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Exhibit 10.8
SERVICING AGREEMENT
among
INTERNATIONAL LEASE FINANCE CORPORATION,
XXXXXX XXXXXXX AIRCRAFT FINANCE ("MSAF"),
THE ENTITIES LISTED ON APPENDIX A HERETO
AND
SUBJECT TO THE EXECUTION OF AN AGREEMENT SUBSTANTIALLY
IN THE FORM OF EXHIBIT A ATTACHED HERETO, THE
ADMINISTRATIVE AGENT AND THE CALCULATION AGENT
AND CERTAIN OTHER ENTITIES
Dated as of November 10, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions..........................2
ARTICLE 2
APPOINTMENT, SERVICES
SECTION 2.01. Appointment..........................9
SECTION 2.02. Services............................10
SECTION 2.03. Compliance with Applicable Laws.....10
SECTION 2.04. Limitations.........................10
ARTICLE 3
STANDARD OF CARE; CONFLICTS OF INTEREST; STANDARD OF LIABILITY
SECTION 3.01. Standard of Care....................10
SECTION 3.02. Conflicts of Interest...............10
SECTION 3.03. Standard of Liability...............11
SECTION 3.04. Waiver of Implied Standard..........12
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Aircraft Assets.....................12
SECTION 4.02. Aircraft Assets Related Documents...12
SECTION 4.03. Accounts and Cash flow..............12
ARTICLE 5
SERVICER UNDERTAKINGS
SECTION 5.01. Staff and Resources.................13
SECTION 5.02. Access..............................13
SECTION 5.03. Compliance with Law.................13
SECTION 5.04. Commingling.........................13
SECTION 5.05. Credit Enhancement..................13
SECTION 5.06. Security Deposits...................15
SECTION 5.07. Notes Offering......................15
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ARTICLE 6
UNDERTAKINGS OF MSAF AND THE SUBSIDIARIES
PAGE
SECTION 6.01. Cooperation...................................... 16
SECTION 6.02. No Representation with Respect to Third Parties.. 16
SECTION 6.03. Related Document Amendments...................... 16
SECTION 6.04. Other Servicing Arrangements..................... 17
SECTION 6.05. Communications................................... 17
SECTION 6.06. Ratification..................................... 17
SECTION 6.07. Execution, Amendment, Modification or Termination
of Aircraft Assets Related Documents............. 17
SECTION 6.08. MSAF Group Accounts and Cash Arrangements........ 18
SECTION 6.09. Notification of Bankruptcy....................... 18
SECTION 6.10. Further Assurances............................... 18
ARTICLE 7
MSAF GROUP RESPONSIBILITY; BUDGETS
SECTION 7.01. MSAF Group Responsibility........................ 19
SECTION 7.02. Instructions by the MSAF Group................... 19
SECTION 7.03. Request for Authority............................ 19
SECTION 7.04. Overall Business Objectives with Respect to
Aircraft Assets.................................. 19
SECTION 7.05. Operating Budget; Aircraft Asset Expenses Budget. 20
SECTION 7.06. Transaction Approval Requirements................ 21
ARTICLE 8
EFFECTIVENESS
SECTION 8.01. Effectiveness.................................... 23
ARTICLE 9
SERVICING FEES; EXPENSES
SECTION 9.01. Servicing Fees................................... 24
SECTION 9.02. Base Fees........................................ 24
SECTION 9.03. Rent Fees........................................ 24
SECTION 9.04. Incentive Fee.................................... 25
SECTION 9.05. Sales Fees....................................... 25
SECTION 9.06. Expenses......................................... 26
SECTION 9.07. Default Interest................................. 28
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ARTICLE 10
TERMS; RIGHTS TO TERMINATE; CONSEQUENCES OF TERMINATION; SURVIVAL
SECTION 10.01. Term......................................... 28
SECTION 10.02. Right to Terminate........................... 28
SECTION 10.03. Consequences of Termination.................. 32
SECTION 10.04. Survival..................................... 33
ARTICLE 11
INDEMNIFICATION
SECTION 11.01. Indemnity.................................... 33
SECTION 11.02. Procedures for Defense of Claims............. 34
SECTION 11.03. Reimbursement of Costs....................... 34
ARTICLE 12
ASSIGNMENT AND DELEGATION
SECTION 12.01. Assignment and Delegation.................... 35
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Best Efforts................................. 35
SECTION 13.02. Notices...................................... 35
SECTION 13.03. Governing Law................................ 37
SECTION 13.04. Jurisdiction................................. 37
SECTION 13.05. WAIVER OF JURY TRIAL......................... 37
SECTION 13.06. Counterparts; Third Party Beneficiaries...... 37
SECTION 13.07. Entire Agreement............................. 37
SECTION 13.08. Power of Attorney............................ 38
SECTION 13.09. Restrictions on Disclosure................... 38
SECTION 13.10. Rights of Setoff............................. 39
SCHEDULES
APPENDIX A..........................................Subsidiaries
SCHEDULE 2.02(a)........................................Services
SCHEDULE 4.01...........................................Aircraft
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SCHEDULE 4.02...................................Documents
SCHEDULE 4.03...............................Bank Accounts
SCHEDULE 1.03(a) to Schedule 2.02(a)............Insurance
SCHEDULE 8.01 to Schedule 2.02(a)...........Weekly Report
EXHIBIT A............................ Accession Agreement
EXHIBIT B.................................Pro-Forma Lease
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SERVICING AGREEMENT dated as of November 10, 1997 among INTERNATIONAL
LEASE FINANCE CORPORATION, a corporation incorporated under the laws of
California (the "SERVICER"), MSAF, a statutory trust established under the laws
of the State of Delaware, and, upon execution of an agreement substantially in
form of Exhibit A attached hereto, the Administrative Agent and Calculation
Agent, and the entities listed on Appendix A hereto organized as set forth
therein (together, the "SUBSIDIARIES").
For the consideration set forth herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties each
agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have the
following meanings. Unless otherwise defined herein, all capitalized terms used
but not defined herein have the meanings assigned to such terms in the Asset
Purchase Agreement between International Lease Finance Corporation, MSAF and
the Subsidiaries dated the date hereof (the "PURCHASE AGREEMENT").
"ADMINISTRATIVE AGENCY AGREEMENT" means the Administrative Agency
Agreement to be dated as of the date hereof, among the Administrative Agent,
MSAF and the Subsidiaries.
"ADMINISTRATIVE AGENT" means the administrative agent under the
Administrative Agency Agreement as set out in the executed agreement
substantially in the form of Exhibit A attached hereto.
"AFFILIATE" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Person specified; provided, however, that MSAF and the Subsidiaries,
on the one part, and International Lease Finance Corporation and its
subsidiaries, on the other part, shall not be considered to be Affiliates of
each other.
"AFTER-TAX BASIS" means on a basis such that any payment received, deemed
to have been received or receivable by any Person shall, if necessary, be
supplemented by a further payment to that Person so that the sum of the two
payments shall, after deduction of all U.S. federal, state, local or foreign
Taxes, penalties, fines, interest, additions to Tax and other charges resulting
from the receipt (actual or constructive) or accrual of such payments imposed
by or under any U.S. federal, state, local or other foreign law or Governmental
Authority
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(after taking into account any current deduction to which such Person shall be
entitled with respect to the amount that gave rise to the underlying payment),
be equal to the payment received, deemed to have been received or receivable.
"AIRCRAFT" means the Aircraft as defined in the Purchase Agreement.
"AIRCRAFT ASSETS" means all Aircraft and related lease interests owned by
any Person within the MSAF Group as of the applicable Delivery Date; provided,
however, that Aircraft Assets shall not include any Aircraft Asset (x) that
shall have ceased to be an Aircraft Asset pursuant to this Agreement, or (y) in
respect of which the Servicer or MSAF shall have terminated the Servicer's
obligation to provide Services in accordance with Article 10 of this Agreement.
"AIRCRAFT ASSET EXPENSES" has the meaning assigned to such term in Section
9.06(b)(i) of this Agreement.
"AIRCRAFT ASSETS RELATED DOCUMENTS" means all Lease Documents (as defined
in the Purchase Agreement) and other contracts and agreements of Persons within
the MSAF Group the terms of which relate to or affect any of the Aircraft
Assets.
"AIRCRAFT MONTHLY BASE FEE" has the meaning assigned to such term in
Section 9.02(a) of this Agreement.
"AIRCRAFT MONTHLY BASE FEE FRACTION" has the meaning assigned to such term
in Section 9.02(a) of this Agreement.
"APPLICABLE LAW" with respect to any Person means any law, statute,
ordinance, rule or regulation or code of conduct or practice of any U.S.
federal, state or local Governmental Authority, the foreign or international
Governmental Authority that applies to such Person or any of its properties or
assets.
"ASSET EXPENSES BUDGET" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.
"APPROVED BUDGET" has the meaning assigned to such term in Section 7.05(c)
of this Agreement.
"BANK ACCOUNTS" has the meaning assigned to such term in Section 6.01(b)
of Schedule 2.02(a) to this Agreement.
"BASE FEES" has the meaning assigned to such term in Section 9.01(a) of
this Agreement.
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"BASE SALES FEE" has the meaning assigned to such term in Section 9.01(d)
of this Agreement.
"BUSINESS DAY" means a day on which U.S. dollar deposits may be traded on
the London inter-bank market and commercial banks and foreign exchange markets
are open in New York, New York and London, England.
"CALCULATION DATE" means the calculation date as defined in the
Calculation Agency Agreement.
"CALCULATION AGENCY AGREEMENT" means the Calculation Agency Agreement to
be dated as of the date hereof, among the Calculation Agent, MSAF and Bankers
Trust, solely in its capacity as indenture trustee and security trustee.
"CALCULATION AGENT" means the calculation agent under the Calculation
Agency Agreement as set out in the executed agreement substantially in the form
of Exhibit A attached hereto.
"CHANGE IN CONTROL" has the meaning assigned to such term in Section
10.02(b) of this Agreement.
"CONCENTRATION THRESHOLDS" has the meaning assigned to such term in
Section 2.02(a) of Schedule 2.02(a).
"CONFLICTS STANDARD" has the meaning assigned to such term in Section
3.02(b) of this Agreement.
"CONTROL" (including, with its correlative meanings, "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means possession, directly or indirectly, of the
power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise).
"CONTROLLING TRUSTEES" means the controlling trustees of MSAF as specified
in the trust agreement constituting MSAF.
"CREDIT ENHANCEMENT FACILITY" has the meaning assigned to such term in
Section 5.05 of this Agreement.
"DELIVERY DATE" means, with respect to each Aircraft, the date on which
Buyer (as defined in the Purchase Agreement) obtains title to such Aircraft
(or, in the case of the B767-300 Aircraft MSN 24798, the SPC-5 Shares) and the
related
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Purchased Assets (in each case as defined in the Purchase Agreement) in
accordance with the Purchase Agreement.
"EFFECTIVENESS DATE" has the meaning assigned to such term in Section
10.02(c)(ii) of this Agreement.
"GOVERNMENTAL AUTHORITY" means any court, administrative agency or
commission or other governmental agency or instrumentality (or any officer or
representative thereof) domestic, foreign or international, of competent
jurisdiction including the EU.
"GROUP" has the meaning assigned to such term in Section 10.02 of this
Agreement.
"ILFC" means International Lease Finance Corporation, a California
corporation, and its successors.
"INCENTIVE FEE" has the meaning assigned to such term in Section 9.01(c)
of this Agreement.
"INDENTURE" has the meaning assigned to such term in Section 7.06(a) of
this Agreement.
"INITIAL APPROVED BUDGETS" has the meaning assigned to such term in
Section 7.05(a)(i) of this Agreement.
"INITIAL PERIODS" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.
"LEASE" means each Lease as defined in the Purchase Agreement, including
future leases entered into in accordance with the terms of this Agreement.
"LESSEE" means each Lessee as defined in the Purchase Agreement, including
future lessees with respect to future leases entered into in accordance with
the terms of this Agreement.
"LOSS" means any and all damage, loss, liability and expense (including
reasonable legal fees, expenses and related charges and costs of
investigation); provided, however, the term "Loss" shall not include any
indemnified party's management time or overhead expenses except for
non-ordinary course management time or overhead expenses relating to such
damage, loss, liability or expense.
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"MSAF GROUP" has the meaning assigned to such term in Section 2.01(a) of
this Agreement.
"MSAF GROUP LIABILITIES" means any obligations or liabilities of any
Person within the MSAF Group (whether accrued, absolute, contingent,
unasserted, known or unknown or otherwise).
"NET GAINS" has the meaning assigned to such term in Section 9.05(b) of
this Agreement.
"NOTES OFFERING" has the meaning assigned to such term in Section 5.07 of
this Agreement.
"OFFICER'S CERTIFICATE" means, as to any Person, a certificate of the
President, any Vice President or Assistant Vice President or the Treasurer.
"ONE YEAR INITIAL PERIOD" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.
"ONE YEAR PERIOD" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.
"OPERATING BUDGET" has the meaning assigned to such term in Section
7.05(a)(i) of this Agreement.
"OTHER ASSETS" has the meaning assigned to such term in Section 3.02 of
this Agreement.
"OVERHEAD EXPENSES" has the meaning assigned to such term in Section 9.06
of this Agreement.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, statutory business trust, common law trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.
"PRECEDENT LEASE" has the meaning assigned to such term in Article 3 of
Schedule 2.02(a) to this Agreement.
"PRO FORMA LEASE" has the meaning assigned to such term in Article 3 of
Schedule 2.02(a) to this Agreement.
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"PURCHASE AGREEMENT" has the meaning assigned to such term in the preamble
to Section 1.01 of this Agreement.
"RATING AGENCY" has the meaning assigned to such term in Section 5.05 of
this Agreement.
"RATING DECLINE" has the meaning assigned to such term in Section 10.02 of
this Agreement.
"REIMBURSABLE EXPENSES" has the meaning assigned to such term in Section
9.06(b) of this Agreement.
"RELATED PERSON" has the meaning assigned to such term in Section 10.02 of
this Agreement.
"RENT COLLECTED FEE" has the meaning assigned to such term in Section
9.01(b) of this Agreement.
"RENT FEES" has the meaning assigned to such term in Section 9.01(b) of
this Agreement.
"RENT PAYABLE FEE" has the meaning assigned in such term in Section
9.01(b) of this Agreement.
"REPLACEMENT SERVICER" means a replacement servicer to perform some or all
of the Services under the Servicing Agreement formerly performed by the
Servicer, which is appointed in accordance with Section 10.03(c) of this
Agreement.
"SALES FEES" has the meaning assigned to such term in Section 9.05(b) of
this Agreement.
"SALES INCENTIVE FEE" has the meaning assigned to such term in Section
9.05(b) of this Agreement.
"SECURITY DEPOSITS" means, at the time of calculation, with respect to
each Aircraft, all cash amounts, prepayments of rent, letters of credit and
guarantees paid by or issued on behalf of the Lessee for the benefit of the
lessor under the relevant Lease as security for obligations of such Lessee
under such Lease and related Lease Documents.
"SERVICER" means International Lease Finance Corporation.
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"SERVICES" has the meaning assigned to such term in Section 2.02(a) of
this Agreement.
"STANDARD OF CARE" has the meaning assigned to such term in Section 3.01
of this Agreement.
"STANDARD OF LIABILITY" has the meaning assigned to such term in Section
3.03 of this Agreement.
"SUBSIDIARIES" means those entities listed on Appendix A hereto.
"TARGET NET RESULTS" has the meaning assigned to such term in Section 9.04
of this Agreement.
"TARGET SALES PRICE" has the meaning assigned to such term in Section
9.05(a) of this Agreement.
"TAX" or "TAXES" means (i) any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, registration, recording, documentary,
conveyancing, gains, withholding on amounts paid to or by any Person, payroll,
employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom duty or other tax, governmental
fee or other like assessment or charge of any kind whatsoever, together with
any interest, penalty, addition to tax or additional amount imposed by any
governmental authority responsible for the imposition of any such tax (domestic
or foreign) (a "TAXING AUTHORITY"), or (ii) liability for the payment of any
amounts of the type described in (i) as a result of being party to any
agreement or any express or implied obligation to indemnify any other Person.
"TERMINATION NOTICE" has the meaning assigned to such term in Section
10.02(c)(i) of this Agreement.
"THIRD PARTY CLAIM" means a claim by a third party arising out of a matter
for which an indemnified party is entitled to be indemnified pursuant to the
indemnity provisions of this Agreement.
"THREE YEAR INITIAL PERIOD" has the meaning assigned to such term in
Section 7.05(a) of this Agreement.
"THREE YEAR PERIOD" has the meaning assigned to such term in Section
7.05(a) of this Agreement.
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"TRANSACTION APPROVAL REQUIREMENTS" has the meaning assigned to such term
in Section 7.06(c) of this Agreement.
"YEAR" means each twelve month period commencing on December 1 and ending
on November 30.
ARTICLE 2
APPOINTMENT, SERVICES
SECTION 2.01. Appointment. (a) Each of MSAF and the Subsidiaries hereby
appoints the Servicer as the exclusive provider of the Services (as defined in
Section 2.02 below) to MSAF and the Subsidiaries (collectively, the "MSAF
GROUP") in respect of the Aircraft Assets on the terms and subject to the
conditions set forth in this Agreement.
(b) The Servicer hereby accepts such appointment and agrees to perform the
Services on the terms and subject to the conditions set forth in this
Agreement. In connection with the provision of the Services with respect to
the Aircraft Assets, the Servicer generally shall, where and to the extent
practicable, contract for or otherwise obtain goods and services from third
party providers the cost of which is an Aircraft Asset Expense in the name of,
or as disclosed agent for, MSAF and/or the relevant Subsidiary as applicable;
if the Servicer shall not have contracted for or otherwise obtained such goods
and services in the name of or as disclosed agent for MSAF or the relevant
Subsidiary, as the case may be, the Servicer shall cause MSAF or the relevant
Subsidiary, as the case may be, to be in a position to have direct recourse
against any such third party provider providing goods and services for MSAF or
the relevant Subsidiary, as the case may be, for any breaches by such third
party provider related to the provision of such goods and services. Any third
party provider discount or rebate related directly or indirectly to the
Aircraft Assets shall be made available to MSAF Group on a pro-rated basis.
(c) MSAF has advised the Servicer that each Person within the MSAF Group
has appointed or will appoint the Administrative Agent to act as its
representative with respect to any matter in respect of which MSAF or any other
Person within the MSAF Group is required or permitted to take any action
pursuant to the terms of this Agreement. Accordingly, in connection with the
performance of the Services, unless earlier notified in writing by MSAF that
the Administrative Agent's appointment to act on behalf of the MSAF Group has
not become effective or has been revoked or terminated, the Servicer shall in
all cases
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be entitled to rely on the instructions (or other actions) of the
Administrative Agent as representative of each Person within the MSAF Group.
(d) MSAF has advised the Servicer that the Calculation Agent is expected
to be appointed to perform certain calculation services on behalf of the MSAF
Group in accordance with the terms of the Calculation Agency Agreement.
SECTION 2.02. Services. (a) The services to be provided by the Servicer
in respect of the Aircraft Assets (the "SERVICES") are as set forth in Schedule
2.02(a).
(b) In connection with the performance of the Services, the Servicer shall
in all cases only be obliged to act upon, and shall be entitled to rely on, the
instructions of MSAF or, as provided above in Section 2.01(c), the
Administrative Agent on behalf of the MSAF Group. The Servicer shall not be
liable to any of MSAF, the Subsidiaries or any other Person for any act or
omission to act taken in accordance with such instructions, except to the
extent provided in Section 3.03 (other than if MSAF or the Administrative Agent
has instructed the Servicer to breach the terms of this Agreement or take any
action or omit to take any action required by the terms of this Agreement or
misstate any information).
SECTION 2.03. Compliance with Applicable Laws. Notwithstanding anything
to the contrary in this Agreement, the Servicer shall not be obligated to take
or refrain from taking any action which would violate any Applicable Law.
SECTION 2.04. Limitations. Without prejudice to any provision of the
Purchase Agreement, including the indemnity set out in Article 10 thereof,
neither the Servicer nor any of its Affiliates shall assume any MSAF Group
Liabilities.
ARTICLE 3
STANDARD OF CARE; CONFLICTS OF INTEREST; STANDARD OF LIABILITY
SECTION 3.01. Standard of Care. The Servicer shall use reasonable care
and diligence at all times in the performance of the Services as if it were the
owner of the Aircraft Assets (the "STANDARD OF CARE").
SECTION 3.02. Conflicts of Interest. (a) Each of MSAF and the
Subsidiaries acknowledges and agrees that (i) in addition to managing the
Aircraft Assets under this Agreement, the Servicer may manage, and shall be
entitled to manage, from time to time, the separate assets of
International Lease Finance Corporation, its Affiliates and third parties
("OTHER ASSETS"); (ii) notwithstanding
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Section 3.02(b) below, in the course of conducting such activities, the
Servicer may from time to time have conflicts of interest in performing its
duties on behalf of the various entities to whom it provides management
services and with respect to the various assets in respect of which it provides
management services; and (iii) the Controlling Trustees of MSAF have approved
the transactions contemplated by this Agreement and desire that such
transactions be consummated and, in giving such approval, the Controlling
Trustees of MSAF have expressly recognized that such conflicts of interest may
arise and that when such conflicts of interest arise the Servicer shall perform
the Services in accordance with the Standard of Care and the Conflicts
Standard.
(b) The Servicer shall affirmatively seek to avoid conflicts of interest
with respect to the Aircraft Assets; however, if conflicts of interest arise
regarding the management of (i) a particular Aircraft Asset, on the one hand,
and another Aircraft Asset, on the other hand, or (ii) any Aircraft Assets, on
the one hand, and Other Assets, on the other hand, the Servicer shall (A)
notify MSAF in the weekly report as set forth in Section 8.01 of Schedule
2.02(a) and (B) perform the Services in good faith and to the extent (i) such
Aircraft Assets or (ii) such Aircraft Asset and such Other Asset are
substantially similar in terms of objectively identifiable characteristics
relevant for purposes of the particular Services to be performed, the Servicer
shall not discriminate among such Aircraft Assets or between such Aircraft
Assets and such Other Assets (the standard set forth in this Section 3.02(b)
shall be referred to collectively as the "CONFLICTS STANDARD").
SECTION 3.03. Standard of Liability. The Servicer shall not be liable to
MSAF or any of the Subsidiaries for any Losses arising (i) as a result of an
Aircraft Asset sold, leased or purchased on less favorable terms than might
have been achieved at any time provided such transactions were entered into on
the basis of a commercial decision of the Servicer, or (ii) in respect of the
Servicer's obligation to apply the Conflicts Standard in respect of its
performance of the Services, except, in either case, in the case of wilful
misconduct or fraud on the part of the Servicer. MSAF and the Subsidiaries
shall indemnify, reimburse and hold harmless the Servicer on an After-Tax Basis
in accordance with the provisions of Article 11 for any Loss arising as a
result of the performance of any of the Servicer's obligations as Servicer or
as a result of any action which the Servicer is requested to take or refrain
from taking by MSAF, unless (i) such Loss has arisen as a result of the wilful
misconduct of the Servicer, (ii) such Loss has directly resulted from a breach
by the Servicer of the express terms and conditions of this Agreement or (iii)
such Loss is a Loss for which the Servicer has indemnified MSAF and its
Affiliates and arises as a result of any material misstatements or omissions in
any public filings relating to information on the Aircraft Assets, Services and
the Servicer provided by the Servicer for disclosure
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in such public filings (the liability standards set forth in this Section 3.03,
the "STANDARD OF LIABILITY").
SECTION 3.04. Waiver of Implied Standard. Except as expressly stated
above in this Article 3, all other warranties, conditions and representations,
express or implied, statutory or otherwise, arising under, Delaware, New York
or California law in relation to either the skill, care, diligence or otherwise
in respect of any service to be performed hereunder or to the quality or
fitness for any particular purpose of any goods are hereby excluded and the
Servicer shall not be liable in contract, tort or otherwise under Delaware, New
York or California law for any loss, damage, expense or injury of any kind
whatsoever, arising out of or in connection with the services to be supplied
pursuant to this Agreement or any goods to be provided or sold in conjunction
with such services.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of MSAF and the Subsidiaries jointly and severally represents and
warrants to the Servicer as follows:
SECTION 4.01. Aircraft Assets. Schedule 4.01 contains a true and complete
list of all Aircraft intended to be Aircraft Assets as of the date hereof.
SECTION 4.02. Aircraft Assets Related Documents. Schedule 4.02 sets
forth a true and complete list of all material Aircraft Assets Related
Documents. The Aircraft Assets Related Documents relating to a particular
Aircraft will be delivered to the Servicer on the applicable Delivery Date.
The MSAF Group will deliver to the Servicer any Aircraft Assets Related
Document received after the relevant Delivery Date that has not previously been
delivered to the Servicer from time to time after the relevant Delivery Date.
The Servicer shall not be required to perform any service provided for in any
Aircraft Assets Related Documents not delivered to it.
SECTION 4.03. Accounts and Cash flow. The MSAF Group shall, prior to the
first Delivery Date, provide to the Servicer a true and complete list of all
the MSAF Group's bank or other similar accounts relating to the Aircraft
Assets, with respect to which the MSAF Group has authority and has provided a
reasonably detailed written description to the Servicer of all material
arrangements and procedures relating to the flow of cash related to the
Aircraft Assets, which list shall become Schedule 4.03 hereto as if part of
this Agreement on the date hereof.
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ARTICLE 5
SERVICER UNDERTAKINGS
SECTION 5.01. Staff and Resources. The Servicer shall employ or otherwise
engage such staff (including in-house legal staff) and maintain such supporting
resources as the Servicer shall deem necessary in accordance with its usual
business practices with respect to its own aircraft, both in number and in
quality, to enable the Servicer to perform the Services in accordance with the
terms of this Agreement.
SECTION 5.02. Access. The Servicer at such times as MSAF may reasonably
request (which requests shall be no more frequent than quarterly) shall make
available to the MSAF Group and its agents (including the Administrative Agent,
Calculation Agent and auditors) reports, ledgers, documents, reports and other
records (including without limitation, transaction reports, invoice books,
receipts, receipt records, journals and journal entries) and other information
on a "READ ONLY" basis (by way of hard copy or computer disc) related to the
Aircraft Assets or the MSAF Group's business (copies of which MSAF Group shall
be entitled to take) and to officers and employees of the Servicer, subject to
their reasonable availability, to enable the MSAF Group to monitor the
performance of the Servicer under this Agreement.
SECTION 5.03. Compliance with Law. The Servicer shall, in connection with
the performance of the Services, comply with all laws, rules and regulations
applicable to the Servicer and with the laws, rules and regulations applicable
to the Aircraft Assets.
SECTION 5.04. Commingling. The Servicer shall not commingle with its own
funds, any funds of any Person within the MSAF Group other than Security
Deposits held pursuant to Section 5.06 hereof and misdirected funds from
Lessees and others which shall be promptly redirected to a Bank Account.
SECTION 5.05. Credit Enhancement. (a) (i) From and after the time of the
consummation of the first Notes Offering, the Servicer shall, at the Servicer's
expense, procure, for MSAF's benefit and in a form approved by MSAF, a letter
of credit, credit facility or similar credit enhancement instrument (a "CREDIT
ENHANCEMENT FACILITY") provided by an Eligible Provider. The Credit
Enhancement Facility shall be in two parts; (A) the first part shall be in an
amount equal to the sum of, at any time, (x) $10,000,000 plus (y) the amount of
cash Security Deposits with respect to the Aircraft Assets held by the Servicer
from time to time pursuant to Section 5.06 of this Agreement, which amount
shall be available to be drawn for the purpose of paying principal and interest
on debt
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issued in any Notes Offering; and (B) the second part shall be in an amount
equal to the sum of, at any time, (x) the amount of all non-cash Security
Deposits relating to any Aircraft delivered to MSAF or its designee and which
non-cash Security Deposit has not been reissued in the name of MSAF or its
designee on or prior to the Delivery Date relating to such Aircraft, less (y)
the amount of all non-cash Security Deposits relating to any Aircraft delivered
to MSAF or its designee and not reissued in the name of MSAF or its designee on
or prior to such Delivery Date but that have been so reissued after such
Delivery Date, which amount shall be available to be drawn only if the drawing
conditions under such non-cash Security Deposits are satisfied in accordance
with their terms.
The Credit Enhancement Facility will name any Person within MSAF Group as
beneficiaries as MSAF shall designate. Amounts drawn by a beneficiary under
the Credit Enhancement Facility shall be notified to the Servicer not less than
four Business Days prior to the draw date and shall accrue interest compounded
daily and calculated on a bond equivalent basis in favor of the Servicer at 3%
per annum and shall be repaid monthly to the Servicer by such beneficiary after
the payment of any interest due and payable on the most junior public
securitization debt of such Person or its Affiliates, pursuant to the priority
of payments provisions set out in the instrument governing the issuance of such
debt. Any amounts drawn and not so repaid shall continue to accrue interest on
the basis set forth above. Amounts drawn under the Credit Enhancement Facility
will be drawn and repaid on a pari passu basis with any other such credit
facilities providing liquidity to MSAF at the equivalent priority level as
determined by the priority of payments set out in any Indenture.
An "ELIGIBLE PROVIDER" means ILFC, American International Group, Inc. or a
bank or other financial institution, in each case whose short-term unsecured
debt is rated at least A1+ by Standard & Poor's Rating Group, D1+ by Duff &
Xxxxxx Credit Rating Co. (if Duff & Xxxxxx Credit Rating Co. is then rating the
short-term unsecured debt of such institution) or P1 by Xxxxx'x Investors
Service, Inc. (each such credit rating agency, together with any successors, a
"RATING AGENCY").
(ii) If at any time the provider of the Credit Enhancement Facility is not
an Eligible Provider, the Servicer shall provide cash collateral for the amount
of the Credit Enhancement Facility at such time to the commercially reasonable
satisfaction of MSAF.
(iii) The Servicer agrees to maintain the Credit Enhancement Facility
until the earliest of (1) twenty-five years from the last Delivery Date, (2)
termination of this Agreement pursuant to Section 10.02(b)(iii) or 10.02 (iv),
and (3) as otherwise agreed between MSAF and the Servicer; provided that, if
this
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Agreement terminates pursuant to any provision of Section 10.02 other than
subsections 10.02(b)(iii) and (iv) thereof, the Servicer shall continue to
provide a Credit Enhancement Facility in an amount equal to only $10,000,000
and otherwise on the terms set out in this Section 5.05 until repayment or
defeasance (but not refinancing) of all of the public securitization debt.
(b) At any time before the consummation of the first Notes Offering, the
Servicer shall provide credit support (the "SERVICER CREDIT ENHANCEMENT
FACILITY") to MSAF in the amount and for the purposes that would otherwise be
required for the Credit Enhancement Facility at such time pursuant to Section
5.05(a). MSAF may at any such time designate a beneficiary under the Servicer
Credit Enhancement Facility. Amounts drawn by a beneficiary under the
Servicer Credit Enhancement Facility shall accrue interest in favor of the
Servicer at 3% per annum compounded daily and calculated on a bond equivalent
basis and shall be repaid monthly to the Servicer by such beneficiary after the
payment of any interest due and payable by MSAF on its financial indebtedness
(including indebtedness to an Affiliate of MSAF).
SECTION 5.06. Security Deposits. For so long as the Servicer is servicing
the Aircraft Assets under this Agreement, the Servicer shall hold, for the
benefit of MSAF or its designee, all cash Security Deposits paid by Lessees
with respect to the Aircraft Assets and any interest accruing on such Security
Deposits shall be for the benefit of the Servicer unless such interest is
required to be paid to the Lessee pursuant to the terms of any Lease. The
Servicer agrees to return to MSAF or its designee Security Deposits that are
(a) determined in good faith by the Servicer to be no longer held on behalf of
any Lessee, whether upon expiry or breach of the Lease or otherwise, (b) in an
amount exceeding three months rent with respect to a single Aircraft and paid
by a single Lessee, and (c) held by the Servicer on the earliest of (i) the
termination of this Agreement and (ii) a date agreed by MSAF and the Servicer.
Interest on Security Deposits payable to Lessees under the applicable Lease
shall be paid by the party holding such Security Deposits.
SECTION 5.07. Notes Offering. The Servicer agrees to use its best efforts
to cooperate with MSAF and its Affiliates in connection with the public or
private offering and sale after the last Delivery Date of any securities of
MSAF or any of its Affiliates (a "NOTES OFFERING") including participating in
customary marketing activities relating to a Notes Offering in the Servicer's
capacity as Servicer of the Aircraft Assets (including road shows and investor
meetings); attending, on reasonable prior notice, and subject to the reasonable
availability of the Servicer's officers and employees, all meetings with Rating
Agencies relating to any Notes Offering; providing MSAF and its Affiliates,
underwriters, Rating Agencies and other advisors with reasonable opportunities
to conduct legal and business due
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diligence with respect to the Servicer and provision of Services and with
respect to the Aircraft Assets and Leases including providing any historical
financial information, the names of prior lessees and repossession and
restructuring information (including costs and expenses related thereto that
are reasonably available) with respect to the Aircraft (which information shall
not include any lease document to which MSAF or any of its Affiliates was not a
party); procuring, at MSAF's expense, opinions of counsel with respect to
matters requested by the Rating Agencies and relating to the Aircraft Assets,
Leases and related documents and related collateral and payments thereunder;
assisting with respect to the preparation by the Administrative Agent of
financial statements for the Aircraft Assets as if the Aircraft Assets had been
operated as a business, if and to the extent such financial statements are
required by any regulatory authority; and providing, reviewing, commenting on
and providing customary indemnities against material misstatements or omissions
with respect to, written information regarding the Aircraft Assets, the
Servicer and provision of Services for inclusion in any securities offering
document related to the Aircraft Assets.
ARTICLE 6
UNDERTAKINGS OF MSAF AND THE SUBSIDIARIES
SECTION 6.01. Cooperation. Each of MSAF and the Subsidiaries shall at all
times use their best efforts to cooperate with the Servicer to enable the
Servicer to provide the Services, including providing the Servicer with all
powers of attorney as may be reasonably necessary or appropriate to perform the
Services.
SECTION 6.02. No Representation with Respect to Third Parties. Each of
MSAF and the Subsidiaries agrees that as between the Servicer, on the one hand,
and any Person within the MSAF Group, on the other hand, no representation is
made as to the financial condition and affairs of any Lessee of, or purchaser
of, any Aircraft Asset or any manufacturer, representative, maintenance
facility, contractor, vendor or supplier utilized by the Servicer in connection
with its performance of the Services and, subject to the Standard of Liability,
the Servicer shall have no liability with respect to such third parties.
SECTION 6.03. Related Document Amendments. Each of MSAF and the
Subsidiaries shall not take any action that would increase in any respect the
scope, nature or level of the Services to be provided under this Agreement
without the Servicer's prior written consent.
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SECTION 6.04. Other Servicing Arrangements. Without the prior written
consent of the Servicer, MSAF and the Subsidiaries shall not (a) enter into, or
cause or permit any Person (other than the Servicer) to enter into on their
behalf, any transaction for the lease or sale of any Aircraft Asset in respect
of which the Servicer is at such time performing Services, or (b) employ any
Person other than the Servicer to perform any of the Services with respect to
the Aircraft Assets.
SECTION 6.05. Communications. Each of MSAF and the Subsidiaries shall
forward promptly to the Servicer a copy of any written communication received
from any Person in relation to any Aircraft Asset.
SECTION 6.06. Ratification. Each of MSAF and the Subsidiaries hereby
ratifies and confirms and agrees to ratify and confirm whatever the Servicer
does in accordance with this Agreement in the exercise of any of the powers or
authorities conferred upon the Servicer under the terms of this Agreement.
SECTION 6.07. Execution, Amendment, Modification or Termination of
Aircraft Assets Related Documents. (a) No later than five Business Days after
the date that (i) any agreement, instrument or other document becomes an
Aircraft Assets Related Document or (ii) any Aircraft Assets Related Document
shall have been amended, modified or terminated, MSAF shall deliver written
notice thereof to the Servicer together with (A) in the case of any newly
executed Aircraft Assets Related Document, a true and complete copy of such
Aircraft Assets Related Document, a list of all Aircraft Assets to which it
relates and a description, in reasonable detail, of the relevance of such
Aircraft Assets Related Document to such assets or (B) in the case of any
amendment, modification or termination, a true and complete copy of any related
agreement, instrument or other document; provided, however, that such notice or
such document shall not be required to be delivered if the Servicer was
substantially involved in the preparation and execution of such new, amended,
modified or terminated agreement, instrument or other document.
(b) MSAF shall promptly deliver to the Servicer a complete copy of each
executed Indenture (which shall include a definition of the relevant
calculation date) , Calculation Agency Agreement and Administrative Agency
Agreement or similar agreements, and any amendments, changes, modifications or
waivers relating to any of the aforementioned agreements, in each case
excluding any confidential pricing information contained therein.
(c) MSAF shall promptly notify the Servicer of the name, identity and
contact details of the Administrative Agent, the Calculation Agent and
Controlling Trustees and of any changes thereto and any other relevant
information relating to such parties reasonably requested by the Servicer.
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SECTION 6.08. MSAF Group Accounts and Cash Arrangements. MSAF shall
promptly notify the Servicer of any new bank or similar account established by
or on behalf of MSAF or any of the Subsidiaries or otherwise relating to the
Aircraft Assets and of any such account relating to any Aircraft Assets that
become Aircraft Assets after the date of this Agreement and the closing of any
such account. When MSAF notifies the Servicer that it has established a new
bank or similar account by or on behalf of MSAF or any of the Subsidiaries or
otherwise relating to the Aircraft Assets, MSAF shall provide the Servicer with
an updated list of all material arrangements and procedures relating to the
flow of cash related to the Aircraft Assets.
SECTION 6.09. Notification of Bankruptcy. If any of MSAF or the
Subsidiaries shall consider taking any action to:
(a) file any petition or application, commence any proceeding, pass any
resolution or convene a meeting with respect to itself or any of its Affiliates
under any United States federal, state or foreign or international law relating
to the appointment of a trustee in bankruptcy, liquidator or receiver with
respect to any of MSAF or the Subsidiaries or over the whole or any part of any
properties or assets of any of MSAF or the Subsidiaries or any bankruptcy,
reorganization, compromise arrangements or insolvency of any of MSAF or the
Subsidiaries; or
(b) make an assignment for the benefit of its creditors generally;
then MSAF shall notify the Servicer, to the extent practicable, of such
consideration a reasonable period of time prior to taking any such action, but
in any event, prior to taking any such action (it being understood that the
foregoing notice requirement shall not be construed to prohibit or restrain the
taking of any action described in (a) or (b) above). If any of MSAF or the
Subsidiaries becomes aware of the intent or action of any Person (whether a
creditor or member of any of MSAF or the Subsidiaries) to appoint a trustee in
bankruptcy, liquidator or receiver, MSAF shall promptly notify the Servicer.
SECTION 6.10. Further Assurances. Each of MSAF and the Subsidiaries
agrees that at any time and from time to time upon the written request of the
Servicer, it will execute and deliver such further documents and do such
further acts and things as the Servicer may reasonably request in order to
effect the purposes of this Agreement.
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ARTICLE 7
MSAF GROUP RESPONSIBILITY; BUDGETS
SECTION 7.01. MSAF Group Responsibility. Notwithstanding the appointment
of the Servicer to perform the Services and the related delegation of authority
and responsibility to the Servicer pursuant to this Agreement, each of MSAF and
the Subsidiaries shall remain responsible for all matters related to its
business, operations, assets and liabilities.
SECTION 7.02. Instructions by the MSAF Group. MSAF may at any time
deliver written notice to the Servicer directing the Servicer to limit or
terminate any action being taken by it under this Agreement or to take any
action authorized or contemplated by this Agreement (including sale or disposal
of any Aircraft Asset) or the applicable Lease which is described in reasonable
detail in such notice and, upon receipt of such written notice, the Servicer
shall use commercially reasonable efforts to comply with the terms thereof.
SECTION 7.03. Request for Authority. (a) Subject to Section 7.03(b), if
the Servicer wishes to take or approve any action which it is not expressly
authorized under this Agreement to take or approve, it shall request authority
from MSAF to take or approve the action. The Servicer's request for authority
shall be in writing, and shall include a reasonably detailed explanation of the
reason for the request. If on or prior to the last day for a response by MSAF
as specified by the Servicer in its request (being not less than five Business
Days after the request), MSAF does not expressly refuse such request, the
Servicer may be deemed to be authorized in writing to take or to approve such
action on behalf of the MSAF Group.
(b) If the Servicer reasonably determines that an action to protect the
interests of the MSAF Group is required before the expiration of the relevant
time period specified in Section 7.03(a), then the Servicer shall send
notification to MSAF of such determination and, unless otherwise directed by
MSAF, the action proposed may be deemed to be authorized in writing on behalf
of the MSAF Group.
(c) In relation to each payment required to be made in relation to an
Aircraft Asset and not certified under any other provision of this Agreement,
the Servicer will submit a certificate to the Administrative Agent with a copy
to MSAF giving reasonable details for such payment.
SECTION 7.04. Overall Business Objectives with Respect to Aircraft Assets.
The Servicer will perform the Services with a view towards maximizing the
present value of the cash flows over the life of the Aircraft Assets from
leasing
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and re-leasing or selling or otherwise disposing of Aircraft Assets taking into
account the then-existing and anticipated market conditions affecting the
operating lease of used aircraft and the commercial aviation industry generally
and any restrictions within any Indenture.
SECTION 7.05. Operating Budget; Aircraft Asset Expenses Budget. (a) (i)
MSAF, on behalf of the MSAF Group, shall adopt with respect to the Initial
Periods, each one Year period (a "ONE YEAR PERIOD") and each three Year period
(a "THREE YEAR PERIOD") during the term of this Agreement:
(A) a separate cash operating budget with respect to the
Aircraft Assets (each, an "OPERATING BUDGET"); and
(B) a separate cash budget with respect to Aircraft Asset
Expenses related to the Aircraft Assets (each, an "ASSET EXPENSES
BUDGET").
The initial Operating Budgets for the period from the first Delivery Date
through November 30, 1998 (the "ONE YEAR INITIAL PERIOD") and through November
30, 2000 (the "THREE YEAR INITIAL PERIOD" and together with the One Year
Initial Period, the "INITIAL PERIODS"), and the initial Asset Expenses Budgets
for the One Year Initial Period and the Three Year Initial Period, shall be
substantially in a form to be agreed by the parties following execution of this
Agreement but no later than the first Delivery Date (together, the "INITIAL
APPROVED BUDGETS").
The Operating Budgets and Asset Expenses Budgets for each Initial Period,
One Year Period and Three Year Period during the term of this Agreement shall
be adopted by MSAF Group in accordance with Section 7.05(b).
The Servicer shall use best efforts to achieve the Initial Approved
Budgets and the Approved Budgets for any One Year Period and Three Year Period.
(b) In respect of each One Year Period and Three Year Period after the
Initial Periods during the term of this Agreement, MSAF shall prepare, and
deliver to the Servicer no later than the September 30 immediately preceding
the commencement of each Year, proposed One Year and Three Year Operating
Budgets and One Year and Three Year Asset Expenses Budgets for each such period
together with reasonably detailed supporting information and the assumptions
underlying such proposed Operating Budgets or Asset Expenses Budgets. The
proposed Operating Budget and Asset Expenses Budget for the following Year
shall include the Target Net Results amount.
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(c) In connection with the preparation of such proposed One Year and Three
Year Operating Budgets and One Year and Three Year Asset Expenses Budgets for
each period, the Servicer shall provide MSAF and the Administrative Agent, not
later than the August 30 immediately preceding the commencement of each Year,
information in a form to be agreed from time to time relating to (i) lease
rates, (ii) downtime, (iii) technical expenditures (including any costs to be
capitalized) relating to the Aircraft Assets, (iv) costs relating to insurance,
legal, consulting and other similar expenses and (v) such other Aircraft Assets
expense-related information as may be requested to prepare such budgets, in
each case including the assumptions relating thereto.
The Servicer shall have the right during the 30-day period following its
receipt of MSAF's proposed Operating Budgets and Asset Expenses Budgets to
express any objections it may reasonably have to such budgets. During such
30-day period, MSAF shall negotiate in good faith with the Servicer to agree on
a final one Year and three Year Operating Budget and a final one Year and three
Year Asset Expenses Budgets for each Period; provided that MSAF shall not be
obligated to agree to any changes to its proposed Operating Budgets and Asset
Expenses Budgets for any One Year Period or Three Year Period. Not later than
the November 10 immediately preceding the commencement of such Year, MSAF
shall deliver to the Servicer final Operating Budgets and Asset Expenses
Budgets for each One Year Period and Three Year Period (the "APPROVED BUDGETS")
together with reasonably detailed information regarding MSAF's underlying
assumptions.
(d) If at any time the Servicer reasonably believes that the incurrence of
any Aircraft Asset Expense is reasonably likely to result in the actual
aggregate Aircraft Asset Expenses of the same category as such Aircraft Asset
Expense (taking into account all Aircraft Asset Expenses of such category
incurred to date) exceeding 110% of the line item amount included in the then
applicable Approved Budget for any One Year Period for such category of
Aircraft Asset Expenses, the Servicer shall not incur such Asset Expense
without prior notification to MSAF. In connection with the foregoing, the
Servicer may request that the related line item amount included in the then
applicable Approved Budget be increased to the reasonably anticipated level in
such category for the balance of the relevant One Year Period or One Year
Initial Period, as the case may be.
SECTION 7.06. Transaction Approval Requirements. (a) Consistent with the
overall business objectives of the MSAF Group with respect to the Aircraft
Assets, and with the delegation to the Servicer by the MSAF Group of a
practicable and workable level of autonomy, responsibility and authority
regarding the performance of the Services, the Servicer shall not do any of the
following without the express prior written approval of MSAF.
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(i) Except as required in accordance with the terms of any Lease or
other agreement with the Lessee, sell (or enter into any commitment or
agreement to sell) or otherwise dispose of any Aircraft or any Engine;
(ii) Enter into any new Lease (or any renewal or extension of an
existing Lease or other agreement with a Lessee) of Aircraft Assets if
such new Lease shall not comply with the applicable provision of any
indenture or similar agreement binding MSAF or any of its Affiliates and
related to a Notes Offering (each such agreement, an "INDENTURE").
(iii) Terminate any Lease or Leases to any single Lessee with
respect to any Aircraft having an aggregate depreciated net book value
on the books of the relevant Person (or Persons) in MSAF Group in excess
of $100,000,000.
(iv) Unless provided for in the then current One Year Approved
Budget, enter into any contract for the modification or maintenance of
Aircraft Assets forming part of the Aircraft Assets (A) if the costs to
be incurred thereunder by the MSAF Group exceed the greater of (1) the
estimated aggregate cost of a heavy maintenance "D" check for the
airframe and a full restoration shop visit for the engines for Aircraft
Assets of the type in question and (2) the amount of the available
maintenance reserve or other collateral under the applicable Lease or
(B) outside the ordinary course of the MSAF Group's business.
(v) Enter into on behalf of MSAF or any of the Subsidiaries, any
capital commitment or confirm any order or commitment to acquire, or
acquire on behalf of the MSAF Group, aircraft or; subject to Section (e)
of Article 4 of Schedule 2.02(a), engines with any aircraft or engine
manufacturers except Servicer may enter into any capital commitment or
order or commitment to acquire a replacement engine or spare part for an
Aircraft so long as the same is provided for in the then applicable One
Year Approved Budget.
(vi) Issue any guarantee on behalf of, or otherwise pledge the
credit of any Person within the MSAF Group.
(vii) Unless permitted by any other provision of this Section 7.06,
enter into any agreement for services to be provided in respect of
Aircraft Assets by third parties outside the ordinary course of ILFC's
business, the cost of which is to be borne by the MSAF Group, except in
each case to the extent that the same is an Asset Expense provided for
in the then applicable One Year Approved Budget.
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(viii) Incur on behalf of any Person within the MSAF Group any
liability (actual or contingent) or cause any such liability to be
incurred, except for a liability (A) contemplated in the then applicable
One Year Approved Budget, (B) pursuant to a transaction of a type which
is subject to another Transaction Approval Requirement or which would be
subject to another Transaction Approval Requirement if the threshold set
forth in such Transaction Approval Requirement were met or (C) incurred
in the ordinary course of MSAF Group's business.
(ix) On behalf of any Person within the MSAF Group enter into,
amend or grant a waiver with respect to any transaction with the
Servicer or any of its Affiliates including without limitation for the
acquisition, sale or lease of any Aircraft Assets from or to, or the
obtaining or provision of services by, any such Person.
(b) Any transaction entered into by the Servicer on behalf of the MSAF
Group shall be on an arm's length basis and on market terms, unless otherwise
agreed by the MSAF Group or directed by the MSAF Group in accordance with
Section 7.02.
(c) The transaction approval requirements (the "TRANSACTION APPROVAL
REQUIREMENTS") set forth in this Section 7.06 may only be amended by mutual
agreement of the parties, and shall not in any event be amended to reduce or
circumscribe the delegation to the Servicer of the level of autonomy, authority
and responsibility contemplated by the Transaction Approval Requirements with
respect to the performance of the Services.
ARTICLE 8
EFFECTIVENESS
SECTION 8.01. Effectiveness. The effectiveness of this Agreement and all
obligations of the parties hereunder with respect to each Aircraft Asset shall
be conditioned upon (a) the delivery of such Aircraft Asset to MSAF or one of
the Subsidiaries, (b) with respect to MSAF, the Servicer and the entities
listed on Appendix A to this Agreement the execution hereof by those parties
and (c) with respect to the parties signing the Accession Agreement attached as
Exhibit A to this Agreement, the execution of the Accession Agreement by those
parties.
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ARTICLE 9
SERVICING FEES; EXPENSES
SECTION 9.01. Servicing Fees. In consideration of the Servicer's
performance of the Services, MSAF shall pay to the Servicer servicing fees
consisting of the fees set forth in (a) Section 9.02 ("BASE FEES"), (b) Section
9.03, the "RENT PAYABLE FEE" and "RENT COLLECTED FEE", together, the "RENT
FEES"), (c) Section 9.04 (the "INCENTIVE FEE") and (d) Section 9.05 (the "BASE
SALES FEE" and "SALES INCENTIVE FEE", together, the "SALES FEES").
SECTION 9.02. Base Fees. (a) A Base Fee shall be paid by MSAF to the
Servicer of (i) $2,000,000 on December 1, 1997 and (ii) an amount with respect
to each Aircraft for each month (the "AIRCRAFT MONTHLY BASE FEE") equal to the
amount set forth below opposite the period during which such month occurs,
multiplied by the Aircraft Monthly Base Fee Fraction with respect to such
Aircraft for such month:
Period Amount
------ ------
December 1, 1997 -- November 30, 1998 $83,333.33
December 1, 1998 -- November 30, 1999 250,000.00
From December 1, 1999 until the termination or
expiration of this Agreement 166,666.66
The "AIRCRAFT MONTHLY BASE FEE FRACTION" for any month means, with respect
to each Aircraft, the fraction which is the product of (x) the quotient of (A)
the number of days during such month that MSAF Group owned such Aircraft
(including the relevant Delivery Date and excluding the date of disposal of
such Aircraft) divided by (B) the total number of days in such month,
multiplied by (y) the quotient of (A) the Base Purchase Price of such Aircraft,
as set forth on Exhibit A-1 to the Purchase Agreement divided by (B) the sum of
the Base Purchase Prices of all the Aircraft.
(b) For any month in which an Aircraft is initially delivered under the
Purchase Agreement or disposed of, the Aircraft Monthly Base Fee payable with
respect to such Aircraft shall be paid in arrears on the fifteenth day (or, if
not a Business Day, the next succeeding Business Day) of the month following
such month. For any other month, all Aircraft Monthly Base Fees shall be paid
in advance on the fifteenth day (or, if not a Business Day, the next succeeding
Business Day) of the month immediately preceding such month.
SECTION 9.03. Rent Fees. (a) A Rent Payable Fee shall be paid for each
month during the term of this Agreement by MSAF to the Servicer equal to 1% of
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the aggregate amount of the rent (as defined in each Lease, but, for the
avoidance of doubt, not including any amounts reimbursable to Lessees) due to
the lessor by each Lessee attributable to any such month, or portion of a month
in which the related Aircraft is owned by MSAF Group and shall be paid on the
fifteenth day (or, if not a Business Day, the next succeeding Business Day) of
such month. If any Aircraft shall be initially delivered under the Purchase
Agreement or disposed of during any such month, the Rent Payable Fee with
respect to the related Lessee shall be pro-rated by multiplying the amount of
rent attributable to the relevant month by a fraction, the numerator of which
is the actual number of days the related Aircraft has been owned by MSAF Group
in such month (including the relevant Delivery Date and excluding the date of
disposal of such Aircraft) and the denominator of which is the actual number of
days in such month. If the date of initial delivery or date of disposition
occurs after the tenth day of such month or if any or all of the rent for such
Aircraft is based on a number of flight hours flown by such Aircraft or any
other variable rate (a "power-by-the-hour amount"), the fee in relation to such
Aircraft or power-by-the-hour amount shall be paid on the fifteenth day (or, if
not a Business Day, the next succeeding Business Day) of the next succeeding
month.
(b) A Rent Collected Fee shall be paid for each month during the term of
this Agreement by MSAF to the Servicer equal to 1% of the aggregate amount of
the rent (as defined in each Lease but for the avoidance of doubt, not
including any amounts reimbursable to Lessees) actually paid by each Lessee for
such month or portion of a month the related Aircraft is owned by MSAF Group.
All payments of the Rent Collected Fee shall be payable in arrears on the
fifteenth day (or, if not a Business Day, the next succeeding Business Day) of
the month next succeeding the month in which the rental payment is made.
SECTION 9.04. Incentive Fee. An Incentive Fee shall be payable during the
term of this Agreement by MSAF to the Servicer for the One Year Initial Period
and each subsequent One Year Period in the amount of (i) 10% of (ii) the amount
(if any) by which the actual net results for such Year (calculated on the same
basis as net results is calculated in the Approved Budget for such Year) shall
have exceeded the Target Net Results. "TARGET NET RESULTS" for any Year shall
be as specified in the Approved Budget for such Year, taking into account,
among other things, cash amounts required to repay security holders of MSAF.
All payments of the Incentive Fee shall be payable in arrears on the fifteenth
day (or, if not a Business Day, the next succeeding Business Day) of the month
next succeeding the end of the One Year Initial Period and each subsequent One
Year Period.
SECTION 9.05. Sales Fees. (a) A Base Sales Fee shall be payable at any
time during the term of this Agreement by MSAF to the Servicer in the amount of
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(i) 1.5% of (ii) the lesser of (x) Net Cash Proceeds (including relating to a
disposition of an Aircraft as a result of a total loss of such Aircraft) and
(y) the Target Sales Price for the sale of any Aircraft provided that no Sales
Fees shall be payable with respect to sales in connection with a refinancing,
restructuring or reorganization with respect to MSAF Group or the Aircraft
after which the Servicer shall remain as servicer of such Aircraft. "TARGET
SALES PRICE" means, with respect to a sale or disposition of any Aircraft, an
amount agreed by MSAF and Servicer, subject to any restrictions imposed by any
Indenture. "NET CASH PROCEEDS" means the gross cash proceeds of any sale or
disposition of Aircraft net of any transaction costs (including transaction
taxes and the Servicer's out-of-pocket expenses) and brokers' commissions.
(b) A Sales Incentive Fee shall be payable at any time during the term of
this Agreement by MSAF to the Servicer equal to (i) five percent multiplied by
(ii) Net Gains earned on the sale or disposition of any Aircraft. "NET GAINS"
means, with respect to the sale of any Aircraft, an amount (not less than zero)
of the Net Cash Proceeds in excess of the Target Sales Price in connection with
such sale.
SECTION 9.06. Expenses. (a) The Servicer shall be responsible for, and
shall not be entitled to reimbursement for, the Servicer's overhead expenses
("OVERHEAD EXPENSES") which shall include, without limitation:
(i) salary, bonuses, company cars and benefits of the Servicer's
employees;
(ii) travel and entertainment expenses of the Servicer's employees;
(iii) office, office equipment and rental expenses other than
office and office equipment rental expense charged by independent
advisors retained by the Servicer with respect to the Aircraft Assets;
(iv) telecommunications expenses;
(v) advertising and promotional expenses; and
(vi) taxes on the income, receipts, profits, gains, net worth or
franchise of the Servicer and payroll, employment and social security
taxes for employees of the Servicer.
(b) (i) Without limiting the Servicer's obligations as Seller under the
Purchase Agreement, the MSAF Group shall be responsible for all costs and
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expenses relating to or associated with the Aircraft Assets other than Overhead
Expenses, ("AIRCRAFT ASSET EXPENSES") which shall include, without limitation,
(A) storage, maintenance, test flight, navigation, landing,
ferry flights, fuel, repossession (whether or not successful),
reconfiguration, refurbishment and repaid expenses related to
Aircraft Assets, including all expenses incurred by the Servicer
relating to compliance with airworthiness directives and service
bulletins, which includes the fees and expenses of independent
technicians and other experts retained for any of the foregoing
purposes other than with respect to expenditures specifically
agreed to be borne by the Servicer in or in connection with the
Lease Novations (as defined in the Purchase Agreement);
(B) insurance expense related to Aircraft Assets, including
all fees and expenses of insurance advisors and brokers;
(C) expenses incurred in connection with the acceptance of
delivery of any Aircraft Asset, whether being sold or leased by
any Person within the MSAF Group;
(D) fees and expenses of independent advisors including
office and office equipment rental expense charged by such
advisors retained by the Servicer with respect to the Aircraft
Assets;
(E) outside legal counsel fees and expenses and other
professional fees and expenses, (i) related to litigation
concerning any Aircraft Asset, (ii) in the case of an Aircraft
being leased in a jurisdiction other than a jurisdiction with
respect to which the Servicer has both leased an aircraft
previously and received an opinion of outside legal counsel
(which may be lessee's outside counsel) and (iii) relating to out
of the ordinary course of business situations; except as provided
in Section 11.02(b)(i); and
(F) taxes reimbursable to the Servicer pursuant to this
Section 9.06;
In the event that MSAF does not approve the payment of any Asset Expense,
the Servicer shall be entitled to make such payment on behalf of the MSAF Group
and to the extent the Servicer does so, the funds so advanced ("REIMBURSABLE
EXPENSES") shall be repaid by MSAF to the Servicer in accordance with paragraph
9.06(b)(ii) of this Section 9.06, provided that:
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(G) The Servicer believes that failure to make such payment
is reasonably likely to prejudice or otherwise adversely affect
the Servicer or its Affiliates' business relationship with the
relevant payee;
(H) The relevant Asset Expense (when added to all the
Aircraft Asset Expenses of the same category incurred to date
during such Year) shall not exceed 110% of the line item amount
in the applicable One Year Approved Budget for such Year or the
Asset Expense shall otherwise have been approved by MSAF; and
(I) The Servicer shall have contracted for or otherwise
committed for such Asset Expense prior to such time.
(ii) Reimbursable Expenses shall be paid by MSAF to the Servicer on
the fifteenth day of the month (or, if such date is not a Business Day,
the next succeeding Business Day) following the month in which payment
of such Reimbursable Expenses was made by the Servicer.
SECTION 9.07. Default Interest. Any late payment of fees and Reimbursable
Expenses under this Agreement shall accrue default interest at One Month LIBOR
until payment thereof, other than late payments arising from an administrative
or technical bank payment error or the amount of which MSAF is contesting in
good faith.
ARTICLE 10
TERMS; RIGHTS TO TERMINATE; CONSEQUENCES OF TERMINATION; SURVIVAL
SECTION 10.01. Term. This Agreement shall expire on the twenty-fifth
anniversary of the last Delivery Date. During such term, this Agreement shall
not be terminable by either party except as expressly provided in this Article
10.
SECTION 10.02. Right to Terminate. (a) At any time during the term of
this Agreement, the Servicer shall in accordance with Section 10.02(a) be
entitled to terminate this Agreement if:
(i) MSAF fails to make any payment it is required to make to the
Servicer within five days after written notice from the Servicer of such
failure;
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(ii) MSAF or the Subsidiaries shall materially breach any of their
obligations under this Agreement other than payment obligations;
(iii) all of the public debt of MSAF is repaid or defeased in full
in accordance with the terms of any Indenture;
(iv) all of the Aircraft of the MSAF Group are sold;
(v) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
relief in respect of MSAF or the Subsidiaries or in respect of a
substantial part of the property or assets of MSAF or the Subsidiaries
under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other U.S. federal or state or foreign
bankruptcy, insolvency, receivership or similar law, and such proceeding
or petition shall continue undismissed for 120 days or an order or
decree approving or ordering any of the foregoing shall be entered or
MSAF or the Subsidiaries shall go into liquidation, suffer a receiver or
mortgagee to take possession of all or substantially all of its assets
or have an examiner appointed over it, or if a petition or proceeding is
presented for any of the foregoing and not discharged within 120 days;
or
(vi) MSAF or the Subsidiaries shall (A) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other U.S. federal or state or foreign bankruptcy, insolvency,
receivership or similar law, (B) consent to the institution of, or fail
within 120 days to contest the filing of, any petition described in
clause 10.02(a)(v) above, (C) file an answer admitting the material
allegations of a petition filed against it in any such proceeding or (D)
make a general assignment for the benefit of its creditors.
(b) At any time during the term of this Agreement, MSAF and the
Subsidiaries shall in accordance with Section 10.02(c) be entitled to terminate
this Agreement with respect to one or more Aircraft if:
(i) the Servicer shall materially breach any of its obligations
under this Agreement;
(ii) the Servicer fails to, within a reasonable period of time,
re-lease an Aircraft upon the termination of any Lease or sell an
Aircraft upon commercially reasonable written direction from MSAF;
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(iii) all of the public debt of MSAF is repaid or defeased in full
in accordance with the terms of any Indenture;
(iv) all of the Aircraft of the MSAF Group are sold;
(v) a Change of Control has occurred and, as a result thereof, a
Rating Decline occurs. A "CHANGE OF CONTROL" will be deemed to have
occurred at such time as either (A) any Person or any Persons acting
together that would constitute a "group" (a "GROUP") for purposes of
Section 13(d) of the Securities Exchange Act of 1934, or any successor
provision thereto, together with any Affiliates or Related Persons
thereof, shall beneficially own (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, or any successor provision thereto
("RULE 13D-3") at least 50% of the aggregate voting power of all classes
of voting stock of the Servicer; or (B) any Person or Group, together
with any Affiliates or Related Persons thereof, shall succeed in having
a sufficient number of its nominees elected to the Board of Directors of
the Servicer such that such nominees, when added to any existing
director remaining on the Board of Directors of the Servicer after such
election who was a nominee of or is an Affiliate or Related Person of
such Person or Group, will constitute a majority of the Board of
Directors of the Servicer; provided that with respect to both clauses
(A) and (B) above, a Change of Control shall not be deemed to have
occurred if AIG continues to beneficially own (within the meaning of
Rule 13d-3) at least 51% of the aggregate voting power of all classes of
voting stock of the Servicer.
A "RATING DECLINE" will be deemed to have occurred if at any time
between (a) the date of public notice of a Change of Control, or of the
intention of the Servicer or of any Person to effect a Change of Control
and (b) 90 days after the occurrence of the Change in Control (which
period shall in either event be extended so long as the rating of the
outstanding senior unsecured long-term debt securities of the Servicer
is under publicly announced consideration for possible downgrade by a
Rating Agency), the rating of the outstanding senior unsecured long-term
debt securities of the Servicer is decreased by any Rating Agency from
the rating given by any such Rating Agency on the date hereof.
A "RELATED PERSON" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the outstanding common stock of such
Person, (or, in the case of a Person that is not a corporation, 5% or
more of the equity interest in such Person) or (b) 5% or more of the
combined voting power of the voting stock of such Person.
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(vi) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
relief in respect of the Servicer or in respect of a substantial part of
the property or assets of the Servicer, under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other U.S.
federal or state or foreign bankruptcy, insolvency, receivership or
similar law, and such proceeding or petition shall continue undismissed
for 120 days or an order or decree approving or ordering any of the
foregoing shall be entered or the Servicer shall go into liquidation,
suffer a receiver or mortgagee to take possession of all or
substantially all of its assets or have an examiner appointed over it or
if a petition or proceeding is presented for any of the foregoing and
not discharged within 120 days; or
(vii) the Servicer shall (A) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other U.S. federal
or state or foreign bankruptcy, insolvency, receivership or similar law,
(B) consent to the institution of, or fail within 120 days to contest
the filing of, any petition described in clause 10.02(b)(vi) above, (C)
file an answer admitting the material allegations of a petition filed
against it in any such proceeding or (D) make a general assignment for
the benefit of its creditors.
(c) (i) A terminating party may, at any time during the term of this
Agreement, by written notice ("TERMINATION NOTICE") to the terminated party,
set forth its determination to terminate this Agreement pursuant to this
Section 10.02 Any Termination Notice shall set forth in reasonable detail the
basis for such termination.
(ii) No later than the fifth Business Day following the delivery of
the Termination Notice (the "EFFECTIVENESS DATE"), the terminated party
shall advise the terminating party in writing whether the terminated
party (A) intends to cure the basis for such termination and, if so, the
action it intends to take to effectuate such cure or (B) does not intend
to cure the basis for such termination (it being understood that failure
of the terminated party to deliver such written advice by such day shall
be deemed to constitute notice that it does not intend to cure the basis
for termination). In the event that the terminated party notifies (or
is deemed to have notified) the terminating party that it does not
intend to cure the basis for such termination, then this Agreement shall
terminate, subject to Section 10.03(c)(ii), immediately or on such
later date that the terminating party shall have indicated in the
Termination Notice. In the event that the terminated party notifies the
terminating party by such fifth Business Day
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that it intends to cure the basis for such termination, then the
terminated party shall (A) have 30 days from the Effectiveness Date to
effectuate such cure to the satisfaction of the terminating party or (B)
if such cure cannot reasonably be expected to be effectuated within a
30-day period, (1) demonstrate to the satisfaction of the terminating
party that substantial progress is being made toward the effectuation of
such cure and (2) effectuate such cure to the reasonable satisfaction of
the terminating party no later than the sixtieth day following the
Effectiveness Date. Upon the failure of the terminated party to
effectuate a cure in accordance with the immediately preceding sentence,
this Agreement shall terminate on the latest of (A) the day immediately
following the expiration of such 30 or 60-day period, as the case may
be, (B) such later date as shall be indicated in the Termination Notice
and (C) the date as of which a Replacement Servicer has been engaged to
perform the Services with respect to the Aircraft and has accepted such
appointment in accordance with the provisions of Section 10.03(c).
SECTION 10.03. Consequences of Termination.
(a) (i) Upon the expiration or termination of this Agreement in accordance
with this Article 10, or upon the removal of the Servicer with respect to the
performance of the Services for any Aircraft, the Servicer will promptly
forward to MSAF any notices, reports and communications received by it from any
relevant Lessee after termination or expiration.
(ii) MSAF will notify promptly each relevant Lessee and any
relevant third party of the termination or expiration of the Servicer
under this Agreement in relation to any of the Aircraft and will request
that all such notices, reports and communications thereafter be made or
given directly to or as directed by MSAF.
(b) A termination or resignation in relation to any or all Aircraft shall
not affect the respective rights and liabilities of either party accrued prior
to such termination in respect of any prior breaches hereof or otherwise.
(c) (i) Upon the expiration or termination of this Agreement in accordance
with this Article 10, or upon the removal of the Servicer with respect to the
performance of the Services for any Aircraft, the Servicer will cooperate with
any Replacement Servicer, including providing all information, documents and
records relating to the Aircraft.
(ii) Other than pursuant to a termination of this Agreement in
accordance with Section 10.02(a)(i), this Agreement may not be
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terminated with respect to the Servicer, in whole or in part, unless a
Replacement Servicer has been appointed and has accepted such
appointment; provided, however, that in the event that a Replacement
Servicer shall not have been appointed within 90 days after any
termination of this Agreement with respect to the Servicer or any
resignation by the Servicer, the Servicer may petition any court of
competent jurisdiction for the appointment of a Replacement Servicer.
(d) Upon the termination of this Agreement in accordance with this Article
10, or upon the removal of the Servicer with respect to the performance of the
Services for any Aircraft, MSAF shall continue to pay the Servicing Fees and
Reimbursable Expenses to the Servicer until a Replacement Servicer shall have
been appointed and shall have accepted such appointment in accordance with the
provisions of Section 10.03(c) and such appointment has become effective.
(e) Upon the termination of this Agreement in accordance with this Article
10, or upon the removal of the Servicer with respect to the performance of the
Services for any Aircraft, the Servicer shall promptly return the Security
Deposits and the originals within its possession of all applicable Aircraft
Assets Related Documents and other documents related to the Aircraft Assets to
MSAF and shall provide access to other documentation and information relating
to the business of the MSAF Group (and, to the extent practicable, copies
thereof) within its possession as is reasonably necessary to the conduct of the
MSAF Group's business.
(f) Upon the expiration or termination of this Agreement in accordance
with this Article 10, the parties shall, subject to Section 10.04 and Section
10.03(b), be relieved of any obligations hereunder.
SECTION 10.04. Survival. Notwithstanding any termination or the
expiration of this Agreement, the obligations of MSAF, and the Subsidiaries
under Section 3.03, Section 3.04, Section 10.03, Section 10.04, and Article 11
and the Servicer's obligations under Section 3.03, Section 5.05, Section 10.03,
Section 10.04, Article 11.01 and 13.09 shall survive such termination or
expiration, as the case may be.
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ARTICLE 11
INDEMNIFICATION
SECTION 11.01. Indemnity. (a) MSAF and the Subsidiaries do hereby assume
liability for, and do hereby jointly and severally agree to indemnify reimburse
and hold harmless on an After-Tax Basis, the Servicer from any and all Losses
that arise as a result of the Servicer's performance of any of its obligations
as Servicer or as a result of any action which the Servicer is requested to
take or requested to refrain from taking by MSAF; provided that such indemnity
shall not extend to (i) any Loss which arises as a result of the willful
misconduct of the Servicer, (ii) any Loss which directly results from a breach
by the Servicer of the express terms and conditions of this Agreement or (iii)
any Loss for which the Servicer indemnifies MSAF and its Affiliates arising as
a result of any material misstatements or omissions in any public filings
relating to written information on the Aircraft and the Servicer provided by
the Servicer for disclosure in such public filings.
(b) The Servicer agrees to give MSAF prompt notice of any action, claim,
demand, discovery of fact, proceeding or suit for which the Servicer intends to
assert a right to indemnification under this Agreement; provided, however, that
failure to give such notification shall not affect the Servicer's entitlement
to indemnification under this Section 11.01 unless and only to the extent such
failure results in actual material prejudice to any of MSAF or the Subsidiaries
with respect to the action, claim, demand, discovery of fact, proceeding or
suit for which a right of indemnification is asserted.
SECTION 11.02. Procedures for Defense of Claims. (a) If a Third Party
Claim is made against the Servicer, the Servicer shall promptly notify MSAF in
writing of such claim (which notice shall include all relevant information
reasonably necessary for MSAF to understand such claim which is in the
possession or under the control of, or can be obtained by, the Servicer at the
time of such notice, subject to Applicable Laws and confidentiality
obligations), and the Servicer or MSAF (as agreed between them) will undertake
the defense thereof. The failure to notify MSAF promptly shall not relieve it
of its obligations under this Article 11 unless such failure results in actual
material prejudice to any of MSAF or the Subsidiaries with respect to the
action, claim, demand, discovery of fact, proceeding or suit for which a right
of indemnification is asserted.
(b) If agreed and accepted by the Servicer, MSAF shall within 30
days, undertake the conduct and control, through counsel of its own
choosing (subject to the consent of the Servicer, such consent not to be
unreasonably withheld or delayed) and at the MSAF Group's sole risk and
expense, of the good faith settlement or defense of such claim, and the
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Servicer shall cooperate fully with MSAF in connection therewith;
provided that (i) at all times the Servicer shall be entitled to
participate in such settlement or defense through counsel chosen by it
(after reasonable consultation with MSAF), and the fees and expenses of
such counsel shall be borne by the Servicer, and (ii) none of MSAF or
the Subsidiaries shall be entitled to settle such claims unless it shall
have confirmed in writing the obligation of MSAF or the Subsidiaries to
indemnify the Servicer for the liability asserted in such claim.
(c) So long as MSAF is reasonably contesting any such claim in good faith,
the Servicer shall fully cooperate with MSAF in the defense of such claim as
reasonably required by MSAF, and MSAF shall reimburse the Servicer for
reasonable out-of-pocket expenses incurred in connection with such cooperation.
Such cooperation shall include the retention and the provision of records and
information which are reasonably relevant to such Third Party Claim and the
availability on a mutually convenient basis of directors, officers and
employees to provide additional information. The Servicer shall not settle or
compromise any claim without the written consent of MSAF unless the Servicer
agrees in writing to forego any and all claims for indemnification from MSAF
and the Subsidiaries with respect to such claims.
SECTION 11.03. Reimbursement of Costs. The costs and expenses, including
fees and disbursements of counsel (except as provided in Section 11.02(b)(i))
and expenses of investigation, incurred by the Servicer in connection with any
Third Party Claim, shall be reimbursed on the fifteenth of each month (or if
not a Business Day, the next succeeding Business Day) by MSAF upon the
submission of evidence reasonably satisfactory to MSAF that such expenses have
been incurred in the preceding month, without prejudice to MSAF's right to
contest the Servicer's right to indemnification and subject to refund in the
event that MSAF, and the Subsidiaries are ultimately held not to be obligated
to indemnify the Servicer.
ARTICLE 12
ASSIGNMENT AND DELEGATION
SECTION 12.01. Assignment and Delegation. (a) No party to this Agreement
shall assign or delegate this Agreement or all or any part of its rights or
obligations hereunder to any Person without the prior written consent of each
of the other parties; provided, however, the foregoing provisions on assignment
and delegation shall not limit the ability of (i) the Servicer to contract with
any Person, including any of its Affiliates, for services in respect of
Aircraft Assets or
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(ii) MSAF to transfer or assign the benefit of the Servicer's representations,
warranties, covenants and indemnity obligations to a special purpose entity or
entities established by it in connection with a securitization of the Aircraft
Assets.
(b) Without limiting the foregoing, any Person who shall become a
successor by assignment or otherwise of any of MSAF, the Subsidiaries or the
Servicer (or any of their respective successors) in accordance with this
Section 12.01 shall be required as a condition to the effectiveness of any such
assignment or other arrangement to become a party to this Agreement.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Best Efforts. In this Agreement the term "best efforts"
shall mean reasonable best efforts under the commercial circumstances at the
time.
SECTION 13.02. Notices. Any notice, request or information required or
permissible under this Agreement will be in writing and in English. Notices
will be delivered in person or sent by fax, letter (mailed airmail, certified
and return receipt requested), or by expedited delivery addressed to the
parties as set forth below in this Section. In the case of a fax, notice will
be deemed received upon the date set forth on the confirmation of receipt
produced by the sender's fax machine immediately after the fax is sent. In the
case of a mailed letter, notice will be deemed received on the tenth (10th) day
after mailing. In the case of a notice sent by expedited delivery, notice will
be deemed received on the date of delivery set forth in the records of the
person which accomplished the delivery. If any notice is sent by more than one
of the above listed methods, notice will be deemed received on the earliest
possible date in accordance with the above provisions. Notices will be
addressed as follows:
if to MSAF, to:
Administrative Agent
c/o KPMG Corporate Finance
Xxxxxxx Xxxxx
Xx. Xxxxxxx'x Xxxxx
Xxxxxx 0 Xxxxxxx
Attention: Xxxxxx X'Xxxxx
Fax: x000 0 000 0000
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with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0 Xxxxxxxxx'x Xxxxx
Xxxxxx XX0X 0XX
Attention: Mr. Xxx Xxxx
Fax: x00-000-000 1400
and
Xxxxxx Xxxxxxx & Co. International Limited
00 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx X00 0XX
Attention: Mr. Xxxxx Xxxxxxxx
Fax: x00-000-000 4328
if to the Servicer, to:
International Lease Finance Corporation
1999 Avenue of the Stars
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Legal Department
Fax: x0 000 000 0000
or to such other address as any party hereto shall from time to time designate
in writing to the other parties.
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 7 p.m. in the
place of receipt and such day is a business day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to
have been received until the next succeeding business day in the place of
receipt.
SECTION 13.03. Governing Law. This agreement shall be governed by and
construed in accordance with the law of the State of New York.
SECTION 13.04. Jurisdiction. Except as otherwise expressly provided in
this Agreement, the parties hereto agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or
in connection with, this Agreement or the transactions contemplated hereby may
be brought in the United States District Court for the Southern District of New
York
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or any other New York State court sitting in New York City, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 13.02 shall
be deemed effective service of process on such party.
SECTION 13.05. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 13.06. Counterparts; Third Party Beneficiaries. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other party
hereto. No provision of this Agreement is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.
SECTION 13.07. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
SECTION 13.08. Power of Attorney. Each of MSAF and the Subsidiaries shall
appoint the Servicer and its successors, and its permitted designees and shall
assign, as their true and lawful attorney-in-fact. All services to be
performed and actions to be taken by the Servicer pursuant to this Agreement
shall be performed to and on behalf of each of MSAF and the Subsidiaries. The
Servicer shall be entitled to seek and obtain from each of MSAF and the
Subsidiaries a power of attorney in respect of the execution of any specific
action as the Servicer deems appropriate.
SECTION 13.09. Restrictions on Disclosure. The Servicer agrees that it
shall not, prior to the termination or expiration of this Agreement or within
the three years after such termination or expiration, disclose to any Person
any
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confidential or proprietary information, whether of a technical, financial,
commercial or other nature, received directly or indirectly from any Person
within the MSAF Group regarding the MSAF Group's business or the Aircraft
Assets or the Leases, except as authorized in writing by MSAF, and except:
(a) to Representatives of the Servicer and any of its Affiliates in
furtherance of the purpose of this Agreement;
(b) to the extent required by Applicable Law or by judicial or
administrative process, but in the event of proposed disclosure, the Servicer
shall seek the assistance of MSAF to protect information, in which MSAF has an
interest, to the maximum extent achievable;
(c) to the extent that the information:
(i) was generally available in the public domain;
(ii) was lawfully obtained from a source under no obligation or
confidentiality, directly or indirectly, to any Person within the MSAF
Group;
(iii) was disclosed to the general public with the approval of any
Person within the MSAF Group;
(iv) was in the files, records or knowledge of the Servicer or any
of the Servicer's Affiliates prior to initial disclosure thereof to the
Servicer or any of the Servicer's Affiliates by any Person within the
MSAF Group;
(v) was provided by any Person within the MSAF Group to the
Servicer or any of the Servicer's Affiliates without any express written
restriction on use of or access to such information; or
(vi) was developed independently by the Servicer or any of the
Servicer's Affiliates; and
(d) to the extent the Servicer deems necessary to protect and enforce its
rights and remedies under this Agreement.
SECTION 13.10. Rights of Setoff. To the extent permitted by Applicable
Law, the Servicer hereby waives any right it may have under Applicable Law to
exercise any rights of setoff it has under Applicable Law with respect to any
assets it holds owned by, or money or monies it owes to, any Person within the
MSAF Group pursuant to and in accordance with the terms and conditions of this
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Agreement; provided, however, that this Section 13.10 shall not affect any
rights of setoff or other rights that the Servicer has or may have under the
express terms and conditions of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed on the date
first written above.
INTERNATIONAL LEASE FINANCE
CORPORATION
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Executive Vice President
XXXXXX XXXXXXX AIRCRAFT FINANCE
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Attorney-in-Fact
THE ENTITIES LISTED ON APPENDIX A HERETO
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Attorney-in-Fact
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APPENDIX A
MSA I, a Delaware business trust
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Aircraft Assets Services
The provision of the Services set forth in this Schedule 2.02(a) will be
subject in all cases to such approval as may be required or such limitations as
may be imposed pursuant to Section 7.06 of this Agreement and the provisions of
this Schedule 2.02(a) shall be deemed to be so qualified.
Unless otherwise defined herein, all capitalized terms used in this
Schedule 2.02(a) have the meanings assigned to such terms in the Purchase
Agreement.
ARTICLE 1
LEASE SERVICES
SECTION 1.01. Collections and Disbursements.
In connection with each Lease of an Aircraft Asset under which any Person
within the MSAF Group is the lessor, the Servicer will:
(a) invoice the Lessee (if contemplated by the applicable Lease) or
otherwise arrange, on behalf of such Person within the MSAF Group, for all
payments due from the Lessee, including Rents, Security Deposits, Maintenance
Reserves, late payment charges and any payments in respect of Taxes and other
payments (including technical, engineering, insurance and other recharges) due
under the relevant lease, direct the Lessee, subject to the terms of the lease,
to make such payments to such accounts as are specified in writing by the
Calculation Agent and enforce the payment thereof in the event of a nonpayment
by the relevant due date;
(b) review from time to time, as deemed necessary by the Servicer, the
level of rents, Security Deposits, Maintenance Reserves and other amounts that
may be adjusted under the Lease and propose to the relevant Lessee or make such
adjustments to the rents, Security Deposits, Maintenance Reserves and other
amounts as are required or that the terms of the relevant Lease and practices
that the Servicer believes are prevalent in the operating lease market;
(c) maintain appropriate records regarding payments under the Leases;
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(d) subject to the terms of any applicable Aircraft Asset Related
Document, take such actions as are necessary to apply any payments of any type
received from any Lessee on a basis consistent with the directions of such
Lessee, or as otherwise reasonably determined by the Servicer, and, to the
extent that any such payments are made to an account other than the account to
which such payment should have been directed pursuant to such Lessee's
direction, to take such further actions as are necessary to give effect to such
directions; and
(e) provide for the safekeeping and recording of any letters of credit,
guarantees or other credit support (other than cash and cash equivalents) held
as part of Security Deposits or Maintenance Reserves and the timely renewal or
drawing on or disbursement thereof as provided under the applicable Lease or
other Aircraft Asset Related Document or otherwise in accordance with Section
1.05 of this Schedule 2.02(a).
SECTION 1.02. Maintenance. The Servicer will perform the following
technical services relating to the maintenance of the Aircraft Assets:
(a) monitor the performance of maintenance obligations by Lessees under
all Leases relating to the Aircraft Assets by including the Aircraft Assets in
the Servicer's technical audit program (which shall include, if deemed
necessary based on the reasonable determination of the Servicer, inspection of
each Aircraft Asset and maintenance of a record of all written reports
generated in connection with such inspections) consistent with practices
employed from time to time by International Lease Finance Corporation and its
Affiliates with respect to their own Aircraft; the Servicer shall advise MSAF
as to the content of such technical audit program and shall advise MSAF as to
any material change to such technical audit program from time to time;
(b) in connection with a termination or expiration of a Lease under which
any Person within the MSAF Group is the lessor:
(i) arrange for the appropriate technical inspection of the
Aircraft Asset for the purpose of determining if the re-delivery
conditions under the Lease have been satisfied;
(ii) maintain a record of the return acceptance certificate and
related written materials normally received and retained or generated by
the Servicer in connection with such inspection and provide reasonable
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access to such certificates and written materials to the relevant
Persons within the MSAF Group;
(iii) on the basis of the final inspection and available records,
determine whether the Lessee has complied with the return condition and
maintenance requirements of the applicable Lease;
(iv) (A) determine whether the Lessee has satisfied the re-delivery
conditions applicable to the Aircraft Asset specified in the Lease and
negotiate any modifications, repairs, refurbishments, inspections or
overhauls to or compromises of such conditions that the Servicer deems
reasonably necessary or appropriate, (B) determine the application of
any available Security Deposits, Maintenance Reserves or other payments
under the Lease and (C) maintain a record of the satisfaction of such
conditions and accept redelivery of the Aircraft Asset; and
(v) determine the need for and procure any maintenance or
refurbishment of the Aircraft Asset upon redelivery, including
compliance with applicable airworthiness directives, service bulletins
and other modifications in all cases which the Servicer may deem
reasonably necessary or appropriate for the marketing of the Aircraft
Asset consistent with its own practice with respect to its own aircraft;
(c) consider and, to the extent the Servicer deems reasonably necessary or
appropriate, approve any Lessee-originated modifications to any Aircraft Asset
submitted by any Lessee:
(i) to the extent authorized by the terms of the relevant Lease; or
(ii) which the Servicer reasonably determines would not result in a
material diminution in value of the Aircraft Asset;
(d) estimate the amount (if any) MSAF is obliged to contribute pursuant to
the provisions of a Lease (taking into account the amount of Maintenance
Reserves available with respect to such Lease and the receivables position of
the related Lessee) to maintenance work performed, the cost of complying with
any modification requirements, airworthiness directives and similar
requirements; and
(e) arrange appropriate storage and any required on-going maintenance of
any Aircraft Asset, at the expense of MSAF, following termination of a Lease
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for any reason and redelivery of the Aircraft Asset thereunder and prior to
delivery of such Aircraft Asset to a new lessee or purchaser, consistent with
the Servicer's own practice with respect to its own aircraft.
The Servicer shall generally provide the technical/maintenance advisory
services set forth in this Section 1.02 of this Schedule 2.02(a) through the
use of its own staff, consistent with the Servicer's own practice with respect
to its own aircraft; provided that it shall utilize third parties to provide
such technical/maintenance services where it shall deem appropriate (it being
understood that while the obligations set forth in Section 1.02 of this
Schedule 2.02(a) are, to the extent possible, generally anticipated to be
discharged by the Servicer without resorting to third party service providers,
the Servicer retains the flexibility to engage third party service providers as
it reasonably determines in its sole discretion to be appropriate).
SECTION 1.03. Insurance. (a) The Servicer will provide the following
insurance services:
(i) negotiate the insurance provisions of any proposed lease or
other agreement affecting any of the Aircraft Assets, with such
provisions to include such minimum coverage amounts with respect to hull
and liability insurance as are consistent with ILFC's commercially
reasonable practice with respect to its own aircraft with any
differences in such amounts and the amounts set forth on Schedule
1.03(a) to this Schedule 2.02(a) to be notified to MSAF by the Servicer;
(ii) monitor the performance of the obligations of Lessees relating
to insurance under Leases of any Aircraft Assets and ensure that
appropriate evidence of insurance exists with respect to any Aircraft
Assets maintenance facilities providing maintenance work on the Aircraft
paid for by the Servicer;
(iii) assist in arranging, through MSAF's broker, a group aviation
insurance program covering the Aircraft Assets (it being understood that
any savings resulting from a group policy covering both Aircraft Assets
and Other Assets shall be shared equitably based on the amount of
insurance obtained and premium paid thereunder with respect to the
covered Aircraft Assets, on the one hand, and the Other Assets, on the
other hand), with such minimum coverage amounts with respect to hull and
liability insurance as are consistent with ILFC's commercially
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reasonable practice with respect to its own aircraft with any
differences in such amounts and the amounts set forth on Schedule
1.03(a) to this Schedule 2.02(a) to be notified to MSAF by the Servicer;
(iv) arrange, through MSAF's broker, at the expense and written
direction of MSAF, such political risk insurance for Aircraft Assets
habitually based or registered in those countries in a list to be
determined by MSAF from time to time by MSAF and such other insurance
related thereto from the sources and with such minimum coverage amounts
with respect to hull insurance as are consistent with ILFC's
commercially reasonable practice with respect to its own aircraft with
any differences in such amounts and the amounts set forth on Schedule
1.03(a) to this Schedule 2.02(a) to be notified to MSAF by the Servicer;
(v) if at any time any Aircraft Asset ceases to be insured or any
Person within the MSAF Group requires insurance coverage relating to an
Aircraft for any reason, including default by the lessee or an Aircraft
Asset not being leased upon termination of a Lease, the Servicer will
arrange through MSAF's broker, at the direction and expense of MSAF,
alternative insurance coverage, with such minimum coverage amounts with
respect to hull and liability insurance as are set forth on Schedule
1.03(a) to this Schedule 2.02(a), except as notified to MSAF by the
Servicer;
(vi) advise MSAF of any settlement offers received by the Servicer
from a Lessee or its insurer with respect to any claim of damage or loss
in excess of the damage notification threshhold in the relevant Lease
with respect to an Aircraft Asset, provide MSAF with copies of all
relevant documentation related thereto and such other additional
information and advice from the Lessee's or the insurer's agents,
brokers or adjusters as MSAF may reasonably request and, upon direction
from MSAF that any settlement offer received by the Servicer related
thereto is acceptable (which direction, if not received 15 days after
such advisement, shall be deemed to be a direction not to accept such
settlement offer), forward to MSAF's insurance broker the appropriate
documentation, including releases and any indemnities required in
connection with such releases, to give effect to such settlement offer
and procure the execution of such documentation by MSAF.
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provided, however, that, in each case where insurance is to be obtained by the
Servicer through MSAF's broker, such insurance is reasonably available in the
relevant insurance market using reasonable sourcing techniques consistent with
the techniques for the Servicer's then current practice for obtaining such
insurance. Any decision or action implemented by or on behalf of MSAF as a
result of the insurance services provided by the Servicer is solely the decision
of MSAF. The foregoing provisions shall apply to any arrangements in which
Persons other than Lessees have possession of, or insurance responsibility for,
an Aircraft Asset (including in the event that an Aircraft Asset has been sold
pursuant to a mortgage, deferred payment agreement or any similar arrangement).
(b) The Servicer shall provide to MSAF such periodic reports regarding
insurance matters relating to the Aircraft Assets as the Servicer shall
generate internally or deliver to MSAF's insurance broker from time to time or
as MSAF shall request.
SECTION 1.04. Administration. The Servicer is authorized to administer
each Lease in accordance with its terms and as otherwise specifically addressed
herein.
SECTION 1.05. Enforcement. The Servicer is authorized to enforce the
obligations owed to the relevant Person within the MSAF Group by the Lessee and
any other parties under each Lease and under any ancillary agreements thereto
delivered by MSAF to the Servicer (including any guarantees of the obligations
of the Lessee). Following any default by a Lessee under the applicable Lease,
the Servicer will take all steps as it deems reasonably necessary or
appropriate to preserve and enforce the rights of the relevant Person within
the MSAF Group under the applicable Lease, including entering into negotiations
with such Lessee with respect to the restructuring of such Lease or declaration
of an event of default under the applicable Lease, drawing on or making
disbursement of any Security Deposits, Maintenance Reserves or any letters of
credit, guarantees or other credit support thereunder, voluntary or involuntary
termination of the Lease and repossession of the Aircraft Asset that is the
subject of the Lease, and pursuing such legal action with respect thereto as
the Servicer deems reasonably necessary or appropriate.
SECTION 1.06. Lease Modifications. (a) The Servicer shall be authorized
to make such amendments and modifications to any Lease as it shall deem
reasonably necessary or appropriate; provided, however, that such amendment or
modification shall require the approval of MSAF pursuant to
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Section 7.06 of this Agreement if the provisions of such amendment or
modification, were they to be included in a new Lease to be entered into after
the date hereof, would, on their own, cause the entering into of such new Lease
to require the approval of MSAF pursuant to Section 7.06(a)(ii) of this
Agreement. Such amendments or modifications may be made without regard to
whether there is a default by the Lessee or other party under or with respect
to any such Lease.
(b) The Servicer may waive, in its absolute discretion, overdue interest
due from any Lessee under any Lease on any default in payment of rent,
maintenance reserves or other amount thereunder if any such default is cured
within one month of the date on which such payment was due and such amount is
less than or equal to $50,000.
SECTION 1.07. Options and Other Rights. The Servicer shall be authorized
to take such action as it shall deem reasonably necessary or appropriate with
respect to:
(a) the exercise by any Lessee of any option or right affecting the
applicable Aircraft Asset or the applicable Lease, consistent with the terms of
any such option or right; and
(b) the exercise on behalf of any Person within the MSAF Group of any
right or option that such Person may have with respect to any of the Aircraft
Assets or the Leases provided such exercise is in accordance with the terms of
the relevant Lease.
SECTION 1.08. Lessee Solicitations. Upon MSAF's request, with respect to
the Aircraft Assets, the Servicer shall provide assistance to the relevant
Persons within the MSAF Group with respect to (a) obtaining Lessee consents,
novations, assignments, amendments and related documentation (including
insurance certificates, title transfer documents and legal opinions) and (b)
the issue (or reissue) or amendment of letters of credit, guarantees and
related documentation.
ARTICLE 2
COMPLIANCE WITH COVENANTS
SECTION 2.01. Compliance Generally. The Servicer shall take such actions
as it shall deem reasonably necessary or appropriate to keep MSAF in compliance
with its obligations and covenants under any Indenture solely to the extent
that such obligations and covenants specifically relate to the status,
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insurance, maintenance or operation of the relevant Aircraft Asset; provided,
however, that the foregoing shall only apply to any indenture covenants that
are set forth in full in copies of such Indenture delivered by MSAF to the
Servicer, each certified by MSAF as a true and complete copy thereof (and MSAF
shall promptly provide the Servicer with all amendments, supplements and
waivers thereto, so certified).
SECTION 2.02. Certain Matters Relating to Concentration Thresholds.
(a) Concentration Thresholds Generally. The Servicer shall comply with any
covenants specifically relating to limitations on Lessee concentration set forth
in any Indenture ("CONCENTRATION THRESHOLDS") and shall promptly inform MSAF of
any proposed transaction that it determines may result in such Concentration
Thresholds being exceeded, and MSAF shall promptly provide to the Servicer any
information that the Servicer may reasonably require in connection with such
Concentration Thresholds in order to comply with the provisions of this Section
2.02 of this Schedule 2.02(a). The Servicer shall not enter into any such
transaction other than pursuant to the terms of Section 2.02(b) below.
(b) Directions to Servicer. The Servicer shall not enter into any
transaction with respect to which it has provided notice pursuant to Section
2.02(a) of this Schedule 2.02(a) until MSAF has provided a written
certification to the Servicer to the effect that such transaction will not
result in any violation of the Concentration Thresholds and the Servicer shall
be entitled to rely upon such certification for all purposes of this Agreement
and this Schedule 2.02(a); provided that if the Servicer has not received such
written certification within fifteen Business Days of notification by the
Servicer to MSAF, the Servicer shall not enter into any such transaction.
ARTICLE 3
LEASE MARKETING
(a) The Servicer shall provide and perform lease marketing services with
respect to the Aircraft Assets and in connection therewith is authorized:
(i) to negotiate and enter into any commitment for a lease of an
Aircraft Asset on behalf of and (through a power of attorney) in the
name of the relevant Person within the MSAF Group; and
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(ii) to include within any commitment for a Lease of an Aircraft
Asset any intermediate Lease or Leases through any Person within the
MSAF Group that the Servicer deems reasonably necessary or appropriate.
(b) The Servicer shall commence the negotiation of any commitment for a
Lease or Leases of Aircraft Assets in a manner consistent with the practices
employed by the Servicer with respect to its aircraft operating leasing
services business generally and shall commence the drafting of, and negotiation
with respect to, any Leases for Aircraft Assets on the following basis:
(i) in the case of any proposed Lessee that is not and has not been
a lessee of an aircraft managed or serviced by the Servicer, the
Servicer shall commence the drafting of, and negotiation with respect
to, a Lease for Aircraft Assets based on the form of lease agreement or
agreements to be agreed by the parties following execution of this
Agreement and attached hereto as Exhibit B (as such form of lease shall
be amended from time to time by the Servicer, subject to Section (c) of
this Article 3 of this Schedule 2.02(a) below, the "PRO FORMA LEASE") or
with a form of lease agreement, the material provisions of which are
generally economically and legally no worse from the point of view of
the lessor than the Pro Forma Lease; and
(ii) in the case of any proposed Lessee that is or was a lessee of
an aircraft managed or serviced by the Servicer, the Servicer may
commence the drafting of, and negotiation with respect to, a Lease for
Aircraft Assets based on a form of lease substantially similar to the
lease previously used with respect to such Lessee (the "PRECEDENT
LEASE") or a Lease in the form set out in clause (b)(i) above.
Provided that the Servicer commences the negotiation of a Lease of any
Aircraft Asset in accordance with clauses (b)(i) and (b)(ii) above, the terms
of any executed Lease may vary from the terms of the Pro Forma Lease or the
Precedent Lease. Section (b) of this Schedule 2.02(a) of this Article 3 shall
not be applicable to the negotiation with respect to, or execution of, any
Lease for Aircraft Assets in which negotiations commenced on or prior to the
Delivery Date for such Aircraft Asset. Subject to Section (c) of this Article
3 of this Schedule 2.02(a), the Servicer is authorized to execute and deliver
binding leases and related agreements on behalf of the relevant Person within
the MSAF Group based on the foregoing procedures. It is the intention of the
parties that following the execution and delivery of any Lease with respect to
Aircraft Assets the
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Servicer shall deliver a copy of the executed Lease, together with a copy
thereof marked to reflect changes from the Pro Forma Lease or the Precedent
Lease, as applicable, to MSAF within 25 Business Days of such execution and
delivery (it being understood that in any event such executed (and marked)
Leases shall be delivered in such a manner so as not to materially adversely
impair MSAF's ability to satisfy its obligations with respect to the core lease
provision requirements of any Indenture.
(c) (i) On an annual basis, upon ten Business Days' prior written notice
from MSAF (the "ANNUAL REVIEW"), the Servicer shall provide MSAF with a copy of
its then current Pro Forma Lease, together with a copy thereof marked to
reflect changes from the version of the Pro Forma Lease that was produced by
the Servicer following the immediately preceding Annual Review to give effect
to the terms of Section (c)(ii) of this Article 3 of this Schedule 2.02(a)
below (or from the Pro Forma Lease utilized as of the last Delivery Date in the
case of the first such Annual Review.)
(ii) On or prior to each anniversary of the last Delivery Date and
following the Annual Review, MSAF shall advise the Servicer in writing
whether any provisions in the then current Pro Forma Lease that
correspond to any core lease provisions or similar provisions are
required in accordance with the terms of any Indenture to be deleted
from such Pro Forma Lease and replaced with the provision corresponding
thereto in the most recent Pro Forma Lease in which such provision was
determined to be in accordance with the terms of such Indenture.
Following any such written advice from MSAF, the Servicer shall amend
the Pro Forma Lease accordingly and shall commence the negotiation of
any Lease thereafter with the Pro Forma Lease as so amended in respect
of any such provision.
(d) The Servicer shall deliver any Aircraft Asset pursuant to the terms of
the documentation of the Lease or Leases of such Aircraft Asset, including upon
an extension of such Lease or Leases.
(e) The Servicer shall generally provide the marketing services set forth
in this Article 3 through the use of its own marketing staff where it shall
deem appropriate and shall utilize third parties to provide such marketing
services where it shall deem appropriate (it being understood that while the
obligations set forth in Article 3 are, to the extent possible, generally
anticipated to be discharged by the Servicer without resorting to third party
service providers, the Servicer
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retains the flexibility to engage third party service providers as it
determines in its sole discretion to be appropriate).
ARTICLE 4
PURCHASES AND SALES OF AIRCRAFT AND ENGINES
(a) The Servicer shall provide and perform sales services with respect to
the Aircraft Assets at, and on a basis consistent with, the direction from time
to time of MSAF, and, in connection therewith, is authorized:
(i) to enter into any commitment for a sale of an Aircraft Asset on
behalf and (through a power of attorney) in the name of the relevant
Person within the MSAF Group; and
(ii) to include within any sale any intermediate Lease or Leases
through any Person within the MSAF Group that the Servicer deems
reasonably necessary or appropriate; provided, however, that, except as
otherwise required in accordance with the terms of a Lease, the Servicer
shall not enter into any sale of any Aircraft Asset or agreement to sell
any Aircraft Assets without obtaining the approval of MSAF pursuant to
Section 7.06(a) of this Agreement.
(b) The Servicer shall negotiate documentation of any sale and, subject to
Section (a) of this Article 4 of this Schedule 2.02(a), is authorized to
execute and deliver binding agreements on behalf and (through a power of
attorney) in the name of the relevant Person within the MSAF Group.
(c) The Servicer shall deliver any Aircraft Asset pursuant to the terms of
the documentation of the sale.
(d) In the event that MSAF directs the Servicer to arrange for the sale of
any Aircraft Asset, the Servicer will not be required to take any such action
until MSAF shall provide the Servicer with an Officer's Certificate certifying
that such sale complies with the terms of any Indenture and that the Servicer
is entitled to rely upon such certification for all purposes of this Agreement
and this Schedule 2.02(a).
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(e) Notwithstanding any other provision in Section 7.06 of this Agreement
to the contrary, the Servicer shall be permitted to purchase, sell or exchange
any Engine relating to an Aircraft or any part or components thereof or spare
parts or ancillary equipment or devices furnished with an Aircraft at such
times and on such terms and conditions as the Servicer deems reasonably
necessary or appropriate in connection with its performance of the Services;
provided, however, the Servicer shall not be permitted to purchase, or enter
into any order to purchase, Engines or spare parts in a quantity in excess of
that quantity then required to enable the Aircraft Assets to be leased without
obtaining the prior written consent of MSAF.
ARTICLE 5
MARKET AND OTHER RESEARCH
SECTION 5.01. Valuations. From time to time, including on a regular
basis, MSAF may obtain current or projected valuations of the Aircraft Assets
from any internationally recognized independent appraiser chosen by MSAF and
the Servicer shall, upon such request, provide such information and assistance
relating to such valuation services with respect to the Aircraft Assets as
shall be reasonably necessary or appropriate in connection with such
valuations.
SECTION 5.02. Regulatory Changes. The Servicer shall (a) advise MSAF on a
timely basis in summary form of such information regarding legal and regulatory
material changes and developments with respect to each Aircraft Asset after the
relevant Delivery Date, of which the Servicer has knowledge, but only if such
legal or regulatory developments are applicable to the Aircraft Assets, and (b)
take such action as may be necessary or appropriate to comply therewith.
SECTION 5.03. Market Research. The Servicer shall provide reasonable face
to face or telephone access to executives, officers and employees of the
Servicer as reasonably requested by MSAF concerning market information with
respect to commercial aviation demand in terms of traffic growth, new aircraft
requirements and other information relevant to the MSAF Group's long-term
planning with respect to Leases, purchases and sales, market conditions,
industry trends and the Aircraft Assets.
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SECTION 5.04. Lessee Information. The Servicer shall provide on a timely
basis in summary form such information regarding default history or other
material Lessee information of which the Servicer has knowledge.
ARTICLE 6
AIRCRAFT ASSET CASH SERVICES
SECTION 6.01. Accounts and Account Information. (a) Existing Accounts.
In the event that the Calculation Agent or MSAF desires to modify any of the
arrangements relating to any of the bank accounts set forth on Schedule 4.03 to
this Agreement (the "EXISTING ACCOUNTS"), the Calculation Agent or MSAF shall
deliver a certificate to the Servicer specifying in reasonable detail the
modifications to be made with respect to any such Existing Accounts and the
Servicer shall, to the extent necessary to transfer signing and related
authority, cooperate with the MSAF Group and the relevant banking institution
to effect such modifications and shall take such other actions as are
incidental thereto in order to give effect to the foregoing.
(b) New Accounts. The Servicer shall notify MSAF and the Calculation
Agent in the event that any new bank accounts need to be established on behalf
of any Person within the MSAF Group in connection with the execution of a Lease
with a new Lessee and MSAF or the Calculation Agent shall deliver a certificate
to the Servicer specifying in reasonable detail (v) the name and location of
the bank at which such account should be established, (w) the name(s) in which
such account should be established, (x) the names of the beneficiaries of such
account, (y) the names of the Persons authorized to make withdrawals from such
account and (z) such other information (including with respect to any security
arrangements) as the Calculation Agent or MSAF deems appropriate. The Servicer
shall, to the extent necessary to create signing and related authority,
cooperate with MSAF and the relevant banking institution and take such other
actions as are incidental thereto in order to give effect to the foregoing (the
"NEW ACCOUNTS" and, together with the Existing Accounts, the "BANK ACCOUNTS").
In the event that the Servicer is required to transfer funds from any Bank
Account to the account of another Person (other than any Person within MSAF
Group) in order to give effect to the directions of any Lessee in accordance
with Section 1.01(d) of this Schedule 2.02(a), the Servicer shall provide the
Calculation Agent or MSAF with written notice setting forth the (i) name of the
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transferor, (ii) name of the transferee, (iii) accounts from and to which funds
are to be transferred, (iv) amounts to be transferred, (v) amount of the
initial payment from the Lessee and (vi) anticipated date of transfer. No
later than the next following Business Day, the Calculation Agent or MSAF shall
notify the Servicer in writing whether the proposed transfer is approved or
disapproved. If approved, the Servicer shall cause such transfer to be made in
accordance with the terms of such written notice. If not approved, the
Calculation Agent or MSAF shall advise the Servicer in writing as to the
reasons therefor and the Servicer shall not proceed with such transfer.
SECTION 6.02. Payments. (a) Anticipated Payments. For purposes of the
calculation of the required expenses by the Calculation Agent pursuant to the
Calculation Agency Agreement, not less than one Business Day prior to each
Calculation Date, the Servicer shall deliver to the Calculation Agent a written
projection of payment obligations (including projected expenditures, or return
to Lessees, of security deposits or maintenance reserves in accordance with the
terms of any Lease) reasonably anticipated by the Servicer to be necessary to
be paid in connection with the Servicer's performance of the Services under
this Agreement during the period extending from the Payment Date immediately
following such Calculation Date to but not including the next succeeding
Payment Date (the "MONTHLY PAYMENT PERIOD").
Not less than five Business Days prior to the first Business Day of each
week, the Servicer shall deliver to the Calculation Agent a list specifying
each cash payment projected to be made during such week (whether or not such
cash payment was reflected in the projection referred to in this Section
6.02(a) of this Schedule 2.02(a)), and shall state the (i) anticipated date of
such payment, (ii) payee, (iii) amount of such payment, (iv) obligation in
respect of which such payment is to be made (the "STATED SERVICES OBLIGATION")
and (v) the account from which such payment should be made. Not later than two
Business Days prior to the date of each payment set forth on such list, the
Servicer shall deliver to the Calculation Agent a written notice of such
payment, restating the date, payee and amount relating to such payment. No
later than the Business Day prior to the date of such payment, the Calculation
Agent shall notify the Servicer in writing whether the proposed payment is
approved or disapproved. If approved, the Servicer shall pay or cause such
payment to be made to the payee for the Stated Services Obligation from the
funds then available in the relevant account, as the case may be. If not
approved, the Calculation Agent shall advise the Servicer in writing as to
reasons therefor and the Servicer shall not proceed with such transfer.
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(b) Unanticipated Payments. During any Monthly Payment Period the
Servicer may request in writing the Calculation Agent's approval for the
Servicer to pay or cause to be paid expenses that had not been reasonably
anticipated by the Servicer at the time the projection required to be provided
to the Calculation Agent pursuant to Section 6.02(a) of this Schedule 2.02(a)
with respect to such Monthly Payment Period was delivered to the Calculation
Agent (whether or not such expense was reflected in the weekly list of
projected payments referenced in Section 6.02(a) of this Schedule 2.02(a)).
Any such request shall specify for each such payment obligation the (i)
anticipated date of such payment, (ii) payee, (iii) amount of such payment,
(iv) Stated Services Obligation and (v) the account from which such payment
should be made. No later than the Business Day next following such request by
the Servicer, the Calculation Agent shall notify the Servicer in writing
whether such payment request is approved or disapproved. If approved, the
Servicer shall pay or cause such payment to be made to the payee for the Stated
Services Obligation from the funds then available in the relevant account. In
the event that the funds then available in such account are insufficient to
make any such payment, pursuant to the Calculation Agency Agreement, the
Calculation Agent shall take such actions as are necessary to cause funds
sufficient to make any such payments to be transferred as soon as practicable
from the Collection Account to such account. Following the transfer of such
funds, the Servicer shall pay or cause such payments to be made in accordance
with the foregoing provisions.
(c) Other Payments. In connection with the calculation of the required
expenses by the Calculation Agent pursuant to the Calculation Agency Agreement,
not less than two days prior to each Calculation Date, the Calculation Agent
shall deliver to the Servicer a written projection of non-Aircraft Assets
related payment obligations that are reasonably anticipated by the Calculation
Agent to be necessary to be paid during the next following Monthly Payment
Period. Not less than five Business Days prior to the first Business Day of
each week, the Calculation Agent shall deliver to the Servicer a list
specifying each cash payment projected to be made during such week (whether or
not such cash payment was reflected in the projection referred to in Section
6.02(a) of this Schedule 2.02(a)) and shall state the (i) anticipated date of
such payment, (ii) payee (together with relevant account information), (iii)
amount of such payment and (iv) obligation in respect of which such payment is
to be made (the "STATED NON-AIRCRAFT OBLIGATION") and certifying that payment
of each amount so specified to the applicable payee is in accordance with the
applicable provisions of any Indenture and the Calculation Agency Agreement.
Not later than two Business Days prior to the date of each payment set forth on
such list, the
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Calculation Agent shall deliver to the Servicer a certificate with respect to
each non-Aircraft Assets related payment obligation restating the date, payee
and amount relating to such payment. Following receipt of such certificate
from the Calculation Agent, the Servicer shall pay or cause such payment to be
made to the payee for the Stated Non-Aircraft Obligation from the funds then
available in the relevant expense account.
(d) Delegation of Authority. The Calculation Agent hereby authorizes the
Servicer to make, or cause to be made payments from the specified accounts in
accordance with the foregoing procedures. In order to give effect to the
foregoing provisions of this Article 6 of this Schedule 2.02(a), the
Calculation Agent shall take such other actions as are necessary or
appropriate, including by delegation or otherwise, pursuant to the terms of the
Calculation Agency Agreement, the Indentures, the agreements between any Person
within the MSAF Group and the relevant banking institutions with respect to the
Bank Accounts or otherwise, or as the Servicer shall reasonably request, to
authorize the Servicer to take such actions with respect to such accounts as
the Calculation Agent determines to be necessary or appropriate as are set
forth above.
ARTICLE 7
PROFESSIONAL AND OTHER SERVICES
SECTION 7.01. Legal Services. The Servicer shall provide or procure legal
services, in all relevant jurisdictions, on behalf of the relevant Persons
within the MSAF Group with respect to the lease, sale or financing of the
Aircraft Assets, any amendment or modification of any Lease, the enforcement of
the rights of any Person within the MSAF Group under any Lease, any disputes
that arise with respect to the Aircraft Assets or for any other purpose that
the Servicer reasonably determines is necessary in connection with the
performance of the Services. The Servicer shall provide such legal services by
using its in-house legal staff where it shall deem appropriate and shall
authorize outside counsel to provide such legal services where it shall deem
appropriate (including litigation). Each Person within the MSAF Group
recognizes that from time to time the Servicer will retain legal counsel to
provide legal services on behalf of Persons within the MSAF Group and, in the
event that a dispute arises between any Person within the MSAF Group and the
Servicer, each agrees to waive any conflict of interest any such counsel may
have with respect to any such dispute or otherwise to enable the Servicer to
retain such counsel on its own behalf.
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SECTION 7.02. Accounting and Tax Services. The Servicer shall arrange for
such accounting and tax services and advice (which may be provided by the
Servicer's internal staff, to the extent available) as shall be reasonably
necessary or appropriate in connection with the structuring of lease, sale or
financing transactions with respect to the Aircraft Assets or for any other
purpose that the Servicer reasonably determines is necessary in connection with
the performance of the Services.
ARTICLE 8
INFORMATION; REPORTS; CUSTODY
SECTION 8.01. Weekly Reports. On the last Business Day of each week the
Servicer shall provide to MSAF a report in the form attached hereto as Schedule
8.01.
SECTION 8.02. Monthly Reports. Five Business Days after the first
Business Day of each month (or, to the extent impracticable, promptly
thereafter), the Servicer shall provide to MSAF:
(a) A written report of (i) the leasing, sales and purchasing activities
that were completed during the preceding month, which shall include a summary
of the principal financial terms related to any new or amended lease
transactions, including floating rate and fixed rates of interest applicable
thereto (attaching a copy of the factual portions of the applicable transaction
overview, if any), and (ii) any default notices issued, in each case with
respect to the Aircraft Assets, in such detail as MSAF may request from time to
time.
(b) A detailed statement of the cash receipts and disbursements with
respect to the Aircraft Assets for the preceding month in such details as MSAF
may request from time to time.
(c) A detailed statement of certain expected cash disbursements in respect
of technical and other leasing expenditures, overheads and Maintenance Reserve
expenditures on a monthly basis for six months (a "FORECAST") (it being
understood that any such Forecast may be based upon historical cash flow
patterns), in such details as MSAF and the Servicer may agree from time to
time.
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(d) A detailed statement of receivables (including details, if any, of any
set-offs among Lessee receivables, Lessee Maintenance Reserves and Security
Deposits) analyzed by Lessee and by region for each account balance outstanding
(including with respect to restructured Leases), categorized by number of days
outstanding, in such details as MSAF may request from time to time.
(e) A report on all pending and potential (with respect to which the
Servicer has received written notice threatening litigation, which, in the sole
judgment of the Servicer, is material) litigation involving any Aircraft Assets
or Leases of which the Servicer has written notice.
(f) A report of any claims being made with respect to any of the Aircraft
Assets of which the Servicer is aware with an actual or potential liability in
excess of $100,000.
SECTION 8.03. Other Information. (a) To the extent the Servicer is in
possession of the relevant information, the Servicer shall prepare and submit
to MSAF the following information with respect to each Person within the MSAF
Group:
(i) reasonable information with respect to annual use of the
Aircraft within the United States on a state-by-state basis and, if
requested by MSAF, transactions relating to Aircraft Assets necessary
for each Person within the MSAF Group to prepare tax returns;
(ii) promptly after the occurrence thereof, notify MSAF of any
accident or incident of which the Servicer has notice involving any
Aircraft Asset where the potential loss in connection therewith exceeds
the damage notification threshold under the relevant Lease; and
(iii) information with respect to transactions relating to Aircraft
Assets necessary for any Person within the MSAF Group to prepare
statutory returns with respect to contractors engaged by the Servicer on
behalf of such Person.
(b) The Servicer will make available to MSAF and its advisers and
designees, subject to their reasonable availability, and at reasonable
times and upon reasonable notice, the Servicer's directors, officers,
employees, representatives, advisers and other agents, in order to
provide to MSAF and its advisers and designees information with regard
to the
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Aircraft Assets and Leases (including in response to inquiries with
respect to the reports provided to MSAF by the Servicer pursuant to
Sections 8.01, 8.02 and 8.03 of this Schedule 2.02(a)) which may be
required by MSAF. In furtherance thereof, in order to facilitate each
Person within the MSAF Group carrying out its responsibilities upon the
request of MSAF, the Servicer shall make available (through physical
attendance or telephonic conference) such officers and employees,
depending on such person's reasonable availability, that MSAF shall
reasonably deem appropriate for regular weekly meetings with MSAF's
representatives to provide to MSAF information, and response to
inquiries, with respect to the reports provided to MSAF by the Servicer
pursuant to Sections 8.01, 8.02 and 8.03 of this Schedule 2.02(a).
SECTION 8.04. Ratings Information. Upon request by MSAF, the Servicer
shall provide to MSAF such information and data about the Aircraft Assets and
other assistance relating to the Aircraft Assets as MSAF and the Servicer shall
deem reasonably necessary or appropriate in connection with providing
information to the ratings agencies for MSAF's debt ratings or the ratings of
any public securitization debt issued by an Affiliate of MSAF.
SECTION 8.05. Public Filing Information. The Servicer shall provide to
MSAF such information and data relating to the Servicer, the Services and the
Aircraft Assets as MSAF shall reasonably request to comply with its public or
statutory reporting and filing obligations; provided that, if the Securities
and Exchange Commission (the "SEC") seeks to require MSAF to disclose any such
information and data that the Servicer considers in good faith to be
confidential, MSAF agrees to include the Servicer in any discussions or
correspondence with the SEC concerning the confidential treatment of such
information.
SECTION 8.06. Custody of Documents. The Servicer agrees to hold all
original documents of any Person within the MSAF Group that relate to the
Aircraft Assets in the possession of the Servicer in safe custody.
SECTION 8.07. Accession. Until the Calculation Agent and the
Administrative Agent accede to this Agreement, all obligations of those
entities shall be performed by MSAF.
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SCHEDULE 4.01(a)
AIRCRAFT
Aircraft
A300-600R MSN 555
A310-300 MSN 409
A310-300 MSN 410
A310-300 MSN 437
A320-200 MSN 279
A320-200 MSN 393
A320-200 MSN 414
A321-100 MSN 597
B737-382 MSN 25161
X000-0X0 XXX 00000
B737-3Q8 MSN 24299
X000-0X0 XXX 00000
B737-3S3F MSN 23811
X000-0X0XX XXX 00000
X000-0X0 XXX 00000
B737-4Q8 MSN 25104
X000-0X0 XXX 00000
X000-0X0 XXX 00000
B737-548 MSN 25165
B747-341B MSN 24106
B757-28A MSN 24367
B757-28AER MSN 24260
X000-0X0XX XXX 00000
B767-204ER MSN 23807
B767-300 MSN 24798
B767-39HER MSN 26256
B767-3X2ER MSN 26260
X-00 XXX 00000
X-00 XXX 00000
F-70 MSN 11569
MD-82 MSN 49825
MD-83 MSN 49822
XX-00 XXX 00000
CF6-80C2-B6F MSN 704279
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SCHEDULE 4.02
DOCUMENTS
See Schedule 3.09 to the Purchase Agreement.
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SCHEDULE 4.03
BANK ACCOUNTS
Account number 00000000
Bankers Trust Company
(ABA 000000000)
Account Name: Wilmington Trust Company, as owner trustee
for Xxxxxx Xxxxxxx Aircraft Finance
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SCHEDULE 1.03(a)
TO SCHEDULE 2.02(a)
INSURANCE
MINIMUM COVERAGE AMOUNTS
1. Hull Insurance: With respect to any Aircraft, hull insurance shall be
maintained by the Lessee and MSAF in an amount equal to the greatest of (a) the
Note Target Price for such Aircraft (as such Note Target Price is defined in
any Indenture, as the same shall be amended in writing from time to time by
MSAF), (b) the appraised value for such Aircraft, (c) the Agreed Value of such
Aircraft (as such Agreed Value is defined in the applicable Lease), and (d)
such greater amounts as may be directed in writing by MSAF from time to time;
provided, however, that in the event that an agreement with respect to hull
insurance cannot be reached with any particular Lessee pursuant to which such
Lessee will pay the premiums to procure such insurance in amounts consistent
with the foregoing, hull insurance shall be maintained in an amount equal to
the greater of clauses (a) and (d) above. Spare engines and parts, if any,
shall be insured on the basis of their "replacement costs".
2. Liability Insurance: Liability insurance shall be maintained by the
Lessee and MSAF for each Aircraft Asset and occurrence in an amount equal to
that set forth below, as the same shall be amended in writing from time to time
by MSAF. Liability insurance shall be maintained for each non-passenger
(cargo) Aircraft Asset and occurrence in an amount equal to 75% of the amounts
set forth below:
MODEL MINIMUM LIMIT
----- -------------
F70 US $250 million
B737/MD80 US $500 million
A320 US $550 million
A310 US $650 million
B767/A300/B757 US $800 million
3. Insurance Deductibles
(a) Deductibles and self-insurance for Aircraft Assets subject to a
Lease may be maintained in an amount pursuant to deductible and
self-insurance arrangements (taking into account, inter alia, the
creditworthiness and experience of the Lessee, the type of aircraft and
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market practices in the aircraft insurance industry generally)
consistent with ILFC's commercially reasonable practices for its own
aircraft.
(b) Deductibles for Aircraft Assets off-lease shall be maintained
in respect of any one occurrence in respect of such Aircraft Assets in
an amount consistent with ILFC's commercially reasonable practice for
its own aircraft with any difference between such amount and $200,000
(or such other amount as MSAF may direct in writing from time to time),
taking into account any deductible insurance procured, to be notified to
MSAF by the Servicer.
4. Other Insurance Matters: Apart from the matters set forth above, the
coverage and terms of any insurance with respect to any Aircraft Assets not
subject to a Lease, shall be substantially consistent with the reasonable
commercial practices of ILFC with respect to its own aircraft.
5. Additional Insureds: Any insurance arrangements entered into with
respect to any Aircraft Assets shall include as named insureds such persons as
are reasonably requested by MSAF.
6. Currencies: Any insurance requirement stated in U.S. dollar terms shall
be interpreted to include the foreign currency equivalent thereto from time to
time if any such insurance related thereto is denominated in a currency other
than U.S. dollars.
7. Availability: The insurance guidelines set forth herein are subject to
such insurance being generally available in the relevant insurance market at
commercially reasonable rates from time to time.
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SCHEDULE 8.01 TO
SCHEDULE 2.02(a)
WEEKLY REPORT
1. Notification of maintenance claims received but not yet approved for
reimbursement giving dollar amount, brief description, Lessee name and MSN.
2. Update on previously reported maintenance claims awaiting approval.
3. Copies of newly signed letters of intent.
4. Notification of return of deposits to Lessees.
5. Confirmation of any drawings of expenses.
6. Notification of drawing down on Lessee letters of credit and/or
Security Deposits or other guarantees.
7. List of any recently signed Leases, amendments or sideletters with full
copies to follow.
8. Notification of any insurance claims.
9. Notification of any Event of Default under any Lease.
10. Notification of any claim or alleged claim by a Lessee against MSAF or
its affiliates.
11. Notification of any contingent liabilities.
12. Notification of any payments relating to an Aircraft in excess of
$50,000 (not included elsewhere in this report).
13. Any other matters reasonably requested by MSAF.
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EXHIBIT A
ACCESSION AGREEMENT
[ ], 1997
We refer to the Servicing Agreement among International Lease Finance
Corporation, Xxxxxx Xxxxxxx Aircraft Finance, and the other entities listed
therein dated as of November 10, 1997 (the "Servicing Agreement"). We agree,
as of the date hereof, as [Administrative Agent/Calculation Agent under the
Administration Agency Agreement/Calculation Agency Agreement] [a subsidiary of
MSAF] to be bound as such by the terms of the Servicing Agreement and to be
considered a party thereto for all purposes hereafter.
[ ]
By:
------------------------------
Name:
Title:
ACCEPTED AND ACKNOWLEDGED,
XXXXXX XXXXXXX AIRCRAFT
FINANCE
By:
------------------------
Name:
Title:
INTERNATIONAL LEASE FINANCE
CORPORATION
By:
------------------------
Name:
Title:
[OTHERS ACCEDED]
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EXHIBIT B
PRO FORMA LEASE
[FORM TO BE MUTUALLY AGREED BY SERVICER AND MSAF NO LATER THAN TWO WEEKS AFTER
THE LAST DELIVERY DATE
