<PAGE> 1
================================================================================
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
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
______________ TO ____________
COMMISSION FILE NUMBER 0-11350
INTERNATIONAL LEASE FINANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
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
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
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 (SEC. 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, 1997, THERE WERE 35,818,122 SHARES OF COMMON STOCK, NO
PAR VALUE, OUTSTANDING.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
================================================================================
<PAGE> 2
INTERNATIONAL LEASE FINANCE CORPORATION
1996 FORM 10-K ANNUAL REPORT
------------------------
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Business.................................................................... 1
Item 2. Properties.................................................................. 5
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............. 12
</TABLE>
<PAGE> 3
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, 1996, the Company owned 296 aircraft and managed an
additional 18 aircraft. See "Item 2. Properties -- Flight Equipment." At
December 31, 1996, the Company had committed to purchase 243 aircraft
deliverable through 2004 at an estimated aggregate purchase price of $13.3
billion. It also had options to purchase an additional 35 aircraft deliverable
through 2005 at an estimated aggregate purchase price of $2.8 billion. See "Item
2. Properties -- Commitments."
The Company maintains the mix of flight equipment to meet its customers'
needs by purchasing those models of new and used aircraft which it believes will
have the greatest airline demand and operational longevity and minimize the time
that its aircraft are not leased to customers.
The Company purchases, and finances the purchase of, aircraft on terms
intended to permit the Company to lease or resell such aircraft at a profit. The
Company typically finances the purchase of aircraft with borrowed funds and
internally generated cash flow. The Company accesses the capital markets for
such funds at times and on terms and conditions it considers appropriate. The
Company may, but does not necessarily, engage in financing transactions for
specific aircraft. The Company relies significantly on short- and medium-term
financing, and thereby attempts to manage interest rate exposure. To date, the
Company has been able to purchase aircraft on terms which have permitted it to
lease the aircraft at a profit and has not experienced any difficulty in
obtaining financing.
The Company's aircraft are usually leased on terms under which the Company
does not fully recover the acquisition cost of such aircraft. Thus, at the
termination of a lease, the Company bears the risk of selling or releasing the
aircraft on terms which will cover its remaining cost.
The airlines are in a cyclical, economically sensitive and highly
competitive business. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations." The Company's revenue and income
may be affected by political instability abroad, changes in national policy,
competitive pressures on certain air carriers, fuel shortages, labor stoppages,
recessions, and other political or economic events adversely affecting world or
regional trading markets or impacting a particular customer. The Company's
continued success is partly dependent on management's ability in the future to
develop customer relationships for leasing, sales and remarketing with those
airlines best able to maintain their economic viability and survive in a
deregulated environment.
The Company is incorporated in the State of California and its principal
executive offices are located at 1999 Avenue of the Stars, Los Angeles,
California 90067. The Company's telephone, telecopier and telex numbers are
(310) 788-1999, (310) 788-1990 and 69-1400, respectively. The Company is 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.
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
1
<PAGE> 4
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,
1996, four 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. Varying
lease terms mitigate the effects of changes in prevailing market conditions at
the time aircraft become eligible for re-lease or sale and the 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 relevant business materials 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 disposes of its leased aircraft at or before the
expiration of their leases. The buyers include the aircraft's lessee, another
airline or a third party lessor. Any gain or loss on disposition of leased
aircraft is reflected as revenues from flight equipment marketing.
From time to time, the Company also engages in transactions to buy aircraft
for resale. In some cases, the Company assists its customers through consulting
services and procurement of financing from third parties.
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
fixed time period. 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 $87,081,000. See Note K of Notes to
Consolidated Financial Statements.
2
<PAGE> 5
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 and the 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, 1996, 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), Western Pacific and World Airways; (foreign) Aer Lingus, Aero
Lloyd Flugreisen, Aeromexico, Aeroperu, Air 2000, Air Afrique, Air Belgium, Air
Canada, Air Espana, Air Europe SpA, Air Liberte, Air Macau, Air Madagascar, Air
Mauritius, Air New Zealand, Air Pacific, Air Seychelles, Air Transat, Air UK,
Asiana, Avianca, 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, Compagnie Air France Europe, Emirates, Estonian Air, EVA Airways, Far
Eastern Air Transport, Garuda Indonesia, GB Airways, Guyana Airways, Hapag-Lloyd
Flug, Hong Kong Dragon Airlines (Dragonair), Icelandair, Kenya Airways, KLM
Royal Dutch Airlines, Korean Airlines, L'Aeropostale, LACSA, Lineas Aereas
Privadas Argentinas, S.A. (LAPA), Lloyd Aero Boliviano (LAB), LAN Chile, LTU
Luftransport-Unternehmen, Lufthansa, Lufthansa Cargo, Malaysian Airline System,
Malev Hungarian Airlines, Martinair Holland, Mexicana, Middle East Airlines
Airliban, Monarch Airways, National Jet Systems, Nordic East, ONUR Air, Pegasus,
Polynesian Airways, QANTAS Airways, Rio Sul, SAETA, Sahara India Airlines,
Shenzhen, Sichuan Airlines, Sunquest Vacations Limited, Surinam, Swissair, TACA
International Airlines, TACV Cabo Verde, TAP Air Portugal, TEA Basel, THY,
Transaero Airlines, Transavia, Transbrasil, Translift Airways, Varig, Virgin
Atlantic Airways, VIVA Airways, Wuhan Airlines and Xiamen. 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
$1,202,651,000 (1996), $1,002,251,000 (1995) and $798,619,000 (1994) comprising
83.3%, 80.0% and 80.4%, respectively, of total rentals of flight equipment. See
Note J of Notes to Consolidated Financial Statements.
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>
1996 1995 1994
------------------ ------------------ ----------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe............................... $ 551,703 38.2% $ 462,252 36.9% $353,009 35.5%
Asia/Pacific......................... 332,159 23.0 255,163 20.4 180,215 18.2
United States and Canada............. 304,801 21.1 304,784 24.3 230,856 23.2
Central, South America and Mexico.... 165,819 11.5 166,443 13.2 199,041 20.0
Africa and the Middle East........... 89,957 6.2 65,378 5.2 30,475 3.1
---------- ----- ---------- ----- -------- -----
$1,444,439 100.0% $1,254,020 100.0% $993,596 100.0%
========= ===== ========= ===== ======== =====
</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
lease 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
3
<PAGE> 6
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. No aircraft were
repossessed in 1994. 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 1996, the Company repossessed a total of five aircraft from
two airlines. In one case, one aircraft was repossessed and was quickly
released. In the other case, of the four repossessed aircraft, two have been
sold and the other two have been promptly released.
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.
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, the 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, 1996, the Company had 75 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
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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
the 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 stated in 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. dollars.
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.
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, 1996, 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, 1996, the average age of the Company's flight equipment was 3.98
years.
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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, 1996:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 TOTAL
- ---------------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300........................... 4 13 6 5 8 6 4 2 2 1 51
737-400........................... 4 9 7 10 7 6 9 6 1 59
737-500........................... 2 3 2 3 1 4 1 16
757-200........................... 2 11 4 5 4 3 3 2 4 3 41
767-200........................... 2 2 1 5
767-300........................... 4 2 4 9 2 4 1 26
747-200........................... 1 1 2
747-300........................... 3 3
747-400........................... 2 1 3 1 1 8
MD-82............................. 1 1
MD-83............................. 1 3 1 3 1 9
MD-87............................. 1 1
MD-11............................. 3 1 2 6
F-70.............................. 1 2 3
A300-600R......................... 1 1 2 1 1 1 7
A310-200(a)....................... 3 3
A310-300(a)....................... 5 5
A319.............................. 2 2
A320.............................. 1 11 2 7 1 3 6 1 32
A321.............................. 2 2 2 1 7
A330.............................. 7 1 2 10
A340.............................. 1 2 2 5
L-1011(a)......................... 1 2 1 4
-- -- -- -- -- -- -- -- - - ---
Total............................. 17 69 41 48 36 24 36 17 9 9 306
</TABLE>
- ---------------
(a) All A310-200, one A310-300 and three L-1011 aircraft are committed for sale
in 1997.
This schedule does not include two A310-200 aircraft committed for sale in
1997 yet unleased at December 31, 1996. In addition, the schedule does not
include an A310-300 and an A300-600R, off lease at December 31, 1996, yet
subsequently leased. This schedule includes 14 aircraft leased by the Company
and subleased to others.
6
<PAGE> 9
COMMITMENTS
At December 31, 1996, the Company had committed to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $13.3 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL
------------------------------------ ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300/400/500(a).................. 9 4 13
737-600/700/800(a).................. 2 8 9 9 9 9 7 2 55
757-200............................. 13 5 4 22
767-300............................. 5 7 2 14
777-200/300(a)...................... 2 3 3 4 3 3 3 3 24
747-400............................. 1 1 1 3
A310-200............................ 2 2
A310-300............................ 6 6
A319................................ 3 3 4 3 1 14
A320-200............................ 10 9 5 4 2 30
A321-100/200(a)..................... 7 7 9 6 2 1 1 33
A330-200/300(a)..................... 1 4 8 1 2 1 17
A340................................ 3 2 1 1 1 2 10
-- -- -- -- -- -- -- - ---
Total..................... 64 53 46 27 18 18 12 5 243
</TABLE>
- ---------------
(a) The Company has the right to designate the size of the aircraft within the
specific model type at specific dates prior to contractual delivery.
At December 31, 1996, the Company had options to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $2.8 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 1999 2000 2001 2002 2003 2004 2005 TOTAL
------------------------------------------ ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
757-200................................... 2 1 3
767-300................................... 2 1 3
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 1 3 5
A340...................................... 1 1 1 2 2 7
-- -- -- -- -- -- -- --
Total........................... 5 4 7 4 4 9 2 35
</TABLE>
If all 278 aircraft were to be acquired, the estimated aggregate purchase
price (including adjustment for anticipated inflation) would be approximately
$16.1 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.
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
7
<PAGE> 10
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, 1996, 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
$450,849,000 and $329,390,000 with Boeing and Airbus, respectively.
As of March 11, 1997, the Company had entered into contracts for the lease
of all of the 64 aircraft to be delivered in 1997, 21 of the 53 aircraft to be
delivered in 1998, 15 of the 46 aircraft to be delivered in 1999, 5 of the 27
aircraft to be delivered in 2000 and 3 of the 53 aircraft to be delivered
subsequent to 2000. 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, 1994, 1995 and 1996, the Company
paid cash dividends to its parent company of $13,462,000, $21,150,000 and
$20,600,000, 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, 1996 in the amount of $311,775,000 were unrestricted as
to the payment of dividends.
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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 "Item 7. 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,
--------------------------------------------------------------------
1992 1993 1994 1995 1996
---------- ---------- ---------- ----------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Rentals of flight equipment.... $ 628,600 $ 795,437 $ 993,596 $ 1,254,020 $ 1,444,439
Flight equipment marketing..... 46,845 53,680 76,193 119,078 136,099
Interest and other income...... 55,072 62,515 40,267 49,390 51,976
Total revenues................. 730,517 911,632 1,110,056 1,422,488 1,632,514
Expenses....................... 484,277 633,992 798,049 1,084,142 1,237,575
Income before income taxes..... 246,240 277,640 312,007 338,346 394,939
Net income..................... 157,749 168,565 201,943 196,437 251,774
RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS(1): 1.75x 1.68x 1.59x 1.43x 1.47x
BALANCE SHEET DATA:
Flight equipment under
operating leases (net of
accumulated depreciation).... $4,759,899 $6,515,837 $8,851,079 $10,762,870 $12,182,774
Net investment in finance and
sales-type leases............ 242,445 290,269 92,233 86,237 103,629
Total assets................... 6,079,765 8,139,821 10,386,256 12,329,182 13,725,596
Total debt..................... 4,242,288 5,819,481 7,583,006 8,892,634 9,794,260
Shareholders' equity........... 1,156,195 1,409,181 1,640,772 2,000,107 2,214,552
OTHER DATA:
Aircraft owned at period
end(2)....................... 176 230 270 278 296
Aircraft sold or remarketed
during the period............ 7 9 24 41 37
</TABLE>
- ---------------
(1) See Exhibit 12.
(2) See "Item 2. Properties -- Flight Equipment."
9
<PAGE> 12
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 1996, the
Company repossessed five aircraft from two airlines. As of February 28, 1997,
three of the aircraft were released to other airlines and the remaining two
aircraft were sold. 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, 1996, 1995 and 1994, the Company's
debt financing and capital lease obligations were comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Public term debt with single
maturities........................... $3,500,000 $3,550,000 $2,950,000
Public medium-term notes with varying
maturities........................... 2,563,720 2,403,770 2,011,770
Capital lease obligations.............. 995,872 1,088,424 305,400
Bank and other term debt............... -- 22,502 43,503
---------- ---------- ----------
Total term debt.............. 7,059,592 7,064,696 5,310,673
Commercial paper....................... 2,757,417 1,843,630 1,972,361
Bank lines of credit and revolvers..... -- -- 319,000
Less: Deferred debt discount........... (22,749) (15,692) (19,028)
---------- ---------- ----------
Debt financing and capital
lease obligations.......... $9,794,260 $8,892,634 $7,583,006
========= ========= =========
Composite interest rate................ 6.23% 6.47% 6.41%
Percentage of total debt at fixed
rate................................. 68.95% 75.59% 66.98%
Composite interest rate on fixed
debt................................. 6.58% 6.66% 6.65%
Bank prime rate........................ 8.25% 8.50% 8.50%
</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, 1996,
the Company had committed revolving loans and lines of credit with 46 banks
aggregating $2.40 billion and uncommitted lines of credit with three banks
aggregating $200 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 17, 1997, the Company replaced $2.25 billion of the committed
revolving loans and lines of credit with a new, expanded facility for $2.50
billion. The facility consists of a $1.25 billion, 364 day tranche with a 5.5
basis point annual facility fee and a $1.25 billion, 5 year tranche with an 8
basis point annual facility fee. The pricing options range from prime to .20%
over LIBOR.
As of December 31, 1996, the Company had an effective shelf registration
with respect to $2.111 billion of debt securities, under which $800 million of
notes were sold through 1996. Additionally, a $750 million Medium-Term Note
program was implemented under the shelf registration, under which $675 million
was sold through 1996. In February 1997, the Company increased the Medium-Term
Note program by $160.6 million to $910.6 million. Through February 1997, the
Company sold an additional $400 million of notes and $146 million of Medium-Term
Notes.
10
<PAGE> 13
In February 1997, a new registration statement of the Company with respect
to $2.09 billion of debt securities was declared effective. A new $500 million
Medium-Term Note program has been implemented under the shelf registration.
The Company has Export Credit Lease financings which 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% and 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.
In 1995 and 1996, the Company, through unrestricted subsidiaries, entered
into sale-leaseback transactions in the amounts of $413 million and $507.6
million, respectively, each relating to seven aircraft. The transactions result
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 based on LIBOR or commercial paper pricing.
In each of 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 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 derivatives are subject to a bilateral
security agreement which, in certain circumstances, may allow one party to the
agreement to require the second party to the agreement to establish a cash
collateral account. 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 $993.6
million in 1994 to $1,254.0 million in 1995 to $1,444.4 million in 1996 is due
to the increase in both the size and relative cost of the fleet of the aircraft
subject to operating lease from 262 in 1994 to 282 in 1995 and 308 in 1996.
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, or during, the lease term.
Revenue from such flight equipment marketing increased from $76.2 million in
1994 to $119.1 million in 1995 to $136.1 million in 1996 as a result of the type
of the related flight equipment marketed in each period:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Sales of flight equipment........................... 1 0 3
Commissions......................................... 10 6 10
Disposition of leased aircraft...................... 36 41 21
</TABLE>
In addition, the Company sold seven engines (1996), 19 engines (1995) and
eight engines (1994).
11
<PAGE> 14
Expenses as a percentage of total revenues were 71.9% for 1994, 76.2% for
1995 and 75.8% for 1996. Interest expense increased from $376.6 million in 1994
to $541.4 million in 1995 to $573.6 million in 1996, primarily as a result of an
increase in debt outstanding, excluding the effect of debt discount, from $7.602
billion in 1994 to $8.908 billion in 1995 to $9.817 billion in 1996, 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, 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
March 31, 1996................................................ 6.31
June 30, 1996................................................. 6.22
September 30, 1996............................................ 6.28
December 31, 1996............................................. 6.23
</TABLE>
Depreciation of flight equipment increased from $334.6 million in 1994 to
$431.9 million in 1995 to $485.1 million in 1996 due to the addition of
aircraft. Provisions for overhauls also increased from $57.6 million in 1994 to
$71.1 million in 1995 to $85.1 million in 1996 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.
Rent expense of $51.8 million in 1996 is due to the sale-leaseback
transactions entered into for 14 aircraft in December of 1995 and September of
1996.
The provision for income taxes as a percentage of income before income
taxes increased from 35.3% in 1994 to 41.9% in 1995 and decreased to 36.2% in
1996. The increase in 1995 was due principally to the impact of losses of
subsidiaries for which the Company did not receive a current or future tax
benefit. During the fourth quarter of 1995, two of these corporations were
restructured.
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.
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 on this report beginning on page 14.
12
<PAGE> 15
(b) Reports on Form 8-K: Current Reports on Form 8-K, event dates October
4, 1996 and October 18, 1996. 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........................................................ 15
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1996........................................ 16
Statements of Income for the years ended December 31, 1994, 1995 and 1996........... 17
Statements of Shareholders' Equity for the years ended December 31, 1994, 1995 and
1996............................................................................. 18
Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996....... 19
Notes to Consolidated Financial Statements.......................................... 21
</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
- --------------- ------------------------------------------------------------------------ ----
<C> <S> <C>
II Valuation and Qualifying Accounts....................................... 34
</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.
The following exhibits of the Company and its subsidiaries are included in
Item 14(c):
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<C> <S>
3.1 Restated Articles of Incorporation of the Company, as amended through December 9,
1992, filed November 3, 1993 (filed as an exhibit to Registration Statement No.
33-50913 and incorporated herein by reference).
3.2 Certificate of Determination of Preferences of Series C Market Auction 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 Auction 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 Auction 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 Auction 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 Auction Preferred
Stock (filed as an exhibit to Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------------
<C> <S>
3.7 Certificate of Determination of Preferences of Series H Market Auction Preferred
Stock (filed as an exhibit to Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference).
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
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 Purchase Agreement No. 1916, dated as of June 24, 1996, between the Company and
The Boeing Company, including Letter Agreements relating thereto (filed as an
exhibit to Form 10-Q for the fiscal quarter ended June 30, 1996 and incorporated
herein by reference).
10.2 Revolving Credit Agreement, dated as of January 17, 1997, among the Company,
Union Bank of Switzerland, New York Branch, and the other banks listed therein
providing up to $1,250,000,000 (five year facility).
10.3 Revolving Credit Agreement, dated as of January 17, 1997, among the Company,
Union Bank of Switzerland, New York Branch, and the other banks listed therein
providing up to $1,250,000,000 (364 day facility).
12. Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.
23. Consent of Ernst & Young LLP.
27. Financial Data Schedule.
</TABLE>
14
<PAGE> 17
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, 1996
and 1995, and the related consolidated statements of income, shareholders'
equity, and cash flows for each of the three years in the period ended December
31, 1996. 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, 1996
and 1995, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31, 1996, 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 19, 1997
15
<PAGE> 18
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash, including interest bearing accounts of $31,704 (1996)
and $59,624 (1995).............................................. $ 36,558 $ 87,097
Current income taxes.............................................. 16,420 30,803
Notes receivable.................................................. 429,146 423,799
Net investment in finance and sales-type leases................... 103,629 86,237
Flight equipment under operating leases........................... 13,674,996 12,015,308
Less accumulated depreciation................................... 1,492,222 1,252,438
----------- -----------
12,182,774 10,762,870
Deposits on flight equipment purchases............................ 861,355 805,570
Accrued interest, other receivables and other assets.............. 50,895 87,991
Investments....................................................... 18,099 17,311
Deferred debt issue costs -- less accumulated amortization
of $43,537 (1996) and $30,778 (1995)............................ 26,720 27,504
----------- -----------
$13,725,596 $12,329,182
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables............................... $ 219,111 $ 196,676
Debt financing, net of deferred debt discount of $22,749 (1996)
and $15,692 (1995).............................................. 8,798,388 7,804,210
Capital lease obligations......................................... 995,872 1,088,424
Security and other deposits on flight equipment................... 611,272 498,016
Rentals received in advance....................................... 77,107 80,811
Deferred income taxes............................................. 809,294 660,938
Commitments and contingencies -- Note K
SHAREHOLDERS' EQUITY
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 (1996 and 1995), each
having 500 shares issued and outstanding..................... 400,000 400,000
Common stock -- no par value; 100,000,000 authorized shares,
35,818,122 (1996 and 1995) issued and outstanding............ 3,582 3,582
Paid-in capital................................................. 579,955 580,085
Retained earnings............................................... 1,231,015 1,016,440
----------- -----------
2,214,552 2,000,107
----------- -----------
$13,725,596 $12,329,182
=========== ===========
</TABLE>
See accompanying notes.
16
<PAGE> 19
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental of flight equipment............................... $1,444,439 $1,254,020 $ 993,596
Flight equipment marketing............................... 136,099 119,078 76,193
Interest and other....................................... 51,976 49,390 40,267
---------- ---------- ----------
1,632,514 1,422,488 1,110,056
Expenses:
Interest................................................. 573,599 541,428 376,560
Depreciation............................................. 485,102 431,947 334,587
Provision for overhaul................................... 85,083 71,113 57,619
Rent expense............................................. 51,809
Selling, general and administrative...................... 41,982 39,654 29,283
---------- ---------- ----------
1,237,575 1,084,142 798,049
---------- ---------- ----------
INCOME BEFORE INCOME TAXES............................ 394,939 338,346 312,007
Provision for income taxes................................. 143,165 141,909 110,064
---------- ---------- ----------
NET INCOME............................................ $ 251,774 $ 196,437 $ 201,943
========== ========== ==========
</TABLE>
See accompanying notes.
17
<PAGE> 20
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARKET AUCTION
PREFERRED STOCK COMMON STOCK
----------------------- ---------------------
NUMBER OF NUMBER OF PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
--------- --------- ----------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
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
Sale of MAPS
preferred....... (130) (130)
Dividend to AIG... (20,600) (20,600)
Preferred stock
dividends....... (16,599) (16,599)
Net income........ 251,774 251,774
----- -------- ---------- ------ -------- ---------- ----------
Balance at December
31, 1996.......... 4,000 $ 400,000 35,818,122 $3,582 $579,955 $1,231,015 $2,214,552
===== ======== ========== ====== ======== ========== ==========
</TABLE>
See accompanying notes.
18
<PAGE> 21
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................................. $ 251,774 $ 196,437 $ 201,943
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation of flight equipment.......................... 485,102 431,947 334,587
Deferred income taxes..................................... 148,356 173,528 147,657
Amortization of deferred debt issue costs................. 8,841 11,554 5,956
Gain on sale of flight equipment included in amount
financed................................................ (16,063) (46,260) (53,627)
Increase in notes receivable.............................. (66,721) (9,053) (36,608)
Equity in net (income) loss of affiliates................. (788) 517 (2,022)
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest, other receivables
and other assets........................................ 37,096 (16,753) 10,006
Increase in accrued interest and other payables........... 22,435 72,651 31,796
(Increase) decrease in current income taxes receivable.... 14,383 2,321 (33,346)
(Decrease) increase in rentals received in advance........ (3,704) 8,254 30,606
----------- ----------- --------
Net cash provided by operating activities..................... 880,711 825,143 636,948
----------- ----------- --------
INVESTING ACTIVITIES:
Acquisition of flight equipment:
For operating leases...................................... (3,210,986) (3,364,496) (2,621,669)
For finance leases........................................ (4,790)
(Increase) decrease in deposits and progress payments....... (55,785) 85,141 (70,663)
Proceeds from disposal of flight equipment -- net of gain... 1,194,946 862,935 119,799
Advances on notes receivable................................ (5,606) (16,227)
Collections on notes receivable............................. 163,298 150,093 114,141
Collections on finance and sales-type leases................ 7,781 5,996 9,891
Purchase of investments..................................... (845) (850)
Sale of investments -- net of gain.......................... 2,000 1,727
----------- ----------- --------
Net cash used in investing activities......................... (1,900,746) (2,264,782) (2,468,641)
----------- ----------- --------
FINANCING ACTIVITIES:
Proceeds from debt financing and capital lease
obligations............................................... 5,042,064 6,309,304 4,746,500
Payments in reduction of debt financing and capital lease
obligations............................................... (4,133,381) (5,003,012) (2,974,141)
Proceeds from sale of MAPS preferred stock (net of issue
costs).................................................... (130) 197,144
Cash contributions to capital by AIG........................ 50,000
Debt issue costs............................................ (8,057) (18,211) (11,637)
Change in unamortized debt discount......................... (7,057) 3,336 (8,834)
Payment of common and preferred dividends................... (37,199) (34,246) (20,352)
Increase in customer deposits............................... 113,256 19,530 41,482
----------- ----------- --------
Net cash provided by financing activities..................... 969,496 1,473,845 1,823,018
----------- ----------- --------
Net increase (decrease) in cash............................... (50,539) 34,206 (8,675)
Cash at beginning of year..................................... 87,097 52,891 61,566
----------- ----------- --------
Cash at end of year....................................... $ 36,558 $ 87,097 $ 52,891
=========== =========== ========
(Table continued on next page)
</TABLE>
19
<PAGE> 22
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
1996 1995 1994
----------- ----------- --------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest (net of amount capitalized $50,368 (1996),
$51,091 (1995) and $44,610 (1994))...................... $ 559,437 $ 503,023 $ 352,805
Income taxes.............................................. (19,574) (33,940) (4,247)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
1996
Notes and finance and sale-type leases in the amount of $173,404 were received as partial payment in
exchange for flight equipment sold with a book value of $157,340.
Flight equipment was received in exchange for notes receivable in the amount of $46,307.
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.
</TABLE>
See accompanying notes.
20
<PAGE> 23
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 $5,595
(1996), $6,439 (1995) and $2,506 (1994).
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 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.
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 $50,368 (1996), $51,091 (1995) and $44,610 (1994).
Deferred Debt Issue Costs: Deferred debt issue costs incurred in connection
with debt financing are amortized over the life of the debt using the interest
rate method and are charged to interest expense.
Financial Instruments: 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, if material, the value of each such option agreement is
adjusted to fair value with changes in value recorded in income.
21
<PAGE> 24
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
When swap agreements are effective in modifying the terms of actual debt
agreements, 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 of 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 1995 and
1994 financial statements to conform to the Company's 1996 presentation.
NOTE B -- NOTES RECEIVABLE
Notes receivable are primarily from the sale of flight equipment and are
summarized as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Fixed rate notes receivable due in varying installments
to 2005:
Less than 6%......................................... $ 3,873 $ 5,656
6% to 7.99%.......................................... 240,754 290,934
8% to 9.99%.......................................... 140,455 81,486
10% to 14%........................................... 8,302 4,862
LIBOR plus 1.1% to LIBOR plus 1.5% notes receivable in
varying installments to 2002......................... 35,762 40,861
-------- --------
$429,146 $423,799
======== ========
</TABLE>
Included above, the Company had notes receivable of $10,694 (1996) and
$2,300 (1995) representing restructured lease payments.
22
<PAGE> 25
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE B -- NOTES RECEIVABLE (CONTINUED)
At December 31, 1996, the minimum future notes receivable payments to be
received are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 48,758
1998.............................................................. 108,924
1999.............................................................. 41,496
2000.............................................................. 33,680
2001.............................................................. 33,325
Thereafter........................................................ 162,963
--------
$429,146
========
</TABLE>
The Company sold notes receivable with certain limited recourse provisions
to a related party of the Company. The notes were sold at face value including
accrued interest and aggregated $116,235 in 1996 and $56,413 in 1995. The
Company continues to collect payments from the notes and transfers to the
related party the amounts received less a servicing fee. The Company recorded no
gain or loss on the sale. The Company recorded servicing fee income of $16 in
1996 related to the notes sold. The Company's maximum exposure under recourse
provisions was $23,205 at December 31, 1996 and $11,283 at December 31, 1995.
During 1996, the Company repurchased one note sold in 1995. The note was not
repurchased under the recourse provisions.
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>
1996 1995
-------- --------
<S> <C> <C>
Total minimum lease payments to be received............ $122,559 $ 91,124
Estimated residual values of leased flight equipment... 18,483 26,544
Less: Unearned income.................................. (37,413) (31,431)
-------- --------
Net investment in finance and sales-type leases........ $103,629 $ 86,237
======== ========
</TABLE>
Minimum future lease payments to be received for flight equipment on
finance and sales-type leases at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997.............................................................. $ 15,962
1998.............................................................. 16,398
1999.............................................................. 14,274
2000.............................................................. 15,045
2001.............................................................. 15,045
Thereafter........................................................ 45,835
--------
Total minimum lease payments to be received....................... $122,559
========
</TABLE>
23
<PAGE> 26
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>
1996 1995
----------------- -----------------
PERCENT PERCENT
OWNED AMOUNT OWNED AMOUNT
------- ------- ------- -------
<S> <C> <C> <C> <C>
Cost method:
Air Liberte............................... 10.8% $ 4,792 10.8% $ 4,792
International Aircraft Investors.......... 6.2% 300 6.2% 300
Others.................................... 845 1,058
Equity method:
Pacific Ocean Leasing Ltd................. 50.0% 5,848 50.0% 5,858
Pacific Asia Leasing Ltd.................. 25.0% 6,314 25.0% 5,303
------- -------
$18,099 $17,311
======= =======
</TABLE>
In addition, the Company has notes receivable of $8,763 (1996) and $11,111
(1995) from entities in which it has investments.
At December 31, 1996, the Company had two 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 and one
spare engine, both of which are on lease to an airline. POL also owns an
inventory of spare parts. 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 the
purchase of such aircraft (see Note K).
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS
Debt financing and capital lease obligations are comprised of the
following:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Commercial Paper (weighted average interest rate at
December 31, 5.48% (1996) and 5.82% (1995)........ $2,757,417 $1,843,630
Term Notes.......................................... 3,500,000 3,550,000
Medium-Term Notes................................... 2,563,720 2,403,770
Capital Lease Obligations........................... 995,872 1,088,424
Bank and other term debt............................ 22,502
Less: Deferred debt discount........................ (22,749) (15,692)
---------- ----------
$9,794,260 $8,892,634
========== ==========
</TABLE>
24
<PAGE> 27
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Bank Financing:
As of December 31, 1996, the Company had committed credit agreements with
46 commercial banks aggregating $2,400,000 and uncommitted lines of credit with
three commercial banks in the amount of $200,000. 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.
25
<PAGE> 28
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
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 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
5 3/4% Notes due January 15, 1996..................... 3 years $ $ 150,000
6 5/8% Notes due June 1, 1996......................... 4 years 100,000
4 3/4% Notes due July 15, 1996........................ 3 years 100,000
7.90% Notes due October 1, 1996....................... 5 years 100,000
6 3/8% Notes due November 1, 1996..................... 4 years 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
4 1/2
Floating Rate Notes due October 15, 1997.............. years 100,000 100,000
8 1/8% Notes due January 15, 1998..................... 3 years 150,000 150,000
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 100,000 100,000
Floating Rate Notes due June 19, 1998 (swapped to
6.50%).............................................. 2 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
Floating Rate Notes due November 2, 1998 (swapped to
6.0725%)............................................ 2 years 100,000
5 3/4% Notes due January 15, 1999..................... 5 years 150,000 150,000
5 1/2% Notes due January 15, 1999..................... 3 years 150,000
7 1/2% Notes due March 1, 1999........................ 4 years 100,000 100,000
6 5/8% Notes due April 1, 1999 (swapped to a floating
rate(1))............................................ 5 years 100,000 100,000
Floating Rate Notes due June 2, 1999 (swapped to
6.64%).............................................. 4 years 100,000 100,000
Floating Rate Notes due July 15, 1999 (swapped to
6.235%)............................................. 4 years 100,000 100,000
6 1/2% Notes due August 15, 1999...................... 7 years 100,000 100,000
6 1/8% Notes due November 1, 1999..................... 4 years 100,000 100,000
5 3/4% Notes due December 15, 1999.................... 4 years 150,000 150,000
8 1/4% Notes due January 15, 2000..................... 5 years 100,000 100,000
6.20% Notes due May 1, 2000........................... 7 years 100,000 100,000
7% Notes due May 15, 2000............................. 5 years 100,000 100,000
6 5/8% Notes due August 15, 2000...................... 4 years 100,000
6 1/4% Notes due October 15, 2000..................... 5 years 100,000 100,000
8 7/8% Notes due April 15, 2001....................... 10 years 150,000 150,000
6 1/2% Notes due October 15, 2001..................... 5 years 100,000
8 3/8% Notes due December 15, 2004.................... 10 years 100,000 100,000
---------- ----------
$3,500,000 $3,550,000
========== ==========
</TABLE>
- ---------------
See Note L -- Financial Instruments.
(1) Floating rate swap expires April 1, 1997.
26
<PAGE> 29
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Medium-Term Notes:
The Company's Medium-Term Notes bear interest at rates varying between 4.9%
and 9.88%, inclusive, with maturities from 1997 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 $1,174,845 (1996) and
$1,215,912 (1995).
Maturities of debt financing and capital lease obligations (excluding
commercial paper) at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997..................................................... $1,334,987
1998..................................................... 1,750,087
1999..................................................... 1,720,802
2000..................................................... 1,000,052
2001..................................................... 453,552
Thereafter............................................... 800,112
----------
$7,059,592
=========
</TABLE>
Under the most restrictive provisions of the related borrowings,
consolidated retained earnings at December 31, 1996, in the amount of $311,775
are unrestricted as to payment of dividends.
NOTE F -- SHAREHOLDERS' EQUITY
Preferred Stock:
In February and November 1995, 500 shares each of Series E and F and G and
H, 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). In addition, issuance costs of $130
for Series G and H were incurred in 1996. 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, 1996, the dividend rates for Series A through H ranged
from 3.90% to 4.38%.
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, 1996.
27
<PAGE> 30
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE G -- RENTAL INCOME
Minimum future rentals on noncancelable operating leases and subleases of
flight equipment which have been delivered at December 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------
<S> <C>
1997..................................................... $1,292,030
1998..................................................... 1,057,695
1999..................................................... 835,580
2000..................................................... 649,204
2001..................................................... 473,549
Thereafter............................................... 743,476
----------
$5,051,534
==========
</TABLE>
Additional rentals earned by the Company based on the lessees' usage
aggregated $194,741 (1996), $168,121 (1995) and $122,321 (1994). Flight
equipment is leased, under operating leases, with remaining terms ranging from
one to 10 years.
NOTE H -- RENTAL EXPENSE
As of December 31, 1995 and 1996, the Company had entered into
sale-leaseback transactions in the amounts of $412,626 and $507,600,
respectively, relating to seven aircraft for each transaction. The transactions
resulted in the sale and leaseback of these aircraft for one year operating
leases, each with six one year extension options, maturing on December 22, 1997
and September 20, 1997, respectively. The lease rates equate to fixed principal
amortization and floating interest payments based on LIBOR or commercial paper
pricing.
Minimum future rental expense for 1997 is $29,160 at December 31, 1996.
NOTE I -- INCOME TAXES
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal.............................................. $(16,700) $(32,962) $(34,027)
State................................................ 1,957 1,427 (3,508)
Foreign.............................................. 9,381
-------- -------- --------
(5,362) (31,535) (37,535)
Deferred:
Federal.............................................. 138,750 162,129 149,364
State................................................ 9,777 11,315 (1,765)
-------- -------- --------
148,527 173,444 147,599
-------- -------- --------
$143,165 $141,909 $110,064
======== ======== ========
</TABLE>
28
<PAGE> 31
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE I -- INCOME TAXES (CONTINUED)
The provision for deferred income taxes is comprised of the following
temporary differences:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Accelerated depreciation on flight equipment........... $132,101 $182,125 $180,137
Excess of state income taxes not currently deductible
for Federal income tax purposes...................... (3,422) (3,960) 626
Tax versus book lease differences...................... 35,933 779 (806)
Provision for overhauls................................ (7,726) (4,370) (9,951)
Rentals received in advance............................ (5,855) (308) (14,511)
Straight line rents.................................... (3,020) (606) (2,315)
Other.................................................. 516 (216) (5,581)
-------- -------- --------
$148,527 $173,444 $147,599
======== ======== ========
</TABLE>
The deferred tax liability at December 31, 1996 consists of the following:
<TABLE>
<S> <C>
Accelerated depreciation on flight equipment........... $819,375
Excess of state income taxes not currently deductible
for Federal income tax purposes...................... (17,471)
Tax versus book lease differences...................... 67,897
Provision for overhauls................................ (38,773)
Rentals received in advance............................ (36,477)
Straight line rents.................................... 14,408
Other.................................................. 335
--------
$809,294
========
</TABLE>
A reconciliation of computed expected total provision for income taxes to
the amount recorded is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Computed expected provision based upon a federal rate
of 35%............................................... $138,229 $118,421 $109,202
State income taxes, net of Federal income taxes........ 7,628 8,282 5,772
Foreign sales corporation benefit...................... (6,160) (7,305) (3,178)
Subsidiary losses without tax benefit.................. 17,169
Other.................................................. (1,818) 5,342 (1,732)
Foreign taxes.......................................... 5,286
-------- -------- --------
$143,165 $141,909 $110,064
======== ======== ========
</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.
29
<PAGE> 32
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE J -- OTHER INFORMATION (CONTINUED)
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
$1,202,651 (1996), $1,002,251 (1995) and $798,619 (1994).
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>
1996 1995 1994
------------------ ------------------ ----------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- -------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe............................... $ 551,703 38.2% $ 462,252 36.9% $353,009 35.5%
Asia/Pacific......................... 332,159 23.0 255,163 20.4 180,215 18.2
United States and Canada............. 304,801 21.1 304,784 24.3 230,856 23.2
Central, South America and Mexico.... 165,819 11.5 166,443 13.2 199,041 20.0
Africa and the Middle East........... 89,957 6.2 65,378 5.2 30,475 3.1
---------- ----- -------- ----- -------- -----
$1,444,439 100.0% $1,254,020 100.0% $993,596 100.0%
========== ===== ======== ===== ======== =====
</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, 1996 by
$21,974.
NOTE K -- COMMITMENTS AND CONTINGENCIES
Aircraft orders and options
At December 31, 1996, the Company had committed to purchase 243 aircraft
deliverable from 1997 through 2004 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $13,328,600.
At December 31, 1996, the Company had options to purchase 35 aircraft
deliverable from 1999 through 2005 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $2,806,500.
Most of these purchase commitments and options 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 Boeing aircraft (models 737, 747, 757, 767 and 777), and the Airbus
aircraft (models A319, A320, A321, A330 and A340) are being purchased 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, 1996, 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 $450,849 and $329,390 with Boeing and
Airbus, respectively.
30
<PAGE> 33
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE K -- COMMITMENTS AND CONTINGENCIES (CONTINUED)
Aircraft orders and options (continued)
If all 278 aircraft were to be acquired, the estimated aggregate purchase
price (including adjustment for anticipated inflation) would be approximately
$16,135,100. 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, seven aircraft for fees paid in 1994 and two aircraft for
fees paid in 1996. The aggregate guarantees at December 31, 1996, are $137,184
and, if called upon, are payable in the amounts of $7,084 (1997), $6,100 (1999),
$21,000 (2000), $4,000 (2001), $63,000 (2003) and $36,000 (2006).
Other Guarantees
In connection with the acquisition of eight aircraft by entities in which
the Company has an investment, the Company guaranteed the loans, which at
December 31, 1996 aggregated $71,172.
The Company guaranteed the loans of three customers which, at December 31,
1996, aggregated $15,909.
NOTE L -- FINANCIAL INSTRUMENTS
In the normal course of business, the Company employs a variety of
off-balance sheet derivative transactions 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, swaptions and interest rate floors (off-balance sheet derivative
transactions).
The Company accounts for its off-balance sheet derivative transactions on
an accrual basis. As such, accrued future payments or receipts are reflected in
operating income in the period incurred or earned. Credit risk exposure arises
from the potential that the counterparty may not perform under these agreements
with respect to the off-balance sheet derivative transactions. The Company
minimizes such exposure through transacting with recognized U.S. derivative
dealers at least assigned an "A" rating by a recognized statistical rating
organization. The counterparties to the majority of the off-balance sheet
derivative transactions are assigned an "AAA" rating. One of the counterparties
is a related party of the Company. All of the derivative contracts between the
Company and the related party are at arms length. The Company monitors each
counterparty's assigned credit rating throughout the life of the off-balance
sheet derivative transaction. The Company currently does not require, nor is it
required by, its counterparties to provide security for its positions with the
Company although it can in certain circumstances.
The following table provides the notional and contractual amounts of the
Company's off-balance sheet derivative transactions at December 31, 1996. The
notional amounts used to express the extent of the Company's involvement in swap
transactions represent a standard measurement of the volume of the Company's
swap transactions. Notional amount is not a quantification of market risk or
credit risk and is not recorded on the balance sheet. Notional amounts represent
those amounts used to calculate contractual cash flows to be exchanged and are
not paid or received. The timing and the amount of cash flows relating to
31
<PAGE> 34
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L -- FINANCIAL INSTRUMENTS (CONTINUED)
swaption and other interest rate option contracts are determined by each of the
respective contractual agreements.
It is management's belief that any failure of a counterparty to perform
under the agreement with respect to these off-balance sheet transactions would
have an immaterial effect on the results of operations, financial condition and
liquidity.
The following table presents the Company's notional amounts of its interest
rate swap agreements, swaptions and interest rate floors by maturity at December
31, 1996.
<TABLE>
<CAPTION>
REMAINING LIFE
--------------------------------------------------------------------
AFTER FIVE TOTAL TOTAL
TYPE ONE YEAR YEARS 1996 1995
- ------------------------------ -------- ---------- ---------- ----------
TWO TO
FIVE YEARS
----------
<S> <C> <C> <C> <C> <C>
Interest Rate:
Swaps......................... $161,707 $ 840,673 $ 346,854 $1,349,234 $ 974,568
Swaptions(1).................. 100,000 100,000 565,670
Floors........................ 33,369 133,681 733,384 900,434 412,626
-------- ---------- ---------- ---------- ----------
Total......................... $195,076 $1,074,354 $1,080,238 $2,349,668 $1,952,864
</TABLE>
- ---------------
(1) Swaptions obligate the Company to convert certain fixed note obligations to
floating rate obligations if the option purchaser chooses to exercise. These
amounts do not represent credit exposure.
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, 1996 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, 1996, 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 U.S. Treasury bonds
for similar debt at year-end.
Off-balance-sheet instruments: Fair values for the Company's
off-balance-sheet instruments are based on pricing models or formulas using
current assumptions (swaps, swaptions and interest rate floors) 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).
32
<PAGE> 35
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, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
------------------------------------- -------------------------------------
CARRYING CARRYING
AMOUNT OF FAIR VALUE OF AMOUNT OF FAIR VALUE OF
ASSET (LIABILITY) ASSET (LIABILITY) ASSET (LIABILITY) ASSET (LIABILITY)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Cash and cash equivalents............ $ 36,558 $ 36,558 $ 87,097 $ 87,097
Notes receivable..................... 429,146 418,520 423,799 408,648
Investments.......................... 18,099 18,099 17,311 18,301
Debt financing....................... (8,798,388) (8,951,593) (7,804,210) (8,034,202)
Off-balance-sheet financial
instruments:
Swaps........................... (6,386) 10,426
Swaptions....................... (1,821) (1,821) (2,981) (2,981)
Interest rate floors............ (4,487) (4,487) (2,662) (2,662)
Acquired financing options...... 1,574
</TABLE>
33
<PAGE> 36
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
CHARGED TO
BALANCE AT CHARGED TO OTHER
BEGINNING OF COSTS AND 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, 1996...... $ 83,857 $ 85,083 $ 783 $67,231 $ 102,492
Year ended December 31, 1995...... $ 71,554 $ 71,113 $ 4,191(2) $63,001 $ 83,857
Year ended December 31, 1994...... $ 44,843 $ 57,619 $ 1,802(2) $32,710 $ 71,554
</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.
34
<PAGE> 37
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 14, 1997
INTERNATIONAL LEASE FINANCE
CORPORATION
By /s/ LESLIE L. GONDA
------------------------------------
Leslie L. Gonda
Chairman of the Board
Pursuant to the 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
- ---------------------------------------- ------------------------------ ----------------
<C> <S> <C>
/s/ LESLIE L. GONDA Director March 14, 1997
- ----------------------------------------
Leslie L. Gonda
/s/ STEVEN F. UDVAR-HAZY Chief Executive Officer and March 14, 1997
- ---------------------------------------- Director
Steven F. Udvar-Hazy
/s/ LOUIS L. GONDA Director March 14, 1997
- ----------------------------------------
Louis L. Gonda
Director
- ----------------------------------------
M. R. Greenberg
/s/ EDWARD E. MATTHEWS Director March 14, 1997
- ----------------------------------------
Edward E. Matthews
Director
- ----------------------------------------
Petros K. Sabatacakis
Director
- ----------------------------------------
Howard I. Smith
/s/ ALAN H. LUND Chief Financial Officer and March 14, 1997
- ---------------------------------------- Chief Accounting Officer
Alan H. Lund
</TABLE>
35
<PAGE> 38
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, 1996 or proxy
statement, form of proxy or other proxy soliciting materials have been sent to
securities holders since January 1, 1990.
36
<PAGE> 1
EXHIBIT 10.2
$1,250,000,000 REVOLVING CREDIT AGREEMENT
DATED AS OF
JANUARY 17, 1997
AMONG
INTERNATIONAL LEASE FINANCE CORPORATION
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
AND
THE OTHER BANKS (AS DEFINED HEREIN)
<PAGE> 2
TABLE OF CONTENTS
Page
----
SECTION 1. CERTAIN DEFINITIONS............................................. 1
Section 1.1. Terms Generally...................................... 1
Section 1.2. Specific Terms....................................... 2
SECTION 2. BID LOANS AND BID NOTES......................................... 13
Section 2.1. Making of Bid Loans.................................. 13
Section 2.2. Procedure for Bid Loans.............................. 13
Section 2.3. Funding of Bid Loans................................. 16
Section 2.4. Bid Notes............................................ 16
SECTION 3. COMMITTED LOANS AND NOTES....................................... 17
Section 3.1. Agreement to Make Committed Loans.................... 17
Section 3.2. Procedure for Committed Loans........................ 17
Section 3.3. Maturity of Committed Loans.......................... 19
Section 3.4. Committed Notes...................................... 19
SECTION 4. INTEREST AND FEES............................................... 19
Section 4.1. Interest Rates....................................... 19
Section 4.2. Interest Payment Dates............................... 20
Section 4.3. Setting and Notice of Committed Loan
Rates.................................. 20
Section 4.4. Facility Fee......................................... 21
Section 4.5. Agent's Fees......................................... 22
Section 4.6. Computation of Interest and Fees..................... 22
SECTION 5. REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENTS.................................. 22
Section 5.1. Voluntary Termination or Reduction
of the Commitments..................... 22
Section 5.2. Voluntary Prepayments................................ 22
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF;
TAXES..................................................... 23
Section 6.1. Making of Payments................................... 23
Section 6.2. Pro Rata Treatment; Sharing.......................... 23
Section 6.3. Set-off.............................................. 24
Section 6.4. Taxes, etc........................................... 25
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR
ABSOLUTE RATE LOANS AND LIBOR RATE LOANS.................. 26
Section 7.1. Increased Costs...................................... 26
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair................... 28
Section 7.3. Changes in Law Rendering Certain
Loans Unlawful......................... 29
Section 7.4. Funding Losses....................................... 29
Section 7.5. Discretion of Banks as to Manner of
i
<PAGE> 3
Page
----
Funding................................ 30
Section 7.6. Conclusiveness of Statements;
Survival of Provisions................. 30
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................. 30
Section 8.1. Organization, etc.................................... 30
Section 8.2. Authorization; Consents; No
Conflict............................... 31
Section 8.3. Validity and Binding Nature.......................... 31
Section 8.4. Financial Statements................................. 31
Section 8.5. Litigation and Contingent
Liabilities............................ 32
Section 8.6. Employee Benefit Plans............................... 32
Section 8.7. Investment Company Act............................... 33
Section 8.8. Public Utility Holding Company Act................... 33
Section 8.9. Regulation U......................................... 33
Section 8.10. Information.......................................... 33
Section 8.11. Compliance with Applicable Laws,
etc.................................... 33
Section 8.12. Insurance............................................ 34
Section 8.13. Taxes................................................ 34
Section 8.14. Use of Proceeds...................................... 34
Section 8.15. Pari Passu........................................... 34
Section 8.16. Ownership and Liens.................................. 34
SECTION 9. COVENANTS....................................................... 35
Section 9.1. Reports, Certificates and Other
Information............................ 35
Section 9.2. Existence............................................ 37
Section 9.3. Nature of Business................................... 37
Section 9.4. Books, Records and Access............................ 37
Section 9.5. Insurance............................................ 38
Section 9.6. Repair............................................... 38
Section 9.7. Taxes................................................ 38
Section 9.8. Compliance........................................... 38
Section 9.9. Sale of Assets....................................... 38
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio.. 39
Section 9.11. Fixed Charge Coverage Ratio.......................... 39
Section 9.12. Consolidated Tangible Net Worth...................... 39
Section 9.13. Restricted Payments.................................. 39
Section 9.14. Liens................................................ 39
Section 9.15. Leases............................................... 42
Section 9.16. Use of Proceeds...................................... 42
SECTION 10. CONDITIONS TO LENDING.......................................... 43
Section 10.1. Conditions Precedent to All Loans................... 43
Section 10.2. Conditions to the Availability of
the Commitments........................ 44
ii
<PAGE> 4
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT............................. 45
Section 11.1. Events of Default................................... 45
Section 11.2. Effect of Event of Default.......................... 48
SECTION 12. THE AGENT...................................................... 48
Section 12.1. Authorization....................................... 48
Section 12.2. Indemnification..................................... 49
Section 12.3. Action on Instructions of the
Required Banks......................... 49
Section 12.4. Payments............................................ 50
Section 12.5. Exculpation......................................... 51
Section 12.6. Credit Investigation................................ 52
Section 12.7. UBS and Affiliates.................................. 52
Section 12.8. Resignation......................................... 52
SECTION 13. GENERAL........................................................ 53
Section 13.1. Waiver; Amendments.................................. 53
Section 13.2. Notices............................................. 54
Section 13.3. Computations........................................ 54
Section 13.4. Assignments; Participations......................... 55
Section 13.5. Costs, Expenses and Taxes........................... 58
Section 13.6. Indemnification..................................... 58
Section 13.7. Regulation U........................................ 59
Section 13.8. Extension of Termination Dates;
Removal of Banks; Substitution of
Banks................................. 59
Section 13.9. Captions............................................ 62
Section 13.10. Governing Law; Severability......................... 62
Section 13.11. Counterparts; Effectiveness......................... 62
Section 13.12. Further Assurances.................................. 62
Section 13.13. Successors and Assigns.............................. 63
Section 13.14. Waiver of Jury Trial................................ 63
iii
<PAGE> 5
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> 6
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as of
January 17, 1997, 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 New York 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.
<PAGE> 7
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 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.
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
-2-
<PAGE> 8
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, 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
-3-
<PAGE> 9
reflected as a liability on a consolidated balance sheet of the Company and its
Subsidiaries.
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 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.
-4-
<PAGE> 10
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.
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,
-5-
<PAGE> 11
the rate for such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m., New York
City time, on such day by each of three leading brokers of Federal funds
transactions in New York City, selected by the Agent. The rate for any day which
is not a Business Day shall be the rate for the immediately preceding Business
Day.
Fixed Charge Coverage Ratio on the last day of any quarter of
any fiscal year of the Company means the ratio for the period of four fiscal
quarters ending on such day of earnings to combined fixed charges and preferred
stock dividends referred to in Paragraph (d)(1)(i) of Item 503 of Regulation S-K
of the Securities and Exchange Commission, as amended from time to time, and
determined pursuant to Paragraphs (d)(2) through (d)(10) of such Item 503 with
the Company as "registrant" (such ratio for the four fiscal quarters ended
September 30, 1996 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
-6-
<PAGE> 12
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;
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<PAGE> 13
(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 writeups, 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.
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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 and (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; 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.
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<PAGE> 15
Material Adverse Effect means (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 material
adverse effect on the legality, validity, binding effect or enforceability 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 office of the Agent which, as of the
date hereof, is 299 Park Avenue, New York, New York 10071-0026, Attn: James
Broadus, Telecopy Number (212) 821-3259; Telephone (212) 821-3227.
Operating Lease means any lease other than a Capitalized
Lease; provided, however, that leases with an original term of less than one
year shall not be Operating Leases.
Operating Lease Rental of an Operating Lease means, as of the
date of any determination thereof, the net present value of the aggregate unpaid
amount due at such date and to become due from the Company or any Subsidiary, on
a consolidated basis, as lessee under such Operating Lease discounted at such
lessee's incremental borrowing rate or if the interest rate implicit in such
Operating Lease can be practically determined and is smaller, at such interest
rate, such present value and interest rate being determined in accordance with
standard financial practice and such borrowing rate being determined in
accordance with FASB 13, excluding from such aggregate amount all amounts which
are in excess of the minimum aggregate unpaid amount due at such date and to
become due from such lessee under such Operating Lease assuming that such lessee
would take or fail to take all actions with respect to all termination, renewal,
purchase and other options as would produce the least amount becoming due under
such Operating Lease, and "Operating
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<PAGE> 16
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.
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 UBS as its prime commercial lending rate.
Reference Banks means UBS, The Bank of Nova Scotia,
Commerzbank AG and The Bank of New York.
Reportable Event has the meaning assigned to such term in
section 4043 of ERISA.
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<PAGE> 17
Required Banks means Banks having an aggregate Percentage of
51% or more.
Significant Subsidiary means any Subsidiary which is so
defined pursuant to Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission.
Submission Deadline - see Section 2.2(b).
Subsidiary means any Person of which or in which the Company
and its other Subsidiaries own directly or indirectly 50% or more of:
(a) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a majority
of the board of directors of such Person, if it is a corporation;
(b) the capital interest or profits interest of such Person,
if it is a partnership, joint venture or similar entity; or
(c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization;
provided, however, that so long as (i) the Company continues to own not more
than 50% of Pacific Ocean Leasing, Ltd. and (ii) Pacific Ocean Leasing, Ltd.
does not materially alter the manner in which it conducts the business in which
it is currently engaged, Pacific Ocean Leasing, Ltd. shall not be considered a
Subsidiary within the foregoing definition for purposes of this Agreement.
Successor Bank - see Section 13.8(c).
Taxes with respect to any Person means income, excise and
other taxes, and all assessments, imposts, duties and other governmental charges
or levies, imposed upon such Person, its income or any of its properties,
franchises or assets by any Governmental Authority.
Terminating Bank - see Section 13.8(c).
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
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<PAGE> 18
Bank's Termination Date pursuant to Section 13.8(b), or, if in any case (other
than clause (ii) above) such day is not a Business Day, the next succeeding
Business Day; in all cases, subject to the provisions of Section 13.8(d).
UBS - see Preamble.
Unmatured Event of Default means any event which if it
continues uncured will, with lapse of time or notice or lapse of time and
notice, constitute an Event of Default.
Wholly-owned Subsidiary means any Person of which or in which
the Company and its other Wholly-owned Subsidiaries own directly or indirectly
100% of:
(a) the issued and outstanding shares of stock (except shares
required as directors' qualifying shares);
(b) the capital interest or profits interest of such Person,
if it is a partnership, joint venture or similar entity; or
(c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization.
SECTION 2. BID LOANS AND BID NOTES.
Section 2.1. Making of Bid Loans. On the terms and subject to
the conditions of this Agreement, each Bank, severally and for itself alone, may
(but is not obligated to) make Bid Loans to the Company from time to time on or
after the date hereof and prior to the date which is the fourteenth day
preceding such Bank's Termination Date in amounts equal to such Bank's Bids that
have been accepted as provided in Section 2.2(c); provided that the aggregate
principal amount of all outstanding Loans shall not at any time exceed the then
Aggregate Commitment.
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
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<PAGE> 19
Loan. Each such notice shall be substantially in the form of Exhibit A hereto
(each a "Notice of Competitive Bid Borrowing"), and shall specify in each case
(i) the date of such proposed Bid Borrowing (which shall be a Business Day),
(ii) the aggregate amount of the proposed Bid Borrowing, (iii) whether the
proposed Bid Borrowing is to be an Absolute Rate Loan or a LIBOR Rate Loan and
the Loan Period, (iv) the maturity date for repayment of each Bid Loan to be
made as part of such borrowing (which maturity date shall not be earlier than
one month after the date of any proposed LIBOR Rate Loan or 14 days after the
date of any proposed Absolute Rate Loan or later than the earliest to occur of
(x) six months after the date of such proposed Bid Loan, (y) the Termination
Date and (z) if the proposed Bid Loan has an interest rate that is the LIBOR
Rate, the last day of the proposed Loan Period), (v) the interest payment date
or dates relating thereto, (vi) the account of the Company to which the proceeds
of such Bid Borrowing are to be credited and (vii) any other terms to be
applicable to such Bid Borrowing. The Agent shall promptly give each Bank
written notice (or telephonic notice promptly confirmed in writing) of each such
request for a Bid Borrowing received by it from the Company. Each Notice of
Competitive Bid Borrowing shall contemplate Bid Loans in a minimum aggregate
principal amount of $10,000,000 or a higher integral multiple of $1,000,000, not
to exceed, however, the excess of the then Aggregate Commitment over the
aggregate principal amount of all outstanding Loans, calculated as of the
relevant Funding Date, assuming that the Company will pay, when due, all Loans
maturing on or prior to such Funding Date (the "Available Commitment").
(b) Bidding Procedure. Each Bank shall, if in its sole
discretion it elects to do so, irrevocably offer to make one or more Bid Loans
to the Company as part of such proposed Bid Borrowing at a rate or rates of
interest specified by such Bank in its sole discretion and determined by such
Bank independently of each other Bank, by notifying by telephone confirmed in
writing to the Agent at its Notice Office (which shall give prompt notice
thereof to the Company), before 10:00 a.m. (New York City time) on the date (the
"Submission Deadline") that is (x) in the case of a proposed Absolute Rate Loan,
the same day as the date of such proposed Bid Loan and (y) in the case of a
proposed LIBOR Rate Loan, two Business Days before, the date of such proposed
Bid Loan, of the minimum amount and maximum amount of each Bid Loan that such
Bank would be willing to make as part of such proposed Bid Borrowing (which
amounts may, subject to the proviso in Section 2.1, exceed such Bank's
Commitment), the rate or rates of interest therefor and such Bank's lending
office with respect to such Bid Loan;
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<PAGE> 20
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.
(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
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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
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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.
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 or (ii) 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, request each Reference Bank to notify the
Agent of its applicable rate (as contemplated in the definitions of Base LIBOR).
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
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Rate Loan or a Base Rate Loan and (iv) if a LIBOR 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 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, 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
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<PAGE> 24
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.
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
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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; and
(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;
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) and (ii) 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
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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, 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 definition of Base LIBOR). 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, then the
applicable LIBOR Rate 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, 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.
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, 1997) 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.
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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 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;
and 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 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 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,
except as may be
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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 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 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.
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(b) If any Bank or other holder of a Committed Loan shall
obtain any payment or other recovery (whether voluntary, involuntary, by
application of offset or otherwise) on account of principal of, interest on or
fees or other amounts with respect to any Committed Loan in excess of the share
of payments and other recoveries (exclusive of payments or recoveries under
Section 7 or pursuant to Section 13.8) such Bank or other holder would have
received if such payment had been distributed pursuant to the provisions of
Section 6.2(a), such Bank or other holder shall purchase from the other Banks or
holders, in a manner to be specified by the Agent, such participations in the
Committed Loans held by them as shall be necessary so that all such payments of
principal and interest with respect to the Committed Loans shall be shared by
the Banks and other holders pro rata in accordance with their respective
Percentages; provided, however, that if all or any portion of the excess payment
or other recovery is thereafter recovered from such purchasing Bank or holder,
the purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) If any Bank or other holder of a Bid Loan shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
offset or otherwise) on account of principal of, interest on or fees or other
amounts with respect to any Bid Loan in excess of the share of payments and
other recoveries (exclusive of payments or recoveries pursuant to Section 7 or
Section 13.8) such Bank or other holder would have received if such payment had
been distributed pursuant to the provisions of Section 6.2(a), such Bank or
other holder shall purchase from the other Banks or holders participating in
such Bid Borrowing, in a manner to be specified by the Agent, such
participations in the Bid Loans held by them as shall be necessary so that all
such payments of principal and interest with respect to the Bid Loans shall be
shared by the Banks and other holders participating in such Bid Borrowing in a
manner consistent with Section 6.2(a); provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Bank or holder, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
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
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this Agreement is due to any such Person or (ii) any Event of Default exists,
each such Person may apply to the payment of any amount payable hereunder any
and all balances, credits, deposits, accounts or moneys of the Company then or
thereafter with such Person.
Section 6.4. Taxes, etc. (a) All payments made by the Company
to the Agent, any Bank, any Assignee or any Participant under this Agreement and
the Notes shall be made without any set-off or counterclaim, and free and clear
of and without deduction for or on account of any present or future Taxes now or
hereafter imposed (except to the extent that such withholding or deduction is
compelled by law or results from the breach, by the recipient of a payment, of
its agreement contained in Section 6.4(b) or would not be required if the
representation or warranty contained in Section 6.4(b) were true), excluding any
Taxes generally assessed on the overall net income of the Agent, any Bank, any
Assignee or any Participant, as the case may be, by the government or other
authority of the country in which the Agent, such Bank, such Assignee or such
Participant is incorporated or in which its Funding Office or the office through
which it is acting is located. If the Company is compelled by law to make any
such deductions or withholdings it will:
(i) pay to the relevant authorities the full amount required
to be so withheld or deducted;
(ii) except to the extent that such withholding or deduction
results from the breach by the recipient of a payment of its agreement
contained in Section 6.4(b) or would not be required if the
representation or warranty contained in Section 6.4(b) were true, pay
such additional amounts as may be necessary in order that the net
amount received by the Agent, each Bank, each Assignee and each
Participant after such deductions or withholdings (including any
required deduction or withholding on such additional amounts) shall
equal the amount such payee would have received had no such deductions
or withholdings been made; and
(iii) promptly forward to the Agent (for delivery to such
payee) an official receipt or other documentation satisfactory to the
Agent evidencing such payment to such authorities.
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
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penalties, interest or expenses) as may be necessary in order that the net
amount received by such payee after the payment of such Taxes (including any
Taxes on such additional amount) shall equal the amount such payee would have
received had no such Taxes been asserted. For purposes of this Section 6.4, a
distribution hereunder by the Agent or any Bank to or for the account of any
Bank, Assignee or Participant shall be deemed to be a payment by the Company.
The Company's agreement under this Section 6.4 shall survive repayment of the
Loans, cancellation of the Notes or any termination of this Agreement.
(b) In consideration of, and as a condition to, the Company's
undertakings in Section 6.4(a), each Bank (other than a Bank that is organized
and existing under the laws of the United States of America or any State
thereof) agrees to execute and deliver to the Agent at its Payment Office for
delivery to the Company, before the first scheduled payment date in each year,
two United States Internal Revenue Service Forms 1001 or 4224, or any successor
forms, as appropriate, properly completed and claiming complete exemption from
withholding and deduction of United States federal Taxes. Each Bank represents
and warrants to the Company that, at the date of this Agreement, or at the time
such Bank becomes a Bank hereunder pursuant to Section 13.4.1, its Funding
Office is entitled to receive payments of principal and interest hereunder
without deduction for or on account of any Taxes imposed by the United States or
any political subdivision thereof.
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS
FOR ABSOLUTE RATE LOANS AND LIBOR 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 Notes or its obligation to make LIBOR Rate Loans, or shall
change
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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 or
any other amounts due under this Agreement in respect of its LIBOR Rate
Loans or its obligation to make LIBOR 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 Notes or
its obligation to make or maintain LIBOR 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 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
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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:
(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, adequate and reasonable means do not exist
for ascertaining the applicable LIBOR Rate; or
(b) the Required Banks advise the Agent that the LIBOR Rate as
determined by the Agent will not adequately and fairly reflect the cost
to such Required Banks of maintaining or funding LIBOR Rate Loans for
such Loan Period, or that the making or funding of LIBOR 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;
then (i) the Agent shall promptly notify the other parties thereof and (ii) so
long as such circumstances shall
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continue, no Bank shall be under any obligation to make any LIBOR Rate Loan.
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 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 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,
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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 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
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each jurisdiction where, because of the nature of its activities or properties,
such qualification is required, except where the failure to be so qualified or
in good standing could not reasonably be expected to have a Material Adverse
Effect.
Section 8.2. Authorization; Consents; No Conflict. The
execution and delivery by the Company of this Agreement and the Notes, the
borrowings hereunder and the performance by the Company of its obligations under
this Agreement and the Notes (a) are within the corporate powers of the Company,
(b) have been duly authorized by all necessary corporate action on the part of
the Company, (c) have received all necessary approvals, authorizations,
consents, registrations, notices, exemptions and licenses (if any shall be
required) from Governmental Authorities and other Persons, except for any such
approvals, authorizations, consents, registrations, notices, exemptions or
licenses non-receipt of which could not reasonably be expected to have a
Material Adverse Effect, (d) do not and will not contravene or conflict with any
provision of (i) law, (ii) any judgment, decree or order to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is bound,
(iii) the charter, by-laws or other organizational documents of the Company or
any Subsidiary or (iv) any provision of any agreement or instrument binding on
the Company or any Subsidiary, or any agreement or instrument of which the
Company is aware affecting the properties of the Company or any Subsidiary,
except with respect to (i), (ii) and (iv) above, for any such contravention or
conflict which could not reasonably be expected to have a Material Adverse
Effect and (e) do not and will not result in or require the creation or
imposition of any Lien on any of the Company's or its Subsidiaries' properties.
Section 8.3. Validity and Binding Nature. This Agreement is,
and the Notes when duly executed and delivered will be, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 8.4. Financial Statements. The Company's audited
consolidated financial statements as at December 31, 1995, and unaudited
consolidated financial statements as at September 30, 1996, 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
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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.
Section 8.5. Litigation and Contingent Liabilities. All
Litigation Actions, taken as a whole, could not reasonably be expected to have a
Material Adverse Effect. Other than any liability incident to such Litigation
Actions or provided for or disclosed in the financial statements referred to in
Section 8.4, neither the Company nor any Subsidiary has any contingent
liabilities which are material to the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries taken as a whole.
Section 8.6. Employee Benefit Plans. Each employee benefit
plan (as defined in Section 3(3) of ERISA) as to which the Company, or any
Subsidiary or any ERISA Affiliate may have any liability complies in all
material respects with all applicable requirements of law and regulations.
During the twelve-consecutive-month period prior to the execution and delivery
of this Agreement, (i) no steps have been taken to terminate any Plan and no
contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under section 302(f) of ERISA, (ii) no Reportable Event has
occurred with respect to any Plan and (iii) neither the Company nor any ERISA
Affiliate has either withdrawn or instituted steps to withdraw from any
Multiemployer Plan, except in any such case for actions which individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect. No condition exists or event or transaction has occurred in connection
with any Plan which could reasonably be expected to result in the incurrence by
the Company, any Subsidiary or any ERISA Affiliate of any material liability,
fine or penalty (imposed by Section 4975 of the Code or Section 502(i) of ERISA
or otherwise). Neither the Company nor any ERISA Affiliate is a member of, or
contributes to, any Multiemployer Plan. Neither the Company nor any ERISA
Affiliate has any contingent liability with respect to any post retirement
benefit under an employee welfare benefit plan (as defined in section 3(i) of
ERISA), other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
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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.
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
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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,
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except as disclosed in such financial statements or as may be permitted under
this Agreement.
SECTION 9. COVENANTS.
Until the expiration or termination of the Commitments, and
thereafter until all obligations of the Company hereunder and under the Notes
are paid in full, the Company agrees that, unless at any time the Required Banks
shall otherwise expressly consent in writing, it will:
Section 9.1. Reports, Certificates and Other Information.
Furnish to the Agent with sufficient copies for each Bank which the Agent shall
promptly furnish to each Bank:
9.1.1. Audited Financial Statements. As soon as available, and
in any event within 95 days after each fiscal year of the Company, a
copy of the audited financial statements and annual audit report of the
Company and its Subsidiaries for such fiscal year prepared on a
consolidated basis and in conformity with generally accepted accounting
principles in the United States and certified by Ernst & Young or by
another independent certified public accountant of recognized national
standing selected by the Company and satisfactory to the Required
Banks.
9.1.2. Interim Reports. As soon as available, and in any event
within 50 days after each quarter (except the last quarter) of each
fiscal year of the Company, a copy of the unaudited financial
statements of the Company and its Subsidiaries for such quarter
prepared in a manner consistent with the audited financial statements
referred to in Section 9.1.1, signed by the Company's chief financial
officer and consisting of at least a balance sheet as at the close of
such quarter and statements of earnings and cash flows for such quarter
and for the period from the beginning of such fiscal year to the close
of such quarter.
9.1.3. Certificates. Contemporaneously with the furnishing of
a copy of each annual audit report and of each set of quarterly
statements provided for in this Section 9.1, a certificate of the
Company dated the date of delivery of such annual report or such
quarterly statements and signed by the Company's chief financial
officer, to the effect that no Event of Default or Unmatured Event of
Default has occurred and
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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 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 $50,000,000 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
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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 proviso in Section 9.9, cause each Subsidiary to maintain and preserve, its
respective existence as a corporation or other form of business organization, as
the case may be, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, trade names, franchises and other authority to the
extent material and necessary for the conduct of its respective business in the
ordinary course as conducted from time to time, except as may be determined by
the Board of Directors of the Company in good faith to wind up and dissolve a
Subsidiary that is not necessary or material to the business of the Company in
its ordinary course as conducted from time to time.
Section 9.3. Nature of Business. Engage, and cause each
Subsidiary to engage, in substantially the same fields of business as it is
engaged in on the date hereof.
Section 9.4. Books, Records and Access. Maintain, and cause
each Subsidiary to maintain, complete and accurate books and records in which
full and correct entries in conformity with generally accepted accounting
principles in the United States shall be made of all dealings and transactions
in relation to its respective business and activities. Permit, and cause each
Subsidiary to permit, access by the Agent and each Bank to the books and records
of the Company and such Subsidiary during normal business hours, and permit, and
cause each Subsidiary to
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permit, the Agent and each Bank to make copies of such books and records.
Section 9.5. Insurance. Maintain, and cause each Subsidiary to
maintain, such insurance as is described in Section 8.12.
Section 9.6. Repair. Maintain, preserve and keep, and cause
each Subsidiary to maintain, preserve and keep, its material properties in good
repair, working order and condition, and from time to time make, and cause each
Subsidiary to make, all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained. In the case of
properties leased by the Company or any Subsidiary to lessees, the Company may
satisfy its obligations related to such properties under the previous sentence
by causing, or by causing each Subsidiary to cause, such lessees to perform such
obligations.
Section 9.7. Taxes. Pay, and cause each Subsidiary to pay,
when due, all of its Taxes, unless and only to the extent that the Company or
such Subsidiary, as the case may be, is contesting any such Taxes in good faith
and by appropriate proceedings and the Company or such Subsidiary has set aside
on its books such reserves or other appropriate provisions therefor as may be
required by generally accepted accounting principles in the United States,
except where failure to pay such Taxes, individually or in the aggregate, cannot
reasonably be expected to have a Material Adverse Effect.
Section 9.8. Compliance. Comply, and cause each Subsidiary to
comply, in all material respects with all statutes and governmental rules and
regulations applicable to it; and use reasonable efforts to cause, and cause
each Subsidiary to use reasonable efforts to cause, each lessee of property
owned by the Company or any Subsidiary to comply in all material respects with
all statutes, governmental rules and regulations applicable to such property or
applicable to such lessee in connection with its leasing.
Section 9.9. Sale of Assets. Not, and not permit any
Subsidiary to, transfer, convey, lease or otherwise dispose of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole; provided, however, that any Wholly-owned Subsidiary may transfer, convey,
lease or assign all or a substantial part of its assets to the Company or
another Wholly-owned Subsidiary if immediately thereafter and after giving
effect thereto no
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Event of Default or Unmatured Event of Default shall have occurred and be
continuing.
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 110%.
Section 9.12. Consolidated Tangible Net Worth. Not permit the
Company's Consolidated Tangible Net Worth to be less than $1,500,000,000 plus
50% of (a) the cumulative net income (but without deduction for cumulative net
losses) of the Company and its Subsidiaries determined on a consolidated basis
in accordance with United States generally accepted accounting principles, (b)
the cumulative equity capital contributions from AIG and (c) the net proceeds
from the sale of preferred stock, in each case for the period from September 30,
1994 to and including the date of any determination hereunder.
Section 9.13. Restricted Payments. Not declare or pay any
dividends whatsoever or make any distribution on any capital stock of the
Company (except in shares of, or warrants or rights to subscribe for or purchase
shares of, capital stock of the Company), and not, and not permit any Subsidiary
to, make any payment to acquire or retire shares of capital stock of the
Company, at any time when (i) an Event of Default as described in Section 11.1
has occurred and is continuing and there are Loans outstanding hereunder or (ii)
an Event of Default as described in Section 11.1.1 has occurred and is
continuing and there are no Loans outstanding hereunder; provided, however, that
notwithstanding the foregoing, this Section 9.13 shall not prohibit (x) the
payment of dividends on any of the Company's market auction preferred stock that
was sold to the public pursuant to an effective registration statement under the
Securities Act of 1933 or (y) the payment of dividends within 30 days of the
declaration thereof if such declaration was not prohibited by this Section 9.13.
Section 9.14. Liens. Not, and not permit any Subsidiary to,
create or permit to exist any Lien upon or with respect to any of its properties
or assets of any kind,
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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;
(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
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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;
(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
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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 Whollyowned 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 $3 billion minus 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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(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 10. CONDITIONS TO LENDING.
Section 10.1. Conditions Precedent to All Loans. Each Bank's
obligation to make each Loan is subject to the following conditions precedent:
10.1.1. No Default. (a) No Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the
making of such Loan, (b) the representations and warranties contained
in Section 8 are true and correct in all material respects as of the
date of such requested Loan, with the same effect as though made on the
date of such Loan (it being understood that each request for a Loan
shall automatically constitute a representation and warranty by the
Company that, as at the requested date of such Loan, (x) all conditions
under this Section 10.1.1 shall be satisfied and (y) after the making
of such Loan the aggregate principal amount of all outstanding Loans
will not exceed the Aggregate Commitment).
10.1.2. Documents. The Agent shall have received (a) a
certificate signed by an Authorized Officer of the Company as to
compliance with Section 10.1.1, which requirement shall be deemed
satisfied by the submission of a properly completed Notice of
Competitive Bid Borrowing or Committed Loan Request and (b) such other
documents as the Agent may reasonably request in support of such Loan.
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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 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
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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 Agent's fees payable to the Funding Date pursuant to
Section 4.5 hereof.
10.2.9. Material Adverse Change. The Agent shall have received
a certificate of the Company's chief financial officer confirming that
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 January 19, 1996, 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.
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11.1.2. Non-Payment of Other Indebtedness for Borrowed Money.
Default in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any principal of,
interest on or fees incurred in connection with any other Indebtedness
of, or guaranteed by, the Company or any Significant Subsidiary (except
(i) any such Indebtedness of any Subsidiary to the Company or to any
other Subsidiary and (ii) any Indebtedness hereunder) and, if a default
in the payment of interest or fees, continuance of such default for
five days, in the case of interest, or 30 days, in the case of fees, or
default in the performance or observance of any obligation or condition
with respect to any such other Indebtedness if the effect of such
default (subject to any applicable grace period) is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders
thereof, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity;
provided, however, that the aggregate principal amount of all
Indebtedness as to which there has occurred any default as described
above shall equal or exceed $50,000,000.
11.1.3. Bankruptcy, Insolvency, etc. The Company or any
Significant Subsidiary becomes insolvent or generally fails to pay, or
admits in writing its inability or refusal to pay, debts as they become
due; or the Company or any Significant Subsidiary applies for, consents
to, or acquiesces in the appointment of a trustee, receiver or other
custodian for the Company or such Significant Subsidiary or any
property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for
the Company or any Significant Subsidiary or for a substantial part of
the property of any thereof and is not discharged within 60 days; or
any warrant of attachment or similar legal process is issued against
any substantial part of the property of the Company or any of its
Significant Subsidiaries which is not released within 60 days of
service; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding (except the voluntary
dissolution, not under any bankruptcy or insolvency law, of a
Significant Subsidiary), is commenced in respect of the Company or any
Significant Subsidiary, and, if such case or proceeding is not
commenced by the Company or such Significant Subsidiary it is consented
to or acquiesced
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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 60 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, 60 days less the number of days elapsed between the
date the Company obtained such actual knowledge and the date the
Company gives the notice pursuant to Section 9.1.4, but in no event
less than one Business Day) after notice thereof to the Company from
the Agent, any Bank, or the holder of any Note.
11.1.5. Representations and Warranties. Any representation or
warranty made by the Company herein is untrue or misleading in any
material respect when made or deemed made; or any schedule, statement,
report, notice, or other writing furnished by the Company to the Agent
or any Bank is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified; or any
certification made or deemed made by the Company to the Agent or any
Bank is untrue or misleading in any material respect on or as of the
date made or deemed made.
11.1.6. Employee Benefit Plans. The institution by the Company
or any ERISA Affiliate of steps to terminate any Plan if, in order to
effectuate such termination, (i) the Company or any ERISA Affiliate
would be required to make a contribution to such Plan or would incur a
liability or obligation to such Plan in an amount in excess of
$10,000,000 and (ii) immediately after giving effect to the payment or
satisfaction of such contribution, liability or obligation (if made or
undertaken by the Company or any Subsidiary) an Event of Default or
Unmatured Event of Default would exist and be continuing; or the
institution by the PBGC of steps to terminate any Plan; or a
contribution failure occurs with respect to a Plan sufficient to give
rise to a lien under Section 302(f) of ERISA securing an amount in
excess of $10,000,000.
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11.1.7. Litigation. There shall be entered against the Company
or any Subsidiary one or more judgments or decrees in excess of
$50,000,000 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 60 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.
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
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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
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or applicable law. The relationship between the Agent and the Banks is and shall
be that of agent and principal only and nothing herein contained shall be
construed to constitute the Agent a trustee for any holder of a Note or of a
participation therein nor to impose on the Agent duties and obligations other
than those expressly provided for herein.
Section 12.4. Payments. (a) The Agent shall be entitled to
assume that each Bank has made its Loan available in accordance with Section 2.3
or Section 3.2(c), as applicable, unless such Bank notifies the Agent at its
Notice Office prior to 11:00 a.m., New York City time, on the Funding Date for
such Loan that it does not intend to make such Loan available, it being
understood that no such notice shall relieve such Bank of any of its obligations
under this Agreement. If the Agent makes any payment to the Company on the
assumption that a Bank has made the proceeds of such Loan available to the Agent
but such Bank has not in fact made the proceeds of such Loan available to the
Agent, such Bank shall pay to the Agent on demand an amount equal to the amount
of such Bank's Loan, together with interest thereon for each day that elapses
from and including such Funding Date to but excluding the Business Day on which
the proceeds of such Bank's Loan become immediately available to the Agent at
its Payment Office prior to 12:00 Noon, New York City time, at the Federal Funds
Rate for each such day, based upon a year of 360 days. A certificate of the
Agent submitted to any Bank with respect to any amounts owing under this Section
12.4(a) shall be conclusive absent demonstrable error. If the proceeds of such
Bank's Loan are not made available to the Agent at its Payment Office by such
Bank within three Business Days of such Funding Date, the Agent shall be
entitled to recover such amount on demand from the Company, together with
interest thereon for each day that elapses from and including such Funding Date
to but excluding the Business Day on which such proceeds become immediately
available to the Agent prior to 12:00 Noon, New York City time, (i) in the case
of a Bid Loan, at the rate per annum applicable thereto and (ii) in the case of
a Committed Loan, at the rate per annum applicable to Base Rate Loans hereunder,
in either case based upon a year of 360 days. Nothing in this paragraph (a)
shall relieve any Bank of any obligation it may have hereunder to make any Loan
or prejudice any rights which the Company may have against any Bank as a result
of any default by such Bank hereunder.
(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
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notification prior to any such due date from the Company that the Company does
not intend to make any such payment, it being understood that no such notice
shall relieve the Company of any of its obligations under this Agreement. If the
Agent distributes any payment to a Bank hereunder in the belief that the Company
has paid to the Agent the amount thereof but the Company has not in fact paid to
the Agent such amount, such Bank shall pay to the Agent on demand (which shall
be made by telegram, telex, facsimile or personal delivery) an amount equal to
the amount of the payment made by the Agent to such Bank, together with interest
thereon for each day that elapses from and including the date on which the Agent
made such payment to but excluding the Business Day on which the amount of such
payment is returned to the Agent at its Payment Office in immediately available
funds prior to 12:00 Noon, New York City time, at the Federal Funds Rate for
each such day, based upon a year of 360 days. If the amount of such payment is
not returned to the Agent in immediately available funds within three Business
Days after demand by the Agent, such Bank shall pay to the Agent on demand an
amount calculated in the manner specified in the preceding sentence after
substituting the term "Base Rate" for the term "Federal Funds Rate". A
certificate of the Agent submitted to any Bank with respect to amounts owing
under this Section 12.4(b) shall be conclusive absent demonstrable error.
Section 12.5. Exculpation. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters, and upon this Agreement and any
Note, security agreement, schedule, certificate, statement, report, notice or
other writing which it believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors, officers, employees
or agents shall (i) be responsible for any recitals, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement, any Note or any other
instrument or document delivered hereunder or in connection herewith, (ii) be
deemed to have knowledge of an Event of Default or Unmatured Event of Default
until after having received actual notice thereof from the Company or a Bank,
(iii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by the Company or any
other obligor of its obligations or (iv) in any event, be liable as such for any
action taken or omitted by it or them, except for its or their own gross
negligence or willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or
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impose any duties or obligations upon, the Agent in its individual capacity.
Section 12.6. Credit Investigation. Each Bank acknowledges,
and shall cause each Assignee or Participant to acknowledge in its assignment or
participation agreement with such Bank, that it has (i) made and will continue
to make such inquiries and has taken and will take such care on its own behalf
as would have been the case had the Loans been made directly by such Bank or
other applicable Person to the Company without the intervention of the Agent or
any other Bank and (ii) independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made and will continue to make its own credit analysis and
decisions relating to this Agreement. Each Bank agrees and acknowledges, and
shall cause each Assignee or Participant to agree and acknowledge in its
assignment or participation agreement with such Bank, that the Agent makes no
representations or warranties about the creditworthiness of the Company or any
other party to this Agreement or with respect to the legality, validity,
sufficiency or enforceability of this Agreement or any Note.
Section 12.7. UBS and Affiliates. UBS and each of its
successors as Agent shall have the same rights and powers hereunder as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and UBS and any such successor and its Affiliates may accept deposits
from, lend money to and generally engage, and continue to engage, in any kind of
business with the Company or any Affiliate thereof as if UBS or such successor
were not the Agent hereunder.
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-
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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, (ii) shall modify or 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
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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
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good faith appropriate revisions of such covenants (it being understood,
however, that such covenants shall remain in full force and effect in accordance
with their existing terms pending the execution by the Company and the Banks of
any such amendment).
Section 13.4. Assignments; Participations. Each Bank may
assign, or sell participations in, its Loans and its Commitment to one or more
other Persons in accordance with this Section 13.4 (and the Company consents to
the disclosure of any information obtained by any Bank in connection herewith to
any actual or prospective Assignee or Participant).
Section 13.4.1. Assignments. Any Bank may with the written
consents of the Company and the Agent (which consents will not be
unreasonably withheld or delayed) at any time assign and delegate to
one or more commercial banks or other financial institutions (any
Person to whom an assignment and delegation is made being herein called
an "Assignee") all or any fraction of such Bank's Loans and Commitment
(which assignment and delegation shall be of a constant, and not a
varying, percentage of such assigning Bank's Loans and Commitment);
each such assignment of a Bank's Commitment, when considered in
aggregate with any simultaneous assignment by such Bank pursuant to the
$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;
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(ii) provided evidence satisfactory to the Company
and the Agent that, as of the date of such assignment and
delegation, the Company will not be required to pay any costs,
fees, taxes or other amounts of any kind or nature with
respect to the interest assigned in excess of those payable by
the Company with respect to such interest prior to such
assignment;
(iii) paid to the Agent for the account of the Agent
a processing fee of $2,500; and
(iv) provided to the Agent evidence reasonably
satisfactory to the Agent that the assigning Bank has complied
with the provisions of the last sentence of Section 12.6.
Upon receipt of the foregoing items and the consents of the Company and the
Agent, (x) the Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee, such Assignee shall have the rights and
obligations of a Bank hereunder and under the other instruments and documents
executed in connection herewith and (y) the assigning Bank, to the extent that
rights and obligations hereunder have been assigned and delegated by it, shall
be released from its obligations hereunder. The Agent may from time to time (and
upon the request of the Company or any Bank after any change therein shall)
distribute a revised Schedule I indicating any changes in the Banks party hereto
or the respective Percentages of such Banks. Within five Business Days after the
Company's receipt of notice from the Agent of the effectiveness of any such
assignment and delegation, the Company shall execute and deliver to the Agent
(for delivery to the relevant Assignee) new Notes in favor of such Assignee and,
if the assigning Bank has retained Loans and a Commitment hereunder, replacement
Notes in favor of the assigning Bank (such Notes to be in exchange for, but not
in payment of, the Notes previously held by such assigning Bank). Each such Note
shall be dated the date of the predecessor Notes. The assigning Bank shall
promptly mark the predecessor Notes "exchanged" and deliver them to the Company.
Any attempted assignment and delegation not made in accordance with this Section
13.4.1 shall be null and void.
The foregoing consent requirement shall not be applicable in
the case of, and this Section 13.4.1 shall not restrict, any assignment or other
transfer by any Bank of all or any portion of such Bank's Loans to any Federal
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Reserve Bank; provided that such Federal Reserve Bank shall not be considered a
"Bank" for purposes of this Agreement.
Section 13.4.2. Participations. Any Bank may at any time sell
to one or more commercial banks or other Persons (any such commercial bank or
other Person being herein called a "Participant") participating interests in any
of its Loans, its Commitment or any other interest of such Bank hereunder;
provided, however, that
(a) no participation contemplated in this Section 13.4.2 shall
relieve such Bank from its Commitment or its other obligations
hereunder;
(b) such Bank shall remain solely responsible for the
performance of its Commitment and such other obligations hereunder and
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Company hereunder, including the right to approve
any amendment, modification or waiver of any provision of this
Agreement (subject to Section 13.4.2(d) below);
(c) the Company and the Agent shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement;
(d) no Participant, unless such Participant is an affiliate of
such Bank, or is itself a Bank, shall be entitled to require such Bank
to take or refrain from taking any action hereunder, except that such
Bank may agree with any Participant that such Bank will not, without
such Participant's consent, take any actions of the type described in
the third sentence of Section 13.1;
(e) the Company shall not be required to pay any amount under
Sections 4.1, 6.4 or 7.1 that is greater than the amount which the
Company would have been required to pay had no participating interest
been sold;
(f) no Participant may further participate any interest in any
Committed Loan (and each participation agreement shall contain a
restriction to such effect). The Company acknowledges and agrees that,
to the extent permitted by applicable law, each Participant shall be
considered a Bank for purposes of Sections 7.1, 7.4, 13.5 and 13.6, and
by its acceptance of a participation herein, each Participant agrees to
be bound by the
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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.
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,
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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 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 17 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 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
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by Section 6.4, (ii) on account of which the Company is required to pay any
additional amounts, as contemplated by Section 7.1, (iii) for which it is
illegal to make a LIBOR Rate Loan, as contemplated by Section 7.3 or (iv) which
has declined to extend such Bank's scheduled Termination Date and Banks with an
aggregate Percentage in excess of 75% have elected to extend their respective
Termination Dates, the Company may in its discretion, upon not less than 30
days' prior written notice to the Agent and each Bank, remove such Bank as a
party hereto. Each such notice shall specify the date of such removal (which
shall be a Business Day and, if such Bank has any outstanding Bid Loans, shall
(unless otherwise agreed by such Bank) be on or after the last day of the Loan
Period for the Bid Loan of such Bank having the latest maturity date), which
shall thereupon become the scheduled Termination Date for such Bank.
(c) In the event that any Bank does not extend its scheduled
Termination Date pursuant to subsection (a) above or is the subject of a notice
of removal pursuant to subsection (b) above, then, at any time prior to the
Termination Date for such Bank (a "Terminating Bank"), the Company may, at its
option, arrange to have one or more other commercial banks or financial
institutions (which may be a Bank or Banks and each of which shall herein be
called a "Successor Bank") succeed to all or a percentage of the Terminating
Bank's outstanding Loans, if any, and rights under this Agreement and assume all
or a like percentage (as the case may be) of such Terminating Bank's undertaking
to make Loans pursuant hereto and other obligations hereunder (as if (i) in the
case of any Bank electing not to extend its scheduled Termination Date pursuant
to subsection (a) above, such Successor Bank had extended its scheduled
Termination Date pursuant to such subsection (a) and (ii) in the case of any
Bank that is the subject of a notice of removal pursuant to subsection (b)
above, no such notice of removal had been given by the Company). Such succession
and assumption shall be effected by means of one or more agreements supplemental
to this Agreement among the Terminating Bank, the Successor Bank, the Company
and the Agent. On and as of the effective date of each such supplemental
agreement, each Successor Bank party thereto shall be and become a Bank for all
purposes of this Agreement and to the same extent as any other Bank hereunder
and shall be bound by and entitled to the benefits of this Agreement in the same
manner as any other Bank.
(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
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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, payment of such Terminating Bank's Loans
shall be postponed to (and, for the purposes of calculating facility fees under
Section 4.4 and determining the Required Banks (except as provided below), but
for no other purpose, such Termination Bank's Commitment shall continue until)
the first Business Day thereafter on which (i) no Event of Default or Unmatured
Event of Default exists (without regard to any waiver or amendment that makes
this Agreement less restrictive for the Company, other than as described in
clause (ii) below) or (ii) the Required Banks (which for purposes of this
subsection (d) shall be determined based upon the respective Percentages and
aggregate Commitments of all Banks other than any Terminating Bank whose
scheduled Termination Date has been extended pursuant to this proviso) waive or
amend the provisions of this Agreement to cure all existing Events of Default or
Unmatured Events of Default or agree to permit any borrowing hereunder
notwithstanding the existence of any such event. In the event that UBS shall
become a Terminating Bank, the Required Banks with the consent of the Company
(which consent shall not be unreasonably withheld) shall appoint another Bank or
other Person as Agent, which shall have all of the rights and obligations of the
Agent upon the effective date of and pursuant to an agreement supplemental
hereto among the Company and the Banks, and thereupon UBS, as Agent, shall be
relieved from its obligations as Agent hereunder, it being understood that the
provisions of Section 12 shall inure to the benefit of UBS as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement. If
no such successor Agent shall be appointed within 30 days of the Termination
Date of the Agent, then the Agent shall, on behalf of the Banks, appoint a
successor Agent in accordance with the provisions set forth in Section 12.8 for
a resigning Agent.
(e) To the extent that all or a portion of any 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.
-61-
<PAGE> 67
(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 NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES. All obligations of the Company and the rights of the Agent, the
Banks and any other holders of the Notes expressed herein or in the Notes shall
be in addition to and not in limitation of those provided by applicable law.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
Section 13.11. Counterparts; Effectiveness. This Agreement may
be executed in any number of counterparts and by the different parties on
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Agreement. When counterparts of this Agreement executed by each party shall
have been lodged with the Agent (or, in the case of any Bank as to which an
executed counterpart shall not have been so lodged, the Agent shall have
received telegraphic, telex or other written confirmation of execution of a
counterpart hereof by such Bank), this Agreement shall become effective as of
the date hereof and the Agent shall so inform all of the parties hereto.
Section 13.12. Further Assurances. The Company agrees to do
such other acts and things, and to deliver to the Agent and each Bank such
additional agreements, powers and instruments, as the Agent or any Bank may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to better assure and confirm unto the Agent and each Bank their
respective rights, powers and remedies hereunder.
-62-
<PAGE> 68
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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement 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
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: Pamela S. Hendry
Telephone: (310) 788-1999
Facsimile: (310) 788-1990
Telex: 69-1400 INTERLEAS BVHL
-63-
<PAGE> 69
Agent: UNION BANK OF SWITZERLAND,
acting through its New York
Branch, in its individual
corporate capacity and as
Agent
By: /s/ Robert Mendeles
---------------------------------
Name: Robert Mendeles
Title: Vice President
By: /s/ Didier Magloire
---------------------------------
Name: Didier Magloire
Title: Vice President
299 Park Avenue
New York, New York 10171-0026
Attention: Robert Mendeles
Telephone: (212) 821-3020
Facsimile: (212) 821-4541
Telex: 426239 Answerback UI
Managing Agents: THE CHASE MANHATTAN BANK
By: /s/ Richard C. Smith
---------------------------------
Name: Richard C. Smith
Title: Vice President
One Chase Manhattan Plaza
New York, New York 10081
Attention: Sherwood E. Exum, Jr.
Telephone: (212) 552-4655
Facsimile: (212) 552-5879
Telex: 62910
-64-
<PAGE> 70
COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By: /s/ Christian Jagenburg
-------------------------------------
Name: Christian Jagenburg
Title: SVP and Manager
By: /s/ W. Schmidbauer
-------------------------------------
Name: Werner Schmidbauer
Title: Vice President
660 South Figueroa Street
Suite 1450
Los Angeles, California 90017
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
THE FUJI BANK, LIMITED
By: /s/ N. Umemura
-------------------------------------
Name: Nobuhiro Umemura
Title: Joint General Manager
333 South Hope Street
Suite 3900
Los Angeles, California 90071
Attention: Yoshizumi Takata
Telephone: (213) 253-4176
Facsimile: (213) 253-4198
ROYAL BANK OF CANADA
By: /s/ Michael J. Madnick
-------------------------------------
Name: Michael Madnick
Title: Manager
1 Financial Square
Corporate Banking East, U.S.A.
New York, New York 10005-3531
Attention: D.G. Calancie
Telephone: (212) 428-6445
Facsimile: (212) 428-6459
-65-
<PAGE> 71
THE SAKURA BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Ofusa Sato
-------------------------------------
Name: Ofusa Sato
Title: Senior Vice President &
Assistant General Manager
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
SOCIETE GENERALE
By: /s/ Maureen Kelly
-------------------------------------
Name: Maureen E. 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
-66-
<PAGE> 72
THE BANK OF NOVA SCOTIA
By: /s/ A. Pendergast
-------------------------------------
Name: A. W. Pendergast
Title: RM
580 California Street
21st Floor
San Francisco, California 94104
Attention: Alan Pendergast
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
Telex: 00340602
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ Michael C. Irwin
-------------------------------------
Name: Michael C. Irwin
Title: Vice President
1251 Avenue of the Americas
New York, New York 10116-3138
Attention: Michael Irwin
Telephone: (212) 782-4316
Facsimile: (212) 782-6445
Co-Agents: DRESDNER BANK AG, NEW YORK
& GRAND CAYMAN BRANCH
By: /s/ Thomas J. Nadramia
-------------------------------------
Name: Thomas J. Nadramia
Title: Vice President
By: /s/ Brigitte Sacin
-------------------------------------
Name: Brigitte Sacin
Title: Assistant Treasurer
725 South Figueroa Street
Suite 3950
Los Angeles, California 90017-5439
Attention: Barbara J. Readick
Telephone: (213) 473-5400
Facsimile: (213) 473-5450
Telex: 4720286
-67-
<PAGE> 73
THE BANK OF NEW YORK
By: /s/ Jonathan Rollins
-------------------------------------
Name: Jonathan Rollins
Title: Assistant Vice President
10990 Wilshire Boulevard
Suite 1125
Los Angeles, California 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
Lead Managers: 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
-68-
<PAGE> 74
BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT,
CAYMAN ISLANDS BRANCH
By: /s/ Wolfgang Haugk
-------------------------------------
Name: Wolfgang Haugk
Title: First Vice President
By: /s/ Thomas A. Lowe
-------------------------------------
Name: Assistant Vice President
Title:
Financial Square
32 Old Slip, 32nd Floor
New York, New York 10005
Attention: Thomas Lowe
Telephone: (212) 440-0789
Facsimile: (212) 440-0741
Telex: 175850
THE SANWA BANK, LIMITED
By: /s/ Stephen C. Small
-------------------------------------
Name: Stephen C. Small
Title: Vice President & Area
Manager
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Stephen C. Small
Telephone: (212) 339-6201
Facsimile: (212) 754-1304
Telex: 232423 RCA
-69-
<PAGE> 75
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: /s/ Raymond K. Miller
-------------------------------------
Name: Raymond K. Miller
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: DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ Robert M. Wood, Jr.
-------------------------------------
Name: Robert M. Wood, Jr.
Title: Vice President
By: /s/ Angela Bozorgmir
-------------------------------------
Name: Angela Bozorgmir
Title: Assistant Vice President
31 W. 52nd Street
New York, New York 10019
Attention: Robert Landis
Telephone: (212) 469-8214
Facsimile: (212) 469-8212
-70-
<PAGE> 76
THE ASAHI BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Muneo Nishimura
-------------------------------------
Name: Muneo Nishimura
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
BANCA COMMERCIALE ITALIANA,
LOS ANGELES FOREIGN BRANCH
By: /s/ Richard E. Iwanicki
-------------------------------------
Name: Richard E. Iwanicki
Title: Vice President
By: /s/ Moufid Hanna
-------------------------------------
Name: Moufid Hanna
Title: Assistant Vice President
555 So. Flower Street, 43rd Flr.
Los Angeles, California 90071
Attention: Rick Iwanicki
Telephone: (213) 624-0440
Facsimile: (213) 624-0457
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By: /s/ Wilfried Freudenberger
-------------------------------------
Name: Wilfried Freudenberger
Title: Executive Vice President &
General Manager
By: /s/ Peter Obermann
-------------------------------------
Name: Peter Obermann
Title: Senior Vice President
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
-71-
<PAGE> 77
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Masatsugu Morishita
-------------------------------------
Name: Masatsugu Morishita
Title: Sr. Vice President & 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
WELLS FARGO BANK
By: /s/ Anthony J. Xinis
-------------------------------------
Name: Anthony J. Xinis
Title: Senior Vice President
707 Wilshire Blvd.
U.S. Bank - 16th Flr.
Los Angeles, California 90017
Attention: Anthony J. Xinis
Facsimile: (213) 614-2569
Telex:
Participants: BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: /s/ Giuliano Violetta
-------------------------------------
Name: Giuliano Violetta
Title: First Vice President
By: /s/ Giulio Giovine
-------------------------------------
Name: Giulio Giovine
Title: Vice President
25 West 51st Street
New York, New York 10019
Attention: Miguel J. Medida
Telephone: (212) 314-0263
Facsimile: (212) 765-2978
Telex: 62840
-72-
<PAGE> 78
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: /s/ Robert S. Wurster
-------------------------------------
Name: Robert S. Wurster
Title: First Vice President
By: /s/ William J. De Angelo
-------------------------------------
Name: William J. De Angelo
Title: First Vice President
444 South Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Donald W. Brown
Telephone: (213) 489-3105
Facsimile: (213) 622-2514
Telex: 220045
BANQUE NATIONALE DE PARIS
By: /s/ C. Bettles
-------------------------------------
Name: C. Bettles
Title: Sr. V.P. & Manager
By: /s/ Tjalling Terpstra
-------------------------------------
Name: Tjalling Terpstra
Title: V.P.
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attention: Tjalling Terpstra
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
Telex: 6734168 BNPLA
-73-
<PAGE> 79
BANK OF HAWAII
By: /s/ J. L. Hall
-------------------------------------
Name: J. Lawrence Hall
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: J. Lawrence Hall
Telephone: (808) 537-8433
Facsimile: (808) 537-8301
Telex: 7238434
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: /s/ Gonzalo Innerarity
-------------------------------------
Name: Gonzalo Innerarity
Title: S.V.P. and General Manager
100 Pine Street, Suite 2950
San Francisco, California 94111
Attention: Fernando Laseca
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 470598 CENT SF
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, NY BRANCH
By: /s/ Margaret Holloway
-------------------------------------
Name: Margaret Holloway
Title: Vice President & Manager
1 World Financial Center
21st Flr., 200 Liberty Street
New York, N.Y. 10281
Attention: Margaret Holloway
Telephone: (212) 341-0300
Facsimile: (212) 945-4170
-74-
<PAGE> 80
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: /s/ Masahiko Saito
-------------------------------------
Name: Masahiko Saito
Title: Asst. General Manager
300 South Grand Avenue
Los Angeles, CA 90071
Attention: Kenji Oshigane
Telephone: (213) 972-0200,
ext. 8451
Facsimile: (213) 689-3200
FIRST HAWAIIAN BANK
By: /s/ Robert M. Wheeler, III
-------------------------------------
Name: Robert M. Wheeler, III
Title: Vice President
999 Bishop Street
11th Floor
Honolulu, Hawaii 96813
Attention: Robert M. Wheeler, III
Telephone: (808) 525-6367
Facsimile: (808) 525-8708
Telex: 7238329
BARCLAYS BANK PLC
By: /s/ Kathryn A. Cochrane
-------------------------------------
Name: Kathryn A. Cochrane
Title: Associate Director
222 Broadway
New York, New York 10038
Attention: Kathryn A. Cochrane
Telephone: (212) 412-7630
Facsimile: (212) 412-5610
-75-
<PAGE> 81
CIBC, INC.
By: /s/ Brian E. O'Callahan
-------------------------------------
Name: Brian E. O'Callahan,
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
425 Lexington Avenue
New York, New York 10017
Attention: Gregor Dannacher
Telephone: (212) 856-4131
Facsimile: (212) 856-3991
CITICORP USA, INC.
By: /s/ Stephen P. Zwick
-------------------------------------
Name: Stephen P. Zwick
Title: V.P.
399 Park Avenue
12th Floor
New York, New York 10043
Attention: Peter Bickford
Telephone: (212) 559-8146
Facsimile: (212) 935-4285
COMERICA BANK
By: /s/ Dirk Price
-------------------------------------
1920 Main Street, Suite 1150
Irvine, California 92714
Attention: Dirk A. Price
Telephone: (714) 476-1933
Facsimile: (714) 476-1222
-76-
<PAGE> 82
KREDIETBANK NV
By: /s/ R. Snauffer
-------------------------------------
Name: Robert Snauffer
Title: Vice President
By: /s/ Tod R. Angus
-------------------------------------
Name: Tod R. Angus
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Luc Cools
Telephone: (213) 624-0401
Facsimile: (213) 629-5801
Attention: Robert Snauffer - NY
Telephone: (212) 541-0700
Facsimile: (212) 956-5580
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Kirk Seagers
-------------------------------------
Name: Kirk Seagers
Title: Assistant Vice President
1600 Market Street
21st Floor
Philadelphia, PA 19103
Attention: Kirk Seagers
Telephone: (215) 585-6036
Facsimile: (215) 585-7615
-77-
<PAGE> 83
STANDARD CHARTERED BANK
By: /s/ Paul S. Knox
-------------------------------------
Name: Paul S. Knox
Title: Sr. Vice President
7 World Trade Center
New York, New York 10048
Attention: Paul S. Knox
Telephone: (212) 667-0493
Facsimile: (212) 667-0251
Telex: 420117
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ T. Iyoda
-------------------------------------
Name: Toshinari Iyoda
Title: Senior Vice President &
Senior Manager
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Craig Papayanis
Telephone: (213) 893-6441
Facsimile: (213) 488-9840
Telex: 6831123
THE TOYO TRUST & BANKING CO., LTD.,
LOS ANGELES AGENCY
By: /s/ K. 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
-78-
<PAGE> 84
UNIBANK A/S
By: /s/ Kevin J. Foran
-------------------------------------
Name: Kevin J. Foran
Title: Assistant Vice President
By: /s/ Meryl L. Feiner
-------------------------------------
Name: Meryl L. Feiner
Title: Assistant Vice President
13-15 West 54th Street
New York, New York 10019
Attention: Kevin J. Foran
Telephone: (212) 603-6924
Facsimile: (212) 603-1685
Telex: 668776
THE YASUDA TRUST & BANKING CO.,
LTD.
By: /s/ M. Tagawa
-------------------------------------
Name: Makota Tagawa
Title: Deputy General Manager
725 S. Figueroa St., Suite 3990
Los Angeles, California 90017
Attention: Donovan E. Reiner
Telephone: (213) 688-4246
Facsimile: (213) 488-1695
-79-
<PAGE> 85
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
-80-
<PAGE> 86
SCHEDULE I
SCHEDULE OF BANKS
<TABLE>
<CAPTION>
Bank Commitment
- ---- ----------
(in millions)
<S> <C>
Union Bank of Switzerland................................. $ 80.000
The Chase Manhattan Bank.................................. 71.375
Commerzbank Aktiengesellschaft............................ 58.000
The Fuji Bank, Limited.................................... 58.000
Royal Bank of Canada...................................... 58.000
The Sakura Bank, Ltd...................................... 58.000
Societe Generale.......................................... 58.000
The Bank of Nova Scotia................................... 58.000
Bank of Tokyo - Mitsubishi Trust Company ................. 58.000
Dresdner Bank AG.......................................... 50.000
The Bank of New York...................................... 50.000
DG Bank Deutsche Genossenschaftsbank...................... 37.500
Bayerische Hypotheken-und Wechsel-Bank
Aktiengesellschaft....................................... 37.500
The Sanwa Bank, Limited................................... 37.500
Westdeutsche Landesbank Girozentrale...................... 37.500
Deutsche Bank AG.......................................... 29.500
The Asahi Bank, Ltd. ..................................... 25.000
Banca Commerciale Italiana................................ 25.000
Bayerische Landesbank Girozentrale........................ 25.000
The Dai-Ichi Kangyo Bank, Ltd............................. 25.000
Wells Fargo............................................... 25.000
Banca Nazionale del Lavoro, S.p.A......................... 20.000
Banco de Napoli........................................... 20.000
Istituto Bancario San Paolo di Torino S.p.A............... 18.750
Banque Nationale de Paris................................. 17.500
Bank of Hawaii............................................ 15.625
Banco Central Hispanoamericano............................ 15.000
The Mitsui Trust & Banking Company, Limited............... 15.000
The Tokai Bank, Ltd....................................... 15.000
First Hawaiian Bank....................................... 13.750
Barclays Bank PLC......................................... 12.500
CIBC, Inc................................................. 12.500
Citicorp USA, Inc. ....................................... 12.500
Comerica Bank. ........................................... 12.500
Kredietbank NV............................................ 12.500
PNC Bank, National Association............................ 12.500
Standard Chartered........................................ 12.500
The Industrial Bank of Japan, Limited..................... 12.500
The Toyo Trust & Banking Co., Ltd......................... 12.500
Unibank A/S............................................... 12.500
The Yasuda Trust & Banking Co., Ltd....................... 12.500
</TABLE>
<PAGE> 87
SCHEDULE II
FEES AND MARGINS
(IN BASIS POINTS)
<TABLE>
<CAPTION>
==============================================================================================================================
SENIOR UNSECURED Aa2/AA A1/A+ A2/A(1) A3/A-(1) Baa2/BBB Baa3/BBB-
LONG-TERM or or or higher(1) or below(1)
DEBT RATINGS higher(1) higher(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Facility Fee 6.5 8.0 8.5 9.0 12.5 15.0
- ------------------------------------------------------------------------------------------------------------------------------
Margins:
LIBOR 11.0 12.0 14.0 16.0 18.75 25.0
Base -- -- -- -- -- --
-------------------------------------------------------------------------------------------------
Competitive Bid Option As Bid by the Banks
- ------------------------------------------------------------------------------------------------------------------------------
All-In Drawn
LIBOR Margins 17.5 20.0 22.5 25.0 31.25 40.0
==============================================================================================================================
</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 Senior 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 higher
rating shall apply.
<PAGE> 88
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 17, 1997 (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> 89
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> 90
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 17, 1997 (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> 91
<TABLE>
<CAPTION>
(a) Loan Period of days months
- --------------------------------------------------------------------------------
Principal Amount Interest Rate or
Minimum Maximum LIBOR +/- Margin
- --------------------------------------------------------------------------------
<C> <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> 92
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
17, 1997 (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]
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> 93
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> 94
Exhibit D
FORM OF BID NOTE
$1,250,000,000 January __, 1997
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, 2002, 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 17, 1997, 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> 95
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 New York, 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> 96
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> 97
Exhibit E
FORM OF COMMITTED NOTE
$_______________ January __, 1997
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, 2002, 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 17, 1997, 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 and LIBOR Rate
Loans (as defined in the Credit Agreement), as the case may be.
Except as otherwise provided in the Credit Agreement with
respect to LIBOR Rate Loans, if interest or principal on any loan evidenced by
this Note becomes due and payable on a day which is not a Business Day (as
defined in the Credit Agreement) the maturity thereof shall be extended
E-1
<PAGE> 98
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 New York, 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> 99
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> 100
Exhibit F
FIXED CHARGE COVERAGE RATIO*
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
12 Months Ended
September 30, 1996
(Dollars in thousands)
--------------------------------------
<S> <C>
Earnings
Net Income .......................... $219,606
Add:
Provision for income taxes ....... 162,446
Fixed charges .................... 625,708
Less:
Capitalized interest ............. 49,596
------------
Earnings as adjusted (A) ............ $958,165
============
Preferred dividend requirements ..... $ 16,040
Ratio of income before provision for
income taxes to net income ..... 169%
------------
Preferred dividend factor on
pretax basis ..................... 27,097
Fixed charges
Interest expense ................. 570,345
Capitalized interest ............. 49,596
Estimate of minimum rents under
operating leases representing the
interest factor .................... 5,767
Fixed charges as adjusted ........... 625,708
------------
Fixed charges and preferred
stock dividends (B) .............. $652,805
============
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))* ............................ 1.47 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> 101
Exhibit G
January __, 1997
To the Financial Institutions and
the Agent Referred to Below
c/o Union Bank of Switzerland
299 Park Avenue
New York, New York 10171-0026
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 $1,250,000,000 364-Day Revolving Credit
Agreement, in each case dated as of January 17, 1997 among the Company, Union
Bank of Switzerland acting through its New York 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> 102
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 New York.
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> 103
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> 104
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> 105
Exhibit H
January __, 1997
To the Financial Institutions and
the Agent Referred to Below
c/o Union Bank of Switzerland
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
I am General Counsel for International Lease Finance
Corporation (the "Company") and am rendering this opinion in connection with a
$1,250,000,000 364-Day Revolving Credit Agreement and a $1,250,000,000 Revolving
Credit Agreement, in each case dated as of January 17, 1997 among the Company,
Union Bank of Switzerland acting through its New York Branch, in its individual
capacity and as Agent, and certain financial institutions ("Banks") signatory
thereto (collectively, the "Credit Agreement"). Terms defined in the Credit
Agreement are used herein as therein defined.
I have examined originals, or copies certified or otherwise
identified to my satisfaction as being true copies, of such documents, corporate
records, certificates of public officials and other instruments and have
conducted such other investigations of fact and law as I have deemed necessary
or advisable for purposes of this opinion. I am opining herein as to the effect
on the subject transactions of only United States federal law and the laws of
the State of California.
Upon the basis of the foregoing, I am of the opinion that:
1. The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
the ownership or leasing of its property or the conduct of its business requires
it to be so qualified; provided, however, that the Company may not be so
qualified in certain jurisdictions, the effect of which would not have a
Material Adverse Effect on the Company.
2. To the best of my knowledge, Interlease Aviation
Corporation, ILFC Aircraft Holding Corporation, Interlease Management
Corporation, Aircraft SPC-1, Inc., Aircraft SPC-2, Inc. and Atlantic
International Aviation Holdings, Inc., a wholly
H-1
<PAGE> 106
The Banks and the Agent -2-
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> 107
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 17, 1997 (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> 108
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> 109
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 New York.
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> 110
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> 111
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 17, 1997 (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> 112
(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:
J-2
<PAGE> 1
EXHIBIT 10.3
$1,250,000,000 364-DAY REVOLVING CREDIT AGREEMENT
DATED AS OF
JANUARY 17, 1997
AMONG
INTERNATIONAL LEASE FINANCE CORPORATION
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
AND
THE OTHER BANKS (AS DEFINED HEREIN)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. CERTAIN DEFINITIONS.............................................. 1
Section 1.1. Terms Generally....................................... 1
Section 1.2. Specific Terms........................................ 1
SECTION 2. BID LOANS AND BID NOTES.......................................... 13
Section 2.1. Making of Bid Loans................................... 13
Section 2.2. Procedure for Bid Loans............................... 13
Section 2.3. Funding of Bid Loans.................................. 16
Section 2.4. Bid Notes............................................. 16
SECTION 3. COMMITTED LOANS AND NOTES........................................ 17
Section 3.1. Agreement to Make Committed Loans..................... 17
Section 3.2. Procedure for Committed Loans......................... 17
Section 3.3. Maturity of Committed Loans........................... 19
Section 3.4. Committed Notes....................................... 19
SECTION 4. INTEREST AND FEES................................................ 19
Section 4.1. Interest Rates........................................ 19
Section 4.2. Interest Payment Dates................................ 20
Section 4.3. Setting and Notice of Committed Loan
Rates................................... 20
Section 4.4. Facility Fee.......................................... 21
Section 4.5. Agent's Fees.......................................... 21
Section 4.6. Computation of Interest and Fees...................... 22
SECTION 5. REDUCTION OR TERMINATION OF THE
COMMITMENTS; PREPAYMENTS................................... 22
Section 5.1. Voluntary Termination or Reduction
of the Commitments...................... 22
Section 5.2. Voluntary Prepayments................................. 22
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF;
TAXES...................................................... 23
Section 6.1. Making of Payments.................................... 23
Section 6.2. Pro Rata Treatment; Sharing........................... 23
Section 6.3. Set-off............................................... 24
Section 6.4. Taxes, etc............................................ 25
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR
ABSOLUTE RATE LOANS AND LIBOR RATE LOANS................... 26
Section 7.1. Increased Costs....................................... 26
Section 7.2. Basis for Determining Interest Rate
Inadequate or Unfair.................... 28
Section 7.3. Changes in Law Rendering Certain
Loans Unlawful.......................... 29
Section 7.4. Funding Losses........................................ 29
Section 7.5. Discretion of Banks as to Manner of
</TABLE>
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Funding................................. 30
Section 7.6. Conclusiveness of Statements;
Survival of Provisions.................. 30
SECTION 8. REPRESENTATIONS AND WARRANTIES................................... 30
Section 8.1. Organization, etc..................................... 30
Section 8.2. Authorization; Consents; No
Conflict................................ 31
Section 8.3. Validity and Binding Nature........................... 31
Section 8.4. Financial Statements.................................. 31
Section 8.5. Litigation and Contingent
Liabilities............................. 32
Section 8.6. Employee Benefit Plans................................ 32
Section 8.7. Investment Company Act................................ 32
Section 8.8. Public Utility Holding Company Act.................... 32
Section 8.9. Regulation U.......................................... 33
Section 8.10. Information........................................... 33
Section 8.11. Compliance with Applicable Laws,
etc..................................... 33
Section 8.12. Insurance............................................. 33
Section 8.13. Taxes................................................. 34
Section 8.14. Use of Proceeds....................................... 34
Section 8.15. Pari Passu............................................ 34
Section 8.16. Ownership and Liens................................... 34
SECTION 9. COVENANTS........................................................ 34
Section 9.1. Reports, Certificates and Other
Information............................. 35
Section 9.2. Existence............................................. 37
Section 9.3. Nature of Business.................................... 37
Section 9.4. Books, Records and Access............................. 37
Section 9.5. Insurance............................................. 37
Section 9.6. Repair................................................ 37
Section 9.7. Taxes................................................. 38
Section 9.8. Compliance............................................ 38
Section 9.9. Sale of Assets........................................ 38
Section 9.10. Consolidated Indebtedness to
Consolidated Tangible Net Worth Ratio... 38
Section 9.11. Fixed Charge Coverage Ratio........................... 39
Section 9.12. Consolidated Tangible Net Worth....................... 39
Section 9.13. Restricted Payments................................... 39
Section 9.14. Liens................................................ 39
Section 9.15. Leases............................................... 42
Section 9.16. Use of Proceeds...................................... 42
SECTION 10. CONDITIONS TO LENDING........................................... 43
Section 10.1. Conditions Precedent to All Loans.................... 43
Section 10.2. Conditions to the Availability of
the Commitments......................... 44
</TABLE>
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SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT.............................. 45
Section 11.1. Events of Default.................................... 45
Section 11.2. Effect of Event of Default........................... 48
SECTION 12. THE AGENT....................................................... 48
Section 12.1. Authorization........................................ 48
Section 12.2. Indemnification...................................... 48
Section 12.3. Action on Instructions of the
Required Banks.......................... 49
Section 12.4. Payments............................................. 49
Section 12.5. Exculpation.......................................... 51
Section 12.6. Credit Investigation................................. 51
Section 12.7. UBS and Affiliates................................... 52
Section 12.8. Resignation.......................................... 52
SECTION 13. GENERAL......................................................... 53
Section 13.1. Waiver; Amendments................................... 53
Section 13.2. Notices.............................................. 53
Section 13.3. Computations......................................... 54
Section 13.4. Assignments; Participations.......................... 54
Section 13.5. Costs, Expenses and Taxes............................ 57
Section 13.6. Indemnification...................................... 58
Section 13.7. Regulation U......................................... 59
Section 13.8. Extension of Termination Dates;
Removal of Banks; Substitution of
Banks................................... 59
Section 13.9. Captions............................................. 62
Section 13.10. Governing Law; Severability.......................... 62
Section 13.11. Counterparts; Effectiveness.......................... 62
Section 13.12. Further Assurances................................... 62
Section 13.13. Successors and Assigns............................... 62
Section 13.14. Waiver of Jury Trial................................. 63
</TABLE>
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<PAGE> 5
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)
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<PAGE> 6
364-Day REVOLVING CREDIT AGREEMENT
364-DAY REVOLVING CREDIT AGREEMENT (this "Agreement"), dated
as of January 17, 1997, 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 New York
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 364 day 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> 7
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.
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
-2-
<PAGE> 8
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, 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.
-3-
<PAGE> 9
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 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.
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<PAGE> 10
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.
Federal Funds Rate means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any successor
publication, published by the Board of Governors of the Federal Reserve System
(including any such successor publication, "H.15(519)") for such day opposite
the caption "Federal Funds (Effective)". If on any relevant day such rate is not
yet published in H.15(519), the rate for such day will be the rate set forth in
the daily statistical release designated as the Composite 3:30 p.m. Quotations
for U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day the appropriate rate for such day is not
yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the
rate for such day will be the arithmetic mean of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m., New York
City time, on such day
-5-
<PAGE> 11
by each of three leading brokers of Federal funds transactions in New York City,
selected by the Agent. The rate for any day which is not a Business Day shall be
the rate for the immediately preceding Business Day.
Fixed Charge Coverage Ratio on the last day of any quarter of
any fiscal year of the Company means the ratio for the period of four fiscal
quarters ending on such day of earnings to combined fixed charges and preferred
stock dividends referred to in Paragraph (d)(1)(i) of Item 503 of Regulation S-K
of the Securities and Exchange Commission, as amended from time to time, and
determined pursuant to Paragraphs (d)(2) through (d)(10) of such Item 503 with
the Company as "registrant" (such ratio for the four fiscal quarters ended
September 30, 1996 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
-6-
<PAGE> 12
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,
(c) obligations created or arising under any conditional sale,
or other title retention agreement with respect to property acquired by
such Person,
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<PAGE> 13
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.
LIBOR Rate Loan means any Loan which bears interest at a LIBOR
Rate.
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<PAGE> 14
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 and (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; 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.
Material Adverse Effect means (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
-9-
<PAGE> 15
adverse effect on the ability of the Company to perform its obligations
hereunder and under the Notes or (iii) any material adverse effect on the
legality, validity, binding effect or enforceability of this Agreement or any
Note.
Multiemployer Plan has the meaning assigned to such term in
section 3(37) of ERISA.
New Litigation - see Section 10.1.3.
Notes means, collectively, the Bid Notes and the Committed
Notes; and Note means any individual Bid Note or Committed Note.
Notice of Competitive Bid Borrowing - see Section 2.2(a).
Notice Office means the New York Branch of UBS which, as of
the date hereof, is 299 Park Avenue, New York, New York 10071-0026, Attn: James
Broadus, Telecopy Number (212) 821-3259; Telephone (212) 821-3227.
Operating Lease means any lease other than a Capitalized
Lease; provided, however, that leases with an original term of less than one
year shall not be Operating Leases.
Operating Lease Rental of an Operating Lease means, as of the
date of any determination thereof, the net present value of the aggregate unpaid
amount due at such date and to become due from the Company or any Subsidiary, on
a consolidated basis, as lessee under such Operating Lease discounted at such
lessee's incremental borrowing rate or if the interest rate implicit in such
Operating Lease can be practically determined and is smaller, at such interest
rate, such present value and interest rate being determined in accordance with
standard financial practice and such borrowing rate being determined in
accordance with FASB 13, excluding from such aggregate amount all amounts which
are in excess of the minimum aggregate unpaid amount due at such date and to
become due from such lessee under such Operating Lease assuming that such lessee
would take or fail to take all actions with respect to all termination, renewal,
purchase and other options as would produce the least amount becoming due under
such Operating Lease, and "Operating Lease Rentals" means, as of the date of any
determination, the aggregate Operating Lease Rental of all Operating Leases as
of such date.
Participant - see Section 13.4.2.
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<PAGE> 16
Payment Office means the office of the Agent 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.
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 UBS as its prime commercial lending rate.
Reference Banks means UBS, The Bank of Nova Scotia,
Commerzbank AG and The Bank of New York.
Reportable Event has the meaning assigned to such term in
section 4043 of ERISA.
Required Banks means Banks having an aggregate Percentage of
51% or more.
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.
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<PAGE> 17
Submission Deadline - see Section 2.2(b).
Subsidiary means any Person of which or in which the Company
and its other Subsidiaries own directly or indirectly 50% or more of:
(a) the combined voting power of all classes of stock having
general voting power under ordinary circumstances to elect a majority
of the board of directors of such Person, if it is a corporation,
(b) the capital interest or profits interest of such Person,
if it is a partnership, joint venture or similar entity, or
(c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization;
provided, however, that so long as (i) the Company continues to own not more
than 50% of Pacific Ocean Leasing, Ltd., and (ii) Pacific Ocean Leasing, Ltd.
does not materially alter the manner in which it conducts the business in which
it is currently engaged, Pacific Ocean Leasing, Ltd. shall not be considered a
Subsidiary within the foregoing definition for purposes of this Agreement.
Successor Bank - see Section 13.8(c).
Taxes with respect to any Person means income, excise and
other taxes, and all assessments, imposts, duties and other governmental charges
or levies, imposed upon such Person, its income or any of its properties,
franchises or assets by any Governmental Authority.
Terminating Bank - see Section 13.8(c).
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.
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Unmatured Event of Default means any event which if it
continues uncured will, with lapse of time or notice or lapse of time and
notice, constitute an Event of Default.
Wholly-owned Subsidiary means any Person of which or in which
the Company and its other Wholly-owned Subsidiaries own directly or indirectly
100% of:
(a) the issued and outstanding shares of stock (except shares
required as directors' qualifying shares),
(b) the capital interest or profits interest of such Person,
if it is a partnership, joint venture or similar entity, or
(c) the beneficial interest of such Person, if it is a trust,
association or other unincorporated organization.
SECTION 2. BID LOANS AND BID NOTES.
Section 2.1. Making of Bid Loans. On the terms and subject to
the conditions of this Agreement, each Bank, severally and for itself alone, may
(but is not obligated to) make Bid Loans to the Company from time to time on or
after the date hereof and prior to the date which is the fourteenth day
preceding such Bank's Termination Date in amounts equal to such Bank's Bids that
have been accepted as provided in Section 2.2(c); provided that the aggregate
principal amount of all outstanding Loans shall not at any time exceed the then
Aggregate Commitment.
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,
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(iv) the maturity date for repayment of each Bid Loan to be made as part of such
borrowing (which maturity date shall not be earlier than one month after the
date of any proposed LIBOR Rate Loan or 14 days after the date of any proposed
Absolute Rate Loan or later than the earliest to occur of (x) six months after
the date of such proposed Bid Loan, (y) the Termination Date and (z) if the
proposed Bid Loan has an interest rate that is the LIBOR Rate, the last day of
the proposed Loan Period), (v) the interest payment date or dates relating
thereto, (vi) the account of the Company to which the proceeds of such Bid
Borrowing are to be credited and (vii) any other terms to be applicable to such
Bid Borrowing. The Agent shall promptly give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each such request for a Bid
Borrowing received by it from the Company. Each Notice of Competitive Bid
Borrowing shall contemplate Bid Loans in a minimum aggregate principal amount of
$10,000,000 or a higher integral multiple of $1,000,000, not to exceed, however,
the excess of the then Aggregate Commitment over the aggregate principal amount
of all outstanding Loans, calculated as of the relevant Funding Date, assuming
that the Company will pay, when due, all Loans maturing on or prior to such
Funding Date (the "Available Commitment").
(b) Bidding Procedure. Each Bank shall, if in its sole
discretion it elects to do so, irrevocably offer to make one or more Bid Loans
to the Company as part of such proposed Bid Borrowing at a rate or rates of
interest specified by such Bank in its sole discretion and determined by such
Bank independently of each other Bank, by notifying by telephone confirmed in
writing to the Agent at its Notice Office (which shall give prompt notice
thereof to the Company), before 10:00 a.m. (New York City time) on the date (the
"Submission Deadline") that is (x) in the case of a proposed Absolute Rate Loan,
the same day as the date of such proposed Bid Loan and (y) in the case of a
proposed LIBOR Rate Loan, two Business Days before, the date of such proposed
Bid Loan, of the minimum amount and maximum amount of each Bid Loan that such
Bank would be willing to make as part of such proposed Bid Borrowing (which
amounts may, subject to the proviso in Section 2.1, exceed such Bank's
Commitment), the rate or rates of interest therefor and such Bank's lending
office with respect to such Bid Loan; provided that if the Agent in its capacity
as a Bank shall, in its sole discretion, elect to make any such offer, it shall
notify the Company of such offer before 8:30 a.m. (New York City time) on the
Submission Deadline.
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(c) Acceptance of Bids. The Company shall, in turn, before
10:30 a.m. (New York City time) on the Submission Deadline, either:
(i) cancel such proposed Bid Borrowing by giving the Agent
notice to that effect, or
(ii) accept (such acceptance to be irrevocable) one or more of
the offers made by any Bank or Banks pursuant to clause (b) above by
giving notice (in writing or by telephone confirmed in writing) to the
Agent of the amount of each Bid Loan (which amount shall be equal to or
greater than the minimum amount, and equal to or less than the maximum
amount, notified to the Company by the Agent on behalf of such Bank for
such Bid Borrowing pursuant to clause (b) above) to be made by such
Bank as part of such Bid Borrowing, and reject any remaining offers
made by any Bank pursuant to clause (b) above by giving the Agent
notice to that effect; provided that for any maturity date acceptance
of offers may only be made on the basis of ascending Absolute Rates (in
the case of an Absolute Rate Loan) or floating rates (in the case of a
LIBOR Rate Loan), in each case commencing with the lowest rate so
offered and only as to offers made in conformity with the terms hereof;
provided further, however, if offers are made by two or more Banks at
the same rate or rates and acceptance of all such equal offers would
result in a greater principal amount of Bid Loans being accepted than
the aggregate principal amount requested by the Company, the Company
shall have the right to accept one or more of such equal offers in
their entirety and reject the other equal offer or offers or to
allocate acceptance among all such equal offers (but giving effect to
the minimum and maximum amounts specified for each such offer pursuant
to clause (b) above), as the Company may elect in its sole discretion.
For the avoidance of doubt, the Company may accept offers whose
aggregate principal amount is greater than or less than the requested
aggregate amount as specified in the related Notice of Competitive Bid
Borrowing, subject to the proviso in Section 2.1.
(d) Cancellation of Bid Borrowing. If the Company notifies the
Agent that such proposed Bid Borrowing is cancelled pursuant to clause (c)(i)
above, the Agent shall give prompt notice thereof to the Banks and such Bid
Borrowing shall not be made.
(e) Notification of Acceptance. If the Company accepts one or
more of the offers made by any Bank or Banks
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<PAGE> 21
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
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<PAGE> 22
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.
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 or (ii) 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, request each Reference Bank to notify the
Agent of its applicable rate (as contemplated in the definition of Base LIBOR).
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 or a Base Rate Loan and (iv) if a LIBOR Rate
Loan, the Loan Period therefor (subject to the limitations set forth in the
definition of Loan Period).
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(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 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, 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
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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.
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:
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(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; and
(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;
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) and (ii) 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
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upon the parties hereto in the absence of demonstrable error.
In the case of LIBOR 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 definition of Base LIBOR). 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, then the applicable LIBOR Rate 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, 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.
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, 1997) 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.
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Section 4.6. Computation of Interest and Fees. Interest on
LIBOR 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;
and 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 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 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,
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
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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 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
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<PAGE> 29
or other amounts with respect to any Committed Loan in excess of the share of
payments and other recoveries (exclusive of payments or recoveries under Section
7 or pursuant to Section 13.8) such Bank or other holder would have received if
such payment had been distributed pursuant to the provisions of Section 6.2(a),
such Bank or other holder shall purchase from the other Banks or holders, in a
manner to be specified by the Agent, such participations in the Committed Loans
held by them as shall be necessary so that all such payments of principal and
interest with respect to the Committed Loans shall be shared by the Banks and
other holders pro rata in accordance with their respective Percentages;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Bank or holder, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) If any Bank or other holder of a Bid Loan shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
offset or otherwise) on account of principal of, interest on or fees or other
amounts with respect to any Bid Loan in excess of the share of payments and
other recoveries (exclusive of payments or recoveries pursuant to Section 7 or
Section 13.8) such Bank or other holder would have received if such payment had
been distributed pursuant to the provisions of Section 6.2(a), such Bank or
other holder shall purchase from the other Banks or holders participating in
such Bid Borrowing, in a manner to be specified by the Agent, such
participations in the Bid Loans held by them as shall be necessary so that all
such payments of principal and interest with respect to the Bid Loans shall be
shared by the Banks and other holders participating in such Bid Borrowing in a
manner consistent with Section 6.2(a); provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Bank or holder, the purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.
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,
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credits, deposits, accounts or moneys of the Company then or thereafter with
such Person.
Section 6.4. Taxes, etc. (a) All payments made by the Company
to the Agent, any Bank, any Assignee or any Participant under this Agreement and
the Notes shall be made without any set-off or counterclaim, and free and clear
of and without deduction for or on account of any present or future Taxes now or
hereafter imposed (except to the extent that such withholding or deduction is
compelled by law or results from the breach, by the recipient of a payment, of
its agreement contained in Section 6.4(b) or would not be required if the
representation or warranty contained in Section 6.4(b) were true), excluding any
Taxes generally assessed on the overall net income of the Agent, any Bank, any
Assignee or any Participant, as the case may be, by the government or other
authority of the country in which the Agent, such Bank, such Assignee or such
Participant is incorporated or in which its Funding Office or the office through
which it is acting is located. If the Company is compelled by law to make any
such deductions or withholdings it will:
(i) pay to the relevant authorities the full amount
required to be so withheld or deducted,
(ii) except to the extent that such withholding or deduction
results from the breach by the recipient of a payment of its agreement
contained in Section 6.4(b) or would not be required if the
representation or warranty contained in Section 6.4(b) were true, pay
such additional amounts as may be necessary in order that the net
amount received by the Agent, each Bank, each Assignee and each
Participant after such deductions or withholdings (including any
required deduction or withholding on such additional amounts) shall
equal the amount such payee would have received had no such deductions
or withholdings been made, and
(iii) promptly forward to the Agent (for delivery to such
payee) an official receipt or other documentation satisfactory to the
Agent evidencing such payment to such authorities.
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
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additional amount) shall equal the amount such payee would have received had no
such Taxes been asserted. For purposes of this Section 6.4, a distribution
hereunder by the Agent or any Bank to or for the account of any Bank, Assignee
or Participant shall be deemed to be a payment by the Company. The Company's
agreement under this Section 6.4 shall survive repayment of the Loans,
cancellation of the Notes or any termination of this Agreement.
(b) In consideration of, and as a condition to, the Company's
undertakings in Section 6.4(a), each Bank (other than a Bank that is organized
and existing under the laws of the United States of America or any State
thereof) agrees to execute and deliver to the Agent at its Payment Office for
delivery to the Company, before the first scheduled payment date in each year,
two United States Internal Revenue Service Forms 1001 or 4224, or any successor
forms, as appropriate, properly completed and claiming complete exemption from
withholding and deduction of United States federal Taxes. Each Bank represents
and warrants to the Company that, at the date of this Agreement, or at the time
such Bank becomes a Bank hereunder pursuant to Section 13.4.1, its Funding
Office is entitled to receive payments of principal and interest hereunder
without deduction for or on account of any Taxes imposed by the United States or
any political subdivision thereof.
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS
FOR ABSOLUTE RATE LOANS AND LIBOR 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 Notes or its obligation to make LIBOR 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
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interest on its LIBOR Rate Loans or any other amounts due under this
Agreement in respect of its LIBOR Rate Loans or its obligation to make
LIBOR 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 Notes or
its obligation to make or maintain LIBOR 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 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
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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:
(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, adequate and reasonable means do not exist
for ascertaining the applicable LIBOR Rate; or
(b) the Required Banks advise the Agent that the LIBOR Rate,
as determined by the Agent will not adequately and fairly reflect the
cost to such Required Banks of maintaining or funding LIBOR Rate Loans
for such Loan Period, or that the making or funding of LIBOR 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,
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.
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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 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 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
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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 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
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standing could not reasonably be expected to have a Material Adverse Effect.
Section 8.2. Authorization; Consents; No Conflict. The
execution and delivery by the Company of this Agreement and the Notes, the
borrowings hereunder and the performance by the Company of its obligations under
this Agreement and the Notes (a) are within the corporate powers of the Company,
(b) have been duly authorized by all necessary corporate action on the part of
the Company, (c) have received all necessary approvals, authorizations,
consents, registrations, notices, exemptions and licenses (if any shall be
required) from Governmental Authorities and other Persons, except for any such
approvals, authorizations, consents, registrations, notices, exemptions or
licenses non-receipt of which could not reasonably be expected to have a
Material Adverse Effect, (d) do not and will not contravene or conflict with any
provision of (i) law, (ii) any judgment, decree or order to which the Company or
any Subsidiary is a party or by which the Company or any Subsidiary is bound,
(iii) the charter, by-laws or other organizational documents of the Company or
any Subsidiary or (iv) any provision of any agreement or instrument binding on
the Company or any Subsidiary, or any agreement or instrument of which the
Company is aware affecting the properties of the Company or any Subsidiary,
except with respect to (i), (ii) and (iv) above, for any such contravention or
conflict which could not reasonably be expected to have a Material Adverse
Effect and (e) do not and will not result in or require the creation or
imposition of any Lien on any of the Company's or its Subsidiaries' properties.
Section 8.3. Validity and Binding Nature. This Agreement is,
and the Notes when duly executed and delivered will be, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 8.4. Financial Statements. The Company's audited
consolidated financial statements as at December 31, 1995, and unaudited
consolidated financial statements as at September 30, 1996, 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
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dates and the results of their operations for the periods then ended.
Section 8.5. Litigation and Contingent Liabilities. All
Litigation Actions, taken as a whole, could not reasonably be expected to have a
Material Adverse Effect. Other than any liability incident to such Litigation
Actions or provided for or disclosed in the financial statements referred to in
Section 8.4, neither the Company nor any Subsidiary has any contingent
liabilities which are material to the business, credit, operations, financial
condition or prospects of the Company and its Subsidiaries taken as a whole.
Section 8.6. Employee Benefit Plans. Each employee benefit
plan (as defined in Section 3(3) of ERISA) as to which the Company, or any
Subsidiary or any ERISA Affiliate may have any liability complies in all
material respects with all applicable requirements of law and regulations.
During the twelve-consecutive-month period prior to the execution and delivery
of this Agreement, (i) no steps have been taken to terminate any Plan and no
contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under section 302(f) of ERISA, (ii) no Reportable Event has
occurred with respect to any Plan and (iii) neither the Company nor any ERISA
Affiliate has either withdrawn or instituted steps to withdraw from any
Multiemployer Plan, except in any such case for actions which individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect. No condition exists or event or transaction has occurred in connection
with any Plan which could reasonably be expected to result in the incurrence by
the Company, any Subsidiary or any ERISA Affiliate of any material liability,
fine or penalty (imposed by Section 4975 of the Code or Section 502(i) of ERISA
or otherwise). Neither the Company nor any ERISA Affiliate is a member of, or
contributes to, any Multiemployer Plan. Neither the Company nor any ERISA
Affiliate has any contingent liability with respect to any post retirement
benefit under an employee welfare benefit plan (as defined in section 3(i) of
ERISA), other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
Section 8.7. Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
Section 8.8. Public Utility Holding Company Act. Neither the
Company nor any Subsidiary is a "holding
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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.
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
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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.
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
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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
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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 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 $50,000,000 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
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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 proviso in Section 9.9, cause each Subsidiary to maintain and preserve, its
respective existence as a corporation or other form of business organization, as
the case may be, and all rights, privileges, licenses, patents, patent rights,
copyrights, trademarks, trade names, franchises and other authority to the
extent material and necessary for the conduct of its respective business in the
ordinary course as conducted from time to time, except as may be determined by
the Board of Directors of the Company in good faith to wind up and dissolve a
Subsidiary that is not necessary or material to the business of the Company in
its ordinary course as conducted from time to time.
Section 9.3. Nature of Business. Engage, and cause each
Subsidiary to engage, in substantially the same fields of business as it is
engaged in on the date hereof.
Section 9.4. Books, Records and Access. Maintain, and cause
each Subsidiary to maintain, complete and accurate books and records in which
full and correct entries in conformity with generally accepted accounting
principles in the United States shall be made of all dealings and transactions
in relation to its respective business and activities. Permit, and cause each
Subsidiary to permit, access by the Agent and each Bank to the books and records
of the Company and such Subsidiary during normal business hours, and permit, and
cause each Subsidiary to permit, the Agent and each Bank to make copies of such
books and records.
Section 9.5. Insurance. Maintain, and cause each Subsidiary to
maintain, such insurance as is described in Section 8.12.
Section 9.6. Repair. Maintain, preserve and keep, and cause
each Subsidiary to maintain, preserve and keep, its material properties in good
repair, working order
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and condition, and from time to time make, and cause each Subsidiary to make,
all necessary and proper repairs, renewals, replacements, additions, betterments
and improvements thereto so that at all times the efficiency thereof shall be
fully preserved and maintained. In the case of properties leased by the Company
or any Subsidiary to lessees, the Company may satisfy its obligations related to
such properties under the previous sentence by causing, or by causing each
Subsidiary to cause, such lessees to perform such obligations.
Section 9.7. Taxes. Pay, and cause each Subsidiary to pay,
when due, all of its Taxes, unless and only to the extent that the Company or
such Subsidiary, as the case may be, is contesting any such Taxes in good faith
and by appropriate proceedings and the Company or such Subsidiary has set aside
on its books such reserves or other appropriate provisions therefor as may be
required by generally accepted accounting principles in the United States,
except where failure to pay such Taxes, individually or in the aggregate, cannot
reasonably be expected to have a Material Adverse Effect.
Section 9.8. Compliance. Comply, and cause each Subsidiary to
comply, in all material respects with all statutes and governmental rules and
regulations applicable to it; and use reasonable efforts to cause, and cause
each Subsidiary to use reasonable efforts to cause, each lessee of property
owned by the Company or any Subsidiary to comply in all material respects with
all statutes, governmental rules and regulations applicable to such property or
applicable to such lessee in connection with its leasing.
Section 9.9. Sale of Assets. Not, and not permit any
Subsidiary to, transfer, convey, lease or otherwise dispose of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole; provided, however, that 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 if immediately thereafter and after giving
effect thereto no Event of Default or Unmatured Event of Default shall have
occurred and be continuing.
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.
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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 110%.
Section 9.12. Consolidated Tangible Net Worth. Not permit the
Company's Consolidated Tangible Net Worth to be less than $1,500,000,000 plus
50% of (a) the cumulative net income (but without deduction for cumulative net
losses) of the Company and its Subsidiaries determined on a consolidated basis
in accordance with United States generally accepted accounting principles, (b)
the cumulative equity capital contributions from AIG and (c) the net proceeds
from the sale of preferred stock, in each case for the period from September 30,
1994 to and including the date of any determination hereunder.
Section 9.13. Restricted Payments. Not declare or pay any
dividends whatsoever or make any distribution on any capital stock of the
Company (except in shares of, or warrants or rights to subscribe for or purchase
shares of, capital stock of the Company), and not, and not permit any Subsidiary
to, make any payment to acquire or retire shares of capital stock of the
Company, at any time when (i) an Event of Default as described in Section 11.1
has occurred and is continuing and there are Loans outstanding hereunder or (ii)
an Event of Default as described in Section 11.1.1 has occurred and is
continuing and there are no Loans outstanding hereunder; provided, however, that
notwithstanding the foregoing, this Section 9.13 shall not prohibit (x) the
payment of dividends on any of the Company's market auction preferred stock that
was sold to the public pursuant to an effective registration statement under the
Securities Act of 1933 or (y) the payment of dividends within 30 days of the
declaration thereof if such declaration was not prohibited by this Section 9.13.
Section 9.14. Liens. Not, and not permit any Subsidiary to,
create or permit to exist any Lien upon or with respect to any of its properties
or assets of any kind, now owned or hereafter acquired, or on any income or
profits therefrom, except for
(a) Liens existing on date hereof that are reflected in the
financial statements of the Company dated prior to the date hereof;
(b) Liens upon or in any property (other than property
acquired for lease to a Person other than the Company or a Subsidiary)
acquired or held by the
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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
he 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
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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;
(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
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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
$3 billion minus the amount of outstanding Liens permitted under
Section 9.14(m); and
(m) other Liens securing Indebtedness of the Company or any
Subsidiary in an aggregate amount which, together with all other
outstanding Indebtedness of the Company and the Subsidiaries secured by
Liens not listed in clauses (a) through (l) of this Section 9.14, does
not at the time exceed 12.5% of the Consolidated Tangible Net Worth of
the Company as shown on its audited consolidated financial statements
as of the end of the fiscal year preceding the date of determination
minus the amount of outstanding Liens permitted under Section 9.14(l).
Section 9.15. Leases. Not, and not permit any Subsidiary to,
become obligated, as lessee, under any lease of real or personal property if at
the time of entering into such lease and after giving effect thereto the
aggregate Operating Lease Rentals would exceed 20% of Consolidated
Indebtedness.
Section 9.16. Use of Proceeds. Not permit any proceeds of the
Loans to be used, either directly or indirectly,
(a) for the payment of any dividend or for the repurchase of
any of the Company's equity securities;
(b) for the purpose, whether immediate, incidental or
ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended from time to time;
(c) for the purpose, whether immediate, incidental or
ultimate, of acquiring directly or indirectly any of the outstanding
shares of voting stock of any corporation which (i) has announced that
it will oppose such acquisition or (ii) has commenced
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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 10. CONDITIONS TO LENDING.
Section 10.1. Conditions Precedent to All Loans. Each Bank's
obligation to make each Loan is subject to the following conditions
precedent:
10.1.1. No Default. (a) No Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the
making of such Loan, (b) the representations and warranties contained
in Section 8 are true and correct in all material respects as of the
date of such requested Loan, with the same effect as though made on the
date of such Loan (it being understood that each request for a Loan
shall automatically constitute a representation and warranty by the
Company that, as at the requested date of such Loan, (x) all conditions
under this Section 10.1.1 shall be satisfied and (y) after the making
of such Loan the aggregate principal amount of all outstanding Loans
will not exceed the Aggregate Commitment).
10.1.2. Documents. The Agent shall have received (a) a
certificate signed by an Authorized Officer of the Company as to
compliance with Section 10.1.1, which requirement shall be deemed
satisfied by the submission of a properly completed Notice of
Competitive Bid Borrowing or Committed Loan Request and (b) such other
documents as the Agent may reasonably request in support of such Loan.
10.1.3. Litigation. No Litigation Action not disclosed in
writing by the Company to the Agent and the Banks prior to the date of
the last previous Loan hereunder (or, in the case of the initial Loan,
prior to the date of execution and delivery of this Agreement) ("New
Litigation") has been instituted and no development not so disclosed
has occurred in any other Litigation Action ("Existing Litigation"),
unless the resolution of all New Litigation and Existing Litigation
against the Company and its Subsidiaries could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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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 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.
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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 Agent's fees payable to the Funding Date pursuant to
Section 4.5 hereof.
10.2.9. Material Adverse Change. The Agent shall have received
a certificate of the Company's chief financial officer confirming that
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 January 19, 1996, 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
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of interest, or 30 days, in the case of fees, or default in the
performance or observance of any obligation or condition with respect
to any such other Indebtedness if the effect of such default (subject
to any applicable grace period) is to accelerate the maturity of any
such Indebtedness or to permit the holder or holders thereof, or any
trustee or agent for such holders, to cause such Indebtedness to become
due and payable prior to its expressed maturity; provided, however,
that the aggregate principal amount of all Indebtedness as to which
there has occurred any default as described above shall equal or exceed
$50,000,000.
11.1.3. Bankruptcy, Insolvency, etc. The Company or any
Significant Subsidiary becomes insolvent or generally fails to pay, or
admits in writing its inability or refusal to pay, debts as they become
due; or the Company or any Significant Subsidiary applies for, consents
to, or acquiesces in the appointment of a trustee, receiver or other
custodian for the Company or such Significant Subsidiary or any
property thereof, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for
the Company or any Significant Subsidiary or for a substantial part of
the property of any thereof and is not discharged within 60 days; or
any warrant of attachment or similar legal process is issued against
any substantial part of the property of the Company or any of its
Significant Subsidiaries which is not released within 60 days of
service; or any bankruptcy, reorganization, debt arrangement, or other
case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding (except the voluntary
dissolution, not under any bankruptcy or insolvency law, of a
Significant Subsidiary), is commenced in respect of the Company or any
Significant Subsidiary, and, if such case or proceeding is not
commenced by the Company or such Significant Subsidiary it is consented
to or acquiesced in by the Company or such Significant Subsidiary or
remains for 60 days undismissed; or the Company or any Significant
Subsidiary takes any corporate action to authorize, or in furtherance
of, any of the foregoing.
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
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60 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, 60 days less the
number of days elapsed between the date the Company obtained such
actual knowledge and the date the Company gives the notice pursuant to
Section 9.1.4, but in no event less than one Business Day) after notice
thereof to the Company from the Agent, any Bank, or the holder of any
Note.
11.1.5. Representations and Warranties. Any representation or
warranty made by the Company herein is untrue or misleading in any
material respect when made or deemed made; or any schedule, statement,
report, notice, or other writing furnished by the Company to the Agent
or any Bank is false or misleading in any material respect on the date
as of which the facts therein set forth are stated or certified; or any
certification made or deemed made by the Company to the Agent or any
Bank is untrue or misleading in any material respect on or as of the
date made or deemed made.
11.1.6. Employee Benefit Plans. The institution by the Company
or any ERISA Affiliate of steps to terminate any Plan if, in order to
effectuate such termination, (i) the Company or any ERISA Affiliate
would be required to make a contribution to such Plan or would incur a
liability or obligation to such Plan in an amount in excess of
$10,000,000 and (ii) immediately after giving effect to the payment or
satisfaction of such contribution, liability or obligation (if made or
undertaken by the Company or any Subsidiary) an Event of Default or
Unmatured Event of Default would exist and be continuing; or the
institution by the PBGC of steps to terminate any Plan; or a
contribution failure occurs with respect to a Plan sufficient to give
rise to a lien under Section 302(f) of ERISA securing an amount in
excess of $10,000,000.
11.1.7. Litigation. There shall be entered against the Company
or any Subsidiary one or more judgments or decrees in excess of
$50,000,000 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 60 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
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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.
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
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extent not reimbursed by the Company), ratably according to their respective
Percentages, from and against any and all actions, causes of action, suits,
losses, liabilities, damages and expenses which may at any time (including,
without limitation, at any time following the payment of the Notes) be imposed
on, incurred by or asserted against the Agent in any way relating to or arising
out of this Agreement, or any documents contemplated by or referred to herein or
the transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided that no Bank shall be
liable for the payment to the Agent of any portion of such actions, causes of
action, suits, losses, liabilities, damages and expenses resulting from the
Agent's or its employees' or agents' gross negligence or willful misconduct.
Without limiting the foregoing, subject to Section 13.5 each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent
in such capacity in connection with the preparation, execution or enforcement
of, or legal advice in respect of rights or responsibilities under, this
Agreement or any amendments or supplements hereto or thereto to the extent that
the Agent is not reimbursed for such expenses by the Company. All obligations
provided for in this Section 12.2 shall survive repayment of the Loans,
cancellation of the Notes or any termination of this Agreement.
Section 12.3. Action on Instructions of the Required Banks. As
to any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but the Agent shall in
all cases be fully protected in acting or refraining from acting upon the
written instructions from (i) the Required Banks, except for instructions which
under the express provisions hereof must be received by the Agent from all Banks
and (ii) in the case of such instructions, from all Banks. In no event will the
Agent be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law. The
relationship between the Agent and the Banks is and shall be that of agent and
principal only and nothing herein contained shall be construed to constitute the
Agent a trustee for any holder of a Note or of a participation therein nor to
impose on the Agent duties and obligations other than those expressly provided
for herein.
Section 12.4. Payments. (a) The Agent shall be entitled to
assume that each Bank has made its Loan
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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
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payment made by the Agent to such Bank, together with interest thereon for each
day that elapses from and including the date on which the Agent made such
payment to but excluding the Business Day on which the amount of such payment is
returned to the Agent at its Payment Office in immediately available funds prior
to 12:00 Noon, New York City time, at the Federal Funds Rate for each such day,
based upon a year of 360 days. If the amount of such payment is not returned to
the Agent in immediately available funds within three Business Days after demand
by the Agent, such Bank shall pay to the Agent on demand an amount calculated in
the manner specified in the preceding sentence after substituting the term "Base
Rate" for the term "Federal Funds Rate". A certificate of the Agent submitted to
any Bank with respect to amounts owing under this Section 12.4(b) shall be
conclusive absent demonstrable error.
Section 12.5. Exculpation. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters, and upon this Agreement and any
Note, security agreement, schedule, certificate, statement, report, notice or
other writing which it believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors, officers, employees
or agents shall (i) be responsible for any recitals, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement, any Note or any other
instrument or document delivered hereunder or in connection herewith, (ii) be
deemed to have knowledge of an Event of Default or Unmatured Event of Default
until after having received actual notice thereof from the Company or a Bank,
(iii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by the Company or any
other obligor of its obligations or (iv) in any event, be liable as such for any
action taken or omitted by it or them, except for its or their own gross
negligence or willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity.
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
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other Bank and (ii) independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made and will continue to make its own credit analysis and
decisions relating to this Agreement. Each Bank agrees and acknowledges, and
shall cause each Assignee or Participant to agree and acknowledge in its
assignment or participation agreement with such Bank, that the Agent makes no
representations or warranties about the creditworthiness of the Company or any
other party to this Agreement or with respect to the legality, validity,
sufficiency or enforceability of this Agreement or any Note.
Section 12.7. UBS and Affiliates. UBS and each of its
successors as Agent shall have the same rights and powers hereunder as any other
Bank and may exercise or refrain from exercising the same as though it were not
the Agent, and UBS and any such successor and its Affiliates may accept deposits
from, lend money to and generally engage, and continue to engage, in any kind of
business with the Company or any Affiliate thereof as if UBS or such successor
were not the Agent hereunder.
Section 12.8. Resignation. The Agent may resign as such at any
time upon at least 30 days' prior notice to the Company and the Banks. In the
event of any such resignation, Banks having an aggregate Percentage of more than
50% shall as promptly as practicable appoint a successor Agent reasonably
acceptable to the Company. If no successor Agent shall have been so appointed,
and shall have accepted such appointment, within 30 days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent reasonably acceptable to the Company,
which shall be a commercial bank organized under the laws of the United States
of America or of any State thereof or under the laws of another country which is
doing business in the United States of America and having a combined capital,
surplus and undivided profits of at least $1,000,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from all further duties and obligations under this Agreement. After
any retiring Agent's resignation hereunder as Agent, the provisions of this
Section 12 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
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SECTION 13. GENERAL.
Section 13.1. Waiver; Amendments. No delay on the part of the
Agent, any Bank, or the holder of any Loan in the exercise of any right, power
or remedy shall operate as a waiver thereof, nor shall any single or partial
exercise by any of them of any right, power or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement or the Notes shall in any event be effective unless the same
shall be in writing and signed and delivered by the Agent and by Banks having an
aggregate Percentage of not less than the aggregate Percentage expressly
designated herein with respect thereto or, in the absence of such designation as
to any provision of this Agreement or the Notes, by the Required Banks, and then
any amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (i) shall extend or increase the amount of the
Commitments, extend the due date for any amount payable hereunder, reduce or
waive any fee hereunder, change the definition of "Required Banks" or Percentage
in Section 1, amend or modify Section 4.1 or change any of the defined terms
used in Section 4.1, amend or modify Section 4.4, Section 4.6, Section 11.1.1 or
Section 11.1.8, modify this Section 13.1 or otherwise change the aggregate
Percentage required to effect an amendment, modification, waiver or consent
without the written consent of all Banks, (ii) shall modify or 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
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given and received when sent and, if mailed, shall be deemed to have been given
and received three Business Days after the date when sent by registered or
certified mail, postage prepaid, and addressed to the Company, the Agent, or
such Bank (or other holder) at its address shown below its signature hereto or
at such other address as it may, by written notice received by the other parties
to this Agreement, have designated as its address for such purpose. The Agent,
any Bank or the holder of any Note giving any waiver, consent or notice to, or
making any request upon, the Company hereunder shall promptly notify the Agent
thereof. Correspondence of the type described in Section 2.2 with respect to Bid
Loans and notices of Committed Loan Requests made by the Company shall, except
as otherwise provided herein, be directed to the persons specified for such
purpose for each party on the signature pages hereof or in subsequent writings
among the parties. Additional copies of certain notices which any party may have
requested on the signature pages hereof need not be delivered at the same time
as the primary notices to such party, but the party delivering such primary
notices shall use reasonable efforts to distribute such copies on the same
Business Day as that on which such primary notices were distributed.
Section 13.3. Computations. Where the character or amount of
any asset or liability or item of income or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made, for the purpose of this Agreement, such determination or calculation
shall, at any time and to the extent applicable and except as otherwise
specified in this Agreement, be made in accordance with generally accepted
accounting principles in the United States applied on a basis consistent with
those in effect as at the date of the Company's audited financial statements
referred to in Section 8.4. If there should be any material change in generally
accepted accounting principles in the United States after the date hereof which
materially affects the financial covenants in this Agreement, the parties hereto
agree to negotiate in good faith appropriate revisions of such covenants (it
being understood, however, that such covenants shall remain in full force and
effect in accordance with their existing terms pending the execution by the
Company and the Banks of any such amendment).
Section 13.4. Assignments; Participations. Each Bank may
assign, or sell participations in, its Loans and its Commitment to one or more
other Persons in accordance with this Section 13.4 (and the Company consents to
the disclosure of any information obtained by any Bank in
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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
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(iv) provided to the Agent evidence reasonably
satisfactory to the Agent that the assigning Bank has complied
with the provisions of the last sentence of Section 12.6.
Upon receipt of the foregoing items and the consents of the Company and the
Agent, (x) the Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder have been
assigned and delegated to such Assignee, such Assignee shall have the rights and
obligations of a Bank hereunder and under the other instruments and documents
executed in connection herewith, and (y) the assigning Bank, to the extent that
rights and obligations hereunder have been assigned and delegated by it, shall
be released from its obligations hereunder. The Agent may from time to time (and
upon the request of the Company or any Bank after any change therein shall)
distribute a revised Schedule I indicating any changes in the Banks party hereto
or the respective Percentages of such Banks. Within five Business Days after the
Company's receipt of notice from the Agent of the effectiveness of any such
assignment and delegation, the Company shall execute and deliver to the Agent
(for delivery to the relevant Assignee) new Notes in favor of such Assignee and,
if the assigning Bank has retained Loans and a Commitment hereunder, replacement
Notes in favor of the assigning Bank (such Notes to be in exchange for, but not
in payment of, the Notes previously held by such assigning Bank). Each such Note
shall be dated the date of the predecessor Notes. The assigning Bank shall
promptly mark the predecessor Notes "exchanged" and deliver them to the Company.
Any attempted assignment and delegation not made in accordance with this Section
13.4.1 shall be null and void.
The foregoing consent requirement shall not be applicable in
the case of, and this Section 13.4.1 shall not restrict, any assignment or other
transfer by any Bank of all or any portion of such Bank's Loans to any Federal
Reserve Bank; provided that such Federal Reserve Bank shall not be considered a
"Bank" for purposes of this Agreement.
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
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(a) no participation contemplated in this Section 13.4.2 shall
relieve such Bank from its Commitment or its other obligations
hereunder;
(b) such Bank shall remain solely responsible for the
performance of its Commitment and such other obligations hereunder and
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Company hereunder, including the right to approve
any amendment, modification or waiver of any provision of this
Agreement (subject to Section 13.4.2(d) below);
(c) the Company and the Agent shall continue to deal solely
and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement;
(d) no Participant, unless such Participant is an affiliate of
such Bank, or is itself a Bank, shall be entitled to require such Bank
to take or refrain from taking any action hereunder, except that such
Bank may agree with any Participant that such Bank will not, without
such Participant's consent, take any actions of the type described in
the third sentence of Section 13.1;
(e) the Company shall not be required to pay any amount under
Sections 4.1, 6.4 or 7.1 that is greater than the amount which the
Company would have been required to pay had no participating interest
been sold;
(f) no Participant may further participate any interest in any
Committed Loan (and each participation agreement shall contain a
restriction to such effect). The Company acknowledges and agrees that,
to the extent permitted by applicable law, each Participant shall be
considered a Bank for purposes of Sections 7.1, 7.4, 13.5 and 13.6, and
by its acceptance of a participation herein, each Participant agrees to
be bound by the provisions of Section 6.2(b) as if such Participant
were a Bank; and
(g) such Bank shall have provided to the Agent evidence
reasonably satisfactory to the Agent that such Bank has complied with
the provisions of the last sentence of Section 12.6.
Section 13.5. Costs, Expenses and Taxes. The Company agrees to
pay on demand (a) all out-of-pocket costs
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and expenses of the Agent (including the fees and out-of-pocket expenses of
counsel for the Agent (and of local counsel, if any, who may be retained by said
counsel) in an amount not to exceed an amount separately agreed to between the
Agent and the Company), in connection with the preparation, execution, delivery
and administration of this Agreement, the Notes and all other instruments or
documents provided for herein or delivered or to be delivered hereunder or in
connection herewith and (b) all out-of-pocket costs and expenses (including
reasonable attorneys' fees and legal expenses and allocated costs of staff
counsel) incurred by the Agent and each Bank in connection with the enforcement
of this Agreement, the Notes or any such other instruments or documents. Each
Bank agrees to reimburse the Agent for such Bank's pro rata share (based upon
its respective Percentage) of any such costs or expenses incurred by the Agent
on behalf of all the Banks and not paid by the Company other than any fees and
out-of-pocket expenses of counsel for the Agent which exceed the amount which
the Company has agreed with the Agent to reimburse. In addition, the Company
agrees to pay, and to hold the Agent and the Banks harmless from all liability
for, any stamp or other Taxes which may be payable in connection with the
execution and delivery of this Agreement, the borrowings hereunder, the issuance
of the Notes or the execution and delivery of any other instruments or documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith. All obligations provided for in this Section 13.5 shall survive
repayment of the Loans, cancellation of the Notes or any termination of this
Agreement.
Section 13.6. Indemnification. In consideration of the
execution and delivery of this Agreement by the Agent and the Banks, the Company
hereby agrees to indemnify, exonerate and hold each of the Banks, the Agent, and
each of the officers, directors, employees and agents of the Banks and Agent
(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
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<PAGE> 64
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 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
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<PAGE> 65
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, payment
of such Terminating Bank's Loans shall be postponed
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to (and, for purposes of calculating facility fees under Section 4.4 and
determining the Required Banks (except as provided below), but for no other
purpose, such Terminating Bank's Commitment shall continue until) the first
Business Day thereafter on which (i) no Event of Default or Unmatured Event of
Default exists (without regard to any waiver or amendment that makes this
Agreement less restrictive for the Company, other than as described in clause
(ii) below) or (ii) the Required Banks (which for purposes of this subsection
(d) shall be determined based upon the respective Percentages and aggregate
Commitments of all Banks other than any Terminating Bank whose scheduled
Termination Date has been extended pursuant to this proviso) waive or amend the
provisions of this Agreement to cure all existing Events of Default or Unmatured
Events of Default or agree to permit any borrowing hereunder notwithstanding the
existence of any such event. In the event that UBS shall become a Terminating
Bank, the Required Banks with the consent of the Company (which consent shall
not be unreasonably withheld) shall appoint another Bank or other Person as
Agent, which shall have all of the rights and obligations of the Agent upon the
effective date of and pursuant to an agreement supplemental hereto among the
Company and the Banks, and thereupon UBS, as Agent, shall be relieved from its
obligations as Agent hereunder, it being understood that the provisions of
Section 12 shall inure to the benefit of UBS as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no such successor
Agent shall be appointed within 30 days of the Termination Date of the Agent,
then the Agent shall, on behalf of the Banks, appoint a successor Agent in
accordance with the provisions set forth in Section 12.8 for a resigning Agent.
(e) To the extent that all or a portion of any 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.
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<PAGE> 67
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 NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES. All obligations of the Company and the rights of the Agent, the
Banks and any other holders of the Notes expressed herein or in the Notes shall
be in addition to and not in limitation of those provided by applicable law.
Whenever possible each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
Section 13.11. Counterparts; Effectiveness. This Agreement may
be executed in any number of counterparts and by the different parties on
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Agreement. When counterparts of this Agreement executed by each party shall
have been lodged with the Agent (or, in the case of any Bank as to which an
executed counterpart shall not have been so lodged, the Agent shall have
received telegraphic, telex or other written confirmation of execution of a
counterpart hereof by such Bank), this Agreement shall become effective as of
the date hereof and the Agent shall so inform all of the parties hereto.
Section 13.12. Further Assurances. The Company agrees to do
such other acts and things, and to deliver to the Agent and each Bank such
additional agreements, powers and instruments, as the Agent or any Bank may
reasonably require or deem advisable to carry into effect the purposes of this
Agreement or to better assure and confirm unto the Agent and each Bank their
respective rights, powers and remedies hereunder.
Section 13.13. Successors and Assigns. This Agreement shall be
binding upon the Company, the Banks and the Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the Banks
and the Agent and the respective successors and assigns of the Banks and the
Agent. Subject to Section 9.9, the Company may not
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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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement 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
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: Pamela S. Hendry
Telephone: (310) 788-1999
Facsimile: (310) 788-1990
Telex: 69-1400 INTERLEAS BVHL
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<PAGE> 69
Agent: UNION BANK OF SWITZERLAND,
acting through its New York
Branch, in its individual
corporate capacity and as Agent
By: /s/ Robert Mendeles
-------------------------------------
Name: Robert Mendeles
Title: Vice President
By: /s/ Didier Magloire
-------------------------------------
Name: Didier Magloire
Title: Vice President
299 Park Avenue
New York, New York 10171-0026
Attention: Robert Mendeles
Telephone: (212) 821-3020
Facsimile: (212) 821-4541
Telex: 426239 Answerback UI
Managing Agents: THE CHASE MANHATTAN BANK
By: /s/ Richard C. Smith
-------------------------------------
Name: Richard C. Smith
Title: Vice President
One Chase Manhattan Plaza
New York, New York 10081
Attention: Sherwood E. Exum, Jr.
Telephone: (212) 552-4655
Facsimile: (212) 552-5879
Telex: 62910
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<PAGE> 70
COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By: /s/ Christian Jagenburg
-------------------------------------
Name: Christian Jagenburg
Title: SVP and Manager
By: /s/ W. Schmidbauer
-------------------------------------
Name: Werner Schmidbauer
Title: Vice President
660 South Figueroa Street
Suite 1450
Los Angeles, California 90017
Attention: Werner Schmidbauer
Telephone: (213) 623-8223
Facsimile: (213) 623-0039
Telex: 678338
THE FUJI BANK, LIMITED
By: /s/ N. Umemura
-------------------------------------
Name: Nobuhiro Umemura
Title: Joint General Manager
333 South Hope Street
Suite 3900
Los Angeles, California 90071
Attention: Yoshizumi Takata
Telephone: (213) 253-4176
Facsimile: (213) 253-4198
ROYAL BANK OF CANADA
By: /s/ Michael J. Madnick
-------------------------------------
Name: Michael Madnick
Title: Manager
1 Financial Square
Corporate Banking East, U.S.A.
New York, New York 10005-3531
Attention: D.G. Calancie
Telephone: (212) 428-6445
Facsimile: (212) 428-6459
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<PAGE> 71
THE SAKURA BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Ofusa Sato
------------------------------------
Name: Ofusa Sato
Title: Senior Vice President &
Assistant General Manager
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
SOCIETE GENERALE
By: /s/ Maureen Kelly
-------------------------------------
Name: Maureen E. 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
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<PAGE> 72
THE BANK OF NOVA SCOTIA
By: /s/ A. Pendergast
-------------------------------------
Name: A. W. Pendergast
Title: RM
580 California Street
21st Floor
San Francisco, California 94104
Attention: Alan Pendergast
Telephone: (415) 986-1100
Facsimile: (415) 397-0791
Telex: 00340602
BANK OF TOKYO - MITSUBISHI TRUST
COMPANY
By: /s/ Michael C. Irwin
-------------------------------------
Name: Michael C. Irwin
Title: Vice President
1251 Avenue of the Americas
New York, New York 10116-3138
Attention: Michael Irwin
Telephone: (212) 782-4316
Facsimile: (212) 782-6445
Co-Agents: DRESDNER BANK AG, NEW YORK
& GRAND CAYMAN BRANCH
By: /s/ T.J. Nadramia
-------------------------------------
Name: Thomas J. Nadramia
Title: Vice President
By: /s/ John W. Sweeney
-------------------------------------
Name: John W. Sweeney
Title: Assistant Vice President
725 South Figueroa Street
Suite 3950
Los Angeles, California 90017-5439
Attention: Barbara J. Readick
Telephone: (213) 473-5400
Facsimile: (213) 473-5450
Telex: 4720286
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<PAGE> 73
THE BANK OF NEW YORK
By: /s/ Jonathan Rollins
-------------------------------------
Name: Jonathan Rollins
Title: Assistant Vice President
10990 Wilshire Boulevard
Suite 1125
Los Angeles, California 90024
Attention: Jonathan Rollins
Telephone: (310) 996-8658
Facsimile: (310) 996-8667
Lead Managers: 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
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<PAGE> 74
BAYERISCHE HYPOTHEKEN-UND
WECHSEL-BANK AKTIENGESELLSCHAFT,
CAYMAN ISLANDS BRANCH
By: /s/ Wolfgang Haugk
------------------------------------
Name: Wolfgang Haugk
Title: First Vice President
By: /s/ Thomas A. Lowe
------------------------------------
Name: Assistant Vice President
Title:
Financial Square
32 Old Slip, 32nd Floor
New York, New York 10005
Attention: Thomas Lowe
Telephone: (212) 440-0789
Facsimile: (212) 440-0741
Telex: 175850
THE SANWA BANK, LIMITED
By: /s/ Stephen C. Small
-------------------------------------
Name: Stephen C. Small
Title: Vice President & Area
Manager
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Stephen C. Small
Telephone: (212) 339-6201
Facsimile: (212) 754-1304
Telex: 232423 RCA
-69-
<PAGE> 75
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND
CAYMAN ISLANDS BRANCHES
By: /s/ Raymond K. Miller
-------------------------------------
Name: Raymond K. Miller
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: DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES
By: /s/ Robert M. Wood, Jr.
-------------------------------------
Name: Robert M. Wood, Jr.
Title: Vice President
By: /s/ Angela Bozorgmir
-------------------------------------
Name: Angela Bozorgmir
Title: Assistant Vice President
31 W. 52nd Street
New York, New York 10019
Attention: Robert Landis
Telephone: (212) 469-8214
Facsimile: (212) 469-8212
-70-
<PAGE> 76
THE ASAHI BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Muneo Nishimura
-------------------------------------
Name: Muneo Nishimura
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
BANCA COMMERCIALE ITALIANA,
LOS ANGELES FOREIGN BRANCH
By: /s/ Richard E. Iwanicki
-------------------------------------
Name: Richard E. Iwanicki
Title: Vice President
By: /s/ Moufid Hanna
-------------------------------------
Name: Moufid Hanna
Title: Assistant Vice President
555 So. Flower Street, 43rd Flr.
Los Angeles, California 90071
Attention: Rick Iwanicki
Telephone: (213) 624-0440
Facsimile: (213) 624-0457
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
By: /s/ Wilfried Freudenberger
-------------------------------------
Name: Wilfried Freudenberger
Title: Executive Vice President &
General Manager
By: /s/ Peter Obermann
------------------------------------
Name: Peter Obermann
Title: Senior Vice President
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
-71-
<PAGE> 77
THE DAI-ICHI KANGYO BANK, LTD.,
LOS ANGELES AGENCY
By: /s/ Masatsugu Morishita
-------------------------------------
Name: Masatsugu Morishita
Title: Sr. Vice President & 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
WELLS FARGO BANK
By: /s/ Anthony J. Xinis
-------------------------------------
Name: Anthony J. Xinis
Title: Senior Vice President
707 Wilshire Blvd.
U.S. Bank - 16th Flr.
Los Angeles, California 90017
Attention: Anthony J. Xinis
Facsimile: (213) 614-2569
Telex:
Participants: BANCA NAZIONALE DEL LAVORO,
S.p.A. - NEW YORK BRANCH
By: /s/ Giuliano Violetta
-------------------------------------
Name: Giuliano Violetta
Title: First Vice President
By: /s/ Giulio Giovine
-------------------------------------
Name: Giulio Giovine
Title: Vice President
25 West 51st Street
New York, New York 10019
Attention: Miguel J. Medida
Telephone: (212) 314-0263
Facsimile: (212) 765-2978
Telex: 62840
-72-
<PAGE> 78
ISTITUTO BANCARIO SAN PAOLO
DI TORINO S.p.A.
By: /s/ Robert S. Wurster
-----------------------------------
Name: Robert S. Wurster
Title: First Vice President
By: /s/ William J. De Angelo
-------------------------------------
Name: William J. De Angelo
Title: First Vice President
444 South Flower Street, Suite 4550
Los Angeles, California 90071
Attention: Donald W. Brown
Telephone: (213) 489-3105
Facsimile: (213) 622-2514
Telex: 220045
BANQUE NATIONALE DE PARIS
By: /s/ C. Bettles
-------------------------------------
Name: C. Bettles
Title: Sr. V.P. & Manager
By: /s/ Tjalling Terpstra
-------------------------------------
Name: Tjalling Terpstra
Title: V.P.
725 South Figueroa Street
Suite 2090
Los Angeles, California 90017
Attention: Tjalling Terpstra
Telephone: (213) 488-9120
Facsimile: (213) 488-9602
Telex: 6734168 BNPLA
-73-
<PAGE> 79
BANK OF HAWAII
By: /s/ J. L. Hall
-------------------------------------
Name: J. Lawrence Hall
Title: Vice President
130 Merchant Street
20th Floor
Honolulu, Hawaii 96813
Attention: J. Lawrence Hall
Telephone: (808) 537-8433
Facsimile: (808) 537-8301
Telex: 7238434
BANCO CENTRAL HISPANOAMERICANO,
SAN FRANCISCO AGENCY
By: /s/ Gonzalo Innerarity
-------------------------------------
Name: Gonzalo Innerarity
Title: S.V.P. and General Manager
100 Pine Street, Suite 2950
San Francisco, California 94111
Attention: Fernando Laseca
Telephone: (415) 398-6333
Facsimile: (415) 398-3173
Telex: 470598 CENT SF
THE MITSUI TRUST & BANKING COMPANY,
LIMITED, NY BRANCH
By: /s/ Margaret Holloway
-------------------------------------
Name: Margaret Holloway
Title: Vice President & Manager
1 World Financial Center
21st Flr., 200 Liberty Street
New York, N.Y. 10281
Attention: Margaret Holloway
Telephone: (212) 341-0300
Facsimile: (212) 945-4170
-74-
<PAGE> 80
THE TOKAI BANK, LTD.
LOS ANGELES AGENCY
By: /s/ Masahiko Saito
-------------------------------------
Name: Masahiko Saito
Title: Asst. General Manager
300 South Grand Avenue
Los Angeles, CA 90071
Attention: Kenji Oshigane
Telephone: (213) 972-0200,
ext. 8451
Facsimile: (213) 689-3200
FIRST HAWAIIAN BANK
By: /s/ Robert M. Wheeler, III
-------------------------------------
Name: Robert M. Wheeler, III
Title: Vice President
999 Bishop Street
11th Floor
Honolulu, Hawaii 96813
Attention: Robert M. Wheeler, III
Telephone: (808) 525-6367
Facsimile: (808) 525-8708
Telex: 7238329
BARCLAYS BANK PLC
By: /s/ Kathryn A. Cochrane
-------------------------------------
Name: Kathryn A. Cochrane
Title: Associate Director
222 Broadway
New York, New York 10038
Attention: Kathryn A. Cochrane
Telephone: (212) 412-7630
Facsimile: (212) 412-5610
-75-
<PAGE> 81
CIBC, INC.
By: /s/ Brian E. O'Callahan
-------------------------------------
Name: Brian E. O'Callahan,
Title: Director, CIBC Wood Gundy
Securities Corp., as Agent
425 Lexington Avenue
New York, New York 10017
Attention: Gregor Dannacher
Telephone: (212) 856-4131
Facsimile: (212) 856-3991
CITICORP USA, INC.
By: /s/ Stephen P. Zwick
-------------------------------------
Name: Stephen P. Zwick
Title: V.P.
399 Park Avenue
12th Floor
New York, New York 10043
Attention: Peter Bickford
Telephone: (212) 559-8146
Facsimile: (212) 935-4285
COMERICA BANK
By: /s/ Dirk Price
-------------------------------------
1920 Main Street, Suite 1150
Irvine, California 92714
Attention: Dirk A. Price
Telephone: (714) 476-1933
Facsimile: (714) 476-1222
-76-
<PAGE> 82
KREDIETBANK NV
By: /s/ R. Snauffer
-------------------------------------
Name: Robert Snauffer
Title: Vice President
By: /s/ Tod R. Angus
-------------------------------------
Name: Tod R. Angus
Title: Vice President
125 West 55th Street
10th Floor
New York, New York 10019
Attention: Luc Cools
Telephone: (213) 624-0401
Facsimile: (213) 629-5801
Attention: Robert Snauffer - NY
Telephone: (212) 541-0700
Facsimile: (212) 956-5580
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Kirk Seagers
-------------------------------------
Name: Kirk Seagers
Title: Assistant Vice President
1600 Market Street
21st Floor
Philadelphia, PA 19103
Attention: Kirk Seagers
Telephone: (215) 585-6036
Facsimile: (215) 585-7615
-77-
<PAGE> 83
STANDARD CHARTERED BANK
By: /s/ Paul S. Knox
-------------------------------------
Name: Paul S. Knox
Title: Sr. Vice President
7 World Trade Center
New York, New York 10048
Attention: Paul S. Knox
Telephone: (212) 667-0493
Facsimile: (212) 667-0251
Telex: 420117
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ T. Iyoda
-------------------------------------
Name: Toshinari Iyoda
Title: Senior Vice President &
Senior Manager
350 South Grand Avenue
Suite 1500
Los Angeles, California 90071
Attention: Craig Papayanis
Telephone: (213) 893-6441
Facsimile: (213) 488-9840
Telex: 6831123
THE TOYO TRUST & BANKING CO., LTD.,
LOS ANGELES AGENCY
By: /s/ K. 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
-78-
<PAGE> 84
UNIBANK A/S
By: /s/ Kevin J. Foran
-------------------------------------
Name: Kevin J. Foran
Title: Assistant Vice President
By: /s/ Meryl L. Feiner
-------------------------------------
Name: Meryl L. Feiner
Title: Assistant Vice President
13-15 West 54th Street
New York, New York 10019
Attention: Kevin J. Foran
Telephone: (212) 603-6924
Facsimile: (212) 603-1685
Telex: 668776
THE YASUDA TRUST & BANKING CO.,
LTD.
By: /s/ M. Tagawa
------------------------------------
Name: Makota Tagawa
Title: Deputy General Manager
725 S. Figueroa St., Suite 3990
Los Angeles, California 90017
Attention: Donovan E. Reiner
Telephone: (213) 688-4246
Facsimile: (213) 488-1695
-79-
<PAGE> 85
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
-80-
<PAGE> 86
SCHEDULE I
SCHEDULE OF BANKS
<TABLE>
<CAPTION>
Bank Commitment
- ---- -----------
in millions)
<S> <C>
Union Bank of Switzerland......................................... $ 80.000
The Chase Manhattan Bank.......................................... 71.375
Commerzbank Aktiengesellschaft..................................... 58.000
The Fuji Bank, Limited............................................ 58.000
Royal Bank of Canada.............................................. 58.000
The Sakura Bank, Ltd.............................................. 58.000
Societe Generale.................................................. 58.000
The Bank of Nova Scotia........................................... 58.000
Bank of Tokyo - Mitsubishi Trust Company ......................... 58.000
Dresdner Bank AG.................................................. 50.000
The Bank of New York.............................................. 50.000
DG Bank Deutsche Genossenschaftsbank.............................. 37.500
Bayerische Hypotheken-und Wechsel-Bank
Aktiengesellschaft............................................... 37.500
The Sanwa Bank, Limited........................................... 37.500
Westdeutsche Landesbank Girozentrale.............................. 37.500
Deutsche Bank AG.................................................. 29.500
The Asahi Bank, Ltd. .............................................. 25.000
Banca Commerciale Italiana......................................... 25.000
Bayerische Landesbank Girozentrale................................ 25.000
The Dai-Ichi Kangyo Bank, Ltd..................................... 25.000
Wells Fargo Bank.................................................. 25.000
Banca Nazionale del Lavoro, S.p.A................................. 20.000
Banco di Napoli................................................... 20.000
Istituto Bancario San Paolo di Torino S.p.A....................... 18.750
Banque Nationale de Paris......................................... 17.500
Bank of Hawaii.................................................... 15.625
Banco Central Hispanoamericano.................................... 15.000
The Mitsui Trust & Banking Company, Limited....................... 15.000
The Tokai Bank, Ltd............................................... 15.000
First Hawaiian Bank............................................... 13.750
Barclays Bank PLC................................................. 12.500
CIBC, Inc......................................................... 12.500
Citicorp USA, Inc. ............................................... 12.500
Comerica Bank. ................................................... 12.500
Kredietbank NV.................................................... 12.500
PNC Bank, National Association..................................... 12.500
Standard Chartered................................................. 12.500
The Industrial Bank of Japan, Limited............................. 12.500
The Toyo Trust & Banking Co., Ltd.................................. 12.500
Unibank A/S........................................................ 12.500
The Yasuda Trust & Banking Co., Ltd................................ 12.500
</TABLE>
<PAGE> 87
SCHEDULE II
FEES AND MARGINS
(IN BASIS POINTS)
<TABLE>
<S> <C>
Facility Fee 5.50
Margins:
LIBOR 14.50
Base --
Competitive Bid Option As Bid by the Banks.
</TABLE>
<PAGE> 88
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 $1,250,000,000 364-Day Revolving Credit
Agreement, dated as of January 17, 1997 (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):*
Absolute Rate Loan s: __ 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> 89
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> 90
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 $1,250,000,000 364-Day Revolving Credit Agreement, dated as of January 17,
1997 (as amended, modified or supplemented, the "Credit Agreement"), among
International Lease Finance Corporation (the "Company"), Union Bank of
Switzerland in its individual capacity and as Agent, and certain financial
institutions referred to therein, including the undersigned. Terms not otherwise
expressly defined herein shall have the meanings set forth in the Credit
Agreement.
(1) The Company's related Notice of Competitive Bid Borrowing,
dated _____________, 19__, inviting this Bid has requested a Bid Loan,
subject to the terms and conditions of the Credit Agreement, in the
aggregate principal amount of $____________ with a Funding Date of
_______________, 19__.
(2) The undersigned hereby offers to make the following Bid
Loan(s) on the Funding Date:*
- --------
* $10,000,000 or a higher integral multiple of $1,000,000.
B-1
<PAGE> 91
(a) Loan Period of ___ days ___ months
<TABLE>
<CAPTION>
Principal Amount Interest Rate or
Minimum Maximum LIBOR +/- Margin
<S> <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> 92
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 $1,250,000,000 364-Day Revolving Credit Agreement, dated as of
January 17, 1997 (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]
The officer of the Company signing this Committed Loan Request
hereby certifies that:
(a) Before and after giving effect to the Committed Loans
requested hereby, no Event of Default or Unmatured Event of
Default shall have occurred and be continuing or shall result
from the making of such Loans;
(b) Before and after giving effect to the Loans requested hereby,
the representations and warranties set forth in Section 8 of
the Credit Agreement shall be true and correct in all
C-1
<PAGE> 93
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> 94
Exhibit D
FORM OF BID NOTE
$1,250,000,000 January __, 1997
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 16, 1998, 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
364-Day Revolving Credit Agreement (as amended, modified or supplemented, the
"Credit Agreement"), dated as of January 17, 1997, 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> 95
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 New York, 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> 96
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> 97
Exhibit E
FORM OF COMMITTED NOTE
$_______________ January __, 1997
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 16, 1998, 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
364-Day Revolving Credit Agreement (as amended, modified or supplemented, the
"Credit Agreement"), dated as of January 17, 1997, 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 and LIBOR Rate Loans (as
defined in the Credit Agreement), as the case may be.
Except as otherwise provided in the Credit Agreement with
respect to LIBOR Rate Loans, if interest or principal on any loan evidenced by
this Note becomes due and payable on a day which is not a Business Day (as
defined in the Credit Agreement) the maturity thereof shall be extended
E-1
<PAGE> 98
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 New York, 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> 99
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> 100
Exhibit F
FIXED CHARGE COVERAGE RATIO*
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
12 Months Ended
September 30, 1996
(Dollars in thousands)
----------------------
<S> <C>
Earnings
Net Income ............................................... $219,606
Add:
Provision for income taxes ............................ 162,446
Fixed charges ......................................... 625,708
Less:
Capitalized interest .................................. 49,596
--------
Earnings as adjusted (A) ................................. $958,165
========
Preferred dividend requirements .......................... $ 16,040
Ratio of income before provision for
income taxes to net income .......................... 169%
--------
Preferred dividend factor on
pretax basis .......................................... 27,097
Fixed charges
Interest expense ...................................... 570,345
Capitalized interest .................................. 49,596
Estimate of minimum rents under
operating leases representing the
interest factor ..................................... 5,767
Fixed charges as adjusted ................................ 625,708
--------
Fixed charges and preferred
stock dividends (B) ................................... $652,805
========
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))* ................................................. 1.47 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> 101
Exhibit G
January __, 1997
To the Banks and the Agent
Referred to Below
c/o Union Bank of Switzerland
299 Park Avenue
New York, New York 10171-0026
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 $1,250,000,000 364-Day Revolving Credit
Agreement, in each case dated as of January 17, 1997 among the Company, Union
Bank of Switzerland acting through its New York 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> 102
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 New York.
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> 103
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> 104
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> 105
Exhibit H
January __, 1997
To the Banks and the Agent
Referred to Below
c/o Union Bank of Switzerland
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
I am General Counsel for International Lease Finance
Corporation (the "Company") and am rendering this opinion in connection with a
$1,250,000,000 364-Day Revolving Credit Agreement and a $1,250,000,000 Revolving
Credit Agreement, in each case dated as of January 17, 1997 among the Company,
Union Bank of Switzerland acting through its New York 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> 106
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> 107
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 $1,250,000,000 364-Day Revolving Credit Agreement
dated as of January 17, 1997 (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> 108
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount and the Assigned Loans, and the Assignee
hereby accepts such assignment from the Assignor and assumes all of the
obligations of the Assignor under the Credit Agreement to the extent of the
Assigned Amount and the Assigned Loans. Upon the execution and delivery hereof
by the Assignor, the Assignee, the Company and the Agent and the payment of the
amounts specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and the
Assignor released from its obligations under the Credit Agreement to the extent
such obligations have been assumed by the Assignee. The assignment provided for
herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds an amount equal to $_________*. It is
understood that facility fees accrued to the date hereof are for the account of
the Assignor and such fees accruing from and including the date hereof are for
the account of the Assignee. Each of the Assignor and the Assignee hereby agrees
that if it receives any amount under the Credit Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
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
- --------
* 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> 109
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 New York.
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> 110
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> 111
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 $1,250,000,000 364-Day Revolving Credit Agreement, dated as of January 17,
1997 (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> 112
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> 1
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,
----------------------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earnings
Net income........................... $157,749 $168,565 $201,943 $196,437 $ 251,774
Add:
Provision for income taxes........ 88,491 109,075 110,064 141,909 143,165
Fixed charges..................... 279,827 340,568 421,170 592,519 655,958
Less:
Capitalized interest.............. 36,291 39,363 44,610 51,091 50,368
-------- -------- -------- -------- --------
Earnings as adjusted (A)............. $489,776 $578,845 $688,567 $879,774 $1,000,529
======== ======== ======== ======== ========
Preferred dividend requirements...... $ -- $ 2,692 $ 6,890 $ 13,096 $ 16,599
Ratio of income before provision
for income taxes to net
income.......................... 156% 165% 155% 172% 157%
-------- -------- -------- -------- --------
Preferred dividend factor on
pretax basis.................... -- 4,442 10,680 22,525 26,060
-------- -------- -------- -------- --------
Fixed charges
Interest expense.................. 243,536 301,205 376,560 541,428 573,599
Capitalized interest.............. 36,291 39,363 44,610 51,091 50,368
Interest factor of rents.......... -- -- -- -- 31,991
-------- -------- -------- -------- --------
Fixed charges as adjusted (B)........ 279,827 340,568 421,170 592,519 655,958
-------- -------- -------- -------- --------
Fixed charges and preferred stock
dividends (C)..................... $279,827 $345,010 $431,850 $615,044 $ 682,018
======== ======== ======== ======== ========
Ratio of earnings to fixed charges ((A)
divided by (B))...................... 1.75x 1.70x 1.63x 1.48x 1.53x
======== ======== ======== ======== ========
Ratio of earnings to fixed charges and
preferred stock dividends ((A)
divided by (C))...................... 1.75x 1.68x 1.59x 1.43x 1.47x
======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-21901) of International Lease Finance Corporation and in the
related Prospectus of our report dated February 19, 1997, 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, 1996.
ERNST & YOUNG LLP
Century City,
Los Angeles, California
March 12, 1997
<TABLE> <S> <C>
<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, 1996 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 36,558
<SECURITIES> 0
<RECEIVABLES> 429,146
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 13,674,996
<DEPRECIATION> 1,492,222
<TOTAL-ASSETS> 13,725,596
<CURRENT-LIABILITIES> 0
<BONDS> 8,798,388
0
400,000
<COMMON> 3,582
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 13,725,596
<SALES> 1,444,439
<TOTAL-REVENUES> 1,632,514
<CGS> 0
<TOTAL-COSTS> 663,976
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 573,599
<INCOME-PRETAX> 394,939
<INCOME-TAX> 143,165
<INCOME-CONTINUING> 251,774
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 251,774
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
