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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT
------------------------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
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, CALIFORNIA 90067
(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 [ ] 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 MARCH 9, 2000, THERE WERE 35,818,122 SHARES OF COMMON STOCK, NO PAR
VALUE, OUTSTANDING.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(a)
AND (b) OF FORM 10-K AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.
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INTERNATIONAL LEASE FINANCE CORPORATION
1999 FORM 10-K ANNUAL REPORT
------------------------
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 6
Item 3. Legal Proceedings........................................... 8
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 9
Item 6. Selected Financial Data..................................... 9
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 10
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 14
Item 8. Financial Statements and Supplementary Data................. 14
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 14
</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 of those aircraft to airlines throughout the world. In addition to its
leasing activity, the Company regularly sells aircraft from its leased aircraft
fleet and aircraft owned by others to third party lessors and airlines and in
some cases provides fleet management services to these buyers. The Company, in
terms of the number and value of transactions concluded, is a major owner-
lessor of commercial jet aircraft.
As of December 31, 1999, the Company's lease portfolio consisted of 357
aircraft under operating lease and two aircraft under finance lease.
Additionally, the Company provided fleet management services for 89 aircraft.
See "Item 2. Properties -- Flight Equipment." At December 31, 1999, the Company
had committed to purchase 331 aircraft deliverable through 2007 at an estimated
aggregate purchase price of $16.4 billion. It also had options to purchase an
additional 83 aircraft deliverable through 2007 at an estimated aggregate
purchase price of $3.9 billion. See "Item 2. Properties -- Commitments."
The Company maintains the mix of flight equipment to meet its customers'
needs and to minimize the time that its aircraft are not leased to customers by
purchasing those models of new and used aircraft which it believes will have the
greatest airline demand and operational longevity.
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 re-leasing the
aircraft on terms which will cover its remaining cost.
The airline industry is cyclical, economically sensitive and highly
competitive. 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 or economic 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, remarketing and
management services with those airlines and other customers 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 and telecopier numbers are (310)
788-1999 and (310) 788-1990, 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 and financial services 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
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retains the benefit and assumes the risk of the residual value of the aircraft.
The Company on occasion also enters into finance and sales-type leases where the
full cost of the aircraft is substantially recovered over the term of the lease.
At December 31, 1999, two 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 ratably 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 the estimated residual value of the aircraft at
the end of the lease term.
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 related hourly rentals paid to the Company by the lessee. Such
rentals are included in the caption Rental of flight equipment. The Company
provides a charge to operations for such reimbursements based on the estimated
reimbursements during the life of the lease, which amount is included in
overhaul reserves. 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 payments 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 and specific provisions regarding
the condition of the aircraft upon redelivery to the Company. The lessee is
required to continue to make lease payments under all circumstances, including
periods during which the aircraft is not in operation due to maintenance or
grounding.
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 included in the caption 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 in acquiring or
disposing of aircraft 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 selective basis
involving specific situations where these activities will not conflict or
compete with, but rather will be complementary to, its leasing and selling
activities.
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FLEET MANAGEMENT SERVICES
The Company provides fleet management services to third party operating
lessors who are unable or unwilling to perform this service as part of their own
operation. The Company typically provides the same services that it performs for
its own fleet. Specifically, the Company provides leasing, re-leasing and sales
services on behalf of the lessor for which the Company receives a fee.
FINANCING/SOURCE OF FUNDS
The Company purchases new aircraft directly from manufacturers and used
aircraft from airlines and other owners 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, 1999, the Company leased aircraft, and managed aircraft
leased, to the following airlines: (domestic) Alaska Airlines, America West,
Continental Airlines, Frontier Airlines, Jet Blue, National Airlines, North
American Airlines, Pro Air, Southwest Airlines, Trans World Airlines (TWA),
Transmeridian and World Airways; (foreign) Aer Lingus, Aeris, Aero Continente,
Aeroflot, Aero Lloyd Flugreisen, Aeromexico, Air 2000, Air Afrique, Air Alfa,
Air Anatolia, Air Atlanta Icelandic, Air Canada, Air Europa (Air Espana SPA),
Air Europe SpA, Air France, Air Jamaica, Air Liberte, Air Macau, Air Madagascar,
Air Malta, Air Mauritius, Air New Zealand, Air One, Air Pacific, Air Seychelles,
Air Transat, Air Vanuatu, Alitalia, Ansett Australia, Asiana Airlines, Austrian
Airlines, Avianca, Brussels International Airline, BRA Transportes, Braathens
S.A.F.E., Britannia Airways, British Airways, British Midland Airways, Blue
Panorama, BWIA, Caledonian, Canada 3000, Canadian Airlines, Cathay Pacific,
China Airlines, China Eastern, China Hainan Airlines, China Northwest, China
Southern Airlines, China Southwest Airlines, China Xinjiang, Easy Jet, El Al
Israel Airlines, Emirates, Estonian Air, Far Eastern Air Transport, Finnair,
Flying Colours, Garuda Indonesia, GB Airways, Hapag-Lloyd Flug, Heliopolis, Hong
Kong Dragon Airlines (Dragonair), Iberia, Icelandair, Kenya Airways, KLM Royal
Dutch Airlines, KLM City Hoppers, L'Aeropostale, Lineas Aereas Privadas
Argentinas, S.A. (LAPA), Lithuanian, Lloyd Aero Boliviano (LAB), Linea Aerea
Nacional Chile, Lotus Air, LTU Luftransport-Unternehmen, Lufthansa, Malev,
Mandarin Airlines, Martinair Holland, Meridiana, Mexicana, Middle East Airlines
Airliban, Monarch Airlines, Olympic Airways, Oman Aviation, Pegasus, Pharoah,
Polynesian Airlines, QANTAS, Rio Sul, Royal Jordanian, Sabena, Sabre Airways,
Sahara India Airlines, Shanghai, Shenzhen, Sichuan Airlines, Skymark, Skyservice
Airlines, Spanair, Star, Sterling European, Swissair, TACV Cabo Verde, TAP Air
Portugal, Turk Hava Yollari (THY), TransAer, Transavia, Transbrasil, Varig,
VASP, Virgin Atlantic Airways, VIVA Airways, Volare, Wuhan Airlines, Xiamen
Airlines and Yemenia. 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
$1,842,126,000 (1999), $1,623,891,000 (1998) and $1,472,075,000 (1997)
comprising 88.5%, 87.6% and 85.0%, respectively, of total rentals of flight
equipment. See Note J of Notes to Consolidated Financial Statements.
3
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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>
1999 1998 1997
------------------ ------------------ ------------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe............................. $ 946,335 45.5% $ 798,773 43.1% $ 705,128 40.7%
Asia/Pacific....................... 421,337 20.3 410,600 22.1 358,687 20.7
United States and Canada........... 389,593 18.7 333,472 18.0 345,143 19.9
Central and South America and
Mexico........................... 201,405 9.7 190,572 10.3 211,152 12.2
Africa and the Middle East......... 121,885 5.8 120,566 6.5 112,557 6.5
---------- ----- ---------- ----- ---------- -----
$2,080,555 100.0% $1,853,983 100.0% $1,732,667 100.0%
========== ===== ========== ===== ========== =====
</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 most of its aircraft lease and all of
its sales transactions in U.S. dollars and all guarantees obtained to support
various lease agreements are denominated for payment in the same currency. The
Company requires, as a condition to any foreign transaction, that the lessee or
purchaser in a foreign country first obtain, if required, written approval of
the appropriate government agency, finance ministry or central bank for the
remittance of all funds contractually owed to the Company in U.S. dollars. Some
of the Company's leases are negotiated in Euros to meet the needs of a growing
number of airlines. These Euro denominated leases are primarily used as a hedge
against Euro denominated debt obligations of the Company. As a result, foreign
currency risk is immaterial to the Company.
The Company has restructured leases with both foreign and domestic lessees.
Such restructurings have involved the voluntary termination of leases prior to
lease expiration, the replacement of leased aircraft with smaller, less
expensive leased aircraft, the arrangement of subleases from the primary lessee
to another airline and the rescheduling of lease payments. In 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 or economic
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, financial institutions and other 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 and the U.S. Departments of Transportation and State exercise
regulatory authority over the air transportation in the United States.
The U.S. Departments of Transportation and State, in general, have
jurisdiction over the economic regulation of air transportation, including the
negotiation with foreign governments of the rights of U.S. carriers to fly to
other countries and the rights of foreign carriers to fly to and within the
United States.
The FAA has regulatory jurisdiction over the maintenance and operation of
U.S. air carriers, the operation of aircraft in the United States by foreign
carriers and the registration of aircraft in the United
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States. The FAA can suspend or revoke the authority of U.S. air carriers or
their licensed personnel and can similarly revoke the authority of foreign air
carriers to operate within the United States for failure to comply with FAA
regulations. The FAA can also ground aircraft if their airworthiness is in
question.
In every foreign country, similar government agencies regulate the
country's air carriers, the operations of foreign airlines in the country and
the registration of aircraft. Like the FAA, the civil aviation authority in a
foreign country can suspend or revoke the operating authority of an airline and
ground aircraft for safety reasons.
Since the Company does not itself operate its aircraft for public
transportation of passengers and property, the Company is not directly subject
to the regulatory jurisdiction of the U.S. Departments of Transportation and
State or their counterpart organizations in foreign countries.
The Company's interface with the FAA consists of the registration with the
FAA of those aircraft which are leased by the Company to U.S. carriers and to a
number of foreign carriers where, by agreement, the aircraft are to be
registered in the United States. In limited circumstances, the Company also
obtains from the FAA or its designated representatives a U.S. Certificate of
Airworthiness for a particular aircraft or a ferry flight permit.
The Company's involvement with the civil aviation authorities of foreign
jurisdictions consists largely of requests to register and deregister the
Company's aircraft on lease to carriers in those countries.
The Company also works with U.S. Customs with respect to the import and
export of the Company's aircraft into and from the United States for maintenance
or lease.
EMPLOYEES
The Company is in a capital intensive rather than a labor intensive
business. As of December 31, 1999, the Company had 95 full-time employees, which
it considered adequate for its business operations. The Company will expand its
management and administrative personnel, as necessary, to meet future growth.
None of the Company's employees is covered by a collective bargaining agreement
and the Company believes that it has maintained excellent employee relations.
The Company provides certain employee benefits, including retirement plans and
health, life, disability and accident insurance.
INSURANCE
The Company requires its lessees to carry those types of insurance which
are customary in the air transportation industry, including comprehensive
liability insurance and aircraft hull insurance. In general, the Company is an
additional insured on liability policies carried by the lessees. All policies
contain a breach of warranty endorsement so that the interests of the Company
are not prejudiced by any act or omission of the operator-lessee.
Insurance premiums are paid by the lessee, with coverage acknowledged by
the broker or 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. Aircraft hull policies contain
standard clauses covering aircraft engines. All deductibles are 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
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cargo airline operations with minimal deductibles. Such policies generally have
combined comprehensive single liability limits of not less than $250 million.
Additionally, all aircraft in the Company's fleet are covered by Contingent
Liability insurance.
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.
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K contains or incorporates statements that
constitute forward-looking statements. Those statements appear in a number of
places in this Form 10-K and include statements regarding, among other matters,
the Company's growth and acquisition opportunities, the Company's acquisition
strategy, regulatory matters pertaining to compliance with governmental
regulations and other factors affecting the Company's financial condition or
results of operations. Words such as "expects," "anticipates," "intends,"
"plans," "believes," "seeks," "estimates," and "should" and variations of these
words and similar expressions, are used in many cases to identify these
forward-looking statements. Any such forward-looking statements are not
guarantees of future performance and involve risks, uncertainties and other
factors that may cause actual results, performance or achievements of the
Company or industry results to vary materially from the Company's future
results, performance or achievements, or those of the industry, expressed or
implied in such forward-looking statements. Such factors include, among others,
general industry economic and business conditions, which will, among other
things, affect demand for aircraft, availability and creditworthiness of current
and prospective lessees, lease rents, availability and cost of financing and
operating expenses; governmental actions and initiatives, environmental and
safety requirements and Year 2000 compliance issues of the Company and third
parties and related service interruptions or payment delays. The Company will
not update any forward-looking information to reflect actual results or changes
in the factors affecting the forward-looking information.
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, 1999, all of the Company's fleet was Stage III compliant,
meaning that the aircraft 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, 1999, the average age of the Company's
aircraft was 3.84 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 operating lease
portfolio at December 31, 1999:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TOTAL
------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-300/400/500......... 10 14 17 18 9 8 2 4 82
737-700/800............. 1 3 5 4 1 1 2 17
757-200................. 2 9 3 3 5 10 6 9 4 2 53
767-200................. 2 1 3
767-300................. 2 7 8 7 7 3 2 1 2 1 40
777-200................. 2 2 3 2 9
747-300................. 2 2
747-400................. 1 6 2 2 11
MD-83................... 1 1
DC10-30................. 2 2
MD-11................... 3 3 6
A300-600R............... 3 1 1 1 6
A310-300................ 4 1 1 1 7
A319.................... 2 2 3 4 11
A320.................... 1 1 2 19 8 2 5 3 2 1 44
A321.................... 1 4 3 5 6 2 2 3 3 29
A330-200................ 2 2 8 1 13
A330-300................ 3 2 2 1 1 1 10
A340.................... 3 6 1 1 11
-- -- -- -- -- -- -- -- -- -- -- -- ---
Total................... 19 55 51 61 40 40 35 32 11 8 2 3 357
</TABLE>
- ---------------
This schedule includes 19 aircraft leased by the Company and subleased to
others and two aircraft which were not subject to lease at December 31, 1999,
but subsequently were leased.
COMMITMENTS
At December 31, 1999, the Company had committed to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $16.4 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL
------------- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
737-600/700/800(a).................. 12 23 24 25 25 16 9 134
757-200............................. 6 3 2 1 12
767-300............................. 4 3 1 1 1 10
777-200............................. 3 5 3 3 3 3 3 23
A318................................ 2 5 6 6 6 5 30
A319................................ 10 2 3 7 8 8 38
A320-200............................ 6 13 4 5 3 4 2 37
A321-200............................ 4 1 2 3 3 5 18
A330-200............................ 5 2 4 3 3 1 18
A340/300/500/600(a)................. 1 2 2 2 2 2 11
-- -- -- -- -- -- -- -- ---
Total..................... 51 54 47 55 52 45 22 5 331
</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.
7
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At December 31, 1999, the Company had options to purchase the following
aircraft at an estimated aggregate purchase price (including adjustment for
anticipated inflation) of approximately $3.9 billion for delivery as shown:
<TABLE>
<CAPTION>
AIRCRAFT TYPE 2000 2001 2002 2003 2004 2005 2006 2007 TOTAL
------------- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
B737-600/700/800.................... 1 1 9 16 25 52
B777-200............................ 1 1 2
A319................................ 3 1 1 1 4 3 13
A320-200............................ 1 1 2
A321-200............................ 1 2 1 2 6
A330-200............................ 1 1 1 1 4
A340-300/500/600.................... 1 1 2 4
-- -- -- -- -- -- -- -- --
0 1 8 8 6 10 22 28 83
</TABLE>
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.
The aircraft listed above are being purchased pursuant to master agreements
with each of The Boeing Company ("Boeing") and AVSA, S.A.R.L., the sales
subsidiary of Airbus Industrie ("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, 1999, 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 $434,560,000 and $334,556,000 with Boeing and Airbus,
respectively.
As of March 8, 2000, the Company had entered into contracts for the lease
of all of the 51 aircraft to be delivered in 2000, 52 of the 54 aircraft to be
delivered in 2001, 26 of the 47 aircraft to be delivered in 2002, 18 of the 55
aircraft to be delivered in 2003 and 4 of the 124 aircraft to be delivered
subsequent to 2003. 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
2005. As of December 31, 1999, the Company occupied approximately 30,000 square
feet of office space with a signed agreement to obtain an additional 20,000
square feet during 2000. The leases provide for annual rentals of approximately
$3,000,000, and the rental payments thereunder are subject to certain indexed
escalation provisions.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any significant legal proceedings.
8
<PAGE> 11
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, 1999, 1998, and 1997, the Company
paid cash dividends to its parent company of $69,500,000, $25,200,000 and
$19,700,000, 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, 1999 in the amount of $718,820,000 were unrestricted as
to the payment of dividends.
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected consolidated financial data and
certain 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,
-------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Rentals of flight equipment..... $ 2,080,555 $ 1,853,983 $ 1,732,667 $ 1,444,439 $ 1,254,020
Flight equipment marketing...... 147,216 118,183 176,005 136,099 119,078
Interest and other income....... 72,317 73,500 49,335 51,976 49,390
Total revenues.................. 2,300,088 2,045,666 1,958,007 1,632,514 1,422,488
Expenses........................ 1,596,683 1,483,392 1,431,848 1,237,575 1,084,142
Income before income taxes...... 703,405 562,274 526,159 394,939 338,346
Net income...................... 453,447 369,352 338,684 251,774 196,437
RATIO OF EARNINGS TO FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS(1): 1.75x 1.60x 1.58x 1.47x 1.43x
BALANCE SHEET DATA:
Flight equipment under operating
leases (net of accumulated
depreciation)................. $16,096,053 $14,872,430 $12,792,531 $12,182,774 $10,762,870
Net investment in finance and
sales-type leases............. 56,555 89,904 98,026 103,629 86,237
Total assets.................... 17,507,124 16,379,632 14,551,954 13,725,596 12,329,182
Total debt...................... 11,861,796 11,184,010 9,954,362 9,794,260 8,892,634
Shareholders' equity............ 3,210,192 2,844,375 2,517,188 2,214,552 2,000,107
OTHER DATA:
Aircraft owned at period
end(2)........................ 338 329 299 296 278
Aircraft sold or remarketed
during the period............. 51 31 57 37 41
</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
INDUSTRY CONDITION
From time to time, certain 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. See "Item
1. Business -- Customers."
FINANCIAL CONDITION
The Company borrows funds to purchase flight equipment, including funds for
progress payments during the construction phase, principally on an unsecured
basis from various sources. At December 31, 1999, 1998 and 1997, the Company's
debt financing and capital lease obligations were comprised of the following:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Public term debt with single
maturities......................... $ 3,721,330 $ 3,825,000 $3,950,000
Public medium-term notes with varying
maturities......................... 3,225,500 3,348,350 2,896,865
Capital lease obligations............ 669,576 810,768 903,320
Bank term debt....................... 1,295,038 -- --
----------- ----------- ----------
Total term debt, bank debt
and
capital lease
obligations.............. 8,911,444 7,984,118 7,750,185
Commercial paper..................... 2,978,353 3,214,744 2,212,601
Less: Deferred debt discount......... (28,001) (14,852) (8,424)
----------- ----------- ----------
Debt financing and capital
lease obligations........ $11,861,796 $11,184,010 $9,954,362
=========== =========== ==========
Composite interest rate.............. 6.14% 6.03% 6.44%
Percentage of total debt at fixed
rate............................... 69.28% 64.20% 76.49%
Composite interest rate on fixed
debt............................... 6.06% 6.41% 6.63%
Bank prime rate...................... 8.50% 7.75% 8.50%
</TABLE>
Public Debt
The interest on substantially all of the public debt (exclusive of the
commercial paper) is fixed for the term of the note. As of December 31, 1999,
the Company had an effective shelf registration statement with respect to $2.0
billion of debt securities, under which $275 million of notes were sold through
December 31, 1999. Additionally, a $750 million Medium-Term Note program was
implemented under the shelf registration statement, under which $45 million was
sold through December 31, 1999. In addition, the Company established a Euro
Medium Term Note Program for $2 billion, under which $771 million in notes were
sold through December 31, 1999.
Capital Lease Obligations
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 is fixed at rates varying between
6.18% and 6.89%. These two tranches are guaranteed by various European Export
Credit Agencies. The remaining 15% of the original financing available provides
for LIBOR based pricing.
Bank Term Debt
In January 1999, the Company entered into a new Export Credit Facility, up
to a maximum of $4.3 billion, for approximately 75 aircraft to be delivered from
1999 through 2001. The Company has the right, but is not required, to use the
facility to fund 85% of each aircraft's purchase price. This facility is
guaranteed
10
<PAGE> 13
by various European Export Credit Agencies. The interest rate varies from 5.753%
to 5.898% on the first 75 aircraft depending on the delivery date of the
aircraft. Through March 8, 2000, the Company borrowed $1.5 billion under this
facility.
Bank Commitments
As of December 31, 1999, the Company had committed revolving loans and
lines of credit with 53 commercial banks aggregating $2.9 billion. Bank debt
principally provides for interest rates that vary according to the pricing
option in effect at the time of borrowing. Pricing options include prime, a
range from .22% over LIBOR to .32% over LIBOR based upon utilization, or a rate
determined by a competitive bid process with the banks. The revolving loans and
lines of credit are subject to facility fees of up to .08% of amounts available.
Such financing is used primarily as backup for the Company's Commercial Paper
program. In November 1999, the Company replaced $1.5 billion of the committed
revolving loans with a new 364 day facility for $1.5 billion at the same
pricing.
Other
In 1995, 1996 and 1997, the Company, through subsidiaries, entered into
sale-leaseback transactions providing proceeds to the Company in the amounts of
$413.0 million, $507.6 million and $601.9 million, respectively, each relating
to seven aircraft. The transactions resulted 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. As of December 31, 1999, the Company had repurchased two aircraft which
were sold to third parties.
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
currency risk and not to speculate on interest rates or currency fluctuations.
These derivative products include interest rate swap agreements, currency swap
agreements, interest rate swaptions and interest rate floors.
The counterparties to the Company's derivative instruments are all 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.
Measuring potential losses in fair values has recently become the focus of
risk management efforts by many companies. Such measurements are performed
through the application of various statistical techniques. One such technique is
Value at Risk (VaR), a summary statistical measure that uses historical interest
rates and estimates the volatility and correlation of these rates to calculate
the maximum loss that could occur over a defined period of time given a certain
probability.
ILFC believes that statistical models alone do not provide a reliable
method of monitoring and controlling market risk. While VaR models are
relatively sophisticated, the quantitative market risk information generated is
limited by the assumptions and parameters established in creating the related
models. Therefore, such models are tools and do not substitute for the
experience or judgment of senior management.
11
<PAGE> 14
ILFC is exposed to market risk and the risk of loss of fair value resulting
from adverse fluctuations in interest rates. As of December 31, 1999, ILFC
statistically measured the loss of fair value through the application of a VaR
model. In this analysis the net fair value of ILFC was determined using the
financial instrument assets, which included the tax adjusted future flight
equipment lease revenue, and the financial instrument liabilities, which
included the future servicing of the current debt. The estimated impact of the
current derivative positions was also taken into account.
ILFC calculated the VaR with respect to the net fair value using the
variance-covariance (delta-normal) methodology. This calculation also used daily
historical interest rates for the two years ending December 31, 1999. The VaR
model estimated the volatility of each of these interest rates and the
correlation among them. The yield curve was constructed using eleven key points
on the curve to model possible curve movements. Thus, the VaR measured the
sensitivity of the assets and liabilities to the calculated interest rate
exposures. These sensitivities were then applied to a database, which contained
the historical ranges of movements in interest rates and the correlation among
them. The results were aggregated to provide a single amount that depicts the
maximum potential loss in fair value of a confidence level of 95 percent for a
time period of one month. As December 31, 1999, the VaR of ILFC with respect to
its aforementioned net fair value was $50 million.
RESULTS OF OPERATIONS
The increase in revenues from rentals of flight equipment from $1,732.7
million in 1997 to $1,854.0 million in 1998 to $2,080.6 million in 1999 is due
to the increase in the number of aircraft available for operating lease from 319
in 1997 to 349 in 1998, to 357 in 1999. The increase is also attributable to the
increase in the cost of the leased fleet, which includes aircraft subject to
sale-leaseback transactions from which rental income is earned, from $15.9
billion in 1997 to $18.3 billion in 1998 and $19.7 billion in 1999.
Additionally, the percentage of widebodies, for which higher lease payments are
typically received, has increased from 28% to 30% to 33% of the fleet in 1997,
1998 and 1999, respectively.
In addition to its leasing operations, the Company engages in the marketing
of flight equipment at the end of, or during, the lease term, as well as the
sales of flight equipment on a principal and commission basis. Revenue from such
flight equipment marketing decreased from $176.0 million in 1997, to $118.2
million in 1998 and increased to $147.2 million in 1999 as a result of the type
and the number of the flight equipment marketed in each period which fluctuated
from 57 aircraft in 1997 to 31 aircraft in 1998 and to 51 aircraft in 1999. In
addition, the Company sold 11 engines (1997), 15 engines (1998) and 13 engines
(1999).
Interest expense fluctuated from $642.3 million in 1997, to $640.0 million
in 1998, to $686.8 million in 1999, as a result of an increase in debt
outstanding, excluding the effect of debt discount, from $10.0 billion in 1997
to $11.2 billion in 1998 to $11.9 billion in 1999, to finance aircraft
acquisitions, offset in part by lower composite borrowing rates in 1998 and
1999. The Company's composite borrowing rate fluctuated as follows:
<TABLE>
<S> <C>
December 31, 1996........................................... 6.23%
March 31, 1997.............................................. 6.20
June 30, 1997............................................... 6.32
September 30, 1997.......................................... 6.34
December 31, 1997........................................... 6.44
March 31, 1998.............................................. 6.29
June 30, 1998............................................... 6.22
September 30, 1998.......................................... 6.18
December 31, 1998........................................... 6.03
March 31, 1999.............................................. 5.90
June 30, 1999............................................... 5.85
September 30, 1999.......................................... 6.03
December 31, 1999........................................... 6.14
</TABLE>
12
<PAGE> 15
Depreciation of flight equipment increased from $546.2 million in 1997 to
$556.1 million in 1998 to $637.3 million in 1999 due to the increased cost of
the fleet. The cost of flight equipment during the same periods increased from
$14.4 billion at December 31, 1997 to $16.9 billion at December 31, 1998 to
$18.2 billion at December 31, 1999. The increase in depreciation expense due to
increased flight equipment cost from 1997 to 1998 was partially offset by
depreciation taken in 1997 on older aircraft, which were acquired used, that
were either sold or fully depreciated prior to the end of 1997.
Provisions for overhauls increased from $99.5 million in 1997 to $102.5
million in 1998 and decreased to $94.5 million in 1999 due to changes in the
number of aircraft on which the Company collects overhaul revenue. An increase
or decrease in the number of aircraft will result in a corresponding increase or
decrease in the aggregate number of hours flown, for which overhaul reserves are
provided.
Rent expense increased from $103.9 million in 1997 to $138.4 million in
1998 and decreased to $130.0 million in 1999 due to corresponding changes in the
number of sale-leaseback transactions.
The effective tax rate decreased from 35.6% in 1997 to 34.3% in 1998 and
increased to 35.5% in 1999.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. This could
result in a failure of the information technology systems ("IT systems") and
other operating equipment containing imbedded technology ("non-IT systems") in
the year 2000, causing disruption of operations of the Company, its lessees,
vendors, or business partners.
The Company developed and executed a plan to address the Year 2000 issue as
it affected the Company's internal IT and non-IT systems, and to assess Year
2000 issues related to third parties on which the Company has critical
dependencies. The development and execution of the plan was overseen by a
steering committee made up of executives of member companies of American
International Group, Inc. ("AIG"), the Company's parent.
The Company has not experienced any interruption of operations as a result
of Year 2000 related issued related to internal IT and non-IT systems. The
Company has not experienced any impact on the operations of the Company's
lessees, vendors or business partners as a result of Year 2000 related issues.
As a result of long production lead times and other factors, a disruption
of the Company's operations from a Year 2000 issue may not become evident until
some time in the future. Therefore, the Company continues, to monitor, through
its normal business practices, its lessees' insurance coverages and payment
histories, vendors delivery dates and business partners' services for Year 2000
issues. The Company believes that its lessees, vendors and business partners are
Year 2000 ready and will not experience business disruptions as a result of Year
2000 related issues.
The costs associated with addressing the Year 2000 issue, including
developing and executing the above plan and remediating affected systems and
equipment, have been nominal and were expensed as incurred. Such costs did not
include normal system upgrades and replacements. The Company does not expect to
incur any significant future costs relating to internal IT and non-IT systems as
a result of the Year 2000 issue.
NEW ACCOUNTING PRONOUNCEMENTS, ISSUED BUT NOT YET EFFECTIVE
On June 23, 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133. (SFAS 137). SFAS 137 is effective for all fiscal quarters of
all fiscal years beginning after June 15, 2000 (January 1, 2001 for the
Company). SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are
recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company has not yet determined
the impact that the adoption of SFAS 133 will have on its earnings or statement
of financial position.
13
<PAGE> 16
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Financial Condition
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
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2): Financial Statements and Financial Statement Schedule: The
response to this portion of Item 14 is submitted as a separate section of this
report beginning on page 15.
(a)(3) and (c): Exhibits: The response to this portion of Item 14 is
submitted as a separate section of this report beginning on page 15.
(b) Reports on Form 8-K: None.
14
<PAGE> 17
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 Accountants........................... 17
Consolidated Financial Statements:
Balance Sheets at December 31, 1999 and 1998.............. 18
Statements of Income for the years ended December 31,
1999, 1998 and 1997.................................... 19
Statements of Shareholders' Equity for the years ended
December 31, 1999, 1998 and 1997....................... 20
Statements of Cash Flows for the years ended December 31,
1999, 1998 and 1997.................................... 21-22
Notes to Consolidated Financial Statements................ 23
</TABLE>
The following financial statement schedule of the Company and its
subsidiaries is included in Item 14(a)(2):
<TABLE>
<CAPTION>
SCHEDULE NUMBER DESCRIPTION PAGE
- --------------- ----------- ----
<C> <S> <C>
II Valuation and Qualifying Accounts........................... 36
</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).
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).
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
4.1 Indenture dated as of November 1, 1991, between the Company
and U.S. Bank 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 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) (filed as an exhibit to
Form 10-K for the year ended March 31, 1996 and incorporated
herein by reference).
10.2 Revolving Credit Agreement, dated as of November 17, 1999,
among the Company, Citicorp USA, Inc., and the other banks
listed therein providing up to $1,500,000,000 (364 day
facility).
10.3 Aircraft Facility Agreement, dated as of January 19, 1999,
among the Company, Halifax PLC and the other banks listed
therein providing up to $4,327,260,000 for the financing of
approximately seventy-five Airbus aircraft (filed as an
exhibit to Form 10-K for the year ended December 31, 1998
and incorporated herein by reference).
10.4 Boeing Purchase Agreement No. 2241 and related letter
agreements, all dated July 30, 1999, between the Company and
the Boeing Company (filed as an exhibit to Form 10-Q for the
quarter ended September 30, 1999) (confidential treatment
granted).
12 Computation of Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends.
23 Consent of PricewaterhouseCoopers LLP.
27 Financial Data Schedule.
</TABLE>
16
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
To The Shareholder and Board of Directors
International Lease Finance Corporation
Los Angeles, California
In our opinion, the consolidated financial statements listed in the
accompanying index appearing under Items 14(a)(1) and (2) on page 15 present
fairly, in all material respects, the financial position of International Lease
Finance Corporation and its subsidiaries (the "Company") at December 31, 1999
and December 31, 1998, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with accounting principles generally accepted in the Untied States. In addition,
in our opinion, the financial statement schedule listed in the accompanying
index presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements. These financial statements and the financial statement schedule are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements and the financial statement schedule
based on our audits. We conducted our audits of these statements in accordance
with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
PricewaterhouseCoopers LLP
Los Angeles, California
February 11, 2000
17
<PAGE> 20
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash, including interest bearing accounts of
$112,372 (1999) and $33,716 (1998)........................ $ 123,109 $ 52,723
Current income taxes........................................ -- 16,007
Notes receivable............................................ 270,436 340,344
Net investment in finance and sales-type leases............. 56,555 89,904
Flight equipment under operating leases..................... 18,246,253 16,860,789
Less accumulated depreciation............................. 2,150,200 1,988,359
----------- -----------
16,096,053 14,872,430
Deposits on flight equipment purchases...................... 848,730 906,197
Accrued interest, other receivables and other assets........ 77,825 60,754
Investments................................................. 6,067 11,771
Deferred debt issue costs -- less accumulated amortization
of
$70,375 (1999) and $62,115 (1998)......................... 28,349 29,502
----------- -----------
$17,507,124 $16,379,632
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued interest and other payables......................... $ 280,933 $ 235,046
Current income taxes........................................ 14,370 --
Debt financing, net of deferred debt discount of
$28,001 (1999) and $14,852 (1998)......................... 11,192,220 10,373,242
Capital lease obligations................................... 669,576 810,768
Security and other deposits on flight equipment............. 801,313 863,832
Rentals received in advance................................. 110,435 119,682
Deferred income taxes....................................... 1,228,085 1,132,687
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
(1999 and 1998), each having
500 shares issued and outstanding...................... 400,000 400,000
Common stock -- no par value; 100,000,000 authorized
shares, 35,818,122 shares (1999 and 1998) issued and
outstanding............................................ 3,582 3,582
Paid-in capital........................................... 579,955 579,955
Retained earnings......................................... 2,226,655 1,860,838
----------- -----------
3,210,192 2,844,375
----------- -----------
$17,507,124 $16,379,632
=========== ===========
</TABLE>
See accompanying notes.
18
<PAGE> 21
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental of flight equipment............................... $2,080,555 $1,853,983 $1,732,667
Flight equipment marketing............................... 147,216 118,183 176,005
Interest and other....................................... 72,317 73,500 49,335
---------- ---------- ----------
2,300,088 2,045,666 1,958,007
Expenses:
Interest................................................. 686,767 639,964 642,321
Depreciation of flight equipment......................... 637,256 556,082 546,226
Provision for overhaul................................... 94,535 102,508 99,458
Flight equipment rent.................................... 130,026 138,392 103,883
Selling, general and administrative...................... 48,099 46,446 39,960
---------- ---------- ----------
1,596,683 1,483,392 1,431,848
---------- ---------- ----------
INCOME BEFORE INCOME TAXES............................ 703,405 562,274 526,159
Provision for income taxes................................. 249,958 192,922 187,475
---------- ---------- ----------
NET INCOME............................................ $ 453,447 $ 369,352 $ 338,684
========== ========== ==========
</TABLE>
See accompanying notes.
19
<PAGE> 22
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, 1996........ 4,000 $400,000 35,818,122 $3,582 $579,955 $1,231,015 $2,214,552
Dividends to AIG.................. (19,700) (19,700)
Preferred stock dividends......... (16,348) (16,348)
Net income........................ 338,684 338,684
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31, 1997........ 4,000 $400,000 35,818,122 $3,582 $579,955 $1,533,651 $2,517,188
Dividends to AIG.................. (25,200) (25,200)
Preferred stock dividends......... (16,965) (16,965)
Net income........................ 369,352 369,352
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31, 1998........ 4,000 $400,000 35,818,122 $3,582 $579,955 $1,860,838 $2,844,375
Dividends to AIG.................. (69,500) (69,500)
Preferred stock dividends......... (18,130) (18,130)
Net income........................ 453,447 453,447
----- -------- ---------- ------ -------- ---------- ----------
Balance at December 31, 1999........ 4,000 $400,000 35,818,122 $3,582 $579,955 $2,226,655 $3,210,192
===== ======== ========== ====== ======== ========== ==========
</TABLE>
See accompanying notes.
20
<PAGE> 23
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ $ 453,447 $ 369,352 $ 338,684
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of flight equipment........................ 637,256 556,082 546,226
Deferred income taxes................................... 95,398 205,666 117,727
Amortization of deferred debt issue costs............... 8,260 10,242 9,505
Gain on sale of flight equipment included in amount
financed.............................................. (7,631) (10,747) (30,369)
Increase in notes receivable............................ (67,867) (18,591) (712)
Equity in net loss (income) of affiliates............... 705 (1,165) (632)
Change in unamortized debt discount..................... (13,148) (6,428) 14,325
Changes in operating assets and liabilities:
Increase in accrued interest, other receivables and
other assets.......................................... (21,521) (338) (9,521)
Increase (decrease) in accrued interest and other
payables.............................................. 45,887 20,940 (5,005)
Decrease (increase) in current income taxes
receivable............................................ 30,377 (80,898) 81,311
(Decrease) increase in rentals received in advance...... (9,247) (9,904) 52,479
----------- ----------- -----------
Net cash provided by operating activities................... 1,151,916 1,034,211 1,114,018
----------- ----------- -----------
INVESTING ACTIVITIES:
Acquisition of flight equipment for operating leases...... (3,446,630) (3,274,247) (3,289,744)
Decrease (increase) in deposits and progress payments..... 57,466 111,431 (156,273)
Proceeds from disposal of flight equipment -- net of
gain.................................................... 1,486,893 587,882 2,038,390
Advances on notes receivable.............................. -- (7,000) --
Collections on notes receivable........................... 248,713 214,067 82,464
Collections on finance and sales-type leases (net of
income amortized)....................................... 33,350 8,122 11,049
Dividend from unconsolidated subsidiary................... 5,000 8,125 --
----------- ----------- -----------
Net cash used in investing activities....................... (1,615,208) (2,351,620) (1,314,114)
----------- ----------- -----------
FINANCING ACTIVITIES:
Proceeds from debt financing and capital lease
obligations............................................. 6,855,019 5,772,791 6,084,081
Payments in reduction of debt financing and capital lease
obligations............................................. (6,164,085) (4,536,715) (5,938,304)
Debt issue costs.......................................... (7,107) (6,565) (15,966)
Payment of common and preferred dividends................. (87,630) (42,165) (36,048)
(Decrease) increase in customer deposits.................. (62,519) 119,032 133,529
----------- ----------- -----------
Net cash provided by financing activities................... 533,678 1,306,378 227,292
----------- ----------- -----------
Net increase (decrease) in cash............................. 70,386 (11,031) 27,196
Cash at beginning of year................................... 52,723 63,754 36,558
----------- ----------- -----------
Cash at end of year..................................... $ 123,109 $ 52,723 $ 63,754
=========== =========== ===========
(Table continued on next page)
</TABLE>
21
<PAGE> 24
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest (net of amount capitalized $45,235 (1999),
$54,297 (1998),
and $48,818 (1997).................................... $ 482,186 $ 628,819 $ 619,274
Income taxes (net)...................................... 124,183 68,154 (11,563)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
1999
Notes in the amount of $110,940 were received as partial payment in exchange for flight equipment
sold with a book value of $103,308.
1998
Notes and finance and sales-type leases in the amount of $107,155 were received as partial
payment in exchange for flight equipment sold with a book value of $96,407.
Flight equipment was received in exchange for notes receivable in the amount of $46,023.
1997
Notes and finance and sales-type leases in the amount of $125,741 were received as partial
payment in exchange for flight equipment sold with a book value of $95,372.
</TABLE>
See accompanying notes.
22
<PAGE> 25
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: International Lease Finance Corporation (the "Company") is
primarily engaged in the acquisition of new and used commercial jet aircraft and
the leasing of those aircraft to airlines throughout the world. In addition to
its leasing activities, the Company regularly sells aircraft from its leased
aircraft fleet and aircraft owned by others to third party lessors and airlines
and in some cases provides fleet management services to these buyers. The
Company, in terms of the number and value of transactions concluded, is a major
owner-lessor of commercial jet aircraft.
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 and
financial services 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 a specific identification basis or a proportional cost allocation basis.
The charges aggregated $2,896 (1999), $3,828 (1998) and $4,526 (1997).
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
rentals 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 and commissions.
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 many
leases, for certain airframe and engine overhauls, the lessee is reimbursed for
costs incurred up to but not exceeding related hourly rentals paid to the
Company by the lessee. Such rentals are included in the caption Rental of flight
equipment. The Company provides a charge to operations for such reimbursements
based on the estimated reimbursements during the life of the lease, which amount
is included in overhaul reserves.
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.
The Company regularly reviews its flight equipment to determine that its
carrying value is not impaired.
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.
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.
23
<PAGE> 26
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Instruments: 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.
The Company has granted certain parties the right but not the obligation to
effectively convert certain of the Company's fixed rate obligations to floating
rate obligations based on an established notional amount. The proceeds of such
option agreements are initially recorded as a liability.
Income Taxes: The Company and its U.S. subsidiaries are included in the
consolidated federal income tax return and 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").
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect 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 1998 and
1997 financial statements to conform to the Company's 1999 presentation.
NOTE B -- NOTES RECEIVABLE
Notes receivable are primarily from the sale of and collaterized by flight
equipment and are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Fixed rate notes receivable due in varying
installments to 2008:
Less than 6%..................................... $ -- $ 3,504
6% to 7.99%...................................... 209,255 219,493
8% to 9.99%...................................... 32,135 83,711
10% to 12.99%.................................... 6,902 11,199
13% to 15%....................................... 4,221 --
LIBOR plus 1.1% to LIBOR plus 1.5% notes receivable
in varying installments to 2002.................. 17,923 22,437
-------- --------
$270,436 $340,344
======== ========
</TABLE>
Included above, the Company had notes receivable of $12,585 (1999) and
$10,328 (1998) representing restructured lease payments.
24
<PAGE> 27
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE B -- NOTES RECEIVABLE (CONTINUED)
At December 31, 1999, the minimum future notes receivable payments to be
received are as follows:
<TABLE>
<S> <C> <C>
2000................................................... $120,890
2001................................................... 29,955
2002................................................... 20,245
2003................................................... 15,044
2004................................................... 31,618
Thereafter............................................. 52,684
--------
$270,436
========
</TABLE>
In 1998 and prior years, the Company sold notes receivable with certain
limited recourse provisions to a related party of the Company. The notes sold in
1998 aggregated $68,694 and were sold at face value including accrued interest.
The Company continues to collect payments on the notes, transfers the payments
to the related party and receives a servicing fee. The Company recorded no gain
or loss on the sale. The Company recorded servicing fee income of $50 (1999), $1
(1998) and $112 (1997) related to the notes sold. The Company's maximum exposure
under recourse provisions was $13,739 at December 31, 1999. During 1999 the
Company repurchased two notes sold in 1998. The notes were 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>
1999 1998
-------- --------
<S> <C> <C>
Total minimum lease payments to be received............ $ 69,675 $ 93,832
Estimated residual values of leased flight equipment... 7,070 19,949
Less: Unearned income.................................. (20,190) (23,877)
-------- --------
Net investment in finance and sales-type leases........ $ 56,555 $ 89,904
======== ========
</TABLE>
Minimum future lease payments to be received on finance and sales-type
leases at December 31, 1999 are as follows:
<TABLE>
<S> <C> <C>
2000.................................................... $12,615
2001.................................................... 12,615
2002.................................................... 12,636
2003.................................................... 13,017
2004.................................................... 11,565
Thereafter.............................................. 7,227
-------
Total minimum lease payments to be received............. $69,675
=======
</TABLE>
25
<PAGE> 28
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>
1999 1998
----------------- ------------------
PERCENT PERCENT
OWNED AMOUNT OWNED AMOUNT
------- ------ ------- -------
<S> <C> <C> <C> <C>
Cost method:
Air Liberte.......................... (A) $4,792 (A) $ 4,792
Others............................... 1,167 1,158
Equity method:
Pacific Ocean Leasing Ltd............ 50.0% 127 50.0% 5,219
Pacific Asia Leasing Ltd............. 25.0% (19) 25.0% 602
------ -------
$6,067 $11,771
====== =======
</TABLE>
- ---------------
(A) During 1997, Air Liberte was acquired by British Airways. As a result of the
acquisition, ILFC's percentage ownership will be reduced. ILFC's percentage
ownership is not yet determinable.
The Company has a 50% interest in Pacific Ocean Leasing Ltd. ("POL"), a
Bermuda corporation. POL owned one Boeing 767-200 aircraft and one spare engine,
both of which were on lease to an airline. The aircraft and spare engine were
sold in January 1999. POL owns an inventory of spare parts. Additionally, the
Company had guaranteed the bank loan to POL (see Note K). The Company received a
dividend of $5,000 in 1999.
The Company has a 25% interest in Pacific Asia Leasing Ltd. ("PAL"), a
Bermuda corporation. PAL owned one Boeing 767-300ER aircraft on lease to an
airline. The aircraft was sold in 1998. The Company received a dividend of
$8,125 in 1998.
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
Debt financing and capital lease obligations are comprised of the
following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Commercial Paper (weighted average interest rate
at December 31, 5.87% (1999) and 5.30%
(1998))......................................... $ 2,978,353 $ 3,214,744
Public Term Debt with Single Maturities........... 3,721,330 3,825,000
Public Medium-Term Notes with Varying
Maturities...................................... 3,225,500 3,348,350
Bank Term Debt.................................... 1,295,038 --
Capital Lease Obligations......................... 669,576 810,768
Less: Deferred debt discount...................... (28,001) (14,852)
----------- -----------
$11,861,796 $11,184,010
=========== ===========
</TABLE>
The interest on substantially all of the public debt (exclusive of the
commercial paper) is fixed for the term of the note.
Bank Commitments:
As of December 31, 1999, the Company had committed revolving loans and
lines of credit with 53 commercial banks aggregating $2.9 billion. Bank debt
principally provides for interest rates that vary according to the pricing
option in effect at the time of borrowing. Pricing options include prime, a
range from .22% over LIBOR to .32% over LIBOR based upon utilization, or a rate
determined by a competitive bid process with the banks. The revolving loans and
lines of credit are subject to facility fees of up to .08% of amounts available.
Such financing is used primarily as backup for the Company's Commercial Paper
program.
Public Debt
As of December 31, 1999 the Company had an effective shelf registration
statement with respect to $2.0 billion in debt securities, under which $275
million of notes were sold through December 31, 1999. Additionally, a $750
million Medium-Term Note program was implemented under the shelf registration
statement, under which $45 million was sold through December 31, 1999.
27
<PAGE> 30
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
Public 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 1999 1998
-------- ---------- ----------
<S> <C> <C> <C>
5 3/4% Notes due January 15, 1999........................... 5 years 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
6 5/8% Notes due April 1, 1999.............................. 5 years 100,000
6.70% Notes due April 30, 1999.............................. 2 years 100,000
Floating Rate Notes due June 2, 1999 (swapped to 6.64%)..... 4 years 100,000
Floating Rate Notes due July 15, 1999 (swapped to 6.235%)... 4 years 100,000
6 1/2% Notes due August 15, 1999............................ 7 years 100,000
6 1/8% Notes due November 1, 1999........................... 4 years 100,000
5 3/4% Notes due December 15, 1999.......................... 4 years 150,000
8 1/4% Notes due January 15, 2000........................... 5 years 100,000 100,000
6 3/8% Notes due January 18, 2000........................... 3 years 200,000 200,000
6.65% Notes due April 1, 2000............................... 3 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 June 1, 2000............................... 3 years 100,000 100,000
6 5/8% Notes due August 15, 2000............................ 4 years 100,000 100,000
6 1/4% Notes due October 15, 2000........................... 5 years 100,000 100,000
Floating Rate Notes due February 1, 2001 (swapped to
6.53%).................................................... 4 years 100,000 100,000
8 7/8% Notes due April 15, 2001............................. 10 years 150,000 150,000
5 7/8% Notes due January 15, 2001........................... 3 years 200,000 200,000
6 7/8% Notes due May 1, 2001................................ 4 years 100,000 100,000
5.95% Notes due June 1, 2001................................ 3 years 100,000 100,000
6 1/2% Notes due July 1, 2001............................... 4 years 100,000 100,000
5 7/8% Notes due July 1, 2001............................... 3 years 125,000 125,000
6 3/8% Notes due August 1, 2001............................. 4 years 100,000 100,000
6 1/2% Notes due October 15, 2001........................... 5 years 100,000 100,000
6 3/8% Notes due February 15, 2002.......................... 5 years 100,000 100,000
5.90% Notes due April 15, 2002.............................. 4 years 100,000 100,000
5 5/6% Notes due April 15, 2002............................. 3 years 100,000
5 5/8% Notes due May 1, 2002................................ 3 years 175,000
6.00% Notes due May 15, 2002................................ 4 years 100,000 100,000
6 3/8% Notes due August 1, 2002............................. 5 years 100,000 100,000
5 3/4% Notes due January 15, 2003........................... 5 years 100,000 100,000
6.00% Notes due June 15, 2003............................... 5 years 100,000 100,000
8 3/8% Notes due December 15, 2004.......................... 10 years 100,000 100,000
Euro Denominated Medium Term Notes
3.625% Notes due July 1, 2002 (swapped to $US at 5.80%)..... 3 years 207,880 --
4.125% Notes due July 12, 2004.............................. 5 years 563,450 --
---------- ----------
$3,721,330 $3,825,000
========== ==========
</TABLE>
The Company established a Euro Medium-Term Note Program for $2.0 billion,
under which $771 million in Notes were sold through December 31, 1999. The
Company has hedged the notes through operating lease payments or through swaps
to transfer the currency exposure to third parties.
28
<PAGE> 31
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 Term Debt
In January 1999, the Company entered into a new Export Credit Facility for
up to a maximum of $4.3 billion, for approximately 75 aircraft to be delivered
from 1999 through 2001. The Company has the right, but is not required, to use
the facility to fund 85% of each aircraft's purchase price. This facility is
guaranteed by various European Export Credit Agencies. The interest rate varies
from 5.753% to 5.898% depending on the delivery date of the aircraft.
See Note L -- Financial Instruments.
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%. These two tranches are guaranteed by various
European Export Credit Agencies. The remaining 15% of the original debt is at a
floating LIBOR based rate. The debt matures through 2005. The flight equipment
associated with the obligations, and included in flight equipment under
operating leases in the balance sheet, had a net book value of $1,049,447 (1999)
and $1,104,413 (1998).
The following is a schedule by years of future minimum lease payments under
capitalized leases together with the present value of the net minimum lease
payments as of December 31, 1999:
<TABLE>
<S> <C>
2000...................................................... $134,224
2001...................................................... 128,227
2002...................................................... 122,360
2003...................................................... 116,437
2004...................................................... 162,316
Thereafter................................................ 199,336
--------
Total minimum lease payments.............................. 862,900
Less amount representing interest......................... 193,324
--------
Present value of net minimum lease payments............... $669,576
========
</TABLE>
Maturities of debt financing and capital lease obligations (excluding
commercial paper and deferred debt discount) at December 31, 1999 are as
follows:
<TABLE>
<S> <C>
2000..................................................... $2,176,670
2001..................................................... 2,208,170
2002..................................................... 1,832,550
2003..................................................... 825,670
2004..................................................... 1,058,020
Thereafter............................................... 810,363
----------
$8,911,443
==========
</TABLE>
Under the most restrictive provisions of the related borrowings,
consolidated retained earnings at December 31, 1999, in the amount of $718,820,
are unrestricted as to payment of dividends based on consolidated tangible net
worth requirements.
29
<PAGE> 32
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE E -- DEBT FINANCING AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
The Company has entered into various debt and derivative transactions with
several broker-dealers, including a related party broker-dealer. The Company has
executed $757,480 and $3,264,223 notional amount of derivative instruments with
the related party during 1999 and 1998, respectively.
NOTE F -- SHAREHOLDERS' EQUITY
Preferred Stock:
The Market Auction Preferred Stock (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 is reset approximately every 7
weeks (49 days) on the basis of orders placed in an auction. At December 31,
1999, the dividend rates for Series A through H ranged from 4.800% to 5.180%.
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, 1999.
NOTE G -- RENTAL INCOME
Minimum future rentals on noncancelable operating leases and subleases of
flight equipment which have been delivered at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
----------
<S> <C>
2000..................................................... $1,662,866
2001..................................................... 1,553,955
2002..................................................... 1,385,110
2003..................................................... 1,161,863
2004..................................................... 940,129
Thereafter............................................... 1,699,743
----------
$8,403,666
==========
</TABLE>
Additional rentals earned by the Company based on the lessees' usage
aggregated $202,976 (1999), $202,425 (1998), and $219,380 (1997). Flight
equipment is leased, under operating leases, with remaining terms ranging from
one to 12 years.
NOTE H -- RENTAL EXPENSE
During 1995, 1996 and 1997, the Company entered into sale-leaseback
transactions providing proceeds to the Company in the amounts of $412,626,
$507,600 and $601,860, respectively, relating to seven aircraft for each
transaction. The transactions resulted in the sale and leaseback of these
aircraft under one year operating leases, each with six one year extension
options, maturing on December 22, 2000, September 20, 2000 and September 12,
2000, respectively. One aircraft was repurchased in 1997 and 1999. The lease
rates equate to fixed principal amortization and floating interest payments
based on LIBOR or commercial paper pricing.
30
<PAGE> 33
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE H -- RENTAL EXPENSE (CONTINUED)
Minimum future rental expense for 2000 is $110,400 at December 31, 1999.
NOTE I -- INCOME TAXES
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Current:
Federal(1)........................................... $141,585 $(10,033) $ 60,003
State................................................ 12,013 (2,938) 8,280
Foreign.............................................. 961 227 1,465
-------- -------- --------
154,559 (12,744) 69,748
Deferred:
Federal.............................................. 87,865 191,633 111,120
State................................................ 7,534 14,033 6,607
-------- -------- --------
95,399 205,666 117,727
-------- -------- --------
$249,958 $192,922 $187,475
======== ======== ========
</TABLE>
- ---------------
(1) Including U.S. tax on foreign income
The provision for deferred income taxes is comprised of the following
temporary differences:
<TABLE>
<CAPTION>
1999 1998 1997
------- -------- --------
<S> <C> <C> <C>
Accelerated depreciation on flight equipment............ $72,577 $194,352 $123,486
Excess of state income taxes not currently deductible
for Federal income tax purposes....................... (6,213) (3,015) (4,127)
Tax versus book lease differences....................... 17,721 23,341 18,568
Provision for overhauls................................. 6,394 (15,616) (2,873)
Rentals received in advance............................. 4,027 3,464 (18,270)
Straight line rents..................................... 3,542 829 778
Other................................................... (2,649) 2,311 165
------- -------- --------
$95,399 $205,666 $117,727
======= ======== ========
</TABLE>
The deferred tax liability consists of the following:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Accelerated depreciation on flight equipment................ $1,209,790 $1,137,213
Excess of state income taxes not currently deductible
for Federal income tax purposes........................... (31,643) (25,430)
Tax versus book lease differences........................... 127,527 109,806
Provision for overhauls..................................... (50,868) (57,262)
Rentals received in advance................................. (47,256) (51,283)
Straight line rents......................................... 19,557 16,015
Other....................................................... 979 3,628
---------- ----------
$1,228,086 $1,132,687
========== ==========
</TABLE>
31
<PAGE> 34
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE I -- INCOME TAXES (CONTINUED)
A reconciliation of computed expected total provision for income taxes to
the amount recorded is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Computed expected provision based upon a federal rate
of 35%............................................... $246,192 $196,796 $184,156
State income taxes, net of Federal income taxes........ 12,706 7,211 9,676
Foreign sales corporation benefit...................... (10,041) (8,719) (6,920)
Foreign taxes.......................................... 586 (3,194) --
Other.................................................. 515 828 563
-------- -------- --------
$249,958 $192,922 $187,475
======== ======== ========
</TABLE>
NOTE J -- OTHER INFORMATION
Concentration of Credit Risk
The Company leases and sells aircraft to airlines and others throughout the
world. All of the lease receivables and the majority of notes receivable are
from entities located throughout the world. The Company generally obtains
deposits on leases and obtains collateral in flight equipment on notes
receivable. The Company has no single customer which accounts for 10% or more of
revenues.
Segment Information
The Company operates within one industry: the leasing, sales and management
of flight equipment.
Revenues include rentals of flight equipment to foreign airlines of
$1,842,126 (1999), $1,623,891 (1998) and $1,472,075 (1997).
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>
1999 1998 1997
------------------ ------------------ ------------------
AMOUNT % AMOUNT % AMOUNT %
---------- ----- ---------- ----- ---------- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Europe............................. $ 946,335 45.5% $ 798,773 43.1% $ 705,128 40.7%
Asia/Pacific....................... 421,337 20.3 410,600 22.1 358,687 20.7
United States and Canada........... 389,593 18.7 333,472 18.0 345,143 19.9
Central, South America and
Mexico........................... 201,405 9.7 190,572 10.3 211,152 12.2
Africa and the Middle East......... 121,885 5.8 120,566 6.5 112,557 6.5
---------- ----- ---------- ----- ---------- -----
$2,080,555 100.0% $1,853,983 100.0% $1,732,667 100.0%
========== ===== ========== ===== ========== =====
</TABLE>
Currency Risk
The Company attempts to minimize its currency and exchange risks by
negotiating most of its aircraft lease in US dollars. Some of the Company's
leases, however, are negotiated in Euros to meet the needs of a growing number
of airlines. These Euro denominated leases are primarily used as a hedge against
Euro denominated debt obligations of the Company.
32
<PAGE> 35
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE J -- OTHER INFORMATION (CONTINUED)
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, 1999 by
$35,601.
NOTE K -- COMMITMENTS AND CONTINGENCIES
Aircraft orders
At December 31, 1999, the Company had committed to purchase 331 aircraft
deliverable from 2000 through 2007 at an estimated aggregate purchase price
(including adjustment for anticipated inflation) of approximately $16.4 billion.
The Company also had options to purchase an additional 83 aircraft
deliverable through 2007 at an estimated aggregate purchase price of $3.9
billion.
Most of these purchase commitments and options are based upon master
agreements 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, 757, 767 and 777), and the Airbus aircraft
(models A318, A319, A320, A321, A330 and A340) are being purchased pursuant to
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, 1999, the
Company had made non-refundable deposits (exclusive of capitalized interest) on
the aircraft which the Company has committed to purchase of approximately
$434,560 and $334,556 with Boeing and Airbus, respectively.
Management anticipates that a significant portion of the 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 has guaranteed a portion of the residual value of 29 aircraft
to financial institutions expiring at various dates through 2009. The guarantees
generally provide for the Company to pay the difference between the fair market
value of the aircraft and the guaranteed value up to certain specified amounts,
or, at the option of the Company, purchase the aircraft for the guaranteed
value. At December 31, 1999 and 1998, the maximum exposure if the Company were
to pay under such guarantees was $136,669 and $155,656, respectively.
Other Guarantees
The Company has guaranteed certain obligations for entities in which it has
an investment. At December 31, 1999 and 1998, the Company guaranteed nine loans
collateralized by aircraft aggregating $30,824 and $57,088, respectively.
33
<PAGE> 36
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L -- FINANCIAL INSTRUMENTS
In the normal course of business, the Company employs a variety of
off-balance sheet derivative transactions with the objective lowering its
overall borrowing cost and maintaining its optimal mix of variable and fixed
rate interest obligations. These derivative products include interest rate swap
agreements, currency swap agreements, swaptions and interest rate floors
(off-balance sheet derivative transactions). The Company only enters into
derivative transactions to hedge interest rate and currency risk and not to
speculate on interest rates or currency fluctuation.
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 credit risk through transacting with U.S. derivative dealers assigned
at least 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. 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
collateral for its positions with the Company although it can in certain
circumstances.
The following table provides the notional amounts of the Company's
off-balance sheet derivative transactions at December 31, 1999. 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
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 Company's results of operations, financial
condition and liquidity.
The following table presents the notional amounts of the Company's interest
rate swap agreements, swaptions and interest rate floors by maturity at December
31, 1999 and 1998.
<TABLE>
<CAPTION>
REMAINING LIFE
------------------------------------
TWO TO AFTER FIVE TOTAL TOTAL
TYPE ONE YEAR FIVE YEARS YEARS 1999 1998
---- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest Rate:
Swaps......................... $148,234 $2,139,228 $1,484,481 $3,771,943 $4,185,945
Swaptions(1).................. 100,000
Floors........................ 33,451 766,794 -- 800,245 830,655
-------- ---------- ---------- ---------- ----------
Total......................... $181,685 $2,906,022 $1,484,481 $4,572,188 $5,116,600
======== ========== ========== ========== ==========
</TABLE>
- ---------------
(1) Swaptions obligate the Company to convert certain fixed rate obligations to
floating rate obligations if the option purchaser chooses to exercise. These
amounts do not represent credit exposure.
The Company has entered into various derivative transactions with several
broker-dealers, including a related party broker-dealer. The Company has
executed $775,480 and $3,264,223 notional amount of derivative instruments with
the related party during 1999 and 1998, respectively.
34
<PAGE> 37
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
NOTE L -- FINANCIAL INSTRUMENTS (CONTINUED)
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 determine 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 determine fair value without incurring excessive costs due to
their short maturities. The carrying amount of these investments at
December 31, 1999 represents the original cost or original cost plus the
Company's share of earnings of the investment. For investments held by the
Company that had a quoted market price at December 31, 1999, the Company
used such quoted market price in determining 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
assumptions about future interest rates, interest volatility and other
factors (swaps, swaptions and interest rate floors).
Guarantees: It is not practical to determine the fair value of the
Company's guarantees and the value is not significant to the Company.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------- -------------------------------------
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............ $ 123,109 $ 123,109 $ 52,723 $ 52,723
Notes receivable..................... 270,436 247,475 340,344 334,452
Investments.......................... 6,067 6,067 11,771 11,879
Debt financing....................... (11,192,220) (11,045,875) (10,373,242) (10,607,696)
Off-balance-sheet financial
instruments:
Swaps (interest and currency)... (34,793) (9,925) (36,260) (36,384)
Swaptions....................... (2,066) -- (2,501) --
Interest rate floors............ (1,210) 3,205 (1,568) (10,824)
</TABLE>
35
<PAGE> 38
INTERNATIONAL LEASE FINANCE CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E
------ ------------ ----------------------------- ------------ -------------
ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER ACCOUNTS-- DEDUCTIONS-- BALANCE AT
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE(1) END OF PERIOD
----------- ------------ ---------- ---------------- ------------ -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Reserve for overhaul:
Year ended December 31, 1999...... $152,764 $101,302 $117,615 $136,451
Year ended December 31, 1998...... $110,822 $102,508 $ 60,566 $152,764
Year ended December 31, 1997...... $102,492 $ 99,458 $ 91,128 $110,822
</TABLE>
- ---------------
(1) Reimbursements to lessees for overhauls performed and amounts transferred to
buyers for aircraft sold.
36
<PAGE> 39
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 9, 2000
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 9, 2000
- ------------------------------------------------
Leslie L. Gonda
/s/ STEVEN F. UDVAR-HAZY Chief Executive Officer and March 9, 2000
- ------------------------------------------------ Director
Steven F. Udvar-Hazy
Director
- ------------------------------------------------
Louis L. Gonda
Director
- ------------------------------------------------
M. R. Greenberg
Director
- ------------------------------------------------
Edward E. Matthews
/s/ WILLIAM N. DOOLEY Director March 9, 2000
- ------------------------------------------------
William N. Dooley
/s/ HOWARD I. SMITH Director March 9, 2000
- ------------------------------------------------
Howard I. Smith
/s/ ALAN H. LUND Chief Financial Officer and March 9, 2000
- ------------------------------------------------ Chief Accounting Officer
Alan H. Lund
</TABLE>
37
<PAGE> 40
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 or proxy statement, form of proxy or other
proxy soliciting materials have been sent to security holders since January 1,
1990.
38
<PAGE> 1
EXECUTION COPY
$1,500,000,000 364-Day Revolving Credit Agreement
dated as of
November 17, 1999
among
INTERNATIONAL LEASE FINANCE CORPORATION,
THE BANKS (as defined herein),
CITICORP USA, INC.,
as Administrative Agent,
THE CHASE MANHATTAN BANK,
COMMERZBANK,
SOCIETE GENERALE,
as Co-Syndication Agents,
and
SALOMON SMITH BARNEY INC.,
as Arranger and Book Manager
<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........................................................10
Section 2.1. Making of Bid Loans..................................................10
Section 2.2. Procedure for Bid Loans..............................................11
Section 2.3. Funding of Bid Loans.................................................13
Section 2.4. Bid Notes............................................................13
SECTION 3. COMMITTED LOANS AND NOTES......................................................13
Section 3.1. Agreement to Make Committed Loans....................................13
Section 3.2. Procedure for Committed Loans........................................15
Section 3.3. Maturity of Committed Loans..........................................16
Section 3.4. Committed Notes......................................................16
SECTION 4. INTEREST AND FEES..............................................................16
Section 4.1. Interest Rates.......................................................16
Section 4.2. Interest Payment Dates...............................................17
Section 4.3. Setting and Notice of Committed Loan Rates...........................17
Section 4.4. Facility Fee.........................................................17
Section 4.5. Utilization Fee......................................................18
Section 4.6. Agent's Fees.........................................................18
Section 4.7. Computation of Interest and Fees.....................................18
SECTION 5. REDUCTION OR TERMINATION OF THE COMMITMENTS; REPAYMENT; PREPAYMENTS............18
Section 5.1. Voluntary Termination or Reduction of the Commitments................18
Section 5.2. Voluntary Prepayments................................................19
SECTION 6. MAKING AND PRORATION OF PAYMENTS; SET-OFF; TAXES...............................19
Section 6.1. Making of Payments...................................................19
Section 6.2. Pro Rata Treatment; Sharing..........................................19
Section 6.3. Set-off..............................................................20
Section 6.4. Taxes, etc...........................................................20
SECTION 7. INCREASED COSTS AND SPECIAL PROVISIONS FOR ABSOLUTE RATE LOANS AND
LIBOR RATE LOANS...................................................................22
Section 7.1. Increased Costs......................................................22
Section 7.2. Basis for Determining Interest Rate Inadequate or Unfair.............23
Section 7.3. Changes in Law Rendering Certain Loans Unlawful......................23
Section 7.4. Funding Losses.......................................................24
Section 7.5. Discretion of Banks as to Manner of Funding..........................24
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 7.6. Conclusiveness of Statements; Survival of Provisions.................24
SECTION 8. REPRESENTATIONS AND WARRANTIES.................................................24
Section 8.1. Organization, etc....................................................25
Section 8.2. Authorization; Consents; No Conflict.................................25
Section 8.3. Validity and Binding Nature..........................................25
Section 8.4. Financial Statements.................................................25
Section 8.5. Litigation and Contingent Liabilities................................26
Section 8.6. Employee Benefit Plans...............................................26
Section 8.7. Investment Company Act...............................................26
Section 8.8. Public Utility Holding Company Act...................................26
Section 8.9. Regulation U.........................................................26
Section 8.10. Information.........................................................26
Section 8.11. Compliance with Applicable Laws, etc................................27
Section 8.12. Insurance...........................................................27
Section 8.13. Taxes...............................................................27
Section 8.14. Use of Proceeds.....................................................27
Section 8.15. Pari Passu..........................................................27
Section 8.16. Ownership and Liens.................................................28
Section 8.17. Year 2000...........................................................29
SECTION 9. COVENANTS......................................................................29
Section 9.1. Reports, Certificates and Other Information..........................29
Section 9.2. Existence............................................................30
Section 9.3. Nature of Business...................................................31
Section 9.4. Books, Records and Access............................................31
Section 9.5. Insurance............................................................31
Section 9.6. Repair...............................................................31
Section 9.7. Taxes................................................................31
Section 9.8. Compliance...........................................................31
Section 9.9. Sale of Assets.......................................................32
Section 9.10. Consolidated Indebtedness to Consolidated Tangible Net
Worth Ratio.........................................................32
Section 9.11. Fixed Charge Coverage Ratio.........................................32
Section 9.12. Consolidated Tangible Net Worth.....................................32
Section 9.13. Restricted Payments.................................................32
Section 9.14. Liens...............................................................32
Section 9.15. Leases..............................................................35
Section 9.16. Use of Proceeds.....................................................35
SECTION 10. CONDITIONS TO LENDING.........................................................35
Section 10.1. Conditions Precedent to All Loans...................................35
Section 10.2. Conditions to the Availability of the Commitments...................36
SECTION 11. EVENTS OF DEFAULT AND THEIR EFFECT............................................37
Section 11.1. Events of Default...................................................37
Section 11.2. Effect of Event of Default..........................................39
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 12. THE AGENT.....................................................................39
Section 12.1. Authorization.......................................................39
Section 12.2. Indemnification.....................................................39
Section 12.3. Action on Instructions of the Required Banks........................40
Section 12.4. Payments............................................................40
Section 12.5. Exculpation.........................................................41
Section 12.6. Credit Investigation................................................41
Section 12.7. CUSA and Affiliates.................................................43
Section 12.8. Resignation.........................................................43
SECTION 13. GENERAL.......................................................................43
Section 13.1. Waiver; Amendments..................................................43
Section 13.2. Notices.............................................................44
Section 13.3. Computations........................................................44
Section 13.4. Assignments; Participations.........................................44
Section 13.5. Costs, Expenses and Taxes...........................................48
Section 13.6. Indemnification.....................................................48
Section 13.7. Regulation U........................................................49
Section 13.8. Extension of Termination Dates; Removal of Banks;
Substitution of Banks...............................................49
Section 13.9. Captions............................................................51
Section 13.10. Governing Law; Severability........................................51
Section 13.11. Counterparts; Effectiveness........................................51
Section 13.12. Further Assurances.................................................51
Section 13.13. Successors and Assigns.............................................51
Section 13.14. Waiver of Jury Trial...............................................52
Section 13.15. No Fiduciary Relationship..........................................52
</TABLE>
iii
<PAGE> 5
SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
Schedule I Schedule of Banks (Sections 1.2 and 13.8)
Schedule II Fees and Margins (Sections 1.2, 4.4, 4.5 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 1.2 and 3.2)
Exhibit D Form of Bid Note (Section 1.2 and 2.4)
Exhibit E Form of Committed Note (Section 1.2 and 3.4)
Exhibit F Fixed Charge Coverage Ratio (Sections 1.2 and 9.11)
Exhibit G Form of Opinion of 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)
</TABLE>
iv
<PAGE> 6
364-DAY REVOLVING CREDIT AGREEMENT
364-DAY REVOLVING CREDIT AGREEMENT (this "Agreement"), dated as
of November 17, 1999, 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 CITICORP USA, INC. (herein, in its individual corporate
capacity, together with its successors and assigns, called "CUSA"), 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
$1,500,000,000 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:
"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
<PAGE> 7
-2-
of such other Person, whether through ownership of stock, by contract or
otherwise.
"Agent" - see Preamble.
"Aggregate Commitment" means $1,500,000,000, 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 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 on any day be
equal to the higher of, (a) the rate of interest announced publicly by Citibank,
N.A. in New York, New York, from time to time, as Citibank, N.A.'s base rate;
(b) the Federal Funds Rate for such day plus 1/2 of 1% per annum; (c) the
Three-Month Secondary CD Rate for such day plus 1/2 of 1% per annum; and (d)
during the period from and including December 15, 1999 to and including January
17, 2000, 2% per annum above the Targeted 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.
<PAGE> 8
-3-
"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 of America.
"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.
"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
<PAGE> 9
-4-
accordance with generally accepted accounting principles in the United States of
America.
"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 of
America consolidating the Company and its Subsidiaries.
"CUSA" - see Preamble.
"Dollar", and $, refer to the lawful money of the United States
of America.
"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 limitation, 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 period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for such day
on such transactions
<PAGE> 10
-5-
received by the Agent from three Federal funds brokers of recognized standing
selected by it.
"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 June
30, 1999 is attached hereto as Exhibit F); provided, however, that if the
Required Banks in their sole discretion determine that amendments to Regulation
S-K subsequent to the date hereof substantially modify the provisions of such
Item 503, "Fixed Charge Coverage Ratio" shall have the meaning determined by
this definition without regard to any such amendments.
"Funding Date" means the date on which any Loan is scheduled to
be disbursed.
"Funding Office" means, with respect to any Bank, any office or
offices of such Bank or Affiliate or Affiliates of such Bank through which such
Bank shall fund or shall have funded any Loan. A Funding Office may be, at such
Bank's option, either a domestic or foreign office of such Bank or a domestic or
foreign office of an Affiliate of such Bank.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranties" by any Person means all obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Indebtedness, dividend or other obligation of any other Person (the "Primary
Obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such Person: (a) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (b) to advance or supply
funds (i) for the purchase or payment of such Indebtedness or obligation or (ii)
to maintain working capital or other balance sheet condition or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, (c) to lease property or to purchase securities or other property
or services primarily for the purpose of assuring the owner of such Indebtedness
or obligation of the ability of the Primary Obligor to make payment of the
Indebtedness or obligation or (d) otherwise to assure the owner of the
Indebtedness or obligation of the Primary Obligor against loss in respect
thereof; provided, however, that the obligation described in clause (c) shall
not include (i) obligations of a buyer under an agreement with a seller to
purchase goods or services entered into in the ordinary course of such buyer's
and seller's businesses unless such agreement requires that such buyer make
payment whether or not delivery is ever made of such goods or services and (ii)
remarketing agreements where the remaining debt on an aircraft does not exceed
the aircraft's net book value, determined in accordance with industry standards,
except that clause (c) shall apply to the amount of remaining debt under a
remarketing agreement that exceeds the net book value of the aircraft. For the
purposes of all computations made under this Agreement, a Guaranty in respect of
any Indebtedness for borrowed money shall be deemed to
<PAGE> 11
-6-
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 of America shall be classified upon a balance sheet of such
Person as liabilities of such Person, and in any event shall include all:
(a) obligations of such Person for borrowed money or which have
been incurred in connection with the acquisition of property or assets
(other than security and other deposits on flight equipment),
(b) obligations secured by any Lien or other charge upon
property or assets owned by such Person, even though such Person has not
assumed or become liable for the payment of such obligations,
(c) obligations created or arising under any conditional sale,
or other title retention agreement with respect to property acquired by
such Person, notwithstanding the fact that the rights and remedies of
the seller, lender or lessor under such agreement in the event of
default are limited to repossession or sale of property,
(d) Capitalized Rentals of such Person under any Capitalized
Lease,
(e) obligations evidenced by bonds, debentures, notes or other
similar instruments, and
(f) Guaranties by such Person to the extent required pursuant to
the definition thereof.
"Indemnified Liabilities" - see Section 13.6.
"Investment" means any investment, made in cash or by delivery
of any kind of property or asset, in any Person, whether (i) by acquisition of
(x) shares of stock or similar interest, (y) Indebtedness or (z) other
obligation or security or (ii) by loan, advance or capital contribution, or
otherwise. For purposes of this Agreement, Investment shall exclude any notes
receivable and any finance or sales type leases entered into by the Company or
any of its Subsidiaries in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto and minus the amount of any portion of such Investment repaid
to such Person in cash as a return of capital, but without any other adjustment
for increases or decreases in value, or write ups, write-downs or write-offs
with respect to such Investment.
"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%),
<PAGE> 12
-7-
determined pursuant to the following formula:
<TABLE>
<S> <C>
LIBOR = Base LIBOR
---------------------------------------------
(1 - Eurodollar Reserve Percentage)
</TABLE>
"LIBOR Rate" means (i) with respect to Committed Loans that are
LIBOR Rate Loans, LIBOR plus the applicable rate margin set forth in Schedule II
and (ii) with respect to Bid Loans that are LIBOR Rate Loans, LIBOR plus or
minus the rate margin set forth in a Bid for a particular Bid Loan amount and a
particular Loan Period.
"LIBOR Rate Loan" means any Loan which bears interest at a LIBOR
Rate.
"Lien" means any mortgage, pledge, lien, security interest or
other charge, encumbrance or preferential arrangement, including the retained
security title of a conditional vendor or lessor.
"Litigation Actions" means all litigation, claims and
arbitration proceedings, proceedings before any Governmental Authority or
investigations which are pending or, to the knowledge of the Company, threatened
against, or affecting, the Company or any Subsidiary.
"Loan Period" means (i) with respect to any Absolute Rate Loan,
the period commencing on such Loan's Funding Date and ending not less than 14
days thereafter nor more than 183 days thereafter as specified in the Bid Loan
Request related to such Bid Loan 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 Notice of Competitive Bid Borrowing, 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
<PAGE> 13
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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 CUSA which, as of the date
hereof, is located at 2 Penns Way, Suite 200, New Castle, DE 19720, Attn:
Christian Laughton, Telecopy Number 302-894-6005; Telephone 302-894-6120.
"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.
"Payment Office" means the office of the Agent which, as of the
date hereof, is at 2 Penns Way, Suite 200, New Castle, DE 19720, Account Number:
36852248, Attn: Christian Laughton.
"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
<PAGE> 14
-9-
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.
"Reference Banks" means Citibank, N.A., Commerzbank and Societe
Generale.
"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.
"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.
"Successor Bank" - see Section 13.8(c).
"Targeted Federal Funds Rate" has the meaning assigned to such
term in Regulation A of the Board of Governors of the Federal Reserve System.
<PAGE> 15
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"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) November 15, 2000 or such later date as may be agreed to by such
Bank pursuant to Section 13.8(a), or if such day is not a Business Day, the next
preceding Business Day, (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 such day is not a Business Day, the next
preceding Business Day; in all cases, subject to the provisions of Section
13.8(d).
"Three-Month Secondary CD Rate" means, for any period, the
latest three-week moving average of secondary market morning offering rates in
the United States of America for three-month certificates of deposit of major
United States of America money market banks, such three-week moving average
being determined weekly on each Monday (or, if any such day is not a Business
Day, on the next succeeding Business Day) for the three-week period ending on
the next previous Friday by the Agent on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve Bank of
New York or, if such publications shall be suspended or terminated, on the basis
of quotations for such rates received by the Agent from three New York
certificate of deposit dealers of recognized standing selected by the Agent, in
either case adjusted to the nearest 1/4 of 1% or, if there is no nearest 1/4 of
1%, to the next highest 1/4 of 1%.
"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
<PAGE> 16
-11-
the fourteenth day preceding such Bank's Termination Date in amounts equal to
such Bank's Bids that have been accepted as provided in Section 2.2(c);
provided, that the aggregate principal amount of all outstanding Loans shall not
at any time exceed the then Aggregate Commitment.
Section 2.2. Procedure for Bid Loans.
(a) Bid Loan Request. Whenever the Company desires to incur a
competitive bid borrowing (a "Bid Borrowing"), it shall give the Agent written
notice (or telephonic notice promptly confirmed in writing), such notice to be
delivered to the Agent at its Notice Office no later than 12:00 Noon, New York
City time, at least three Business Days prior to any proposed LIBOR Rate Loan
and at least one Business Day prior to any proposed Absolute Rate Loan. Each
such notice shall be substantially in the form of Exhibit A hereto (each a
"Notice of Competitive Bid Borrowing"), and shall specify in each case (i) the
date of such proposed Bid Borrowing (which shall be a Business Day), (ii) the
aggregate amount of the proposed Bid Borrowing, (iii) whether the proposed Bid
Borrowing is to be an Absolute Rate Loan or a LIBOR Rate Loan and the Loan
Period, (iv) the maturity date for repayment of each Bid Loan to be made as part
of such borrowing (which maturity date shall not be earlier than one month after
the date of any proposed LIBOR Rate Loan or 14 days after the date of any
proposed Absolute Rate Loan or later than the earliest to occur of (x) six
months after the date of such proposed Bid Loan, (y) the Termination Date and
(z) if the proposed Bid Loan has an interest rate that is the LIBOR Rate, the
last day of the proposed Loan Period), (v) the interest payment date or dates
relating thereto, (vi) the account of the Company to which the proceeds of such
Bid Borrowing are to be credited and (vii) any other terms to be applicable to
such Bid Borrowing. The Agent shall promptly give each Bank written notice (or
telephonic notice promptly confirmed in writing) of each such request for a Bid
Borrowing received by it from the Company. Each Notice of Competitive Bid
Borrowing shall contemplate Bid Loans in a minimum aggregate principal amount of
$10,000,000 or a higher integral multiple of $1,000,000, not to exceed, however,
the excess of the then Aggregate Commitment over the aggregate principal amount
of all outstanding Loans, calculated as of the relevant Funding Date, assuming
that the Company will pay, when due, all Loans maturing on or prior to such
Funding Date (the "Available Commitment").
(b) Bidding Procedure. Each Bank shall, if in its sole
discretion it elects to do so, irrevocably offer to make one or more Bid 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. Each Bid shall be substantially in the form of Exhibit B (each a "Bid"),
and shall specify in each case (i) the Loan Period, (ii) 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), (iii) the rate or rates of interest
therefor and (iv) such Bank's lending office with respect to such Bid Loan;
provided, that if the Agent in its capacity as a Bank
<PAGE> 17
-12-
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. The Company may not accept
offers whose aggregate principal amount is greater than the requested
aggregate amount as specified in the related Notice of Competitive Bid
Borrowing, subject to the proviso in Section 2.1.
(d) Cancellation of Bid Borrowing. If the Company notifies the
Agent that such proposed Bid Borrowing is cancelled pursuant to clause (c)(i)
above, the Agent shall give prompt notice thereof to the Banks and such Bid
Borrowing shall not be made.
(e) Notification of Acceptance. If the Company accepts one or
more of the offers made by any Bank or Banks pursuant to clause (c)(ii) above,
the Agent shall in turn promptly notify (x) each Bank that has made an offer as
described in clause (b) above, of the date and aggregate amount of such Bid
Borrowing and whether or not any offer or offers made by such Bank pursuant to
clause (b) above have been accepted by the Company and (y) each Bank that is to
make a Bid Loan as part of such Bid Borrowing, of the amount of each Bid Loan to
be made by such Bank as part of such Bid Borrowing.
(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
<PAGE> 18
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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 the 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 refutable 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 from the date hereof until 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. Within the limits of this Section 3.1, the
Company may from time to time borrow, prepay and reborrow Committed Loans on the
terms and conditions set forth in this Agreement.
<PAGE> 19
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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).
(b) Amount and Increments of Committed Loans. Each Committed
Loan Request shall contemplate Committed Loans in a minimum aggregate amount of
$10,000,000 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
<PAGE> 20
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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 each Loan for the period commencing
on the Funding Date for such Loan 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
<PAGE> 21
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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 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
<PAGE> 22
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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 December, 1999) 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. Utilization Fee. The Company agrees to pay to the
Agent for the accounts of the Banks pro rata in accordance with their respective
Percentages, (i) during any period that the aggregate outstanding principal
amount of the Loans exceeds 33.33% of the Aggregate Commitment, a utilization
fee computed by multiplying the average daily amount of the Aggregate Commitment
by the applicable percentage determined with respect to such utilization fee in
accordance with Schedule II hereto and (ii) during any period that the aggregate
outstanding principal amount of the Loans exceeds 66.66% of the Aggregate
Commitment, a utilization fee computed by multiplying the average daily amount
of the Aggregate Commitment by the applicable percentage determined with respect
to such utilization fee in accordance with Schedule II hereto; provided, that in
calculating the aggregate outstanding principal amount of the Loans for purposes
of this Section 4.5 only, the aggregate outstanding principal amount of the
Loans shall not include the first $300,000,000 of the aggregate outstanding
principal amount of Bid Loans. Accrued utilization fees shall be due and payable
on each date that interest is payable on each such Loan.
Section 4.6. 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 4.7. Computation of Interest and Fees. Interest on LIBOR
Rate Loans, 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 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;
REPAYMENT; 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 of $1,000,000 in excess 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
<PAGE> 23
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fees and all other obligations of the Company hereunder; provided, however, that
the Company may not at any time terminate the Commitments if any Bid Loan is
outstanding (unless the holder of each such outstanding Bid Loan has given its
prior written consent to the concurrent repayment of such Bid Loan).
Section 5.2. Voluntary Prepayments. The Company may voluntarily
prepay Loans (other than Bid Loans, which may only be prepaid with the prior
written consent of the holder thereof) without premium or penalty, except as may
be required pursuant to subsection (e) below, in whole or in part; provided,
that (a) each prepayment shall be in an aggregate principal amount of
$10,000,000 or an integral multiple of $1,000,000 in excess thereof, (b) except
for the prepayment of the aggregate amount of all Loans outstanding, no such
prepayment shall result in there being less than $10,000,000 in Loans
outstanding in the aggregate, (c) the Company shall give the Agent at its Notice
Office (which shall promptly advise each Bank) not less than three Business
Days' prior notice thereof specifying the Loans to be prepaid and the date and
amount of prepayment, (d) any prepayment of principal of any Loan shall include
accrued interest to the date of prepayment on the principal amount being prepaid
and (e) any prepayment of a LIBOR Rate Loan 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), payments (including those made pursuant to Sections 5.1) of principal
of, or interest on, the Loans and all payments of fees shall be made by the
Company to the Agent in immediately available funds at its Payment Office not
later than 12:00 Noon, New York City time, on the date due; and funds received
after that hour shall be deemed to have been received by the Agent on the next
following Business Day. The Agent shall promptly remit to each Bank or other
holder of a Note its share (if any) of each such payment. All payments under
Section 7 shall be made by the Company directly to the Persons entitled thereto.
Section 6.2. Pro Rata Treatment; Sharing.
(a) Except as required pursuant to Section 7 or Section 13.8,
each payment or prepayment of principal of any Committed Loans, each payment of
interest on the Committed Loans, and each payment of the facility fee shall be
allocated pro rata among the Banks in accordance with their respective
Percentages. Each payment of principal of any Bid Borrowing shall be allocated
pro rata among the Banks participating in such Bid Borrowing in accordance with
the respective principal amounts of their outstanding Bid Loans comprising such
Bid Borrowing. Each payment of interest on any Bid Borrowing shall be allocated
pro rata among the Banks participating in such Bid Borrowing in accordance with
the respective amounts of accrued and unpaid interest on their outstanding Bid
Loans comprising such Bid Borrowing.
(b) If any Bank or other holder of a Committed Loan shall obtain
any payment or other recovery (whether voluntary, involuntary, by application of
offset or otherwise) on account of principal of, interest on or fees or other
amounts with respect to any Committed Loan in excess of the share of payments
and other recoveries (exclusive of payments or recoveries under Section 7 or
pursuant to Section 13.8) such Bank or other holder would have received if such
<PAGE> 24
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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,
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,
<PAGE> 25
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(ii) except to the extent that such withholding or deduction
results from the breach by the recipient of a payment of its agreement
contained in Section 6.4(b) or would not be required if the
representation or warranty contained in Section 6.4(b) were true, pay
such additional amounts as may be necessary in order that the net amount
received by the Agent, each Bank, each Assignee and each Participant
after such deductions or withholdings (including any required deduction
or withholding on such additional amounts) shall equal the amount such
payee would have received had no such deductions or withholdings been
made, and
(iii) promptly forward to the Agent (for delivery to such payee)
an official receipt or other documentation satisfactory to the Agent
evidencing such payment to such authorities.
Moreover, if any Taxes are directly asserted against the Agent,
any Bank, any Assignee or any Participant, such payee may pay such Taxes and the
Company shall promptly pay such additional amount (including, without
limitation, any penalties, interest or expenses) as may be necessary in order
that the net amount received by such payee after the payment of such Taxes
(including any Taxes on such additional amount) shall equal the amount such
payee would have received had no such Taxes been asserted (provided, that the
Agent, the Banks, and any Assignee or Participant shall use reasonable efforts,
to the extent consistent with applicable laws and regulations, to minimize to
the extent possible any such Taxes if they can do so without material cost or
legal or regulatory disadvantage). 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 of America 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 of America 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 or 13.8(c), 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 of America 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
<PAGE> 26
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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 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
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
<PAGE> 27
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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.
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
<PAGE> 28
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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 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
<PAGE> 29
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of the jurisdiction of its incorporation; each other Subsidiary (if any) is an
entity duly organized and validly existing under the laws of the jurisdiction of
its organization; and each of the Company and each Subsidiary has the power to
own its property and to carry on its business as now being conducted and is duly
qualified and in good standing as a foreign corporation or other entity
authorized to do business in each jurisdiction where, because of the nature of
its activities or properties, such qualification is required, except where the
failure to be so qualified or in good standing could not reasonably be expected
to have a Material Adverse Effect.
Section 8.2. Authorization; Consents; No Conflict. The execution
and delivery by the Company of this Agreement and the Notes, the borrowings
hereunder and the performance by the Company of its obligations under this
Agreement and the Notes (a) are within the corporate powers of the Company, (b)
have been duly authorized by all necessary corporate action on the part of the
Company, (c) have received all necessary approvals, authorizations, consents,
registrations, notices, exemptions and licenses (if any shall be required) from
Governmental Authorities and other Persons, except for any such approvals,
authorizations, consents, registrations, notices, exemptions or licenses
non-receipt of which could not reasonably be expected to have a Material Adverse
Effect, (d) do not and will not contravene or conflict with any provision of (i)
law, (ii) any judgment, decree or order to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary is bound, (iii) the
charter, by-laws or other organizational documents of the Company or any
Subsidiary or (iv) any provision of any agreement or instrument binding on the
Company or any Subsidiary, or any agreement or instrument of which the Company
is aware affecting the properties of the Company or any Subsidiary, except with
respect to (i), (ii) and (iv) above, for any such contravention or conflict
which could not reasonably be expected to have a Material Adverse Effect and (e)
do not and will not result in or require the creation or imposition of any Lien
on any of the Company's or its Subsidiaries' properties.
Section 8.3. Validity and Binding Nature. This Agreement is, and
the Notes when duly executed and delivered will be, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 8.4. Financial Statements. The Company's audited
consolidated financial statements as at December 31, 1998, and unaudited
consolidated financial statements as at June 30, 1999, 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 of America 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 year 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
<PAGE> 30
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of the Company and its Subsidiaries taken as a whole.
Section 8.6. Employee Benefit Plans. Each employee benefit plan
(as defined in Section 3(3) of ERISA) as to which the Company, or any Subsidiary
or any ERISA Affiliate may have any liability complies in all material respects
with all applicable requirements of law and regulations. During the
twelve-consecutive-month period prior to the execution and delivery of this
Agreement, (i) no steps have been taken to terminate any Plan and no
contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA, (ii) no Reportable Event has
occurred with respect to any Plan and (iii) neither the Company nor any ERISA
Affiliate has either withdrawn or instituted steps to withdraw from any
Multiemployer Plan, except in any such case for actions which individually or in
the aggregate could not reasonably be expected to have a Material Adverse
Effect. No condition exists or event or transaction has occurred in connection
with any Plan which could reasonably be expected to result in the incurrence by
the Company, any Subsidiary or any ERISA Affiliate of any material liability,
fine or penalty (imposed by Section 4975 of the Code or Section 502(i) of ERISA
or otherwise). Neither the Company nor any ERISA Affiliate is a member of, or
contributes to, any Multiemployer Plan. Neither the Company nor any ERISA
Affiliate has any contingent liability with respect to any post retirement
benefit under an employee welfare benefit plan (as defined in section 3(i) of
ERISA), other than liability for continuation coverage described in Part 6 of
Title I of ERISA.
Section 8.7. Investment Company Act. The Company is not an
"investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
Section 8.8. Public Utility Holding Company Act. Neither the
Company nor any Subsidiary is a "holding company", or a "subsidiary company" of
a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 8.9. Regulation U. Neither the Company nor any
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System).
Section 8.10. Information.
(a) All information with respect to the Company contained in the
October 6, 1999 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
<PAGE> 31
-26-
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, ERISA and all applicable environmental laws).
Neither the Company nor any Subsidiary is in default under any agreement or
instrument to which the Company or such Subsidiary is a party or by which it or
any of its properties or assets is bound, which default could reasonably be
expected to have a Material Adverse Effect on the business, credit, operations,
financial condition or prospects of the Company and its Subsidiaries taken as a
whole. No Event of Default or Unmatured Event of Default has occurred and is
continuing.
Section 8.12. Insurance. Each of the Company and each Subsidiary
maintains, or, in the case of any property owned by the Company or any
Subsidiary and leased to lessees, has caused such lessees to maintain, insurance
with financially sound and reputable insurers to such extent and against such
hazards and liabilities as is commonly maintained, or caused to be maintained,
as the case may be, by companies similarly situated.
Section 8.13. Taxes. Each of the Company and each Subsidiary has
filed all tax returns which are required to have been filed and has paid, or
made adequate provisions for the payment of, all of its Taxes which are due and
payable, except such Taxes, if any, as are being contested in good faith and by
appropriate proceedings and as to which such reserves or other appropriate
provisions as may be required by generally accepted accounting principles have
been established and except where failure to pay such Taxes, individually or in
the aggregate, cannot reasonably be expected to have a Material Adverse Effect.
Section 8.14. Use of Proceeds. The proceeds of the Loans will be
used by the Company to support the Company's commercial paper program and for
other general corporate purposes.
Section 8.15. Pari Passu. All obligations and liabilities of the
Company hereunder shall rank at least equally and ratably (pari passu) in
priority with all other unsubordinated, unsecured obligations of the Company to
any other creditor.
Section 8.16. Ownership and Liens. Each of the Company and each
Subsidiary has title to, or valid leasehold interests in, all of its properties
and assets, real and personal, including the properties and assets, and
leasehold interests reflected in the financial statements referred to in Section
8.4 (other than any properties or assets disposed of in the ordinary course of
business) other than such imperfections in title or leasehold interests which
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect, and none of the properties and assets owned by the Company or any of its
Subsidiaries and none of its leasehold interests is subject to any Lien, except
as disclosed in such financial statements or as may be permitted under this
Agreement.
<PAGE> 32
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Section 8.17. Year 2000. The Company has reviewed and is
currently completing a detailed analysis of its operations with a view to
assessing whether it will be vulnerable to a Year 2000 Problem (as defined
below). Based on such review, the Company does not believe that a Material
Adverse Effect will result from a Year 2000 Problem. For purposes of this
Section 8.17, "Year 2000 Problem" means any significant risk that computer
hardware or software used in the essential business systems, process control
systems or other operations of the Company will not, in the case of dates or
time periods occurring after December 31, 1999, function adequately so that no
Material Adverse Effect will result from the advent of year 2000.
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 of America and certified by Ernst &
Young or by another independent certified public accountant of
recognized national standing selected by the Company and satisfactory to
the Required Banks.
9.1.2. Interim Reports. As soon as available, and in any event
within 50 days after each quarter (except the last quarter) of each
fiscal year of the Company, a copy of the unaudited financial statements
of the Company and its Subsidiaries for such quarter prepared in a
manner consistent with the audited financial statements referred to in
Section 9.1.1, signed by the Company's chief financial officer and
consisting of at least a balance sheet as at the close of such quarter
and statements of earnings and cash flows for such quarter and for the
period from the beginning of such fiscal year to the close of such
quarter.
9.1.3. Certificates. Contemporaneously with the furnishing of a
copy of each annual audit report and of each set of quarterly statements
provided for in this Section 9.1, a certificate of the Company dated the
date of delivery of such annual report or such quarterly statements and
signed by the Company's chief financial officer, to the effect that no
Event of Default or Unmatured Event of Default has occurred and is
continuing, or, if there is any such event, describing it and the steps,
if any, being taken to cure it and containing a computation of, and
showing compliance with, each of the financial ratios and restrictions
contained in this Section 9.
9.1.4. Certain Notices. Forthwith upon learning of the
occurrence of any of the following, written notice thereof, describing
the same and the steps being taken by the
<PAGE> 33
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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 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,
<PAGE> 34
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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. (a) 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 of America shall be made of all dealings and
transactions in relation to its respective business and activities. (b) Permit,
and cause each Subsidiary to permit, access by the Agent and each Bank to the
books and records of the Company and such Subsidiary during normal business
hours, and permit, and cause each Subsidiary to permit, the Agent and each Bank
to make copies of such books and records.
Section 9.5. Insurance. Maintain, and cause each Subsidiary to
maintain, such insurance as is described in Section 8.12.
Section 9.6. Repair. Maintain, preserve and keep, and cause each
Subsidiary to maintain, preserve and keep, its material properties in good
repair, working order and condition, and from time to time make, and cause each
Subsidiary to make, all necessary and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that at all times the
efficiency thereof shall be fully preserved and maintained. In the case of
properties leased by the Company or any Subsidiary to lessees, the Company may
satisfy its obligations related to such properties under the previous sentence
by causing, or by causing each Subsidiary to cause, such lessees to perform such
obligations.
Section 9.7. Taxes. Pay, and cause each Subsidiary to pay, when
due, all of its Taxes, unless and only to the extent that the Company or such
Subsidiary, as the case may be, is contesting any such Taxes in good faith and
by appropriate proceedings and the Company or such Subsidiary has set aside on
its books such reserves or other appropriate provisions therefor as may be
required by generally accepted accounting principles in the United States of
America, 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 (including without limitation
ERISA) and governmental rules and regulations applicable to it; and use
reasonable efforts to cause, and cause each Subsidiary to use reasonable efforts
to cause, each lessee of property owned by the Company or any Subsidiary to
comply in all material respects with all statutes, governmental rules and
regulations applicable to such property or applicable to such lessee in
connection with its leasing.
<PAGE> 35
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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.
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 since September 30, 1994 determined
on a consolidated basis in accordance with United States of America generally
accepted accounting principles, (b) the cumulative equity capital contributions
from AIG since September 30, 1994 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 the 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
<PAGE> 36
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property or to secure Indebtedness permitted under Section 9.15 incurred
or guaranteed by the Company or any Subsidiary prior to, at the time of,
or within 60 days after the later of the acquisition, completion of
construction or commencement of full operation of such property, which
Indebtedness was incurred or guaranteed solely for the purpose of
financing the acquisition of such property or construction or
improvements thereon; provided, however, that in the case of any such
acquisition, construction or improvement, the Lien shall not apply to
any property theretofore owned by the Company or a Subsidiary, other
than, in the case of any such construction or improvement, any
theretofore unimproved real property on which the property so
constructed, or the improvement, is located;
(c) Liens securing the Indebtedness of a Subsidiary owing to the
Company or to a Wholly-owned Subsidiary;
(d) Liens on property of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a
Subsidiary or at the time of a purchase, lease or other acquisition of
the properties of a corporation or firm as an entirety or substantially
as an entirety by the Company or a Subsidiary; provided, that any such
Lien shall not extend to or cover any assets or properties of the
Company or such Subsidiary owned by the Company or such Subsidiary prior
to such merger, consolidation, purchase, lease or acquisition, unless
otherwise permitted under this Section 9.14;
(e) leases or subleases granted to others in the ordinary and
usual course of the Company's business;
(f) easements, rights of way, restrictions and other similar
charges or encumbrances not interfering with the ordinary conduct of the
business of the Company or any Subsidiary;
(g) banker's Liens arising, other than by contract, in the
ordinary and usual course of the Company's business;
(h) Liens incurred or deposits made in the ordinary course of
business in connection with surety and appeal bonds, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed
money); provided, however, that the obligation so secured is not overdue
or is being contested in good faith and by appropriate proceedings
diligently pursued;
(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
<PAGE> 37
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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;
(1) Liens securing Indebtedness of each of the Company's
Wholly-owned Subsidiaries to be incorporated outside the United States
of America for the purpose of providing subsidized financing of the
acquisition of Airbus Industrie aircraft, the repayment obligations of
which will be supported by guaranties issued by certain European
government export credit agencies (the European Credit Agency Export
Finance Program or "ECA Program") and a Company Guaranty and a pledge of
the assets of (including any rights to or interests in any reserve or
security deposit held by) each such Wholly- owned Subsidiary; provided,
that such Liens shall encumber only the assets of (including any rights
to or interests in any reserve or security deposit held by) each such
Wholly-owned Subsidiary; and provided, further, that the aggregate
amount of Indebtedness of all such Wholly-owned Subsidiaries secured by
Liens does not at the time exceed $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.
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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 buying 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.
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 the satisfaction of each
of the following conditions precedent, 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 LLP, counsel
for the Company, in substantially the form of Exhibit G, and the General
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 Milbank, Tweed, Hadley & McCloy
LLP, special New York 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 4.6 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
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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 Facility. The Company
shall have paid all amounts owing and otherwise satisfied and discharged
all of its obligations arising under the $1,500,000,000 364-Day
Revolving Credit Agreement, dated as of January 15, 1999, as amended,
among the Company, the Agent and the banks named therein, and such
agreement shall have been terminated and be 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 three Business Days, in the payment when due of any interest on any
Loan, any fees or any other amounts payable by the Company hereunder.
11.1.2. Non-Payment of Other Indebtedness for Borrowed Money.
Default in the payment when due (subject to any applicable grace
period), whether by acceleration or otherwise, of any principal of,
interest on or fees incurred in connection with any other Indebtedness
of, or Guaranteed by, the Company or any Significant Subsidiary (except
(i) any such Indebtedness of any Subsidiary to the Company or to any
other Subsidiary and (ii) any Indebtedness hereunder) and, if a default
in the payment of interest or fees, continuance of such default for five
days, in the case of interest, or 30 days, in the case of fees, or
default in the performance or observance of any obligation or condition
with respect to any such other Indebtedness if the effect of such
default (subject to any applicable grace period) is to accelerate the
maturity of any such Indebtedness or to permit the holder or holders
thereof, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity;
provided, however, that the aggregate principal amount of all
Indebtedness as to which there has occurred any default as described
above shall equal or exceed $50,000,000.
11.1.3. Bankruptcy, Insolvency, etc. The Company or any
Significant Subsidiary becomes insolvent or generally fails to pay, or
admits in writing its inability or refusal to pay, debts as they become
due; or the Company or any Significant Subsidiary applies for, consents
to, or acquiesces in the appointment of a trustee, receiver or other
custodian for the Company or such Significant Subsidiary or any property
thereof, or makes a general assignment for the benefit of creditors; or,
in the absence of such application, consent or acquiescence, a trustee,
receiver or other custodian is appointed for the Company or any
Significant Subsidiary or for a substantial part of the property of any
thereof and is not discharged within 60 days; or any warrant of
attachment or similar legal process is issued against any substantial
part of the property of the Company or any of its Significant
Subsidiaries which is not released within 60 days of service; or any
bankruptcy,
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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 60 days (or, if the Company failed
to give notice of such noncompliance 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 denied coverage in writing or for
and to the extent to which the Company or any
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Subsidiary is otherwise indemnified if the terms of such indemnification
are satisfactory to the Required Banks.
11.1.8. Change of Ownership. AIG shall cease to own beneficially
at least 51% of all of the outstanding shares of the common stock of the
Company.
Section 11.2. Effect of Event of Default. If any Event of
Default described in Section 11.1.3 shall occur, the Commitments (if they have
not theretofore terminated) shall immediately terminate and all Loans and all
interest and other amounts due hereunder shall become immediately due and
payable, all without presentment, demand or notice of any kind; and, in the case
of any other Event of Default, the Agent may, and upon written request of the
Required Banks shall, declare the Commitments (if they have not theretofore
terminated) to be terminated and all Loans and all interest and other amounts
due hereunder to be due and payable, whereupon the Commitments (if they have not
theretofore terminated) shall immediately terminate and all Loans and all
interest and other amounts due hereunder shall become immediately due and
payable, all without presentment, demand or notice of any kind. The Agent shall
promptly advise the Company and each Bank of any such declaration, but failure
to do so shall not impair the effect of such declaration.
SECTION 12. THE AGENT.
Section 12.1. Authorization. Each Bank and the holder of each
Note authorizes the Agent to act on behalf of such Bank or holder to the extent
provided herein and in any other document or instrument delivered hereunder or
in connection herewith, and to take such other action as may be reasonably
incidental thereto. Subject to the provisions of Section 12.3, the Agent will
take such action permitted by any agreement delivered in connection with this
Agreement as may be requested in writing by the Required Banks or if required
under Section 13.1, all of the Banks. The Agent shall promptly remit in
immediately available funds to each Bank or other holder its share of all
payments received by the Agent for the account of such Bank or holder, and shall
promptly transmit to each Bank (or share with each Bank the contents of) each
notice it receives from the Company pursuant to this Agreement.
Section 12.2. Indemnification. The Banks agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Company),
ratably according to their respective Percentages, from and against any and all
actions, causes of action, suits, losses, liabilities, damages and expenses
which may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the Agent
in any way relating to or arising out of this Agreement, or any documents
contemplated by or referred to herein or the transactions contemplated hereby or
any action taken or omitted by the Agent under or in connection with any of the
foregoing; provided, that no Bank shall be liable for the payment to the Agent
of any portion of such actions, causes of action, suits, losses, liabilities,
damages and expenses resulting from the Agent's or its employees' or agents'
gross negligence or willful misconduct. Without limiting the foregoing, subject
to Section 13.5 each Bank agrees to reimburse the Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including reasonable counsel
fees) incurred by the Agent in such capacity in connection with the preparation,
execution or enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement or any amendments or supplements hereto
or thereto to
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the extent that the Agent is not reimbursed for such expenses by the Company.
All obligations provided for in this Section 12.2 shall survive repayment of the
Loans, cancellation of the Notes or any termination of this Agreement.
Section 12.3. Action on Instructions of the Required Banks. As
to any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but the Agent shall in
all cases be fully protected in acting or refraining from acting upon the
written instructions from (i) the Required Banks, except for instructions which
under the express provisions hereof must be received by the Agent from all Banks
and (ii) in the case of such instructions, from all Banks. In no event will the
Agent be required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law. The
relationship between the Agent and the Banks is and shall be that of agent and
principal only and nothing herein contained shall be construed to constitute the
Agent a trustee for any holder of a Note or of a participation therein nor to
impose on the Agent duties and obligations other than those expressly provided
for herein.
Section 12.4. Payments. (a) The Agent shall be entitled to
assume that each Bank has made its Loan available in accordance with Section 2.3
or Section 3.2(c), as applicable, unless such Bank notifies the Agent at its
Notice Office prior to 11:00 a.m., New York City time, on the Funding Date for
such Loan that it does not intend to make such Loan available, it being
understood that no such notice shall relieve such Bank of any of its obligations
under this Agreement. If the Agent makes any payment to the Company on the
assumption that a Bank has made the proceeds of such Loan available to the Agent
but such Bank has not in fact made the proceeds of such Loan available to the
Agent, such Bank shall pay to the Agent on demand an amount equal to the amount
of such Bank's Loan, together with interest thereon for each day that elapses
from and including such 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
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obligations under this Agreement. If the Agent distributes any payment to a Bank
hereunder in the belief that the Company has paid to the Agent the amount
thereof but the Company has not in fact paid to the Agent such amount, such Bank
shall pay to the Agent on demand (which shall be made by telegram, telex,
facsimile or personal delivery) an amount equal to the amount of the payment
made by the Agent to such Bank, together with interest thereon for each day that
elapses from and including the date on which the Agent made such payment to but
excluding the Business Day on which the amount of such payment is returned to
the Agent at its Payment Office in immediately available funds prior to 12:00
Noon, New York City time, at the Federal Funds Rate for each such day, based
upon a year of 360 days. If the amount of such payment is not returned to the
Agent in immediately available funds within three Business Days after demand by
the Agent, such Bank shall pay to the Agent on demand an amount calculated in
the manner specified in the preceding sentence after substituting the term "Base
Rate" for the term "Federal Funds Rate". A certificate of the Agent submitted to
any Bank with respect to amounts owing under this Section 12.4(b) shall be
conclusive absent demonstrable error.
Section 12.5. Exculpation. The Agent shall be entitled to rely
upon advice of counsel concerning legal matters, and upon this Agreement and any
Note, security agreement, schedule, certificate, statement, report, notice or
other writing which it believes to be genuine or to have been presented by a
proper person. Neither the Agent nor any of its directors, officers, employees
or agents shall (i) be responsible for any recitals, representations or
warranties contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement, any Note or any other
instrument or document delivered hereunder or in connection herewith, (ii) be
deemed to have knowledge of an Event of Default or Unmatured Event of Default
until after having received actual notice thereof from the Company or a Bank,
(iii) be under any duty to inquire into or pass upon any of the foregoing
matters, or to make any inquiry concerning the performance by the Company or any
other obligor of its obligations or (iv) in any event, be liable as such for any
action taken or omitted by it or them, except for its or their own gross
negligence or willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity.
Section 12.6. Credit Investigation. Each Bank acknowledges, and
shall cause each Assignee or Participant to acknowledge in its assignment or
participation agreement with such Bank, that it has (i) made and will continue
to make such inquiries and has taken and will take such care on its own behalf
as would have been the case had the Loans been made directly by such Bank or
other applicable Person to the Company without the intervention of the Agent or
any other Bank and (ii) independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made and will continue to make its own credit analysis and
decisions relating to this Agreement. Each Bank agrees and acknowledges, and
shall cause each Assignee or Participant to agree and acknowledge in its
assignment or participation agreement with such Bank, that the Agent makes no
representations or warranties about the creditworthiness of the Company or any
other party to this Agreement or with respect to the legality, validity,
sufficiency or enforceability of this Agreement or any Note.
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Section 12.7. CUSA and Affiliates. CUSA 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 CUSA 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 CUSA 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 from among the
Banks 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 from among the
Banks reasonably acceptable to the Company, which shall be a commercial bank
organized under the laws of the United States of America or of any State thereof
or under the laws of another country which is doing business in the United
States of America and having a combined capital, surplus and undivided profits
of at least $1,000,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from all further
duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Section 12 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
SECTION 13. GENERAL.
Section 13.1. Waiver; Amendments. No delay on the part of the
Agent, any Bank, or the holder of any Loan in the exercise of any right, power
or remedy shall operate as a waiver thereof, nor shall any single or partial
exercise by any of them of any right, power or remedy preclude other or further
exercise thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Agreement or the Notes shall in any event be effective unless the same
shall be in writing and signed and delivered by the Agent and by Banks having an
aggregate Percentage of not less than the aggregate Percentage expressly
designated herein with respect thereto or, in the absence of such designation as
to any provision of this Agreement or the Notes, by the Required Banks, and then
any amendment, modification, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No amendment,
modification, waiver or consent (i) shall extend or increase the amount of the
Commitments, extend the due date for any amount payable hereunder, reduce or
waive any fee hereunder, change the definition of "Required Banks" or
"Percentage" in Section 1, amend or modify Section 4.1 or change any of the
defined terms used in Section 4.1, amend or modify Section 4.4, Section 4.5,
Section 4.7, 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
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written consent of the holder of the Note evidencing such Loan. Amendments,
modifications, waivers and consents of the type described in clause (iii) of the
preceding sentence with respect to Bid Loans or Bid Notes may be effected with
the written consent of the holder of such Bid Loans or Bid Notes and no consent
of any other Bank or other holder shall be required in connection therewith. No
provisions of Section 12 shall be amended, modified or waived without the
Agent's written consent.
Section 13.2. Notices. Except as otherwise expressly provided in
this Agreement, any notice hereunder to the Company, the Agent, or any Bank or
other holder of a Loan shall be in writing and, if by telegram, telex, facsimile
or personal delivery, shall be deemed to have been given and received when sent
and, if mailed, shall be deemed to have been given and received three Business
Days after the date when sent by registered or certified mail, postage prepaid,
and addressed to the Company, the Agent, or such Bank (or other holder) at its
address shown below its signature hereto or at such other address as it may, by
written notice received by the other parties to this Agreement, have designated
as its address for such purpose. The Agent, any Bank or the holder of any Note
giving any waiver, consent or notice to, or making any request upon, the Company
hereunder shall promptly notify the Agent thereof. Correspondence of the type
described in Section 2.2 with respect to Bid Loans and notices of Committed Loan
Requests made by the Company shall, except as otherwise provided herein, be
directed to the persons specified for such purpose for each party on the
signature pages hereof or in subsequent writings among the parties. Additional
copies of certain notices which any party may have requested on the signature
pages hereof need not be delivered at the same time as the primary notices to
such party, but the party delivering such primary notices shall use reasonable
efforts to distribute such copies on the same Business Day as that on which such
primary notices were distributed.
Section 13.3. Computations. Where the character or amount of any
asset or liability or item of income or expense is required to be determined, or
any consolidation or other accounting computation is required to be made, for
the purpose of this Agreement, such determination or calculation shall, at any
time and to the extent applicable and except as otherwise specified in this
Agreement, be made in accordance with generally accepted accounting principles
in the United States of America 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 of America after the date hereof
which materially affects the financial covenants in this Agreement, the parties
hereto agree to negotiate in good faith appropriate revisions of such covenants
(it being understood, however, that such covenants shall remain in full force
and effect in accordance with their existing terms pending the execution by the
Company and the Banks of any such amendment).
Section 13.4. Assignments; Participations. Each Bank may assign,
or sell participations in, its Loans and its Commitment to one or more other
Persons in accordance with this Section 13.4 (and the Company consents to the
disclosure of any information obtained by any Bank in connection herewith to any
actual or prospective Assignee or Participant).
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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 shall be in the minimum amount of
$10,000,000 or in integral multiples of $1,000,000 in excess thereof;
provided, that any such Assignee will comply, if applicable, with the
provisions contained in the first sentence of Section 6.4(b) and shall
be deemed to have made, on the date of the effectiveness of such
assignment and delegation, the representation and warranty set forth in
the second sentence of Section 6.4(b); and provided, further, that the
Company and the Agent shall be entitled to continue to deal solely and
directly with such assigning Bank in connection with the interests so
assigned and delegated to an Assignee until such assigning Bank and/or
such Assignee shall have:
(i) given written notice of such assignment and
delegation, together with payment instructions, addresses and
related information with respect to such Assignee, substantially
in the form of Exhibit I, to the Company and the Agent;
(ii) provided evidence satisfactory to the Company and
the Agent that, as of the date of such assignment and
delegation, the Company will not be required to pay any costs,
fees, taxes or other amounts of any kind or nature with respect
to the interest assigned in excess of those payable by the
Company with respect to such interest prior to such assignment;
(iii) paid to the Agent for the account of the Agent a
processing fee of $2,500; and
(iv) provided to the Agent evidence reasonably
satisfactory to the Agent that the assigning Bank has complied
with the provisions of the last sentence of Section 12.6.
Upon receipt of the foregoing items and the consents of the Company and
the Agent, (x) the Assignee shall be deemed automatically to have become
a party hereto and, to the extent that rights and obligations hereunder
have been assigned and delegated to such Assignee, such Assignee shall
have the rights and obligations of a Bank hereunder and under the other
instruments and documents executed in connection herewith and (y) the
assigning Bank, to the extent that rights and obligations hereunder have
been assigned and delegated by it, shall be released from its
obligations hereunder. The Agent may from time to time (and upon the
request of the Company or any Bank after any change therein shall)
distribute a revised Schedule I indicating any changes in the Banks
party hereto or the respective Percentages of such Banks. Within five
Business Days after the Company's receipt of notice from the Agent of
the effectiveness of any such assignment and delegation, the Company
shall execute and deliver to the Agent (for delivery to the
<PAGE> 48
-43-
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
(i) any Federal Reserve Bank (provided, that such Federal Reserve Bank
shall not be considered a "Bank" for purposes of this Agreement) or (ii)
any Affiliate of such Bank (provided, that the assigning or transferring
Bank shall give notice of such assignment or transfer to the Agent and
the Company).
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
<PAGE> 49
-44-
law, each Participant shall be considered a Bank for purposes of
Sections 7.1, 7.4, 13.5 and 13.6 and by its acceptance of a
participation herein, each Participant agrees to be bound by the
provisions of Section 6.2(b) as if such Participant were a Bank;
and
(g) such Bank shall have provided to the Agent evidence
reasonably satisfactory to the Agent that such Bank has complied
with the provisions of the last sentence of Section 12.6.
Section 13.5. Costs, Expenses and Taxes. The Company agrees to
pay on demand (a) all out-of-pocket costs and expenses of the Agent (including
the fees and out-of-pocket expenses of counsel for the Agent (and of local
counsel, if any, who may be retained by said counsel)), in 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, the
Affiliates of each of the Banks and the Agent, and each of the officers,
directors, employees and agents of the Banks, the Agent and the Affiliates of
each of the Banks and the Agent (collectively herein called the "Bank Parties"
and individually called a "Bank Party") free and harmless from and against any
and all actions, causes of action, suits, losses, liabilities, damages and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements (collectively herein called the "Indemnified Liabilities"),
incurred by the Bank Parties or any of them as a result of, or arising out of,
or relating to (i) this Agreement, the Notes or the Loans or (ii) the direct or
indirect use of proceeds of any of the Loans or any credit extended hereunder,
except for any such Indemnified Liabilities arising on account of such Bank
Party's gross negligence or willful misconduct, and if and to the extent that
the foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. All obligations provided for in this Section 13.6 shall survive repayment
of the Loans, cancellation of the Notes or any termination of this Agreement.
<PAGE> 50
-45-
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, who shall notify the Company, in writing, of the
Banks' decisions no later than 15 days prior to the existing Termination Date,
whereupon (unless Banks with an aggregate Percentage in excess of 25% decline to
extend their respective scheduled Termination Dates, in which event the Agent
shall notify all the Banks thereof and no such extension shall occur) such
Bank's scheduled Termination Date shall be extended, effective only as of the
date that is such Bank's then-current scheduled Termination Date, to the date
that is 364 days after such Bank's then-current scheduled Termination Date. Any
Bank that declines or fails to respond to the Company's request for such
extension shall be deemed to have not extended its scheduled Termination Date.
(b) With respect to any Bank (i) on account of which the Company
is required to make any deductions or withholdings or pay any additional
amounts, as contemplated by Section 6.4, (ii) on account of which the Company is
required to pay any additional amounts, as contemplated by Section 7.1, (iii)
for which it is illegal to make a LIBOR Rate Loan, as contemplated by Section
7.3 or (iv) which has declined to extend such Bank's scheduled Termination Date
and Banks with an aggregate Percentage in excess of 75% have elected to extend
their respective Termination Dates, the Company may in its discretion, upon not
less than 30 days' prior written notice to the Agent and each Bank, remove such
Bank as a party hereto. Each such notice shall specify the date of such removal
(which shall be a Business Day and, if such Bank has any outstanding Bid Loans,
shall (unless otherwise agreed by such Bank) be on or after the last day of the
Loan Period for the Bid Loan of such Bank having the latest maturity date),
which shall thereupon become the scheduled Termination Date for such Bank.
(c) In the event that any Bank does not extend its scheduled
Termination Date pursuant to subsection (a) above or is the subject of a notice
of removal pursuant to subsection (b) above, then, at any time prior to the
Termination Date for such Bank (a "Terminating Bank"), the Company may, at its
option, arrange to have one or more other commercial banks or financial
institutions (which may be a Bank or Banks, or if not a Bank, shall be
acceptable to the Agent (such acceptance not to be unreasonably withheld), and
each of which shall herein be called a "Successor Bank") with the approval of
the Agent (such approval not to be unreasonably withheld) 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
<PAGE> 51
-46-
(as if (i) in the case of any Bank electing not to extend its scheduled
Termination Date pursuant to subsection (a) above, such Successor Bank had
extended its scheduled Termination Date pursuant to such subsection (a) and (ii)
in the case of any Bank that is the subject of a notice of removal pursuant to
sub-section (b) above, no such notice of removal had been given by the Company);
provided, that prior to replacing any Terminating Bank with any Successor Bank,
the Company shall have given each Bank which has agreed to extend its
Termination Date an opportunity to increase its Commitment by all or a portion
of the Terminating Banks' Commitments. 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 (i) 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
and (ii) the Borrower agrees to pay to the Agent for the account of the Agent a
processing fee of $2,500 for each such Successor Bank which is not a 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 to (and, for purposes of
calculating facility fees under Section 4.4, utilization fees under Section 4.5
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 CUSA or its Affiliates 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 CUSA, 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 CUSA 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
<PAGE> 52
-47-
the applicable Termination Date and each Bank's percentage of the reduced
Aggregate Commitment shall be revised pro rata to reflect such Terminating
Bank's absence. The Agent shall distribute a revised Schedule I indicating such
revisions promptly after the applicable Termination Date. Such revised Schedule
I shall be deemed conclusive in the absence of demonstrable error.
(f) The Agent agrees to use reasonable commercial efforts to
assist the Company in locating one or more commercial banks or other financial
institutions to replace any Terminating Bank prior to such Terminating Bank's
Termination Date.
Section 13.9. Captions. Section captions used in this Agreement
are for convenience only and shall not affect the construction of this
Agreement.
Section 13.10. Governing Law; Severability. THIS AGREEMENT AND
EACH NOTE SHALL BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. All obligations of the Company
and the rights of the Agent, the Banks and any other holders of the Notes
expressed herein or in the Notes shall be in addition to and not in limitation
of those provided by applicable law. Whenever possible each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
Section 13.11. Counterparts; Effectiveness. This Agreement may
be executed in any number of counterparts and by the different parties on
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Agreement. When counterparts of this Agreement executed by each party shall
have been lodged with the Agent (or, in the case of any Bank as to which an
executed counterpart shall not have been so lodged, the Agent shall have
received telegraphic, telex or other written confirmation of execution of a
counterpart hereof by such Bank), this Agreement shall become effective as of
the date hereof and the Agent shall so inform all of the parties hereto.
Section 13.12. Further Assurances. The Company agrees to do such
other acts and things, and to deliver to the Agent and each Bank such additional
agreements, powers and instruments, as the Agent or any Bank may reasonably
require or deem advisable to carry into effect the purposes of this Agreement or
to better assure and confirm unto the Agent and each Bank their respective
rights, powers and remedies hereunder.
Section 13.13. Successors and Assigns. This Agreement shall be
binding upon the Company, the Banks and the Agent and their respective
successors and assigns, and shall inure to the benefit of the Company, the Banks
and the Agent and the respective successors and assigns of the Banks and the
Agent. Subject to Section 9.9, the Company may not assign any of its rights or
delegate any of its duties under this Agreement without the prior written
consent of all of the Banks.
<PAGE> 53
-48-
Section 13.14. Waiver of Jury Trial. THE COMPANY, THE AGENT AND
EACH BANK HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY NOTE OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 13.15. No Fiduciary Relationship. The Company
acknowledges that neither the Agent nor any Bank has any fiduciary relationship
with, or fiduciary duty to, the Company arising out of or in connection with
this Agreement, the Notes or the transactions contemplated hereby, and the
relationship between the Agent and the Banks, on the one hand, and the Company,
on the other, in connection herewith or therewith is solely that of creditor and
debtor. This Agreement does not create a joint venture among the parties.
<PAGE> 54
-49-
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/ [SIGNATURE ILLEGIBLE}
---------------------------------
Name: [NAME ILLEGIBLE}
Title: VICE PRESIDENT AND
TREASURER
Address:
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
<PAGE> 55
-50-
Agent: CITICORP USA, INC., in its
individual corporate capacity and as
Agent
By: /s/ ROBERT A. DANZIGER
---------------------------------
Name: ROBERT A. DANZIGER
Title: Vice President
By:
---------------------------------
Name:
Title:
Address:
2 Penns Way, Suite 200
New Castle, DE 19720
Attention: Christian Laughton
Telephone: 302-894-6005
Facsimile: 302-894-6120
<PAGE> 56
-51-
Banks: CITIBANK, N.A.
By: /s/ ROBERT A. DANZIGER
---------------------------------
Name: ROBERT A. DANZIGER
Title: Vice President
Address:
399 Park Avenue
New York, NY 10043
Attention: Tom Hollohan
Telephone: 212-559-4243
Facsimile: 212-793-1246
<PAGE> 57
-52-
THE CHASE MANHATTAN BANK
By: [SIGNATURE ILLEGIBLE]
---------------------------------
Name:
Title:
Address:
1 Chase Manhattan Plaza, 8th Floor
New York, NY 10005
Attention: Lenora Kiernan
Telephone: 212-552-7309
Facsimile: 212-552-5650
<PAGE> 58
-53-
COMMERZBANK AKTIENGESELLSCHAFT NEW
YORK AND GRAND CAYMAN BRANCHES
<TABLE>
<S> <C> <C>
By: /s/ CHRISTAIN JAGENBERG /s/ [SIGNATURE ILLEGIBLE]
-----------------------------------------------------
Name: Christian Jagenberg [NAME ILLEGIBLE]
Title: SVP and Manager Vice President
</TABLE>
Address:
2 World Financial Center
New York, NY 10281
Attention: Christine Hunermund
Telephone: 212-266-7684
Facsimile: 212-266-7499
<PAGE> 59
-54-
SOCIETE GENERALE
By: /s/ RICHARD BERNAL
---------------------------------
Name: Richard Bernal
Title: Vice President
Address:
1221 Avenue of the Americas
New York, NY 10020
Attention: Charles Fischer
Telephone: 212-278-6239
Facsimile: 212-278-7430
<PAGE> 60
-55-
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By: /s/ JOSEPH P. DEVOE
---------------------------------
Name: JOSEPH P. DEVOE
Title: Vice President
Address:
1251 Avenue of the Americas, 12th
Floor
New York, NY 10020-1104
Attention: Rolando Uv
Telephone: 201-413-8570
Facsimile: 201-521-2304/2305
<PAGE> 61
-56-
BANK ONE, N.A. (formerly known as
the"First National Bank of Chicago")
By: /s/ RICHARD WILSON
---------------------------------
Name: Richard Wilson
Title: Assistant Vice President
Address:
1 Bank One Plaza
Chicago, IL 60670-0084
Attention: William Sholten
Telephone: 312-732-4600
Facsimile: 312-732-6222
<PAGE> 62
-57-
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
Name: [Name Illegible]
Title: Senior Vice President
Address:
1301 Avenue of the Americas
New York, NY 10019-6022
Attention: Brian Bolotin
Telephone: 212-261-3815
Facsimile: 212-261-7368
<PAGE> 63
-58-
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCHES
By: /s/ GEORGE KORCHOWSKY
---------------------------------
Name: George Korchowsky
Title: Vice President
By: /s/ SUSAN A. MAROS
---------------------------------
Name: Susan A. Maros
Title: Managing Director
Address:
31 West 52nd Street
New York, NY 10019
Attention: Susan Maros
Telephone: 212-469-8104
Facsimile: 212-469-8366
<PAGE> 64
-59-
FLEET BANK, N.A.
By: /s/ JOHN TOPOLOVEC
---------------------------------
Name: John Topolovec
Title: Assistant Vice President
Address:
1185 Avenue of the Americas
Mail Stop NY, NY S02T
New York, NY 10036
Attention: John Topolovec
Telephone: 212-819-6121
Facsimile: 212-819-6212
<PAGE> 65
-60-
ROYAL BANK OF CANADA
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
Name: [NAME ILLEGIBLE]
Title: [TITLE ILLEGIBLE]
Address:
One Liberty Plaza
New York, NY 10006-1404
Attention: Mike Madnick
Telephone: 212-428-6203
Facsimile: 212-428-6459
<PAGE> 66
-61-
BAYERISCHE HYPO-UND VEREINSBANK
AG, NEW YORK BRANCH
<TABLE>
<S> <C>
By: /s/ STEVEN ATWELL /s/ IMKE ENGLEMANN
--------------------------------------
Name: Steven Atwell Imke Englemann
Title: Director Associate Director
</TABLE>
Address:
150 East 42nd Street
New York, NY 10017
Attention: Arelis Cepeda
Telephone: 212-672-5495
Facsimile: 212-672-5691
<PAGE> 67
-62-
ABN AMRO BANK
<TABLE>
<S> <C>
By: /s/ DAVID J. THOMAS /s/ [SIGNATURE ILLEGIBLE]
----------------------------------------------------------
Name: David J. Thomas [Name Illegible]
Title: Group Vice President Assistant Vice President
</TABLE>
Address:
208 South LaSalle, Suite 1500
Chicago, IL 60604-1003
Attention: Loan Administration
Telephone: 312-992-5151
Facsimile: 312-992-5156
<PAGE> 68
-63-
BANCA NAZIONALE DEL LAVORO S.P.A.
NEW YORK BRANCH
<TABLE>
<S> <C>
By: /s/ GIULIO GIOVINE /s/ LEONARDO VALENTINI
-----------------------------------------------------
Name: Giulio Giovine Leonardo Valentini
Title: Vice President First Vice President
</TABLE>
Address:
25 West 51st Street
New York, NY 10019
Attention: Giulio Giovine
Telephone: 212-314-0239
Facsimile: 212-765-2978
<PAGE> 69
-64-
BAYERISCHE LANDESBANK
GIROZENTRALE, CAYMAN ISLANDS
BRANCH
By: /s/ JAMES H. BOYLE By: /s/ HEREWARD DRUMMOND
--------------------------------- --------------------------------
Name: James H. Boyle Name: Hereward Drummond
Title: Vice President Title: Senior Vice President
Address:
560 Lexington Avenue, 17th Floor
New York, NY 10022
Attention: Patricia Sanchez
Telephone: 212-310-9810
Facsimile: 212-310-9930
<PAGE> 70
-65-
CARIPLO-CASSA DI RISPARMIO DELLE
PROVINCIE LOMBARDE S.P.A.
By: /s/ MARIA ELENA GREENE
---------------------------------
Name: Maria Elena Greene
Title: Assistant Vice President
By: /s/ CHARLES W. KENNEDY
---------------------------------
Name: Charles W. Kennedy
Title: First Vice President
Address:
10 East 53rd Street, 36th Floor
New York, NY 10022
Attention: Marilena Greene
Telephone: 212-527-8744
Facsimile: 212-527-8777
<PAGE> 71
-66-
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
AG
By: /s/ CRAIG ANDERSON
---------------------------------
Name: CRAIG ANDERSON
Title: Assistant Vice President
By: /s/ ROB T. JOKHAI
---------------------------------
Name: Rob T. Jokhai
Title: Assistant Vice President
Address:
609 Fifth Avenue
New York, NY 10017-1021
Attention: Craig Anderson
Telephone: 212-745-1583
Facsimile: 212-745-1556/1550
<PAGE> 72
-67-
FUJI BANK, LTD.
By: /s/ MASAHITO FUKUDA
---------------------------------
Name: Masahito Fukuda
Title: Senior Vice President
Address:
333 S. Hope Street, Suite 3900
Los Angeles, CA 90071-1406
Attention: Steve Brennan
Telephone: 213-253-4174
Facsimile: 213-253-4178
<PAGE> 73
-68-
WESTDEUTSCHE LANDESBANK
<TABLE>
<S> <C>
By: /s/ RAYMOND K. MILLER /s/ [SIGNATURE ILLEGIBLE]
-----------------------------------------------------
Name: Raymond K. Miller [Name Illegible]
Title: Vice President Associate
</TABLE>
Address:
633 West Fifth Street, Suite 6750
Los Angeles, CA 90024
Attention: Bob Edmonds
Telephone: 213-623-1401
Facsimile: 213-623-4706
<PAGE> 74
-69-
THE BANK OF NEW YORK
By: /s/ ROBERT LOUK
---------------------------------
Name: Robert Louk
Title: Vice President
Address:
One Wall Street, 22nd Floor
New York, NY 10005
Attention: Dawn Hertling
Telephone: 212-635-6742
Facsimile: 212-635-6399/6877
<PAGE> 75
-70-
THE BANK OF NOVA SCOTIA
By: /s/ ROBERT LUCCHESE
---------------------------------
Name: Robert Lucchese
Title: Director
Address:
580 California Street, Suite 2100
Los Angeles, CA 94104
Attention: Robert Lucchese
Telephone: 415-986-1100
Facsimile: 415-397-0791
<PAGE> 76
-71-
BANCO DI NAPOLI
4 East 54th Street
New York, NY 10022
By: /s/ VITO SPADA By: /s/ CLAUDE P. MAPES
--------------------------------- ---------------------------------
Vito Spada Claude P. Mapes
Executive Vice President Vice President
Attention: CLEMENTE IMPERIALI
VICE PRESIDENT
Telephone: 212-872-2417
Facsimile: 212-872-2426
<PAGE> 77
-72-
ARAB BANK PLC
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
Name:
Title:
Address:
520 Madison Avenue
New York, NY 10022
Attention: Justo Huapaya
Telephone: 212-715-9713
Facsimile: 212-593-4632
<PAGE> 78
-73-
BANCA COMMERCIALE ITALIANA
LOS ANGELES FOREIGN BRANCH
<TABLE>
<S> <C>
By: /s/ [SIGNATURE ILLEGIBLE] /s/ E. BERMANT
-----------------------------------------------------
Name: [Name Illegible] E. Bermant
Title: [Illegible] FVP/Deputy Manager
</TABLE>
Address:
One William Street
New York, NY 10004
Attention: Jonathan Sahr
Telephone: 212-607-3814
Facsimile: 212-607-3897
<PAGE> 79
-74-
BANCA DI ROMA - SAN FRANCISCO
By: /s/ THOMAS C. WOODRUFF
---------------------------------
Name: THOMAS C. WOODRUFF
Title: Vice President
97969
By: /s/ FRANCESCO BAROLO
---------------------------------
Name: FRANCESCO BAROLO
Title: 20538
Address:
One Market, Steuart Tower,
Suite 1000
San Francisco, CA 94105
Attention: Cecilia Gin
Telephone: 415-977-7321
Facsimile: 415-357-9869
<PAGE> 80
-75-
BANK OF HAWAII
By: /s/ SCOTT R. NAHME
---------------------------------
Name: SCOTT R. NAHME
Title: Vice President
Address:
130 Merchant Street, 20th Floor
Honolulu, HI 96813
Attention: Scott R. Nahme
Telephone: 808-538-4238
Facsimile: 808-537-8301
<PAGE> 81
-76-
BANK OF MONTREAL
By: /s/ BRUCE A. PIETKA
---------------------------------
Name: BRUCE A. PIETKA
Title: DIRECTOR
Address:
430 Park Avenue
New York, NY 10022
Attention: Brian Banke
Telephone: 212-605-1643
Facsimile: 212-605-1454
<PAGE> 82
-77-
FIRST HAWAIIAN BANK
By: /s/ CHARLES L. JENKINS
---------------------------------
Name: Charles L. Jenkins
Title: Vice President, Manager
Address:
999 Bishop Street, 11th Floor
Honolulu, HI 96813
Attention: Charles L. Jenkins
Telephone: 808-525-6289
Facsimile: 808-525-6372
<PAGE> 83
-78-
MELLON BANK
By: /s/ DAVID B. WIRL
---------------------------------
Name: David B. Wirl
Title: Assistant Vice President
Address:
One Mellon Bank Center, Room 4425
Pittsburgh, PA 15258
Attention: Dave Wirl
Telephone: 412-234-4175
Facsimile: 412-234-9047
<PAGE> 84
-79-
NATEXIS BANQUE
<TABLE>
<S> <C>
By: /s/ GILLES CHARMEY /s/ XAVIER GUYARD
-----------------------------------------------------
Name: Gilles CHARMEY Xavier GUYARD
Title: Vice President Senior Vice President
</TABLE>
Address:
D.G.O.I.
Unite Financements Specialises
21, Boulevard Haussmann - 75009
Paris - France
Attention: M. Herve Blasquez
Telephone: 011-33-1-4800-4122
Facsimile: 011-33-1-4800-4072
<PAGE> 85
-80-
SANWA BANK LIMITED
By: /s/ STEPHEN C. SMALL
---------------------------------
Name: Stephen C. Small
Title: Vice President & Area
Manager
Address:
55 East 52nd Street
New York, NY 10022
Attention: Stephen C. Small
Telephone: 212-339-6201
Facsimile: 212-754-1304
<PAGE> 86
-81-
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: /s/ VICENTE L. TIMIRAOS
---------------------------------
Name: Vicente L. Timiraos
Title: Joint General Manager
Address:
1251 Avenue of the Americas
New York, NY 10020-1104
Attention: Svayan Ghosh-Mazumdar
Telephone: 212-282-4093
Facsimile: 212-282-4480
<PAGE> 87
-82-
WELLS FARGO BANK
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
Name: [Illegible]
Title: [Illegible]
Address:
201 Third Street
San Francisco, CA 94103
Attention: Ginnie Padgett
Telephone: 415-477-5374
Facsimile: 415-512-1943
<PAGE> 88
-83-
NORDDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /s/ [SIGNATURE ILLEGIBLE]
---------------------------------
Name: [Illegible]
Title: SVP
Address:
1114 Avenue of the Americas, 37th
Floor
New York, NY 10036
Attention: Normann Liebenstein
Telephone: 212-812-6809
Facsimile: 212-812-6860
<PAGE> 89
-84-
BANQUE NATIONALE DE PARIS
<TABLE>
<S> <C>
By: /s/ C. BETTLES /s/ [SIGNATURE ILLEGIBLE]
---------------------------------------------------
Name: C. BETTLES [Name Illegible]
Title: SR. V.P. & Manager Vice President
</TABLE>
Address:
725 South Figueroa Street,
Suite 2090
Los Angeles, CA 90017
Attention: Tjalling Terpstra
Telephone: 213-488-6425
Facsimile: 213-488-9602
<PAGE> 90
-85-
STANDARD CHARTERED BANK
By: /s/ ROBERT GILBERT
---------------------------------
Name: Robert Gilbert
Title: Senior Vice President
By: /s/ WILLIAM HUGHES
---------------------------------
Name: William Hughes
Title: Vice President
Address:
7 World Trade Center, 27th Floor
New York, NY 10048
Attention: Robert Gilbert
Telephone: 212-667-0493
Facsimile: 212-667-0251
<PAGE> 91
-86-
UNIBANK
<TABLE>
<S> <C>
By: /s/ THOMAS P. HICKEY /s/ [SIGNATURE ILLEGIBLE]
------------------------------------------------------
Name: Thomas P. Hickey [NAME ILLEGIBLE]
Title: Vice President ASSISTANT VICE PRESIDENT
</TABLE>
Address:
13-15 W. 54th Street
New York, NY 10019
Attention: Anna Roina
Telephone: 212-603-1682
Facsimile: 212-603-2846
<PAGE> 92
Schedule I
Schedule of Banks
<TABLE>
<CAPTION>
BANK COMMITMENT
- ---- ----------
<S> <C>
Citibank, N.A. $81,875,000
The Chase Manhattan Bank $81,875,000
Commerzbank Aktiengesellschaft New York and $81,875,000
Grand Cayman Branches
Societe Generale $81,875,000
Bank of Tokyo-Mitsubishi Trust Company $57,500,000
Bank One, N.A. $57,500,000
Credit Lyonnais New York Branch $57,500,000
Deutsche Bank AG New York and/or Cayman Islands $57,500,000
Branches
Fleet Bank, N.A. $57,500,000
Royal Bank of Canada $57,500,000
Bayerische Hypo-Und Vereinsbank AG, New York $47,500,000
Branch
ABN AMRO Bank $47,500,000
Banca Nazionale del Lavoro S.P.A. New York $47,500,000
Branch
Bayerische Landesbank Girozentrale, Cayman $47,500,000
Islands Branch
Cariplo-Cassa Di Risparmio Delle Provincie $47,500,000
Lombarde S.P.A.
DG Bank Deutsche Genossenschaftsbank AG $47,500,000
Fuji Bank, Ltd. $47,500,000
Westdeutsche Landesbank $47,500,000
The Bank of New York $40,000,000
The Bank of Nova Scotia $40,000,000
Banco di Napoli $30,000,000
Arab Bank Plc $25,000,000
Banca Commerciale Italiana Los Angeles Foreign $25,000,000
Branch
Banca di Roma - San Francisco $25,000,000
Bank of Hawaii $25,000,000
Bank of Montreal $25,000,000
First Hawaiian Bank $25,000,000
Mellon Bank $25,000,000
Natexis Banque $25,000,000
Sanwa Bank Limited $25,000,000
The Industrial Bank of Japan, Limited $25,000,000
Wells Fargo Bank $25,000,000
Norddeutsche Landesbank Girozentrale, New $20,000,000
</TABLE>
<PAGE> 93
-88-
<TABLE>
<S> <C>
York Branch and/or Cayman Islands Branch
Banque Nationale de Paris $17,500,000
Standard Chartered $12,500,000
Unibank $12,500,000
</TABLE>
<PAGE> 94
Schedule II
Fees and Margins
(in basis points)
<TABLE>
<S> <C>
Facility Fee 8.0
Margins:
LIBOR 22.0
BASE 0.0
Competitive Bid Option As Bid by the Banks.
Utilization Fee:
In excess of 33.33% 5.0
In excess of 66.66% 10.0
</TABLE>
<PAGE> 95
Exhibit A
FORM OF
NOTICE OF COMPETITIVE BID BORROWING
---------------------, ----
Citicorp USA, Inc., as Agent
2 Penns Way, Suite 200
New Castle, DE 19720
Attention: Christian Laughton
Ladies and Gentlemen:
This instrument constitutes a Notice of Competitive Bid
Borrowing under, and as defined by, the $1,500,000,000 364-Day Revolving Credit
Agreement, dated as of November 17, 1999 (as amended, modified or supplemented,
the "Credit Agreement") , among International Lease Finance Corporation (the
"Company"), Citicorp USA, Inc., 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 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
- ----------
* The Company may select up to three loan periods per Notice of Competitive Bid
Borrowing.
<PAGE> 96
-2-
(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:
--------------------------------
<PAGE> 97
Exhibit B
FORM OF
BID FROM [Name of Bank]
(Contact Person:_________________)
---------------------, ----
Citicorp USA, Inc., as Agent
2 Penns Way, Suite 200
New Castle, DE 19720
Attention: Christian Laughton
Ladies and Gentlemen:
This instrument constitutes a Bid under, and as defined by, the
$1,500,000,000 364-Day Revolving Credit Agreement, dated as of November 17, 1999
(as amended, modified or supplemented, the "Credit Agreement"), among
International Lease Finance Corporation (the "Company"), Citicorp USA, Inc., in
its individual corporate 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.
<PAGE> 98
-2-
(a) Loan Period of ________ days ________ months
<TABLE>
<CAPTION>
Principal Amount Interest Rate or
--------------------------------- ------------------------------------
Minimum Maximum LIBOR +/- Margin
<S> <C> <C> <C>
1. $* $* **
2. $* $* **
3. $* $* **
4. $* $* **
</TABLE>
(3) The undersigned's lending office for the proposed Bid Loan
is ____________.
(4) The undersigned acknowledges that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions precedent set
forth in the Credit Agreement, irrevocably obligate(s) the undersigned to make
the Bid Loan(s) for which any offer(s) are accepted, in whole or in part, in
accordance with the terms of the Credit Agreement.
Very truly yours,
[NAME OF BANK]
By:
---------------------------------
Its:
--------------------------------
- ----------
* $10,000,000 of higher integral multiple of $1,000,000 for each interest rate
(i.e., Portion) for each Loan Period.
** Specify the interest rate per annum (expressed as a percentage to four
decimal places) in the case of an Absolute Rate Loan and the margin above or
below LIBOR in the case of a LIBOR Rate Loan.
<PAGE> 99
Exhibit C
FORM OF
COMMITTED LOAN REQUEST
______________, ____
Citicorp USA, Inc., as Agent
2 Penns Way, Suite 200
New Castle, DE 19720
Attention: Christian Laughton
Ladies and Gentlemen:
This constitutes a Committed Loan Request under, and as defined
by, the $1,500,000,000 364-Day Revolving Credit Agreement, dated as of November
17, 1999 (as amended, modified or supplemented, the "Credit Agreement"), among
International Lease Finance Corporation (the "Company"), Citicorp USA, Inc., 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 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 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
<PAGE> 100
-2-
amount of all outstanding Loans will not exceed the
Aggregate Commitment.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:
---------------------------------
Its:
--------------------------------
<PAGE> 101
Exhibit D
FORM OF BID NOTE
$1,500,000,000 November 17, 1999
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 office of Citicorp USA, Inc., in
its individual corporate capacity and as Agent (the "Agent"), at 2 Penns Way,
Suite 200, New Castle, DE 19720 on November 15, 2000, or at such other place, to
such other person or at such other time and date as provided for in the
$1,500,000,000 364-Day Revolving Credit Agreement (as amended, modified or
supplemented, the "Credit Agreement"), dated as of November 17, 1999, among the
Company, the Agent, and the financial institutions named therein, in lawful
money of the United States of America, the principal sum of $1,500,000,000
Dollars or, if less, the aggregate unpaid principal amount of all Bid Loans made
by the Bank to the Company pursuant to the Credit Agreement. This Bid Note shall
bear interest as set forth in the Credit Agreement for Bid Borrowings (as
defined in the Credit Agreement).
Except as otherwise provided in the Credit Agreement with
respect to LIBOR Rate Loans, if interest or principal on any loan evidenced by
this Note becomes due and payable on a day which is not a Business Day (as
defined in the Credit Agreement) the maturity thereof shall be extended to the
next succeeding Business Day, and interest shall be payable thereon at the rate
herein specified during such extension.
This Note is one of the Bid Notes referred to in the Credit
Agreement. This Note is subject to prepayment in whole or in part, and the
maturity of this Note is subject to acceleration, upon the terms provided in the
Credit Agreement.
This Note shall be governed by, and construed and interpreted in
accordance with, the law of the State of New York.
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:
---------------------------------
Name:
Title::
<PAGE> 102
-2-
Bid Loans and Payments of Principal
<TABLE>
<CAPTION>
Name of
Principal Amount of Unpaid Person
Amount of Interest Interest Loan Principal Principal Making
Funding Date Loan Method Rate Period Paid Balance Notation
- ------------ ---- ------ ---- ------ ---- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 103
Exhibit E
FORM OF COMMITTED NOTE
$_____________________ November 17, 1999
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 office of Citicorp USA, Inc., in
its individual corporate capacity and as Agent (the "Agent"), at 2 Penns Way,
Suite 200, New Castle, DE 19720 on November 15, 2000, or at such other place, to
such other person or at such other time and date as provided for in the
$1,500,000,000 364-Day Revolving Credit Agreement (as amended, modified or
supplemented, the "Credit Agreement"), dated as of November 17, 1999, among the
Company, the Agent, and the financial institutions named therein, in lawful
money of the United States of America, 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 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 law of the State of New York.
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:
---------------------------------
Name:
Title:
<PAGE> 104
-2-
Committed Loans and Payments of Principal
<TABLE>
<CAPTION>
Name of
Principal Amount of Unpaid Person
Amount of Interest Interest Loan Principal Principal Making
Funding Date Loan Method Rate Period Paid Balance Notation
- ------------ ---- ------ ---- ------ ---- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 105
Exhibit F
FIXED CHARGE COVERAGE RATIO*
FOR THE PERIOD ENDED June 30, 1999
<TABLE>
<CAPTION>
12 Months Ended
June 30, 1999 (Dollars)
-----------------------
<S> <C>
Earnings
Net Income................................................... 391,626,000
Add (to the extent deducted):
Provision for income taxes................................ 205,481,000
Fixed charges............................................. 821,816,000
Less (to the extent added):
Capitalized interest...................................... 61,391,000
Earnings as adjusted (A)..................................... 1,357,533,000
Preferred dividend requirements.............................. 15,681,000
Ratio of income before provision for
income taxes to net income.............................. 152%
Preferred dividend factor on
pretax basis.............................................. 23,909,000
Fixed charges
Interest expense.......................................... 663,383,000
Capitalized interest...................................... 61,391,000
Estimate of minimum rents under
operating leases representing the
interest factor........................................ 97,044,000
Fixed charges as adjusted.................................... 821,816,000
Fixed charges and preferred
Stock dividends (B)....................................... 845,725,000
Ratio of earnings to fixed charges and
preferred stock dividends ((A) divided
by (B))*.................................................... 1.61
</TABLE>
- -----------
* As calculated pursuant to Section 9.11 and the definition of Fixed
Charge Coverage Ratio set forth in Section 1.2.
<PAGE> 106
Exhibit G
FORM OF OPINION OF COUNSEL FOR THE COMPANY
November 17, 1999
To the Banks and the Agent
Referred to Below
c/o Citicorp USA, Inc.
2 Penns Way, Suite 200
New Castle, DE 19720
Ladies and Gentlemen:
We have acted as special counsel for International Lease Finance
Corporation (the "Company") in connection with a $1,500,000,000 Revolving Credit
Agreement dated as of November 17, 1999 among the Company, Citicorp USA, Inc.,
in its individual corporate capacity and as Agent, and certain financial
institutions ("Banks") signatory thereto (collectively, the "Credit Agreement").
Terms defined in the Credit Agreement are used herein as therein defined.
In our capacity as such counsel, we have examined originals, or
copies certified or otherwise identified to our satisfaction as being true
copies of such records, documents or other instruments as in our judgment are
necessary or appropriate to enable us to render the opinions expressed below. We
have been furnished, and have relied upon, certificates of officers of the
Company with respect to certain factual matters regarding the Company. As to
matters of fact, we have also relied on the representations and warranties made
by the Company in the Credit Agreement. In addition, we have obtained and relied
upon such certificates and assurances from public officials as we have deemed
necessary.
Except with respect to the Company and its Subsidiaries, in our
review and examination we have assumed the authenticity of documents submitted
to us as originals and the conformity to authentic original documents of all
documents submitted to us as conformed or photostatic copies. For the purpose of
the opinions hereinafter expressed, we have assumed the due execution and
delivery, pursuant to due authorization, of each document referred to in this
opinion by each party thereto other than the Company and its Subsidiaries, that
each document constitutes the legally valid and binding obligation of each such
other party and that such other person is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization.
We have investigated such questions of law for the purpose of
rendering this opinion as we have deemed necessary. We are opining herein as to
the effect on the subject transactions of only United States of America Federal
law and the laws of the State of New York.
Upon the basis of the foregoing, we are of the opinion that:
<PAGE> 107
-2-
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 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, 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
<PAGE> 108
-3-
performance or injunctive relief, regardless of whether considered in a
proceeding in equity or at law.
Our opinions rendered in paragraphs 4 and 6 above are based upon
our review only of those statutes, rules and regulations which, in our
experience, are normally applicable to transactions of the type contemplated by
the Credit Agreement and the Notes.
In rendering our opinions in paragraph 4 above, we have assumed
that each Bank is a sophisticated financial institution capable of evaluating
the merits and risks relating to the Notes, and that each Bank has been provided
access to such information relating to the Company as such Bank has requested.
Except as expressly set forth in paragraph 7 above, we are not
expressing any opinion as to the effect of the Agent's or any Bank's compliance
with any state or Federal laws or regulations applicable to the transactions
contemplated by the Company because of the nature of the Agent's or any Bank's
business.
This opinion is furnished to you in connection with the
Company's execution and delivery of the Credit Agreement, is solely for your
benefit and the benefit of your successors and assigns, and may not be relied
upon by, nor may copies be delivered to, any other person, without our prior
written consent.
Very truly yours,
<PAGE> 109
Exhibit H
FORM OF THE OPINION OF GENERAL COUNSEL OF THE COMPANY
November 17, 1999
To the Banks and the Agent
Referred to Below
c/o Citicorp USA, Inc.
2 Penns Way, Suite 200
New Castle, DE 19720
Ladies and Gentlemen:
I am General Counsel for International Lease Finance Corporation
(the "Company") and am rendering this opinion in connection with a
$1,500,000,000 364-Day Revolving Credit Agreement dated as of November 17, 1999
among the Company, Citicorp USA, Inc., in its individual corporate 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 of America Federal law and the
laws of the State of California.
Upon the basis of the foregoing, I am of the opinion that:
1. The Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in which
the ownership or leasing of its property or the conduct of its business requires
it to be so qualified; provided, however, that the Company may not be so
qualified in certain jurisdictions, the effect of which would not have a
Material Adverse Effect on the Company.
2. To the best of my knowledge, Interlease Aviation Corporation,
ILFC Aircraft Holding Corporation, Interlease Management Corporation, Aircraft
SPC-1, Inc., Aircraft SPC-2, Inc. and Atlantic International Aviation Holdings,
Inc., a wholly owned subsidiary of Interlease Management Corporation, are the
only domestic Subsidiaries of the Company.
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.
<PAGE> 110
-2-
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,
[Name]
General Counsel
<PAGE> 111
Exhibit I
FORM OF 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 $1,500,000,000 364-Day Revolving Credit Agreement
dated as of November 17, 1999 (the "Credit Agreement") among International Lease
Finance Corporation (the "Company"), the Assignor and Citicorp USA, Inc., 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:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein all 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
- -----------------
* See Section 13.4.1 for minimum requirements.
** Assignment of Bid Loans is optional.
<PAGE> 112
-2-
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 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 law 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
- -------------
* Amount should combine principal and face together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion
of any fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
<PAGE> 113
-3-
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:
---------------------------------
Name:
Title:
[ASSIGNEE]
By:
---------------------------------
Name:
Title:
Consented, and with respect to Section 4, agreed:
INTERNATIONAL LEASE FINANCE
CORPORATION
By:
---------------------------------
Name:
Title:
Consented:
CITICORP USA, INC.,
as Agent
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
<PAGE> 114
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
$1,500,000,000 364-Day Revolving Credit Agreement, dated as of November 17, 1999
(as amended, modified or supplemented, the "Credit Agreement"), among
International Lease Finance Corporation (the "Company"),Citicorp USA, Inc., in
its individual corporate capacity and as Agent, and certain financial
institutions referred to therein. Terms not otherwise expressly defined herein
shall have the meanings set forth in the Credit Agreement.
The Company [hereby requests that you extend your] [has sent a
letter to each Bank that is now a party to the Credit Agreement asking such Bank
to extend its] now scheduled Termination Date under the Credit Agreement by 364
days.
The officer of the Company signing this instrument hereby
certifies that:
(a) Before and after giving effect to the extension of the
Termination Date requested hereby, no Event of Default or Unmatured Event of
Default shall have occurred and be continuing and all Loans payable prior to the
date hereof shall have been paid in full; and
(b) Before and after giving effect to the extension of the
Termination Date requested hereby, the representations and warranties set forth
in Section 8 of the Credit Agreement shall be true and correct in all material
respects with the same effect as though made on the date hereof.
Very truly yours,
INTERNATIONAL LEASE FINANCE
CORPORATION
By:
---------------------------------
Its:
--------------------------------
<PAGE> 115
-2-
Confirmed and accepted, subject to
the terms and conditions of the
Credit Agreement, as of the date
first above written:
[NAME OF BANK]
By:
---------------------------------
Its:
- --------
<PAGE> 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,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earnings
Net income......................... $ 453,447 $ 369,352 $ 338,684 $ 251,774 $ 196,437
Add:
Provision for income taxes...... 249,958 192,922 187,475 143,165 141,909
Fixed charges................... 807,495 778,817 754,246 655,958 592,519
Less:
Capitalized interest............ 45,235 54,297 48,818 50,368 51,091
---------- ---------- ---------- ---------- ----------
Earnings as adjusted (A)........... $1,465,665 $1,286,794 $1,231,587 $1,000,529 $ 879,774
========== ========== ========== ========== ==========
Preferred dividend requirements.... $ 18,131 $ 16,965 $ 16,348 $ 16,599 $ 13,096
Ratio of income before provision
for income taxes to net
income........................ 155% 152% 155% 157% 172%
---------- ---------- ---------- ---------- ----------
Preferred dividend factor on
pretax basis.................. 28,103 25,787 25,339 26,060 22,525
---------- ---------- ---------- ---------- ----------
Fixed charges
Interest expense................ 686,767 639,964 642,321 573,599 541,428
Capitalized interest............ 45,235 54,297 48,818 50,368 51,091
Interest factor of rents........ 75,493 84,556 63,107 31,991 --
---------- ---------- ---------- ---------- ----------
Fixed charges as adjusted (B)...... 807,495 778,817 754,246 655,958 592,519
---------- ---------- ---------- ---------- ----------
Fixed charges and preferred stock
dividends (C)................... $ 835,598 $ 804,604 $ 779,585 $ 682,018 $ 615,044
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges
((A) divided by (B))............... 1.82x 1.65x 1.63x 1.53x 1.48x
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges
and preferred stock dividends ((A)
divided by (C)).................... 1.75x 1.60x 1.58x 1.47x 1.43x
========== ========== ========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement
(Form S-3 No. 333-74095) of International Lease Finance Corporation (the
"Company") and in the related Prospectus of our report dated February 11, 2000,
relating to the consolidated financial statements and schedule, which appear in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
PricewaterhouseCoopers LLP
Los Angeles, California
March 9, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 123,109
<SECURITIES> 0
<RECEIVABLES> 270,436
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 18,246,253
<DEPRECIATION> 2,150,200
<TOTAL-ASSETS> 16,096,053
<CURRENT-LIABILITIES> 0
<BONDS> 11,192,220
0
400,000
<COMMON> 3,582
<OTHER-SE> 2,806,610
<TOTAL-LIABILITY-AND-EQUITY> 17,507,124
<SALES> 2,080,555
<TOTAL-REVENUES> 2,300,088
<CGS> 0
<TOTAL-COSTS> 909,916
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 686,767
<INCOME-PRETAX> 703,405
<INCOME-TAX> 249,958
<INCOME-CONTINUING> 453,447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 453,447
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
