a.m., London
time, on the second full Business Day preceding the first day of
such Loan Period in an amount substantially equal to the amount
of such LIBOR Rate Loan for such Reference Banks and for a period
equal to such Loan Period.
Base Rate means a fluctuating interest rate per annum,
as shall be in effect from time to time, which rate per annum
shall be equal to the higher of (i) the Prime Rate and (ii) one
half of one percent per annum above the Federal Funds Rate.
<PAGE>
Base Rate Loan means any Loan which bears interest at
the Base Rate.
Bid means one or more offers by a Bank to make one or
more Bid Loans, submitted to the Agent by telephone no later than
the Submission Deadline and promptly confirmed in writing on the
same day on a duly completed and executed form substantially
similar to Exhibit B, personally delivered or transmitted by
facsimile to the Agent.
Bid Borrowing - see Section 2.2(a).
Bid Loan means a Loan in Dollars that is an Absolute
Rate Loan or a LIBOR Rate Loan made pursuant to Section 2.
Bid Note means a promissory note of the Company, sub-
stantially in the form of Exhibit D, duly completed, evidencing
Bid Loans made to the Company, as such note may be amended,
modified or supplemented or supplanted pursuant to Section 13.4.1
from time to time.
Business Day means any day of the year on which banks
are open for commercial banking business in the city of New York
and in Los Angeles and, if the applicable Business Day relates to
the determination of LIBOR for any LIBOR Rate Loan any such
Business Day on which dealings in deposits in Dollars are
transacted in the London interbank market.
Capitalized Lease means any lease under which any
obligations of the lessee are, or are required to be, capitalized
on a balance sheet of the lessee in accordance with generally
accepted accounting principles in the United States.
Capitalized Rentals means, as of the date of any
determination, the amount at which the obligations of the lessee,
due and to become due under all Capitalized Leases under which
the Company or any Subsidiary is a lessee, are reflected as a
liability on a consolidated balance sheet of the Company and its
Subsidiaries.
CD Base Rate means with respect to any Loan Period for
a CD Rate Loan the average of the bid rates (rounded to the
nearest 1/100 of 1% or, if there is no nearest 1/100 of 1%, to
the next higher 1/100 of 1%) quoted at 10:00 a.m., New York City
time (or as soon thereafter as is practicable), on the first
Business Day of such Loan Period by two or more New York
certificate of deposit dealers of recognized standing, selected
by the Agent, for the purchase at face value of 30-day, 60-day,
90-day or 180-day, as the case may be, certificates of deposit
sold by the Reference Banks in the secondary market in an amount
substantially equal to the amount of such CD Rate Loan.
<PAGE>
CD Rate means, with respect to any Loan Period, the
rate per annum determined pursuant to the following formula,
which rate shall change during such Loan Period as and when the
Reserve Percentage or the Assessment Rate shall change:
CDBR
CD Rate = -------- + AR + ARM
1 - RP
where:
CDBR = CD Base Rate for such Loan Period for a
CD Rate Loan
AR = Assessment Rate
ARM = The applicable rate margin with respect
to CD Rate Loans set forth in
Schedule II hereto
RP = Reserve Percentage
CD Rate Loan means any Loan that bears interest at the
CD Rate.
Code means the Internal Revenue Code of 1986, as
amended.
Commitments means the Banks' commitments to make
Committed Loans hereunder; and Commitment as to any Bank means
the amount set forth opposite such Bank's name on Schedule I (as
reduced in accordance with Section 5.1, or as periodically
revised in accordance with Section 13.4 or Section 13.8).
Committed Loan means a Loan in Dollars that is a Base
Rate Loan, CD Rate Loan or LIBOR Rate Loan made pursuant to
Section 3.
Committed Loan Request - see Section 3.2(a).
Committed Note means a promissory note of the Company,
substantially in the form of Exhibit E, duly completed,
evidencing Committed Loans to the Company, as such note may be
amended, modified or supplemented or supplanted pursuant to
Section 13.4.1 from time to time.
Company - see Preamble.
Consolidated Indebtedness means, as of the date of any
determination, the total amount of Indebtedness, less the amount
of current and deferred income taxes and rentals received in
advance of the Company and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted
accounting principles in the United States.
Consolidated Tangible Net Worth means, as of the date
of any determination, the total of shareholders' equity
(including capital stock, additional paid-in capital and retained
earnings after deducting treasury stock), less the sum of the
total amount of goodwill, organization expenses, unamortized debt
issue costs (determined on an after tax basis), deferred assets
other than prepaid insurance and prepaid taxes, the excess of
cost of shares acquired over book value of related assets,
surplus resulting from any revaluation write-up of assets
subsequent to September 30, 1994 and such other assets as are
properly classified as intangible assets, all determined in
accordance with generally accepted accounting principles in the
United States consolidating the Company and its Subsidiaries.
<PAGE>
Dollar, and $, refer to the lawful money of the United
States.
ERISA means the Employee Retirement Income Security Act
of 1974, as amended.
ERISA Affiliate means any corporation, trade or
business that is, along with the Company or any Subsidiary, a
member of a controlled group of corporations or a controlled
group of trades or businesses, as described in sections 414(b)
and 414(c), respectively, of the Code or section 4001 of ERISA.
Eurodollar Reserve Percentage means for any day in any
Loan Period for any LIBOR Rate Loan that percentage in effect on
such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor thereto) or other U.S.
government agency for determining the reserve requirement
(including, without limitations, any marginal, basic,
supplemental or emergency reserves) for a member bank of the
Federal Reserve System in New York City with deposits exceeding
one billion dollars in respect of eurocurrency funding
liabilities. LIBOR shall be adjusted automatically on and as of
the effective date of any change in the Eurodollar Reserve
Percentage.
Event of Default means any of the events described in
Section 11.1.
Existing Litigation - see Section 10.1.3.
FASB 13 means the Statement of Financial Accounting
Standards No. 13 (Accounting for Leases) as in effect on the date
hereof.
FDIC means the Federal Deposit Insurance Corporation.
Federal Funds Rate means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors
of the Federal Reserve System (including any such successor
publication, "H.15(519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day such rate is
not yet published in H.15(519), the rate for such day will be the
rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or
any successor publication, published by the Federal Reserve Bank
of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption
"Federal Funds Effective Rate". If on any relevant day the
appropriate rate for such day is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for
such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to
9:00 a.m., New York City time, on such day by each of three
leading brokers of Federal funds transactions in New York City,
selected by the Agent. The rate for any day which is not a
Business Day shall be the rate for the immediately preceding
Business Day.
<PAGE>
Fixed Charge Coverage Ratio on the last day of any
quarter of any fiscal year of the Company means the ratio for the
period of four fiscal quarters ending on such day of earnings to
combined fixed charges and preferred stock dividends referred to
in Paragraph (d)(1)(i) of Item 503 of Regulation S-K of the
Securities and Exchange Commission, as amended from time to time,
and determined pursuant to Paragraphs (d)(2) through (d)(10) of
such Item 503 with the Company as "registrant" (such ratio for
the four fiscal quarters ended September 30, 1994 is attached
hereto as Exhibit F); provided, however, that if the Required
Banks in their sole discretion determine that amendments to
Regulation S-K subsequent to the date hereof substantially modify
the provisions of such Item 503, "Fixed Charge Coverage Ratio"
shall have the meaning determined by this definition without
regard to any such amendments.
Funding Date means the date on which any Loan is
scheduled to be disbursed.
Funding Office means, with respect to any Bank, any
office or offices of such Bank or Affiliate or Affiliates of such
Bank through which such Bank shall fund or shall have funded any
Loan. A Funding Office may be, at such Bank's option, either a
domestic or foreign office of such Bank or a domestic or foreign
office of an Affiliate of such Bank.
Governmental Authority means any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
Guaranties by any Person means all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (a) to purchase such
Indebtedness or obligation or any property or assets constituting
security therefor, (b) to advance or supply funds (i) for the
purchase or payment of such Indebtedness or obligation or (ii) to
maintain working capital or other balance sheet condition or
otherwise to advance or make available funds for the purchase or
payment of such Indebtedness or obligation, (c) to lease property
or to purchase securities or other property or services primarily
for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment
of the Indebtedness or obligation or (d) otherwise to assure the
owner of the Indebtedness or obligation of the primary obligor
against loss in respect thereof; provided, however, that the
obligation described in clause (c) shall not include
(i) obligations of a buyer under an agreement with a seller to
purchase goods or services entered into in the ordinary course of
such buyer's and seller's businesses unless such agreement
requires that such buyer make payment whether or not delivery is
ever made of such goods or services and (ii) remarketing
agreements where the remaining debt on an aircraft does not
exceed the aircraft's net book value, determined in accordance
with industry standards, except that clause (c) shall apply to
the amount of remaining debt under a remarketing agreement that
exceeds the net book value of the aircraft. For the purposes of
all computations made under this Agreement, a Guaranty in respect
of any Indebtedness for borrowed money shall be deemed to be
Indebtedness equal to the principal amount of such Indebtedness
for borrowed money which has been guaranteed, and a Guaranty in
respect of any other obligation or liability or any dividend
shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
<PAGE>
Indebtedness of any Person means and includes all
obligations of such Person which in accordance with generally
accepted accounting principles in the United States shall be
classified upon a balance sheet of such Person as liabilities of
such Person, and in any event shall include all:
(a) obligations of such Person for borrowed money or
which have been incurred in connection with the acquisition
of property or assets (other than security and other
deposits on flight equipment);
(b) obligations secured by any Lien or other charge
upon property or assets owned by such Person, even though
such Person has not assumed or become liable for the payment
of such obligations;
(c) obligations created or arising under any
conditional sale, or other title retention agreement with
respect to property acquired by such Person, notwithstanding
the fact that the rights and remedies of the seller, lender
or lessor under such agreement in the event of default are
limited to repossession or sale of property;
(d) Capitalized Rentals of such Person under any
Capitalized Lease;
(e) obligations evidenced by bonds, debentures, notes
or other similar instruments; and
(f) Guaranties by such Person to the extent required
pursuant to the definition thereof.
Indemnified Liabilities - see Section 13.6.
Investment means any investment, made in cash or by
delivery of any kind of property or asset, in any Person, whether
(i) by acquisition of (x) shares of stock or similar interest,
(y) Indebtedness or (z) other obligation or security or (ii) by
loan, advance or capital contribution, or otherwise. For
purposes of this Agreement, Investment shall exclude any notes
receivable and any finance or sales- type leases entered into by
the Company or any of its Subsidiaries in the ordinary course of
business. The amount of any Investment shall be the original
cost of such Investment plus the cost of all additions thereto
and minus the amount of any portion of such Investment repaid to
such Person in cash as a return of capital, but without any other
adjustment for increases or decreases in value, or write- ups,
write-downs or write-offs with respect to such Investment.
<PAGE>
LIBOR means with respect to any Loan Period the rate
per annum (rounded to the nearest 1/16 of 1% or, if there is no
nearest 1/16 of 1%, to the next higher 1/16 of 1%), determined
pursuant to the following formula:
Base LIBOR
-----------------------------------
LIBOR = (1 - Eurodollar Reserve Percentage)
LIBOR Rate means (i) with respect to Committed Loans
that are LIBOR Rate Loans, LIBOR plus the applicable rate margin
set forth in Schedule II and (ii) with respect to Bid Loans that
are LIBOR Rate Loans, LIBOR plus or minus the rate margin set
forth in a Bid for a particular Bid Loan amount and a particular
Loan Period.
LIBOR Rate Loan means any Loan which bears interest at
a LIBOR Rate.
Lien means any mortgage, pledge, lien, security
interest or other charge, encumbrance or preferential
arrangement, including the retained security title of a
conditional vendor or lessor.
Litigation Actions means all litigation, claims and
arbitration proceedings, proceedings before any Governmental
Authority or investigations which are pending or, to the
knowledge of the Company, threatened against, or affecting, the
Company or any Subsidiary.
Loan Period means (i) with respect to any Absolute Rate
Loan, the period commencing on such Loan's Funding Date and
ending not less than 14 days thereafter nor more than 183 days
thereafter as specified in the Bid Loan Request related to such
Bid Loan, (ii) with respect to any LIBOR Rate Loan, the period
commencing on such Loan's Funding Date and ending 1, 2, 3 or 6
months thereafter as selected by the Company pursuant to
Section 3.2(a) or specified in the Bid Loan Request, as the case
may be and (iii) with respect to any CD Rate Loan, the period
commencing on such Loan's Funding Date and ending 30, 60, 90 or
180 days thereafter as selected by the Company pursuant to
Section 3.2(a); provided, however, that
(a) if a Loan Period would otherwise end on a day
which is not a Business Day, such Loan Period shall end on
the next succeeding Business Day (unless, in the case of a
LIBOR Rate Loan, such next succeeding Business Day would
fall in the next succeeding calendar month, in which case
such Loan Period shall end on the next preceding Business
Day);
(b) in the case of a Loan Period for any LIBOR Rate
Loan, if there exists no day numerically corresponding to
the day such Loan was made in the month in which the last
day of such Loan Period would otherwise fall, such Loan
Period shall end on the last Business Day of such month; and
<PAGE>
(c) on the date of the making of any Loan by a Bank,
the Loan Period for such Loan shall not extend beyond the
then-scheduled Termination Date for such Bank.
Loans means, collectively, the Bid Loans and the
Committed Loans and, individually, any Bid Loan or Committed
Loan.
Material Adverse Effect shall mean (i) any material
adverse effect on the business, properties, condition (financial
or otherwise) or operations, present or prospective, of the
Company and its Subsidiaries, taken as a whole since any stated
reference date or from and after the date of determination, as
the case may be, (ii) any material adverse effect on the ability
of the Company to perform its obligations hereunder and under the
Notes or (iii) any adverse effect on the legality, validity,
binding effect or enforceability of any material provision of
this Agreement or any Note.
Multiemployer Plan has the meaning assigned to such
term in section 3(37) of ERISA.
New Litigation - see Section 10.1.3.
Notes means, collectively, the Bid Notes and the
Committed Notes; and Note means any individual Bid Note or
Committed Note.
Notice of Competitive Bid Borrowing - see
Section 2.2(a).
Notice Office means the New York Branch of UBS which,
as of the date hereof, is 299 Park Avenue, New York, New York
10071-0026, Attn: James Broadus, Telecopy Number (212) 821-3259;
Telephone (212) 821-3227.
Operating Lease means any lease other than a
Capitalized Lease; provided, however, that leases with an
original term of less than one year shall not be Operating
Leases.
Operating Lease Rental of an Operating Lease means, as
of the date of any determination thereof, the net present value
of the aggregate unpaid amount due at such date and to become due
from the Company or any Subsidiary, on a consolidated basis, as
lessee under such Operating Lease discounted at such lessee's
incremental borrowing rate or if the interest rate implicit in
such Operating Lease can be practically determined and is
smaller, at such interest rate, such present value and interest
rate being determined in accordance with standard financial
practice and such borrowing rate being determined in accordance
with FASB 13, excluding from such aggregate amount all amounts
which are in excess of the minimum aggregate unpaid amount due at
such date and to become due from such lessee under such Operating
Lease assuming that such lessee would take or fail to take all
actions with respect to all termination, renewal, purchase and
other options as would produce the least amount becoming due
under such Operating Lease, and "Operating Lease Rentals" means,
as of the date of any determination, the aggregate Operating
Lease Rental of all Operating Leases as of such date.
<PAGE>
Participant - see Section 13.4.2.
Payment Office means the New York Branch of UBS which,
as of the date hereof, is at 299 Park Avenue, New York, New York
10071-0026 Attn: James Broadus.
PBGC means the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
Percentage means as to any Bank the ratio, expressed as
a percentage, that such Bank's Commitment as set forth opposite
such Bank's name on Schedule I, as periodically revised in
accordance with Section 13.4 or 13.8, bears to the Aggregate
Commitment or, if the Commitments have been terminated, the
ratio, expressed as a percentage, that the aggregate principal
amount of such Bank's outstanding Loans bears to the aggregate
principal amount of all outstanding Loans.
Permitted Acquisitions means purchases or other
acquisitions, or Investments by acquisition of shares of stock,
for which cumulatively and in the aggregate since the date hereof
the Company has not given consideration in value exceeding
$100,000,000.
Person means an individual or a corporation,
partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
Plan means, at any date, any employee pension benefit
plan (as defined in section 3(2) of ERISA) which is subject to
Title IV of ERISA (other than a Multiemployer Plan) and to which
the Company or any ERISA Affiliate may have any liability,
including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time
during the preceding five years, or by reason of being deemed to
be a contributing sponsor under section 4069 of ERISA.
Prime Rate means the rate of interest publicly
announced from time to time by the New York Branch of UBS as its
prime commercial lending rate.
Reference Banks means UBS, The Bank of Nova Scotia,
Commerzbank AG and The Bank of New York.
Related Party means, for purposes of Section 9.17 only,
any Person (other than a Subsidiary):
(i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under
common control with, the Company;
(ii) which beneficially owns or holds five percent or
more of the equity interest of the Company; or
(iii) twenty percent or more of the equity interest of
which is beneficially owned or held by the Company or a
Subsidiary.
<PAGE>
The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
Reportable Event has the meaning assigned to such term
in section 4043 of ERISA.
Required Banks means Banks having an aggregate
Percentage of 66 2/3% or more.
Reserve Percentage means for any day, that percentage,
expressed as a decimal, which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including any marginal, supplemental or emergency
reserve requirements) for a member bank of the Federal Reserve
System in New York City with deposits exceeding one billion
dollars in respect of new non-personal time deposits in dollars
in New York City having a maturity comparable to the relevant
Loan Period and in an amount of $100,000 or more. The CD Rate
shall be adjusted automatically on and as of the effective date
of any change in the Reserve Percentage.
Significant Subsidiary means any Subsidiary which is so
defined pursuant to Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission.
Submission Deadline - see Section 2.2(b).
Subsidiary means any Person of which or in which the
Company and its other Subsidiaries own directly or indirectly 50%
or more of:
(a) the combined voting power of all classes of stock
having general voting power under ordinary circumstances to
elect a majority of the board of directors of such Person,
if it is a corporation;
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar
entity; or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organization;
provided, however, that so long as (i) the Company continues to
own not more than 50% of Pacific Ocean Leasing, Ltd. and
(ii) Pacific Ocean Leasing, Ltd. does not materially alter the
manner in which it conducts the business in which it is currently
engaged, Pacific Ocean Leasing, Ltd. shall not be considered a
Subsidiary within the foregoing definition for purposes of this
Agreement.
<PAGE>
Successor Bank - see Section 13.8(c).
Taxes with respect to any Person means income, excise
and other taxes, and all assessments, imposts, duties and other
governmental charges or levies, imposed upon such Person, its
income or any of its properties, franchises or assets by any
Governmental Authority.
Terminating Bank - see Section 13.8(c).
Termination Date means, with respect to any Bank, the
earliest to occur of (i) the third anniversary of the date of
this Agreement or such later date as may be agreed to by such
Bank pursuant to Section 13.8(a), (ii) the date on which the
Commitments shall terminate pursuant to Section 11.2 or the
Commitments shall be reduced to zero pursuant to Section 5.1 and
(iii) the date specified as such Bank's Termination Date pursuant
to Section 13.8(b), or, if in any case (other than clause (ii)
above) such day is not a Business Day, the next succeeding
Business Day; in all cases, subject to the provisions of
Section 13.8(d).
UBS - see Preamble.
Unmatured Event of Default means any event which if it
continues uncured will, with lapse of time or notice or lapse of
time and notice, constitute an Event of Default.
Wholly-owned Subsidiary means any Person of which or in
which the Company and its other Wholly-owned Subsidiaries own
directly or indirectly 100% of:
(a) the issued and outstanding shares of stock (except
shares required as directors' qualifying shares);
(b) the capital interest or profits interest of such
Person, if it is a partnership, joint venture or similar
entity; or
(c) the beneficial interest of such Person, if it is a
trust, association or other unincorporated organization.
SECTION 2. BID LOANS AND BID NOTES.
Section 2.1. Making of Bid Loans. On the terms and
subject to the conditions of this Agreement, each Bank, severally
and for itself alone, may (but is not obligated to) make Bid
Loans to the Company from time to time on or after the date
hereof and prior to the date which is the fourteenth day
preceding such Bank's Termination Date in amounts equal to such
Bank's Bids that have been accepted as provided in
Section 2.2(c); provided that the aggregate principal amount of
all outstanding Loans shall not at any time exceed the then
Aggregate Commitment.
<PAGE>
Section 2.2. Procedure for Bid Loans.
(a) Bid Loan Request. Whenever the Company desires to
incur a competitive bid borrowing (a "Bid Borrowing"), it shall
give the Agent written notice (or telephonic notice promptly
confirmed in writing), such notice to be delivered to the Agent
at its Notice Office no later than 12:00 Noon (New York City
time), at least three Business Days prior to any proposed LIBOR
Rate Loan and at least one Business Day prior to any proposed
Absolute Rate Loan. Each such notice shall be substantially in
the form of Exhibit A hereto (each a "Notice of Competitive Bid
Borrowing"), and shall specify in each case (i) the date of such
proposed Bid Borrowing (which shall be a Business Day), (ii) the
aggregate amount of the proposed Bid Borrowing, (iii) whether the
proposed Bid Borrowing is to be an Absolute Rate Loan or a LIBOR
Rate Loan and the Loan Period, (iv) the maturity date for
repayment of each Bid Loan to be made as part of such borrowing
(which maturity date shall not be earlier than one month after
the date of any proposed LIBOR Rate Loan or 14 days after the
date of any proposed Absolute Rate Loan or later than the
earliest to occur of (x) six months after the date of such
proposed Bid Loan, (y) the Termination Date and (z) if the
proposed Bid Loan has an interest rate that is the LIBOR Rate,
the last day of the proposed Loan Period), (v) the interest
payment date or dates relating thereto, (vi) the account of the
Company to which the proceeds of such Bid Borrowing are to be
credited and (vii) any other terms to be applicable to such Bid
Borrowing. The Agent shall promptly give each Bank written
notice (or telephonic notice promptly confirmed in writing) of
each such request for a Bid Borrowing received by it from the
Company. Each Notice of Competitive Bid Borrowing shall
contemplate Bid Loans in a minimum aggregate principal amount of
$10,000,000 or a higher integral multiple of $1,000,000, not to
exceed, however, the excess of the then Aggregate Commitment over
the aggregate principal amount of all outstanding Loans,
calculated as of the relevant Funding Date, assuming that the
Company will pay, when due, all Loans maturing on or prior to
such Funding Date (the "Available Commitment").
(b) Bidding Procedure. Each Bank shall, if in its
sole discretion it elects to do so, irrevocably offer to make one
or more Bid Loans to the Company as part of such proposed Bid
Borrowing at a rate or rates of interest specified by such Bank
in its sole discretion and determined by such Bank independently
of each other Bank, by notifying by telephone confirmed in
writing to the Agent at its Notice Office (which shall give
prompt notice thereof to the Company), before 10:00 a.m. (New
York City time) on the date (the "Submission Deadline") that is
(x) in the case of a proposed Absolute Rate Loan, the same day as
the date of such proposed Bid Loan and (y) in the case of a
proposed LIBOR Rate Loan, two Business Days before, the date of
such proposed Bid Loan, of the minimum amount and maximum amount
of each Bid Loan that such Bank would be willing to make as part
of such proposed Bid Borrowing (which amounts may, subject to the
proviso in Section 2.1, exceed such Bank's Commitment), the rate
or rates of interest therefor and such Bank's lending office with
respect to such Bid Loan; provided that if the Agent in its
capacity as a Bank shall, in its sole discretion, elect to make
any such offer, it shall notify the Company of such offer before
8:30 a.m. (New York City time) on the Submission Deadline.
<PAGE>
(c) Acceptance of Bids. The Company shall, in turn,
before 10:30 a.m. (New York City time) on the Submission
Deadline, either:
(i) cancel such proposed Bid Borrowing by giving
the Agent notice to that effect; or
(ii) accept (such acceptance to be irrevocable)
one or more of the offers made by any Bank or Banks
pursuant to clause (b) above by giving notice (in
writing or by telephone confirmed in writing) to the
Agent of the amount of each Bid Loan (which amount
shall be equal to or greater than the minimum amount,
and equal to or less than the maximum amount, notified
to the Company by the Agent on behalf of such Bank for
such Bid Borrowing pursuant to clause (b) above) to be
made by such Bank as part of such Bid Borrowing, and
reject any remaining offers made by any Bank pursuant
to clause (b) above by giving the Agent notice to that
effect; provided that for any maturity date acceptance
of offers may only be made on the basis of ascending
Absolute Rates (in the case of an Absolute Rate Loan)
or floating rates (in the case of a LIBOR Rate Loan),
in each case commencing with the lowest rate so offered
and only as to offers made in conformity with the terms
hereof; provided further, however, if offers are made
by two or more Banks at the same rate or rates and
acceptance of all such equal offers would result in a
greater principal amount of Bid Loans being accepted
than the aggregate principal amount requested by the
Company, the Company shall have the right to accept one
or more of such equal offers in their entirety and
reject the other equal offer or offers or to allocate
acceptance among all such equal offers (but giving
effect to the minimum and maximum amounts specified for
each such offer pursuant to clause (b) above), as the
Company may elect in its sole discretion. For the
avoidance of doubt, the Company may accept offers whose
aggregate principal amount is greater than or less than
the requested aggregate amount as specified in the
related Notice of Competitive Bid Borrowing, subject to
the proviso in Section 2.1.
(d) Cancellation of Bid Borrowing. If the Company
notifies the Agent that such proposed Bid Borrowing is cancelled
pursuant to clause (c)(i) above, the Agent shall give prompt
notice thereof to the Banks and such Bid Borrowing shall not be
made.
(e) Notification of Acceptance. If the Company
accepts one or more of the offers made by any Bank or Banks
pursuant to clause (c)(ii) above, the Agent shall in turn
promptly notify (x) each Bank that has made an offer as described
in clause (b) above, of the date and aggregate amount of such Bid
Borrowing and whether or not any offer or offers made by such
Bank pursuant to clause (b) above have been accepted by the
Company and (y) each Bank that is to make a Bid Loan as part of
such Bid Borrowing, of the amount of each Bid Loan to be made by
such Bank as part of such Bid Borrowing.
<PAGE>
(f) Reliance. The Agent may rely and act upon notice
given by telephone by individuals reasonably believed by the
Agent to be those designated to the Agent by the Company or by
any Bank in writing from time to time, without waiting for
receipt of written confirmation thereof, and the Company hereby
agrees to indemnify and hold harmless the Agent from and against
any and all losses, costs, expenses, damages, claims, actions or
other proceedings relating to such reliance.
Section 2.3. Funding of Bid Loans. No later than
1:00 p.m. (New York City time) on the date specified in each
Notice of Competitive Bid Borrowing, each Bank will make
available the Bid Loan, if any, to be made by such Bank as part
of the Bid Borrowing requested to be made on such date in the
manner provided below. All amounts shall be made available to
the Agent in Dollars and immediately available funds at the
Payment Office of the Agent and the Agent promptly will make
available to the Company at its account specified in the relevant
Notice of Competitive Bid Borrowing the aggregate of the amounts
so made available in the type of funds received. Unless the
Agent shall have been notified by any Bank which has submitted a
bid pursuant to Section 2.2(b) prior to the date of the proposed
Bid Borrowing that such Bank does not intend to make available to
the Agent its portion, if any, of the Bid Borrowing to be made on
such date, the Agent may assume that such Bank has made such
amount available to the Agent on such date of Bid Borrowing, and
the Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to
the Company a corresponding amount.
Section 2.4. Bid Notes. The Bid Loans of each Bank
shall be evidenced by a Bid Note payable to the order of such
Bank in the original principal amount of the Aggregate
Commitment. Each Bank shall record in its records, or at its
option on the schedule attached to its Bid Note, the date and
amount of each Bid Loan made by such Bank, each repayment
thereof, and the dates on which the Loan Period for such Loan
shall begin and end. The aggregate unpaid principal amount so
recorded shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on such Note. The failure to
so record or any error in so recording any such amount or any
payment thereof shall not, however, limit or otherwise affect the
obligations of the Company hereunder or under such Bid Note to
repay the principal amount of each Bid Loan together with all
interest accruing thereon.
<PAGE>
SECTION 3. COMMITTED LOANS AND NOTES.
Section 3.1. Agreement to Make Committed Loans. On the
terms and subject to the conditions of this Agreement, each Bank,
severally and for itself alone, agrees to make Loans (herein
collectively called "Committed Loans" and individually each
called a "Committed Loan") on a revolving basis from time to time
before such Bank's Termination Date in such Bank's Percentage of
such aggregate amounts as the Company may from time to time
request as provided in Section 3.2; provided that (a) the
aggregate principal amount of all outstanding Committed Loans of
any Bank shall not at any time exceed the amount set forth
opposite such Bank's name on Schedule I (as reduced in accordance
with Section 5.1, 13.4 or 13.8) and (b) the aggregate principal
amount of all outstanding Committed Loans of all Banks plus the
aggregate principal amount of all outstanding Bid Loans of all
Banks shall not at any time exceed the then Aggregate Commitment.
Section 3.2. Procedure for Committed Loans.
(a) Committed Loan Requests. The Company shall give
the Agent irrevocable telephonic notice at the Notice Office
(promptly confirmed in writing on the same day), not later than
10:30 a.m., New York City time, (i) at least three Business Days
prior to the Funding Date in the case of LIBOR Rate Loans,
(ii) at least two Business Days prior to the Funding Date in the
case of CD Rate Loans or (iii) on the Funding Date in the case of
Base Rate Loans, of each requested Committed Loan, and the Agent
shall promptly advise each Bank thereof and, in the case of a
LIBOR Rate Loan or a CD Rate Loan, request each Reference Bank to
notify the Agent of its applicable rate (as contemplated in the
definitions of Base LIBOR and CD Base Rate). Each such notice to
the Agent (a "Committed Loan Request") shall be substantially in
the form of Exhibit C and shall specify (i) the Funding Date
(which shall be a Business Day), (ii) the aggregate amount of the
Loans requested (in an amount permitted under clause (b) below),
(iii) whether each Loan shall be a LIBOR Rate Loan, a CD Rate
Loan or a Base Rate Loan and (iv) except for a Base Rate Loan,
the Loan Period therefor (subject to the limitations set forth in
the definition of Loan Period).
(b) Amount and Increments of Committed Loans. Each
Committed Loan Request shall contemplate Committed Loans in a
minimum aggregate amount of $25,000,000 or a higher integral
multiple of $1,000,000, not to exceed in the aggregate (for all
requested Committed Loans) the Available Commitment.
<PAGE>
(c) Funding of Committed Loans.
(i) Not later than 1:30 p.m., New York City time, on
the Funding Date of a Committed Loan, each Bank shall,
subject to this Section 3.2(c), provide the Agent at its
Notice Office with immediately available funds covering such
Bank's Committed Loan (provided that a Bank's obligation to
provide funds to the Agent shall be deemed satisfied by such
Bank's delivery to the Agent at its Notice Office not later
than 1:30 p.m., New York City time, of a federal reserve
wire confirmation number covering the proceeds of such
Bank's Committed Loan) and the Agent shall pay over such
funds to the Company not later than 2:00 p.m., New York City
time, on such day if the Agent shall have received the
documents required under Section 10 with respect to such
Loan and the other conditions precedent to the making of
such Loan shall have been satisfied not later than
10:00 a.m., New York City time, on such day. If the Agent
does not receive such documents or such other conditions
precedent have not been satisfied prior to such time, then
(A) the Agent shall not pay over such funds to the Company,
(B) the Company's Committed Loan Request related to such
Loan shall be deemed cancelled in its entirety, (C) in the
case of Committed Loan Requests relative to LIBOR Rate Loans
and CD Rate Loans, the Company shall be liable to each Bank
in accordance with Section 7.4(b) and (D) the Agent shall
return the amount previously provided to the Agent by each
Bank on the next following Business Day.
(ii) The Company agrees, notwithstanding its previous
delivery of any documents required under Section 10 with
respect to a particular Loan, immediately to notify the
Agent of any failure by it to satisfy the conditions
precedent to the making of such Loan. The Agent shall be
entitled to assume, after it has received each of the
documents required under Section 10 with respect to a
particular Loan, that each of the conditions precedent to
the making of such Loan has been satisfied absent actual
knowledge to the contrary received by the Agent prior to the
time of the receipt of such documents. Unless the Agent
shall have notified the Banks prior to 10:30 a.m., New York
City time, on the Funding Date of any Loan that the Agent
has actual knowledge that the conditions precedent to the
making of such Loan have not been satisfied, the Banks shall
be entitled to assume that such conditions precedent have
been satisfied.
(d) Repayment of Loans. If any Bank is to make a
Committed Loan hereunder on a day on which the Company is to
repay (or has elected to prepay, pursuant to Section 5.2) all or
any part of any outstanding Loan held by such Bank, the proceeds
of such new Committed Loan shall be applied to make such
repayment and only an amount equal to the positive difference, if
any, between the amount being borrowed and the amount being
repaid shall be requested by the Agent to be made available by
such Bank to the Agent as provided in Section 3.2(c).
<PAGE>
Section 3.3. Maturity of Committed Loans. Except for
a Base Rate Loan, which shall mature on the Termination Date, a
Committed Loan made by a Bank shall mature on the last day of the
Loan Period applicable to such Committed Loan, but in no event
later than the Termination Date for such Bank.
Section 3.4. Committed Notes. The Committed Loans of
each Bank shall be evidenced by a Committed Note payable to the
order of such Bank in the original principal amount of such
Bank's Commitment. Each Bank shall record in its records, or at
its option on the schedule attached to its Committed Note, the
date and amount of each Loan made by such Bank thereunder, each
repayment or prepayment thereof, and, if applicable, the dates on
which the Loan Period for such Loan shall begin and end. The
aggregate unpaid principal amount so recorded shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on
such Note. The failure to so record or any error in so recording
any such amount or any payment thereof shall not, however, limit
or otherwise affect the obligations of the Company hereunder or
under such Committed Note to repay the principal amount of each
Committed Loan together with all interest accruing thereon.
SECTION 4. INTEREST AND FEES.
Section 4.1. Interest Rates. The Company hereby
promises to pay interest on the unpaid principal amount of each
Loan for the period commencing on the Funding Date until such
Loan is paid in full, as follows:
(a) if such Loan is a Bid Loan, at a rate per annum
equal to the Absolute Rate or the LIBOR Rate, as applicable,
offered by the applicable Bank and accepted by the Company
for such Bid Loan;
(b) if such Loan is a Base Rate Loan, at a rate per
annum equal to the Base Rate from time to time in effect;
(c) if such Loan is a Committed Loan that is a LIBOR
Rate Loan, at a rate per annum equal to the LIBOR Rate
applicable to the Loan Period for such Loan; and
(d) if such Loan is a CD Rate Loan, at a rate per
annum equal to the CD Rate applicable to the Loan Period for
such Loan;
provided, however, that after the maturity of any Loan (whether
by acceleration or otherwise), such Loan shall bear interest on
the unpaid principal amount thereof at a rate per annum
(calculated on the basis of a 360-day year for the actual number
of days involved) equal to the Base Rate from time to time in
effect (but not less than the interest rate in effect for such
Loan immediately prior to maturity) plus 1% per annum.
<PAGE>
Section 4.2. Interest Payment Dates. Except for Base
Rate Loans, as to which accrued interest shall be payable on the
last day of each calendar quarter and on the Termination Date,
accrued interest on each Loan shall be payable in arrears on the
last day of the Loan Period therefor and (i) with respect to each
LIBOR Rate Loan with a Loan Period of six months, on the day that
is three months after the first day of such Loan Period (or, if
there is no day in such third month numerically corresponding to
such first day of the Loan Period, on the last Business Day of
such month), (ii) with respect to each CD Rate Loan with a Loan
Period of 180 days, on the day that is 90 days after the first
day of such Loan Period and (iii) with respect to each Absolute
Rate Loan with a Loan Period exceeding 90 days, on the day that
is 90 days after the first day of such Loan Period. After the
maturity of any Loan, accrued interest on such Loan shall be
payable on demand. If any interest payment date falls on a day
that is not a Business Day, such interest payment date shall be
postponed to the next succeeding Business Day and the interest
paid shall cover the period of postponement (except that if the
Loan is a LIBOR Rate Loan and the next succeeding Business Day
falls in the next succeeding calendar month, such interest
payment date shall be the immediately preceding Business Day).
Section 4.3. Setting and Notice of Committed Loan
Rates. The applicable interest rate for each Committed Loan
hereunder shall be determined by the Agent and notice thereof
shall be given by the Agent promptly to the Company and to each
Bank. Each determination of the applicable interest rate by the
Agent shall be conclusive and binding upon the parties hereto in
the absence of demonstrable error.
In the case of LIBOR Rate Loans and CD Rate Loans, each
Reference Bank agrees to use its best efforts to notify the Agent
in a timely fashion of its applicable rate after the Agent's
request therefor under Section 2.2(a) and Section 3.2(a) (as
contemplated in the definitions of Base LIBOR and CD Base Rate).
If as to any Loan Period any one or more of the Reference Banks
is unable or for any reason fails to notify the Agent of its
applicable rate by 11:30 a.m., New York City time, two Business
Days before the Funding Date with respect to a LIBOR Rate Loan or
by 10:30 a.m., New York City time, on the Funding Date with
respect to a CD Rate Loan, then the applicable LIBOR Rate or CD
Rate, as the case may be, shall be determined on the basis of the
rate or rates of which the Agent is given notice by the remaining
Reference Bank or Banks by such time. If none of the Reference
Banks notifies the Agent of the applicable rate prior to
11:30 a.m., New York City time, two Business Days before the
Funding Date with respect to the LIBOR Rate or by 10:30 a.m.,
New York City time, on the Funding Date with respect to the CD
Rate, then (i) the Agent shall promptly notify the other parties
thereof and (ii) at the option of the Company the Committed Loan
Request delivered by the Company pursuant to Section 3.2(a) with
respect to such Funding Date shall be cancelled or shall be
deemed to have specified a Base Rate Loan.
The Agent shall, upon written request of the Company or
any Bank, deliver to the Company or such Bank a statement showing
the computations used by the Agent in determining the interest
rate applicable to any LIBOR Rate Loan or CD Rate Loan.
<PAGE>
Section 4.4. Facility Fee. The Company agrees to pay
to the Agent for the accounts of the Banks pro rata in accordance
with their respective Percentages an annual facility fee computed
by multiplying the average daily amount of the Aggregate
Commitment (whether used or unused) by the applicable percentage
determined with respect to such facility fee in accordance with
Schedule II hereto. Such fee shall be payable quarterly in
arrears on the last Business Day of March, June, September and
December of each year (beginning with the last Business Day of
March, 1995) until the Commitments have expired or have been
terminated and on the date of such expiration or termination
(and, in the case of any Terminating Bank, such Bank's
Termination Date), in each case for the period then ending for
which such facility fee has not previously been paid.
Section 4.5. Agent's Fees. The Company agrees
promptly to pay to the Agent such fees as may be agreed from time
to time by the Company and the Agent.
Section 4.6. Utilization Fee. The Company agrees to
pay to the Agent for the accounts of the Banks pro rata in
accordance with their respective Percentages an annual
utilization fee computed by multiplying the average daily amount
of Committed Loans outstanding on each day by the applicable
percentage specified with respect to such utilization fee on
Schedule II hereto for each day on which the ratio (expressed as
a percentage) of the aggregate principal amount of Committed
Loans outstanding to the then effective Aggregate Commitment
exceeds 50%. Such utilization fee shall be payable quarterly in
arrears on the last Business Day of March, June, September and
December of each year (beginning with the last Business Day of
March, 1995) until all Commitments have expired or have been
terminated and on the date of such expiration or termination
(and, in the case of any Terminating Bank, such Bank's
Termination Date), in each case for the period then ending for
which such utilization fee has not previously been paid.
Section 4.7. Computation of Interest and Fees.
Interest on LIBOR Rate Loans, CD Rate Loans and Base Rate Loans
where the Base Rate is calculated in reference to the Federal
Funds Rate, and facility and utilization fees shall be computed
for the actual number of days elapsed on the basis of a 360-day
year; interest on Base Rate Loans where the Base Rate is
calculated in reference to the Prime Rate shall be computed for
the actual number of days elapsed on the basis of a 365/366 day
year, as the case may be. The interest rate applicable to each
LIBOR Rate Loan, CD Rate Loan and Base Rate Loan, and (to the
extent applicable) after the maturity of any other type of Loan,
the interest rate applicable to such Loan, shall change
simultaneously with each change in the LIBOR Rate, the CD Rate or
the Base Rate, as applicable.
<PAGE>
SECTION 5. REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENTS.
Section 5.1. Voluntary Termination or Reduction of the
Commitments. The Company may at any time on at least 5 days'
prior irrevocable notice received by the Agent (which shall
promptly on the same day or on the next Business Day advise each
Bank thereof) permanently reduce the amount of the Commitments
(such reduction to be pro rata among the Banks according to their
respective Percentages) to an amount not less than the aggregate
principal amount of all outstanding Loans. Any such reduction
shall be in the amount of $5,000,000 or an integral multiple
thereof. Concurrently with any such reduction, the Company shall
prepay the principal of any Committed Loans outstanding to the
extent that the aggregate amount of such Loans outstanding shall
then exceed the Aggregate Commitment, as so reduced. The Company
may from time to time on like irrevocable notice terminate the
Commitments upon payment in full of all Loans, all interest
accrued thereon, all fees and all other obligations of the
Company hereunder; provided, however, that the Company may not at
any time terminate the Commitments if any Bid Loan is outstanding
(unless the holder of each such outstanding Bid Loan has given
its prior written consent to the concurrent repayment of such Bid
Loan).
Section 5.2. Voluntary Prepayments. The Company may
voluntarily prepay Loans (other than Bid Loans, which may only be
prepaid with the prior written consent of the holder thereof)
without premium or penalty, except as may be required pursuant to
subsection (e) below, in whole or in part, provided that (a) each
prepayment shall be in an aggregate principal amount of
$10,000,000 or an integral multiple of $1,000,000 in excess
thereof, (b) except for the prepayment of the aggregate amount of
all Loans outstanding, no such prepayment shall result in there
being less than $10,000,000 in Loans outstanding in the
aggregate, (c) the Company shall give the Agent at its Notice
Office (which shall promptly advise each Bank) not less than
three Business Days' prior notice thereof specifying the Loans to
be prepaid and the date and amount of prepayment, (d) any
prepayment of principal of any Loan shall include accrued
interest to the date of prepayment on the principal amount being
prepaid and (e) any prepayment of a LIBOR Rate Loan or a CD Rate
Loan shall be subject to the provisions of Section 7.4.
SECTION 6. MAKING AND PRORATION OF PAYMENTS;
SET-OFF; TAXES.
Section 6.1. Making of Payments. Except as provided
in Section 3.2(d) all payments (including those made pursuant to
Sections 5.1 and 5.2) of principal of, or interest on, the Loans
and all payments of fees shall be made by the Company to the
Agent in immediately available funds at its Payment Office not
later than 12:00 Noon, New York City time, on the date due; and
funds received after that hour shall be deemed to have been
received by the Agent on the next following Business Day. The
Agent shall promptly remit to each Bank or other holder of a Note
its share (if any) of each such payment. All payments under
Section 7 shall be made by the Company directly to the Persons
entitled thereto.
<PAGE>
Section 6.2. Pro Rata Treatment; Sharing.
(a) Except as required pursuant to Section 7 or
Section 13.8, each payment or prepayment of principal of any
Committed Loans, each payment of interest on the Committed Loans,
and each payment of the facility fee or the utilization fee shall
be allocated pro rata among the Banks in accordance with their
respective Percentages. Each payment of principal of any Bid
Borrowing shall be allocated pro rata among the Banks
participating in such Bid Borrowing in accordance with the
respective principal amounts of their outstanding Bid Loans
comprising such Bid Borrowing. Each payment of interest on any
Bid Borrowing shall be allocated pro rata among the Banks
participating in such Bid Borrowing in accordance with the
respective amounts of accrued and unpaid interest on their
outstanding Bid Loans comprising such Bid Borrowing.
(b) If any Bank or other holder of a Committed Loan
shall obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise) on account of
principal of, interest on or fees or other amounts with respect
to any Committed Loan in excess of the share of payments and
other recoveries (exclusive of payments or recoveries under
Section 7 or pursuant to Section 13.8) such Bank or other holder
would have received if such payment had been distributed pursuant
to the provisions of Section 6.2(a), such Bank or other holder
shall purchase from the other Banks or holders, in a manner to be
specified by the Agent, such participations in the Committed
Loans held by them as shall be necessary so that all such
payments of principal and interest with respect to the Committed
Loans shall be shared by the Banks and other holders pro rata in
accordance with their respective Percentages; provided, however,
that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank or
holder, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery, but without interest.
(c) If any Bank or other holder of a Bid Loan shall
obtain any payment or other recovery (whether voluntary,
involuntary, by application of offset or otherwise) on account of
principal of, interest on or fees or other amounts with respect
to any Bid Loan in excess of the share of payments and other
recoveries (exclusive of payments or recoveries pursuant to
Section 7 or Section 13.8) such Bank or other holder would have
received if such payment had been distributed pursuant to the
provisions of Section 6.2(a), such Bank or other holder shall
purchase from the other Banks or holders participating in such
Bid Borrowing, in a manner to be specified by the Agent, such
participations in the Bid Loans held by them as shall be
necessary so that all such payments of principal and interest
with respect to the Bid Loans shall be shared by the Banks and
other holders participating in such Bid Borrowing in a manner
consistent with Section 6.2(a); provided, however, that if all or
any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank or holder, the purchase shall
be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
<PAGE>
Section 6.3. Set-off. The Company agrees that the
Agent, each holder of a Note, each Assignee and each Participant
has all rights of set-off and bankers' lien provided by
applicable law, and the Company further agrees that at any time
(i) any amount owing by the Company under this Agreement is due
to any such Person or (ii) any Event of Default exists, each such
Person may apply to the payment of any amount payable hereunder
any and all balances, credits, deposits, accounts or moneys of
the Company then or thereafter with such Person.
Section 6.4. Taxes, etc. (a) All payments made by the
Company to the Agent, any Bank, any Assignee or any Participant
under this Agreement and the Notes shall be made without any set-
off or counterclaim, and free and clear of and without deduction
for or on account of any present or future Taxes now or hereafter
imposed (except to the extent that such withholding or deduction
is compelled by law or results from the breach, by the recipient
of a payment, of its agreement contained in Section 6.4(b) or
would not be required if the representation or warranty contained
in Section 6.4(b) were true), excluding any Taxes generally
assessed on the overall net income of the Agent, any Bank, any
Assignee or any Participant, as the case may be, by the
government or other authority of the country in which the Agent,
such Bank, such Assignee or such Participant is incorporated or
in which its Funding Office or the office through which it is
acting is located. If the Company is compelled by law to make
any such deductions or withholdings it will:
(i) pay to the relevant authorities the full amount
required to be so withheld or deducted;
(ii) except to the extent that such withholding or
deduction results from the breach by the recipient of a
payment of its agreement contained in Section 6.4(b) or
would not be required if the representation or warranty
contained in Section 6.4(b) were true, pay such additional
amounts as may be necessary in order that the net amount
received by the Agent, each Bank, each Assignee and each
Participant after such deductions or withholdings (including
any required deduction or withholding on such additional
amounts) shall equal the amount such payee would have
received had no such deductions or withholdings been made;
and
<PAGE>
(iii) promptly forward to the Agent (for delivery to
such payee) an official receipt or other documentation
satisfactory to the Agent evidencing such payment to such
authorities.
Moreover, if any Taxes are directly asserted against the Agent,
any Bank, any Assignee or any Participant, such payee may pay
such Taxes and the Company shall promptly pay such additional
amount (including, without limitation, any penalties, interest or
expenses) as may be necessary in order that the net amount
received by such payee after the payment of such Taxes (including
any Taxes on such additional amount) shall equal the amount such
payee would have received had no such Taxes been asserted. For
purposes of this Section 6.4, a distribution hereunder by the
Agent or any Bank to or for the account of any Bank, Assignee or
Participant shall be deemed to be a payment by the Company. The
Company's agreement under this Section 6.4 shall survive
repayment of the Loans, cancellation of the Notes or any
termination of this Agreement.
(b) In consideration of, and as a condition to, the
Company's undertakings in Section 6.4(a), each Bank (other than a
Bank that is organized and existing under the laws of the United
States of America or any State thereof) agrees to execute and
deliver to the Agent at its Payment Office for delivery to the
Company, before the first scheduled payment date in each year,
two United States Internal Revenue Service Forms 1001 or 4224, or
any successor forms, as appropriate, properly completed and
claiming complete exemption from withholding and deduction of
United States federal Taxes. Each Bank represents and warrants
to the Company that, at the date of this Agreement, or at the
time such Bank becomes a Bank hereunder pursuant to
Section 13.4.1, its Funding Office is entitled to receive
payments of principal and interest hereunder without deduction
for or on account of any Taxes imposed by the United States or
any political subdivision thereof.
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS
FOR ABSOLUTE RATE LOANS, LIBOR RATE
LOANS AND CD RATE LOANS.
Section 7.1. Increased Costs. (a) If (i) Regulation D
of the Board of Governors of the Federal Reserve System or
(ii) after the date hereof, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or any Funding Office of such Bank) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency,
<PAGE>
(A) shall subject any Bank (or any Funding Office of
such Bank) to any tax, duty or other charge with respect to
its LIBOR Rate Loans, its CD Rate Loans, its Notes or its
obligation to make LIBOR Rate Loans or CD Rate Loans, or
shall change the basis of taxation of payments to any Bank
(or any Funding Office of such Bank) of the principal of or
interest on its LIBOR Rate Loans, its CD Rate Loans or any
other amounts due under this Agreement in respect of its
LIBOR Rate Loans, its CD Rate Loans or its obligation to
make LIBOR Rate Loans or CD Rate Loans (except for changes
in the rate of tax on the overall net income of such Bank or
its Funding Office imposed by any Governmental Authority of
the country in which such Bank is incorporated or in which
such Bank's Funding Office is located);
(B) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed
by the Board of Governors of the Federal Reserve System, but
excluding any reserve included in the determination of
additional interest pursuant to Section 4.1), special
deposit, assessment (including any assessment for insurance
of deposits) or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
any Bank (or any Funding Office of such Bank); or
(C) shall impose on any Bank (or any Funding Office of
such Bank) any other condition affecting its LIBOR Rate
Loans, its CD Rate Loans, its Notes or its obligation to
make or maintain LIBOR Rate Loans or CD Rate Loans;
and the result of any of the foregoing is to increase the cost to
(or to impose an additional cost on) such Bank (or any Funding
Office of such Bank) of making or maintaining any LIBOR Rate Loan
or CD Rate Loans, or to reduce the amount of any sum received or
receivable by such Bank (or such Bank's Funding Office) under
this Agreement or under its Notes with respect thereto, then
within 10 days after demand by such Bank (which demand shall be
accompanied by a statement setting forth the basis of such
demand), the Company shall pay directly to such Bank such
additional amount or amounts as will compensate such Bank for
such increased cost or such reduction (without duplication of any
amounts which have been reimbursed pursuant to Section 6.4).
<PAGE>
(b) If, after the date hereof, any Bank shall
determine that the adoption, effectiveness or phase-in of any
applicable law, rule, guideline or regulation regarding capital
adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or any Funding Office of such Bank or any Person
controlling such Bank) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of
such Bank or any Person controlling such Bank as a consequence of
its obligations hereunder to a level below that which such Bank
or such controlling Person could have achieved but for such
adoption, change or compliance (taking into consideration such
Bank's or such controlling Person's policies with respect to
capital adequacy), then, from time to time, within 10 days after
demand by such Bank (which demand shall be accompanied by a
statement setting forth the basis of such demand), the Company
shall pay directly to such Bank such additional amount or amounts
as will compensate such Bank or such controlling Person for such
reduction.
(c) Each Bank shall promptly notify the Company and
the Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation
pursuant to this Section 7.1 and will designate a different
Funding Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in such
Bank's sole judgment, be otherwise disadvantageous to such Bank.
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair. If with respect to the Loan Period for any
LIBOR Rate Loan or CD Rate Loan:
(a) the Agent is advised by two or more Reference
Banks that deposits in Dollars (in the applicable amounts)
are not being offered to such Reference Banks in the
relevant market for such Loan Period, or the Agent otherwise
determines (which determination shall be binding and
conclusive on all parties) that, by reason of circumstances
affecting the LIBOR market or the certificate of deposit
market, adequate and reasonable means do not exist for
ascertaining the applicable LIBOR Rate or CD Rate; or
(b) the Required Banks advise the Agent that the LIBOR
Rate or CD Rate, as the case may be, as determined by the
Agent will not adequately and fairly reflect the cost to
such Required Banks of maintaining or funding LIBOR Rate
Loans or CD Rate Loans for such Loan Period, or that the
making or funding of LIBOR Rate Loans or CD Rate Loans has
become impracticable as a result of an event occurring after
the date of this Agreement which in such Required Banks'
opinion materially affects LIBOR Rate Loans or CD Rate
Loans;
then (i) the Agent shall promptly notify the other parties
thereof and (ii) so long as such circumstances shall continue, no
Bank shall be under any obligation to make any LIBOR Rate Loan or
CD Rate Loan, as the case may be.
<PAGE>
Section 7.3. Changes in Law Rendering Certain Loans
Unlawful. In the event that any change in (including the
adoption of any new) applicable laws or regulations, or in the
interpretation of applicable laws or regulations by any
Governmental Authority or other regulatory body charged with the
administration thereof, should make it (or in the good faith
judgment of such Bank raise a substantial question as to whether
it is) unlawful for a Bank to make, maintain or fund any LIBOR
Rate Loan, then (a) such Bank shall promptly notify each of the
other parties hereto, (b) upon the effectiveness of such event
and so long as such unlawfulness shall continue, the obligation
of such Bank to make LIBOR Rate Loans shall be suspended and any
request by the Company for LIBOR Rate Loans shall, as to such
Bank, be deemed to be a request for a Base Rate Loan, if said
LIBOR Rate Loan is a Committed Loan, or an Absolute Rate Loan if
said LIBOR Rate Loan is a Bid Loan and (c) on the last day of the
current Loan Period for such Bank's LIBOR Rate Loans (or, in any
event, if such Bank so requests on such earlier date as may be
required by the relevant law, regulation or interpretation) such
Bank's Loans which are LIBOR Rate Loans shall cease to be
maintained as LIBOR Rate Loans and shall thereafter bear interest
at a floating rate per annum equal to the Base Rate, if said
LIBOR Rate Loan is a Committed Loan, or at an Absolute Rate,
which Absolute Rate shall be the LIBOR Rate in effect during such
Loan Period, if said LIBOR Rate Loan is a Bid Loan. If at any
time the event giving rise to such unlawfulness shall no longer
exist, then such Bank shall promptly notify the Company and the
Agent.
Section 7.4. Funding Losses. The Company hereby
agrees that upon demand by any Bank (which demand shall be
accompanied by a statement setting forth the basis for the
calculations of the amount being claimed) the Company will
indemnify such Bank against any net loss or expense which such
Bank may sustain or incur (including, without limitation, any net
loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to
fund or maintain any LIBOR Rate Loan, CD Rate Loan or Absolute
Rate Loan), as reasonably determined by such Bank, as a result of
(a) any payment or mandatory or voluntary prepayment (including,
without limitation, any payment pursuant to Section 7.3 or any
payment resulting from acceleration) of any LIBOR Rate Loan, CD
Rate Loan or Absolute Rate Loan of such Bank on a date other than
the last day of the Loan Period for such Loan or (b) any failure
of the Company to borrow any Loans on the originally scheduled
Funding Date specified therefor pursuant to this Agreement
(including, without limitation, any failure to borrow resulting
from any failure to satisfy the conditions precedent to such
borrowing). For this purpose, all notices to the Agent pursuant
to this Agreement (including, without limitation, all acceptances
of Bids) shall be deemed to be irrevocable.
<PAGE>
Section 7.5. Discretion of Banks as to Manner of
Funding. Notwithstanding any provision of this Agreement to the
contrary (but subject to Section 7.1(c)), each Bank shall be
entitled to fund and maintain its funding of all or any part of
its Loans in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all
determinations hereunder shall be made as if such Bank had
actually funded and maintained each LIBOR Rate Loan, CD Rate Loan
or Absolute Rate Loan during the Loan Period for such Loan
through the purchase of deposits having a maturity corresponding
to such Loan Period and bearing an interest rate equal to the
rate borne by such Loan for such Loan Period.
Section 7.6. Conclusiveness of Statements; Survival of
Provisions. Determinations and statements of any Bank pursuant
to this Section 7 shall be conclusive absent demonstrable error,
and each Bank may use reasonable averaging and attribution
methods in determining compensation pursuant to Section 7.1 or
7.4. The provisions of this Section 7 shall survive termination
of this Agreement and payment of the Notes.
SECTION 8. REPRESENTATIONS AND WARRANTIES.
To induce the Banks to enter into this Agreement and to
make Loans hereunder, the Company hereby makes the following
representations and warranties to the Agent and the Banks, which
representations and warranties shall survive the execution and
delivery of this Agreement and the Notes and the disbursement of
the initial Loans hereunder:
Section 8.1. Organization, etc. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of California; each corporate
Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation; each other Subsidiary (if any) is an entity duly
organized and validly existing under the laws of the jurisdiction
of its organization; and each of the Company and each Subsidiary
has the power to own its property and to carry on its business as
now being conducted and is duly qualified and in good standing as
a foreign corporation or other entity authorized to do business
in each jurisdiction where, because of the nature of its
activities or properties, such qualification is required, except
where the failure to be so qualified or in good standing could
not reasonably be expected to have a Material Adverse Effect.
<PAGE>
Section 8.2. Authorization; Consents; No Conflict.
The execution and delivery by the Company of this Agreement and
the Notes, the borrowings hereunder and the performance by the
Company of its obligations under this Agreement and the Notes
(a) are within the corporate powers of the Company, (b) have been
duly authorized by all necessary corporate action on the part of
the Company, (c) have received all necessary approvals,
authorizations, consents, registrations, notices, exemptions and
licenses (if any shall be required) from Governmental Authorities
and other Persons, except for any such approvals, authorizations,
consents, registrations, notices, exemptions or licenses non-
receipt of which could not reasonably be expected to have a
Material Adverse Effect, (d) do not and will not contravene or
conflict with any provision of (i) law, (ii) any judgment, decree
or order to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary is bound, (iii) the charter,
by-laws or other organizational documents of the Company or any
Subsidiary or (iv) any provision of any agreement or instrument
binding on the Company or any Subsidiary, or any agreement or
instrument of which the Company is aware affecting the properties
of the Company or any Subsidiary, except with respect to (i),
(ii) and (iv) above, for any such contravention or conflict which
could not reasonably be expected to have a Material Adverse
Effect and (e) do not and will not result in or require the
creation or imposition of any Lien on any of the Company's or its
Subsidiaries' properties.
Section 8.3. Validity and Binding Nature. This
Agreement is, and the Notes when duly executed and delivered will
be, legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their
respective 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.
Section 8.4. Financial Statements. The Company's
audited consolidated financial statements as at December 31,
1993, and unaudited consolidated financial statements as at
September 30, 1994, a copy of each of which has been furnished to
each Bank, have been prepared in conformity with generally
accepted accounting principles in the United States applied on a
basis consistent with that of the preceding fiscal year and
fairly present the financial condition of the Company and its
Subsidiaries as at such dates and the results of their operations
for the periods then ended, and since the date of such audited
consolidated financial statements there has been no material
adverse change in the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries taken
as a whole.
Section 8.5. Litigation and Contingent Liabilities.
All Litigation Actions, taken as a whole, could not reasonably be
expected to have a Material Adverse Effect. Other than any
liability incident to such Litigation Actions or provided for or
disclosed in the financial statements referred to in Section 8.4,
neither the Company nor any Subsidiary has any contingent
liabilities which are material to the business, credit,
operations, financial condition or prospects of the Company and
its Subsidiaries taken as a whole.
<PAGE>
Section 8.6. Employee Benefit Plans. Each employee
benefit plan (as defined in Section 3(3) of ERISA) as to which
the Company, or any Subsidiary or any ERISA Affiliate may have
any liability complies in all material respects with all
applicable requirements of law and regulations. During the
twelve-consecutive-month period prior to the execution and
delivery of this Agreement, (i) no steps have been taken to
terminate any Plan and no contribution failure has occurred with
respect to any Plan sufficient to give rise to a lien under
section 302(f) of ERISA, (ii) no Reportable Event has occurred
with respect to any Plan and (iii) neither the Company nor any
ERISA Affiliate has either withdrawn or instituted steps to
withdraw from any Multiemployer Plan, except in any such case for
actions which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect. No
condition exists or event or transaction has occurred in
connection with any Plan which could reasonably be expected to
result in the incurrence by the Company, any Subsidiary or any
ERISA Affiliate of any material liability, fine or penalty
(imposed by Section 4975 of the Code or Section 502(i) of ERISA
or otherwise). Neither the Company nor any ERISA Affiliate is a
member of, or contributes to, any Multiemployer Plan. Neither
the Company nor any ERISA Affiliate has any contingent liability
with respect to any post retirement benefit under an employee
welfare benefit plan (as defined in section 3(i) of ERISA), other
than liability for continuation coverage described in Part 6 of
Title I of ERISA.
Section 8.7. Investment Company Act. The Company is
not an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended.
Section 8.8. Public Utility Holding Company Act.
Neither the Company nor any Subsidiary is a "holding company", or
a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 8.9. Regulation U. Neither the Company nor
any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve
System).
Section 8.10. Information.
(a) All information with respect to the Company
contained in the December 20, 1994 memorandum furnished by
the Agent to the Banks and all information heretofore
furnished by the Company to the Agent or any Bank is, to the
best of the Company's knowledge after due inquiry, true and
accurate in every material respect as of the date thereof,
and none of such information contains any material
misstatement of fact or omits to state any material fact
necessary to make such information not misleading.
<PAGE>
(b) All information furnished by the Company to the
Agent or any Bank on and after the date hereof shall be, to
the best of the Company's knowledge after due inquiry, true
and accurate in every material respect as of the date of
such information, and none of such information shall contain
any material misstatement of fact or shall omit to state any
material fact necessary to make such information not
misleading.
Section 8.11. Compliance with Applicable Laws, etc.
The Company and its Subsidiaries are in material compliance with
the requirements of all applicable laws, rules, regulations, and
orders of all Governmental Authorities (including, without
limitation, all applicable environmental laws). Neither the
Company nor any Subsidiary is in default under any agreement or
instrument to which the Company or such Subsidiary is a party or
by which it or any of its properties or assets is bound, which
default could reasonably be expected to have a Material Adverse
Effect on the business, credit, operations, financial condition
or prospects of the Company and its Subsidiaries taken as a
whole. No Event of Default or Unmatured Event of Default has
occurred and is continuing.
Section 8.12. Insurance. Each of the Company and each
Subsidiary maintains, or, in the case of any property owned by
the Company or any Subsidiary and leased to lessees, has caused
such lessees to maintain, insurance with financially sound and
reputable insurers to such extent and against such hazards and
liabilities as is commonly maintained, or caused to be
maintained, as the case may be, by companies similarly situated.
Section 8.13. Taxes. Each of the Company and each
Subsidiary has filed all tax returns which are required to have
been filed and has paid, or made adequate provisions for the
payment of, all of its Taxes which are due and payable, except
such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other
appropriate provisions as may be required by generally accepted
accounting principles have been established and except where
failure to pay such Taxes, individually or in the aggregate,
cannot reasonably be expected to have a Material Adverse Effect.
Section 8.14. Use of Proceeds. The proceeds of the
Loans will be used by the Company to support the Company's
commercial paper program and for other general corporate
purposes.
Section 8.15. Pari Passu. All obligations and
liabilities of the Company hereunder shall rank at least equally
and ratably (pari passu) in priority with all other
unsubordinated, unsecured obligations of the Company to any other
creditor.
<PAGE>
Section 8.16. Ownership and Liens. Each of the
Company and each Subsidiary has title to, or valid leasehold
interests in, all of its properties and assets, real and
personal, including the properties and assets, and leasehold
interests reflected in the financial statements referred to in
Section 8.4 (other than any properties or assets disposed of in
the ordinary course of business) other than such imperfections in
title or leasehold interests which could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, and
none of the properties and assets owned by the Company or any of
its Subsidiaries and none of its leasehold interests is subject
to any Lien, except as disclosed in such financial statements or
as may be permitted under this Agreement.
SECTION 9. COVENANTS.
Until the expiration or termination of the Commitments,
and thereafter until all obligations of the Company hereunder and
under the Notes are paid in full, the Company agrees that, unless
at any time the Required Banks shall otherwise expressly consent
in writing, it will:
Section 9.1. Reports, Certificates and Other
Information. Furnish to the Agent with sufficient copies for
each Bank which the Agent shall promptly furnish to each Bank:
9.1.1. Audited Financial Statements. As soon as
available, and in any event within 95 days after each fiscal
year of the Company, a copy of the audited financial
statements and annual audit report of the Company and its
Subsidiaries for such fiscal year prepared on a consolidated
basis and in conformity with generally accepted accounting
principles in the United States and certified by Ernst &
Young or by another independent certified public accountant
of recognized national standing selected by the Company and
satisfactory to the Required Banks.
9.1.2. Interim Reports. As soon as available, and in
any event within 50 days after each quarter (except the last
quarter) of each fiscal year of the Company, a copy of the
unaudited financial statements of the Company and its
Subsidiaries for such quarter prepared in a manner
consistent with the audited financial statements referred to
in Section 9.1.1, signed by the Company's chief financial
officer and consisting of at least a balance sheet as at the
close of such quarter and statements of earnings and cash
flows for such quarter and for the period from the beginning
of such fiscal year to the close of such quarter.
9.1.3. Certificates. Contemporaneously with the
furnishing of a copy of each annual audit report and of each
set of quarterly statements provided for in this
Section 9.1, a certificate of the Company dated the date of
delivery of such annual report or such quarterly statements
and signed by the Company's chief financial officer, to the
effect that no Event of Default or Unmatured Event of
Default has occurred and is continuing, or, if there is any
such event, describing it and the steps, if any, being taken
to cure it and containing a computation of, and showing
compliance with, each of the financial ratios and
restrictions contained in this Section 9.
<PAGE>
9.1.4. Certain Notices. Forthwith upon learning of
the occurrence of any of the following, written notice
thereof, describing the same and the steps being taken by
the Company or the Subsidiary affected with respect thereto:
(i) the occurrence of an Event of Default or an
Unmatured Event of Default;
(ii) the institution of any Litigation Action,
provided that the Company need not give notice of any
new Litigation Action unless such Litigation Action,
together with all other pending Litigation Actions,
could, if adversely determined, reasonably be expected
to have a Material Adverse Effect;
(iii) the entry of any judgment or decree against
the Company or any Subsidiary if the aggregate amount
of all judgments and decrees then outstanding against
the Company and all Subsidiaries exceeds $10,000,000
after deducting (i) the amount with respect to which
the Company or any Subsidiary is insured and with
respect to which the insurer has not denied coverage in
writing and (ii) the amount for which the Company or
any Subsidiary is otherwise indemnified if the terms of
such indemnification are satisfactory to the Agent and
the Required Banks;
(iv) the occurrence of a Reportable Event with
respect to any Plan; the institution of any steps by
the Company, any ERISA Affiliate, the PBGC or any other
Person to terminate any Plan; the institution of any
steps by the Company or any ERISA Affiliate to withdraw
from any Plan; the incurrence of any material increase
in the contingent liability of the Company or any
Subsidiary with respect to any post-retirement welfare
benefits; or the failure of the Company or any other
Person to make a required contribution to a Plan if
such failure is sufficient to give rise to a lien under
Section 302(f) of ERISA; provided, however, that no
notice shall be required of any of the foregoing unless
the circumstance could reasonably be expected to have a
Material Adverse Effect; or
(v) the occurrence of a material adverse change
in the business, credit, operations, financial
condition or prospects of the Company and its
Subsidiaries taken as a whole.
9.1.5. SEC Filings. Promptly after the filing or
making thereof, copies of all 8-K's (other than 8-K's
relating solely to the issuance by the Company of securities
pursuant to an effective registration statement), 10-Q's,
10-K's, and other material reports or registration
statements filed by the Company or any Subsidiary with or to
any securities exchange or the Securities and Exchange
Commission.
<PAGE>
9.1.6. Other Information. From time to time such
other information concerning the Company and its
Subsidiaries as any Bank or the Agent may reasonably
request.
Section 9.2. Existence. Maintain and preserve, and,
subject to the provisions of clauses (w), (x), (y) and (z) of
Section 9.9, cause each Subsidiary to maintain and preserve, its
respective existence as a corporation or other form of business
organization, as the case may be, and all rights, privileges,
licenses, patents, patent rights, copyrights, trademarks, trade
names, franchises and other authority to the extent material and
necessary for the conduct of its respective business in the
ordinary course as conducted from time to time, except as may be
determined by the Board of Directors of the Company in good faith
to wind up and dissolve a Subsidiary that is not necessary or
material to the business of the Company in its ordinary course as
conducted from time to time.
Section 9.3. Nature of Business. Engage, and cause
each Subsidiary to engage, in substantially the same fields of
business as it is engaged in on the date hereof.
Section 9.4. Books, Records and Access. Maintain, and
cause each Subsidiary to maintain, complete and accurate books
and records in which full and correct entries in conformity with
generally accepted accounting principles in the United States
shall be made of all dealings and transactions in relation to its
respective business and activities. Permit, and cause each
Subsidiary to permit, access by the Agent and each Bank to the
books and records of the Company and such Subsidiary during
normal business hours, and permit, and cause each Subsidiary to
permit, the Agent and each Bank to make copies of such books and
records.
Section 9.5. Insurance. Maintain, and cause each
Subsidiary to maintain, such insurance as is described in
Section 8.12.
Section 9.6. Repair. Maintain, preserve and keep, and
cause each Subsidiary to maintain, preserve and keep, its
material properties in good repair, working order and condition,
and from time to time make, and cause each Subsidiary to make,
all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all
times the efficiency thereof shall be fully preserved and
maintained. In the case of properties leased by the Company or
any Subsidiary to lessees, the Company may satisfy its
obligations related to such properties under the previous
sentence by causing, or by causing each Subsidiary to cause, such
lessees to perform such obligations.
<PAGE>
Section 9.7. Taxes. Pay, and cause each Subsidiary to
pay, when due, all of its Taxes, unless and only to the extent
that the Company or such Subsidiary, as the case may be, is
contesting any such Taxes in good faith and by appropriate
proceedings and the Company or such Subsidiary has set aside on
its books such reserves or other appropriate provisions therefor
as may be required by generally accepted accounting principles in
the United States, except where failure to pay such Taxes,
individually or in the aggregate, cannot reasonably be expected
to have a Material Adverse Effect.
Section 9.8. Compliance. Comply, and cause each
Subsidiary to comply, in all material respects with all statutes
and governmental rules and regulations applicable to it; and use
reasonable efforts to cause, and cause each Subsidiary to use
reasonable efforts to cause, each lessee of property owned by the
Company or any Subsidiary to comply in all material respects with
all statutes, governmental rules and regulations applicable to
such property or applicable to such lessee in connection with its
leasing.
Section 9.9. Merger, Purchase and Sale. Except with
respect to any Permitted Acquisition, not, and not permit any
Subsidiary to:
(a) be a party to any merger or consolidation;
(b) transfer, convey, lease or otherwise dispose of
all or substantially all of the assets of the Company and
its Subsidiaries taken as a whole; or
(c) purchase or otherwise acquire all or substantially
all the assets of any Person unless such purchase or
acquisition is a Permitted Acquisition by the Company.
Notwithstanding the foregoing:
(w) the Company may merge or consolidate with a person
that is a U.S. corporation;
(x) any Wholly-owned Subsidiary may merge into the
Company or into or with any other Wholly-owned Subsidiary;
(y) any Wholly-owned Subsidiary may consolidate with
any other Wholly-owned Subsidiary so long as immediately
thereafter 100% of the voting stock or other ownership
interest of the resulting Person is owned by the Company or
another Wholly-owned Subsidiary; and
(z) any Wholly-owned Subsidiary may sell, transfer,
convey, lease or assign all or a substantial part of its
assets to the Company or another Wholly-owned Subsidiary;
<PAGE>
provided, in each of the cases described in preceding
clauses (w), (x), (y) and (z), that immediately thereafter and
after giving effect thereto no Event of Default or Unmatured
Event of Default shall have occurred and be continuing and in the
case of any (i) merger in which the Company is not the surviving
entity or (ii) consolidation to which the Company is a party, the
surviving entity or the Person formed by such consolidation, as
the case may be, shall assume the Company's obligations and
performance of the Company's covenants under this Agreement in a
writing satisfactory in form and substance to the Agent.
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio. Not permit the ratio of
Consolidated Indebtedness to Consolidated Tangible Net Worth to
exceed 600% on and as of the last day of any fiscal year or 650%
at any other time.
Section 9.11. Fixed Charge Coverage Ratio. Not permit
the Fixed Charge Coverage Ratio on the last day of any quarter of
any fiscal year of the Company to be less than 125%.
Section 9.12. Consolidated Tangible Net Worth. Not
permit the Company's Consolidated Tangible Net Worth to be less
than $1,500,000,000 plus 50% of (a) the cumulative net income
(but without deduction for cumulative net losses) of the Company
and its Subsidiaries determined on a consolidated basis in
accordance with United States generally accepted accounting
principles, (b) the cumulative equity capital contributions from
AIG and (c) the net proceeds from the sale of preferred stock, in
each case for the period from September 30, 1994 to and including
the date of any determination hereunder.
Section 9.13. Restricted Payments. Not declare or pay
any dividends whatsoever or make any distribution on any capital
stock of the Company (except in shares of, or warrants or rights
to subscribe for or purchase shares of, capital stock of the
Company), and not, and not permit any Subsidiary to, make any
payment to acquire or retire shares of capital stock of the
Company, at any time when (i) an Event of Default as described in
Section 11.1 has occurred and is continuing and there are Loans
outstanding hereunder or (ii) an Event of Default as described in
Section 11.1.1 has occurred and is continuing and there are no
Loans outstanding hereunder; provided, however, that
notwithstanding the foregoing, this Section 9.13 shall not
prohibit (x) the payment of dividends on any of the Company's
market auction preferred stock that was sold to the public
pursuant to an effective registration statement under the
Securities Act of 1933 or (y) the payment of dividends within
30 days of the declaration thereof if such declaration was not
prohibited by this Section 9.13.
Section 9.14. Liens. Not, and not permit any
Subsidiary to, create or permit to exist any Lien upon or with
respect to any of its properties or assets of any kind, now owned
or hereafter acquired, or on any income or profits therefrom,
except for
<PAGE>
(a) Liens existing on date hereof that are reflected
in the financial statements of the Company dated prior to
the date hereof;
(b) Liens upon or in any property (other than property
acquired for lease to a Person other than the Company or a
Subsidiary) acquired or held by the Company or a Subsidiary
in the ordinary course of business to secure the purchase
price of such property or to secure Indebtedness permitted
under Section 9.15 incurred or guaranteed by the Company or
any Subsidiary prior to, at the time of, or within 60 days
after the later of the acquisition, completion of
construction or commencement of full operation of such
property, which Indebtedness was incurred or guaranteed
solely for the purpose of financing the acquisition of such
property or construction or improvements thereon; provided,
however, that in the case of any such acquisition,
construction or improvement, the Lien shall not apply to any
property theretofore owned by the Company or a Subsidiary,
other than, in the case of any such construction or
improvement, any theretofore unimproved real property on
which the property so constructed, or the improvement, is
located;
(c) Liens securing the Indebtedness of a Subsidiary
owing to the Company or to a Wholly-owned Subsidiary;
(d) Liens on property of a corporation existing at the
time such corporation is merged into or consolidated with
the Company or a Subsidiary or at the time of a purchase,
lease or other acquisition of the properties of a
corporation or firm as an entirety or substantially as an
entirety by the Company or a Subsidiary, provided that any
such Lien shall not extend to or cover any assets or
properties of the Company or such Subsidiary owned by the
Company or such Subsidiary prior to such merger,
consolidation, purchase, lease or acquisition, unless
otherwise permitted under this Section 9.14;
(e) leases or subleases granted to others in the
ordinary and usual course of the Company's business;
(f) easements, rights of way, restrictions and other
similar charges or encumbrances not interfering with the
ordinary conduct of the business of the Company or any
Subsidiary;
(g) banker's Liens arising, other than by contract, in
the ordinary and usual course of the Company's business;
(h) Liens incurred or deposits made in the ordinary
course of business in connection with surety and appeal
bonds, leases, government contracts, performance and
return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed
money), provided, however, that the obligation so secured is
not overdue or is being contested in good faith and by
appropriate proceedings diligently pursued;
<PAGE>
(i) any replacement or successive replacement in
whole or in part of any Lien referred to in the foregoing
clauses (a) to (h), inclusive, provided, however, that the
principal amount of any Indebtedness secured by the Lien
shall not be increased and the principal repayment schedule
and maturity of such Indebtedness shall not be extended and
(i) such replacement shall be limited to all or a part of
the property which secured the Lien so replaced (plus
improvements and construction on such property) or (ii) if
the property which secured the Lien so replaced has been
destroyed, condemned or damaged and pursuant to the terms of
the Lien other property has been substituted therefor, then
such replacement shall be limited to all or part of such
substituted property;
(j) Liens created by or resulting from any litigation
or other proceeding which is being contested in good faith
by appropriate proceedings, including Liens arising out of
judgments or awards against the Company or any Subsidiary
with respect to which the Company or such Subsidiary is in
good faith prosecuting an appeal or proceedings for review;
or Liens incurred by the Company or any Subsidiary for the
purpose of obtaining a stay or discharge in the course of
any litigation or other proceeding to which the Company or
such Subsidiary is a party;
(k) carrier's, warehouseman's, mechanic's, landlord's
and materialmen's Liens, Liens for Taxes, assessments and
other governmental charges and other similar Liens, in each
case arising in the ordinary course of business, securing
obligations that are not incurred in connection with the
obtaining of any advance or credit and which are either not
overdue or are being contested in good faith and by
appropriate proceedings diligently pursued;
(l) Liens securing Indebtedness of each of the
Company's Wholly-owned Subsidiaries to be incorporated
outside the United States for the purpose of providing
subsidized financing of the acquisition of Airbus Industrie
aircraft, the repayment obligations of which will be
supported by guaranties issued by certain European
government export credit agencies (the European Credit
Agency Export Finance Program or "ECA Program") and a
Company Guaranty and a pledge of the assets of (including
any rights to or interests in any reserve or security
deposit held by) each such Wholly-owned Subsidiary, provided
that such Liens shall encumber only the assets of (including
any rights to or interests in any reserve or security
deposit held by) each such Wholly-owned Subsidiary, and
provided further, that the aggregate amount of Indebtedness
of all such Wholly-owned Subsidiaries secured by Liens does
not at the time exceed $2 billion during the 1995 fiscal
year of the Company and $3 billion thereafter, minus in
either case the amount of outstanding Liens permitted under
Section 9.14(m); and
<PAGE>
(m) other Liens securing Indebtedness of the Company
or any Subsidiary in an aggregate amount which, together
with all other outstanding Indebtedness of the Company and
the Subsidiaries secured by Liens not listed in clauses (a)
through (l) of this Section 9.14, does not at the time
exceed 12.5% of the Consolidated Tangible Net Worth of the
Company as shown on its audited consolidated financial
statements as of the end of the fiscal year preceding the
date of determination minus the amount of outstanding Liens
permitted under Section 9.14(l).
Section 9.15. Leases. Not, and not permit any
Subsidiary to, become obligated, as lessee, under any lease of
real or personal property if at the time of entering into such
lease and after giving effect thereto the aggregate Operating
Lease Rentals would exceed 20% of Consolidated Indebtedness.
Section 9.16. Use of Proceeds. Not permit any
proceeds of the Loans to be used, either directly or indirectly,
(a) for the payment of any dividend or for the
repurchase of any of the Company's equity securities;
(b) for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying any margin stock"
within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System, as amended from time to time;
(c) for the purpose, whether immediate, incidental or
ultimate, of acquiring directly or indirectly any of the
outstanding shares of voting stock of any corporation which
(i) has announced that it will oppose such acquisition or
(ii) has commenced any litigation which alleges that any
such acquisition violates, or will violate, applicable law;
or
(d) for any other purpose except (i) to support the
Company's commercial paper program or (ii) for general
corporate purposes in the ordinary course of business.
Section 9.17. Transactions with Related Parties. Not,
and not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement, including, without limitation, the
purchase, sale, lease or exchange of property or the rendering of
any service, with any Related Party, except in the ordinary
course of and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such
Subsidiary than would be obtained in a comparable arm's-length
transaction with a Person not a Related Party.
Section 9.18. Securitization. Promptly after the
receipt thereof, apply the proceeds from the securitization of
assets (aircraft lease portfolio securitizations), net of
expenses related to any such securitization, to the repayment of
Indebtedness.
<PAGE>
SECTION 10. CONDITIONS TO LENDING.
Section 10.1. Conditions Precedent to All Loans. Each
Bank's obligation to make each Loan is subject to the following
conditions precedent:
10.1.1. No Default. (a) No Event of Default or
Unmatured Event of Default has occurred and is continuing or
will result from the making of such Loan, (b) the
representations and warranties contained in Section 8 are
true and correct in all material respects as of the date of
such requested Loan, with the same effect as though made on
the date of such Loan (it being understood that each request
for a Loan shall automatically constitute a representation
and warranty by the Company that, as at the requested date
of such Loan, (x) all conditions under this Section 10.1.1
shall be satisfied and (y) after the making of such Loan the
aggregate principal amount of all outstanding Loans will not
exceed the Aggregate Commitment).
10.1.2. Documents. The Agent shall have received
(a) a certificate signed by an Authorized Officer of the
Company as to compliance with Section 10.1.1, which
requirement shall be deemed satisfied by the submission of a
properly completed Notice of Competitive Bid Borrowing or
Committed Loan Request and (b) such other documents as the
Agent may reasonably request in support of such Loan.
10.1.3. Litigation. No Litigation Action not
disclosed in writing by the Company to the Agent and the
Banks prior to the date of the last previous Loan hereunder
(or, in the case of the initial Loan, prior to the date of
execution and delivery of this Agreement) ("New Litigation")
has been instituted and no development not so disclosed has
occurred in any other Litigation Action ("Existing
Litigation"), unless the resolution of all New Litigation
and Existing Litigation against the Company and its
Subsidiaries could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
Section 10.2. Conditions to the Availability of the
Commitments. The obligations of each Bank hereunder are subject
to, and the Banks' Commitments shall not become available until
the date on which each of the following conditions precedent
shall have been satisfied or waived in writing by the Required
Banks:
10.2.1. Revolving Credit Agreement. The Agent shall
have received this Agreement duly executed and delivered by
each of the Banks and the Company and each of the Banks
shall have received a fully executed Committed Note and a
fully executed Bid Note.
10.2.2. Evidence of Corporate Action. The Agent shall
have received certified copies of all corporate actions
taken by the Company to authorize this Agreement and the
Notes.
<PAGE>
10.2.3. Incumbency and Signatures. The Agent shall
have received a certificate of the Secretary or an Assistant
Secretary of the Company certifying the names of the officer
or officers of the Company authorized to sign this
Agreement, the Notes and the other documents provided for in
this Agreement to be executed by the Company, together with
a sample of the true signature of each such officer (it
being understood that the Agent and each Bank may
conclusively rely on such certificate until formally advised
by a like certificate of any changes therein).
10.2.4. Good Standing Certificates. The Agent shall
have received such good standing certificates of state
officials with respect to the incorporation of the Company,
or other matters, as the Agent or the Banks may reasonably
request.
10.2.5. Opinions of Company Counsel. The Agent shall
have received favorable written opinions of O'Melveny &
Myers, counsel for the Company, in substantially the form of
Exhibit G, and the Corporate Counsel of the Company, in
substantially the form of Exhibit H.
10.2.6. Opinion of Agent's Counsel. The Agent shall
have received a favorable written opinion of Sullivan &
Cromwell, counsel to the Agent, with respect to documents
received by the Agent and the Banks and such legal matters
as the Agent reasonably may require.
10.2.7. Other Documents. The Agent shall have
received such other certificates and documents as the Agent
or the Banks reasonably may require.
10.2.8. Fees. The Agent shall have received for the
account of the Agent, the arrangement fee, as previously
agreed to between the Company and the Agent and the Agent's
fees payable to the Funding Date pursuant to Section 4.5
hereof.
10.2.9. Material Adverse Change. Since the date of
the audited financial statements identified in Section 8.4
hereof, there shall not have occurred any material adverse
change in the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries
taken as a whole.
10.2.10. Termination of Revolving Credit Facilities.
The Company shall have paid all amounts owing and otherwise
satisfied and discharged all of its obligations arising
under each of the Revolving Credit Agreements, dated as of
June 1, 1993, as amended, among the Company, the Agent and
the banks named therein, and such agreements shall have been
terminated and of no further force and effect, evidence of
which shall have been made available to the Agent.
<PAGE>
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT.
Section 11.1. Events of Default. Each of the
following shall constitute an Event of Default under this
Agreement:
11.1.1. Non-Payment of Notes, etc. Default in the
payment when due of any principal of any Loan; or default,
and continuance thereof for five days, in the payment when
due of any interest on any Loan or any fees payable by the
Company hereunder.
11.1.2. Non-Payment of Other Indebtedness for Borrowed
Money. Default in the payment when due (subject to any
applicable grace period), whether by acceleration or
otherwise, of any principal of, interest on or fees incurred
in connection with any other Indebtedness of, or guaranteed
by, the Company or any Significant Subsidiary (except
(i) any such Indebtedness of any Subsidiary to the Company
or to any other Subsidiary and (ii) any Indebtedness
hereunder) and, if a default in the payment of interest or
fees, continuance of such default for five days, in the case
of interest, or 30 days, in the case of fees, or default in
the performance or observance of any obligation or condition
with respect to any such other Indebtedness if the effect of
such default (subject to any applicable grace period) is to
accelerate the maturity of any such Indebtedness or to
permit the holder or holders thereof, or any trustee or
agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity; provided,
however, that the aggregate principal amount of all
Indebtedness as to which there has occurred any default as
described above shall equal or exceed $50,000,000.
11.1.3. Bankruptcy, Insolvency, etc. The Company or
any Significant Subsidiary becomes insolvent or generally
fails to pay, or admits in writing its inability or refusal
to pay, debts as they become due; or the Company or any
Significant Subsidiary applies for, consents to, or
acquiesces in the appointment of a trustee, receiver or
other custodian for the Company or such Significant
Subsidiary or any property thereof, or makes a general
assignment for the benefit of creditors; or, in the absence
of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for the Company or
any Significant Subsidiary or for a substantial part of the
property of any thereof and is not discharged within
60 days; or any warrant of attachment or similar legal
process is issued against any substantial part of the
property of the Company or any of its Significant
Subsidiaries which is not released within 60 days of
service; or any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or
liquidation proceeding (except the voluntary dissolution,
not under any bankruptcy or insolvency law, of a Significant
Subsidiary), is commenced in respect of the Company or any
Significant Subsidiary, and, if such case or proceeding is
not commenced by the Company or such Significant Subsidiary
it is consented to or acquiesced in by the Company or such
Significant Subsidiary or remains for 60 days undismissed;
or the Company or any Significant Subsidiary takes any
corporate action to authorize, or in furtherance of, any of
the foregoing.
<PAGE>
11.1.4. Non-Compliance with this Agreement. Failure by
the Company to comply with or to perform any of the
Company's covenants herein or any other provision of this
Agreement (and not constituting an Event of Default under
any of the other provisions of this Section 11.1) and
continuance of such failure for 30 days (or, if the Company
failed to give notice of such non-compliance or
nonperformance pursuant to Section 9.1.4 within one Business
Day after obtaining actual knowledge thereof, 30 days less
the number of days elapsed between the date the Company
obtained such actual knowledge and the date the Company
gives the notice pursuant to Section 9.1.4, but in no event
less than one Business Day) after notice thereof to the
Company from the Agent, any Bank, or the holder of any Note.
11.1.5. Representations and Warranties. Any
representation or warranty made by the Company herein is
untrue or misleading in any material respect when made or
deemed made; or any schedule, statement, report, notice, or
other writing furnished by the Company to the Agent or any
Bank is false or misleading in any material respect on the
date as of which the facts therein set forth are stated or
certified; or any certification made or deemed made by the
Company to the Agent or any Bank is untrue or misleading in
any material respect on or as of the date made or deemed
made.
11.1.6. Employee Benefit Plans. The institution by
the Company or any ERISA Affiliate of steps to terminate any
Plan if, in order to effectuate such termination, (i) the
Company or any ERISA Affiliate would be required to make a
contribution to such Plan or would incur a liability or
obligation to such Plan in an amount in excess of
$10,000,000 and (ii) immediately after giving effect to the
payment or satisfaction of such contribution, liability or
obligation (if made or undertaken by the Company or any
Subsidiary) an Event of Default or Unmatured Event of
Default would exist and be continuing; or the institution by
the PBGC of steps to terminate any Plan; or a contribution
failure occurs with respect to a Plan sufficient to give
rise to a lien under Section 302(f) of ERISA securing an
amount in excess of $10,000,000.
11.1.7. Litigation. There shall be entered against
the Company or any Subsidiary one or more judgments or
decrees in excess of $10,000,000 in the aggregate at any one
time outstanding for the Company and all Subsidiaries and
all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 30 days
from the entry thereof, excluding those judgments or decrees
for and to the extent to which the Company or any Subsidiary
is insured and with respect to which the insurer has not
denied coverage in writing or for and to the extent to which
the Company or any Subsidiary is otherwise indemnified if
the terms of such indemnification are satisfactory to the
Required Banks; and
<PAGE>
11.1.8. Change of Ownership. AIG shall cease to own
beneficially at least 51% of all of the outstanding shares
of the common stock of the Company.
Section 11.2. Effect of Event of Default. If any Event
of Default described in Section 11.1.3 shall occur, the
Commitments (if they have not theretofore terminated) shall
immediately terminate and all Loans and all interest and other
amounts due hereunder shall become immediately due and payable,
all without presentment, demand or notice of any kind; and, in
the case of any other Event of Default, the Agent may, and upon
written request of the Required Banks shall, declare the
Commitments (if they have not theretofore terminated) to be
terminated and all Loans and all interest and other amounts due
hereunder to be due and payable, whereupon the Commitments (if
they have not theretofore terminated) shall immediately terminate
and all Loans and all interest and other amounts due hereunder
shall become immediately due and payable, all without
presentment, demand or notice of any kind. The Agent shall
promptly advise the Company and each Bank of any such
declaration, but failure to do so shall not impair the effect of
such declaration.
SECTION 12. THE AGENT.
Section 12.1. Authorization. Each Bank and the holder
of each Note authorizes the Agent to act on behalf of such Bank
or holder to the extent provided herein and in any other document
or instrument delivered hereunder or in connection herewith, and
to take such other action as may be reasonably incidental
thereto. Subject to the provisions of Section 12.3, the Agent
will take such action permitted by any agreement delivered in
connection with this Agreement as may be requested in writing by
the Required Banks or if required under Section 13.1, all of the
Banks. The Agent shall promptly remit in immediately available
funds to each Bank or other holder its share of all payments
received by the Agent for the account of such Bank or holder, and
shall promptly transmit to each Bank (or share with each Bank the
contents of) each notice it receives from the Company pursuant to
this Agreement.
Section 12.2. Indemnification. The Banks agree to
indemnify the Agent in its capacity as such (to the extent not
reimbursed by the Company), ratably according to their respective
Percentages, from and against any and all actions, causes of
action, suits, losses, liabilities, damages and expenses which
may at any time (including, without limitation, at any time
following the payment of the Notes) be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out
of this Agreement, or any documents contemplated by or referred
to herein or the transactions contemplated hereby or any action
taken or omitted by the Agent under or in connection with any of
the foregoing; provided that no Bank shall be liable for the
payment to the Agent of any portion of such actions, causes of
action, suits, losses, liabilities, damages and expenses
resulting from the Agent's or its employees' or agents' gross
negligence or willful misconduct. Without limiting the
foregoing, subject to Section 13.5 each Bank agrees to reimburse
the Agent promptly upon demand for its ratable share of any out-
of-pocket expenses (including reasonable counsel fees) incurred
by the Agent in such capacity in connection with the preparation,
execution or enforcement of, or legal advice in respect of rights
or responsibilities under, this Agreement or any amendments or
supplements hereto or thereto to the extent that the Agent is not
reimbursed for such expenses by the Company. All obligations
provided for in this Section 12.2 shall survive repayment of the
Loans, cancellation of the Notes or any termination of this
Agreement.
<PAGE>
Section 12.3. Action on Instructions of the Required
Banks. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement or
collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but the Agent shall
in all cases be fully protected in acting or refraining from
acting upon the written instructions from (i) the Required Banks,
except for instructions which under the express provisions hereof
must be received by the Agent from all Banks and (ii) in the case
of such instructions, from all Banks. In no event will the Agent
be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or
applicable law. The relationship between the Agent and the Banks
is and shall be that of agent and principal only and nothing
herein contained shall be construed to constitute the Agent a
trustee for any holder of a Note or of a participation therein
nor to impose on the Agent duties and obligations other than
those expressly provided for herein.
Section 12.4. Payments. (a) The Agent shall be
entitled to assume that each Bank has made its Loan available in
accordance with Section 2.3 or Section 3.2(c), as applicable,
unless such Bank notifies the Agent at its Notice Office prior to
11:00 a.m., New York City time, on the Funding Date for such Loan
that it does not intend to make such Loan available, it being
understood that no such notice shall relieve such Bank of any of
its obligations under this Agreement. If the Agent makes any
payment to the Company on the assumption that a Bank has made the
proceeds of such Loan available to the Agent but such Bank has
not in fact made the proceeds of such Loan available to the
Agent, such Bank shall pay to the Agent on demand an amount equal
to the amount of such Bank's Loan, together with interest thereon
for each day that elapses from and including such Funding Date to
but excluding the Business Day on which the proceeds of such
Bank's Loan become immediately available to the Agent at its
Payment Office prior to 12:00 Noon, New York City time, at the
Federal Funds Rate for each such day, based upon a year of 360
days. A certificate of the Agent submitted to any Bank with
respect to any amounts owing under this Section 12.4(a) shall be
conclusive absent demonstrable error. If the proceeds of such
Bank's Loan are not made available to the Agent at its Payment
Office by such Bank within three Business Days of such Funding
Date, the Agent shall be entitled to recover such amount on
demand from the Company, together with interest thereon for each
day that elapses from and including such Funding Date to but
excluding the Business Day on which such proceeds become
immediately available to the Agent prior to 12:00 Noon, New York
City time, (i) in the case of a Bid Loan, at the rate per annum
applicable thereto and (ii) in the case of a Committed Loan, at
the rate per annum applicable to Base Rate Loans hereunder, in
either case based upon a year of 360 days. Nothing in this
paragraph (a) shall relieve any Bank of any obligation it may
have hereunder to make any Loan or prejudice any rights which the
Company may have against any Bank as a result of any default by
such Bank hereunder.
<PAGE>
(b) The Agent shall be entitled to assume that the
Company has made all payments due hereunder from the Company on
the due date thereof unless it receives notification prior to any
such due date from the Company that the Company does not intend
to make any such payment, it being understood that no such notice
shall relieve the Company of any of its obligations under this
Agreement. If the Agent distributes any payment to a Bank
hereunder in the belief that the Company has paid to the Agent
the amount thereof but the Company has not in fact paid to the
Agent such amount, such Bank shall pay to the Agent on demand
(which shall be made by telegram, telex, facsimile or personal
delivery) an amount equal to the amount of the payment made by
the Agent to such Bank, together with interest thereon for each
day that elapses from and including the date on which the Agent
made such payment to but excluding the Business Day on which the
amount of such payment is returned to the Agent at its Payment
Office in immediately available funds prior to 12:00 Noon,
New York City time, at the Federal Funds Rate for each such day,
based upon a year of 360 days. If the amount of such payment is
not returned to the Agent in immediately available funds within
three Business Days after demand by the Agent, such Bank shall
pay to the Agent on demand an amount calculated in the manner
specified in the preceding sentence after substituting the term
"Base Rate" for the term "Federal Funds Rate". A certificate of
the Agent submitted to any Bank with respect to amounts owing
under this Section 12.4(b) shall be conclusive absent
demonstrable error.
Section 12.5. Exculpation. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters,
and upon this Agreement and any Note, security agreement,
schedule, certificate, statement, report, notice or other writing
which it believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors,
officers, employees or agents shall (i) be responsible for any
recitals, representations or warranties contained in, or for the
execution, validity, genuineness, effectiveness or enforceability
of, this Agreement, any Note or any other instrument or document
delivered hereunder or in connection herewith, (ii) be deemed to
have knowledge of an Event of Default or Unmatured Event of
Default until after having received actual notice thereof from
the Company or a Bank, (iii) be under any duty to inquire into or
pass upon any of the foregoing matters, or to make any inquiry
concerning the performance by the Company or any other obligor of
its obligations or (iv) in any event, be liable as such for any
action taken or omitted by it or them, except for its or their
own gross negligence or willful misconduct. The agency hereby
created shall in no way impair or affect any of the rights and
powers of, or impose any duties or obligations upon, the Agent in
its individual capacity.
<PAGE>
Section 12.6. Credit Investigation. Each Bank
acknowledges, and shall cause each Assignee or Participant to
acknowledge in its assignment or participation agreement with
such Bank, that it has (i) made and will continue to make such
inquiries and has taken and will take such care on its own behalf
as would have been the case had the Loans been made directly by
such Bank or other applicable Person to the Company without the
intervention of the Agent or any other Bank and
(ii) independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has
deemed appropriate, made and will continue to make its own credit
analysis and decisions relating to this Agreement. Each Bank
agrees and acknowledges, and shall cause each Assignee or
Participant to agree and acknowledge in its assignment or
participation agreement with such Bank, that the Agent makes no
representations or warranties about the creditworthiness of the
Company or any other party to this Agreement or with respect to
the legality, validity, sufficiency or enforceability of this
Agreement or any Note.
Section 12.7. UBS and Affiliates. UBS and each of its
successors as Agent shall have the same rights and powers
hereunder as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent, and UBS and
any such successor and its Affiliates may accept deposits from,
lend money to and generally engage, and continue to engage, in
any kind of business with the Company or any Affiliate thereof as
if UBS or such successor were not the Agent hereunder.
Section 12.8. Resignation. The Agent may resign as
such at any time upon at least 30 days' prior notice to the
Company and the Banks. In the event of any such resignation,
Banks having an aggregate Percentage of more than 50% shall as
promptly as practicable appoint a successor Agent reasonably
acceptable to the Company. If no successor Agent shall have been
so appointed, and shall have accepted such appointment, within 30
days after the retiring Agent's giving of notice of resignation,
then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent reasonably acceptable to the Company, which shall
be a commercial bank organized under the laws of the United
States of America or of any State thereof or under the laws of
another country which is doing business in the United States of
America and having a combined capital, surplus and undivided
profits of at least $1,000,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor agent, such
successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from all
further duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as Agent, the provisions
of this Section 12 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Agreement.
<PAGE>
SECTION 13. GENERAL.
Section 13.1. Waiver; Amendments. No delay on the
part of the Agent, any Bank, or the holder of any Loan in the
exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them
of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to,
any provision of this Agreement or the Notes shall in any event
be effective unless the same shall be in writing and signed and
delivered by the Agent and by Banks having an aggregate
Percentage of not less than the aggregate Percentage expressly
designated herein with respect thereto or, in the absence of such
designation as to any provision of this Agreement or the Notes,
by the Required Banks, and then any amendment, modification,
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No
amendment, modification, waiver or consent (i) shall extend or
increase the amount of the Commitments, extend the due date for
any amount payable hereunder, reduce or waive any fee hereunder,
change the definition of "Required Banks" or Percentage in
Section 1, amend or modify Section 4.1 or change any of the
defined terms used in Section 4.1, amend or modify Section 4.4,
Section 4.6, Section 11.1.1 or Section 11.1.8, modify this
Section 13.1 or otherwise change the aggregate Percentage
required to effect an amendment, modification, waiver or consent
without the written consent of all Banks, (ii) shall waive any of
the conditions precedent specified in Section 10.1 for the making
of any Loan without the written consent of the Bank which is to
make such Loan or (iii) shall extend the scheduled maturity or
reduce the principal amount of, or rate of interest on, or extend
the due date for any amount payable under, any Loan without the
written consent of the holder of the Note evidencing such Loan.
Amendments, modifications, waivers and consents of the type
described in clause (iii) of the preceding sentence with respect
to Bid Loans or Bid Notes may be effected with the written
consent of the holder of such Bid Loans or Bid Notes and no
consent of any other Bank or other holder shall be required in
connection therewith. No provisions of Section 12 shall be
amended, modified or waived without the Agent's written consent.
Section 13.2. Notices. Except as otherwise expressly
provided in this Agreement, any notice hereunder to the Company,
the Agent, or any Bank or other holder of a Loan shall be in
writing and, if by telegram, telex, facsimile or personal
delivery, shall be deemed to have been given and received when
sent and, if mailed, shall be deemed to have been given and
received three Business Days after the date when sent by
registered or certified mail, postage prepaid, and addressed to
the Company, the Agent, or such Bank (or other holder) at its
address shown below its signature hereto or at such other address
as it may, by written notice received by the other parties to
this Agreement, have designated as its address for such purpose.
The Agent, any Bank or the holder of any Note giving any waiver,
consent or notice to, or making any request upon, the Company
hereunder shall promptly notify the Agent thereof. Corres-
pondence of the type described in Section 2.2 with respect to Bid
Loans and notices of Committed Loan Requests made by the Company
shall, except as otherwise provided herein, be directed to the
persons specified for such purpose for each party on the
signature pages hereof or in subsequent writings among the
parties. Additional copies of certain notices which any party may
have requested on the signature pages hereof need not be
delivered at the same time as the primary notices to such party,
but the party delivering such primary notices shall use
reasonable efforts to distribute such copies on the same Business
Day as that on which such primary notices were distributed.
<PAGE>
Section 13.3. Computations. Where the character or
amount of any asset or liability or item of income or expense is
required to be determined, or any consolidation or other
accounting computation is required to be made, for the purpose of
this Agreement, such determination or calculation shall, at any
time and to the extent applicable and except as otherwise
specified in this Agreement, be made in accordance with generally
accepted accounting principles in the United States applied on a
basis consistent with those in effect as at the date of the
Company's audited financial statements referred to in
Section 8.4. If there should be any material change in generally
accepted accounting principles in the United States after the
date hereof which materially affects the financial covenants in
this Agreement, the parties hereto agree to negotiate in good
faith appropriate revisions of such covenants (it being
understood, however, that such covenants shall remain in full
force and effect in accordance with their existing terms pending
the execution by the Company and the Banks of any such
amendment).
Section 13.4. Assignments; Participations. Each Bank
may assign, or sell participations in, its Loans and its
Commitment to one or more other Persons in accordance with this
Section 13.4 (and the Company consents to the disclosure of any
information obtained by any Bank in connection herewith to any
actual or prospective Assignee or Participant).
Section 13.4.1. Assignments. Any Bank may with the
written consents of the Company and the Agent (which
consents will not be unreasonably withheld or delayed) at
any time assign and delegate to one or more commercial banks
or other financial institutions (any Person to whom an
assignment and delegation is made being herein called an
"Assignee") all or any fraction of such Bank's Loans and
Commitment (which assignment and delegation shall be of a
constant, and not a varying, percentage of such assigning
Bank's Loans and Commitment); each such assignment of a
Bank's Commitment, when considered in aggregate with any
simultaneous assignment by such Bank pursuant to the
$450,000,000 Revolving Credit Agreement executed by the
parties hereto on the date hereof, shall be in the minimum
aggregate amount of $10,000,000 or in integral multiples of
$1,000,000 in excess thereof; provided that any such
Assignee will comply, if applicable, with the provisions
contained in the first sentence of Section 6.4(b) and shall
be deemed to have made, on the date of the effectiveness of
such assignment and delegation, the representation and
warranty set forth in the second sentence of Section 6.4(b);
and provided further, that the Company and the Agent shall
be entitled to continue to deal solely and directly with
such assigning Bank in connection with the interests so
assigned and delegated to an Assignee until such assigning
Bank and/or such Assignee shall have:
<PAGE>
(i) given written notice of such assignment and
delegation, together with payment instructions,
addresses and related information with respect to such
Assignee, substantially in the form of Exhibit I, to
the Company and the Agent;
(ii) provided evidence satisfactory to the Company
and the Agent that, as of the date of such assignment
and delegation, the Company will not be required to pay
any costs, fees, taxes or other amounts of any kind or
nature with respect to the interest assigned in excess
of those payable by the Company with respect to such
interest prior to such assignment;
(iii) paid to the Agent for the account of the
Agent a processing fee of $2,500; and
(iv) provided to the Agent evidence reasonably
satisfactory to the Agent that the assigning Bank has
complied with the provisions of the last sentence of
Section 12.6.
Upon receipt of the foregoing items and the consents of the
Company and the Agent, (x) the Assignee shall be deemed
automatically to have become a party hereto and, to the extent
that rights and obligations hereunder have been assigned and
delegated to such Assignee, such Assignee shall have the rights
and obligations of a Bank hereunder and under the other
instruments and documents executed in connection herewith and
(y) the assigning Bank, to the extent that rights and obligations
hereunder have been assigned and delegated by it, shall be
released from its obligations hereunder. The Agent may from time
to time (and upon the request of the Company or any Bank after
any change therein shall) distribute a revised Schedule I
indicating any changes in the Banks party hereto or the
respective Percentages of such Banks. Within five Business Days
after the Company's receipt of notice from the Agent of the
effectiveness of any such assignment and delegation, the Company
shall execute and deliver to the Agent (for delivery to the
relevant Assignee) new Notes in favor of such Assignee and, if
the assigning Bank has retained Loans and a Commitment hereunder,
replacement Notes in favor of the assigning Bank (such Notes to
be in exchange for, but not in payment of, the Notes previously
held by such assigning Bank). Each such Note shall be dated the
date of the predecessor Notes. The assigning Bank shall promptly
mark the predecessor Notes "exchanged" and deliver them to the
Company. Any attempted assignment and delegation not made in
accordance with this Section 13.4.1 shall be null and void.
The foregoing consent requirement shall not be
applicable in the case of, and this Section 13.4.1 shall not
restrict, any assignment or other transfer by any Bank of all or
any portion of such Bank's Loans to any Federal Reserve Bank;
provided that such Federal Reserve Bank shall not be considered a
"Bank" for purposes of this Agreement.
<PAGE>
Section 13.4.2. Participations. Any Bank may at any
time sell to one or more commercial banks or other Persons (any
such commercial bank or other Person being herein called a
"Participant") participating interests in any of its Loans, its
Commitment or any other interest of such Bank hereunder;
provided, however, that
(a) no participation contemplated in this
Section 13.4.2 shall relieve such Bank from its Commitment
or its other obligations hereunder;
(b) such Bank shall remain solely responsible for the
performance of its Commitment and such other obligations
hereunder and such Bank shall retain the sole right and
responsibility to enforce the obligations of the Company
hereunder, including the right to approve any amendment,
modification or waiver of any provision of this Agreement
(subject to Section 13.4.2(d) below);
(c) the Company and the Agent shall continue to deal
solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement;
(d) no Participant, unless such Participant is an
affiliate of such Bank, or is itself a Bank, shall be
entitled to require such Bank to take or refrain from taking
any action hereunder, except that such Bank may agree with
any Participant that such Bank will not, without such
Participant's consent, take any actions of the type
described in the third sentence of Section 13.1;
(e) the Company shall not be required to pay any
amount under Sections 4.1, 6.4 or 7.1 that is greater than
the amount which the Company would have been required to pay
had no participating interest been sold;
(f) no Participant may further participate any inter-
est in any Committed Loan (and each participation agreement
shall contain a restriction to such effect). The Company
acknowledges and agrees that, to the extent permitted by
applicable law, each Participant shall be considered a Bank
for purposes of Sections 7.1, 7.4, 13.5 and 13.6, and by its
acceptance of a participation herein, each Participant
agrees to be bound by the provisions of Section 6.2(b) as if
such Participant were a Bank; and
(g) such Bank shall have provided to the Agent
evidence reasonably satisfactory to the Agent that such Bank
has complied with the provisions of the last sentence of
Section 12.6.
<PAGE>
Section 13.5. Costs, Expenses and Taxes. The Company
agrees to pay on demand (a) all out-of-pocket costs and expenses
of the Agent (including the fees and out-of-pocket expenses of
counsel for the Agent (and of local counsel, if any, who may be
retained by said counsel) in an amount not to exceed an amount
separately agreed to between the Agent and the Company), in
connection with the preparation, execution, delivery and adminis-
tration of this Agreement, the Notes and all other instruments or
documents provided for herein or delivered or to be delivered
hereunder or in connection herewith and (b) all out-of-pocket
costs and expenses (including reasonable attorneys' fees and
legal expenses and allocated costs of staff counsel) incurred by
the Agent and each Bank in connection with the enforcement of
this Agreement, the Notes or any such other instruments or
documents. Each Bank agrees to reimburse the Agent for such
Bank's pro rata share (based upon its respective Percentage) of
any such costs or expenses incurred by the Agent on behalf of all
the Banks and not paid by the Company other than any fees and
out-of-pocket expenses of counsel for the Agent which exceed the
amount which the Company has agreed with the Agent to reimburse.
In addition, the Company agrees to pay, and to hold the Agent and
the Banks harmless from all liability for, any stamp or other
Taxes which may be payable in connection with the execution and
delivery of this Agreement, the borrowings hereunder, the issu-
ance of the Notes or the execution and delivery of any other
instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All obliga-
tions provided for in this Section 13.5 shall survive repayment
of the Loans, cancellation of the Notes or any termination of
this Agreement.
Section 13.6. Indemnification. In consideration of
the execution and delivery of this Agreement by the Agent and the
Banks, the Company hereby agrees to indemnify, exonerate and hold
each of the Banks, the Agent, and each of the officers, direc-
tors, employees and agents of the Banks and Agent (collectively
herein called the "Bank Parties" and individually called a "Bank
Party") free and harmless from and against any and all actions,
causes of action, suits, losses, liabilities, damages and
expenses, including, without limitation, reasonable attorneys'
fees and disbursements (collectively herein called the "Indemni-
fied Liabilities"), incurred by the Bank Parties or any of them
as a result of, or arising out of, or relating to (i) this Agree-
ment, the Notes or the Loans or (ii) the direct or indirect use
of proceeds of any of the Loans or any credit extended hereunder,
except for any such Indemnified Liabilities arising on account of
such Bank Party's gross negligence or willful misconduct, and if
and to the extent that the foregoing undertaking may be
unenforceable for any reason, the Company hereby agrees to make
the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under appli-
cable law. All obligations provided for in this Section 13.6
shall survive repayment of the Loans, cancellation of the Notes
or any termination of this Agreement.
<PAGE>
Section 13.7. Regulation U. Each Bank represents that
it in good faith is not relying, either directly or indirectly,
upon any margin stock (as such term is defined in Regulation U
promulgated by the Board of Governors of the Federal Reserve
System) as collateral security for the extension or maintenance
by it of any credit provided for in this Agreement.
Section 13.8. Extension of Termination Dates; Removal
of Banks; Substitution of Banks. (a) Not more than 90 days nor
less than 60 days prior to the then-effective Termination Date,
the Company may, at its option, request all the Banks then party
to this Agreement to extend their scheduled Termination Dates by
one calendar year by means of a letter, addressed to each such
Bank and the Agent, substantially in the form of Exhibit J. Each
such Bank electing (in its sole discretion) so to extend its
scheduled Termination Date shall execute and deliver prior to the
30th day following receipt of such request counterparts of such
letter to the Company and the Agent, whereupon (unless Banks with
an aggregate Percentage in excess of 25% decline to extend their
respective scheduled Termination Dates, in which event the Agent
shall notify all the Banks thereof and no such extension shall
occur), such Bank's scheduled Termination Date shall be extended
to February 2 of the year immediately succeeding such Bank's
then-current scheduled Termination Date. Any Bank that declines
or fails to respond to the Company's request for such extension
shall be deemed to have not extended its scheduled Terminate
Date.
(b) With respect to any Bank (i) on account of which
the Company is required to make any deductions or withholdings or
pay any additional amounts, as contemplated by Section 6.4,
(ii) on account of which the Company is required to pay any
additional amounts, as contemplated by Section 7.1, (iii) for
which it is illegal to make a LIBOR Rate Loan, as contemplated by
Section 7.3 or (iv) which has declined to extend such Bank's
scheduled Termination Date and Banks with an aggregate Percentage
in excess of 75% have elected to extend their respective Termi-
nation Dates, the Company may in its discretion, upon not less
than 30 days' prior written notice to the Agent and each Bank,
remove such Bank as a party hereto. Each such notice shall
specify the date of such removal (which shall be a Business Day
and, if such Bank has any outstanding Bid Loans, shall (unless
otherwise agreed by such Bank) be on or after the last day of the
Loan Period for the Bid Loan of such Bank having the latest
maturity date), which shall thereupon become the scheduled
Termination Date for such Bank.
(c) In the event that any Bank does not extend its
scheduled Termination Date pursuant to subsection (a) above or is
the subject of a notice of removal pursuant to subsection (b)
above, then, at any time prior to the Termination Date for such
Bank (a "Terminating Bank"), the Company may, at its option,
arrange to have one or more other commercial banks or financial
institutions (which may be a Bank or Banks and each of which
shall herein be called a "Successor Bank") succeed to all or a
percentage of the Terminating Bank's outstanding Loans, if any,
and rights under this Agreement and assume all or a like
percentage (as the case may be) of such Terminating Bank's
undertaking to make Loans pursuant hereto and other obligations
hereunder (as if (i) in the case of any Bank electing not to
extend its scheduled Termination Date pursuant to subsection
(a) above, such Successor Bank had extended its scheduled
Termination Date pursuant to such subsection (a) and (ii) in the
case of any Bank that is the subject of a notice of removal
pursuant to subsection (b) above, no such notice of removal had
been given by the Company). Such succession and assumption shall
be effected by means of one or more agreements supplemental to
this Agreement among the Terminating Bank, the Successor Bank,
the Company and the Agent. On and as of the effective date of
each such supplemental agreement, each Successor Bank party
thereto shall be and become a Bank for all purposes of this
Agreement and to the same extent as any other Bank hereunder and
shall be bound by and entitled to the benefits of this Agreement
in the same manner as any other Bank.
<PAGE>
(d) On the Termination Date for any Terminating Bank,
such Terminating Bank's Commitment shall terminate and the
Company shall pay in full all of such Terminating Bank's Loans
(except to the extent assigned pursuant to subsection (c) above)
and all other amounts payable to such Bank hereunder (including
any amounts payable pursuant to Section 7.4 on account of such
payment); provided that if an Event of Default or Unmatured Event
of Default exists on the date scheduled as any Terminating Bank's
Termination Date, such Terminating Bank's scheduled Termination
Date shall be extended to the first Business Day thereafter on
which (i) no Event of Default or Unmatured Event of Default
exists (without regard to any waiver or amendment that makes this
Agreement less restrictive for the Company, other than as
described in clause (ii) below) or (ii) the Required Banks (which
for purposes of this subsection (d) shall be determined based
upon the respective Percentages and aggregate Commitments of all
Banks other than any Terminating Bank whose scheduled Termination
Date has been extended pursuant to this proviso) waive or amend
the provisions of this Agreement to cure all existing Events of
Default or Unmatured Events of Default or agree to permit any
borrowing hereunder notwithstanding the existence of any such
event. In the event that UBS shall become a Terminating Bank,
the Required Banks with the consent of the Company (which consent
shall not be unreasonably withheld) shall appoint another Bank or
other Person as Agent, which shall have all of the rights and
obligations of the Agent upon the effective date of and pursuant
to an agreement supplemental hereto among the Company and the
Banks, and thereupon UBS, as Agent, shall be relieved from its
obligations as Agent hereunder, it being understood that the
provisions of Section 12 shall inure to the benefit of UBS as to
any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no such successor Agent shall be
appointed within 30 days of the Termination Date of the Agent,
then the Agent shall, on behalf of the Banks, appoint a successor
Agent in accordance with the provisions set forth in Section 12.8
for a resigning Agent.
(e) To the extent that all or a portion of any Termi-
nating Bank's obligations are not assumed pursuant to subsec-
tion (c) above, the Aggregate Commitment shall be reduced on the
applicable Termination Date and each Bank's percentage of the
reduced Aggregate Commitment shall be revised pro rata to reflect
such Terminating Bank's absence. The Agent shall distribute a
revised Schedule I indicating such revisions promptly after the
applicable Termination Date. Such revised Schedule I shall be
deemed conclusive in the absence of demonstrable error.
(f) The Agent agrees to use reasonable commercial
efforts to assist the Company in locating one or more commercial
banks or other financial institutions to replace any Terminating
Bank prior to such Terminating Bank's Termination Date.
Section 13.9. Captions. Section captions used in this
Agreement are for convenience only and shall not affect the
construction of this Agreement.
<PAGE>
Section 13.10. Governing Law; Severability. THIS
AGREEMENT AND EACH NOTE SHALL BE A CONTRACT MADE UNDER, GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. All
obligations of the Company and the rights of the Agent, the Banks
and any other holders of the Notes expressed herein or in the
Notes shall be in addition to and not in limitation of those
provided by applicable law. Whenever possible each provision of
this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 13.11. Counterparts; Effectiveness. This
Agreement may be executed in any number of counterparts and by
the different parties on separate counterparts and each such
counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
Agreement. When counterparts of this Agreement executed by each
party shall have been lodged with the Agent (or, in the case of
any Bank as to which an executed counterpart shall not have been
so lodged, the Agent shall have received telegraphic, telex or
other written confirmation of execution of a counterpart hereof
by such Bank), this Agreement shall become effective as of the
date hereof and the Agent shall so inform all of the parties
hereto.
Section 13.12. Further Assurances. The Company agrees
to do such other acts and things, and to deliver to the Agent and
each Bank such additional agreements, powers and instruments, as
the Agent or any Bank may reasonably require or deem advisable to
carry into effect the purposes of this Agreement or to better
assure and confirm unto the Agent and each Bank their respective
rights, powers and remedies hereunder.
Section 13.13. Successors and Assigns. This Agreement
shall be binding upon the Company, the Banks and the Agent and
their respective successors and assigns, and shall inure to the
benefit of the Company, the Banks and the Agent and the respec-
tive successors and assigns of the Banks and the Agent. Subject
to Section 9.9, the Company may not assign any of its rights or
delegate any of its duties under this Agreement without the prior
written consent of all of the Banks.
Section 13.14. Waiver of Jury Trial. THE COMPANY, THE
AGENT AND EACH BANK HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
THIS AGREEMENT, ANY NOTE OR ANY AMENDMENT, INSTRUMENT, DOCUMENT
OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.
<PAGE>
Section 13.15. Amendment of 1993 Agreement. The
Company, the Agent and the Banks that are parties to the
$566,666,662 Revolving Credit Agreement, dated as of June 1,
1993, as amended (the "1993 Credit Agreement") among the Company,
the Agent and the banks parties thereto, hereby agree to amend
Section 5.1 of the 1993 Credit Agreement, effective as of the
date hereof, by replacing the phrase "30 days'" in the first
sentence with the phrase "one day's".
Delivered at Los Angeles, California as of the day and
year first above written.
INTERNATIONAL LEASE FINANCE
CORPORATION
By: /s/ Alan H. Lund
_________________________
Name: ALAN H. LUND
Title: Exec. V.P., Co-COO, CFO &
Treasurer
By: /s/ Pamela S. Hendry
________________________
Name: PAMELA S. HENDRY
Title: Assistant Vice President &
Controller
1999 Avenue of the Stars
39th Floor
Los Angeles, California 90067
Attention: Pam Hendry
Telephone: (310) 788-1999
Facsimile: (310) 788-1990
Telex: 69-1400 INTERLEAS BVHL
Agent: UNION BANK OF SWITZERLAND,
acting through its Los Angeles
Branch, in its individual
corporate capacity and as
Agent
By: /s/ Patrick J. McKenna
________________________
Name: PATRICK J. McKENNA
Title: Vice President
By: /s/ Scott Sommers
________________________
Name: SCOTT SOMMERS
Title: Vice President
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Attention: L. Scott Sommers
Telephone: (213) 489-0600
Facsimile: (213) 489-0697
Telex: 6831878 UBSLSA
<PAGE>
Co-Agents: COMMERZBANK AG, LOS ANGELES
BRANCH
By: /s/ Christian Jagenberg
______________________
Name: CHRISTIAN JAGENBERG
Title: S.V.P. and Manager
By: /s/ Werner Schmidbauer
______________________
Name: WERNER SCHMIDBAUER
Title: Vice President
660 South Figueroa Street
Suite 1450
Los Angeles, California 90017
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
BAYERISCHE HYPOTHEKEN-UND WECHSEL-
BANK AKTIENGESELLSCHAFT, NEW YORK
BRANCH
By: /s/ Eugene Atwell
___________________________
Name: EUGENE ATWELL
Title: Vice President
By: /s/ Steve Atwel
___________________________
Name: STEVE ATWEL
Title: Vice President
By: /s/ John Quigley
___________________________
Name: JOHN QUIGLEY
Title: Vice President
Financial Square
32 Old Slip, 32nd Floor
New York, New York 10005
Attention: Wolfgang Novotny
Telephone: (212) 440-0789
Facsimile: (212) 440-0741
Telex: 175850
<PAGE>
THE BANK OF NEW YORK
By: /s/ Elizabeth T. Ying
_________________________
Name: ELIZABETH T. YING
Title: Assistant Vice President
10990 Wilshire Boulevard
Suite 1700
Los Angeles, California 90024
Attention: Elizabeth T. Ying
Telephone: (310) 996-8650
Facsimile: (310) 996-8667
THE BANK OF NOVA SCOTIA
By: /s/ James M. Spanier
___________________________
Name: JAMES M. SPANIER
Title: Relationship Manager
101 California Street
48th Floor
San Francisco, California 94111
Attention: James Spanier
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
Telex: 00340602
DEUTSCHE BANK AG, LOS ANGELES
BRANCH & CAYMAN ISLANDS BRANCH
By: /s/ Michael U. Hotze
_________________________
Name: MICHAEL U. HOTZE
Title: Managing Director
By: /s/ Christine Lane
_________________________
Name: CHRISTINE LANE
Title: Assistant Vice President
550 S. Hope Street
Suite 1850
Los Angeles, California 90071
Attention: David Wagstaff
Telephone: (213) 627-8200
Facsimile: (213) 627-9779
<PAGE>
DRESDNER BANK AG, LOS ANGELES
AGENCY & GRAND CAYMAN BRANCH
By: /s/ Jon M. Bland
________________________
Name: JON M. BLAND
Title: Senior Vice President
By: /s/ Barbara J. Readick
________________________
Name: BARBARA J. READICK
Title: Vice President
725 South Figueroa Street
Suite 3950
Los Angeles, California 90017-5439
Attention: Barbara J. Readick
Telephone: (213) 489-5720
Facsimile: (213) 627-3819
Telex: 4720286
SOCIETE GENERALE
By: /s/ J. Blaine Shaum
_______________________
Name: J. BLAINE SHAUM
Title: Regional Manager
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Attention: Maureen Kelly
Telephone: (310) 788-7110
Facsimile: (310) 551-1537
Telex: 188273
Lead Managers: THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Tomohiro Nozaki
__________________________
Name: TOMOHIRO NOZAKI
Title: Senior Vice President and
Joint General Manager
555 West 5th Street
Fifth Floor
Los Angeles, California 90013
Attention: David K. Henry
Telephone: (213) 243-4760
Facsimile: (213) 624-5258
Telex: 67-4 516/DKB-LSA
<PAGE>
THE SAKURA BANK LTD.,
LOS ANGELES AGENCY
By: /s/ Ofusa Sato
_______________________
Name: OFUSA SATO
Title: Senior Vice President &
Assistant General Manager
Name: _________________________
Title: ________________________
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: Robert L. Mann
Telephone: (213) 489-6431
Facsimile: (213) 623-8692
Telex: 67-7185
DAIWA BANK TRUST COMPANY
By: /s/ Masafumi Asai
________________________
Name: MASAFUMI ASAI
Title: Vice President
75 Rockefeller Plaza
New York, New York 10019
Attention: Masafumi Asai
Telephone: (212) 554-7051
Facsimile: (212) 554-7152
Telex: RCA 276626
ROYAL BANK OF CANADA
By: /s/ Michael J. Madnick
_________________________
Name: MICHAEL J. MADNICK
Title: Manager
1 Financial Square
Corporate Banking East, U.S.A.
New York, New York 10005-3531
Attention: D.G. Calancie
Telephone: (212) 428-6445
Facsimile: (212) 428-6459
<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: /s/ Elie Khoury
_______________________
Name: ELIE KHOURY
Title: Vice President
By: /s/ Laura Spichiger
_______________________
Name: LAURA SPICHIGER
Title: Associate
1211 Avenue of the Americas
24th Floor
New York, New York 10036
Attention: Laura Spichiger
Telephone: (212) 852-6012
Facsimile: (212) 852-6148
Managers: BANCO DI NAPOLI S.p.A.
By: /s/ Vito Spada
__________________________
Name: VITO SPADA
Title: Executive Vice President
By: /s/ Claude P. Mapes
__________________________
Name: CLAUDE P. MAPES
Title: First Vice President
277 Park Avenue
New York, New York 10172
Attention: Claude P. Mapes
Telephone: (212) 872-2435
Facsimile: (212) 872-2426
Telex: 420634
<PAGE>
BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: /s/ Giulio Giovine
_________________________
Name: GIULIO GIOVINE
Title: Vice President
By: /s/ Carlo Vecchi
________________________
Name: CARLO VECCHI
Title: Senior Vice President
25 West 51st Street
New York, New York 10019
Attention: Adolph Mascaci
Telephone: (212) 581-0710
Facsimile: (212) 765-2978
Telex: 62840
BAYERISCHE LANDESBANK GIROZENTRALE
By: /s/ Wilfried Freudenberger
____________________________
Name: Wilfried Freudenberger
Title: Executive Vice President
and General Manager
By: /s/ Peter Obermann
___________________________
Name: PETER OBERMANN
Title: First Vice President and
Manager Lending Division
560 Lexington Avenue
22nd Floor
New York, New York 10022
Attention: Joanne Cicino
Telephone: (212) 310-9834
Facsimile: (212) 310-9868
Telex: TRT 177130
<PAGE>
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, LOS ANGELES AGENCY
By: /s/ Ken Takahashi
___________________________
Name: KEN TAKAHASHI
Title: General Manager
611 West 6th Street
Suite 3800
Los Angeles, California 90017
Attention: John C. Korthuis
Telephone: (213) 614-7156
Facsimile: (213) 622-0378
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: /s/ Jose Castello
__________________________
Name: JOSE CASTELLO
Title: Senior Vice President
and General Manager
By: ___________________________
Name: _________________________
Title: ______________________
505 Sansome Street
San Francisco, CA 94111
Attention: Jose Castello
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 677045 CENT SF
BANK OF HAWAII
By: /s/ Marcy E. Fleming
________________________
Name: MARCY E. FLEMING
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: Marcy E. Fleming
Telephone: (808) 537-8471
Facsimile: (808) 537-8301
Telex: 7238434
<PAGE>
BARCLAYS BANK PLC
By: /s/ Francis C.Constantinople
____________________________
Name: FRANCIS C. CONSTANTINOPLE
Title: Vice President
222 Broadway
New York, New York 10038
Attention: Frank Constantinople
Telephone: (212) 412-7634
Facsimile: (212) 412-5610
FIRST HAWAIIAN BANK
By: /s/ Robert M. Wheeler III
_______________________________
Name: ROBERT M. WHEELER III
Title: Vice President
1132 Bishop Street
19th Floor
Honolulu, Hawaii 96813
Attention: Robert M. Wheeler
Telephone: (808) 525-6367
Facsimile: (808) 525-6372
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Michael Grady
____________________________
Name: MICHAEL GRADY
Title: Vice President
One First Union Center
301 South College Street, TW-10
Charlotte, NC 28288-0745
Attention: Mike Grady
Telephone: (704) 383-7514
Facsimile: (704) 374-2802
Telex: 684-3115
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ Toshinari Iyoda
__________________________
Name: TOSHINARI IYODA
Title: Senior Vice President
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Vicente L. Timiraos
Telephone: (213) 893-6442
Facsimile: (213) 488-9840
Telex: 673562
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: /s/ Donald W. Brown
__________________________
Name: DONALD W. BROWN
Title: Branch Manager
By: /s/ Annette Bergsten
__________________________
Name: ANNETTE BERGSTEN
Title: Assistant Vice President
444 South Flower Street
Suite 4550
Los Angeles, California 90071
Attention: Glen Binder
Telephone: (213) 489-3100
Facsimile: (213) 622-2514
Telex: 220045
Participants: CIBC, INC.
By: /s/ Stephen D. Reynolds
__________________________
Name: STEPHEN D. REYNOLDS
Title: Vice President
425 Lexington Avenue
New York, New York 10017
Attention: Stephen D. Reynolds
Telephone: (212) 856-3566
Facsimile: (212) 856-3613
<PAGE>
BANQUE NATIONALE DE PARIS
By: /s/ Christian Morio
_____________________________
Name: CHRISTIAN MORIO
Title: Senior Vice President &
Manager
By: /s/ Tjalling Terpstra
_____________________________
Name: TJALLING TERPSTRA
Title: Vice President
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attention: Tjalling Terpstra
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
Telex: 6734168 BNPLA
CITICORP USA, INC.
By: /s/ Stephen P. Zwick
____________________________
Name: STEPHEN P. ZWICK
Title: Vice President
399 Park Avenue
12th Floor
New York, New York 10043
Attention: Peter Bickford
Telephone: (212) 559-8146
Facsimile: (212) 935-4285
Telex:
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK
By: /s/ Robert B. Herber
______________________
Name: ROBERT B. HERBER
Title: Vice President
By: /s/ Pamela D. Ingram
_______________________
Name: PAMELA D. INGRAM
Title: Assistant Vice President
609 Fifth Avenue
New York, New York 10017-1021
Attention: Robert B. Herber
Telephone: (212) 745-1581
Facsimile: (212) 745-1556
Telex: 234476/666755 MCI
<PAGE>
KREDIETBANK NV
By: /s/ Robert Snauffer
____________________________
Name: ROBERT SNAUFFER
Title: Vice President
By: /s/ Diane Grimmig
_____________________________
Name: DIANE GRIMMIG
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Roxanne Cheng
Telephone: (213) 624-0401
Facsimile: (213) 629-5801
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: /s/ Masahiko Saito
___________________________
Name: MASAHIKO SAITO
Title: Assistant General Manager
534 West Sixth Street
Los Angeles, California 90014
Attention: Kenji Oshigane
Telephone: (213) 892-2856
Facsimile: (213) 892-2818
Telex: 215245
THE CHUO TRUST & BANKING CO., LTD
(Los Angeles Agency)
By: /s/ Shoji Hoshikawa
___________________________
Name: SHOJI HOSHIKAWA
Title: Senior Manager
725 South Figueroa Street
Suite 1700
Los Angeles, California 90017
Attention: Shoji Hoshikawa
Telephone: (213) 955-7412
Facsimile: (213) 955-7431
<PAGE>
THE BANK OF TOKYO LIMITED,
NEW YORK AGENCY
By: __/s/__Yukio Yanaka__
Name: YUKIO YANAKA
Title: Senior Vice President &
Manager
1251 Avenue of the Americas
New York, New York 10116-3138
THE CHASE MANHATTAN BANK, N.A.
By:__/s/__Sherwood E. Exum, Jr.__
Name: SHERWOOD E. EXUM, JR.
Title: Managing Director
One Chase Manhattan Plaza
New York, New York 10081
Attention: Sherwood E. Exum, Jr.
Telephone: (212) 552-4655
Ficsimile: (212) 552-5879
Telex: 62910
CHEMICAL BANK
By:__/s/__Thomas Delaney___
Name: THOMAS DELANEY
Title: Vice President
270 Park Avenue
New York, New York 10017
Attention: Nikolai Nachamkin
Telephone: (212) 270-1012
Facsimile: (212) 270-1469
FIRST INTERSTATE BANK OF CALIFORNIA
By:__/s/__Thomas J. Helotes__
Name: THOMAS J. HELOTES
Title: Vice President
By:__/s/__Jonathan S. David__
Name: JONATHAN S. DAVID
Title: Assistant Vice President
707 Wilshire Boulevard
U.S. Banking Division, W16-14
Los Angeles, California 90017
Attention: Thomas Helotes
Telephone: (213) 614-4122
Facsimile: (213) 614-2569
<PAGE>
THE FUJI BANK, LIMITED
By:__/s/__Nobuhiro Umemura___
Name: NOBUHIRO UMEMURA
Title: Joint General Manager
333 South Grand Avenue
Suite 2500
Los Angeles, California 90071
Attention: Bryan Stapleton
Telephone: (213) 253-4152
Facsimile: (213) 253-4198
THE SANWA BANK LIMITED
By:__/s/__Stephen C. Small__
Name: STEPHEN C. SMALL
Title: Vice President & Area
Manager
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Stephen C. Small
Telephone: (212) 339-6201
Facsimile: (212) 754-1304
Telex: 232423 RCA
<PAGE>
SCHEDULE I
SCHEDULE OF BANKS
Bank Commitment
(in millions)
Union Bank of Switzerland. . . . . . . . . . . . . . $ 82.50
Commerzbank AG . . . . . . . . . . . . . . . . . . . 75.00
Bayerische Hypotheken-und Wechsel-Bank
Aktiengesellschaft. . . . . . . . . . . . . . . . . 63.75
The Bank of New York . . . . . . . . . . . . . . . . 56.25
The Bank of Nova Scotia. . . . . . . . . . . . . . . 56.25
The Bank of Tokyo Limited. . . . . . . . . . . . . . 56.25
The Chase Manhattan Bank, N.A. . . . . . . . . . . . 56.25
Chemical Bank. . . . . . . . . . . . . . . . . . . . 56.25
Deutsche Bank AG . . . . . . . . . . . . . . . . . . 56.25
Dresdner Bank AG . . . . . . . . . . . . . . . . . . 56.25
First Interstate Bank of California. . . . . . . . . 56.25
The Fuji Bank, Limited . . . . . . . . . . . . . . . 56.25
The Sanwa Bank Limited . . . . . . . . . . . . . . . 56.25
Societe Generale . . . . . . . . . . . . . . . . . . 56.25
The Dai-Ichi Kangyo Bank, Ltd. . . . . . . . . . . . 45.00
The Sakura Bank Ltd. . . . . . . . . . . . . . . . . 45.00
Daiwa Bank Trust Company . . . . . . . . . . . . . . 37.50
Royal Bank of Canada . . . . . . . . . . . . . . . . 37.50
Westdeutsche Landesbank Girozentrale . . . . . . . . 37.50
Banco di Napoli S.p.A. . . . . . . . . . . . . . . . 30.00
Banca Nazionale del Lavoro, S.p.A. . . . . . . . . . 22.50
Bayerische Landesbank Girozentrale . . . . . . . . . 22.50
The Mitsui Trust & Banking Company, Limited. . . . . 22.50
Banco Central Hispanoamericano . . . . . . . . . . . 18.75
Bank of Hawaii . . . . . . . . . . . . . . . . . . . 18.75
Barclays Bank PLC. . . . . . . . . . . . . . . . . . 18.75
First Hawaiian Bank. . . . . . . . . . . . . . . . . 18.75
First Union National Bank of North Carolina. . . . . 18.75
The Industrial Bank of Japan, Limited. . . . . . . . 18.75
Istituto Bancario San Paolo di Torino S.p.A. . . . . 18.75
CIBC, Inc. . . . . . . . . . . . . . . . . . . . . . 15.00
Banque Nationale de Paris. . . . . . . . . . . . . . 11.25
Citicorp USA, Inc... . . . . . . . . . . . . . . . . 11.25
DG Bank Deutsche Genossenschaftsbank . . . . . . . . 11.25
Kredietbank NV . . . . . . . . . . . . . . . . . . . 11.25
The Tokai Bank, Ltd. . . . . . . . . . . . . . . . . 11.25
The Chuo Trust & Banking Co., Ltd. . . . . . . . . . 7.50
<PAGE>
SCHEDULE II
FEES AND MARGINS
(IN BASIS POINTS)
UNSUBORDINATED Aa3/AA- A2/A or A3/A-(1) Baa2/BBB Baa3/BBB-
UNSECURED or higher(1) higher but or higher or below(1)
LONG-TERM DEBT lower than but lower
RATINGS AA3/AA-(1) than A3/A-(1)
Facility Fee 9.00 10.00 12.50 25.00 37.50
Margins:
LIBOR 21.00 25.00 30.00 45.00 60.00
CD 33.50 37.50 42.50 57.50 72.50
Base -- -- -- -- --
Competitive Bid Option . . . . . As Bid by the Banks
Utilization Fee:
Borrowing(2) 5.00 5.00 5.00 5.00 5.00
_____________________________
(1) In determining the applicable fees or rate margin, the
effective date of any fee or margin change shall be the date
on which either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc. announces a change in the rating of
the Company's Unsubordinated Unsecured Long-Term Debt, if
such change results in a change in any applicable fee or
rate margin. In the event of a split rating as between
Standard & Poor's Ratings Group and Moody's Investors
Service, Inc., the lower rating shall apply.
(2) Applicable when the aggregate amount of Committed Loans
outstanding is greater than 50% of the Aggregate
Commitments.
<PAGE>
Exhibit A
FORM OF
NOTICE OF COMPETITIVE BID BORROWING
________________, 19__
Union Bank of Switzerland, as Agent
299 Park Avenue
New York, New York 10171-0026
Attention: James Broadus
Ladies and Gentlemen:
This instrument constitutes a Notice of Competitive Bid
Borrowing under, and as defined by, the $1,350,000,000 Revolving
Credit Agreement, dated as of February 2, 1995 (as amended,
modified or supplemented, the "Credit Agreement"), among
International Lease Finance Corporation (the "Company"), Union
Bank of Switzerland, in its individual corporate capacity and as
Agent, and certain financial institutions referred to therein.
Terms not otherwise expressly defined herein shall have the
meanings set forth in the Credit Agreement.
The Company hereby requests (a) Bid Loan(s), subject to
the terms of the Credit Agreement, as follows:
(a) Funding Date: ________________, 19__.
(b) Aggregate principal amount of Bid Loans requested:
$____________.
(c) Loan Period(s):(1)
Absolute Rate Loans: ___ days ___ days ___ days
LIBOR Rate Loans: __ months __ months __ months
(d) Account of the Company to be credited: __________
The officer of the Company signing this Notice of
Competitive Bid Borrowing hereby certifies that the following
statements are true on the date hereof and will be true on the
proposed Funding Date:
(a) Before and after giving effect to the Bid Loans
requested hereby, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing
or shall result from the making of such Loan; and
(b) Before and after giving effect to the Bid Loans
requested hereby, the representations and warranties
set forth in Section 8 of the Credit Agreement shall be
true and correct in all material respects as of the
date of such requested Loans with the same effect as
though made on the date of such Bid Loans.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:_________________________
Its:________________________
_________________
(1) The Company may select up to three loan periods per Notice of
Competitive Bid Borrowing.
<PAGE>
Exhibit B
FORM OF
BID FROM [Name of Bank]
(Contact Person:___________)
______________, 19__
Union Bank of Switzerland, as Agent
299 Park Avenue
New York, New York 10171-0026
Attention: James Broadus
Ladies and Gentlemen:
This instrument constitutes a Bid under, and as defined
by, the $1,350,000,000 Revolving Credit Agreement, dated as of
February 2, 1995 (as amended, modified or supplemented, the
"Credit Agreement"), among International Lease Finance
Corporation (the "Company"), Union Bank of Switzerland in its
individual capacity and as Agent, and certain financial
institutions referred to therein, including the undersigned.
Terms not otherwise expressly defined herein shall have the
meanings set forth in the Credit Agreement.
(1) The Company's related Notice of Competitive Bid
Borrowing, dated _____________, 19__, inviting this Bid has
requested a Bid Loan, subject to the terms and conditions of
the Credit Agreement, in the aggregate principal amount of
$____________ with a Funding Date of _______________, 19__.
(2) The undersigned hereby offers to make the
following Bid Loan(s) on the Funding Date:(1)
___________________
(1) $10,000,000 or a higher integral multiple of $1,000,000.
<PAGE>
(a) Loan Period of ___ days ___ months
Principal Amount Interest Rate or
+
Minimum Maximum LIBOR - Margin
1. $(1) $(1) (2)
2. $(1) $(1) (2)
3. $(1) $(1) (2)
4. $(1) $(1) (2)
(3) The undersigned's lending office for the proposed
Bid Loan is _______________________________.
(4) The undersigned acknowledges that the offer(s) set
forth above, subject to the satisfaction of the applicable
conditions precedent set forth in the Credit Agreement,
irrevocably obligate(s) the undersigned to make the Bid Loan(s)
for which an offer(s) are accepted, in whole or in part, in
accordance with the terms of the Credit Agreement.
Very truly yours,
[NAME OF BANK]
By:__________________________
Its:_________________________
______________________
(1) $10,000,000 or a higher integral multiple of $1,000,000 for
each interest rate (i.e., Portion) for each Loan Period.
(2) Specify the interest rate per annum (expressed as a
percentage to four decimal places) in the case of an
Absolute Rate Loan and the margin above or below LIBOR in
the case of a LIBOR Rate Loan.
<PAGE>
Exhibit C
FORM OF
COMMITTED LOAN REQUEST
______________, 19__
Union Bank of Switzerland, as Agent
299 Park Avenue
New York, New York 10171-0026
Attention: James Broadus
Ladies and Gentlemen:
This constitutes a Committed Loan Request under, and as
defined by, the $1,350,000,000 Revolving Credit Agreement, dated
as of February 2, 1995 (as amended, modified or supplemented, the
"Credit Agreement"), among International Lease Finance
Corporation (the "Company"), Union Bank of Switzerland, in its
individual capacity and as Agent, and certain financial
institutions referred to therein. Terms not otherwise expressly
defined herein shall have the meanings set forth in the Credit
Agreement.
The Company hereby requests that the Banks make
Committed Loans to it, subject to the terms and conditions of the
Credit Agreement, as follows:
(a) Funding Date: _________________, 19__.
(b) Aggregate principal amount of Committed Loans
requested: $______________.
(c) Loan Period: ___________.
(e) Type of Loans: [LIBOR Rate Loans] [Base Rate
Loans] [CD Rate Loans]
The officer of the Company signing this Committed Loan
Request hereby certifies that:
(a) Before and after giving effect to the Committed Loans
requested hereby, no Event of Default or Unmatured
Event of Default shall have occurred and be continuing
or shall result from the making of such Loans;
(b) Before and after giving effect to the Loans requested
hereby, the representations and warranties set forth in
Section 8 of the Credit Agreement shall be true and
correct in all material respects with the same effect
as though made on the date of such Loans; and
(c) After the making of the Loans requested hereby, the
aggregate principal amount of all outstanding Loans
will not exceed the Aggregate Commitment.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:____________________________
Its:___________________________
<PAGE>
Exhibit D
FORM OF BID NOTE
$1,350,000,000 February 2, 1995
International Lease Finance Corporation, a California
corporation (the "Company"), for value received, hereby promises
to pay to the order of [NAME OF BANK] (the "Bank"), at the New
York branch office of Union Bank of Switzerland, as Agent (the
"Agent"), at 299 Park Avenue, New York, New York 10171-0026 on
February __, 1998, or at such other place, to such other person
or at such other time and date as provided for in the
$1,350,000,000 Revolving Credit Agreement (as amended, modified
or supplemented, the "Credit Agreement"), dated as of
February __, 1995, among the Company, the Agent, and the
financial institutions named therein, in lawful money of the
United States, the principal sum of $1,350,000,000 Dollars or, if
less, the aggregate unpaid principal amount of all Bid Loans made
by the Bank to the Company pursuant to the Credit Agreement.
This Bid Note shall bear interest as set forth in the Credit
Agreement for Bid Borrowings (as defined in the Credit
Agreement).
Except as otherwise provided in the Credit Agreement
with respect to LIBOR Rate Loans, if interest or principal on any
loan evidenced by this Note becomes due and payable on a day
which is not a Business Day (as defined in the Credit Agreement)
the maturity thereof shall be extended to the next succeeding
Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is one of the Bid Notes referred to in the
Credit Agreement. This Note is subject to prepayment in whole or
in part, and the maturity of this Note is subject to
acceleration, upon the terms provided in the Credit Agreement.
This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of
California, without reference to principles of conflicts of law.
All Bid Loans made by the Bank to the Company pursuant
to the Credit Agreement and all payments of principal thereof may
be indicated by the Bank upon the grid attached hereto which is a
part of this Note. Such notations shall be rebuttable
presumptive evidence of the aggregate unpaid principal amount of
all Bid Loans made by the Bank pursuant to the Credit Agreement.
INTERNATIONAL LEASE FINANCE CORPORATION
By_____________________________________
Title:
<PAGE>
Bid Loans and Payments of Principal
<TABLE>
<C> <S> <S> <S> <S> <S> <S> <S>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit E
FORM OF COMMITTED NOTE
$_______________ February 2, 1995
International Lease Finance Corporation, a California
corporation (the "Company"), for value received, hereby promises
to pay to the order of [NAME OF BANK] (the "Bank"), at the New
York branch office of Union Bank of Switzerland, as Agent (the
"Agent"), at 299 Park Avenue, New York, New York 10171-0026 on
February __, 1998, or at such other place, to such other person
or at such other time and date as provided for in the
$1,350,000,000 Revolving Credit Agreement (as amended, modified
or supplemented, the "Credit Agreement"), dated as of
February __, 1995, among the Company, the Agent, and the
financial institutions named therein, in lawful money of the
United States, the principal sum of $_________ Dollars or, if
less, the aggregate unpaid principal amount of all Committed
Loans made by the Bank to the Company pursuant to the Credit
Agreement. This Committed Note shall bear interest as set forth
in the Credit Agreement for Base Rate Loans, CD Rate Loans and
LIBOR Rate Loans (as defined in the Credit Agreement), as the
case may be.
Except as otherwise provided in the Credit Agreement
with respect to LIBOR Rate Loans, if interest or principal on any
loan evidenced by this Note becomes due and payable on a day
which is not a Business Day (as defined in the Credit Agreement)
the maturity thereof shall be extended to the next succeeding
Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is one of the Committed Notes referred to in
the Credit Agreement. This Note is subject to prepayment in
whole or in part, and the maturity of this Note is subject to
acceleration, upon the terms provided in the Credit Agreement.
This Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of
California, without reference to principles of conflicts of law.
All Committed Loans made by the Bank to the Company
pursuant to the Credit Agreement and all payments of principal
thereof may be indicated by the Bank upon the grid attached
hereto which is a part of this Note. Such notations shall be
rebuttable presumptive evidence of the aggregate unpaid principal
amount of all Committed Loans made by the Bank pursuant to the
Credit Agreement.
INTERNATIONAL LEASE FINANCE CORPORATION
By_____________________________________
Title:
<PAGE>
Bid Loans and Payments of Principal
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit F
FIXED CHARGE COVERAGE RATIO(1)
FOR THE PERIOD ENDED SEPTEMBER 30, 1994
12 Months Ended
September 30, 1994
(Dollars in thousands)
Earnings
Net Income . . . . . . . . . . . . . . . . $208,487,000
Add:
Provision for income taxes. . . . . . . . 124,699,000
Fixed charges . . . . . . . . . . . . . . 390,637,000
Less:
Capitalized interest. . . . . . . . . . . (41,909,000)
Earnings as adjusted (A). . . . . . . . . . 681,914,000
Preferred dividend requirements . . . . . . $5,814,000
Ratio of income before provision for
income taxes to net income. . . . . . . 158%
Preferred dividend factor on
pretax basis. . . . . . . . . . . . . 9,197,000
Fixed charges
Interest expense. . . . . . . . . . . . 348,728,000
Capitalized interest. . . . . . . . . . 41,909,000
Estimate of minimum rents under
operating leases representing the
interest factor . . . . . . . . . . . . 0
Fixed charges as adjusted . . . . . . . . . 390,637,000
Fixed charges and preferred
stock dividends (B) . . . . . . . . . . . $399,833,000
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))(1). . . . . . . . . . . . . . . . . 1.71 to 1.00
- -----------------
(1) As calculated pursuant to Section 9.11 and the definition
of Fixed Charge Coverage Ratio set forth in Section 1.2.
<PAGE>
Exhibit G
February 2, 1995
To the Financial Institutions and
the Agent Referred to Below
c/o Union Bank of Switzerland
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Ladies and Gentlemen:
We have acted as special counsel for International
Lease Finance Corporation (the "Company") in connection with a
$1,350,000,000 Revolving Credit Agreement and a $450,000,000
Revolving Credit Agreement, in each case dated as of February 2,
1995 among the Company, Union Bank of Switzerland acting through
its Los Angeles Branch, in its individual capacity and as Agent,
and certain financial institutions ("Banks") signatory thereto
(collectively, the "Credit Agreement"). Terms defined in the
Credit Agreement are used herein as therein defined.
In our capacity as such counsel, we have examined
originals, or copies certified or otherwise identified to our
satisfaction as being true copies of such records, documents or
other instruments as in our judgment are necessary or appropriate
to enable us to render the opinions expressed below. We have
been furnished, and have relied upon, certificates of officers of
the Company with respect to certain factual matters regarding the
Company. As to matters of fact, we have also relied on the
representations and warranties made by the Company in the Credit
Agreement. In addition, we have obtained and relied upon such
certificates and assurances from public officials as we have
deemed necessary.
Except with respect to the Company and its
Subsidiaries, in our review and examination we have assumed the
authenticity of documents submitted to us as originals and the
conformity to authentic original documents of all documents
submitted to us as conformed or photostatic copies. For the
purpose of the opinions hereinafter expressed, we have assumed
the due execution and delivery, pursuant to due authorization, of
each document referred to in this opinion by each party thereto
other than the Company and its subsidiaries, that each document
constitutes the legally valid and binding obligation of each such
other party and that such other person is duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization.
We have investigated such questions of law for the
purpose of rendering this opinion as we have deemed necessary. We
are opining herein as to the effect on the subject transactions
of only United States federal law and the laws of the State of
California.
<PAGE>
Upon the basis of the foregoing, we are of the opinion
that:
1. Each of the Company and Interlease Management
Corporation, Interlease Aviation Corporation, Atlantic
International Aviation Holdings, Inc., Aircraft SPC-1, Inc.,
Aircraft SPC-2, Inc. and ILFC Aircraft Holding Corporation has
been duly incorporated and is existing and in good standing under
the laws of the State of California.
2. The Company has the corporate power to own its
properties and conduct its business as described in the Company's
Annual Report on Form 10-K for its fiscal year ended December 31,
1993.
3. The Company has the corporate power and corporate
authority to enter into the Credit Agreement, to make the
borrowings under the Credit Agreement, to execute and deliver the
Notes and to incur the obligations provided for therein, all of
which have been duly authorized by all necessary corporate action
on the part of the Company.
4. No authorizations, consents, approvals,
registrations, filings and licenses with or from any California
or federal court or governmental agency or body are necessary for
the borrowing, the execution and delivery of the Credit Agreement
and the Notes, and the performance by the Company of its
obligations thereunder and under the Notes.
5. The Credit Agreement and the Notes have been duly
executed and delivered by the Company and constitute the legally
valid and binding obligations of the Company enforceable against
the Company in accordance with their respective terms.
<PAGE>
6. Neither the execution and delivery of the Credit
Agreement by the Company, nor the performance thereof by the
Company on or prior to the date hereof nor the payment of the
Notes violates the Articles of Incorporation or Bylaws of the
Company, breaches or results in a default under any of the
agreements, instruments, contracts, orders, injunctions or
judgments identified to us in an officer's certificate of the
Company (a copy of which is being delivered to you concurrently
herewith) as agreements, instruments, contracts, orders,
injunctions or judgments binding on the Company or by which its
assets are bound which have provisions relating to the issuance
by the Company of debt and which the breach of, or default under,
would have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole, or violates any present federal or
California statute, rule or regulation binding on the Company or
its assets.
7. The making of the Loans and the use of the
proceeds thereof as provided in the Credit Agreement will not
violate Regulation U, G, T or X of the Board of Governors of the
Federal Reserve System.
8. The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
Our opinions in paragraph 5 above as to the validity,
binding effect or enforceability of the Credit Agreement and the
Notes are subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors'
rights generally, general principles of equity, including
(without limitation) concepts of materiality, reasonableness,
good faith and fair dealing and the possible unavailability of
specific performance or injunctive relief, regardless of whether
considered in a proceeding in equity or at law.
Our opinions rendered in paragraphs 4 and 6 above are
based upon our review only of those statutes, rules and
regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Credit Agreement and
the Notes.
<PAGE>
In rendering our opinions in paragraph 4 above, we have
assumed that each Bank is a sophisticated financial institution
capable of evaluating the merits and risks relating to the Notes,
and that each Bank has been provided access to such information
relating to the Company as such Bank has requested.
Except as expressly set forth in paragraph 7 above, we
are not expressing any opinion as to the effect of the Agent's or
any Bank's compliance with any state or federal laws or
regulations applicable to the transactions contemplated by the
Company because of the nature of the Agent's or any Bank's
business.
This opinion is furnished to you in connection with the
Company's execution and delivery of the Credit Agreement, is
solely for your benefit and the benefit of your successors and
assigns, and may not be relied upon by, nor may copies be
delivered to, any other person, without our prior written
consent.
Very truly yours,
<PAGE>
Exhibit H
February 2, 1995
To the Financial Institutions and
the Agent Referred to Below
c/o Union Bank of Switzerland
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Ladies and Gentlemen:
I am General Counsel for International Lease Finance
Corporation (the "Company") and am rendering this opinion in
connection with a $1,350,000,000 Revolving Credit Agreement and a
$450,000,000 Revolving Credit Agreement, in each case dated as of
February 2, 1995 among the Company, Union Bank of Switzerland
acting through its Los Angeles Branch, in its individual capacity
and as Agent, and certain financial institutions ("Banks")
signatory thereto (collectively, the "Credit Agreement"). Terms
defined in the Credit Agreement are used herein as therein
defined.
I have examined originals, or copies certified or
otherwise identified to my satisfaction as being true copies, of
such documents, corporate records, certificates of public
officials and other instruments and have conducted such other
investigations of fact and law as I have deemed necessary or
advisable for purposes of this opinion. I am opining herein as
to the effect on the subject transactions of only United States
federal law and the laws of the State of California.
Upon the basis of the foregoing, I am of the opinion
that:
1. The Company is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction in which the ownership or leasing of its
property or the conduct of its business requires it to be so
qualified; provided, however, that the Company may not be so
qualified in certain jurisdictions, the effect of which would not
have a Material Adverse Effect on the Company.
2. To the best of my knowledge, Interlease Aviation
Corporation, ILFC Aircraft Holding Corporation, Interlease
Management Corporation, Aircraft SPC-1, Inc., Aircraft SPC-2,
Inc. and Atlantic International Aviation Holdings, Inc., a wholly
owned subsidiary of Interlease Management Corporation, are the
only domestic Subsidiaries of the Company.
<PAGE>
3. No Subsidiary of the Company nor all of the
Subsidiaries of the Company taken as a whole is a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated
under the Securities Exchange Act of 1934, as amended.
4. There is no pending or, to the best of my
knowledge, threatened action, suit or proceeding before any court
or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries which,
individually or in the aggregate, would have a Material Adverse
effect on the Company and its Subsidiaries taken as a whole.
This opinion is furnished to you in connection with the
Company's execution and delivery of the Credit Agreement, is
solely for your benefit and the benefit of your successors and
assigns, and may not be relied upon by, nor may copies be
delivered to, any other person without my prior written consent.
Very truly yours,
Julie I. Sackman
General Counsel
<PAGE>
Exhibit I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ____________________, 199_
between [ASSIGNOR] (the "Assignor") and [ASSIGNEE] (the
"Assignee").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the $1,350,000,000 Revolving Credit
Agreement dated as of February 2, 1995 (the "Credit Agreement")
among International Lease Finance Corporation (the "Company"),
the Assignor and Union Bank of Switzerland, in its individual
corporate capacity and as Agent (the "Agent"), and certain
financial institutions referred to therein;
WHEREAS, as provided under the Credit Agreement, the
Assignor has a Commitment to make Committed Loans in an aggregate
principal amount at any time outstanding not to exceed
$___________;
WHEREAS, Committed Loans and Bid Loans made by the
Assignor under the Credit Agreement in the respective aggregate
principal amounts of $____________ and $____________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the
Assignee all of the rights of the Assignor under the Credit
Agreement in respect of a portion of its Commitment thereunder in
an amount equal to $ (1) (the "Assigned Amount") together
with $ (1) aggregate principal amount outstanding of
Committed Loans and $ (2) aggregate principal amount
outstanding of Bid Loans (collectively, the "Assigned Loans"),
and the Assignee proposes to accept assignment of such rights and
assume the corresponding obligations from the Assignor on the
terms set forth in the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein, the parties hereto agree
as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set
forth in the Credit Agreement.
- ---------------
(1) See Section 13.4.1 for minimum requirements.
(2) Assignment of Bid Loans is optional.
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns
and sells to the Assignee all of the rights of the Assignor under
the Credit Agreement to the extent of the Assigned Amount and the
Assigned Loans, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned
Amount and the Assigned Loans. Upon the execution and delivery
hereof by the Assignor, the Assignee, the Company and the Agent
and the payment of the amounts specified in Section 3 required to
be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Credit Agreement with a
Commitment in an amount equal to the Assigned Amount and (ii) the
Commitment of the Assignor shall, as of the date hereof, be
reduced by a like amount and the Assignor released from its
obligations under the Credit Agreement to the extent such
obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the
assignment and sale contemplated in Section 2 hereof, the
Assignee shall pay to the Assignor on the date hereof in Federal
funds an amount equal to $_________(1). It is understood that
facility fees and utilization fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and
including the date hereof are for the account of the Assignee.
Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for
the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such
other party.
- ------------------
(1) Amount should combine principal and face together with
accrued interest and breakage compensation, if any, to
be paid by the Assignee, net of any portion of any fee
to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
<PAGE>
SECTION 4. Consent of the Company and the Agent. This
Agreement is conditioned upon the consent of the Company and the
Agent pursuant to Section 13.8 of the Credit Agreement. The
execution of this Agreement by the Company and the Agent is
evidence of this consent. Pursuant to Section 13.8 the Company
agrees to execute and deliver a Bid Note and a Committed Note,
each payable to the order of the Assignee and evidencing the
assignment and assumption provided for herein. The Company also
agrees to execute replacement Notes in favor of the Assignor if
the Assignor has retained any Commitment.
SECTION 5. Non-Reliance on Assignor. The Assignor
makes no representation or warranty in connection with, and shall
have no responsibility with respect to, the solvency, financial
condition, or statements of the Company, or the validity and
enforceability of the obligations of the Company in respect of
the Credit Agreement or any Note. The Assignee acknowledges that
it has, independently and without reliance on the Assignor, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and will continue to be responsible for
making its own independent appraisal of the business, affairs and
financial condition of the Company.
SECTION 6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of California.
SECTION 7. Counterparts. This Agreement may be signed
in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By____________________________
Title:
[ASSIGNEE]
By____________________________
Title:
Consented, and with
respect to Section 4,
agreed:
INTERNATIONAL LEASE FINANCE
CORPORATION
By____________________________
Title:
Consented:
UNION BANK OF SWITZERLAND,
as Agent
By____________________________
Title:
By____________________________
Title:
<PAGE>
Exhibit J
FORM OF REQUEST FOR EXTENSION OF
TERMINATION DATE
________________, 19__
[ADDRESSED TO EACH BANK] [ADDRESSED TO THE AGENT]
Attention:
Ladies and Gentlemen:
This instrument constitutes [a notice to the Agent of]
a request for the extension of the Termination Date pursuant to
Section 13.8 of the $1,350,000,000 Revolving Credit Agreement,
dated as of February 2, 1995 (as amended, modified or
supplemented, the "Credit Agreement"), among International Lease
Finance Corporation (the "Company"), Union Bank of Switzerland,
in its individual corporate capacity and as Agent, and certain
financial institutions referred to therein. Terms not otherwise
expressly defined herein shall have the meanings set forth in the
Credit Agreement.
The Company [hereby requests that you extend your] [has
sent a letter to each Bank that is now a party to the Credit
Agreement asking such Bank to extend its] now scheduled
Termination Date under the Credit Agreement by one calendar year.
The officer of the Company signing this instrument
hereby certifies that:
(a) Before and after giving effect to the extension of the
Termination Date requested hereby, no Event of Default or
Unmatured Event of Default shall have occurred and be continuing
[and all Loans payable prior to the date hereof shall have been
paid in full]; and
(b) Before and after giving effect to the extension of the
Termination Date requested hereby, the representations and
warranties set forth in Section 8 of the Credit Agreement shall
be true and correct in all material respects with the same effect
as though made on the date hereof.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:_________________________
Its:________________________
Confirmed and accepted, subject to
the terms and conditions of
the Credit Agreement, as of the
date first above written:
[NAME OF BANK]
By:____________________________
Its:
<PAGE>
EXHIBIT 12
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
13 MONTHS YEARS ENDED
ENDED DECEMBER 31,
DECEMBER 31, --------------------------------------
1990 1991 1992 1993 1994
------------ -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earnings
Net income............... $ 69,901 $ 89,530 $157,749 $168,565 $201,943
Add:
Provision for income
taxes.................. 46,064 50,170 88,491 109,075 110,064
Fixed charges........... 211,802 230,984 279,827 340,568 421,170
Less:
Capitalized interest.... 33,630 38,947 36,291 39,363 44,610
-------- -------- -------- -------- --------
Earnings as adjusted (A). $294,137 $331,737 $489,776 $578,845 $688,567
======== ======== ======== ======== ========
Preferred dividend
requirements............ $ 4,916 $ -- $ -- $ 2,692 $ 6,890
Ratio of income before
provision for income
taxes to net
income................. 176% 156% 156% 165% 155%
-------- -------- -------- -------- --------
Preferred dividend
factor on pretax
basis.................. 8,652 -- -- 4,442 10,680
-------- -------- -------- -------- --------
Fixed charges
Interest expense........ 178,172 192,037 243,536 301,205 376,560
Capitalized interest.... 33,630 38,947 36,291 39,363 44,610
-------- -------- -------- -------- --------
Fixed charges as adjust-
ed...................... 211,802 230,984 279,827 340,568 421,170
-------- -------- -------- -------- --------
Fixed charges and
preferred stock
dividends(B)............ $220,454 $230,984 $279,827 $345,010 $431,850
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges and preferred
stock dividends
((A) divided by (B))..... 1.33x 1.44x 1.75x 1.68x 1.59x
===== ===== ===== ===== =====
</TABLE>
38
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 33-52763) of International Lease Finance Corporation and in the
related Prospectus of our report dated February 21, 1995, with respect to the
consolidated financial statements and schedule of International Lease Finance
Corporation included in this Annual Report (Form 10-K) for the year ended
December 31, 1994.
ERNST & YOUNG LLP
Century City,
Los Angeles, California
March 16, 1995
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 52,891
<SECURITIES> 0
<RECEIVABLES> 355,151
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 9,928,416
<DEPRECIATION> 1,077,337
<TOTAL-ASSETS> 10,353,132
<CURRENT-LIABILITIES> 0
<BONDS> 7,583,006
<COMMON> 3,582
0
200,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 10,353,132
<SALES> 1,069,789
<TOTAL-REVENUES> 1,110,056
<CGS> 0
<TOTAL-COSTS> 421,489
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 376,560
<INCOME-PRETAX> 312,007
<INCOME-TAX> 110,064
<INCOME-CONTINUING> 201,943
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201,943
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
