<PAGE>
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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, 1995
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 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1999 AVENUE OF THE STARS, LOS ANGELES, 90067
CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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, 1996, 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.
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<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION
1995 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
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
Financial
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.
As of December 31, 1995, the Company owned 278 aircraft including aircraft
owned in joint ventures. See "Item 2. Properties--Flight Equipment." At
December 31, 1995, the Company had committed to purchase, or had secured
positions for (which were subsequently committed), 292 aircraft deliverable
through 2004 at an estimated aggregate purchase price of $15.9 billion. It
also had options to purchase an additional 34 aircraft deliverable through
2005 at an estimated aggregate purchase price of $2.5 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 an
indirect 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. The Common Stock of AIG is listed on, among others,
the New York Stock Exchange.
1
<PAGE>
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, 1995, three of the Company's leases were
accounted for as finance 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.
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.
2
<PAGE>
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.
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 $85,981,000. See Note K 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 financings, 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, 1995, lessees of the Company included: (domestic) Alaska
Airlines, American Trans Air, Carnival Air Lines, Continental Airlines, Millon
Air, North American Airlines, Southwest Airlines, Tower Air, Trans World
Airlines (TWA) and World Airways; (foreign) Aer Lingus, Aero Lloyd Flugreisen,
Aeromexico, Air 2000, Air Afrique, Air Canada, Air Espana, Air Europe SpA, Air
Inter, Air Liberte, Air Macau, Air Madagascar, Air Mauritius, Air New Zealand,
Air Pacific, Air Seychelles, Air Transat, Air UK, Asiana, Baikal Airlines,
Braathens S.A.F.E., Britannia Airways, British Airways, British Midland
Airways, BWIA International, Canada 3000, Cathay Pacific, China Airlines,
China Hainan Airlines, China Southern Airlines, China Southwest Airlines,
Emirates, Estonian Air, EVA Airways, Garuda Indonesia, GB Airways, Guyana
Airways, Hapag-Lloyd Flug, Hong Kong Dragon Airlines (Dragonair), Kenya
Airways, KLM Royal Dutch Airlines, Korean Airlines, L'Aeropostale, LACSA,
Lineas Aereas Privadas Argentinas, S.A. (LAPA), Lloyd Aero Boliviano (LAB),
Ladeco S.A., LAN Chile, Linjeflyg AB (a wholly-owned subsidiary of SAS), LTU
Luftransport-Unternehmen, Lufthansa Cargo, Malev Hungarian Airlines, Martinair
Holland, Middle East Airlines Airliban, Monarch Airways, National Jet Systems,
Nordic East, ONUR Air, Pegasus, Polynesian Airways, QANTAS Airways, SAETA,
Sahara India Airlines, Sichuan Airlines, Sunquest Vacations Limited, Swissair,
TACA International Airlines, TAP Air Portugal, TAT European Airlines, TEA
Basel, THY, Transaero Airlines, Transavia, 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
$1,002,251,000 (1995), $798,619,000 (1994) and $655,773,000 (1993) comprising
80.0%, 80.4% and 82.4%, respectively, of total rentals of flight equipment.
See Note J 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>
1995 1994 1993
---------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- -------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe....................... $ 462,252 36.9% $353,009 35.5% $261,523 32.9%
Asia/Pacific................. 255,163 20.4 180,215 18.2 169,036 21.2
Central, South America and
Mexico...................... 166,443 13.2 199,041 20.0 171,577 21.6
United States and Canada..... 304,784 24.3 230,856 23.2 171,720 21.6
Africa and the Middle East... 65,378 5.2 30,475 3.1 21,581 2.7
---------- ----- -------- ----- -------- -----
$1,254,020 100.0% $993,596 100.0% $795,437 100.0%
========== ===== ======== ===== ======== =====
</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. As a result, foreign currency risk is immaterial to the Company.
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 seven
instances from January 1990 through December 1994, 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 six instances, the aircraft were on lease to
foreign airlines. In 1995, the Company repossessed one A320 from a lessee and
terminated early the lease of one A320. Both aircraft were promptly released
to other customers.
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, 1995, the Company had 74 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. Additionally, all
aircraft in the Company's fleet are covered by Contingent Liability insurance.
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 subsidiaries, 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, 1995, all 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, 1995, the average age of the Company's flight equipment was 4.13
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, 1995:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TOTAL
- - ------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300................. 3 13 7 5 5 6 6 1 4 2 52
737-400................. 3 8 8 7 10 3 3 7 7 56
737-500................. 3 2 2 1 1 9
757-200................. 3 5 6 4 5 2 3 4 2 4 38
767-200................. 1 1 1 3 6
767-300................. 3 2 2 4 4 2 1 18
747-200................. 1 1 2
747-300................. 3 3
747-400................. 1 3 1 1 1 7
MD-82................... 1 1
MD-83................... 1 3 3 1 3 11
MD-87................... 1 1 2
MD-11................... 1 2 1 2 6
F-70.................... 1 1
F-100 (a)............... 7 7
A300-600R............... 1 1 1 3 1 1 8
A310-200 (a)............ 1 4 5
A310-300................ 1 1 3 1 1 6
A320.................... 11 7 1 4 1 2 1 27
A321.................... 2 1 3
A330.................... 6 1 7
A340.................... 1 2 3
L-1011.................. 1 2 1 4
--- --- --- --- --- --- --- --- --- --- ---
Total................... 25 64 39 37 39 19 18 20 13 8 282
</TABLE>
- - ------------
(a) As of March 1, 1996, all F-100 aircraft are committed for sale in 1996. In
addition, all A310-200 aircraft are committed for sale in 1996 and 1997.
This schedule does not include 3 A310-200 aircraft committed for sale in
1996 yet unleased at December 31, 1995. This schedule includes seven aircraft
leased by the Company and subleased to others.
6
<PAGE>
COMMITMENTS
At December 31, 1995 the Company had committed to purchase, or had secured
positions for (which were subsequently committed), the following aircraft at
an estimated aggregate purchase price (including adjustment for anticipated
inflation) of approximately $15.9 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1996 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL
- - ------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300/400/500 (a).......... 17 10 4 31
737-600/700/800 (a).......... 2 8 9 9 9 9 7 2 55
757-200...................... 7 10 7 1 25
767-300...................... 8 8 6 22
777-200/300 (a).............. 2 3 3 4 3 3 3 3 24
747-400...................... 1 1 1 1 4
A300-600R.................... 1 1
A310-200 (b)................. 6 6
A319......................... 2 3 3 4 3 1 16
A320-200..................... 9 9 9 5 4 2 38
A321-100..................... 6 7 6 8 6 2 1 1 37
A330-200/300 (a)............. 3 1 3 2 1 1 2 2 15
A340......................... 2 3 2 2 2 2 2 1 16
F-70......................... 2 2
--- --- --- --- --- --- --- --- --- ---
Total....................... 64 56 52 35 29 19 18 14 5 292
</TABLE>
- - --------
(a) The Company has the right to designate the size of the aircraft within
the specific model type at specified dates prior to contractual
delivery.
(b) All A310-200 aircraft are commited for sale in 1996 and 1997.
At December 31, 1995, the Company had options to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $2.5 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1998 1999 2000 2001 2002 2003 2004 2005 TOTAL
- - ------------- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
757-200........................... 1 5 6
767-300........................... 4 4
777-200/300....................... 2 2
A319.............................. 3 1 1 5
A320-200.......................... 3 1 1 2 7
A321-100.......................... 1 1 1 3
A330-200/300...................... 1 3 4
A340.............................. 1 2 3
--- --- --- --- --- --- --- --- ---
Total............................ 1 10 0 6 2 4 9 2 34
</TABLE>
If all 326 aircraft were to be acquired, the estimated aggregate purchase
price (including adjustment for anticipated inflation) would be approximately
$18.4 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") and AVSA,
S.A.R.L., the sales subsidiary of Airbus Industrie ("Airbus").
The aircraft listed above are either being purchased, or the options to
purchase have been granted, pursuant to purchase agreements executed by the
Company and Boeing or Airbus. 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, 1995, 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
$389,788,000 and $322,537,000 with Boeing and Airbus, respectively.
As of March 15, 1996, the Company had entered into contracts for all of the
64 aircraft to be delivered in 1996, 33 of the 56 aircraft to be delivered in
1997, 4 of the 52 aircraft to be delivered in 1998, 2 of the 35 aircraft to be
delivered in 1999 and 5 of the 85 aircraft to be delivered subsequent to 1999.
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 $1,627,000, 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 indirectly 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, 1993, 1994 and 1995, the Company paid cash
dividends to its parent company of $11,359,000, $13,462,000, and $21,150,000,
respectively. It is the intent of the Company to pay its parent company an
annual dividend of at least 7% of net income subject to the dividend preference
of any preferred stock outstanding. Under the most restrictive provisions of
the Company's borrowing arrangements, consolidated retained earnings at
December 31, 1995 in the amount of $221,744,000 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>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------
1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Rentals of flight equipment....... $ 433,505 $ 628,600 $ 795,437 $ 993,596 $ 1,254,020
Flight equipment marketing........ 38,238 46,845 53,680 76,193 119,078
Interest and other income......... 54,968 55,072 62,515 40,267 49,390
Total revenues.................... 526,711 730,517 911,632 1,110,056 1,422,488
Expenses.......................... 387,011 484,277 633,992 798,049 1,084,142
Income before income taxes........ 139,700 246,240 277,640 312,007 338,346
Net income........................ 89,530 157,749 168,565 201,943 196,437
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS(1): 1.44x 1.75x 1.68x 1.59x 1.43x
BALANCE SHEET DATA:
Flight equipment under operating
leases (net of accumulated
depreciation).................... $3,453,149 $4,759,899 $6,515,837 $8,851,079 $10,762,870
Net investment in finance and
sales-type leases................ 247,936 242,445 290,269 92,233 86,237
Total assets...................... 4,563,622 6,079,765 8,139,821 10,353,132 12,298,379
Total debt........................ 3,242,010 4,242,288 5,819,481 7,583,006 8,892,634
Shareholders' equity.............. 815,208 1,156,195 1,409,181 1,640,772 2,000,107
OTHER DATA:
Aircraft owned at period end(2)... 132 176 230 270 278
Aircraft sold or remarketed during
the period....................... 8 7 9 24 41
</TABLE>
- - ------------
(1)See Exhibit 12.
(2)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, several of the Company's customers have experienced
economic difficulties resulting in the Company's participation in customer
restructurings. Such restructurings have involved the voluntary early
termination of leases and the rescheduling of payments. In addition, in
certain circumstances, the Company has been required to repossess aircraft. In
1995 the Company only repossessed one aircraft and terminated one aircraft
lease early. Both aircraft were promptly released to other customers. See
"Item 1. Business--Customers."
FINANCIAL CONDITION
The Company borrows funds to purchase flight equipment, including to make
progress payments during the construction phase, principally on an unsecured
basis from various sources. At December 31, 1995, 1994 and 1993, the Company's
debt financing and capital lease obligations were comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Public term debt with single
maturities........................... $3,550,000 $2,950,000 $2,550,000
Public medium-term notes with varying
maturities........................... 2,403,770 2,011,770 1,765,920
Capital lease obligations............. 1,088,424 305,400 --
Bank and other term debt.............. 22,502 43,503 68,778
---------- ---------- ----------
Total term debt.................... 7,064,696 5,310,673 4,384,698
Commercial paper...................... 1,843,630 1,972,361 1,444,977
Bank lines of credit and revolvers.... -- 319,000 --
Less: Deferred debt discount.......... (15,692) (19,028) (10,194)
---------- ---------- ----------
Debt financing and capital lease
obligations......................... $8,892,634 $7,583,006 $5,819,481
========== ========== ==========
Composite interest rate............... 6.47% 6.41% 5.89%
Percentage of total debt at fixed
rate................................. 75.59% 66.98% 74.77%
Composite interest rate on fixed debt. 6.66% 6.65% 6.70%
Bank prime rate....................... 8.50% 8.50% 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, 1995,
the Company had committed revolving loans and lines of credit with 40 banks
aggregating $1.95 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 .30% over LIBOR or .395% over CD rates, at the Company's option. Bank
financings are subject to facility fees of up to .10% of amounts available.
On January 19, 1996, the Company replaced $1.8 billion of the committed
revolving loans and lines of credit with a new, expanded facility for $2.25
billion. The facility consists of a $1.0 billion, 364 day tranche with a 7
basis point annual facility fee and a $1.25 billion, 5 year tranche with a 10
basis point annual facility fee.
10
<PAGE>
The Company has an effective shelf registration with respect to $2.111
billion of debt securities, under which $250 million of notes were sold
through 1995. Additionally, a $750 million Medium-Term Note program has been
implemented under the shelf registration, under which $59 million was sold
during 1995.
The Export Credit Lease facilities provide ten year, amortizing loans in the
form of capital lease obligations. The interest rate on 62.5% of the original
financing available is 6.55%, the interest rate on 22.5% of the original
financing available varies between 6.18% and 6.89%. The remaining 15% of the
original financing available provides for LIBOR based pricing. As of March
1996, the Company had the option to enter into an additional facility of $615
million for aircraft to be delivered in 1996. The terms are basically the same
as for the existing facilities.
In 1995, the Company entered into a sale-leaseback transaction in the amount
of $413 million relating to seven aircraft. The transaction results in the
sale and leaseback of these aircraft for one year operating leases, each with
six one year extension options for a total of seven years for each aircraft.
The Company has the option to either buy back the aircraft or redeliver the
aircraft for a fee to the lessor at the end of any lease period. The lease
rates equate to fixed principal amortization and floating interest payments of
LIBOR plus .42%.
In each of 1992, 1993 and February and November 1995, the Company sold $100
million of Market Auction Preferred Stock.
The Company believes that the combination of internally generated funds and
debt financing currently available to the Company will allow the Company to
meet its capital requirements for at least the next 12 months.
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.
The Company only enters into derivative transactions to hedge interest rate
risk and not to speculate on interest rates. These derivative products include
interest rate swap agreements, interest rate spreadlocks, interest rate swap
options ("swaptions") and interest rate floors.
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 $795.4
million in 1993 to $993.6 million in 1994 to $1,254.0 million in 1995 is due
to the increase in both the size and relative cost of the fleet of leased
flight equipment subject to operating lease from 223 in 1993 to 262 in 1994 to
275 in 1995.
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 $53.7 million in 1993 to
11
<PAGE>
$76.2 million in 1994 to $119.1 million in 1995 as a result of the following
number of aircraft transactions in each period:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Sales of flight equipment.................................. 0 3 2
Commissions................................................ 6 10 8
Disposition of leased aircraft............................. 41 21 7
</TABLE>
In addition, the Company sold 19 engines (1995), eight engines (1994) and
five engines (1993).
Interest and other income decreased from $62.5 million in 1993 to $40.3
million in 1994 and increased to $49.4 million in 1995. The decrease in 1994
was due primarily to the decline in dividend income resulting from the
disposition of the Alaska Air Group Stock in 1993. The increase in 1995 was
due, in part, to the increase in notes receivable in 1995.
Expenses as a percentage of total revenues were 70.0% for 1993 compared to
71.9% for 1994 and 76.2% for 1995. Interest expense increased from $301.2
million in 1993 to $376.6 million in 1994 to $541.4 million in 1995, primarily
as a result of an increase in debt outstanding, excluding the effect of debt
discount, from $5.829 billion in 1993 to $7.602 billion in 1994 to $8.908
billion in 1995 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, 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
March 31, 1995.............................. 6.69
June 30, 1995............................... 6.59
September 30, 1995.......................... 6.50
December 31, 1995........................... 6.47
</TABLE>
Depreciation of flight equipment increased from $268.2 million in 1993 to
$334.6 million in 1994 to $431.9 million in 1995 due to the addition of
aircraft. Provisions for overhauls also increased from $39.9 million in 1993
to $57.6 million in 1994 to $71.1 million in 1995 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.
The provision for income taxes as a percentage of Income Before Income Taxes
decreased from 39.3% in 1993 to 35.3% in 1994 and increased to 41.9% in 1995.
The decrease from 1993 to 1994 was due principally to the impact in 1993 of
the change in the federal statutory rate. The increase in 1995 was due
principally to the impact of losses of subsidiaries for which the Company does
not receive current or future tax benefit. During the fourth quarter of 1995,
two of these corporations were restructed. The Company does not anticipate
that losses of consolidated controlled foreign corporations will materially
impact the provision for income taxes in the future.
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 17.
(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 5,
1995, October 13, 1995 (relating to the Company's Medium-Term Notes, Series
H), October 13, 1995 (relating to the Company's 6 1/8% Notes due November 1,
1999) and December 5, 1995. All Current Reports reported under Item 7.
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, 1994 and 1995............................. 18
Statements of Income for the years ended December 31, 1993, 1994 and
1995.................................................................... 19
Statements of Shareholders' Equity for the years ended December 31, 1993,
1994 and 1995........................................................... 20
Statements of Cash Flows for the years ended December 31, 1993, 1994 and
1995.................................................................... 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>
SCHEDULE NUMBER 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>
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 (filed as an exhibit to Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference).
3.3 Certificate of Determination of Preferences of Series D Market Auc-
tion Preferred Stock (filed as an exhibit to Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference).
3.4 Certificate of Determination of Preferences of Series E Market Auc-
tion Preferred Stock (filed as an exhibit to Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference).
3.5 Certificate of Determination of Preferences of Series F Market Auc-
tion Preferred Stock (filed as an exhibit to Form 10-K for the year
ended December 31, 1994 and incorporated herein by reference).
3.6 Certificate of Determination of Preferences of Series G Market Auc-
tion Preferred Stock.
3.7 Certificate of Determination of Preferences of Series H Market Auc-
tion Preferred Stock.
3.8 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
First Trust of Illinois, National Association (successor to
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).
</TABLE>
- - --------
*Denotes management contract.
14
<PAGE>
<TABLE>
<C> <S>
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).
10.6 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 for the year ended December 31, 1993 and
incorporated herein by reference).
10.7 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 for the fiscal quarter ended June 30, 1994 and incorporated
herein by reference).
10.8 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 (filed as an a exhibit to Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference).
10.9 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 (filed as an exhibit to Form 10-K for the year ended
December 31, 1994 and incorporated herein by reference).
10.10 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 (filed as an
exhibit to Form 10-K for the year ended December 31, 1994 and in-
corporated herein by reference).
10.11 Amendment No. 7 dated as of July 5, 1995, to the Airbus A321
Purchase Agreement dated as of February 14, 1990, between AVSA,
S.A.R.L. and the Company (filed as an exhibit to Form 10-Q for the
fiscal quarter ended September 30, 1995 and incorporated herein by
reference).
10.12 Amendment No. 8 dated as of October 4, 1995, to the Airbus A321
Purchase Agreement dated as of Feburary 14, 1990, between AVSA,
S.A.R.L. and the Company (filed as an exhibit to Form 10-Q for the
fiscal quarter ended September 30, 1995 and incorporated herein by
reference).
10.13 Revolving Credit Agreement, dated as of January 19, 1996, among the
Company, Union Bank of Switzerland, Los Angeles Branch, and the
other banks listed therein providing up to $1,000,000,000.
10.14 Revolving Credit Agreement, dated as of January 19, 1996, among the
Company, Union Bank of Switzerland, Los Angeles Branch, and the
other banks listed therein providing up to $1,250,000,000.
10.15 Amendment No. 9 dated as of February 23, 1996, to the Airbus A321
Purchase Agreement dated as of February 14, 1990, between AVSA,
S.A.R.L. and the Company (Confidential treatment requested).
10.16 Amendment No. 10 dated as of February 23, 1996, to the Airbus A321
Purchase Agreement dated as of February 14, 1990, between AVSA,
S.A.R.L. and the Company (Confidential treatment requested).
</TABLE>
15
<PAGE>
<TABLE>
<C> <S>
10.17 Letter Agreement No. 1 dated as of February 23, 1996, with respect
to Amendment No. 10 to the Airbus A321 Purchase Agreement, between
AVSA, S.A.R.L. and the Company (Confidential treatment requested).
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 and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of income,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1995. 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 and subsidiaries at December 31,
1995 and 1994, and the consolidated results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, 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 20, 1996
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,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash, including interest bearing accounts of $59,624
(1995) and $45,831 (1994) .......................... $ 87,097 $ 52,891
Notes receivable--Notes B and D...................... 423,799 355,151
Net investment in finance and sales-type leases--Note
C................................................... 86,237 92,233
Flight equipment under operating leases--Note G...... 12,015,308 9,928,416
Less accumulated depreciation....................... 1,252,438 1,077,337
----------- -----------
10,762,870 8,851,079
Deposits on flight equipment purchases--Note K....... 805,570 890,711
Accrued interest, other receivables and other assets. 87,991 71,238
Investments--Note D.................................. 17,311 18,983
Deferred debt issue costs--less accumulated amortiza-
tion of
$30,778 (1995) and $22,346 (1994) .................. 27,504 20,846
----------- -----------
$12,298,379 $10,353,132
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables.................. $ 196,676 $ 124,025
Debt financing, net of deferred debt discount of
$15,692 (1995) and $19,028 (1994)--Note E........... 7,804,210 7,277,606
Capital lease obligations--Note E.................... 1,088,424 305,400
Security and other deposits on flight equipment...... 498,016 478,486
Rentals received in advance.......................... 80,811 72,557
Deferred income taxes--Note I........................ 660,938 487,410
Current income taxes................................. (30,803) (33,124)
Commitments and contingencies--Note K
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, D, E, F, G and H (1995) and
Series A, B, C and D (1994), each having 500 shares
issued and outstanding............................. 400,000 200,000
Common stock--no par value; 100,000,000 authorized
shares, 35,818,122 (1995 and 1994) issued and out-
standing........................................... 3,582 3,582
Paid-in capital..................................... 580,085 582,941
Retained earnings................................... 1,016,440 854,249
----------- -----------
2,000,107 1,640,772
----------- -----------
$12,298,379 $10,353,132
=========== ===========
</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,
------------------------------
1995 1994 1993
---------- ---------- --------
<S> <C> <C> <C>
Revenues:
Rental of flight equipment--Note G.............. $1,254,020 $ 993,596 $795,437
Flight equipment marketing...................... 119,078 76,193 53,680
Interest and other.............................. 49,390 40,267 62,515
---------- ---------- --------
1,422,488 1,110,056 911,632
Expenses:
Interest........................................ 541,428 376,560 301,205
Depreciation.................................... 431,947 334,587 268,170
Provision for overhaul.......................... 71,113 57,619 39,893
Selling, general and administrative--Note H..... 39,654 29,283 24,724
---------- ---------- --------
1,084,142 798,049 633,992
---------- ---------- --------
INCOME BEFORE INCOME TAXES..................... 338,346 312,007 277,640
Provision for income taxes--Note I............... 141,909 110,064 109,075
---------- ---------- --------
NET INCOME..................................... $ 196,437 $ 201,943 $168,565
========== ========== ========
</TABLE>
See accompanying notes.
19
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARKET 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,
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
Sale of MAPs preferred. 2,000 200,000 (2,856) 197,144
Dividend to AIG........ (21,150) (21,150)
Preferred stock
dividends............. (13,096) (13,096)
Net income............. 196,437 196,437
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31,
1995................... 4,000 $400,000 35,818,122 $3,582 $580,085 $1,016,440 $2,000,107
===== ======== ========== ====== ======== ========== ==========
</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,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................. $ 196,437 $ 201,943 $ 168,565
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation of flight equipment....... 431,947 334,587 268,170
Deferred income taxes.................. 173,528 147,657 113,793
Amortization of deferred debt issue
costs................................. 11,554 5,956 5,055
Gain on sale of flight equipment
included in amount financed........... (46,260) (53,627) (24,806)
Increase in notes receivable........... (9,053) (36,608) (8,694)
Equity in net (income) loss of
affiliates............................ 517 (2,022) (3,036)
Changes in operating assets and
liabilities:
(Increase) decrease in accrued
interest, other receivables and
other assets........................ (16,753) 10,006 (21,110)
Increase in accrued interest and
other payables...................... 72,651 31,796 13,029
Increase (decrease) in current income
taxes payable....................... 2,321 (33,346) (20,262)
Increase in rentals received in
advance............................. 8,254 30,606 3,326
----------- ----------- -----------
Net cash provided by operating
activities............................. 825,143 636,948 494,030
----------- ----------- -----------
INVESTING ACTIVITIES:
Acquisition of flight equipment:
For operating leases................. (3,364,496) (2,621,669) (2,372,789)
For finance leases................... (4,790)
(Increase) decrease in deposits and
progress payments..................... 85,141 (70,663) (111,955)
Proceeds from disposal of flight
equipment--net of gain................ 862,935 119,799 126,005
Advances on notes receivable........... (5,606) (16,227) (14,856)
Collections on notes receivable........ 150,093 114,141 70,242
Collections on finance and sales-type
leases................................ 5,996 9,891 13,576
Purchase of investments................ (845) (850) (2,333)
Sale of investments--net of gain....... 2,000 1,727 32,822
----------- ----------- -----------
Net cash used in investing activities... (2,264,782) (2,468,641) (2,259,288)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing and
capital lease obligations............. 6,309,304 4,746,500 4,265,761
Payments in reduction of debt financing
and capital lease obligations......... (5,003,012) (2,974,141) (2,685,416)
Proceeds from sale of MAPS preferred
stock (net of issue costs)............ 197,144 98,472
Cash contributions to capital by AIG... 50,000
Debt issue costs....................... (18,211) (11,637) (9,961)
Change in unamortized debt discount.... 3,336 (8,834) (3,154)
Payment of common and preferred
dividends............................. (34,246) (20,352) (14,051)
Increase in customer deposits.......... 19,530 41,482 119,992
----------- ----------- -----------
Net cash provided by financing
activities............................. 1,473,845 1,823,018 1,771,643
----------- ----------- -----------
Net increase (decrease) in cash......... 34,206 (8,675) 6,385
Cash at beginning of year............... 52,891 61,566 55,181
----------- ----------- -----------
Cash at end of year.................... $ 87,097 $ 52,891 $ 61,566
=========== =========== ===========
</TABLE>
(Table continued on next page)
21
<PAGE>
(Table continued from previous page)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest (net of amount capitalized $51,091
(1995), $44,610 (1994) and $39,363 (1993))...... $503,023 $352,805 $264,571
Income taxes..................................... (33,940) (4,247) 15,395
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
1995
Notes in the amount of $268,660 were received as partial payments in
exchange for flight equipment sold with a book value of $222,400.
Flight equipment was received in exchange for notes receivable in the
amount of $64,576.
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.
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
an indirect 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 entities are carried at
cost. Investments of between 20% and 50% in other entities are carried under
the equity method. All significant intercompany balances and transactions have
been eliminated in consolidation.
Intercompany Allocations: The Company is party to cost sharing agreements
with AIG. Generally, these agreements provide for the allocation of costs upon
either the specific identification basis or a proportional cost allocation
basis which management believes to be reasonable. The charges amounted to
$6,439 (1995), $2,506 (1994) and $2,312 (1993).
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, including aircraft acquired under capital leases,
are depreciated using the straight-line method over a 25 year life from the
date of manufacture to a 15% residual value.
At the time assets are retired or otherwise disposed of, the cost and
accumulated depreciation 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 the construction of flight equipment ordered. The interest
incurred on such borrowings is capitalized and included in the cost of the
equipment. The amounts were $51,091 (1995), $44,610 (1994) and $39,363 (1993).
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 and are charged to interest expense.
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 accounted for 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").
Organization: The Company is primarily engaged in the acquisition of new and
used commercial jet aircraft and the leasing and sale of such aircraft to
charter and scheduled airlines throughout the world. In addition, the Company
is engaged in the remarketing of commercial jets for its own account, for
airlines and for financial institutions.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that effect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Reclassifications: Certain amounts have been reclassified in the 1994 and
1993 financial statements to conform to the Company's 1995 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>
1995 1994
-------- --------
<S> <C> <C>
Fixed rate notes receivable due in varying installments
to 2005:
Less than 8%........................................... $296,590 $132,341
8% to 9.99%............................................ 81,486 104,585
10% to 14%............................................. 4,862 2,007
Libor plus 1.1% to Libor plus 1.5% notes receivable in
varying installments to 2002........................... 40,861 116,218
-------- --------
$423,799 $355,151
======== ========
</TABLE>
Included above, the Company had notes receivable of $2,300 (1995) and
$18,010 (1994) representing restructured lease payments.
At December 31, 1995, the minimum future notes receivable payments to be
received are as follows:
<TABLE>
<S> <C>
1996................................................................ $ 45,005
1997................................................................ 142,211
1998................................................................ 52,175
1999................................................................ 38,140
2000................................................................ 26,426
Thereafter.......................................................... 119,842
--------
$423,799
========
</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>
1995 1994
-------- --------
<S> <C> <C>
Total minimum lease payments to be received.............. $ 91,124 $101,888
Estimated residual values of leased flight equipment..... 26,544 29,127
Less: Unearned income.................................... (31,431) (38,782)
-------- --------
Net investment in finance and sales-type leases.......... $ 86,237 $ 92,233
======== ========
</TABLE>
Minimum future lease payments to be received for flight equipment on finance
and sales-type leases at December 31, 1995 are as follows:
<TABLE>
<S> <C>
1996...................................... $13,515
1997...................................... 12,714
1998...................................... 13,080
1999...................................... 11,478
2000...................................... 7,935
Thereafter................................ 32,402
-------
Total minimum lease payments to be
received................................. $91,124
=======
</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>
1995 1994
--------------- ---------------
PERCENT PERCENT
OWNED AMOUNT OWNED AMOUNT
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cost method:
Air Liberte.................................... 10.8% $ 4,792 10.8% $ 4,154
International Aircraft Investors............... 6.2% 300 6.2% 300
Others......................................... 1,058 2,850
Equity method:
Pacific Ocean Leasing Ltd...................... 50.0% 5,858 50.0% 7,223
Pacific Asia Leasing Ltd....................... 25.0% 5,303 25.0% 4,456
------- -------
$17,311 $18,983
======= =======
</TABLE>
In addition, the Company has notes receivable of $11,111 (1995) and $10,538
(1994) from entities in which it has investments.
At December 31, 1995, the Company had nine aircraft on lease to Air Liberte.
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 K). 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 K).
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 part of the loan in connection with such
purchase (see Note K).
26
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E--DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS
Debt financing and capital lease obligations are comprised of the following:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Commercial Paper (weighted average interest rate at
December 31, 5.82% (1995) and 5.73% (1994))....... $1,843,630 $1,972,361
Term Notes......................................... 3,550,000 2,950,000
Medium-Term Notes.................................. 2,403,770 2,011,770
Capital Lease Obligations.......................... 1,088,424 305,400
Bank and other term debt........................... 22,502 43,503
Bank lines of credit and revolvers................. -- 319,000
Less: Deferred debt discount....................... (15,692) (19,028)
---------- ----------
$8,892,634 $7,583,006
========== ==========
</TABLE>
Bank Financing:
As of December 31, 1995, the Company had committed credit agreements with 40
commercial banks aggregating $1,950,000 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 .30% over LIBOR or .395% 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 .10% 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 1995 1994
------- ------- --------
<S> <C> <C> <C>
6% Notes due January 15, 1995...................... 3 years $ $150,000
8.20% Notes due April 15, 1995..................... 4 years 150,000
4 7/8% Notes due September 15, 1995................ 3 years 100,000
6 7/8% Notes due December 15, 1995................. 4 years 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 100,000 100,000
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 100,000 100,000
</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 AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Term Notes (continued):
<TABLE>
<CAPTION>
INITIAL
TERM 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
Floating Rate Notes due October 15, 1997. 4 1/2 years $ 100,000 $ 100,000
8 1/8% Notes due January 15, 1998........ 3 years 150,000
5 5/8% Notes due March 1, 1998........... 4 years 100,000 100,000
5 3/4% Notes due March 15, 1998.......... 5 years 100,000 100,000
7% Notes due June 1, 1998................ 4 years 100,000 100,000
6 1/4% Notes due June 15, 1998........... 3 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 150,000 150,000
7 1/2% Notes due March 1, 1999........... 4 years 100,000
6 5/8% Notes due April 1, 1999........... 5 years 100,000 100,000
Floating Rate Notes due June 2, 1999..... 4 years 100,000
Floating Rate Notes due July 15, 1999.... 4 years 100,000
6 1/2% Notes due August 15, 1999......... 7 years 100,000 100,000
6 1/8% Notes due November 1, 1999........ 4 years 100,000
5 3/4% Notes due December 15, 1999....... 4 years 150,000
8 1/4% Notes due January 15, 2000........ 5 years 100,000
6.20% Notes due May 1, 2000.............. 7 years 100,000 100,000
7% Notes due May 15, 2000................ 5 years 100,000
6 1/4% Notes due October 15, 2000........ 5 years 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 100,000 100,000
---------- ----------
$3,550,000 $2,950,000
========== ==========
</TABLE>
Medium-Term Notes:
The Company's Medium-Term Notes bear interest at rates varying between 4.5%
and 9.88%, inclusive, with maturities from 1996 through 2005. 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:
The Company's Capital Lease Obligations provide 10 year, fully amortizing
debt in three interest rate tranches. The first 62.5% of the original debt is
at a fixed rate of 6.55%. The second 22.5% of the original debt is at fixed
rates varying between 6.18% and 6.89%. The final 15% of the original debt is
at a floating LIBOR based rate. The debt matures through 2005. The flight
equipment associated with the obligations had a net book value of $1,215,912
(1995) and $359,266 (1994). As of December 31, 1995, the Company had the
option to enter into an additional facility of $747,000 for aircraft to be
delivered in 1996. The terms are basically the same as for the existing
facilities.
28
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E--DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Maturities of debt financing and capital lease obligations (excluding
commercial paper) at December 31, 1995 are as follows:
<TABLE>
<S> <C>
1996........................................................... $1,171,104
1997........................................................... 1,289,487
1998........................................................... 1,410,087
1999........................................................... 1,477,802
2000........................................................... 648,552
Thereafter..................................................... 1,067,664
----------
$7,064,696
==========
</TABLE>
Under the most restrictive provisions of the related borrowings,
consolidated retained earnings at December 31, 1995, in the amount of $221,744
are unrestricted as to payment of dividends.
NOTE F--SHAREHOLDERS' EQUITY
Preferred Stock:
In February and November 1995 and November 1993, 500 shares each of Series E
and F, G and H and C and D, respectively, of Market Auction Preferred Stock
("MAPS") were issued in connection with public offerings at $100 per share.
Proceeds, net of issuance costs, to the Company were $197,144 (1995) and
$98,472 (1993). The MAPS have a liquidation value of $100 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, 1995, the
dividend rates for Series A through H ranged from 4.35% to 4.69%.
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, 1995.
NOTE G--RENTAL INCOME
Minimum future rentals on noncancelable operating leases and subleases of
flight equipment which have been delivered at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------
<S> <C>
1996................................... $1,112,237
1997................................... 889,205
1998................................... 700,100
1999................................... 551,181
2000................................... 404,996
Thereafter............................. 743,435
----------
$4,401,154
==========
</TABLE>
29
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE G--RENTAL INCOME (CONTINUED)
Additional rentals earned by the Company based on the lessees' usage
aggregated $168,121 (1995), $122,321 (1994) and $101,761 (1993). Flight
equipment is leased, under operating leases, with remaining terms ranging from
one to 10 years.
NOTE H--RENTAL EXPENSE
At December 31, 1995, the Company had entered into a sale-leaseback
transaction in the amount of $412,626 relating to seven aircraft. The
transaction results in the sale and leaseback of these aircraft for one year
operating leases, each with six one year extension options, maturing on
December 22, 1996. The lease rates equate to fixed principal amortization and
floating interest payments of LIBOR plus .42%.
Minimum future rental expense for 1996 is $15,226 at December 31, 1995.
NOTE I--INCOME TAXES
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal....................................... $(32,962) $(34,027) $ (8,522)
State......................................... 1,427 (3,508) 3,826
-------- -------- --------
(31,535) (37,535) (4,696)
Deferred:
Federal....................................... 162,129 149,364 103,220
State......................................... 11,315 (1,765) 10,551
-------- -------- --------
173,444 147,599 113,771
-------- -------- --------
$141,909 $110,064 $109,075
======== ======== ========
</TABLE>
The provision for deferred income taxes is comprised of the following
temporary differences:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Accelerated depreciation on flight equipment..... $182,125 $180,137 $108,548
Excess of state income taxes not currently de-
ductible for Federal income tax purposes........ (3,960) 626 (3,698)
Tax versus book lease differences................ 779 (806) (1,092)
Provision for overhauls.......................... (4,370) (9,951) (3,613)
Rentals received in advance...................... (308) (14,511) (1,077)
Straight line rents.............................. (606) (2,315) 7,269
Changes in tax rates............................. -- -- 6,056
Other............................................ (216) (5,581) 2,659
Investment and other tax credits................. -- -- (1,281)
-------- -------- --------
$173,444 $147,599 $113,771
======== ======== ========
</TABLE>
30
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE I--INCOME TAXES (CONTINUED)
The deferred tax liability at December 31, 1995 consists of the following:
<TABLE>
<S> <C>
Accelerated depreciation on flight equipment...................... $669,742
Excess of state income taxes not currently deductible for Federal
income tax purposes.............................................. (14,049)
Tax versus book lease differences................................. 49,496
Provision for overhauls........................................... (31,047)
Rentals received in advance....................................... (30,622)
Straight line rents............................................... 17,428
Other............................................................. (10)
--------
$660,938
========
</TABLE>
A reconciliation of computed expected total provision for income taxes to
the amount recorded is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Computed expected provision based upon a federal
rate of 35% .................................... $118,421 $109,202 $97,174
State income taxes, net of Federal income taxes.. 8,282 5,772 9,345
Foreign sales corporation benefit................ (7,305) (3,178) (3,324)
Subsidiary losses without tax benefit............ 17,169 -- --
Other............................................ 5,342 (1,732) (176)
Adjustments of deferred tax liability for changes
in tax rates.................................... -- -- 6,056
-------- -------- --------
$141,909 $110,064 $109,075
======== ======== ========
</TABLE>
NOTE J--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
$1,002,251 (1995), $798,619 (1994) and $655,773 (1993).
31
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE J--OTHER INFORMATION (CONTINUED)
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>
1995 1994 1993
---------------- -------------- --------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- -------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe....................... $ 462,252 36.9% $353,009 35.5% $261,523 32.9%
Asia/Pacific................. 255,163 20.4 180,215 18.2 169,036 21.2
Central, South America and
Mexico...................... 166,443 13.2 199,041 20.0 171,577 21.6
United States and Canada..... 304,784 24.3 230,856 23.2 171,720 21.6
Africa and the Middle East... 65,378 5.2 30,475 3.1 21,581 2.7
---------- ----- -------- ----- -------- -----
$1,254,020 100.0% $993,596 100.0% $795,437 100.0%
========== ===== ======== ===== ======== =====
</TABLE>
Employee Benefit Plans
The Company's employees participate in various benefit plans sponsored by
AIG, including a noncontributory qualified defined benefit retirement plan,
various stock option and purchase plans 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, 1995 by
$41,416.
NOTE K--COMMITMENTS AND CONTINGENCIES
Aircraft orders and options
At December 31, 1995, the Company had committed to purchase, or had secured
positions for (which were subsequently committed), 292 aircraft deliverable
from 1996 through 2004 at an estimated aggregate purchase price (including
adjustment for anticipated inflation) of approximately $15,935,000.
At December 31, 1995, the Company had options to purchase 34 aircraft
deliverable from 1998 through 2005 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $2,547,000.
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").
The Boeing aircraft (models 737, 747, 757, 767 and 777), and the Airbus
aircraft (models A300, A319, A320, A321, A330 and A340) are either being
purchased, or the options to purchase have been granted, pursuant to purchase
agreements executed by the Company and Boeing or Airbus. 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,
1995, 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 $389,788, $322,537 with Boeing and Airbus,
respectively.
32
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE K--COMMITMENTS AND CONTINGENCIES (CONTINUED)
If all 326 aircraft were to be acquired, the estimated aggregate purchase
price (including adjustment for anticipated inflation) would be approximately
$18,482,000. 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 four aircraft for
fees paid in 1991 and seven aircraft for fees paid in 1994. The aggregate
guarantees at December 31, 1995, are $131,259 and, if called upon, are payable
in the amounts of $8,159 (1997), $3,100 (1999), $21,000 (2000), $63,000 (2003)
and $36,000 (2006).
Other Guarantees
In connection with the acquisition of seven aircraft by entities in which
the Company has an investment, the Company guaranteed the loans, which at
December 31, 1995 aggregated $75,348.
The Company guaranteed the loans of two customers which, at December 31,
1995, aggregrated $10,633.
NOTE L--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") and interest rate
floors.
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, 1995 and 1994, the Company had interest rate swap agreements
with aggregate notional amounts of $624,568 and $294,761, respectively, which
effectively converted certain fixed rate obligations with a weighted average
interest rate of 6.53% (1995) and 6.46% (1994) to variable rate obligations
equal to the six month LIBOR rate. In addition, at December 31, 1995 and 1994,
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, 1995 and 1994 the
33
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L--FINANCIAL INSTRUMENTS (CONTINUED)
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%. In addition, at December 31, 1995, the Company had interest rate swap
agreements with aggregate notional amounts of $200,000 which converted
floating rate obligations equal to three month LIBOR plus .20% to fixed rate
obligations with a weighted average interest rate of 6.44%. Finally, at
December 31, 1995, the Company had an interest rate swap agreement with a
notional amount of $412,626 which converted floating rate obligations equal to
one month LIBOR plus .42% to one month LIBOR subject to a floor of 5.315%. The
notional amounts of many of the Company's swap agreements amortize on a semi-
annual basis. The interest rate swap agreements amortize and expire in 1996
($80,724 notional value), 1997 ($158,287 notional value), 1998 ($161,194
notional value), 1999 ($314,249 notional value), 2000 ($67,549 notional
value), 2001 ($70,982 notional value), 2002 ($381,227 notional value), 2003
($63,496 notional value), 2004 ($64,339 notional value) and 2005 ($25,147
notional value).
At December 31, 1995, the Company had committed swaption contracts with an
aggregate notional amount of $565,670 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 6.70% 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.
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, 1995 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, 1995, 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, interest rate floors and the acquired
financing options) 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).
34
<PAGE>
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L--FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
CARRYING
AMOUNT OF FAIR VALUE OF
ASSET (LIABILITY) ASSET (LIABILITY)
----------------- -----------------
<S> <C> <C>
Cash and cash equivalents... $ 87,097 $ 87,097
Notes receivable............ 423,799 408,648
Investments................. 17,311 18,301
Debt financing.............. (7,804,210) (8,034,202)
Off-balance-sheet financial
instruments:
Hedging Activities:
Swaps................... (2,377) 10,426
Acquired financing
options................ -- --
Other Risk Management
Activities:
Swaptions............... (2,981) (2,981)
Interest rate floors.... (2,662) (2,662)
Acquired financing
options................ 1,574 1,574
Loan guarantees......... -- --
Asset value guarantees.. -- --
</TABLE>
35
<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,
1995................... $71,554 $71,113 $4,201(2) $63,001 $83,857
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
</TABLE>
- - --------
(1) Reimbursements to lessees for overhauls performed and amounts transferred
to buyers for aircraft sold.
(2)Payments received from lessees in lieu of compliance with return conditions.
36
<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 26, 1996
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 March 26, 1996
- - ------------------------------------
Leslie L. Gonda Director
STEVEN F. UDVAR-HAZY March 26, 1996
- - ------------------------------------
Steven F. Udvar-Hazy Director
LOUIS L. GONDA March 26, 1996
- - ------------------------------------
Louis L. Gonda Director
M. R. GREENBERG March 26, 1996
- - ------------------------------------
M. R. Greenberg Director
EDWARD E. MATTHEWS March 26, 1996
- - ------------------------------------
Edward E. Matthews Director
PETROS K. SABATACAKIS March 26, 1996
- - ------------------------------------
Petros K. Sabatacakis Director
HOWARD I. SMITH March 26, 1996
- - ------------------------------------
Howard I. Smith Director
ALAN H. LUND March 26, 1996
- - ------------------------------------
Alan H. Lund Chief Financial Officer and
Chief Accounting Officer
</TABLE>
37
<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 an indirect wholly owned subsidiary of AIG, no
annual report to security holders for the year ended December 31, 1995 or
proxy statement, form of proxy or other proxy soliciting materials have been
sent to securities holders since January 1, 1990.
38
<PAGE>
EXHIBIT 3.6
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 G" (the "Series G MAPS").
Section 2. Amount.
The number of shares constituting Series G MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES G 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 G 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 G 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 G 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 30, 1996.
(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 G 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 G 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 G
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 G 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 G MAPS (or, in the case of an Existing Holder,
additional shares of Series G 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 G 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 G 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 G MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of 4.40% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series G
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 G MAPS will accumulate (whether or not declared)
from the Date of Original Issue. Except for the Initial Dividend Payment Date,
dividends on the Series G 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 G 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 G 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 G 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 G 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 G 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 G 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
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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 G 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 G 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 G 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 G 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 G 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 G 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 G 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 G 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
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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 G MAPS (the
"Initial Dividend Period")) being referred to herein as a "Dividend Period."
After the Initial Dividend Period for the Series G 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 G 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 G MAPS (other than
because all shares of Series G 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 G 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 G
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 G 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 G 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
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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 G 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 G 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 G 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 G 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 G 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 G 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 G MAPS being in
excess of the Maximum Applicable Rate, the maximum dividend rate applicable to
such Series G 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 G 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 G 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 shall be the
Default
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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.
Any Failure to Deposit with respect to the Series G 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 G 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 G MAPS and (b) the redemption of shares of Series G
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 G 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 G 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 the Series G MAPS for the next Business Day.
Section 3. Redemption.
The Series G MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series G 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 G MAPS,
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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
G MAPS. The Company may only redeem Series G 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 G 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 G 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 G 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 G MAPS will be deemed no longer Outstanding.
So long as all of the Series G 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 G 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 G 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 G 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 G 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 G
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series G 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 G 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 G 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.
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Section 6. Voting Rights.
(a) Holders of the Series G MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series G MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series G
MAPS which are then exercisable (the Series G 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").
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 G 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).
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(b) Except as provided below, so long as any Series G 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 G 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 G MAPS.
Except as provided by law, the consent of the holders of the Series G 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 G 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 G 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
G MAPS necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the Series G
MAPS, such confirmation will be sought from two Substitute Rating Agencies if
they have made ratings available for the Series G 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 G MAPS are not subject or entitled to the benefit of a
sinking fund.
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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 G 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.
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Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series G
MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information as
to:
(A) the number of Outstanding shares of Series G 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 G 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 G 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 G 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 G MAPS may not be redeemed
and any redemption premium applicable in an optional redemption and to
determine the number of Outstanding shares of Series G 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 G 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
G 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 G 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.
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(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series G MAPS specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series
G 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 G 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
G 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 G 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 G 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 G MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series G 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 G 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.")
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(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 G 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 G
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 G 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 G 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 G MAPS
subject to such Submitted Hold Orders exceeds the number of Outstanding
shares of Series G MAPS held by such Existing Holder, the number of shares of
Series G 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 G 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 G MAPS held by such Existing Holder equal to the
difference between (A) the number of Outstanding shares of Series G MAPS held
by such Existing Holder and (B) the number of Outstanding shares of Series G
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 G 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 G 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 G 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 G MAPS held by such Existing Holder over the sum of (A) the
number of shares of Series G 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 G 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 G MAPS subject to such Submitted Sell Orders is greater than
such excess, the number of shares of Series G 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 G
MAPS equal to such excess.
The number of Outstanding shares of Series G 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.
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(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 G 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 G 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 G
MAPS over the number of shares of Series G MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series G MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series G 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 G 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 G 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 G MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series G 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 G 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 G 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 G MAPS that, when
added to the number of Outstanding shares of Series G MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series G 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
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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 G 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 G 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 G 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 G MAPS with a Short Dividend Period
of 184 to 364 days, or 59% of the Applicable Treasury Note Rate in the case
of Series G 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 G 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
G 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 G 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 G MAPS that are the subject of such Submitted Bid, unless
the number of Outstanding shares of Series G MAPS subject to all such
Submitted Bids shall be greater than the number of Outstanding shares of
Series G MAPS ("Remaining Shares of Series G MAPS") equal to the excess of
the Available Shares of Series G MAPS over the number of Outstanding shares
of Series G 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
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shall be required to sell Outstanding shares of Series G MAPS, but only in an
amount equal to the difference between (A) the number of Outstanding shares
of Series G MAPS then held by such Existing Holder subject to such Submitted
Bid and (B) the number of shares of Series G MAPS obtained by multiplying (x)
the number of Remaining Shares of Series G MAPS by (y) a fraction, the
numerator of which shall be the number of Outstanding shares of Series G 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 G 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 G MAPS
obtained by multiplying (x) the difference between the Available Shares of
Series G MAPS and the number of Outstanding shares of Series G 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 G MAPS subject to such Submitted Bid and the denominator of
which shall be the aggregate number of Outstanding shares of Series G 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 G 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 G 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 G 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
G 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 G MAPS then held by such Existing Holder subject to such Submitted
Bid or Submitted Sell Order and (B) the number of shares of Series G MAPS
obtained by multiplying (x) the difference between the Available Shares of
Series G MAPS and the aggregate number of Outstanding shares of Series G 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 G 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 G 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 G 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 G MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series G MAPS will be entitled
or required to be sold or purchased.
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(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 G MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series G
MAPS for purchase among Potential Holders so that only whole shares of Series G
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 G 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 G MAPS to be purchased and the aggregate number of Outstanding
shares of Series G MAPS to be sold by such Potential Holders and Existing
Holders and, to the extent that such aggregate number of Outstanding shares of
Series G MAPS to be purchased and such aggregate number of Outstanding shares of
Series G 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 G 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 G MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series G MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series G 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 G 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 G MAPS shall be
represented by a single certificate 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 G
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.
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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 G MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
Nov. 30, 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 Nov. 30, 1995.
/s/ Steven F. Udvar-Hazy
_____________________________________________
STEVEN F. UDVAR-HAZY
/s/ Julie I. Sackman
_____________________________________________
JULIE I. SACKMAN
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EXHIBIT 3.7
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 H" (the "Series H MAPS").
Section 2. Amount.
The number of shares constituting Series H MAPS shall be 500.
<PAGE>
ARTICLE TWO
SERIES H 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 H 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
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<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 H MAPS.
(p) "Default Period" has the meaning specified in Section 6(a) of this
ARTICLE TWO.
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(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 H 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 21, 1996.
(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 H 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 H 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>
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<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 H
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 H 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 H MAPS (or, in the case of an Existing Holder,
additional shares of Series H 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 H 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.
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<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 H 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 H MAPS. For the Initial Dividend Period,
dividends will accumulate at a rate per annum of 4.35% (the "Initial Dividend
Rate"). For each subsequent Dividend Period, the dividend rate for the Series H
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 H MAPS will accumulate (whether or not
declared) from the Date of Original Issue. Except for the Initial Dividend
Payment Date, dividends on the Series H MAPS with a Standard Dividend Period
will be payable, except as provided below, on each seventh Wednesday following
the preceding Dividend Payment Date. Dividends on the Series H 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 H 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 H 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 H 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 H 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 H 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
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<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 H 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 H 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 H 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 H 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 H 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 H 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 H 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 H 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
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<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 H MAPS (the
"Initial Dividend Period")) being referred to herein as a "Dividend Period."
After the Initial Dividend Period for the Series H 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 H
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 H MAPS (other than
because all shares of Series H 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 H 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
H 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 H 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 H 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
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<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 H 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 H 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 H 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 H 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 H 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 H 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 H MAPS being in
excess of the Maximum Applicable Rate, the maximum dividend rate applicable to
such Series H 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 H 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 H 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 shall be the
Default
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<PAGE>
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.
Any Failure to Deposit with respect to the Series H 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 H 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 H MAPS and (b) the redemption of shares of Series H
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 H 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 H 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 the Series H MAPS for the next Business Day.
Section 3. Redemption.
The Series H MAPS shall be redeemable by the Company as provided below:
(a) At the option of the Company, the Series H 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 H MAPS,
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<PAGE>
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
H MAPS. The Company may only redeem Series H 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 H 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 H 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 H 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 H MAPS will be deemed no longer Outstanding.
So long as all of the Series H 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 H 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 H 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 H 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 H 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 H
MAPS the full amount of the preferential liquidation distributions to which they
are entitled, holders of the Series H 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 H 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 H 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.
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Section 6. Voting Rights.
(a) Holders of the Series H MAPS will have no voting rights except as
hereinafter described, or as expressly required by law.
During any period when dividends on the Series H MAPS or any other Parity
Capital Stock of the Company which has voting rights comparable to the Series H
MAPS which are then exercisable (the Series H 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").
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 occured 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 H 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).
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(b) Except as provided below, so long as any Series H 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 H 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 H MAPS.
Except as provided by law, the consent of the holders of the Series H 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 H 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 H 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
H MAPS necessary to make such a determination or will not confirm whether the
transaction will adversely affect its then existing rating for the Series H
MAPS, such confirmation will be sought from two Substitute Rating Agencies if
they have made ratings available for the Series H 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 H MAPS are not subject or entitled to the benefit of a
sinking fund.
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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 H 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.
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Section 2. Orders by Existing Holders and Potential Holders.
(a) Prior to the Submission Deadline on each Auction Date for Series H
MAPS:
(i) each Existing Holder may submit to a Broker-Dealer information a s
to:
(A) the number of Outstanding shares of Series H 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 H 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 H 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 H 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 H MAPS may not be redeemed
and any redemption premium applicable in an optional redemption and to
determine the number of Outstanding shares of Series H 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 H 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
H 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 H 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.
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(ii) A Sell Order by an Existing Holder shall constitute an irrevocable
offer to sell:
(A) the number of Outstanding shares of Series H MAPS specified in
such Sell Order; or
(B) such number or a lesser number of Outstanding shares of Series
H 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 H 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
H 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 H 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 H 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 H MAPS, if any,
subject to any Hold Order placed by such Existing Holder;
(B) the number of Outstanding shares of Series H 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 H 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.")
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(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 H 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 H
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 H 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 H 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 H MAPS
subject to such Submitted Hold Orders exceeds the number of Outstanding
shares of Series H MAPS held by such Existing Holder, the number of shares
of Series H 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 H 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 H MAPS held by such Existing Holder equal to
the difference between (A) the number of Outstanding shares of Series H
MAPS held by such Existing Holder and (B) the number of Outstanding shares
of Series H 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 H 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 H 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 H 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 H MAPS held by such Existing Holder over the
sum of (A) the number of shares of Series H 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 H 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 H MAPS subject to such Submitted Sell Orders is
greater than such excess, the number of shares of Series H 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 H MAPS equal to such excess.
The number of Outstanding shares of Series H 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.
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(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 H 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 H 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 H
MAPS over the number of shares of Series H MAPS that are the subject of
Submitted Hold Orders (such excess being hereinafter referred to as the
"Available Shares of Series H MAPS");
(ii) from the Submitted Orders, whether the number of Outstanding
shares of Series H 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 H 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 H 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 H MAPS in clauses (A) and (B) above are each
zero because all of the Outstanding shares of Series H 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 H 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 H 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 H MAPS that, when
added to the number of Outstanding shares of Series H MAPS to be purchased by
such Potential Holders described in subclause (iii)(B), would equal or exceed
the number of Available Shares of Series H 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
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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 H 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 H 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 H 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 H MAPS with a Short
Dividend Period of 184 to 364 days, or 59% of the Applicable Treasury Note
Rate in the case of Series H 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 H 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 H 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 H 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 H MAPS that are the subject of such Submitted
Bid, unless the number of Outstanding shares of Series H MAPS subject to
all such Submitted Bids shall be greater than the number of Outstanding
shares of Series H MAPS ("Remaining Shares of Series H MAPS") equal to the
excess of the Available Shares of Series H MAPS over the number of
Outstanding shares of Series H 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
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be required to sell Outstanding shares of Series H MAPS, but only in an
amount equal to the difference between (A) the number of Outstanding shares
of Series H MAPS then held by such Existing Holder subject to such
Submitted Bid and (B) the number of shares of Series H MAPS obtained by
multiplying (x) the number of Remaining Shares of Series H MAPS by (y) a
fraction, the numerator of which shall be the number of Outstanding shares
of Series H 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 H 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 H
MAPS obtained by multiplying (x) the difference between the Available
Shares of Series H MAPS and the number of Outstanding shares of Series H
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 H MAPS subject to such Submitted Bid and
the denominator of which shall be the aggregate number of Outstanding
shares of Series H 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 H 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 H 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 H 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 H 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 H MAPS then held by such Existing Holder
subject to such Submitted Bid or Submitted Sell Order and (B) the number of
shares of Series H MAPS obtained by multiplying (x) the difference between
the Available Shares of Series H MAPS and the aggregate number of
Outstanding shares of Series H 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 H 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 H 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 H 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 H MAPS to be purchased or sold by any Existing Holder or Potential Holder
on such Auction Date so that only whole shares of Series H 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 H MAPS on any Auction Date, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate shares of Series H
MAPS for purchase among Potential Holders so that only whole shares of Series H
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 H 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 H MAPS to be purchased and the aggregate number of
Outstanding shares of Series H MAPS to be sold by such Potential Holders and
Existing Holders and, to the extent that such aggregate number of Outstanding
shares of Series H MAPS to be purchased and such aggregate number of Outstanding
shares of Series H 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 H 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 H MAPS for its own account, it must submit a Sell Order in the
next Auction with respect to such shares of Series H MAPS.
Section 7. Miscellaneous.
An Existing Holder (a) may sell, transfer or otherwise dispose of shares of
Series H 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 H 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 H MAPS shall be
represented by a single certificate 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 H
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 H MAPS, none of which
has been issued, is 500.
IN WITNESS WHEREOF, the undersigned have executed this certificate on
Nov. 30, 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 Nov. 30, 1995.
/s/ Steven F. Udvar-Hazy
_____________________________________________
STEVEN F. UDVAR-HAZY
/s/ Julie I. Sackman
_____________________________________________
JULIE I. SACKMAN
22
<PAGE>
CONFORMED COPY
--------------
10.13
$1,000,000,000 REVOLVING CREDIT AGREEMENT
DATED AS OF
JANUARY 19, 1996
AMONG
INTERNATIONAL LEASE FINANCE CORPORATION
UNION BANK OF SWITZERLAND
LOS ANGELES BRANCH
AND
THE OTHER BANKS (AS DEFINED HEREIN)
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SECTION 1. CERTAIN DEFINITIONS ............................................ 1
Section 1.1. Terms Generally......................................... 1
Section 1.2. Specific Terms.......................................... 1
SECTION 2. BID LOANS AND BID NOTES......................................... 15
Section 2.1. Making of Bid Loans..................................... 15
Section 2.2. Procedure for Bid Loans................................. 15
Section 2.3. Funding of Bid Loans.................................... 18
Section 2.4. Bid Notes............................................... 18
SECTION 3. COMMITTED LOANS AND NOTES....................................... 19
Section 3.1. Agreement to Make Committed Loans....................... 19
Section 3.2. Procedure for Committed Loans........................... 19
Section 3.3. Maturity of Committed Loans............................. 21
Section 3.4. Committed Notes......................................... 21
SECTION 4. INTEREST AND FEES............................................... 21
Section 4.1. Interest Rates.......................................... 21
Section 4.2. Interest Payment Dates.................................. 22
Section 4.3. Setting and Notice of Committed
Loan Rates.............................................. 22
Section 4.4. Facility Fee............................................ 23
Section 4.5. Agent's Fees............................................ 24
Section 4.6. Computation of Interest and Fees........................ 24
SECTION 5. REDUCTION OR TERMINATION OF THE COMMITMENTS; PREPAYMENTS........ 24
Section 5.1. Voluntary Termination or Reduction
of the Commitments...................................... 24
Section 5.2. Voluntary Prepayments................................... 24
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF; TAXES................ 25
Section 6.1. Making of Payments...................................... 25
Section 6.2. Pro Rata Treatment; Sharing............................. 25
Section 6.3. Set-off................................................. 26
Section 6.4. Taxes, etc.............................................. 27
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR ABSOLUTE RATE LOANS,
LIBOR RATE LOANS AND CD RATE LOANS.............................. 28
Section 7.1. Increased Costs......................................... 28
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair.................................... 30
Section 7.3. Changes in Law Rendering Certain
Loans Unlawful.......................................... 31
Section 7.4. Funding Losses.......................................... 31
Section 7.5. Discretion of Banks as to Manner of
Funding................................................. 32
Section 7.6. Conclusiveness of Statements;
Survival of Provisions.................................. 32
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SECTION 8. REPRESENTATIONS AND WARRANTIES................................. 32
Section 8.1. Organization, etc...................................... 32
Section 8.2. Authorization; Consents; No
Conflict............................................... 33
Section 8.3. Validity and Binding Nature............................ 33
Section 8.4. Financial Statements................................... 34
Section 8.5. Litigation and Contingent
Liabilities............................................ 34
Section 8.6. Employee Benefit Plans................................. 34
Section 8.7. Investment Company Act................................. 35
Section 8.8. Public Utility Holding Company Act..................... 35
Section 8.9. Regulation U........................................... 35
Section 8.10. Information............................................ 35
Section 8.11. Compliance with Applicable Laws,
etc.................................................... 36
Section 8.12. Insurance.............................................. 36
Section 8.13. Taxes.................................................. 36
Section 8.14. Use of Proceeds........................................ 36
Section 8.15. Pari Passu............................................. 36
Section 8.16. Ownership and Liens.................................... 36
SECTION 9. COVENANTS...................................................... 37
Section 9.1. Reports, Certificates and Other
Information............................................ 37
Section 9.2. Existence.............................................. 39
Section 9.3. Nature of Business..................................... 39
Section 9.4. Books, Records and Access.............................. 39
Section 9.5. Insurance.............................................. 40
Section 9.6. Repair................................................. 40
Section 9.7. Taxes.................................................. 40
Section 9.8. Compliance............................................. 40
Section 9.9. Merger, Purchase and Sale.............................. 41
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio.................. 41
Section 9.11. Fixed Charge Coverage Ratio............................ 42
Section 9.12. Consolidated Tangible Net Worth........................ 42
Section 9.13. Restricted Payments.................................... 42
Section 9.14. Liens.................................................. 42
Section 9.15. Leases................................................. 45
Section 9.16. Use of Proceeds........................................ 45
Section 9.17. Transactions with Related Parties...................... 46
Section 9.18. Securitization......................................... 46
SECTION 10. CONDITIONS TO LENDING......................................... 46
Section 10.1. Conditions Precedent to All Loans...................... 46
Section 10.2. Conditions to the Availability of
the Commitments........................................ 47
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT............................ 49
Section 11.1. Events of Default...................................... 49
</TABLE>
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Section 11.2. Effect of Event of Default............................. 51
SECTION 12. THE AGENT..................................................... 52
Section 12.1. Authorization.......................................... 52
Section 12.2. Indemnification........................................ 52
Section 12.3. Action on Instructions of the
Required Banks......................................... 53
Section 12.4. Payments............................................... 53
Section 12.5. Exculpation............................................ 54
Section 12.6. Credit Investigation................................... 55
Section 12.7. UBS and Affiliates..................................... 55
Section 12.8. Resignation............................................ 55
SECTION 13. GENERAL....................................................... 56
Section 13.1. Waiver; Amendments..................................... 56
Section 13.2. Notices................................................ 57
Section 13.3. Computations........................................... 57
Section 13.4. Assignments; Participations............................ 58
Section 13.5. Costs, Expenses and Taxes.............................. 61
Section 13.6. Indemnification........................................ 62
Section 13.7. Regulation U........................................... 62
Section 13.8. Extension of Termination Dates;
Removal of Banks; Substitution
of Banks............................................... 62
Section 13.9. Captions............................................... 65
Section 13.10. Governing Law; Severability............................ 65
Section 13.11. Counterparts; Effectiveness............................ 65
Section 13.12. Further Assurances..................................... 66
Section 13.13. Successors and Assigns................................. 66
Section 13.14. Waiver of Jury Trial................................... 66
</TABLE>
-iii-
<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)
-iv-
<PAGE>
REVOLVING CREDIT AGREEMENT
--------------------------
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as of January 19,
1996, 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
$1,000,000,000 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.
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
<PAGE>
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 $1,000,000,000, 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.
-2-
<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, substantially 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 practi cable), 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:
-3-
<PAGE>
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
-4-
<PAGE>
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.
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
-5-
<PAGE>
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 trans
actions 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, 1995 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
-6-
<PAGE>
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.
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.
----------------------- ------------
-7-
<PAGE>
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.
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
- - -------- -------
-8-
<PAGE>
(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
(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
-9-
<PAGE>
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.
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.
-10-
<PAGE>
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.
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:
-11-
<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 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).
---------------- ---------------
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
-12-
<PAGE>
(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.
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
-13-
<PAGE>
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.
(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.
-----------
-14-
<PAGE>
(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.
(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
-15-
<PAGE>
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.
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.
--------------------------
(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
-16-
<PAGE>
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).
- - ------
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.
-17-
<PAGE>
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.
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
-18-
<PAGE>
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.
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
-19-
<PAGE>
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, 1996) 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.
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,
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<PAGE>
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.
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
-21-
<PAGE>
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.
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
-22-
<PAGE>
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.
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.
-23-
<PAGE>
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,
(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).
-----------
-24-
<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
-25-
<PAGE>
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.
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
- - --------------
-26-
<PAGE>
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.
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
-27-
<PAGE>
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, 1994, and unaudited
consolidated financial statements as at September 30, 1995, 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.
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
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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 6, 1995 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.
(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.
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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.
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<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;
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(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.
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
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<PAGE>
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.
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
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<PAGE>
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;
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%.
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<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 consoli dated 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;
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<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
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<PAGE>
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
---------------
(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;
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<PAGE>
(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.
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
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<PAGE>
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.
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.
---------
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<PAGE>
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 February 2, 1995, 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
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<PAGE>
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.
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
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<PAGE>
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
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.
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<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
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<PAGE>
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.
(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
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<PAGE>
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.
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
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<PAGE>
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 suc cessor 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 ,
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<PAGE>
(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. 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
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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 $1,250,000,000 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.
------------
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<PAGE>
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.
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;
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<PAGE>
(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.
------------
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.
-50-
<PAGE>
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 (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
"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.
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
-----------
-51-
<PAGE>
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.
(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
- - ---
-52-
<PAGE>
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.
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
-53-
<PAGE>
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.
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.
-54-
<PAGE>
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: Executive Vice President and
CFO
By: /s/ Pamela S.Hendry
----------------------------------
Name: PAMELA S. HENDRY
Title: Vice President and Treasurer
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
-55-
<PAGE>
Agent: UNION BANK OF SWITZERLAND,
acting through its Los Angeles
Branch, in its individual
corporate capacity and as Agent
By: /s/ Philip A. Stephens
---------------------------------
Name: PHILIP A. STEPHENS
Title: Vice President
By: /s/ Thomas G. Jackson
----------------------------------
Name: THOMAS G. JACKSON
Title: Managing Director
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Attention: Philip Stephens
Telephone: (213) 489-0600
Facsimile: (213) 489-0697
Telex: 6831878 UBSLSA
Managing Agents: COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By: /s/ Christian Jagenberg
---------------------------------
Name: CHRISTIAN JAGENBERG
Title: Senior Vice President and
Manager
By: /s/ Karla Wirth
---------------------------------
Name: KARLA WIRTH
Title: Assistant Treasurer
660 South Figueroa Street
Suite 1450
Los Angeles, California 90017
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
-56-
<PAGE>
BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT,
CAYMAN ISLANDS BRANCH
By: /s/ Wolfgang H. Haugk
---------------------------------
Name: WOLFGANG H. HAUGK
Title: First Vice President
By: /s/ Wolfgang Novotny
---------------------------------
Name: WOLFGANG NOVOTNY
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
Co-Agents: THE BANK OF NEW YORK
By: /s/ Lisa Y. Brown
---------------------------------
Name: LISA Y. BROWN
Title: Vice President
By:___________________________________
Name:_________________________________
Title:________________________________
10990 Wilshire Boulevard
Suite 1700
Los Angeles, California 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
-57-
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ John Quick
---------------------------------
Name: JOHN QUICK
Title: Officer
101 California Street
48th Floor
San Francisco, California 94111
Attention: Alan Pendergast
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
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
-58-
<PAGE>
CHEMICAL BANK
By: /s/ James B. Treger
---------------------------------
Name: JAMES B. TREGER
Title: Vice President
270 Park Avenue
New York, New York 10017
Attention: Mathis Shinnick
Telephone: (212) 270-1012
Facsimile: (212) 270-1469
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: Israel Carmeli
Telephone: (213) 243-4760
Facsimile: (213) 624-5258
Telex: 67-4 516/DKB-LSA
DEUTSCHE BANK AG, LOS ANGELES
BRANCH & CAYMAN ISLANDS BRANCH
By: /s/ Ross A. Howard
---------------------------------
Name: ROSS A. HOWARD
Title: Vice President
By: /s/ J. Scott Jessup
---------------------------------
Name: J. SCOTT JESSUP
Title: Vice President
550 South Hope Street
Suite 1850
Los Angeles, California 90071
Attention: Ross A. Howard,
Christina Moore
Telephone: (213) 627-8200
Facsimile: (213) 627-9779
-59-
<PAGE>
DRESDNER BANK AG, LOS ANGELES
AGENCY & GRAND CAYMAN BRANCH
By: /s/ Sidney S. Jordan
---------------------------------
Name: SIDNEY S. JORDAN
Title: Vice President
By: /s/ Vitol Wiacek
---------------------------------
Name: VITOL WIACEK
Title: Assistant 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
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, W16-14
Los Angeles, California 90017
Attention: Thomas J. Helotes
Telephone: (213) 614-4122
Facsimile: (213) 614-2569
-60-
<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
ROYAL BANK OF CANADA
By: /s/ D.G. Calancie
---------------------------------
Name: D.G. CALANCIE
Title: Senior 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
THE SAKURA BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Ofusa Sato
---------------------------------
Name: OFUSA SATO
Title: Senior Vice President and
Assistant General Manager
By:___________________________________
Name:_________________________________
Title:________________________________
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: J.R. Hainer
Telephone: (213) 489-6479
Facsimile: (213) 623-8692
Telex: 67-7185
-61-
<PAGE>
THE SANWA BANK, LIMITED
By: /s/ Stephen C. Small
---------------------------------
Name: STEPHEN C. SMALL
Title: Vice President and 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/ Maureen Kelly
---------------------------------
Name: MAUREEN KELLY
Title: Vice President
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Attention: Maureen Kelly, Su Fei Koo
Telephone: (310) 788-7110, 788-7107
Facsimile: (310) 551-1537
Telex: 188273
Lead Managers: THE ASAHI BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Jun Kosuge
---------------------------------
Name: JUN KOSUGE
Title: Senior Deputy General Manager
635 West 7th Street
Los Angeles, California 90017
Attention: Tsuyoshi Sakai
Telephone: (213) 626-6266
Facsimile: (213) 620-1564
Telex: 67256
-62-
<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By: /s/ Wilfried Freudenberger
---------------------------------
Name: WILFRIED FREUDENBERGER
Title: Executive Vice President and
General Manager
By: /s/ Peter Obermann
---------------------------------
Name: PETER OBERMANN
Title: Senior Vice President and
Manager Lending Division
560 Lexington Avenue
17th Floor
New York, New York 10022
Attention: Sean O'Sullivan
Telephone: (212) 310-9913
Facsimile: (212) 310-9868
Telex: TRT 177130
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
-63-
<PAGE>
KREDIETBANK NV
By: /s/ Robert Snauffer
---------------------------------
Name: ROBERT SNAUFFER
Title: Vice President
By: /s/ Armen Karozichian
---------------------------------
Name: ARMEN KAROZICHIAN
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Roxanne Cheng - CA
Telephone: (213) 624-0401
Facsimile: (213) 629-5801
Attention: Robert Snauffer - NY
Telephone: (212) 541-0700
Facsimile: (212) 956-5580
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, LOS ANGELES AGENCY
By: /s/ Ken Takahashi
---------------------------------
Name: KEN TAKAHASHI
Title: General Manager and Agent
611 West 6th Street
Suite 3800
Los Angeles, California 90017
Attention: Michael Testa
Telephone: (213) 614-7155
Facsimile: (213) 622-0378
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<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: /s/ Kenneth R. Crespo
---------------------------------
Name: KENNETH R. CRESPO
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: BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: /s/ Carlo Vecchi
---------------------------------
Name: CARLO VECCHI
Title: Senior Vice President
By: /s/ Giulio Giovine
---------------------------------
Name: GIULIO GIOVINE
Title: Vice President
25 West 51st Street
New York, New York 10019
Attention: Adolph Mascari
Telephone: (212) 581-0710
Facsimile: (212) 765-2978
Telex: 62840
-65-
<PAGE>
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: /s/ G. Innerarity
---------------------------------
Name: G. INNERARITY
Title: Senior Vice President and
General Manager
By:___________________________________
Name:_________________________________
Title:________________________________
100 Pine Street, Suite 2950
San Francisco, California 94111
Attention: Fernando Laseca
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 470598 CENT SF
BANCO DI NAPOLI S.p.A.
By: /s/ Claude P. Mapes
---------------------------------
Name: CLAUDE P. MAPES
Title: First Vice President
By: /s/ Vito Spada
---------------------------------
Name: VITO SPADA
Title: Executive Vice President
4 East 54th Street
New York, New York 10022
Attention: Claude P. Mapes
Telephone: (212) 872-2435
Facsimile: (212) 872-2426
Telex: 420634
-66-
<PAGE>
BANK OF HAWAII
By: /s/ D. Edward Wohlleb
---------------------------------
Name: D. EDWARD WOHLLEB
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: Curtis W. Chinn
Telephone: (808) 537-8433
Facsimile: (808) 537-8301
Telex: 7238434
BANQUE NATIONALE DE PARIS
By: /s/ Clive Bettles
---------------------------------
Name: CLIVE BETTLES
Title: Senior Vice President and
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
BARCLAYS BANK PLC
By: /s/ Francis C. Constantinople
---------------------------------
Name: FRANCIS C. CONSTANTINOPLE
Title: Director
222 Broadway
New York, New York 10038
Attention: Frank Constantinople
Telephone: (212) 412-7634
Facsimile: (212) 412-5610
-67-
<PAGE>
CIBC, INC.
By: /s/ Stephen D. Reynolds
---------------------------------
Name: STEPHEN D. REYNOLDS
Title: Director
425 Lexington Avenue
New York, New York 10017
Attention: Stephen D. Reynolds
Telephone: (212) 856-3566
Facsimile: (212) 856-3613
CREDIT SUISSE
By: /s/ Marilou Palenzuela
---------------------------------
Name: MARILOU PALENZUELA
Title: Member of Senior Management
By: /s/ Mark A. Sampson
---------------------------------
Name: MARK A. SAMPSON
Title: Associate
633 West 5th Street, 64th Floor
Los Angeles, CA 90071
Attention: Mark Sampson
Telephone: (213) 955-8200
Facsimile: (213) 955-8245
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, III
Telephone: (808) 525-6367
Facsimile: (808) 525-6372
Telex: 7238329
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<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Judy Flukinger
---------------------------------
Name: JUDY FLUKINGER
Title: Vice President
One First Union Center
301 South College Street
Charlotte, North Carolina 28202-0745
Attention: John E. Reid
Telephone: (704) 383-1385
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: Craig Papayania
Telephone: (213) 893-6441
Facsimile: (213) 488-9840
Telex: 6831123
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<PAGE>
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: /s/ Donald W. Brown
---------------------------------
Name: DONALD W. BROWN
Title: Branch Manager
By: /s/ Glen Binder
---------------------------------
Name: GLEN BINDER
Title: 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
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Kirk Seagers
---------------------------------
Name: KIRK SEAGERS
Title: Assistant Vice President
Broad & Chestnut Streets
13th Floor
Philadelphia, PA 19101
Attention: Kirk Seagers
Telephone: (215) 585-5081
Facsimile: (215) 585-7615
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: /s/ Masahiko Saito
---------------------------------
Name: MASAHIKO SAITO
Title: Assistant General Manager
300 South Grand Avenue
Los Angeles, CA 90071
Attention: Kenji Oshigane
Telephone: (213) 972-0200, ext. 8451
Facsimile: (213) 689-3200
-70-
<PAGE>
THE TOYO TRUST & BANKING CO., LTD.,
LOS ANGELES AGENCY
By: /s/ Kenji Fujikawa
---------------------------------
Name: KENJI FUJIKAWA
Title: General Manager
444 South Flower Street, Suite 1550
Los Angeles, California 90071
Attention: Steven K. Rubinstein
Telephone: (213) 624-2424
Facsimile: (213) 624-5874
Telex: 215288
Participants: THE BANK OF CALIFORNIA, N.A.
By: /s/ Robert J. Vernagallo
---------------------------------
Name: ROBERT J. VERNAGALLO
Title: Vice President
400 California Street
San Francisco, CA 94104
Attention: Robert J. Vernagallo
Telephone: (415) 765-2614
Facsimile: (415) 765-2634
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
-71-
<PAGE>
SCHEDULE I
SCHEDULE OF BANKS
<TABLE>
<CAPTION>
Bank Commitment
- - ---- ----------
(in millions)
<S> <C>
Union Bank of Switzerland..................... $ 56.25
Commerzbank Aktiengesellschaft................ 50.00
Bayerische Hypotheken-und Wechsel-Bank
Aktiengesellschaft........................... 48.75
The Bank of New York.......................... 38.00
The Bank of Nova Scotia....................... 38.00
The Bank of Tokyo, Limited.................... 38.00
The Chase Manhattan Bank, N.A................. 38.00
Deutsche Bank AG.............................. 38.00
Dresdner Bank AG.............................. 38.00
The Fuji Bank, Limited........................ 38.00
Societe Generale.............................. 38.00
Royal Bank of Canada.......................... 37.50
DG Bank Deutsche Genossenschaftsbank.......... 35.00
Chemical Bank................................. 31.50
The Dai-Ichi Kangyo Bank, Ltd................. 31.50
First Interstate Bank of California........... 31.50
The Sakura Bank, Ltd.......................... 31.50
The Sanwa Bank, Limited....................... 31.50
Bayerische Landesbank Girozentrale............ 27.50
The Mitsui Trust & Banking Company, Limited... 27.50
Westdeutsche Landesbank Girozentrale.......... 25.00
The Asahi Bank, Ltd........................... 20.00
Kredietbank NV................................ 20.00
The Tokai Bank, Ltd........................... 18.75
Banco di Napoli S.p.A......................... 16.00
Banca Nazionale del Lavoro, S.p.A............. 15.00
Banque Nationale de Paris..................... 14.00
Banco Central Hispanoamericano................ 12.50
Bank of Hawaii................................ 12.50
Istituto Bancario San Paolo di Torino S.p.A... 12.50
The Toyo Trust & Banking Co., Ltd............. 12.00
Barclays Bank PLC............................. 10.00
CIBC, Inc..................................... 10.00
Credit Suisse................................. 10.00
First Union National Bank of North Carolina... 10.00
The Industrial Bank of Japan, Limited......... 10.00
PNC Bank, National Association................ 10.00
Citicorp USA, Inc............................. 7.50
First Hawaiian Bank........................... 6.25
The Bank of California, N.A................... 4.00
</TABLE>
<PAGE>
SCHEDULE II
FEES AND MARGINS
(IN BASIS POINTS)
<TABLE>
===============================================================================
<S> <C>
Facility Fee 7.00
- - -------------------------------------------------------------------------------
Margins:
LIBOR 28.00
CD 40.50
Base --
--------------------------------------
Competitive Bid Option As Bid by the Banks.
===============================================================================
</TABLE>
<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 $1,000,000,000 Revolving Credit Agreement, dated
as of January 19, 1996 (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: __________
____________________
/1/ The Company may select up to three loan periods per Notice of Competitive
Bid Borrowing.
A-1
<PAGE>
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:________________________________
A-2
<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
$1,000,000,000 Revolving Credit Agreement, dated as of January 19, 1996 (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:/2/
____________________
/2/ $10,000,000 or a higher integral multiple of $1,000,000.
B-1
<PAGE>
(a) Loan Period of ___ days ___ months
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------
Principal Amount Interest Rate or
Minimum Maximum LIBOR +/- Margin
- - -----------------------------------------------------------------------------
<S> <C> <C> <C>
1. $/3/ $* /4/
2. $* $* **
3. $* $* **
4. $* $* **
- - -----------------------------------------------------------------------------
</TABLE>
(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 any 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:________________________________
_________________
/3/ $10,000,000 or a higher integral multiple of $1,000,000 for each interest
rate (i.e., Portion) for each Loan Period.
/4/ 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.
B-2
<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 $1,000,000,000 Revolving Credit Agreement, dated as of January 19, 1996 (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
C-1
<PAGE>
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:_________________________________
C-2
<PAGE>
Exhibit D
FORM OF BID NOTE
$1,000,000,000 January 19, 1996
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
January 17, 1997, or at such other place, to such other person or at such other
time and date as provided for in the $1,000,000,000 Revolving Credit Agreement
(as amended, modified or supplemented, the "Credit Agreement"), dated as of
January 19, 1996, among the Company, the Agent, and the financial institutions
named therein, in lawful money of the United States, the principal sum of
$1,000,000,000 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
D-1
<PAGE>
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:
D-2
<PAGE>
Bid Loans and Payments of Principal
-----------------------------------
<TABLE>
<CAPTION>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
- - -------- --------- -------- -------- ------ --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
</TABLE>
D-3
<PAGE>
Exhibit E
FORM OF COMMITTED NOTE
$_______________ January 19, 1996
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
January 17, 1997, or at such other place, to such other person or at such other
time and date as provided for in the $1,000,000,000 Revolving Credit Agreement
(as amended, modified or supplemented, the "Credit Agreement"), dated as of
January 19, 1996, 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
E-1
<PAGE>
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:
E-2
<PAGE>
Committed Loans and Payments of Principal
-----------------------------------------
<TABLE>
<CAPTION>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
- - -------- --------- -------- -------- ------ --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
</TABLE>
E-3
<PAGE>
Exhibit F
FIXED CHARGE COVERAGE RATIO/5/
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
12 Months Ended
September 30, 1995
(Dollars in thousands)
----------------------
<S> <C>
Earnings
Net Income................................... $185,162
Add:
Provision for income taxes................. 110,732
Fixed charges.............................. 558,401
Less:
Capitalized interest....................... (51,823)
----------------------
Earnings as adjusted (A)..................... 802,472
======================
Preferred dividend requirements.............. $ 11,428
Ratio of income before provision for
income taxes to net income................ 156%
----------------------
Preferred dividend factor on
pretax basis............................... 17,866
Fixed charges
Interest expense........................... 506,578
Capitalized interest....................... 51,823
Estimate of minimum rents under
operating leases representing the
interest factor.......................... 0
Fixed charges as adjusted.................... 558,401
----------------------
Fixed charges and preferred
stock dividends (B)........................ $576,267
======================
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))*..................................... 1.39 to 1.00
======================
</TABLE>
__________________________
/5/ As calculated pursuant to Section 9.11 and the definition of Fixed Charge
------------
Coverage Ratio set forth in Section 1.2.
-----------
F-1
<PAGE>
Exhibit G
January 19, 1996
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 $1,250,000,000 Revolving Credit
Agreement and a $1,000,000,000 Revolving Credit Agreement, in each case dated as
of January 19, 1996 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
G-1
<PAGE>
The Banks and the Agent -2-
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.
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, 1994.
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
G-2
<PAGE>
The Banks and the Agent -3-
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.
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
G-3
<PAGE>
The Banks and the Agent -4-
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,
G-4
<PAGE>
Exhibit H
January 19, 1996
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 $1,250,000,000
Revolving Credit Agreement and a $1,000,000,000 Revolving Credit Agreement, in
each case dated as of January 19, 1996 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
H-1
<PAGE>
The Banks and the Agent -2-
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.
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
H-2
<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 $1,000,000,000 Revolving Credit Agreement dated as of January 19,
1996 (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 $ /6/ (the "Assigned
-------
Amount"), together with $ * aggregate principal amount outstanding of
---------
Committed Loans and $ /7/ 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:
____________________
/6/ See Section 13.4.1 for minimum requirements.
--------------
/7/ Assignment of Bid Loans is optional.
I-1
<PAGE>
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 $_________/8/. 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.
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 CreditAgreement. 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
__________________
/8/ 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.
I-2
<PAGE>
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:
I-3
<PAGE>
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:
I-4
<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
------------
$1,000,000,000 Revolving Credit Agreement, dated as of January 19, 1996 (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
J-1
<PAGE>
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:
J-2
<PAGE>
CONFORMED COPY
--------------
10.14
$1,250,000,000 REVOLVING CREDIT AGREEMENT
DATED AS OF
JANUARY 19, 1996
AMONG
INTERNATIONAL LEASE FINANCE CORPORATION
UNION BANK OF SWITZERLAND
LOS ANGELES BRANCH
AND
THE OTHER BANKS (AS DEFINED HEREIN)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
SECTION 1. CERTAIN DEFINITIONS................................... 1
Section 1.1. Terms Generally............................... 1
Section 1.2. Specific Terms................................ 2
SECTION 2. BID LOANS AND BID NOTES............................... 15
Section 2.1. Making of Bid Loans........................... 15
Section 2.2. Procedure for Bid Loans....................... 15
Section 2.3. Funding of Bid Loans.......................... 18
Section 2.4. Bid Notes..................................... 18
SECTION 3. COMMITTED LOANS AND NOTES............................. 19
Section 3.1. Agreement to Make Committed Loans............. 19
Section 3.2. Procedure for Committed Loans................. 19
Section 3.3. Maturity of Committed Loans................... 21
Section 3.4. Committed Notes............................... 21
SECTION 4. INTEREST AND FEES..................................... 21
Section 4.1. Interest Rates................................ 21
Section 4.2. Interest Payment Dates........................ 22
Section 4.3. Setting and Notice of Committed Loan Rates.... 22
Section 4.4. Facility Fee.................................. 23
Section 4.5. Agent's Fees.................................. 24
Section 4.6. Utilization Fee............................... 24
Section 4.7. Computation of Interest and Fees.............. 24
SECTION 5. REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENTS.............................. 24
Section 5.1. Voluntary Termination or Reduction
of the Commitments............................ 24
Section 5.2. Voluntary Prepayments......................... 25
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF;
TAXES................................................. 25
Section 6.1. Making of Payments............................ 25
Section 6.2. Pro Rata Treatment; Sharing................... 26
Section 6.3. Set-off....................................... 27
Section 6.4. Taxes, etc.................................... 27
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR
ABSOLUTE RATE LOANS, LIBOR RATE LOANS AND
CD RATE LOANS......................................... 29
Section 7.1. Increased Costs............................... 29
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair.......................... 30
Section 7.3. Changes in Law Rendering Certain
Loans Unlawful................................ 31
Section 7.4. Funding Losses................................ 32
</TABLE>
i
<PAGE>
<TABLE>
<S> <C> <C> <C>
Section 7.5. Discretion of Banks as to Manner of Funding... 32
Section 7.6. Conclusiveness of Statements;
Survival of Provisions........................ 32
SECTION 8. REPRESENTATIONS AND WARRANTIES........................ 33
Section 8.1. Organization, etc............................. 33
Section 8.2. Authorization; Consents; No Conflict.......... 33
Section 8.3. Validity and Binding Nature................... 34
Section 8.4. Financial Statements.......................... 34
Section 8.5. Litigation and Contingent Liabilities......... 34
Section 8.6. Employee Benefit Plans........................ 34
Section 8.7. Investment Company Act........................ 35
Section 8.8. Public Utility Holding Company Act............ 35
Section 8.9. Regulation U.................................. 35
Section 8.10. Information................................... 35
Section 8.11. Compliance with Applicable Laws, etc.......... 36
Section 8.12. Insurance..................................... 36
Section 8.13. Taxes......................................... 36
Section 8.14. Use of Proceeds............................... 37
Section 8.15. Pari Passu.................................... 37
Section 8.16. Ownership and Liens........................... 37
SECTION 9. COVENANTS............................................. 37
Section 9.1. Reports, Certificates and Other Information... 37
Section 9.2. Existence..................................... 39
Section 9.3. Nature of Business............................ 40
Section 9.4. Books, Records and Access..................... 40
Section 9.5. Insurance..................................... 40
Section 9.6. Repair........................................ 40
Section 9.7. Taxes......................................... 40
Section 9.8. Compliance.................................... 41
Section 9.9. Merger, Purchase and Sale..................... 41
Section 9.10. Consolidated Indebtedness to Consolidated
Tangible Net Worth Ratio...................... 42
Section 9.11. Fixed Charge Coverage Ratio................... 42
Section 9.12. Consolidated Tangible Net Worth............... 42
Section 9.13. Restricted Payments........................... 42
Section 9.14. Liens......................................... 43
Section 9.15. Leases........................................ 45
Section 9.16. Use of Proceeds............................... 46
Section 9.17. Transactions with Related Parties............. 46
Section 9.18. Securitization................................ 46
SECTION 10. CONDITIONS TO LENDING................................. 46
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C> <C>
Section 10.1. Conditions Precedent to All Loans............. 46
Section 10.2. Conditions to the Availability of
the Commitments............................... 47
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT.................... 49
Section 11.1. Events of Default............................. 49
Section 11.2. Effect of Event of Default.................... 51
SECTION 12. THE AGENT............................................. 52
Section 12.1. Authorization................................. 52
Section 12.2. Indemnification............................... 52
Section 12.3. Action on Instructions of the Required Banks.. 53
Section 12.4. Payments...................................... 53
Section 12.5. Exculpation................................... 55
Section 12.6. Credit Investigation.......................... 55
Section 12.7. UBS and Affiliates............................ 56
Section 12.8. Resignation................................... 56
SECTION 13. GENERAL 56
Section 13.1. Waiver; Amendments............................ 56
Section 13.2. Notices....................................... 57
Section 13.3. Computations.................................. 58
Section 13.4. Assignments; Participations................... 58
Section 13.5. Costs, Expenses and Taxes..................... 61
Section 13.6. Indemnification............................... 62
Section 13.7. Regulation U.................................. 62
Section 13.8. Extension of Termination Dates;
Removal of Banks; Substitution of Banks....... 63
Section 13.9. Captions...................................... 65
Section 13.10. Governing Law; Severability................... 65
Section 13.11. Counterparts; Effectiveness................... 65
Section 13.12. Further Assurances............................ 66
Section 13.13. Successors and Assigns........................ 66
Section 13.14. Waiver of Jury Trial.......................... 66
</TABLE>
iii
<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)
iv
<PAGE>
REVOLVING CREDIT AGREEMENT
--------------------------
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as of January 19,
1996, 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
$1,250,000,000 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 $1,250,000,000, 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.
------------ ------------
-2-
<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, substantially 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.
-3-
<PAGE>
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 practi cable), 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
CD Rate Loan means any Loan that bears interest at the CD Rate.
------------
-4-
<PAGE>
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.
------
-5-
<PAGE>
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,
-6-
<PAGE>
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 trans
actions 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, 1995 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
-7-
<PAGE>
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.
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;
-8-
<PAGE>
(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.
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.
-9-
<PAGE>
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
(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.
-10-
<PAGE>
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
-11-
<PAGE>
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.
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.
-12-
<PAGE>
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.
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:
-13-
<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 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).
---------------- ---------------
Termination Date means, with respect to any Bank, the earliest to
----------------
occur of (i) the fifth 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.
-14-
<PAGE>
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.
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
-15-
<PAGE>
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.
(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
-16-
<PAGE>
(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
-17-
<PAGE>
of each Bid Loan to be made by such Bank as part of such Bid Borrowing.
(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.
-18-
<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.
-19-
<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,
----------
immedi ately 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.
-20-
<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;
-21-
<PAGE>
(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.
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
-22-
<PAGE>
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.
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, 1996) 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.
<PAGE>
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, 1996) 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.
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
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<PAGE>
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
-25-
<PAGE>
share (if any) of each such payment. All payments under Section 7 shall be made
---------
by the Company directly to the Persons entitled thereto.
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
-26-
<PAGE>
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.
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;
-27-
<PAGE>
(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.
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.
-28-
<PAGE>
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,
(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;
-29-
<PAGE>
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.
(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:
-30-
<PAGE>
(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
-31-
<PAGE>
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.
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
- - ---
-32-
<PAGE>
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.
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
-33-
<PAGE>
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, 1994, and unaudited
consolidated financial statements as at September 30, 1995, 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.
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
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<PAGE>
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 6, 1995 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
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<PAGE>
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.
(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.
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<PAGE>
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.
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.
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<PAGE>
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;
(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
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<PAGE>
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
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<PAGE>
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.
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
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<PAGE>
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;
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<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
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<PAGE>
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;
(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;
------------
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<PAGE>
(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;
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<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.
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<PAGE>
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.
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:
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<PAGE>
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.
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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 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,
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<PAGE>
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 February 2, 1995, 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, inter est 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.
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<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 credi tors; 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
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<PAGE>
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
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
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<PAGE>
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
-52-
<PAGE>
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.
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
-53-
<PAGE>
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
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<PAGE>
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.
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.
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<PAGE>
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 suc cessor 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
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<PAGE>
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. Correspondence of the type
described in Section 2.2 with respect to Bid Loans and notices of
-----------
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<PAGE>
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).
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
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<PAGE>
Commitment); each such assignment of a Bank's Commitment, when considered
in aggregate with any simultaneous assignment by such Bank pursuant to the
$1,000,000,000 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
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<PAGE>
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.
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
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<PAGE>
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.
------------
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
-61-
<PAGE>
(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 (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
"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.
-62-
<PAGE>
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 January 19 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 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
-63-
<PAGE>
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 sub section (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.
(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
-64-
<PAGE>
supplemental hereto among the Company and the Banks, and thereupon UBS, as
Agent, shall be relieved from its obliga tions 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.
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
-65-
<PAGE>
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.
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.
-66-
<PAGE>
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: Executive Vice President and CFO
By: /s/ Pamela S. Hendry
-----------------------------------
Name: PAMELA S. HENDRY
Title: Vice President and Treasurer
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
-67-
<PAGE>
Agent: UNION BANK OF SWITZERLAND,
acting through its Los Angeles
Branch, in its individual
corporate capacity and as Agent
By: /s/ Philip A. Stephens
-----------------------------------
Name: PHILIP A. STEPHENS
Title: Vice President
By: /s/ Thomas G. Jackson
-----------------------------------
Name: THOMAS G. JACKSON
Title: Managing Director
444 South Flower Street
Suite 4600
Los Angeles, California 90071
Attention: Philip Stephens
Telephone: (213) 489-0600
Facsimile: (213) 489-0697
Telex: 6831878 UBSLSA
Managing Agents: COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By: /s/ Christian Jagenberg
----------------------------------
Name: CHRISTIAN JAGENBERG
Title: Senior Vice President and
Manager
By: /s/ Karla Wirth
----------------------------------
Name: KARLA WIRTH
Title: Assistant Treasurer
660 South Figueroa Street
Suite 1450
Los Angeles, California 90017
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
-68-
<PAGE>
BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT,
CAYMAN ISLANDS BRANCH
By: /s/ Wolfgang H. Haugk
-----------------------------------
Name: WOLFGANG H. HAUGK
Title: First Vice President
By: /s/ Wolfgang Novotny
-----------------------------------
Name: WOLFGANG NOVOTNY
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
Co-Agents: THE BANK OF NEW YORK
By: /s/ Lisa Y. Brown
-----------------------------------
Name: LISA Y. BROWN
Title: Vice President
By:_____________________________________
Name:___________________________________
Title:__________________________________
10990 Wilshire Boulevard
Suite 1700
Los Angeles, California 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
-69-
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ John Quick
-----------------------------------
Name: JOHN QUICK
Title: Officer
101 California Street
48th Floor
San Francisco, California 94111
Attention: Alan Pendergast
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
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
-70-
<PAGE>
CHEMICAL BANK
By: /s/ James B. Treger
-----------------------------------
Name: JAMES B. TREGER
Title: Vice President
270 Park Avenue
New York, New York 10017
Attention: Mathis Shinnick
Telephone: (212) 270-1012
Facsimile: (212) 270-1469
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: Israel Carmeli
Telephone: (213) 243-4760
Facsimile: (213) 624-5258
Telex: 67-4 516/DKB-LSA
DEUTSCHE BANK AG, LOS ANGELES
BRANCH & CAYMAN ISLANDS BRANCH
By: /s/ Ross A. Howard
-----------------------------------
Name: ROSS A. HOWARD
Title: Vice President
By: /s/ J. Scott Jessup
-----------------------------------
Name: J. SCOTT JESSUP
Title: Vice President
550 South Hope Street
Suite 1850
Los Angeles, California 90071
Attention: Ross A. Howard,
Christina Moore
Telephone: (213) 627-8200
Facsimile: (213) 627-9779
-71-
<PAGE>
DRESDNER BANK AG, LOS ANGELES
AGENCY & GRAND CAYMAN BRANCH
By: /s/ Sidney S. Jordan
-----------------------------------
Name: SIDNEY S. JORDAN
Title: Vice President
By: /s/ Vitol Wiacek
-----------------------------------
Name: VITOL WIACEK
Title: Assistant 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
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, W16-14
Los Angeles, California 90017
Attention: Thomas J. Helotes
Telephone: (213) 614-4122
Facsimile: (213) 614-2569
-72-
<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
ROYAL BANK OF CANADA
By: /s/ D.G. Calancie
-----------------------------------
Name: D.G. CALANCIE
Title: Senior 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
THE SAKURA BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Ofusa Sato
-----------------------------------
Name: OFUSA SATO
Title: Senior Vice President and
Assistant General Manager
By:_____________________________________
Name:___________________________________
Title:__________________________________
515 South Figueroa Street
Suite 400
Los Angeles, California 90071
Attention: J.R. Hainer
Telephone: (213) 489-6479
Facsimile: (213) 623-8692
Telex: 67-7185
-73-
<PAGE>
THE SANWA BANK, LIMITED
By: /s/ Stephen C. Small
-----------------------------------
Name: STEPHEN C. SMALL
Title: Vice President and 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/ Maureen Kelly
-----------------------------------
Name: MAUREEN KELLY
Title: Vice President
2029 Century Park East
Suite 2900
Los Angeles, California 90067
Attention: Maureen Kelly, Su Fei Koo
Telephone: (310) 788-7110, 788-7107
Facsimile: (310) 551-1537
Telex: 188273
Lead Managers: THE ASAHI BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Jun Kosuge
----------------------------------
Name: JUN KOSUGE
Title: Senior Deputy General Manager
635 West 7th Street
Los Angeles, California 90017
Attention: Tsuyoshi Sakai
Telephone: (213) 626-6266
Facsimile: (213) 620-1564
Telex: 67256
-74-
<PAGE>
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By: /s/ Wilfried Freudenberger
-----------------------------------
Name: WILFRIED FREUDENBERGER
Title: Executive Vice President and
General Manager
By: /s/ Peter Obermann
-----------------------------------
Name: PETER OBERMANN
Title: Senior Vice President and
Manager Lending Division
560 Lexington Avenue
17th Floor
New York, New York 10022
Attention: Sean O'Sullivan
Telephone: (212) 310-9913
Facsimile: (212) 310-9868
Telex: TRT 177130
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
-75-
<PAGE>
KREDIETBANK NV
By: /s/ Robert Snauffer
-----------------------------------
Name: ROBERT SNAUFFER
Title: Vice President
By: /s/ Armen Karozichian
-----------------------------------
Name: ARMEN KAROZICHIAN
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Roxanne Cheng - CA
Telephone: (213) 624-0401
Facsimile: (213) 629-5801
Attention: Robert Snauffer - NY
Telephone: (212) 541-0700
Facsimile: (212) 956-5580
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, LOS ANGELES AGENCY
By: /s/ Ken Takahashi
-----------------------------------
Name: KEN TAKAHASHI
Title: General Manager and Agent
611 West 6th Street
Suite 3800
Los Angeles, California 90017
Attention: Michael Testa
Telephone: (213) 614-7155
Facsimile: (213) 622-0378
-76-
<PAGE>
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: /s/ Kenneth R. Crespo
-----------------------------------
Name: KENNETH R. CRESPO
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: BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: /s/ Carlo Vecchi
-----------------------------------
Name: CARLO VECCHI
Title: Senior Vice President
By: /s/ Giulio Giovine
-----------------------------------
Name: GIULIO GIOVINE
Title: Vice President
25 West 51st Street
New York, New York 10019
Attention: Adolph Mascari
Telephone: (212) 581-0710
Facsimile: (212) 765-2978
Telex: 62840
-77-
<PAGE>
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: /s/ G. Innerarity
-----------------------------------
Name: G. INNERARITY
Title: Senior Vice President and
General Manager
By:____________________________________
Name:__________________________________
Title:_________________________________
100 Pine Street, Suite 2950
San Francisco, California 94111
Attention: Fernando Laseca
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 470598 CENT SF
BANCO DI NAPOLI S.p.A.
By: /s/ Claude P. Mapes
-----------------------------------
Name: CLAUDE P. MAPES
Title: First Vice President
By: /s/ Vito Spada
-----------------------------------
Name: VITO SPADA
Title: Executive Vice President
4 East 54th Street
New York, New York 10022
Attention: Claude P. Mapes
Telephone: (212) 872-2435
Facsimile: (212) 872-2426
Telex: 420634
-78-
<PAGE>
BANK OF HAWAII
By: /s/ D. Edward Wohlleb
-----------------------------------
Name: D. EDWARD WOHLLEB
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: Curtis W. Chinn
Telephone: (808) 537-8433
Facsimile: (808) 537-8301
Telex: 7238434
BANQUE NATIONALE DE PARIS
By: /s/ Clive Bettles
-----------------------------------
Name: CLIVE BETTLES
Title: Senior Vice President and
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
BARCLAYS BANK PLC
By: /s/ Francis C. Constantinople
-----------------------------------
Name: FRANCIS C. CONSTANTINOPLE
Title: Director
222 Broadway
New York, New York 10038
Attention: Frank Constantinople
Telephone: (212) 412-7634
Facsimile: (212) 412-5610
-79-
<PAGE>
CIBC, INC.
By: /s/ Stephen D. Reynolds
---------------------------------
Name: STEPHEN D. REYNOLDS
Title: Director
425 Lexington Avenue
New York, New York 10017
Attention: Stephen D. Reynolds
Telephone: (212) 856-3566
Facsimile: (212) 856-3613
CREDIT SUISSE
By: /s/ Marilou Palenzuela
---------------------------------
Name: MARILOU PALENZUELA
Title: Member of Senior Management
By: /s/ Mark A. Sampson
---------------------------------
Name: MARK A. SAMPSON
Title: Associate
633 West 5th Street, 64th Floor
Los Angeles, CA 90071
Attention: Mark Sampson
Telephone: (213) 955-8200
Facsimile: (213) 955-8245
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, III
Telephone: (808) 525-6367
Facsimile: (808) 525-6372
Telex: 7238329
-80-
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Judy Flukinger
---------------------------------
Name: JUDY FLUKINGER
Title: Vice President
One First Union Center
301 South College Street
Charlotte, North Carolina 28202-0745
Attention: John E. Reid
Telephone: (704) 383-1385
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: Craig Papayania
Telephone: (213) 893-6441
Facsimile: (213) 488-9840
Telex: 6831123
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<PAGE>
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: /s/ Donald W. Brown
---------------------------------
Name: DONALD W. BROWN
Title: Branch Manager
By: /s/ Glen Binder
---------------------------------
Name: GLEN BINDER
Title: 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
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Kirk Seagers
---------------------------------
Name: KIRK SEAGERS
Title: Assistant Vice President
Broad & Chestnut Streets
13th Floor
Philadelphia, PA 19101
Attention: Kirk Seagers
Telephone: (215) 585-5081
Facsimile: (215) 585-7615
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: /s/ Masahiko Saito
---------------------------------
Name: MASAHIKO SAITO
Title: Assistant General Manager
300 South Grand Avenue
Los Angeles, CA 90071
Attention: Kenji Oshigane
Telephone: (213) 972-0200, ext. 8451
Facsimile: (213) 689-3200
-82-
<PAGE>
THE TOYO TRUST & BANKING CO., LTD.,
LOS ANGELES AGENCY
By: /s/ Kenji Fujikawa
---------------------------------
Name: KENJI FUJIKAWA
Title: General Manager
444 South Flower Street, Suite 1550
Los Angeles, California 90071
Attention: Steven K. Rubinstein
Telephone: (213) 624-2424
Facsimile: (213) 624-5874
Telex: 215288
Participants: THE BANK OF CALIFORNIA, N.A.
By: /s/ Robert J. Vernagallo
---------------------------------
Name: ROBERT J. VERNAGALLO
Title: Vice President
400 California Street
San Francisco, CA 94104
Attention: Robert J. Vernagallo
Telephone: (415) 765-2614
Facsimile: (415) 765-2634
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
-83-
<PAGE>
SCHEDULE I
SCHEDULE OF BANKS
<TABLE>
<CAPTION>
Bank Commitment
- - ---- ----------
(in millions)
<S> <C>
Union Bank of Switzerland............................................ $ 68.75
Commerzbank Aktiengesellschaft....................................... 62.50
Bayerische Hypotheken-und Wechsel-Bank
Aktiengesellschaft.................................................. 59.25
The Bank of New York................................................. 46.00
The Bank of Nova Scotia.............................................. 46.00
The Bank of Tokyo, Limited........................................... 46.00
The Chase Manhattan Bank, N.A........................................ 46.00
Deutsche Bank AG..................................................... 46.00
Dresdner Bank AG..................................................... 46.00
The Fuji Bank, Limited............................................... 46.00
Societe Generale..................................................... 46.00
Chemical Bank........................................................ 43.50
The Dai-Ichi Kangyo Bank, Ltd........................................ 43.50
First Interstate Bank of California.................................. 43.50
The Sakura Bank, Ltd................................................. 43.50
The Sanwa Bank, Limited.............................................. 43.50
Royal Bank of Canada................................................. 37.50
Westdeutsche Landesbank Girozentrale................................. 37.50
The Asahi Bank, Ltd.................................................. 30.00
Kredietbank NV....................................................... 30.00
Banco di Napoli S.p.A................................................ 24.00
Banca Nazionale del Lavoro, S.p.A.................................... 22.50
Bayerische Landesbank Girozentrale................................... 22.50
The Mitsui Trust & Banking Company, Limited.......................... 22.50
Banque Nationale de Paris............................................ 21.00
Banco Central Hispanoamericano....................................... 18.75
Bank of Hawaii....................................................... 18.75
First Hawaiian Bank.................................................. 18.75
Istituto Bancario San Paolo di Torino S.p.A.......................... 18.75
The Toyo Trust & Banking Co., Ltd.................................... 18.00
Barclays Bank PLC.................................................... 15.00
CIBC, Inc............................................................ 15.00
Credit Suisse........................................................ 15.00
DG Bank Deutsche Genossenschaftsbank................................. 15.00
First Union National Bank of North Carolina.......................... 15.00
The Industrial Bank of Japan, Limited................................ 15.00
PNC Bank, National Association....................................... 15.00
Citicorp USA, Inc.................................................... 11.25
The Tokai Bank, Ltd.................................................. 11.25
The Bank of California, N.A.......................................... 6.00
</TABLE>
<PAGE>
SCHEDULE II
FEES AND MARGINS
(IN BASIS POINTS)
<TABLE>
<CAPTION>
========================================================================================================
UNSUBORDINATED UNSECURED AA3/AA- A2/A OR A3/A-/(1)/ BAA2/BBB BAA3/BBB-
LONG-TERM DEBT RATINGS OR HIGHER/(1)/ HIGHER BUT OR HIGHER OR BELOW/(1)/
LOWER THAN BUT LOWER
AA3/AA-/(1)/ THAN A3/A-/(1)/
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
========================================================================================================
</TABLE>
(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
________________, ____
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 $1,250,000,000 Revolving Credit Agreement, dated
as of January 19, 1996 (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: ________________, ____.
(b) Aggregate principal amount of Bid Loans requested: $____________.
(c) Loan Period(s):/*/
Absolute Rate Loans: ___ days ___ days ___ days
LIBOR Rate Loans: __ months __ months __ months
(d) Account of the Company to be credited: __________
___________________
/*/ The Company may select up to three loan periods per Notice of Competitive
Bid Borrowing.
A-1
<PAGE>
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:________________________
A-2
<PAGE>
Exhibit B
FORM OF
BID FROM [Name of Bank]
(Contact Person:___________)
______________, ____
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
$1,250,000,000 Revolving Credit Agreement, dated as of January 19, 1996 (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
_____________, ____, 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 _______________,
____.
(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.
B-1
<PAGE>
(a) Loan Period of ___ days ___ months
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------
Principal Amount Interest Rate or
Minimum Maximum LIBOR + Margin
-
- - -------------------------------------------------------------------------
<S> <C> <C> <C>
1. $/*/ $/*/ /**/
2. $/*/ $/*/ /**/
3. $/*/ $/*/ /**/
4. $/*/ $/*/ /**/
</TABLE>
(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 any 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.
B-2
<PAGE>
Exhibit C
FORM OF
COMMITTED LOAN REQUEST
________________, ____
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 $1,250,000,000 Revolving Credit Agreement, dated as of January 19, 1996 (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: ______________, ____.
(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
C-1
<PAGE>
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:________________________
C-2
<PAGE>
Exhibit D
FORM OF BID NOTE
$1,250,000,000 January 19, 1996
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
January 19, 2001, or at such other place, to such other person or at such other
time and date as provided for in the $1,250,000,000 Revolving Credit Agreement
(as amended, modified or supplemented, the "Credit Agreement"), dated as of
January 19, 1996, among the Company, the Agent, and the financial institutions
named therein, in lawful money of the United States, the principal sum of
$1,250,000,000 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
D-1
<PAGE>
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:
D-2
<PAGE>
Bid Loans and Payments of Principal
-----------------------------------
<TABLE>
<CAPTION>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
- - ------- --------- -------- -------- ------ --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
</TABLE>
D-3
<PAGE>
Exhibit E
FORM OF COMMITTED NOTE
$_______________ January 19, 1996
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
January 19, 2001, or at such other place, to such other person or at such other
time and date as provided for in the $1,250,000,000 Revolving Credit Agreement
(as amended, modified or supplemented, the "Credit Agreement"), dated as of
January 19, 1996, 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
E-1
<PAGE>
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:
E-2
<PAGE>
Committed Loans and Payments of Principal
-----------------------------------------
<TABLE>
<CAPTION>
Name of
Principal Amount of Unpaid Person
Funding Amount Interest Interest Loan Principal Principal Making
Date of Loan Method Rate Period Paid Balance Notation
- - ------- --------- -------- -------- ------ --------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
</TABLE>
E-3
<PAGE>
Exhibit F
FIXED CHARGE COVERAGE RATIO/*/
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
12 Months Ended
September 30, 1995
(Dollars in thousands)
---------------------------
<S> <C>
Earnings
Net Income.............................. $185,162
Add:
Provision for income taxes............ 110,732
Fixed charges......................... 558,401
Less:
Capitalized interest.................. (51,823)
-----------------
Earnings as adjusted (A)................ 802,472
=================
Preferred dividend requirements......... $ 11,428
Ratio of income before provision for
income taxes to net income.......... 156%
-----------------
Preferred dividend factor on
pretax basis.......................... 17,866
Fixed charges
Interest expense...................... 506,578
Capitalized interest.................. 51,823
Estimate of minimum rents under
operating leases representing the
interest factor..................... 0
Fixed charges as adjusted............... 558,401
-----------------
Fixed charges and preferred
stock dividends (B)................... $576,267
=================
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))*................................ 1.39 to 1.00
=================
</TABLE>
___________________
/*/ As calculated pursuant to Section 9.11 and the definition of Fixed
------------
Charge Coverage Ratio set forth in Section 1.2.
-----------
F-1
<PAGE>
Exhibit G
January 19, 1996
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 $1,250,000,000 Revolving Credit
Agreement and a $1,000,000,000 Revolving Credit Agreement, in each case dated as
of January 19, 1996 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
G-1
<PAGE>
The Banks and the Agent -2-
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.
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, 1994.
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
G-2
<PAGE>
The Banks and the Agent -3-
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.
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
G-3
<PAGE>
The Banks and the Agent -4-
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,
G-4
<PAGE>
Exhibit H
January 19, 1996
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 $1,250,000,000
Revolving Credit Agreement and a $1,000,000,000 Revolving Credit Agreement, in
each case dated as of January 19, 1996 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,
H-1
<PAGE>
The Banks and the Agent -2-
Inc. and Atlantic International Aviation Holdings, Inc., a wholly owned
subsidiary of Interlease Management Corporation, are the only domestic
Subsidiaries of the Company.
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
H-2
<PAGE>
Exhibit I
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of ____________________, ____ 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 $1,250,000,000 Revolving Credit Agreement dated as of January 19,
1996 (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;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
____________________
/*/ See Section 13.4.1 for minimum requirements.
--------------
/**/ Assignment of Bid Loans is optional.
I-1
<PAGE>
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 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.
____________________
/*/ 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.
I-2
<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.
I-3
<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:
I-4
<PAGE>
Exhibit J
FORM OF REQUEST FOR EXTENSION OF
TERMINATION DATE
________________, ____
[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
------------
$1,250,000,000 Revolving Credit Agreement, dated as of January 19, 1996 (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
J-1
<PAGE>
(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 10.15
AMENDMENT NO. 9
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. 9 (hereinafter referred to as the "Amendment") entered into
as of February 23, 1996, 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 "A321 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, Amendment No. 4 dated as of February 28, 1994, Amendment No. 5
dated as of September 23, 1994, Amendment No. 6 dated as of December 27, 1994
(the "A321 Amendment No. 6"), Amendment No. 7 dated as of July 5, 1995 and
Amendment No. 8 dated as of October 4, 1995;
1
<PAGE>
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.";
WHEREAS, in line with the terms of Paragraph 6 of Letter Agreement No. 1 dated
December 27, 1994, the Seller hereby confirms the availability of a version of
the Airbus Industrie A321 model aircraft featuring a Maximum Design Take-Off
Weight of 89 metric tonnes (the "A321-200 Aircraft") and the Buyer confirms its
desire to * ;
The parties agree that this Amendment shall formally amend and constitute part
of the A321 Purchase Agreement.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS :
A. *
- - --
1. *
- - --
*
2. A321-200 SPECIFICATION
- - -- ----------------------
Paragraph 2 of Part C of Amendment No. 8 to the A321 Purchase Agreement is
hereby superseded and replaced by the following paragraph with respect to
the A321-200 Aircraft:
QUOTE
The A321-200 Aircraft shall be manufactured in accordance with the A321-200
Standard Specification referred to in Amendment No. 8 to the A321 Purchase
Agreement as amended by the change orders set forth in Exhibit B to the
Amendment No. 8 * . Such A321-200 Standard Specification, as so
amended, is hereinafter referred to as the "A321-200 Specification". The
A321-200 Specification may be further modified from time to time pursuant
to the General Terms Agreement.
3. PRICE
- - -- -----
* 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>
The terms and conditions of Paragraph 3, Part C of the A321 Amendment No. 8
are cancelled and replaced by the following provisions, with respect to the
A321-200 Aircraft:
QUOTE
4.1 Base Price of the A321-200 Aircraft
- - --- -----------------------------------
The Base Price of the each A321-200 Aircraft is the sum of:
- the Base Price of the A321-200 Airframe, and
- the Base Price of the Propulsion Systems.
4.1.1 Base Price of the A321-200 Airframe for the Remaining
- - ----- ------------------------------------------------------
The Base Price of the Airframe shall be the sum of:
(i) the Base Price of the standard A321-200 airframe as described in
Paragraph 2, Part C, of Amendment No. 8 to the A321 Purchase Agreement,
excluding Buyer Furnished Equipment and SCN's at delivery conditions
prevailing in * , which is * , and
(ii) the Base Price of all change orders set forth in Exhibit "A" to the
Amendment No. 8 to the A321 Purchase Agreement that are mutually agreed
upon prior to the execution and delivery of the Amendment No. 8 to the A321
Purchase Agreement, at delivery conditions prevailing in * , which
is * .
The Base Price of the A321-200 Airframe is subject to adjustment to the date of
delivery of the relevant A321-200 Aircraft in accordance with the Airframe Price
Revision Formula set forth in Appendix 1 of A321 Amendment No. 6.
4.1.2 Base Price of the CFM International 56-5B3 Propulsion Systems
- - ----- -------------------------------------------------------------
The Base Price of a set of CFM 56-5B3 Propulsion Systems is the sum of the Base
Prices quoted below in (i) and (ii):
(i) Base Price of the CFM 56-5B3 Engines
- - ----------------------------------------
The Base Price of a set of two (2) CFM 56-5B3 engines and additional standard
equipment at delivery conditions prevailing in * 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 * .
Said Reference Price is subject to adjustment to the date of delivery of the
relevant A321-200 Aircraft in accordance with the CFM International Price
Revision Formula set forth in Appendix 2 of
* 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>
A321 Amendment No. 6.
(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 56-5B3 shall be as set forth in Paragraph 3 of A321 Amendment No. 6.
Said Base Price is subject to adjustment to the date of delivery of the relevant
A321-200 Aircraft in accordance with the Airframe Price Revision Formula set
forth in Appendix 1 of A321 Amendment No. 6.
4.1.3 Base Price of the IAE V2533-A5 Propulsion Systems
- - ----- -------------------------------------------------
The Base Price of a set of two (2) IAE V2533-A5 Propulsion Systems including
related equipment, nacelles and thrust reversers, at delivery conditions
prevailing in * is * . Said Base Price has been calculated with
reference to the Reference Price indicated by IAE of * in accordance
with theoretical delivery conditions prevailing in * .
Said Reference Price is subject to adjustment to the date of delivery of the
relevant A321-200 Aircraft in accordance with the IAE Price Revision Formula set
forth in Appendix 3 of A321 Amendment No. 6.
4.2 Selection of Propulsion Systems and validity of the Propulsion Systems
- - --- ----------------------------------------------------------------------
Reference Prices
- - ----------------
The terms and conditions of the quoted provisions of Paragraph 4.2 and 4.3 of
Paragraph 3 of A321 Amendment No. 6 shall apply to the A321-200 Aircraft.
UNQUOTE
4. * PREDELIVERY PAYMENTS
- - -- ---------------------------
Upon execution of this Amendment, the Buyer shall pay to the
Seller * .
B. EFFECT OF AMENDMENT
- - -- -------------------
The A321 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 A321 Purchase Agreement.
This Amendment shall be effective upon satisfaction of all conditions
hereof and of the A321 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.
4
<PAGE>
C. 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 D shall survive any
termination of this Amendment.
D. 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.
5
<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 A321 Purchase Agreement as of the date first above written.
Agreed and Accepted, Yours sincerely,
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ R.G. Duncan By: /s/ Mario Schuler
------------------------- -------------------------------
R.G. Duncan
Its: Senior Vice President Its: Director Sales Leasing
Market Division
6
<PAGE>
EXHIBIT 1
---------
LIST OF ELECTED AIRCRAFT
------------------------
<TABLE>
<CAPTION>
AIRCRAFT DELIVERY
RANK MONTH
<S> <C> <C> <C>
14 A321 Firm *
15 A321 Firm *
16 A321 Firm *
17 A321 Firm *
18 A321 Firm *
19 A321 Firm *
20 A321 Firm *
21 A321 Firm *
22 A321 Firm *
23 A321 Firm *
24 A321 Firm *
25 A321 Firm *
26 A321 Firm *
27 A321 Firm *
28 A321 Firm *
29 A321 Firm *
30 A321 Firm *
31 A321 Firm *
32 A321 Firm *
33 A321 Firm *
34 A321 Firm *
35 A321 Firm *
36 A321 Firm *
37 A321 Firm *
38 A321 Firm *
1 A321 Option *
</TABLE>
* 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>
EXHIBIT 10.16
AMENDMENT NO. 10
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. 10 (hereinafter referred to as the "Amendment") entered into
as of February 23, 1996, 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-
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, Amendment No. 5
dated as of September 23, 1994, Amendment No. 6 dated as of December 27, 1994,
Amendment No. 7 dated as of July 5, 1995, Amendment No. 8 dated as of October 4,
1995, and Amendment No. 9 dated as of February 23, 1996 is hereinafter called
the "Purchase Agreement".
WHEREAS, the Buyer now wishes to increase its order by three (3) firmly ordered
A321-200 aircraft (individually and collectively referred to as the "Incremental
Aircraft") and one (1) option A321-200 aircraft (the "Incremental Option
Aircraft").
Amdt. 10-1
<PAGE>
WHEREAS, the Seller is a sales subsidiary of Airbus Industrie G.I.E. (the
"Manufacturer") and will purchase the Incremental Aircraft from the Manufacturer
for resale to the Buyer.
1. INCREMENTAL ORDER
- - -- -----------------
1.1 The Buyer hereby firmly orders three (3) Incremental Aircraft and takes
an option to order firmly one (1) 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 * , except as specifically set forth to the contrary in this
Amendment.
2. SPECIFICATION
- - -- -------------
Sub-clause 3.2 of the Purchase Agreement as it applies to the 1994
Aircraft is hereby superseded and replaced by the following provisions
with respect to the Incremental Aircraft and the Incremental Option
Aircraft:
QUOTE
The Incremental Aircraft shall be manufactured in accordance with the
Standard Specification, Document No. E000.02000 Issue 1 dated June 30,
1995 (a copy of which is annexed as Exhibit A to Amendment No. 10) as
amended by the change orders set forth in Exhibit B to Amendment
No. 10 * . Such Standard Specification is hereinafter referred to
as the "Specification". The Specification may be further modified from
time to time pursuant to the General Terms Agreement.
UNQUOTE
3. PRICE
- - -- -----
3.1 Sub-clause 4.1.1 of the Purchase Agreement as it applies to the 1994
Aircraft is hereby superseded and replaced by the following provisions
with respect to the Incremental Aircraft:
QUOTE
4.1.1 Base Price of the Airframe
- - ----- --------------------------
The Base Price of the Airframe shall be the Base Price of the standard
A321-200
* PURSUANT TO 17 CFR 240.24b-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED
AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
Amdt. 10-2
<PAGE>
airframe as described in Exhibit A to Amendment No. 10 * at delivery
conditions prevailing in * , which is * , and
(ii) the Base Price of all change orders mutually agreed and set forth in
Exhibit B to Amendment No. 10 at delivery conditions prevailing in *
, which is * .
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 to Amendment No. 6.
UNQUOTE
3.2 Sub-clause 4.2 of the Purchase Agreement as it applies to the 1994 Aircraft
is hereby superseded and replaced by the following provisions with respect
to the Incremental Aircraft:
QUOTE
4.2 Selection of the Propulsion Systems
- - --- -----------------------------------
The Buyer shall notify the Seller in writing no later than *
months prior to the 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.
UNQUOTE
4. DELIVERY
--------
The delivery schedule for Aircraft and Option Aircraft as set forth in Sub-
clause 5.1 of the Purchase Agreement is hereby amended by the addition of
the following three (3) Incremental Aircraft and one Incremental Option
Aircraft:
QUOTE
(i) Incremental Aircraft
--------------------
*
* PURSUANT TO 17 CFR 240.24b-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Amdt. 10-3
<PAGE>
(ii) Incremental Option Aircraft
---------------------------
*
UNQUOTE
5. PREDELIVERY PAYMENTS
--------------------
Subclause 6.2 of the Purchase Agreement regarding Predelivery
Payments * , shall apply to the Incremental Aircraft save that the
first payment thereunder in respect of the Incremental Aircraft shall be made
on the date hereof.
6. *
*
7. OPTION EXERCISE
---------------
In the case of the Option Incremental Aircraft, the Buyer shall notify the
Seller of its wish to exercise an option to purchase no later than the first
day of the * month prior to the scheduled month of delivery for that
particular aircraft. * Upon due receipt of due notice, and subject
to payment of all predelivery payments then due, such aircraft shall be
deemed to be an Incremental Aircraft, with all the relevant credits and
concessions thereto.
8. 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 thereof. The
provisions of this Paragraph 8 shall survive any termination of 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.
Amdt. 10-4
<PAGE>
9. 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 capitalised
terms not otherwise defined shall have the meanings provided for in the
Purchase Agreement.
10. 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: /s/ R.G. Duncan By: /s/ Mario Schuler
------------------------- -------------------------------
R.G. Duncan
Its: Senior Vice President Its: Director Sales Leasing
Market Division
Amdt. 10-5
<PAGE>
EXHIBIT A
---------
Standard A321-200 Specification
Registrant will furnish supplementally a copy of the Standard
A321-200 Specification to the Securities and Exchange Commission
upon request.
Amdt. 10-6
<PAGE>
EXHIBIT B
---------
[SCN's]
Amdt. 10-7
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CUSTOMER: ILFC Definition
of a
AIRCRAFT TYPE: A321-200
ILFC A321-200
DELIVERY POSITION(s): applicable Baseline Aircraft
BASELINE/EXHIBIT B SPECIFICATION
STD. SPEC VERSION: Ref. Issue 1, no Revision
ISSUED BY: AVSA/JP
APPLICABLE P.A. REF.
</TABLE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
PRICE
RFC TITLE USD COMMENTS
12L NR *
PER A/C
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
02E2001 FAA Type Design items incl. Ozone Converter *
02E2002 Emergency Equipment partly * * First Aid Kit, PBE
02E2003 Avionics *
11E2001 Install Identification Plates *
21E2001 Ventilation of complete Aft Cargo *
Compartment
23E2001 Single HF Installation and full * *
Provisions for a second one * *
23E2002 Three FM Immune VHF System *
Installation
23E2003 Hot Mike Capability (CVR)
23E2005 Boarding Music / Announcement System *
System *
23E2005 System Provisions for PES
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 Baseline Spec. Page 1 of 3
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
23E2005 System Provisions for Video Monitor System OHSC *
24E2001 Galley Power increased to 70 KVA *
25E2001 Fourth Occupant Seat in Cockpit *
25E2002 Cabin Configuration 220 Pax * as per Draw. AI 321-25.3215 *
25E2002 Stretcher Loading Capability Lavatory D *
25E2002 Installation of Double Bench aft of Lav. B *
25E2003 Interior Colour Scheme *
25E2004 System Provisions for Cargo Cpt. Convertibility *
25E2005 Cargo Floor Panels for Heavy Usage *
25E2006 Cargo Cpt. - Full Bulk Kit Installation *
25E2007 Cabin Emergency Equipment Installation *
28E2001 System Provisions for one ACT *
28E2002 Installation of one ACT *
31E2001 US Units of Indication *
32E2001 Installation of BF Goodrich/ Messier Wheels and Brakes *
33E2001 Floor Prox. Escape Path Marking - Lumi *
34E2001 Full Provisions for 2nd ADF System *
34E2002 TCAS II complete Provisions * incl. ATC Transp. and Gables Control Panel
34E2003 Installation of ILS Collins, FM Immune *
34E2004 DME Collins * *
34E2005 Radio Altimeter Collins *
34E2006 GPS System Provisions C1/C3 *
34E2007 GPS Installation, Litton *
34E2008 Inst. of a JET Electr.- Standby Altitude Indicator *
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 Baseline Spec. Page 2 of 3
<PAGE>
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
35E2001 Flight Crew 02 Cylinder 77.1 FT3 *
49E2001 APIC APU. APS 3200 *
72E2001 Engines V 2533-A5 * Covers only Airframe Repercussions
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Amount per aircraft, in* *
or Total Amount, per aircraft, in* *
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*
* 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 Baseline Spec. Page 3 of 3
<PAGE>
EXHIBIT 10.17
February 23, 1996
To: 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. 3 to the A319 Purchase Agreement
dated December 10, 1992, Amendment No. 14 to the A320 Purchase Agreement dated
November 10, 1988, and Amendment No. 10 to the A321 Purchase Agreement dated
February 14, 1990, all three Amendments being dated February 23, 1996 (together
the "Amendments").
In consideration of the order for twelve (12) firm and three (3) optional Airbus
narrowbody aircraft as set forth in the 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. *
1.1 *
* PURSUANT TO 17 CFR 240.24b-2, CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND
HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
1
<PAGE>
*
1.2 *
1.3 *
1.4 *
2. *
*
* 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>
*
3. *
*
4. *
*
5. *
5.1 *
* 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>
*
5.2 *
5.3 *
6. *
*
7. 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 delivery 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),
* 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>
AVSA may apply any amount of any predelivery payment ot 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 a 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.
8. *
*
9. 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 Letter Agreement, 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 9 shall survive any termination of this Letter Agreement.
* 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>
10. 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 set forth our understanding, please executve this
Amendment in the space provided below, whereupon this Amendment shall constitute
part of the Agreement.
Agreed and Accepted Yours sincerely,
INTERNATIONAL LEASE AVSA, S.A.R.L.
FINANCE CORPORATION
By: /s/ R.G. Duncan By: /s/ Mario Schuler
-------------------- --------------------------
R.G. Duncan
Its: Senior Vice President Its: Director Sales Leasing
Market Division
6
<PAGE>
EXHIBIT 12
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earnings
Net income.................. $ 89,530 $157,749 $168,565 $201,943 $196,437
Add:
Provision for income taxes. 50,170 88,491 109,075 110,064 141,909
Fixed charges.............. 230,984 279,827 340,568 421,170 592,519
Less:
Capitalized interest....... 38,947 36,291 39,363 44,610 51,091
-------- -------- -------- -------- --------
Earnings as adjusted (A).... $331,737 $489,776 $578,845 $688,567 $879,774
======== ======== ======== ======== ========
Preferred dividend
requirements............... $ -- $ -- $ 2,692 $ 6,890 $ 13,096
Ratio of income before
provision for income taxes
to net income............. 156% 156% 165% 155% 172%
-------- -------- -------- -------- --------
Preferred dividend factor
on pretax basis........... -- -- 4,442 10,680 22,525
-------- -------- -------- -------- --------
Fixed charges
Interest expense........... 192,037 243,536 301,205 376,560 541,428
Capitalized interest....... 38,947 36,291 39,363 44,610 51,091
-------- -------- -------- -------- --------
Fixed charges as adjusted
(B)........................ 230,984 279,827 340,568 421,170 592,519
-------- -------- -------- -------- --------
Fixed charges and preferred
stock dividends(C)......... $230,984 $279,827 $345,010 $431,850 $615,044
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges ((A) divided by
(B))........................ 1.44x 1.75x 1.70x 1.63x 1.48x
===== ===== ===== ===== =====
Ratio of earnings to fixed
charges and preferred stock
dividends ((A) divided
by (C))..................... 1.44x 1.75x 1.68x 1.59x 1.43x
</TABLE> ===== ===== ===== ===== =====
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 33-62649) of International Lease Finance Corporation and in the
related Prospectus of our report dated February 20, 1996, 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, 1995.
ERNST & YOUNG LLP
Century City,
Los Angeles, California
March 21, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANT'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 87,097
<SECURITIES> 0
<RECEIVABLES> 423,799
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,015,308
<DEPRECIATION> 1,252,438
<TOTAL-ASSETS> 12,298,379
<CURRENT-LIABILITIES> 0
<BONDS> 8,892,634
0
400,000
<COMMON> 3,582
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,298,379
<SALES> 1,373,098
<TOTAL-REVENUES> 1,422,488
<CGS> 0
<TOTAL-COSTS> 542,714
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 541,428
<INCOME-PRETAX> 338,346
<INCOME-TAX> 141,909
<INCOME-CONTINUING> 196,437
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196,437
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
