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Exhibit 10.5
EXECUTION COPY
SERVICING AGREEMENT
among
Xxxxxxx & Xxxxx Limited
AerCo Limited
And
The Entities Listed on Appendix A Hereto
Dated as of July 15, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
ARTICLE 2
APPOINTMENT; SERVICES
SECTION 2.01. Appointment....................................................10
SECTION 2.02. Services.......................................................11
SECTION 2.03. Compliance with Applicable Laws................................11
ARTICLE 3
STANDARD OF CARE; CONFLICTS OF INTEREST
SECTION 3.01. Standard of Care...............................................12
SECTION 3.02. Conflicts of Interest..........................................12
SECTION 3.03. Standard of Liability..........................................13
SECTION 3.04. Waiver of Implied Standard.....................................14
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Aircraft Assets................................................15
SECTION 4.02. Aircraft Assets Related Documents..............................15
SECTION 4.03. Accounts and Cashflow..........................................16
SECTION 4.04. Organization and Standing......................................16
SECTION 4.05. Authority......................................................16
SECTION 4.06. No Conflicts...................................................17
SECTION 4.07. Compliance with Applicable Laws................................17
ARTICLE 5
SERVICER UNDERTAKINGS
SECTION 5.01. Staff and Resources............................................18
SECTION 5.02. Access.........................................................18
SECTION 5.03. Compliance with Law............................................18
SECTION 5.04. Commingling....................................................19
SECTION 5.05. Notes Offering.................................................19
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SECTION 5.06. Performance Objectives.........................................22
SECTION 5.07. Management.....................................................22
SECTION 5.08. Limitations....................................................22
SECTION 5.09. Location of Performance of Services............................22
ARTICLE 6
UNDERTAKINGS OF AERCO AND THE SUBSIDIARIES
SECTION 6.01. Cooperation....................................................23
SECTION 6.02. No Representation with Respect to Third Parties................23
SECTION 6.03. Related Document Amendments....................................23
SECTION 6.04. Other Services.................................................23
SECTION 6.05. Ratification...................................................24
SECTION 6.06. Execution, Amendment, Modification or Termination of
Aircraft Assets Related Documents..............................24
SECTION 6.07. AerCo Group Accounts and Cash Arrangements.....................24
SECTION 6.08. Notification of Bankruptcy.....................................24
SECTION 6.09. Further Assurances.............................................25
SECTION 6.10. Communications.................................................25
ARTICLE 7
AERCO GROUP RESPONSIBILITY; BUDGETS
SECTION 7.01. AerCo Group Responsibility.....................................26
SECTION 7.02. Instructions by AerCo Group....................................26
SECTION 7.03. Request for Authority..........................................26
SECTION 7.04. Operating Budget; Aircraft Asset Expenses Budget...............27
SECTION 7.05. Transaction Approval Requirements..............................30
SECTION 7.06. Approved Budgets and Transaction Approval Requirements.........31
ARTICLE 8
EFFECTIVENESS
SECTION 8.01. Effectiveness.................................................. 31
ARTICLE 9
SERVICING FEES; EXPENSES
SECTION 9.01. Servicing Fees.................................................32
SECTION 9.02. Retainer Fee...................................................32
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SECTION 9.03. Rental Fee.....................................................32
SECTION 9.04. Incentive Fee..................................................33
SECTION 9.05. Sale Fees......................................................33
SECTION 9.06. Expenses.......................................................34
ARTICLE 10
TERMS; RIGHTS TO TERMINATE; CONSEQUENCES OF TERMINATION; SURVIVAL
SECTION 10.01. Term..........................................................37
SECTION 10.02. Right to Terminate............................................37
SECTION 10.03. Consequences of Termination...................................42
SECTION 10.04. Survival......................................................44
ARTICLE 11
INDEMNIFICATION
SECTION 11.01. Indemnity.....................................................44
SECTION 11.02. Procedures for Defense of Claims..............................45
SECTION 11.03. Reimbursement of Costs........................................46
ARTICLE 12
ASSIGNMENT AND DELEGATION
SECTION 12.01. Assignment and Delegation.....................................46
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. Notices.......................................................47
SECTION 13.02. Governing Law.................................................48
SECTION 13.03. Jurisdiction..................................................48
SECTION 13.04. Waiver of Jury Trial..........................................48
SECTION 13.05. Counterparts; Third Party Beneficiaries.......................49
SECTION 13.06. Entire Agreement..............................................49
SECTION 13.07. Power of Attorney.............................................49
SECTION 13.08. Restrictions on Disclosure....................................49
SECTION 13.09. Rights of Setoff..............................................50
SECTION 13.10. Reliance..................................................... 50
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SCHEDULES
APPENDIX A..........................................................Subsidiaries
SCHEDULE 2.02(a)........................................................Services
SCHEDULE 4.01...........................................................Aircraft
SCHEDULE 4.03......................................................Bank Accounts
SCHEDULE 7.04(b)(1)................One Year Initial Period Asset Expenses Budget
SCHEDULE 7.04(b)(2)..............Three Year Initial Period Asset Expenses Budget
SCHEDULE 10.01.............................................Rental Fee Percentage
SCHEDULE 8 to Schedule 2.02(a)..............Weekly, Monthly and Quarterly Report
ANNEXES
ANNEX 1................................................................Insurance
ANNEX 2......................................................Indenture Covenants
EXHIBITS
EXHIBIT A........................................................Pro Forma Lease
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SERVICING AGREEMENT dated as of July 15, 1998 (the "AGREEMENT") among
Xxxxxxx & Xxxxx Limited (the "SERVICER"), AerCo Limited, a Jersey limited
liability company, ("AERCO"), GPA Administrative Services Limited as
Administrative Agent, GPA Cash Manager II Limited as Cash Manager, 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 offering
memorandum with respect to the debt securities offered in connection with the
acquisition of the Initial Aircraft (the "OFFERING MEMORANDUM").
"ADDITIONAL AIRCRAFT" shall mean any aircraft (i.e., the airframe together
with any engine owned or leased in by AerCo Group that is (i) installed on such
airframe or (ii) subsequently substituted for any such engine) acquired after
the Closing Date by AerCo or any of its Subsidiaries for which the Servicer is
appointed to provide Services pursuant to Section 2.01(d).
"ADMINISTRATIVE AGENCY AGREEMENT" means the Administrative Agency Agreement
dated the Closing Date, among GPA Administrative Services Limited, as
Administrative Agent, AerCo and the Subsidiaries.
"ADMINISTRATIVE AGENT" means GPA Administrative Services Limited, as
administrative agent under the Administrative Agency Agreement.
"AERCO GROUP" has the meaning assigned to such term in Section 2.01 of this
Agreement.
"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 AerCo and the Subsidiaries, on the
one part, and the Servicer and its subsidiaries, on the other part, shall not be
considered to be Affiliates of each other.
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"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 Federal, state, local or other 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 Federal, state, local or other foreign law or Governmental
Authority (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.
"AGREEMENT" has the meaning assigned to such term in the preamble hereto.
"AIRCRAFT" means the Initial Aircraft and any Additional Aircraft.
"AIRCRAFT ASSETS" means all Initial Aircraft, any Additional Aircraft, any
spare parts, spare engines or ancillary equipment or devices furnished therewith
and related lease interests owned by any Person within AerCo Group 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 AerCo 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 Offering Memorandum) and other contracts and agreements of Persons within
AerCo Group the terms of which relate to or affect any of the Aircraft Assets.
"ANNUAL REVIEW" has the meaning assigned to such term in Section 3.02(c)
Schedule 2.02(a) to 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.
"APPROVED BUDGET" has the meaning assigned to such term in Section 7.04(g)
of this Agreement.
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"APPROVED BUDGET TARGET" has the meaning assigned to such term in Section
9.04(a).
"ASSET EXPENSES BUDGET" has the meaning assigned to such term in Section
7.04(a)(ii) 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 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 dealt 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 Indenture.
"CASH MANAGEMENT AGREEMENT" means the Cash Management Agreement to be dated
as of the date hereof, among GPA Cash Manager II Limited as Cash Manager, AerCo
and Bankers Trust Company, solely in its capacity as indenture trustee and
security trustee.
"CASH MANAGER" means the Cash Manager under the Cash Management Agreement.
"CHANGED CIRCUMSTANCE" means any material event, circumstance or condition
shall have occurred or arisen and be continuing that is reasonably likely to
result in the current cash flow projections in any Year being materially less
favorable than the forecast which is the most current at the time that the
Approved Budget is finalized for that Year in accordance with this Agreement.
"CHANGE OF CONTROL" has the meaning assigned to such term in Section
10.02(a)(iv) of this Agreement.
"CLOSING DATE" means the date of the closing of the initial offering of
debt securities by AerCo.
"CONCENTRATION THRESHOLDS" has the meaning assigned to such term in Section
2.02(a) of Schedule 2.02(a).
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"CONFLICTS STANDARD" has the meaning assigned to such term in Section
3.02(b) of this Agreement.
"CONTROL" (including, with its correlative expressions, "CONTROLLED BY" and
"UNDER COMMON CONTROL WITH") means possession, directly or indirectly, of 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);
"DELIVERY DATE" means, with respect to each Aircraft and the related
Aircraft Assets, the date as of which AerCo Group directly or indirectly
acquires ownership of such Aircraft related Aircraft Assets.
"DIRECTORS" means the directors of AerCo as specified in AerCo's corporate
documents or resolutions and any replacement directors.
"DISCLOSURE DOCUMENT" has the meaning assigned to such term in Section
5.05(a) of this Agreement.
"EFFECTIVENESS DATE" has the meaning assigned to such term in Section
10.02(d)(ii) of this Agreement.
"EU" means The European Union.
"EXTRAORDINARY PLAN" has the meaning assigned to such term in Section
7.04(i) of this Agreement.
"FORECAST" has the meaning assigned to such term in Section 8.03(c) of
Schedule 2.02(a) to this Agreement.
"GROUP" has the meaning assigned to such term in Section 10.02(a)(iv) 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.
"INCENTIVE FEE" has the meaning assigned to such term in Section 9.01(c) of
this Agreement.
"INCENTIVE PERIOD" has the meaning assigned to such term in Section 9.04(a)
of this Agreement.
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"INDEMNIFIED PARTY" has the meaning assigned to such term in Section
11.01(b) of this Agreement.
"INDEMNIFYING PARTY" has the meaning assigned to such term in Section
11.01(b) of this Agreement.
"INDENTURE" has the meaning assigned to such term in Section 2.01(a) of
Schedule 2.02(a) to this Agreement.
"INDEPENDENT REPRESENTATIVE" has the meaning assigned to such term in
Section 3.02(c) of this Agreement.
"INITIAL AIRCRAFT" means the aircraft (i.e., the airframe together with any
engine owned or leased in by AerCo Group that is (i) installed on such airframe
or (ii) subsequently substituted for any such engine) specified in Schedule 4.01
hereto.
"INITIAL APPRAISED VALUE" means (i) for all the Initial Aircraft in
aggregate, $951,973,000 and, for each Initial Aircraft, means the dollar amount
specified opposite such Aircraft on Schedule 4.01 hereto and (ii) for the
Additional Aircraft, the "Initial Appraised Value" of such Additional Aircraft
as such term is defined in the Indenture.
"INITIAL APPROVAL BUDGETS" has the meaning assigned to such term in Section
7.04(b) to this Agreement.
"INITIAL PERIODS" has the meaning assigned to such term in Section
7.04(b).
"LEASE" means any lease agreement with respect to an Aircraft including any
and all amendments, side letters and other supplements thereto.
"LEASE DOCUMENTATION" has the meaning assigned to such term in Section
1.08(b) of Schedule 2.02(a) to this Agreement.
"LESSOR" has the meaning assigned to such term in the Offering Memorandum
and includes lessors of Additional Aircraft.
"LESSEE" means each lessee as defined in the Offering Memorandum, including
lessees under future Leases entered into in accordance with the terms of this
Agreement.
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"LOSS" (together with "LOSSES") means any and all damage, loss, liability
and expense (including reasonable legal fees, expenses and related charges and
costs of investigation) provided however, the terms "LOSS" and "LOSSES" shall
not include any Indemnified Party's management time or overhead expenses.
"MAINTENANCE RESERVES" means the maintenance reserves under each of the
Leases.
"MONTHLY PAYMENT PERIOD" has the meaning assigned to such term in Section
6.03(a) to Schedule 2.02(a) to this Agreement.
"NET CASH PROCEEDS" has the meaning assigned to such term in Section
9.05(b) of this Agreement.
"NET GAINS" has the meaning assigned to such term in Section 9.05(b) of
this Agreement.
"NEW ACCOUNTS" has the meaning assigned to such term in Section 6.01(b) of
Schedule 2.02(a) to this Agreement.
"NON TERMINATING PARTY" has the meaning assigned to such term in Section
10.02(d)(i) of this Agreement.
"NOTES OFFERING" has the meaning assigned to such term in Section 5.05(a)
of this Agreement.
"OFFERING MEMORANDUM" has the meaning assigned to such term in Section 1.01
of this Agreement.
"OFFICER'S CERTIFICATE" means, as to any Person, a certificate of the
President, any Vice President or Assistant Vice President, the Treasurer or any
Assistant Treasurer or such other equivalent officer.
"ONE YEAR INITIAL PERIOD" has the meaning assigned to such term in Section
7.04(b).
"ONE YEAR PERIOD" has the meaning assigned to such term in Section 7.04(a)
of this Agreement.
"OPERATING BUDGET" has the meaning assigned to such term in 7.04(a)(i) of
this Agreement.
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"OPERATING GUIDELINES" has the meaning assigned to such term in Section
5.09 of this Agreement.
"OPERATIVE AGREEMENTS" means the Agreement and all other agreements,
instruments or other documents which are required by the terms of this Agreement
to be delivered in connection herewith.
"OTHER ASSETS" has the meaning assigned to such term in Section 3.02(a) of
this Agreement.
"OVERHEAD EXPENSES" has the meaning assigned to such term in Section
9.06(a) of this Agreement.
"PAYMENT DATE" has the meaning assigned to it in the Indenture.
"PERFORMANCE OBJECTIVES" has the meaning assigned to such term in Section
5.06.
"PERIOD" has the meaning assigned to such term in Section 7.04(a) 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 Section 3.02(a)
of Schedule 2.02(a) to this Agreement.
"PRO FORMA LEASE" has the meaning assigned to such term in Section
3.02(a)(ii) of Schedule 2.02(a) to this Agreement.
"REIMBURSABLE EXPENSES" has the meaning assigned to such term in Section
9.06(c) of this Agreement.
"RELATED PERSON" has the meaning assigned to such term in Section
10.02(a)(iv) of this Agreement.
"RENT" has the meaning assigned to such term in Section 9.03 of this
Agreement.
"RENTAL FEE" has the meaning assigned to such term in Section 9.01(b) of
this Agreement.
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"RENTAL FEE PERCENTAGE" has the meaning assigned to such term in Section
9.03 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(d) of this
Agreement.
"REPRESENTATIVE" with respect to any Person means the officers, directors,
employees, advisors and agents of such Person.
"RETAINER FEE" has the meaning assigned to such term in Section 9.01(a) of
this Agreement.
"SALES FEES" has the meaning assigned to such term in Section 9.01(d) of
this Agreement.
"SALES INCENTIVE FEE" has the meaning assigned to such term in Section
9.01(d) of this Agreement.
"SEC" has the meaning assigned to such term in Section 5.05(a) 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 Xxxxxxx & Xxxxx Limited.
"SERVICER REPRESENTATIVE" means any officer, director, employee, partner,
consultant, advisor or agent of the Servicer or any of its Affiliates.
"SERVICES" has the meaning assigned to such term in Section 2.02(a) of this
Agreement.
"SERVICING FEES" has the meaning assigned to such term in Section 9.01 of
this Agreement.
"STANDARD OF CARE" has the meaning assigned to such term in Section 3.01 of
this Agreement.
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"STANDARD OF LIABILITY" has the meaning assigned to such term in Section
3.03(c) of this Agreement.
"STATED SERVICES OBLIGATION" has the meaning assigned to such term in
Section 6.03(a) to Schedule 2.02(a) to this Agreement.
"SUBSIDIARIES" means those entities listed on Appendix A hereto and any
additional direct or indirect subsidiaries of AerCo.
"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.
"TECHNICAL MANAGEMENT EXPENSES" has the meaning assigned to such term in
Section 9.06(b)(i) of this Agreement.
"TECHNICAL MANAGEMENT EXPENSES RESERVE AMOUNT" has the meaning assigned to
such term in Section 7.04(f) of this Agreement.
"TERMINATING PARTY" has the meaning assigned to such term in Section
10.02(d)(i) of this Agreement.
"TERMINATION FEE" has the meaning assigned to such term in Section 10.02(e)
of this Agreement.
"TERMINATION NOTICE" has the meaning assigned to such term in Section
10.02(d)(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.
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"THREE YEAR INITIAL PERIOD" has the meaning assigned to such term in
Section 7.04(b) of this Agreement.
"THREE YEAR PERIOD" has the meaning assigned to such term in Section
7.04(a) of this Agreement.
"TRANSACTION APPROVAL REQUIREMENTS" has the meaning assigned to such term
in Section 7.05(c) of this Agreement.
"YEAR" means each twelve month fiscal year (or such shorter fiscal period
as agreed upon by the parties hereto in the future) ended June 30 or as modified
by agreement of the parties hereto in the future.
ARTICLE 2
APPOINTMENT, SERVICES
SECTION 2.01. Appointment. Each of AerCo and the Subsidiaries hereby
appoints the Servicer as the exclusive provider of the Services (as defined in
Section 2.02 below) to AerCo and the Subsidiaries (collectively, "AERCO GROUP")
in respect of the Aircraft Assets on the terms and subject to the conditions set
forth in this Agreement.
(a) 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 (the cost of which is an
Aircraft Asset Expense) from third party providers in the name of, or as
disclosed agent for, AerCo and each of the Subsidiaries 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 AerCo or the relevant
Subsidiary, as the case may be, the Servicer shall use commercially reasonable
efforts to cause AerCo 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 AerCo 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 AerCo
Group.
(b) AerCo has advised the Servicer that each Person within AerCo Group has
appointed the Administrative Agent to act as its representative with respect to
any matter in respect of which AerCo or any other Person within AerCo
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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 AerCo that the Administrative Agent's
appointment to act on behalf of AerCo has been revoked or terminated, the
Servicer shall in all cases be entitled to rely on the instructions (or other
actions) of the Administrative Agent as representative of each Person within
AerCo Group.
(c) AerCo has advised the Servicer that the Cash Manager has been appointed
to perform certain cash management services on behalf of AerCo Group in
accordance with the terms of the Cash Management Agreement. In connection with
the performance of the Services required to be performed by the Servicer
pursuant to 6.01, 6.02, 6.03 and 6.04 of Schedule 2.02(a) to this Agreement, the
Servicer shall in all cases be entitled to rely on instructions (or other
actions) of the Cash Manager unless earlier notified in writing by AerCo that
the Cash Management Agreement has been terminated, in which case the Servicer
shall be entitled to rely upon the instructions (or other actions) of AerCo or
the Administrative Agent in accordance with Section 2.01(b). The Servicer shall
not be liable to any Person within AerCo Group or any other Person for any
action taken or omission to act in accordance with instructions (or other
actions) of the Cash Manager for purposes of Sections 6.01, 6.02 and 6.03 of
Schedule 2.02(a).
(d) AerCo, at its sole option, may appoint the Servicer to provide Services
under the terms of this Agreement to any future aircraft or engines acquired by
AerCo and its Subsidiaries.
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, except where
discretion has been given to the Servicer under this Agreement, the Servicer
shall in all cases only be obliged to act upon, and shall be entitled to rely
on, the instructions or other actions of AerCo or the Administrative Agent or,
if applicable, the Cash Manager on behalf of AerCo Group. The Servicer shall not
be liable to any of AerCo, the Subsidiaries or any other Person for any action
taken by the Servicer, or which the Servicer omitted to take, in accordance with
such instructions.
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.
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ARTICLE 3
STANDARD OF CARE; CONFLICTS OF INTEREST;
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 (subject to the terms and conditions of this
Agreement and the Indenture) and at all times in a manner at least consistent
with customary commercial practice of a prudent international aircraft lessor in
the management, servicing and marketing of commercial jet aircraft and related
assets (the "STANDARD OF CARE").
SECTION 3.02. Conflicts of Interest. (a) Each of AerCo and the
Subsidiaries acknowledges and agrees that: (i) in addition to managing,
servicing and marketing the Aircraft Assets under this Agreement, the Servicer
may manage, service or market and shall be entitled to manage, service or market
from time to time, the separate assets and businesses of the Servicer, its
Affiliates and other third parties ("OTHER ASSETS"); (ii) nothing in this
Agreement will prevent the Servicer from carrying on its normal investment
banking, advisory or aircraft or lease management businesses; (iii)
notwithstanding 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 AerCo on the one hand and the various entities to whom it
provides management, servicing or marketing services and with respect to the
various assets it may own or in respect of which it provides management,
servicing or marketing services on the other hand; and (iv) the Directors of
AerCo have approved the transactions contemplated by this Agreement and desire
that such transactions be consummated and, in giving such approval, the
Directors of AerCo 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, to the extent
applicable, the Conflicts Standard.
(b) If conflicts of interest arise regarding the management, servicing or
marketing 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 AerCo as
provided in Section 3.02(c), 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, respectively, on an
unreasonable basis (the standard set forth in this Section 3.02(b) shall be
referred to collectively as the "CONFLICTS STANDARD").
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(c) If the Servicer determines in good faith that a conflict of interest
exists with AerCo then, as soon as practicable after becoming aware of the
conflict of interest, the Servicer shall inform AerCo of the existence of the
conflict of interest and shall promptly propose to AerCo a method of resolving
the conflict of interest, including one or more of the following: (i) a proposal
to disregard the conflict of interest on the basis of lack of materiality; (ii)
an agreement by the Servicer to give preference to the particular Aircraft
Asset; (iii) a proposal to form separate teams within the Servicer and its
Affiliates which will act at all times at arm's length and each of which will be
bound by a strict duty of confidentiality towards its respective client; or (iv)
a proposal that the Servicer withdraw from acting as Servicer with respect to
the negotiation of the issue giving rise to such conflict of interest regarding
the particular Aircraft Asset and that AerCo appoint an independent
representative (the "INDEPENDENT REPRESENTATIVE") to act on behalf of AerCo with
respect thereto. If AerCo does appoint an Independent Representative, the
Servicer will not receive fees pursuant to Sections 9.02 and 9.03 in respect of
the Aircraft Asset or Aircraft Assets giving rise to such conflict of interest
for so long as such Independent Representative is engaged. The Independent
Representative's fee will be paid by AerCo.
(d) If AerCo does not find one of the Servicer's proposed resolutions of
the conflict to be acceptable, then AerCo may propose an alternative method of
resolution to the Servicer. If the conflict cannot be resolved to the
satisfaction of AerCo in its sole discretion after negotiation in good faith
with the Servicer, then AerCo reserves the right to terminate the Servicer's
role in respect of such Aircraft Asset.
SECTION 3.03. Standard of Liability. (a) The Servicer shall not be liable
to AerCo or any of the Subsidiaries or any other Person under any circumstances
for any Losses directly or indirectly arising out of, or in connection with or
related to: (i) an Aircraft Asset being 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 or
recommendation of the Servicer in accordance with the Standard of Care; (ii) the
Servicer's obligation to apply the Conflicts Standard in respect of its
performance of the Services, except, in either of case (i) or (ii), where such
Losses are finally adjudicated to have been caused directly by the negligence,
recklessness, wilful misconduct or fraud of the Servicer; (iii) the ownership,
operation, maintenance, acquisition, leasing, financing, refinancing or sale of
any of the Aircraft Assets, or any action or failure to act on the part of any
Person at any time, prior to the effectiveness of this Agreement; (iv) any
action taken, limited or terminated by the Servicer in accordance with the
instructions of AerCo pursuant to Section 7.02 of this Agreement or as
contemplated by this Agreement, the instructions of the Cash
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Manager or the Administrative Agent; (v) a refusal by AerCo or any of the
Subsidiaries to take any action recommended by the Servicer; or (vi) the gross
negligence, recklessness, fraud or wilful misconduct of any person within AerCo
Group.
(b) The Servicer shall indemnify, reimburse and hold harmless AerCo and the
Subsidiaries 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 Services
where (i) such Loss is finally adjudicated to have been caused directly by the
negligence, recklessness, fraud or wilful misconduct of the Servicer or any of
its Affiliates or any Servicer delegate in respect of its obligations to apply
the Standard of Care or the Conflicts Standard in connection with the
performance of the Services; or (ii) such Loss is finally adjudicated to have
directly resulted from a breach by the Servicer of the express terms and
conditions of this Agreement; provided that the Servicer's obligation to
indemnify under this Agreement shall be limited to a maximum amount of $21
million in the aggregate with respect to any and all Losses (except for those
Losses that result from fraud on the part of the Servicer). The parties agree
that under no circumstances shall the foregoing provision provide for or permit
any duplicative payment to or recovery by AerCo Group. In the event that the
Servicer shall have made an indemnity payment with respect to a Loss to Aerco or
a Subsidiary and any member of AerCo Group subsequently is paid or otherwise
recovers an amount in respect of such Loss from any other person, then Aerco
shall repay such amount to the Servicer.
(c) The liability standards set forth in this Section 3.03, shall be 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 U.S. Federal, New York,
Jersey, Channel Islands or other Applicable 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 U.S. Federal, New York, Jersey, Channel Islands or other Applicable 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.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Each of AerCo 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 Assets, the Initial Appraised Value of each Aircraft and
the Person within AerCo Group that owns such Aircraft Asset, in each case as of
the date hereof. Except as set forth on Schedule 4.01, or as disclosed in the
Offering Memorandum, each Person listed within AerCo Group as an owner of the
Aircraft Asset on Schedule 4.01 has good and marketable title to such Aircraft
Asset, free and clear of all liens.
SECTION 4.02. Aircraft Assets Related Documents. Each Aircraft Assets
Related Document provided by the previous servicer to Xxxxxxx & Xxxxx or
subsequently delivered to the Servicer is (or at the time of such delivery will
be) in full force and effect and a legal, valid and binding agreement of the
Person in AerCo Group that is a party thereto and, to the best knowledge of such
Person within AerCo Group, each such other party thereto, and is (or at the time
of such delivery will be) enforceable against such Person within AerCo Group
that is a party thereto and, to the best knowledge of such Person within AerCo
Group, against each such other party thereto in accordance with its terms
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws affecting creditors' rights and remedies and to
general equity principles. To the best knowledge of AerCo after due inquiry (it
being understood that such due inquiry shall consist of a review of the Aircraft
Assets Related Documents obtained by AerCo and the Subsidiaries from the
previous servicer of the Initial Aircraft), none of the Aircraft Assets Related
Documents listed on Schedule 4.02 or subsequently delivered to Servicer has been
modified, amended or terminated except as disclosed therein. To the best
knowledge of AerCo after due inquiry (it being understood that such due inquiry
shall consist of a review of the Aircraft Assets Related Documents obtained by
AerCo and the Subsidiaries from the previous servicer of the Initial Aircraft),
except as set forth in the Aircraft Assets Related Documents with respect to
specific potential defaults, each Person within AerCo Group (and each
predecessor-in-interest of any Person) has performed or is performing all
material obligations required to be performed by it under the applicable
Aircraft Assets Related Documents and is not (with or without notice or lapse of
time or both) in breach or default in any material respect thereunder and, to
the best knowledge of AerCo, no other party to any of the Aircraft Assets
Related Document is or at the time of the delivery of such Aircraft Assets
Related Document to the Servicer will be (with or without notice or lapse of
time or both) in breach of default in any material respect thereunder.
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SECTION 4.03. Accounts and Cashflow. Schedule 4.03 hereto sets forth a
true and complete list as of the date hereof of all AerCo Group's bank or other
similar accounts relating to the Aircraft Assets.
SECTION 4.04. Organization and Standing. (a) Each Person in AerCo Group is
a corporation, limited liability company or business trust, as applicable, duly
organized and validly existing and, if applicable, in good standing under the
laws of the jurisdiction in which it is legally organized and possesses all
franchises, licenses, permits, authorizations and approvals necessary to enable
it to use its corporate or other name and to own, lease or otherwise hold its
properties and assets and to carry on its business as presently conducted and as
proposed to be conducted except for such jurisdictions where the failure to be
so qualified could not, individually or in the aggregate, have a material
adverse effect on the ability of such Person within AerCo Group or the Servicer
to perform their respective obligations under this Agreement. Appendix A sets
forth a true and complete list as of the date hereof of each Person within AerCo
Group, the jurisdiction in which each such Person within the AerCo Group is
legally organized, and its officers, directors and shareholders.
(b) Each Person within AerCo Group is duly qualified to do business as a
foreign corporation, limited liability company or business trust, as applicable,
in each jurisdiction in which the nature of its business or the ownership,
leasing or holding of its properties or assets requires qualification, except
for such jurisdictions where the failure to be so qualified could not,
individually or in the aggregate, have a material adverse effect on the ability
of such Person within AerCo Group or the Servicer to perform their respective
obligations under this Agreement.
(c) No person within AerCo Group is subject to any actual or, or to the
best of its knowledge, contingent liability that could individually or in the
aggregate (i) have a material adverse effect on the ability of such Person
within AerCo Group or the Servicer to perform their respective obligations under
this Agreement or (ii) materially adversely affect the ownership, operation,
leasing, financing, refinancing or sale of any Aircraft Asset.
SECTION 4.05. Authority. (a) Each of AerCo and each other Person within
AerCo Group which is a party to an Operative Agreement has all requisite power
and authority to execute each Operative Agreement to which it is or will be a
party and to consummate the transactions and to perform its obligations
contemplated thereby. All corporate acts and other proceedings required to be
taken by each Person within AerCo Group to authorize the execution, delivery and
performance of each Operative Agreement to which it is or will be a party and
the consummation of the transactions and the performance of its obligations
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contemplated thereby have been on or before the date of entering
into the relevant Operative Agreements or will have been duly and properly
taken.
(b) Each of the Operative Agreements to which each Person within the AerCo
Group is or will be a party has been or will be duly validly executed and
delivered by such Person, as applicable, and each such Operative Agreement is,
or upon such execution and delivery will be, a legal, valid and binding
obligation of such Person, as applicable, and enforceable against it in
accordance with its terms subject to bankruptcy, insolvency fraudulent transfer,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies and to general equity principles.
SECTION 4.06. No Conflicts. Neither the execution and delivery of any
Operative Agreement with respect to which any Person within AerCo Group is a
party nor the consummation of the transactions contemplated thereby or the
performance by any Person within AerCo Group of any of its obligations
thereunder will (i) violate any provision of the constituent documents of any
such Person within the AerCo Group, (ii) violate any order, writ, injunction,
judgment or decree applicable to any Person within AerCo Group or any of their
respective properties or assets, (iii) violate in any material respect any
Applicable Law or (iv) result in any conflict with, breach of or default (or
give rise to any right of termination, cancellation or acceleration) under any
note, bond, mortgage, indenture, warrant or similar instrument or any licence,
permit, material agreement or other material obligation to which any Person
within AerCo Group or by which any Person within the AerCo Group or any of their
respective properties or assets may be bound, except such violations, breaches,
conflicts or defaults which could not individually or in the aggregate have a
material adverse effect on the ability of AerCo Group or the Servicer to perform
their respective obligations under this Agreement. No action, consent or
approval by or filing with any Governmental Authority or any other Person is
required in connection with the execution, delivery or performance by any Person
within the AerCo Group of the Operative Agreements to which it is a party or the
consummation by any Person within the AerCo Group of the transactions
contemplated thereby which has not already been obtained.
SECTION 4.07. Compliance with Applicable Laws. (a) Each of AerCo and each
other Person within AerCo Group and their respective properties, assets,
operations and businesses have been operated and are in compliance with all
Applicable Laws and any filing requirements relating thereto, except where any
non-compliance could not individually or in the aggregate have a material
adverse effect on the ability of AerCo Group or the Servicer to perform their
respective obligations under this Agreement.
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(b) Each of AerCo and each other Person within the AerCo Group has obtained
all permits, licenses and other authorizations which are required with respect
to the operation of their respective businesses and the ownership of their
respective assets and properties under all Applicable Laws, other than any
permits, licenses or authorizations which the failure to obtain could not
individually or in the aggregate have a material adverse effect on the ability
of AerCo Group or the Servicer to perform their respective obligations under
this Agreement. Each Person within AerCo Group is in compliance with all terms
and conditions of such permits, licenses and authorizations, except where any
non compliance could not individually or in the aggregate have a material
adverse effect on the ability of AerCo Group or the Servicer to perform their
respective obligations under this Agreement.
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 reasonably deem necessary, 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 AerCo may reasonably
request shall grant to AerCo Group and its agents (including auditors):
(a) "READ ONLY" (including by way of hard copy) and reporting access
regarding the Servicer's management information systems, but only to that part
of such systems that relates to the Aircraft Assets and AerCo Group's business;
(b) access to the related programs for review and testing purposes only;
and
(c) access to the ledgers, documents and other records related to the
Aircraft Assets or AerCo Group's business (copies of which AerCo Group shall be
entitled to take) and to officers and employees of the Servicer, to enable AerCo
Group to monitor the performance by the Servicer under this Agreement and
otherwise for the purposes of AerCo Group's business.
SECTION 5.03. Compliance with Law. The Servicer shall, in connection with
the performance of the Services, comply in all material respects with all
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laws, rules and regulations applicable to the Servicer and with the laws, rules
and regulations of Jersey, Xxxxxxx Xxxxxxx, Xxxxxxx, xxx Xxxxxx Xxxxxxx and the
United States applicable to the Aircraft Assets; provided, however, that this
Section 5.03 shall not limit the obligation of the Servicer to monitor the
performance of the obligations of Lessees under the Leases as set forth in
Article 1 of Schedule 2.02(a).
SECTION 5.04. Commingling. The Servicer shall not commingle with its own
funds any funds of any Person within AerCo Group.
SECTION 5.05. Notes Offering. (a) The Servicer agrees to use commercially
reasonable efforts to cooperate with AerCo and its Affiliates in connection with
the public or private offering and sale after the date hereof of any securities
of AerCo or any of its Affiliates (a "NOTES OFFERING") including participation
in preparation of any offering memorandum, prospectus or other offering
materials (but assuming no responsibility for the preparation, form or content
thereof, provided, however, that the Servicer will assume responsibility for the
content of any information therein provided by the Servicer regarding it),
participating, on reasonable notice and with representatives of AerCo, in
customary marketing activities relating to a Notes Offering solely in the
Servicer's capacity as Servicer of the Aircraft Assets (including road shows and
investor meetings); attending, on reasonable prior notice, all meetings with
rating agencies relating to any Notes Offering; providing AerCo and its
Affiliates, underwriters, rating agencies and other advisors with reasonable
opportunities to conduct legal and business due diligence with respect to the
Servicer and its provision of Services and with respect to the Aircraft Assets
and Leases (including, for this purpose any future lease) including providing,
to the extent that such data is in the Servicer's possession or within its
knowledge, any historical Lease and Aircraft Assets related data, including
access to and information regarding all Leases for due diligence purposes;
procuring, at AerCo'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 of financial statements for AerCo Group; and (to the
extent that such data is in the Servicer's possession or within its knowledge)
providing, reviewing and, if Servicer so chooses, commenting on information
regarding the Aircraft Assets and provision of Services for inclusion in any
offering memorandum, prospectus or other offering document or any periodic
report required to be filed or furnished by AerCo with or to the United States
Securities and Exchange Commission (the "SEC") or any other Governmental
Authority (any such document or report, a "DISCLOSURE DOCUMENT"). Servicer also
shall provide information regarding the Servicer for inclusion in any Disclosure
Document and shall provide customary indemnities against material misstatements
or omissions
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with respect to such information regarding the Servicer; provided that AerCo
agrees that the Servicer has the right to approve any information in any
Disclosure Document relating to the Servicer or any Affiliate thereof and that
AerCo will not permit the inclusion in any Disclosure Document of (i) any
financial statements or financial data relating to the Servicer or any Affiliate
thereof, (ii) any performance or related data with respect to the Servicer's
management of (y) aircraft directly or indirectly owned by AerCo (it being
understood that such data shall not include financial or other data relating to
the Aircraft Assets, the Leases and the Lessees where the principal purpose for
including such data in the Disclosure Document is not to provide a measurement
or other assessment of the Servicer's performance in managing the Aircraft
Assets) or (z) any other Person's aircraft or other assets or (iii) information
relating to aircraft that do not comprise Aircraft Assets which are owned or
managed by the Servicer or any of its Affiliates (except and to the extent that
the quantities and types of aircraft currently owned or managed by the Servicer
are disclosed in summary form, which summary shall be subject to the prior
approval of the Servicer), except, in the case of clauses (ii) and (iii), to the
extent reasonably required by the SEC or other Governmental Authority or
otherwise under Applicable Law; provided that, before including any such
information so required, AerCo shall have used commercially reasonable efforts
to have (or to have caused its Representatives to have) such requirement
withdrawn or otherwise satisfied and to limit the information required to be
included. AerCo also will provide the Servicer with copies of, and an
opportunity to review and comment on, marketing materials produced in connection
with any Notes Offering. AerCo will not distribute any such marketing materials
or disseminate the information contained therein, where such materials or
information includes information relating to the Servicer or any of its
Affiliates, without the Servicer's prior written consent, which consent shall
not be unreasonably withheld.
(b) AerCo agrees that it will not submit to any rating agency any materials
relating to the Servicer or any of its Affiliates without the Servicer's prior
consent, which consent shall not be unreasonably withheld.
(c) AerCo acknowledges and agrees that neither the Servicer nor any of its
Affiliates will be a party to any underwriting agreement or any letter to,
representation to, indemnity or other agreement with, any underwriter in
connection with any Notes Offering, and shall not assume any responsibility for
any information set forth in any Disclosure Document related thereto except for
information provided by the Servicer regarding the Servicer.
(d) Except to the extent required by law, AerCo agrees, and shall cause
each other Person within AerCo Group to agree, not to issue any press release or
make any other public announcement relating to the Servicer or any of its
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Affiliates and their respective involvement in any Notes Offering without the
Servicer's prior written consent, which consent shall not be unreasonably
withheld. In the event a press release or other public announcement is required
by law, AerCo shall consult with the Servicer prior to issuing or making any
such press release or public announcement to the extent that any such press
release or public announcement relates to the Servicer or any of its Affiliates
and their respective involvement in any Notes Offering.
(e) Neither the Servicer nor any of its Affiliates shall be required to
sign any registration statement (or any similar document) in connection with any
Notes Offering or to take any other action that could reasonably be expected to
result in the Servicer or any of its Affiliates being or being deemed to be a
"control person" with respect to the applicable issuer of any securities issued
in connection with any such financing transaction under applicable securities
laws in connection with any such financing or an "underwriter" of any such
securities. The obligations of the Servicer under this Section 5.05 shall be
subject to the reasonable satisfaction of the Servicer with all the terms and
conditions of the applicable Notes Offering that relate to the Servicer or any
of its Affiliates including the customary indemnities in favour of the Servicer
and its Affiliates.
(f) At the request of the Servicer, AerCo agrees to request that its legal,
accounting and other technical advisors include the Servicer and such Affiliates
of the Servicer as the Servicer may designate as addressees of any opinions
and/or comfort letters being provided to AerCo in connection with any Notes
Offering.
(g) In the case of any Notes Offering, none of the Servicer, its Affiliates
or its Representatives shall have any liability for, and AerCo and the
Subsidiaries jointly and severally shall hold, and shall cause each other
Person, if any, for whom a Notes Offering was conducted to hold, the Servicer,
its Affiliates and its Representatives harmless from, and indemnify on an
After-Tax Basis, the Servicer, its Affiliates and its Representatives against,
any and all Losses that may be imposed on, incurred by or asserted against
(including with respect to any such claims, suits, actions or proceedings by
third parties, including the underwriters and purchasers of any securities
issued in connection with any such Notes Offering) the Servicer, its Affiliates
or its Representatives directly arising out of, in connection with or related to
the Servicer's performance of the obligations set forth in this Section 5.05
with respect to any Notes Offering (except to the extent, but only to the
extent, of any such Losses directly arising out of, in connection with or
related to the content of any information in any offering memorandum or
prospectus provided by the Servicer in writing expressly for use therein
regarding the Servicer). The joint and several obligations of AerCo and the
Subsidiaries under this Section 5.05(g) shall be in addition to any liability
that such Persons
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may otherwise have to the Servicer, its Affiliates or its Representatives and
shall not be limited or reduced with respect to the Servicer, its Affiliates or
its Representatives by any other rights to indemnification that may be available
to the Servicer, its Affiliates or its Representatives.
SECTION 5.06. Performance Objectives. The Servicer will perform the
Services in a manner that is intended to be consistent with maximizing the
present value of the cash flows derived from the lease or sale of the Aircraft
over time, subject to the constraints imposed by the Indenture and this
Agreement and by seeking to achieve a balanced and diversified portfolio
(including with respect to lessees, geography and lease expiries), in all cases
taking into account the then-existing and anticipated market conditions
affecting the operating lease of used aircraft and the commercial aviation
industry generally (the "PERFORMANCE OBJECTIVES").
SECTION 5.07. Management. The Servicer warrants that it is not under any
obligation to a third party owner or lessor of aircraft to give preference to
such aircraft in the management or remarketing of such aircraft over any
Aircraft Assets.
SECTION 5.08. Limitations. (a) Notwithstanding any other provision of this
Agreement, the Servicer shall not be obligated either initially or on a
continuing basis to provide any Person within the AerCo Group or any of their
respective Representatives any confidential or proprietary information regarding
the Servicer's or any of its Affiliates' business or the business or finances of
any Person, other than any Person within the AerCo Group, whose assets it
manages from time to time.
(b) The relationship of the Servicer is an agency relationship and, except
in relation to any money erroneously received by the Servicer into any of the
Servicer's or any of its Affiliates' bank accounts on behalf of any Person
within AerCo Group, which the Servicer will hold in trust for such Person and
deposit into one or more accounts in accordance with the instructions of the
Cash Manager as soon as reasonably practicable, neither the Servicer nor any of
its Affiliates or Representatives shall be under any fiduciary duty or other
implied obligation or duty to any Person within AerCo Group or any holder of any
equity or debt security issued by any Person within the AerCo Group, any Lessee
or any other Person arising out of this Agreement.
SECTION 5.09. Location of Performance of Services. The Servicer shall
manage and control the performance of the Services exclusively from within
Ireland. In this regard, the Servicer shall in no event (1) execute any new
lease agreement, amendment to an existing lease or any agreement in respect of a
sale
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of an Aircraft Asset outside Ireland (except pursuant to a specific power of
attorney issued on a case-by-case basis in Ireland), or (2) make any material
Operational Decision outside Ireland. For the purpose of this Section 5.09, an
"OPERATIONAL DECISION" is any decision with respect to (a) a new lease or an
amendment to a lease that concerns (i) lease rental, (ii) lease term, (iii) the
amount of security deposits and maintenance accruals, or (iv) the terms of
delivery and redelivery conditions, or (b) the sale of Aircraft Assets. The
Servicer shall adopt operating guidelines (as adopted from time to time, the
"OPERATING GUIDELINES") to carry out the purpose of this Section 5.09. The
Servicer shall provide a copy of its Operating Guidelines to AerCo for approval.
ARTICLE 6
UNDERTAKINGS OF AERCO AND THE SUBSIDIARIES
SECTION 6.01. Cooperation. Each of AerCo and the Subsidiaries shall at all
times reasonably cooperate with the Servicer to enable the Servicer to provide
the Services, including providing the Servicer with all powers of attorney or
other required documentation as may be reasonably necessary or appropriate to
perform the Services.
SECTION 6.02. No Representation with Respect to Third Parties. Each of
AerCo and the Subsidiaries agrees that as between the Servicer, on the one hand,
and any Person within AerCo 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 vendor or supplier utilized by the Servicer in connection
with its performance of the Services.
SECTION 6.03. Related Document Amendments. Each of AerCo and the
Subsidiaries shall not take any action that would increase in any material
respect the scope, nature or level of the Services to be provided under this
Agreement or that would affect the Servicer's rights, obligations or liabilities
(or potential liabilities) under this Agreement or with respect to the Cash
Management Agreement or otherwise, in each case without the Servicer's prior
written consent.
SECTION 6.04. Other Services. Except as provided in this Agreement without
the prior written consent of the Servicer, AerCo 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
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Asset in respect of which the Servicer is at such time performing Services,
except and only to the extent expressly permitted by the terms of this
Agreement; or
(b) employ any Person other than the Servicer to perform any of the
Services.
SECTION 6.05. Ratification. Each of AerCo 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 6.06. Execution, Amendment, Modification or Termination of Aircraft
Assets Related Documents. No later than ten 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, AerCo 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 the agreement, instrument or other document as so
amended, modified or terminated; 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. The Servicer shall not be
obligated to perform any Services with respect to or in accordance or connection
with any Aircraft Assets Related Document or any amendment, modification or
termination thereof unless and until AerCo shall have provided it with a copy
thereof in accordance with the foregoing sentence.
SECTION 6.07. AerCo Group Accounts and Cash Arrangements. AerCo shall
promptly notify the Servicer of any new bank or similar account established by
or on behalf of AerCo 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. No Person within AerCo Group shall modify any arrangement with
respect to any bank or similar account or the flow of cash in connection with
the Aircraft Assets other than in accordance with the Cash Management Agreement.
SECTION 6.08. Notification of Bankruptcy. If any of AerCo or the
Subsidiaries shall consider taking any action to:
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(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 AerCo or the Subsidiaries or over the whole or any part of any
properties or assets of any of AerCo or the Subsidiaries or any bankruptcy,
reorganization, compromise arrangements or insolvency of any of AerCo or the
Subsidiaries; or
(b) Make an assignment for the benefit of its creditors generally;
then AerCo 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 AerCo or the
Subsidiaries becomes aware of the intent or action of any Person (whether a
creditor or member of any of AerCo or the Subsidiaries) to appoint a trustee in
bankruptcy, liquidator or receiver, AerCo shall promptly notify the Servicer.
SECTION 6.09. Further Assurances. Each of AerCo and the Subsidiaries
agrees that at any time and from time to time upon the written request of the
Servicer, that 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.
SECTION 6.10. Communications. (a) Upon the occurrence of any change in the
officers, directors or shareholders of any Person within the AerCo Group, AerCo
shall provide prompt written notice thereof to the Servicer.
(b) Each of AerCo and each other Person within the AerCo Group shall, and
shall cause the Administrative Agent and the Cash Manager to, forward promptly
to the Servicer a copy (or, if such communication is oral, notify the Servicer
by prompt written notice) of any communication received from any Person which
relates to the Services to be provided with respect to any Aircraft Asset.
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ARTICLE 7
AERCO GROUP RESPONSIBILITY; BUDGETS
SECTION 7.01. AerCo 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 AerCo and
the Subsidiaries shall remain responsible for all matters related to its
business, operations, assets and liabilities.
SECTION 7.02. Instructions by AerCo Group. If AerCo, by majority vote of
the Directors, determines that an action being taken by the Servicer under this
Agreement is not in the best interests of the AerCo Group, then AerCo may
deliver written notice to the Servicer directing the Servicer to limit or
terminate such action or to take other action authorized or contemplated by this
Agreement (including leases, sales or disposals 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 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 AerCo 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 earlier of (i) the last day for a
response by AerCo as specified by the Servicer in its request (being not less
than 5 Business Days after the request) or (ii) the day following the next
meeting of the Directors following the request, AerCo 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 AerCo Group following notification in
writing to AerCo of the Servicer's intention to proceed in accordance with its
request.
(b) If the Servicer reasonably determines that an action to protect the
interests of AerCo Group is required before the expiration of the relevant time
period specified in Section 7.03(a), then the Servicer shall notify the
Directors of such determination and, unless otherwise directed by the Directors,
the action proposed may be deemed to be authorized in writing on behalf of AerCo
Group following notification in writing to AerCo of Servicer's intention to
proceed in accordance with its request.
(c) In relation to each payment required to be made in relation to an
Aircraft Asset and not authorized under any other provision of this Agreement,
the Servicer will submit a certificate to the Administrative Agent with a copy
to
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the Directors giving reasonable details and confirming that any required
authorization for such payment pursuant to this Agreement has been obtained.
SECTION 7.04. Operating Budget; Aircraft Asset Expenses Budget. (a) AerCo,
on behalf of AerCo 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" and, together with a One Year Period, each a "PERIOD") during the term
of this Agreement, the following proposed budgets which are to be prepared by
the Administrative Agent on behalf of AerCo:
(i) a separate lease operating budget with respect to the Aircraft
Assets distinguishing between cash and non-cash items (an "OPERATING
BUDGET"); and
(ii) a separate budget with respect to Aircraft Asset Expenses related
to the Aircraft Assets distinguishing between cash and non-cash items (an
"ASSET EXPENSES BUDGET").
(b) The initial Operating Budget for the period from the first Delivery
Date through June 30, 1999 (the "ONE YEAR INITIAL PERIOD") and through June 30,
2001 (the "THREE YEAR INITIAL PERIOD" and, together with the One Year Initial
Period, the "INITIAL PERIODS"), and the initial Asset Expenses Budget for the
One Year Initial Period and the Three Year Initial Period shall be substantially
in the forms attached hereto as Schedule 7.04(b)(1) and 7.04(b)(2), (the
"INITIAL APPROVED BUDGETS"). The forms for the Operating Budget and Asset
Expenses Budget for future Years may be modified with the consent of the
Servicer, which consent shall not be unreasonably withheld.
(c) Operating Budgets and Asset Expenses Budgets for each Period during the
term of this Agreement shall be adopted by AerCo Group in accordance with
Section 7.04(a).
(d) The Servicer shall use reasonable commercial efforts to manage the
Aircraft Assets in accordance with this Agreement so as to achieve the Initial
Approved Budget and the Approved Budget for any Period; provided that the
Servicer shall have no liability for any Losses that may be imposed on, incurred
by or asserted against any Indemnified Party arising out of a failure by the
Servicer to achieve either the Initial Approved Budgets or the Approved Budget
for any Period.
(e) In respect of each Period during the term of this Agreement after the
Initial Periods, the Administrative Agent shall prepare, and deliver to AerCo no
later than 30 days immediately preceding the commencement of each Year, a
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proposed Operating Budget and a proposed Asset Expenses Budget for such Period
together with reasonably detailed supporting information and the assumptions
underlying such proposed Operating Budget and Asset Expenses Budget. The
proposed Operating Budget and Asset Expenses Budget for each Year shall include
the Approved Budget Target, and shall supercede prior years' budgets.
(f) In connection with AerCo's approval of such proposed Operating Budget
and Asset Expenses Budget for each Period, the Servicer shall provide AerCo and
the Administrative Agent, not later than 90 days immediately preceding the
commencement of each Year, information on a monthly basis in a form to be agreed
relating to (i) Aircraft lease rates, (ii) Aircraft downtime, (iii) direct
technical expenditures (including any costs to be capitalized) relating to the
Aircraft Assets, (iv) indirect costs relating to insurance, legal, consulting
and other similar expenses and (v) such other Aircraft Assets expense-related
information (including, in the case of the Asset Expenses Budget for any One
Year Period, an estimate of the Technical Management Expenses to be incurred
during such Period (such estimate, the "TECHNICAL MANAGEMENT EXPENSES RESERVE
AMOUNT")) as may be reasonably required to prepare such budgets, in each case
including the assumptions relating thereto. The Servicer will cooperate in good
faith with the Administrative Agent to answer the Administrative Agent's
inquiries with respect to the above items and other items in connection with
preparation of the Operating Budget and the Asset Expenses Budget. The
Administrative Agent shall prepare such proposed Operating Budget and Asset
Expenses Budget and shall, where reasonable, incorporate, use and rely upon the
information and assumptions provided by the Servicer.
(g) AerCo shall have the right during the 20-day period following its
receipt of the Administrative Agent's proposed Operating Budget and Asset
Expenses Budget to express any objections it may reasonably have to the
Administrative Agent's proposed Operating Budget and Asset Expenses Budget.
During such 20-day period, AerCo (which shall also consult with the Servicer)
and the Administrative Agent shall consult in good faith to agree on a final
Operating Budget and Asset Expenses Budget for each applicable One Year Period
and Three Year Period. The Servicer shall have the right to attend and
participate in any meetings of the Directors held for the purpose of considering
and approving the final Operating Budget and Asset Expenses Budget for each
applicable One Year Period and Three Year Period. Not later than the 10 days
immediately preceding the commencement of each Year, the Board shall adopt a
final Operating Budget and Asset Expenses Budget for each applicable One Year
Period and Three Year Period which shall, where reasonable, incorporate, use and
rely upon the information and assumptions by the Servicer (the "APPROVED
BUDGET").
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(h) 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 120% of the line item amount included in the then
applicable Approved Budget for such Year for such category of Aircraft Asset
Expenses, the Servicer shall not incur such Aircraft Asset Expense without the
prior notification of the Administrative Agent. In connection with the
foregoing, the Servicer may request that the related line item amount included
in the then applicable Approved Asset Expenses Budget be increased to the
reasonably anticipated level of Aircraft Asset Expenses in such category for the
balance of the Period.
(i) If, at any time during any Period, AerCo, in its reasonable opinion,
determines that any Changed Circumstance shall have occurred and be continuing,
AerCo may notify the Servicer that such Changed Circumstance has occurred, and
the Administrative Agent and AerCo may modify the Approved Budget in a manner
reasonably necessary or appropriate to reflect such Changed Circumstance,
provided that any such modification shall not become effective unless and until
AerCo shall have given the Servicer at least 15 days prior written notice of
such modification, provided further that during the 15 day period following the
effectiveness of such notice, the Servicer shall have the opportunity to express
any objections it may reasonably have to the proposed modification and AerCo
shall negotiate in good faith with the Servicer to agree on such modification
(it being understood that AerCo shall not be obligated to alter its proposed
modification). In addition, if AerCo notifies the Servicer that a Changed
Circumstance has occurred, then upon the request of AerCo, the Servicer shall
develop, in consultation with AerCo, within the 30 days following such request,
an extraordinary plan (an ("EXTRAORDINARY PLAN"). The Servicer shall implement
such Extraordinary Plan.
(j) Notwithstanding the foregoing, the Approved Budgets shall not be
modified in any manner (including pursuant to an Extraordinary Plan) unless: (i)
AerCo Group shall have funds available to satisfy fully any financial obligation
that may arise from compliance with such modification; (ii) such modification
shall be consistent with, and shall not in any manner reduce, limit or
circumscribe, the delegation to the Servicer pursuant to this Agreement of a
practicable and workable level of autonomy, authority and responsibility with
respect to the performance of the Services; and (iii) such modification shall be
consistent with the express terms of this Agreement and any Aircraft Assets
Related Document then applicable to any of the Aircraft Assets.
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SECTION 7.05. Transaction Approval Requirements. (a) Consistent with the
overall business objectives of AerCo Group with respect to the Aircraft Assets,
and with the delegation to the Servicer by AerCo 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 AerCo:
(i) except as required in accordance with the terms of any Lease
existing as of the date hereof, sell (or enter into any agreement to sell)
or otherwise dispose of any Aircraft or any engine forming part of the
Aircraft Assets;
(ii) enter into any new Lease (or any renewal or extension of an
existing Lease) of an Aircraft Asset if such Lease shall not comply with
the covenants of the Indenture (as summarized or set forth in Annex 2
hereto) and any amendments, modifications or supplements thereto or such
other covenants specifically relating to Leases as AerCo shall identify to
the Servicer in writing and provide the Servicer with copies thereof;
(iii) terminate any Lease or Leases to any single Lessee or related
Lessees with respect to any Aircraft having an aggregate depreciated net
book value on the books of the relevant Person in AerCo Group in excess of
$100,000,000;
(iv) unless provided for in the then current Approved Budget, enter
into any contract for the modification or maintenance of any Aircraft (A)
if the costs to be incurred thereunder by AerCo Group exceed the greater of
(1) the estimated aggregate cost of a heavy maintenance "D" check for the
airframe and the equivalent for engines for Aircraft of the type in
question and (2) the amount of the available maintenance reserve or other
collateral under the applicable Lease or (B) if such modification or
maintenance shall be outside the ordinary course of AerCo Group's business;
(v) enter into on behalf of AerCo or any of the Subsidiaries, any
capital commitment or confirm any order or commitment to acquire, or
acquire on behalf of AerCo Group, Aircraft or engines with any aircraft or
engine manufacturers or other third party;
(vi) issue any guarantee on behalf of, or otherwise pledge the credit
of any Person within AerCo Group other than guarantees by a member of AerCo
Group of the Lease obligations of another member of
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AerCo Group and other than with respect to trade payables in the ordinary course
of AerCo Group's business;
(vii) enter into any agreement for a particular service costing in
excess of $50,000 for such service to be provided in respect of Aircraft
Assets by third parties, the cost of which is to be borne by AerCo Group,
except in each case to the extent that the same is an Aircraft Asset
Expense provided for in the then applicable Approved Budget; or
(viii) on behalf of any Person within AerCo 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 AerCo Group
(other than with Persons within AerCo Group) shall be on an arm's length basis
and on fair market value terms, unless otherwise agreed by AerCo Group or
directed by AerCo Group in accordance with Section 7.02.
(c) The transaction approval requirements (the "TRANSACTION
APPROVAL REQUIREMENTS") set forth in this Section 7.05 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.
SECTION 7.06. Approved Budgets and Transaction Approval Requirements.
Except as set forth in Section 7.05(a), no transaction entered into by the
Servicer on behalf of any Person within the AerCo Group in connection with the
performance by the Servicer of the Services shall require the approval of any
Person within the AerCo Group or their respective Directors or committees
thereof;
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 occurrence of the Delivery Date of such Aircraft Asset, and
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(b) with respect to AerCo, the Servicer and the entities listed on
Appendix A to this Agreement, the execution hereof by those parties.
ARTICLE 9
SERVICING FEES; EXPENSES
Section 9.01. Servicing Fees. In consideration of the Servicer's
performance of the Services, AerCo shall pay to the Servicer servicing fees
consisting of the fees set forth below (collectively, the "SERVICING FEES"):
(a) Section 9.02 (the "RETAINER FEE");
(b) Section 9.03 (the "RENTAL FEE");
(c) Section 9.04 (the "INCENTIVE FEE"); and
(d) Section 9.05 (the "BASE SALES FEE" and the "SALES INCENTIVE FEE",
together, the "SALES FEES").
SECTION 9.02. Retainer Fee. (a) A Retainer Fee of ten basis points per
annum of the Initial Appraised Value of the Aircraft will be payable to the
Servicer monthly in arrears in twelve equal installments on or before the
Payment Date in the succeeding month. Ten percent (10%) of such Retainer Fee
will relate to the provision of technical services under Section 1.02 of
Schedule 2.02(a) to this Agreement.
(c) If and to the extent an Aircraft is sold, the Initial Appraised Value
of the Aircraft on which the Retainer Fee is calculated will be reduced by the
Initial Appraised Value of such Aircraft; provided that, solely for purposes of
calculating the Retainer Fee, the Initial Appraised Value shall not be reduced
below $250 million unless and until all of the Aircraft shall have been sold.
SECTION 9.03. Rental Fee. Subject to the provisions of Section 10.01, a
Rental Fee shall be payable for each month during the term of this Agreement by
AerCo to the Servicer equal to 1.00% (the "RENTAL FEE PERCENTAGE") of the
aggregate amount of the "RENT" (as defined in each Lease) actually paid by each
Lessee in such month or portion of a month the related Aircraft (and Additional
Aircraft in the event the Servicer has been appointed to provide the Services to
such Additional Aircraft) is owned by AerCo Group. All payments of the Rental
Fee shall be payable in arrears on the Payment Date immediately preceding the
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commencement of the second month following each such month or portion of month.
SECTION 9.04 Incentive Fee. (a) An Incentive Fee shall be payable during
the term of this Agreement by AerCo to the Servicer for the Initial Period and
each twelve month period (or other shorter fiscal period as agreed by the
parties) thereafter (each an "INCENTIVE PERIOD") in the event that certain pre
agreed financial targets are met or exceeded by AerCo in respect of any
Incentive Period. The Servicer and AerCo agree to negotiate in good faith prior
to the commencement of each Incentive Period in order to agree on a formula for
calculating the Incentive Fee, with the objective that, in the event that AerCo
meets the Approved Budget Target, the Incentive Fee will represent 30% of the
total fees (to include the Retainer Fee, the Rental Fee and the Incentive Fee)
which the Servicer receives in respect of such Incentive Period. In the event
that the Servicer and AerCo cannot agree on a formula for calculating the
Incentive Fee in respect of any Incentive Period, then the Incentive Fee shall
be an amount equal to (a) 12.5% multiplied by (b) the amount (if any) by which
the actual revenues available to repay holders of AerCo's publicly and privately
issued debt securities for such Year shall have exceeded 95% of the Approved
Budget Target. "APPROVED BUDGET TARGET" for any Year shall be determined
annually by AerCo reasonably, consistently and in good faith following
discussions with the Servicer and review of and reliance on the information
provided by the Servicer in the Operating Budget and the Asset Expenses Budget.
All payments of Incentive Fee shall be payable in arrears on the Payment Date
immediately preceding the thirteen month anniversary of the beginning of any
Year.
(b) In the event that Changed Circumstances have resulted in a
modification of the Approved Budget and of the Approved Budget Target, then the
Servicer and AerCo will modify the formula for calculating the Incentive Fee in
such a manner as to provide the Servicer with an opportunity to earn an
Incentive Fee of no less than the Incentive Fee that would have resulted from
achievement of the Approved Budget Target, provided that the Changed
Circumstances that have been the cause of the modification to the Approved
Budget have not resulted directly from actions by the Servicer in the management
of the Aircraft Assets.
SECTION 9.05. Sales Fees. (a) A Base Sales Fee shall be payable by AerCo to
the Servicer at any time during the term of this Agreement on the actual date of
sale of any of the Aircraft in the amount of (i) 1.25% multiplied by (ii) the
Target Sales Price for the sale of any Aircraft, net of transaction expenses,
provided that no Base Sales Fee shall be payable with respect to a sale in
connection with a refinancing, restructuring, reorganization or tax based
financing with respect to AerCo Group or the Aircraft if, after such sales, the
Servicer (i)
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remains as Servicer of such Aircraft; (ii) continues to receive a Retainer Fee
and a Rental Fee with respect to such Aircraft; and (iii) remains eligible to
earn a Base Sales Fee and a Sales Incentive Fee with respect to such Aircraft in
the future. "TARGET SALES PRICE" means, with respect to a sale of any Aircraft,
an amount initially equal to 90% of the Initial Appraised Value of the relevant
Aircraft, such valuations, in accordance with the appraisals of the Aircraft, to
be adjusted annually by AerCo, subject to any restrictions imposed by any
indenture or similar agreement binding AerCo Group. To the extent that the Net
Cash Proceeds from a sale exceed the Target Sales Price, then transaction
expenses shall not be deducted from the Target Sales Price for the purpose of
calculating the Base Sales Fee but will be deductible from the Net Cash Proceeds
for the purpose of calculating the Sales Incentive Fee.
(b) A Sales Incentive Fee shall be payable by AerCo to the Servicer at any
time during the term of this Agreement on the actual date of sale of any of the
Aircraft equal to (i) 10.0% multiplied by (ii) Net Gains earned on the sale of
any Aircraft. "NET GAINS" means, with respect to the sale of any Aircraft, the
amount (not less than zero) of the Net Cash Proceeds in excess of the Target
Sales Price in connection with such sale, provided that no Sales Incentive Fee
shall be payable with respect to a sale in connection with a refinancing,
restructuring, reorganization or tax based financing if, after such sale, the
Servicer; (i) remains as Servicer of such Aircraft; (ii) continues to receive a
Retainer Fee and a Rental Fee from such Aircraft; and (iii) remains eligible to
earn a Sales Fee and a Sales Incentive Fee from such Aircraft in the future.
"NET CASH PROCEEDS" means the gross cash proceeds of any sale of Aircraft net of
any break funding gains or losses directly associated with the sale of such
Aircraft and transaction costs (including transaction taxes and Servicer's
out-of-pocket expenses) and brokerage commissions.
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 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 those
incurred by third-party independent advisors hired in relation to the Aircraft;
(iv) telecommunications expenses;
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(v) advertising and promotional expenses;
(vi) legal fees and costs, other than those relating to (A) local law,
jurisdictional and tax issues, (B) the provision of legal opinions, (C)
enforcement actions, (D) litigation or (E) other matters outside the
ordinary course of business, but including, for the avoidance of doubt, the
costs associated with providing the legal services set out in Section
7.01(a) of Schedule 2.02(a);
(vii) 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;
(viii) costs of negotiating and managing the insurance arrangements
for each Aircraft Asset under the Leases, in connection with sales of
Aircraft Assets or otherwise, including all insurance renewals; and
(ix) costs in respect of technical management services provided with
respect to any Aircraft Assets as set forth in Section 1.02 of Schedule
2.02(a) (other than any such costs described in clause(b)(i) below).
(b) AerCo Group shall be responsible for all costs and expenses
relating to or associated with the Aircraft Assets other than Overhead Expenses,
("AIRCRAFT ASSET EXPENSES") which shall include, without limitation:
(i) storage, maintenance, fees and expenses in connection with
non-ordinary course technical management services, repossession (whether or
not successful) and repair expenses (all the foregoing fees and expenses,
"TECHNICAL MANAGEMENT EXPENSES") and reconfiguration and refurbishment
expenses related to Aircraft Assets, including, in each case, any 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 (in each case as approved by the
Administrative Agent on behalf of AerCo, except in the case of any
Technical Management Expenses to the extent that the aggregate amount of
such expenses incurred during the applicable One Year Period does not
exceed the Technical Management Expenses Reserve Amount for such One Year
Period) retained for any of the foregoing purposes;
(ii) insurance expense related to Aircraft Assets, including all fees
and expenses of insurance advisors and brokers;
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(iii) fees and expenses of third-party independent advisors' in
relation to the Aircraft and approved by the Administrative Agent on behalf
of AerCo;
(iv) outside legal counsel fees and expenses and other professional
expenses related to the Aircraft Assets in connection with the provision of
advice on local law, jurisdictional and tax issues, the provision of legal
opinions, enforcement actions, litigation and other matters outside the
ordinary course of business; and
(v) third-party fees and expenses incurred in connection with the
negotiation and execution of this Agreement and any amendments thereto, the
preparation of the Offering Memorandum, any Notes Offering, any financing,
restructuring or re-financing efforts, any SEC-registered public offering
and any disclosure in public filings.
(c) The Servicer shall use commercially reasonable efforts to ensure that
Aircraft Asset Expenses shall be paid directly by the Person within AerCo Group
that owns the relevant Aircraft Assets. In the event that AerCo does not approve
the payment of any Aircraft Asset Expense, the Servicer shall be entitled to
make such payment on behalf of AerCo Group and to the extent the Servicer does
so, the funds so advanced ("REIMBURSABLE EXPENSES") shall be repaid by AerCo to
the Servicer in accordance with paragraph (b) of this Section 9.06, provided
that:
(i) 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;
(ii) the relevant Aircraft Asset Expense (when added to all the
Aircraft Asset Expenses of the same category incurred to date during such
Year) shall not exceed 120% of the line item amount in the applicable
Approved Asset Expenses Budget for such Year or the Asset Expense shall
otherwise have been approved by AerCo; and
(iii) the Servicer shall have contracted for or otherwise committed
for such Aircraft Asset Expense prior to such time.
(d) Reimbursable Expenses shall be payable by AerCo to the Servicer
reasonably promptly following the payment of such Reimbursable Expenses by the
Servicer.
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ARTICLE 10
TERMS; RIGHTS TO TERMINATE; CONSEQUENCES OF TERMINATION; SURVIVAL
SECTION 10.01. Term. This Agreement shall expire on the tenth anniversary
of the Closing Date; provided that AerCo shall have the right, upon not less
than six months' written notice to the Servicer and subject to an increase in
the Rental Fee Percentage as set forth on Schedule 10.01, to extend the term of
this Agreement to the twenty-fifth anniversary of the Closing 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, AerCo and the Subsidiaries by a majority vote of the Directors shall
in accordance with this Section 10.02(a) be entitled to terminate this Agreement
with respect to one or more of the Aircraft if:
(i) the Servicer shall materially breach any of its obligations under
this Agreement and, after written notice from AerCo, the Servicer has
failed to cure such breach pursuant to Section 10.02(d); or
(ii) the Servicer ceases, or the Servicer gives notice that it intends
to cease, to be actively involved in the aircraft advisory and management
business; or
(iii) all of the public or private debt securities of AerCo are
repaid, refinanced or defeased in full in accordance with the terms of any
indenture or similar agreement binding AerCo; or
(iv) a Change of Control of the Servicer has occurred. 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) 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
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such Person or Group, will constitute a majority of the Board of Directors of
the Servicer; provided that any event described in clause (A) or (B) above will
not constitute a "CHANGE OF CONTROL" where the relevant Person or Group,
together with any relevant Affiliates or Related Persons, consists exclusively
of the Servicer, any Affiliate or any Person who is an officer, director
shareholder, employee or partner of the Servicer or any Affiliate (or an entity
controlled by any of the foregoing) as of the date of this Agreement. 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;
(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
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 100 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 100 days; or 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 to contest the filing of, any petition described in clause (A) 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;
(vi) upon six months' written notice, or upon shorter written notice
provided that the Servicer is paid the Retainer Fee, the Rental Fee (based on
Rent budgeted to be received) and the Incentive Fee (based on achievement of the
Approved Budget Target) for a six-month period after written notice of
termination is received, and the payment of the Termination Fee set forth in
Section 10.02(e) below; or
(vii) upon six months' written notice, or upon shorter written notice
provided that the Servicer is paid the Retainer Fee, the Rental Fee
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(based on Rent budgeted to be received) and the Incentive Fee (based on
achievement of the Approved Budget Target) for a six-month period after
written notice of termination is received, and the payment of an amount
equal to 50% of the Termination Fee set forth in Section 10.02(e) below,
it, at any time, either:
(A) the Servicer or any of its Affiliates is retained by an
entity or group of entities that are Affiliates (other than AerCo and
the Subsidiaries) to service a fleet of commercial jet aircraft on or
available for lease having an aggregate appraised value exceeding the
lesser of (x) $3.5 billion and (y) the amount which, at the time the
Servicer or any such Affiliate is so retained, represents 50% or more
(by appraised value) of all commercial jet aircraft serviced by the
Servicer and its Affiliates (including such fleet and the Aircraft
serviced by the Servicer) at the time of such retention; or
(B) the Servicer or any of its Affiliates acquires or makes an
equity investment or its equivalent (including an investment
representing an interest in the residual value of aircraft) in any
aircraft portfolio, securitization vehicle or other entity or group of
Affiliated entities that owns or leases commercial jet aircraft on or
available for lease serviced by the Servicer or any of its Affiliates
where (x) such investment represents more than 20% (by value) of the
total equity (including any interest in the residual value of
aircraft) of such aircraft portfolio, securitization vehicle or other
entity or group of entities and (y) the appraised value of the
relevant aircraft portfolio exceeds the lesser of (1) $2.5 billion and
(2) the amount which, at the time such investment is made, represents
35% or more (by appraised value) of all commercial jet aircraft
serviced by the Servicer and its Affiliates (including such aircraft
portfolio and the Aircraft Assets serviced by the Servicer) at the
time such investment is made.
The Servicer agrees to provide AerCo with written notice of any event
described in clause (A) or (B) above within 60 days of its occurrence.
(b) Subject to the following conditions, at any time during the term of
this Agreement, AerCo and the Subsidiaries by a majority vote of the Directors
shall, in accordance with this Section 10.02(b) be entitled to terminate this
Agreement in respect of any Aircraft to which one or more of the following
conditions apply:
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45
(i) in the case of marketing for re-lease of Aircraft, such Aircraft
has been off-lease and is reasonably available for re-lease for more than
180 days after expiry of the agreed lease marketing period; or
(ii) the Servicer fails, within a reasonable period of time (not to
exceed 180 days), to submit to AerCo a bona fide third party offer to
purchase an Aircraft after written direction from AerCo to arrange such a
sale; or
(iii) the Servicer recommends a course of action in respect of an
Aircraft Asset to AerCo which AerCo does not approve and, after negotiation
in good faith, the Servicer refuses to amend, withdraw or replace such
recommendation with one that is consistent with the performance of the
Services pursuant to this Agreement.
(c) At any time during the term of this Agreement, the Servicer shall in
accordance with this Section 10.02(c) be entitled to terminate this Agreement
if:
(i) AerCo shall fail to pay in full when due (A) any Servicing Fees
within five Business Days after the effectiveness of written notice from
the Servicer of such failure or (B) any other amount payable by any Person
within AerCo Group hereunder or under other Operative Agreement, within ten
Business Days after the effectiveness of written notice from the Servicer
of such failure; or
(ii) any Person within the AerCo Group shall fail to perform or
observe or shall violate in any material respect any material term,
covenant, condition or agreement to be performed or observed by it in
respect of this Agreement or any other Operative Document (other than with
respect to the payment obligations of AerCo referred to in clause (c)(i) of
this Section 10.02; or
(iii) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking relief
in respect of AerCo or any Subsidiary or in respect of a substantial part
of the property or assets of AerCo or any Subsidiary under Title 11 of the
Unites 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
100 days or an order or decree approving or ordering any of the foregoing
shall be entered or AerCo or any Subsidiary 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
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46
or if a petition or proceeding is presented for any of the foregoing and
not discharged within 100 days; or AerCo or any Subsidiary 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 to contest the filing of, any petition described in clause (A)
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 of
the benefit of its creditors; or
(iv) the Servicer or any of its Affiliates becomes obligated to pay
(or indemnify) Taxes as a result of its provision of the Services, (other
than Taxes on net income derived by the Servicer under this Agreement),
which Taxes it is unable to avoid using reasonable commercial efforts, and
AerCo fails to indemnify the Servicer or its Affiliate for such Taxes; or
(v) the Servicer reasonably determines that directions given by AerCo
or any Subsidiary are, or if carried out would be, unlawful under
Applicable Law.
(d)(i) Either AerCo or the Servicer, as applicable (the "TERMINATING
PARTY") may, at any time during the term of this Agreement, by written notice
("TERMINATION NOTICE") to the other (the "NON TERMINATING PARTY"), set forth its
determination to terminate this Agreement pursuant to this Section 10.02;
provided however, that, except in the case of the right of AerCo to terminate
this Agreement pursuant to Section 10.02(a)(v), this Agreement shall not
terminate until and unless a Replacement Servicer shall have been appointed and
shall have accepted such appointment in accordance with Section 10.03(d);
provided further that failure by the Terminating Party to provide such
Termination Notice shall not affect such party's rights under 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 effectiveness of
the Termination Notice (the "EFFECTIVENESS DATE"), the Non Terminating Party
shall advise the Terminating Party in writing whether the Non Terminating 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 Non Terminating
Party to deliver such notice 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 Non Terminating Party notifies (or is deemed to have notified) the
Terminating Party that it does
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not intend to cure the basis for such termination, then this Agreement shall
terminate immediately or on such later date as the Terminating Party shall have
indicated in the Termination Notice. In the event that the Non Terminating Party
notifies the Terminating Party by such fifth day that it intends to cure the
basis for such termination, then the Non Terminating 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 Non Terminating Party to
effectuate a cure in accordance with the immediately preceding sentence, this
Agreement shall terminate on the later 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 or (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(d).
(e) The Termination Fee shall be calculated as follows:
Termination Fee
(percentage of Initial
Appraised Value as of
Date of Termination: the date of termination):
-------------------- -------------------------
On or after 31 March 1998 but prior to 31 March 2001 0.20%
On or after 31 March 2001 but prior to 31 March 2003 0.15%
On or after 31 March 2003 but prior to 31 March 2005 0.10%
Thereafter Nil
SECTION 10.03. Consequences of Termination. (a) 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 AerCo any notices, reports and
communications received by it from any relevant Lessee within 30 days after
termination or expiration.
(b) AerCo 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
XxxXx.
00
00
(c) 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.
(d) (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 for a 12 month period following the termination
or expiration.
(ii) this Agreement may not be terminated with respect to the Servicer, in
either case in whole or in part, unless a Replacement Servicer has been
appointed and has accepted such appointment; provided that in the event that a
Replacement Servicer shall not have been appointed within 90 days after the
expiration or termination of this Agreement, or the removal of the Servicer with
respect to the performance of the Services for any Aircraft, the Servicer may
petition any court of competent jurisdiction for the appointment of a
Replacement Servicer.
(e) (i) 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, AerCo 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(d).
(ii) if a Replacement Servicer is appointed with respect to any Aircraft in
accordance with Section 10.03(d) and during the three-month period following the
effectiveness of such appointment such Aircraft is sold by any Person within
AerCo Group to a customer to whom the Servicer had been actively engaged in
marketing such Aircraft and with whom the Servicer had been engaged in
substantive discussions at any time during the three-month period prior to the
appointment and acceptance of such Replacement Servicer, the Servicer shall be
paid Sales Incentive Fees in respect of such Aircraft as if the Servicer had
arranged for the sale of such Aircraft. Following any such appointment of a
Replacement Servicer, the Servicer will, upon the request of AerCo, provide
AerCo with a list of customers with respect to which the Servicer had been
actively engaged in marketing such Aircraft and with which the Servicer had been
engaged in substantive discussions at any time during such three-month period.
Such list shall be treated as confidential by AerCo and shall not be disclosed
to any person other than the Directors and the Administrative Agent or used for
any
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purpose other than as a basis for determining any Sales Incentive Fees payable
to the Servicer pursuant to the first sentence of this Section 10.03(e)(ii).
(f) 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 (but no later than 30
days after the appointment and acceptance of a Replacement Servicer) return the
originals (and all copies) within its possession of all applicable Aircraft
Assets Related Documents and other documents related to the Aircraft Assets to
AerCo and shall provide access to other documentation and information relating
to the business of AerCo Group (and, to the extent practicable, copies thereof)
within its possession as is reasonably necessary to the conduct of AerCo Group's
business.
SECTION 10.04. Survival. Notwithstanding any termination or the expiration
of this Agreement, the obligations of AerCo, and the Subsidiaries under Article
9, Section 10.03, this Section 10.04, Article 11 and Section 13.08 of this
Agreement and the Servicer's obligations or limitations on liability under
Sections 3.03, 10.03, this Section 10.04, Article 11 and Section 13.08, and the
limitations on Servicer's liability under Sections 2.01(c), 2.02, 3.03, 3.04,
5.05, 5.08, 7.04(d), 13.10 and Schedule 2.02(a) shall survive such termination
or expiration, as the case may be.
ARTICLE 11
INDEMNIFICATION
Section 11.01. Indemnity. (a) Notwithstanding anything to the contrary set
forth herein or in any other Operative Agreement, AerCo and the Subsidiaries do
hereby jointly and severally assume liability for, and do hereby jointly and
severally agree to indemnify, reimburse and hold harmless on an After-Tax Basis,
the Servicer, its Affiliates and the Servicer Representatives from any and all
Losses that may be imposed on, incurred by or asserted against any such Person,
directly or indirectly, arising out of, in connection with or related to (i) the
Servicer's performance under this Agreement, errors in judgment or omissions by
the Servicer under this Agreement or any action which the Servicer is requested
to take or requested to refrain from taking by AerCo, or as contemplated by this
Agreement, by the Cash Manager or the Administrative Agent; provided that the
indemnity pursuant to this clause (i) shall not extend to (A) any Loss which is
finally adjudicated to have been caused directly by the negligence,
recklessness, fraud or wilful misconduct of the Servicer in respect of its
obligations to apply the Standard of Care or the Conflicts Standard in respect
of the performance of the
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Services or (B) any other Loss for which the Servicer has agreed to indemnify
AerCo and its Affiliates pursuant to this Agreement or (ii) any of the
circumstances described in clauses (iii) - (vi) of Section 3.03(a).
(b) Any person who may seek indemnification pursuant to Section 3.03 or
Section 11.01(a), (such person the "INDEMNIFIED PARTY") agrees to give the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY")
prompt notice of any action, claim, demand, discovery of fact, proceeding or
suit for which the Indemnified Party intends to assert a right to
indemnification under this Agreement; provided, however, that failure to give
such notification shall not affect the Indemnified Party's entitlement to
indemnification under this Section 11.01 unless and only to the extent such
failure results in actual irreparable prejudice to the Indemnifying Party.
SECTION 11.02. Procedures for Defense of Claims. (a) If a Third Party
Claim is made against the Indemnified Party, the Indemnified Party shall
promptly notify the Indemnifying Party in writing of such claim (which notice
shall include all relevant information reasonably necessary for the Indemnifying
Party to understand such claim which is in the possession or under the control
of, or can be obtained by, the Indemnified Party at the time of such notice,
subject to Applicable Laws and confidentiality obligations), and the Indemnified
Party or the Indemnifying Party (as agreed between them) will undertake the
defense thereof. The failure to notify the Indemnifying Party promptly shall not
relieve the Indemnifying Party of its obligations under Section 3.03 or Section
11.01(a) unless such failure results in actual prejudice to the Indemnifying
Party.
(b) If agreed and accepted by the Indemnified Party, the Indemnifying Party
shall within 30 days, undertake the conduct and control, through counsel of its
own choosing (subject to the consent of the Indemnified Party, such consent not
to be unreasonably withheld or delayed) and at the Indemnifying Party's sole
risk and expense, the good faith settlement or defense of such claim, and the
Indemnified Party shall cooperate fully with the Indemnifying Party in
connection therewith; provided that (i) at all times the Indemnified Party shall
be entitled to participate in such settlement or defense through counsel chosen
by it, and the fees and expenses of such counsel shall be borne by the
Indemnified Party, and (ii) the Indemnifying Party shall not be entitled to
settle such claims unless it shall have confirmed in writing the obligation of
the Indemnifying Party to indemnify the Indemnified Party for the liability
asserted in such claim.
(c) So long as the Indemnifying Party is reasonably contesting any such
claim in good faith, the Indemnified Party shall fully cooperate with the
Indemnifying Party in the defense of such claim as is reasonably required by the
Indemnifying Party. Such cooperation shall include the retention and the
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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 Indemnified Party
shall not settle or compromise any claim without the written consent of the
Indemnifying Party unless the Indemnified Party agrees in writing to forego any
and all claims for indemnification from the Indemnifying Party with respect to
such claims.
(d) If, within five days after notice of any such claim, the Indemnified
Party and the Indemnifying Party are unable to agree on which of them will
defend such Third Party Claim, the Indemnified Party will have the right to
undertake the defense, compromise or settlement of such claim.
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 Indemnified Party in connection
with any Third Party Claim, shall be reimbursed on a quarterly basis by the
Indemnifying Party upon the submission of evidence reasonably satisfactory to
the Indemnifying Party that such expenses have been incurred, without prejudice
to the Indemnifying Party's right to contest the Indemnified Party's right to
indemnification and subject to refund in the event that the Indemnifying Party
is ultimately held not to be obligated to indemnify the Indemnified Party.
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 that (i) the Servicer may delegate any
portion of its obligations to Xxxxxxx & Xxxxx Inc, or to any subsidiary of
Xxxxxxx & Xxxxx Inc. and (ii) the foregoing provisions on assignment and
delegation shall not limit the ability of the Servicer to contract with any
Person, including any of its Affiliates, for services in respect of Aircraft
Assets. Any assignment or delegation pursuant to this Section 12.01(a) shall not
require any approval pursuant to Section 7.05 as long as such assignment or
delegation is at the cost of the Servicer.
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(b) Without limiting the foregoing, any Person who shall become a successor
by assignment or otherwise of any of AerCo, 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. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given,
if to AerCo, to:
AerCo Limited
c/o GPA Administrative Services Limited
as Administrative Agent
GPA House
Xxxxxxx
Ireland
Attention: General Counsel
Fax: 000-00-000-000
and
00 Xxxxxxxxx Xxxxxx
Xx. Xxxxxx
Xxxxxx, XX0 0XX
Channel Islands
Attention: Mourant & Co. Secretaries Limited--Company Secretary
Fax: 00-0000-000-000
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
0 Xxxxxxxxx'x Xxxxx
Xxxxxx XX0X 0XX
Attention: Mr. Xxx Xxxx
Fax: 00-000-000 1400
if to Servicer, to:
Xxxxxxx & Xxxxx Limited
Oracle House
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00
Xxxxxxx Xxxxxx
Xxxxxx 0
Xxxxxxx
Attention: Managing Director
Fax: x000-0-000-0000
with a copy to:
Xxxxxxx & Xxxxx Inc.
0 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx
XX00000
Attention: General Counsel
Fax: + 0-000-000-0000
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
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 13.02. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York.
SECTION 13.03. 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 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 13.01 shall be deemed
effective service of process on such party.
SECTION 13.04. 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
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RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 13.05. 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 13.06. 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 13.07. Power of Attorney. Each of AerCo and the Subsidiaries shall
appoint the Servicer and its successors, and its permitted designees and
assigns, 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 AerCo and the Subsidiaries. The Servicer
shall be entitled to seek and obtain from each of AerCo and the Subsidiaries a
power of attorney or such other appropriate documentation in respect of the
execution of any specific deems appropriate.
SECTION 13.08. 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
confidential or proprietary information, whether of a technical, financial,
commercial or other nature, received directly or indirectly from any Person
within AerCo Group regarding AerCo Group's business or the Aircraft Assets or
the Leases, except as authorized in writing by AerCo, 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 AerCo to protect information in which AerCo 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, to the Servicer's knowledge, lawfully obtained from a
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source under no obligation of confidentiality, directly or indirectly, to any
Person within AerCo Group; (iii) was disclosed to the general public with the
approval of any Person with AerCo Group; or (iv) was developed independently by
the Servicer of 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 13.09. 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 AerCo
Group pursuant to and in accordance with the terms and conditions of this
Agreement; provided however that this Section 13.09 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.
SECTION 13.10. Reliance. The Servicer shall be entitled to rely on the
provisions of this Agreement, including Schedule 2.02(a), any Approved Budget,
any direction of, or certification by, AerCo or the Directors (or any duly
appointed committee thereof) or the Administrative Agent or the Cash Manager, to
the extent set forth in Sections 2.01(b) and 2.01(c), respectively, and the
Transaction Approval Requirements in carrying out its obligations hereunder, and
each of AerCo and each other Person within the AerCo Group hereby waives any
rights to challenge any action taken by the Servicer that is consistent with the
provisions of this Agreement (including the Standard of Care and the Conflict
Standard) including Schedule 2.02(a), any Approved Budget, any such direction or
certification or the Transaction Approval Requirements or which has been
approved by the Directors of AerCo or a Subsidiary or a duly appointed committee
thereof, the Administrative Agent or the Cash Manager.
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57
IN WITNESS WHEREOF, this Agreement has been duly executed on the date first
written above.
XXXXXXX & XXXXX LIMITED
By: Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
Title: Director
AERCO LIMITED
By: Xxxxxxxxx X. Xxxxxxx Xx.
-------------------------------
Name: Xxxxxxxxx X. Xxxxxxx Xx.
Title: Director
AERCO IRELAND LIMITED
By: Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Director
AERCO IRELAND II LIMITED
By: Xxxx Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx
Title: Director
AERCOUSA INC.
By: Xxxxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Xxxxxxxxx
00
XXXXX XXXXXXX N.V.
By: Xxxx Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx
Title: Director
AIRCRAFT LEASE PORTFOLIO
SECURITIZATION 94-1 LIMITED
By: Xxxxxx Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx Xxxxxxxx
Title: Director
ALPS 00-0 (XXXXXXX) N.V.
By: Xxxxxx Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx Xxxxxxxx
Title: Director
PERGOLA LIMITED
By: Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director
59
APPENDIX A
AerCo Ireland Limited
AerCo Ireland II Limited
AerCoUSA Inc.
AerFi Belgium N.V.
Aircraft Lease Portfolio Securitization 94-1 Limited
ALPS 00-0 (Xxxxxxx) N.V.
Pergola Limited
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SCHEDULE 2.02(a)
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 7.05 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 Offering
Memorandum.
ARTICLE 1
LEASE SERVICES
SECTION 1.01. Collections and Disbursements. In connection with each Lease
of an Aircraft Asset under which any Person within AerCo Group is the Lessor,
the Servicer will:
(a) Invoice the Lessee or otherwise arrange, as the Servicer deems
reasonably appropriate on behalf of such Person within AerCo 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, use commercially reasonable efforts to
direct the Lessee, subject to the terms of the Lease, to make such payments to
such accounts as are specified in writing by the Cash Manager and use
commercially reasonable efforts to 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 Leases and propose to the relevant Lessee or make such
adjustments to the Rents, Security Deposits, Maintenance Reserves and other
amounts as are required under the terms of the relevant Lease or that the
Servicer otherwise deems reasonably appropriate considering, among other things,
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 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. Technical Services. The Servicer will perform the following
technical services relating to the management of the technical condition of the
Aircraft Assets and using commercially reasonable efforts to apply the Standard
of Care and the Performance Objectives:
(a) Monitor the performance of maintenance obligations by Lessees under all
Leases relating to the Aircraft by including the Aircraft in the Servicer's
technical audit program (which shall include inspection of each Aircraft at
least every 18 months, attendance at major checks or inspections and maintenance
of a record of written reports generated in connection with such inspections)
consistent with practices employed from time to time by the Servicer and its
Affiliates with respect to their own aircraft and other aircraft which they
manage. The Servicer shall advise AerCo as to the content of such technical
audit program and shall advise AerCo as to any material change to such technical
audit program from time to time;
(b) Determine the air authority approval status of a proposed maintenance
program and proposed maintenance performer under any new Lease of any Aircraft
under which any Person within AerCo Group is the Lessor;
(c) Manage aircraft deliveries and re-deliveries in connection with the
commencement or termination or expiration of a Lease under which any Person
within AerCo Group is the Lessor; and
(i) arrange for the appropriate technical inspection of the Aircraft
Assets and records for the purpose of determining if the re-delivery
conditions under the Lease have been satisfied and integrated into the
maintenance program of the new lessee;
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(ii) maintain a record of all material reports and other written
materials (including any relevant reconciliation statements) received or
generated by the Servicer in connection with such inspection and provide
reasonable access to such reports and written materials to the relevant
Person within AerCo Group;
(iii) on the basis of inspection and available records, determine
whether the Lessee has complied with all required airworthiness directives
and mandatory modifications and establish the status of compliance with
airframe and engine manufacturer service bulletins and Lessee-originated
modifications undertaken, in each case with respect to the Aircraft Assets
and as required by the Lease;
(iv) (A) determine whether the Lessee has satisfied the re-delivery
conditions applicable to the Aircraft Assets 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 recommend whether AerCo should accept redelivery of the Aircraft
Assets; and
(v) determine the need for and procure and monitor the performance of
any maintenance and refurbishment of the Aircraft Assets upon redelivery,
including compliance with applicable airworthiness directives, service
bulletins and other modifications which the Servicer may deem reasonably
necessary or appropriate for the marketing of the Aircraft;
(d) Consider and, to the extent the Servicer deems reasonably necessary
or appropriate, approve any Lessee-originated modifications to any Aircraft
Assets 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 Assets or the interests of any
Person within AerCo Group; or
(iii) which are approved by XxxXx.
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(e) Determine the amount (if any) that the relevant Person within AerCo
Group 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
(f) Arrange and supervise appropriate storage and any required on-going
maintenance of any Aircraft Assets, at the expense of the relevant Person within
AerCo Group, following termination of a Lease for any reason and
redelivery of the Aircraft Asset thereunder and prior to delivery of such
Aircraft Assets to a new lessee or purchaser, on the most economic basis
reasonably commercially available and appropriate under the circumstances.
The Servicer shall generally provide the technical management services set
forth in this Section 1.02 through the use of its own staff and the use of
qualified third parties. Technical management services will be provided at the
Servicer's expense except as specified in Section 9.06(b) of the Servicing
Agreement.
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 set forth on Annex 1 to this Agreement, as the same may be
amended from time to time at the direction of AerCo;
(ii) monitor the performance of the obligations of Lessees relating to
insurance under Leases of any Aircraft Assets and ensuring that appropriate
evidence of insurance exists with respect to any Aircraft Assets
maintenance providers;
(iii) source and arrange 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 set forth on
Annex 1 to this Agreement, as the same may be amended from time to time at
the direction of AerCo;
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(iv) procure such political risk insurance for Aircraft Assets
habitually based or registered in those countries listed on Annex 1 to
this Agreement (which list has been established by AerCo and may be
modified from time to time by AerCo) and such other insurance related
thereto from the sources and with such minimum coverage amounts with
respect to hull insurance as are set forth on Annex 1 to this
Agreement, as the same may be amended from time to time at the
direction of AerCo;
(v) review the "Agreed Values" set forth on Annex 1 to this
Agreement by reference to market valuations and advise AerCo as to
whether the insurance levels should be modified;
(vi) if at any time any Aircraft Asset ceases to be insured or
any Person within AerCo Group requires insurance coverage relating to
an Aircraft for any reason, including default by the Lessee or an
Aircraft not being leased upon termination of a Lease, the
Servicer will promptly procure, at the expense of the relevant Person
within AerCo Group, alternative insurance coverage, with such minimum
coverage amounts with respect to hull and liability insurance as are
set forth on Annex 1 to this Agreement, as the same may be amended from
time to time at the direction of AerCo; and
(vii) advise AerCo of any settlement offers received by the
Servicer with respect to any claim of damage or loss in excess of
$1,000,000 with respect to an Aircraft Asset, provide AerCo with copies
of all relevant documentation related thereto and such other additional
information and advice as AerCo may reasonably request and, upon
direction from AerCo that any settlement offer related thereto is
acceptable, prepare 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 AerCo (it being understood that settlement offers with
respect to any such claims up to and including $1,000,000 may be
settled by the Servicer independently);
provided however, that in each case where insurance is to be obtained by the
Servicer, such insurance is reasonably available in the relevant insurance
market and the Servicer shall have used reasonable sourcing techniques prior to
obtaining such insurance. 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).
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(b) The Servicer shall provide to AerCo such periodic reports
regarding insurance matters relating to the Aircraft Assets as AerCo
shall reasonably request.
(c) The Servicer may engage, with the approval of AerCo, and, at
AerCo's expense, one or more insurance advisers to advise on insurance
related issues. The Servicer shall be entitled to rely reasonably on actions
taken by or recommendations of any such advisor, subject to the terms of the
relevant Lease. Any such insurance advisor may also act in the same or similar
capacities for the Servicer or its Affiliates.
SECTION 1.04. Administration. The Servicer shall administer each Lease
in accordance with its terms and as otherwise specifically addressed herein.
SECTION 1.05. Enforcement. The Servicer shall take commercially
reasonable steps to enforce the obligations to the relevant Person within AerCo
Group of the Lessee and any other parties under each Lease and under any
ancillary agreements thereto delivered by AerCo 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 AerCo 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,
providing for the 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 AerCo pursuant to Section 7.05 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
AerCo pursuant to Section 7.05(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,
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Maintenance Reserves or other amount thereunder if any such default is cured
within seven days of the date on which such payment was due.
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 or other party 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 AerCo Group of any
right or option that such Person may have with respect to any of the Aircraft
Assets or the Leases.
SECTION 1.08. Lessee Solicitations. Upon AerCo's request, with respect
to the Aircraft Assets, the Servicer shall provide assistance to the relevant
Persons within AerCo 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 (the documents referred to in clauses (a)
and (b) above are, collectively, the "LESSEE DOCUMENTATION");
SECTION 1.09. Tax Based Financings. The Servicer will cooperate with
AerCo and its advisors to structure any tax based financings, including
assisting with lessee solicitations in accordance with Section 1.08 to this
schedule 2.02(a), if so requested by AerCo.
ARTICLE 2
COMPLIANCE WITH COVENANTS
SECTION 2.01. Compliance Generally. (a) The Servicer shall take such
actions as it shall deem reasonably necessary or appropriate to keep AerCo in
compliance with its obligations and covenants under any indenture or similar
agreements binding it from time to time (the "INDENTURE") solely to the extent
that such obligations and covenants specifically relate to the status,
insurance,
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maintenance or operation of the relevant Aircraft Assets excluding, in any case,
(i) any reporting obligations in respect of any of the foregoing and (ii) any
rental or other payment or monetary obligations under such; provided, however,
that the foregoing shall only apply to (A) any Indenture covenants that are
summarised (or, in certain cases, appear as extracts) in Annex 2 to the
Servicing Agreement, to the extent such summaries (or extracts) include,
following each provision summarised (or extracted) in such Annex, the relevant
section references for each such provision from each Indenture, and which
(together with the definitions for any capitalised terms used therein) are set
forth in full in a copy of the Indenture delivered by AerCo to the Servicer,
certified by AerCo as a true and complete copy thereof (and AerCo shall promptly
provide the Servicer with all amendments, supplements and waivers thereto, so
certified). AerCo shall provide to the Servicer any instructions the Servicer
may require in the interpretation of the Indenture, on which instructions the
Servicer shall be entitled to rely in all respects, and (B) such Indenture
covenants (excluding, in any case, any such covenants relating to the
limitations on Lessee concentrations, which are treated in Section 2.02 of this
Schedule 2.02(a)) first coming into effect (including through amendments or
modifications) after the date of the Servicing Agreement, or which AerCo shall
from time to time notify the Servicer in writing, in reasonably specific detail.
(b) Nothing in this Schedule 2.02(a) or elsewhere in the Servicing
Agreement shall be deemed to constitute or be construed as (i) a delegation or
other transfer to, or an assumption by, the Servicer or any of its Affiliates of
any obligations of any Person within the AerCo Group to make any payment to any
Lessee or other Person, or to comply with any other monetary obligation, under
any Lease or (ii) a transfer to the Servicer or any of its Affiliates of any
right, title and interest in any Lease or related agreement or any Aircraft
Asset covered thereby.
SECTION 2.02. Certain Matters Relating to Concentration Thresholds. (a)
The Servicer shall use commercially reasonable efforts to comply with any
covenants specifically relating to limitations on Lessee concentration set forth
in the Indenture ("CONCENTRATION THRESHOLDS") and shall promptly inform AerCo of
any proposed transaction that it reasonably determines may result in such
Concentration Thresholds being exceeded, and AerCo 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. The Servicer shall not enter into any such transaction other
than pursuant to the terms of Section 2.02(c) below.
(b) AerCo and each Person with the AerCo Group hereby, jointly and
severally, represent and warrant to the Servicer that set forth in Annex 2
to this
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Schedule 2.02(a) are summaries of the Concentration Thresholds (including,
following each provision summarised in such Annex, the relevant section
references for each such provision from the Indenture) presently imposed under
the Indenture, which Concentration Thresholds (together with the definitions for
any capitalised terms used therein) are set forth in a full copy of the
Indenture delivered by AerCo to the Servicer, certified by AerCo as a true and
complete copy thereof (and AerCo shall promptly provide the Servicer with all
amendments, supplements and waivers thereto, so certified) and AerCo shall
provide to the Servicer any instructions the Servicer may require in the
interpretation of such Concentration Thresholds, on which instructions the
Servicer shall be entitled to rely in all respects.
(c) The Servicer shall not enter into any transaction with respect to which
it has provided notice pursuant to Section 2.02(a) until AerCo 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 Section 2.02.
ARTICLE 3
LEASE MARKETING
Section 3.01. Lease Marketing Services. The Servicer shall provide and
perform lease marketing services with respect to the Aircraft Assets and in
connection therewith is authorised:
(a) 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 AerCo Group; and
(b) To include within any commitment for a Lease of an Aircraft Asset any
intermediate Lease or Leases through any Person within AerCo Group that the
Servicer deems reasonably necessary or appropriate.
SECTION 3.02. Form of Lease. (a) 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:
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(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 then
used by the Servicer in connection with its aircraft operating leasing
services business generally (as such form of lease shall be amended from
time to time by the Servicer, subject to Section 3.02(c) below, 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").
(b) Provided that the Servicer commences the negotiation of a Lease of any
Aircraft Asset in accordance with clauses (a)(i) and (a)(ii) above, the terms
of any executed Lease may vary from the terms of the Pro Forma Lease or the
Precedent Lease employed by the Servicer in accordance with such clauses.
Subject to compliance with the terms and conditions of this Agreement, the
Servicer is authorized to execute and deliver binding Leases and related
agreements on behalf of the relevant Person within AerCo Group. It is
the intention of the parties that following the execution and delivery of any
Lease with respect to Aircraft Assets the Servicer shall deliver a copy of the
executed Lease, together with a copy thereof marked to reflect changes from the
precedent employed in accordance with the foregoing procedures, to AerCo
within 20 Business Days of such execution and delivery.
(c) Upon ten Business Days' prior written notice from AerCo (x)
requesting a copy of the then current Pro Forma Lease and (y) specifying that
such Pro Forma Lease is to be used for purposes of the annual review of the Pro
Forma Lease (the "ANNUAL REVIEW"), the Servicer shall provide AerCo 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 3.02(d) below.
(d) On or prior to each anniversary of the Closing Date and following the
Annual Review, AerCo 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 the 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
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such provision was determined to be in accordance with the terms of the
Indenture. Following any such written advice from AerCo, 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.
SECTION 3.03. Deliveries. The Servicer shall take commercially
reasonable action to 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 Leases.
SECTION 3.04. Management. The Servicer shall generally manage the
marketing services set forth in this Article 3 through the use of its own
marketing staff.
ARTICLE 4
SALES AND PURCHASES OF AIRCRAFT
SECTION 4.01. Sales Services and Authority. (a) The Servicer shall
provide and perform sales services with respect to the Aircraft Assets at, and
on a basis consistent with, the directions from time to time of AerCo, 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 AerCo Group; and
(ii) to include within any sale any intermediate Lease or Leases
through any Person within AerCo 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 AerCo pursuant to Section 7.05(a)
of this Agreement.
(b) The Servicer shall negotiate documentation of any sale and, subject to
Section 4.01(a) 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 AerCo Group.
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(c) The Servicer shall take commercially reasonable efforts to deliver any
Aircraft Asset pursuant to the terms of the documentation of the sale.
(d) In the event that AerCo directs the Servicer to arrange for the sale of
any Aircraft Asset, the Servicer will not be required to take any such action
until AerCo shall provide the Servicer with an Officer's Certificate certifying
that such sale complies with the terms of the Indenture and that the Servicer is
entitled to rely upon such certification for all purposes of this Agreement and
this Schedule 2.02(a).
(e) Notwithstanding any other provision in Section 7.05 of the Servicing
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 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 AerCo.
SECTION 4.02. Tax Based Financings. Subject to satisfaction of the
conditions set forth in clauses (i) and (ii) and (iii) of the provisos in
Sections 9.05(a) and 9.05(b) of the Servicing Agreement, the transfer of title
shall not be deemed to be a sale for the purpose of calculation of Sales Fees
pursuant to Section 9.05 of the Servicing Agreement if such transfer of title is
part of a tax based financing or a refinancing. The transfer of title shall be
deemed to be a sale for the purpose of obtaining approvals pursuant to
Section 7.05 if such transfer of title is part of a tax based financing or a
refinancing.
ARTICLE 5
MARKET AND OTHER RESEARCH
SECTION 5.01. Valuations. From time to time, but in any event at least
annually:
(a) AerCo will request, and the Servicer shall, upon such request, use
commercially reasonable efforts to obtain, current or projected valuations of
the Aircraft; and
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(b) The Servicer shall use commercially reasonable efforts to arrange for
such valuation services with respect to the Aircraft as shall be reasonably
necessary or appropriate in connection with the performance of the Services, in
each case from any internationally recognized independent appraiser chosen by
AerCo.
SECTION 5.02. Regulatory Changes. The Servicer shall:
(a) Advise AerCo on a timely basis in summary form of such information
regarding legal, regulatory and manufacturer material changes and developments
with respect to each Aircraft Asset after the relevant Delivery Date, of which
the Servicer has knowledge, which legal, regulatory and manufacturer
developments are likely to, or will, be applicable to the Aircraft Assets; and
(b) Take such commercially reasonable action as may be necessary or
appropriate to comply therewith.
SECTION 5.03. Market Research. The Servicer shall maintain research
capability and shall provide commercial aviation market industry research
reports to AerCo on a regular basis using internal and external resources where
appropriate to keep AerCo adequately informed regarding developments in the
commercial aviation industry. The reports shall include market information with
respect to commercial aviation demand in terms of traffic growth, new Aircraft
requirements and other information relevant to AerCo Group's long-term planning
with respect to Leases, purchases and sales, market conditions, industry trends
and the Aircraft Assets.
SECTION 5.04. Lessee Information. The Servicer shall provide on a timely
basis in summary form such information regarding default history, audit analysis
or other material Lessee information of which the Servicer has knowledge.
SECTION 5.05. Confidentiality. Nothing in this Article 5 or in Article 8
hereof shall require the Servicer to reveal information which is confidential to
its other clients or its business generally.
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ARTICLE 6
AIRCRAFT ASSET CASH SERVICES
Section 6.01. Accounts and Account Information. (a) EXISTING ACCOUNTS. In
the event that the Cash Manager 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") in accordance with the Cash Management
Agreement, the Cash Manager shall deliver a certificate to the Servicer
specifying in reasonable detail the modifications to be made with respect to any
such Existing Accounts and certifying that any such modifications are in
accordance with the applicable provisions of the Indenture and the Cash
Management Agreement and the Servicer shall notify the relevant Lessees of 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 the Cash Manager in the event
that any new bank accounts need to be established on behalf of any Person within
AerCo Group in connection with the execution of a new Lease and shall set forth
in reasonable detail the (i) identity of the new Lessee, (ii) Aircraft Assets
subject to such Lease and (iii) the jurisdiction of the Lessee in which such
Aircraft Assets are to be registered, and shall take such other actions as are
incidental thereto in order to give effect to the establishment of the new
accounts (the "NEW ACCOUNTS"); and, together with the Existing Accounts, (the
"BANK ACCOUNTS").
SECTION 6.02. Cash Transfers. In the event that the Cash Manager is
required to transfer funds from any Bank Account to the account of another
Person (other than any Person within AerCo 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 Cash Manager with written notice setting
forth (i)the name of the transferor, (ii) the name of the transferee, (iii) the
accounts from and to which funds are to be transferred, (iv) the amounts to be
transferred, (v) the amount of the initial payment from the Lessee and (vi) the
anticipated date of transfer. No later than the next following Business Day, the
Cash Manager shall notify the Servicer in writing whether the proposed transfer
is approved or disapproved. If approved, the Cash Manager shall cause such
transfer to be made in accordance with the terms of such written notice. If not
approved, the Cash Manager shall advise the Servicer in writing as to the
reasons therefor.
SECTION 6.03. Payments. (a) ANTICIPATED PAYMENTS. For purposes of the
calculation of the required expenses by the Cash Manager pursuant to the Cash
Management Agreement, not less than one Business Day prior to each Calculation
Date, the Servicer shall deliver to the Cash Manager a written
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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 through to 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 Cash Manager 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 6.03(a)), and shall state (i) the anticipated date of such payment, (ii)
the payee, (iii) the amount of such payment, (iv) the 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 Cash Manager shall
deliver to the Servicer a written notice of such proposed payment, restating the
date, payee and amount relating to such payment. Not later than the Business Day
prior to the date of such proposed payment, the Cash Manager shall notify the
Servicer in writing whether the proposed payment is approved or disapproved. If
such payment is approved, the Cash Manager 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 such payment is not
approved, the Cash Manager shall advise the Servicer in writing as to reasons
therefor and the Servicer shall not proceed with such transfer.
(b) UNANTICIPATED PAYMENTS. During any Monthly Payment Period the Servicer
may request in writing the Cash Manager's approval 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 Cash Manager pursuant to Section
6.03(a) with respect to such Monthly Payment Period was delivered to the Cash
Manager (whether or not such expense was reflected in the weekly list of
projected payments referenced in Section 6.03(a)). Any such request shall
specify for each such payment obligation (i) the anticipated date of such
payment, (ii) the payee, (iii) the amount of such payment, (iv) the Stated
Services Obligation and (v) the account from which such payment should be made.
Not later than the Business Day next following such request by the Servicer, the
Cash Manager shall notify the Servicer in writing whether such payment request
is approved or disapproved. If approved, the Cash Manager 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 Cash Management Agreement, the Cash Manager shall take such actions as are
necessary to cause funds sufficient to make any such payments to be transferred
as
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soon as practicable from the Collection Account to such account. Following the
transfer of such funds, the Cash Manager shall pay or cause such payments to be
made in accordance with the foregoing provisions. If such payment is not
approved, the Cash Manager shall advise the Servicer in writing as to reasons
therefor and the Cash Manager shall not proceed with such transfer.
ARTICLE 7
PROFESSIONAL AND OTHER SERVICES
Section 7.01. Legal Services. (a) The Servicer shall provide or procure
legal services, in all relevant jurisdictions, on behalf of the relevant Persons
within AerCo Group with respect to the lease or sale of the Aircraft Assets, any
amendment or modification of any Lease, the enforcement of the rights of any
Person within the 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.
(b) The Servicer shall provide such legal services by using its in house
legal staff where it shall deem appropriate and shall authorise outside counsel
to provide such legal services where it shall deem appropriate (it being
understood that while the obligations set forth in this Section 7.01 are, to the
extent possible, generally anticipated to be discharged by the Servicer without
resorting to outside counsel, the Servicer retains the flexibility to engage
outside counsel as it determines in its sole discretion to be necessary). The
cost of any outside counsel shall be borne or reimbursed and apportioned as set
forth in Section 9.06 of the Servicing Agreement. AerCo recognises, and shall
cause each other Person within AerCo Group to recognise, that from time to time
the Servicer will retain legal counsel to provide legal services on behalf of
Persons within AerCo Group and, in the event that a conflict of interest or
potential conflict of interest arises between any Person within AerCo Group and
the Servicer, AerCo agrees, and shall cause each other Person within AerCo Group
to agree, to waive any conflict of interest any such counsel may have with
respect thereto or otherwise to enable the Servicer to retain such counsel on
its own behalf.
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 or sale
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.
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ARTICLE 8
INFORMATION; REPORTS; CUSTODY
SECTION 8.01. Management Information Systems. (a) The Servicer will, so
long as and to the extent it maintains the following, provide to AerCo, the
Administrative Agent and the Cash Manager access to Servicer's management
information storage and systems, provided that such reasonable access shall only
be granted with respect to information related to the Aircraft Assets.
(b) The Servicer will from time to time, as it reasonably deems necessary,
update the management information systems with (i) data and information on a
basis consistent with the type of data and information available on such systems
as of the first Delivery Date and (ii) such other data and information as the
Servicer shall deem necessary or appropriate in connection with the performance
of the Services.
SECTION 8.02. Weekly Reports. On the last Business Day of each week the
Servicer will provide to AerCo and the Administrative Agent a report in the form
of a weekly report attached hereto as part of Schedule 8 to Schedule 2.02(a).
SECTION 8.03. Monthly Reports. Five Business Days after the first
Business Day of each month, the Servicer shall provide to AerCo and the
Administrative Agent a report in the form of a monthly report attached hereto as
part of Schedule 8 to Schedule 2.02(a).
SECTION 8.04. Quarterly Reports. Thirty Business Days after the end of
each calendar quarter the Servicer shall provide to AerCo and the Administrative
Agent a report in the form of a quarterly report attached hereto as part of
Schedule 8 to Schedule 2.02(a).
SECTION 8.05. Other Information. (a) To the extent the Servicer is in
possession of the relevant information, the Servicer shall prepare and submit to
AerCo the following information with respect to each Person within AerCo Group:
(i) information with respect to transactions relating to Aircraft Assets
necessary for each Person within AerCo Group to prepare value added tax and
other tax returns;
(ii) promptly after the occurrence thereof, notify AerCo of any accident or
incident of which the Servicer has notice involving any Aircraft Asset where (A)
the potential loss in connection therewith
70
77
exceeds the higher of the damage notification threshold under the relevant
Lease, if any, and $1,000,000 or (B) the potential liability in connection
therewith exceeds $1,000,000; and
(iii) information with respect to transactions relating to Aircraft
Assets necessary for any Person within AerCo Group to prepare statutory
returns with respect to contractors engaged by the Servicer on behalf of
such Person, to the extent such information is reasonably available to the
Servicer.
(b) The Servicer will make available to AerCo and its advisers and
designees, at reasonable times and upon reasonable notice, the Servicer
Representatives in order to provide to AerCo and its advisers and designees
information with regard to the Aircraft Assets and Leases (including in response
to inquiries with respect to the reports provided to AerCo by the Servicer
pursuant to Sections 8.02, 8.03 and 8.04 hereof) which may reasonably be
required by AerCo. In furtherance thereof, in order to facilitate each Person
within AerCo Group carrying out its responsibilities upon the request of AerCo,
the Servicer shall make available (through physical attendance or telephonic
conference) such officers and employees as AerCo shall reasonably deem
appropriate for board meetings of AerCo and the Subsidiaries and meetings with
AerCo's representatives to provide to AerCo information, and response to
inquiries, with respect to the reports provided to AerCo by the Servicer
pursuant to Sections 8.02, 8.03 and 8.04 or otherwise.
SECTION 8.06. Ratings Information. Upon request by AerCo, the Servicer
shall provide to AerCo such information and data about the Aircraft Assets and
other commercially reasonable assistance relating to the Aircraft Assets as
AerCo shall deem reasonably necessary or appropriate in connection with
providing information to the rating agencies for AerCo's debt ratings.
SECTION 8.07. Custody of Documents. The Servicer agrees to hold all
original documents of any Person within AerCo Group that relate to the Aircraft
Assets in the possession of the Servicer in safe custody and according to the
commercially reasonable instructions of AerCo.
SECTION 8.08. Public Filing Information. (a) The Servicer shall provide
to AerCo such information and data relating to the Servicer, the Services and
the Aircraft Assets as AerCo shall reasonably request to comply with its public
or statutory reporting and filing obligations.
(b) Notwithstanding anything herein to the contrary, each of AerCo and each
Person within AerCo Group, jointly and severally, acknowledges and agrees
71
78
that it shall be responsible for, and the Servicer shall not have any
responsibility for: (i) any reporting or compliance obligations to any holders
of outstanding Notes, any liquidity facility providers or any Governmental
Authorities and (ii) the preparation of any forecasts (except for the mechanical
preparation thereof to the extent expressly specified in Section 8.03 of this
Schedule 2.02(a)) and for all instructions, discretion and judgments related to
such reporting or compliance obligations and forecasts, and each of AerCo and
each Person within AerCo Group, jointly and severally, agrees to indemnify the
Servicer and its Affiliates in respect of the foregoing as further provided in
Article 11 of the Servicing Agreement.
72
79
SCHEDULE 4.01
AIRCRAFT
73
80
81
AERCO PORTFOLIO
INITIAL
APPRAISED
VALUE AT MARCH
DATE OF 1,1998
OWNER COMPANY TYPE MSN MANUFACTURE ($000'S)
1 Alps 94-1 Limited B757-200 26153 Aug-92 42.373
2 Alps 94-1 Limited B737-300 26068 Jun-92 25.683
3 AerCo Ireland 11 Limited A300B4-200 240 May-83 13.317
4 Alps 94-1 Limited B737-300 24465 Aug-89 21.953
5 Alps 94-1 Limited B737-300 24677 Mar-90 21,943
6 Alps 94-1 Limited B737-400 25764 Jul-92 27.353
7 Alps 94-1 Limited B737-400 25765 Jul-92 27.500
8 Alps 94-1 Limited MD83 49952 Dec-91 22.920
9 AerCo Ireland Limited A320-200 85 Feb-90 26.777
10 Alps 94-1 Limited B737-400 24685 May-90 25.710
11 Alps 94-1 Limited F100 11258 Dec-89 14.207
12 Alps 94-1 Limited F100 11342 Aug-91 16.343
13 Alps 94-1 Limited B767-300ER 24999 Feb-91 63.130
14 Alps 94-1 Limited MD83 49627 Apr-89 21.283
15 Alps 94-1 Limited MD83 49790 Oct-89 20.820
16 Alps 94-1 Limited B757-200 26158 Feb-93 43.097
17 Alps 94-1 Limited A320-200 299 Apr-92 31.290
18 Alps 94-1 Limited A320-200 362 Nov-92 31.527
19 AerCo Ireland Limited B737-400 23868 Oct-88 24.214
20 Alps 94-1 Limited A320-200 391 Feb-93 32.883
21 Alps 94-1 Limited B737-300 24909 Apr-91 24.157
22 AerCo Ireland Limited B737-400 23979 Jan-89 24.667
23 Alps 94-1 Limited B737-300 24908 Mar-91 24.367
24 Alps 94-1 Limited B737-400 24904 Feb-91 26.430
25 AerCo Ireland Limited B737-400 26066 Jun-92 28.143
26 AerCo Ireland Limited F100 11341 Aug-91 16.163
27 AerCo Ireland Limited F100 11350 Apr-92 16.710
28 Alps 94-1 Limited F100 11351 Sep-91 16.313
29 Alps 94-1 Limited B767-300ER 24947 Mar-91 62.470
30 Alps 94-1 Limited B757-200 26152 Aug-92 41.680
31 Alps 94-1 Limited A320-200 403 Dec-93 32.083
32 AerCo USA Inc DC8-71F 46064 Mar-92 16.020
33 AerCo USA Inc DC8-71F 46040 Mar-91 15.997
34 AerCo Ireland Limited B747-200B 22496 Oct-81 31.270
35 Alps 94-1 Limited B737-500 26067 Jun-92 21.180
951.973
82
Account Name: GPA Belgium NV
Bank: Citibank Brussels
Account No.: 000-0000000-00
Currency: Belgian Franc
Account Name: GPA Belgium NV
Bank: Citibank Brussels
Account No.: 000-0000000-00
Currency: US Dollar
83
SCHEDULE 7.04(b)(1)
ONE YEAR INITIAL PERIOD
OPERATING BUDGET AND ASSET EXPENSES BUDGET
76
84
AERCO BUDGET -- ONE YEAR PERIOD
85
AERCO GROUP-BUDGET [ONE YEAR PERIOD]
-----------------------------------------------------------------------------
INCOME STATEMENT
Sep-98 Dec-98 Mar-99 Jun-99 FY99
Gross Revenue 0.0 0.0 0.0 0.0 0.0
Downtime/Bad Debts 0.0 0.0 0.0 0.0 0.0
Depreciation 0.0 0.0 0.0 0.0 0.0
Interest Expense-Cash 0.0 0.0 0.0 0.0 0.0
Interest Expense Accrued 0.0 0.0 0.0 0.0 0.0
Interest Expense-Other 0.0 0.0 0.0 0.0 0.0
Sales Income 0.0 0.0 0.0 0.0 0.0
Other Leasing Costs 0.0 0.0 0.0 0.0 0.0
Interest Income 0.0 0.0 0.0 0.0 0.0
Xxxxxxx & Xxxxx Fees 0.0 0.0 0.0 0.0 0.0
GPA Fees 0.0 0.0 0.0 0.0 0.0
Other Overheads 0.0 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Net Loss 0.0 0.0 0.0 0.0 0.0
===== ===== ===== ===== =====
86
SCHEDULE 7.04(B)(2)
THREE YEAR INITIAL PERIOD
OPERATING BUDGET AND ASSET EXPENSES BUDGET
77
87
AERCO BUDGET -- THREE YEAR PERIOD
88
AERCO GROUP -- BUDGET [THREE YEAR PERIOD]
-------------------------------------------------------------------------------
INCOME STATEMENT
FY 1999 FY 2000 FY 2001
Gross Revenue........................... 0.0 0.0 0.0
Downtime/Bad Debts...................... 0.0 0.0 0.0
Depreciation............................ 0.0 0.0 0.0
Interest Expense - Cash................. 0.0 0.0 0.0
Interest Expense Accrued................ 0.0 0.0 0.0
Interest Expense - Other................ 0.0 0.0 0.0
Sales Income............................ 0.0 0.0 0.0
Other Leasing Costs..................... 0.0 0.0 0.0
Interest Income......................... 0.0 0.0 0.0
Xxxxxxx & Xxxxx Fees.................... 0.0 0.0 0.0
GPA Fees................................ 0.0 0.0 0.0
Other Overheads......................... 0.0 0.0 0.0
------- ------- -------
Net Loss................................ 0.0 0.0 0.0
======= ======= =======
89
AERCO GROUP -- BUDGET [THREE YEAR PERIOD]
-----------------------------------------------------------------------------
BALANCE SHEET
Jun-99 Jun-00 Jun-01
Aircraft GBV.......................... 0.0 0.0 0.0
Depreciation.......................... 0.0 0.0 0.0
Aircraft NBV.......................... 0.0 0.0 0.0
------ ------ ------
0.0 0.0 0.0
Deferred Financing Costs.............. 0.0 0.0 0.0
Receivables........................... 0.0 0.0 0.0
Cash.................................. 0.0 0.0 0.0
------ ------ ------
0.0 0.0 0.0
====== ====== ======
Retained Earnings..................... 0.0 0.0 0.0
Subclass E1 Principal................. 0.0 0.0 0.0
Subclass D1 Principal................. 0.0 0.0 0.0
Total Bonds Outstanding............... 0.0 0.0 0.0
Creditors/Accruals.................... 0.0 0.0 0.0
Maintenance........................... 0.0 0.0 0.0
Lessee Deposits....................... 0.0 0.0 0.0
------ ------ ------
Other Liabilities 0.0 0.0 0.0
------ ------ ------
0.0 0.0 0.0
====== ====== ======
90
AERCO GROUP -- BUDGET [THREE YEAR PERIOD]
-------------------------------------------------------------------------------
CASH FLOW
Jun-99 Jun-00 Jun-01
CASH INFLOWS
Net Revenue............................. 0.0 0.0 0.0
Lessee Deposit Receipts................. 0.0 0.0 0.0
Interest Received....................... 0.0 0.0 0.0
------ ------ ------
Total Inflows........................... 0.0 0.0 0.0
CASH OUTFLOWS
Net Swap/Swaption Payments.............. 0.0 0.0 0.0
Lessee Deposit Returns.................. 0.0 0.0 0.0
Xxxxxxx & Xxxxx Fees.................... 0.0 0.0 0.0
GPA Fees................................ 0.0 0.0 0.0
Overhead Payments....................... 0.0 0.0 0.0
Other Leasing Costs..................... 0.0 0.0 0.0
------ ------ ------
Total Outflows.......................... 0.0 0.0 0.0
Bond Interest Payments.................. 0.0 0.0 0.0
Bond Principal Payments................. 0.0 0.0 0.0
------ ------ ------
Distributions to Bond Holders........... 0.0 0.0 0.0
Opening Cash............................ 0.0 0.0 0.0
Total Inflows........................... 0.0 0.0 0.0
Total Outflows.......................... 0.0 0.0 0.0
Distributions to Bond Holders........... 0.0 0.0 0.0
------ ------ ------
Closing Cash............................ 0.0 0.0 0.0
====== ====== ======
91
AERCO GROUP -- BUDGET [ONE YEAR PERIOD]
--------------------------------------------------------------------------------
CASH FLOW
Jun-98 Sep-98 Dec-98 Mar-99 FY99
CASH INFLOWS
Net Revenue.................... 0.0 0.0 0.0 0.0 0.0
Lessee Deposit Receipts........ 0.0 0.0 0.0 0.0 0.0
Interest Received.............. 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Total Inflows.................. 0.0 0.0 0.0 0.0 0.0
CASH OUTFLOWS
Net Swap/Swaption Payments..... 0.0 0.0 0.0 0.0 0.0
Lessee Deposit Returns......... 0.0 0.0 0.0 0.0 0.0
Xxxxxxx & Xxxxx Fees........... 0.0 0.0 0.0 0.0 0.0
GPA Fees....................... 0.0 0.0 0.0 0.0 0.0
Overhead Payments.............. 0.0 0.0 0.0 0.0 0.0
Other Leasing Costs............ 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Total Outflows................. 0.0 0.0 0.0 0.0 0.0
Bond Interest Payments......... 0.0 0.0 0.0 0.0 0.0
Bond Principal Payments........ 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Distributions to Bond Holders.. 0.0 0.0 0.0 0.0 0.0
Opening Cash................... 0.0 0.0 0.0 0.0 0.0
Total Inflows.................. 0.0 0.0 0.0 0.0 0.0
Total Outflows................. 0.0 0.0 0.0 0.0 0.0
Distributions to Bond Holders.. 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Closing Cash................... 0.0 0.0 0.0 0.0 0.0
====== ====== ====== ====== ======
92
AERCO GROUP -- BUDGET [THREE YEAR PERIOD]
--------------------------------------------------------------------------------
BALANCE SHEET
Jul-98 Sep-98 Dec-98 Mar-99 Jun-99
Aircraft GBV................... 0.0 0.0 0.0 0.0 0.0
Depreciation................... 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Aircraft NBV................... 0.0 0.0 0.0 0.0 0.0
Deferred Financing Costs....... 0.0 0.0 0.0 0.0 0.0
Receivables.................... 0.0 0.0 0.0 0.0 0.0
Cash........................... 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
0.0 0.0 0.0 0.0 0.0
====== ====== ====== ====== ======
Retained Earnings.............. 0.0 0.0 0.0 0.0 0.0
Subclass E1 Principal.......... 0.0 0.0 0.0 0.0 0.0
Subclass D1 Principal.......... 0.0 0.0 0.0 0.0 0.0
Total Bonds Outstanding........ 0.0 0.0 0.0 0.0 0.0
Creditors/Accruals............. 0.0 0.0 0.0 0.0 0.0
Maintenance.................... 0.0 0.0 0.0 0.0 0.0
Lessee Deposits................ 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
Other Liabilities.............. 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------
0.0 0.0 0.0 0.0 0.0
====== ====== ====== ====== ======
93
SCHEDULE 10.01
RENTAL FEE PERCENTAGE
In the event that AerCo exercises its right to extend the term of the
Servicing Agreement pursuant to the provisions of Section 10.01, then the
Rental Fee Percentage, to be calculated on July 15, 2008 and applicable to each
month during the remaining term of the Servicing Agreement, shall be the
greater of:
(a) 1.5% and
(b) 1.0% plus the Inflation Adjustment (calculated as set forth below)
provided that in no event shall the Rental Fee Percentage exceed 2.0%.
The Inflation Adjustment shall be calculated as follows:
[(CP12/CP11) - 1] x Year 1 Fees / Year 1 Rentals
where:
CP11 is the level of the US Consumer Price Index expressed as an index
number as of June 1998
CP12 is the level of the US Consumer Price Index expressed as an index
number as of June 2008
Year 1 Fees is the actual amount of the Retainer Fee and the Rental Fee
paid by AerCo to the Servicer from July 15, 1998 to July 15, 1999
Year 1 Rentals is the actual aggregate amount of Rent paid by the Lessees
from July 15, 1998 to July 15, 1999
78
94
ANNEX 1
INSURANCE
1. MINIMUM COVERAGE AMOUNTS:
(a) HULL INSURANCE: With respect to any Aircraft, hull insurance and
political risk insurance, if necessary, shall be maintained in an amount equal
to the greatest of:
(i) the Note Target Price for such Aircraft (as such Note Target Price is
defined in any Indenture and as set forth on Schedule 1 hereto, as the same
shall be amended in writing from time to time by AerCo);
(ii) the appraised value for such Aircraft (as such appraised value is set
forth in Schedule 1 hereto, as the same shall be amended in writing from time to
time by AerCo;
(iii) 110% of the net book value of such Aircraft (as such net book value
is set forth in Schedule 1 attached hereto, as the same shall be amended in
writing from time to time by AerCo); and
(iv) such greater amounts as may be directed in writing by AerCo from time
to time; provided however, that in the event that an agreement with respect to
hull insurance or political risk insurance, if necessary, 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 the amounts described
in clause (i) above and this clause (iv). Spare engines and parts, if any, shall
be insured on the basis of their "replacement costs".
(b) LIABILITY INSURANCE: Liability insurance shall be maintained 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 AerCo.
MODEL MINIMUM LIMIT
F100 US $300 million
B737 US $400 million
MD83 US $400 million
A320 US $400 million
A300 US $550 million
B767 US $550 million
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95
B757 US $450 million
B747 US $750 million
DC8 US $450 million
2. 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 market practices in the
aircraft insurance industry generally) consistent with the Servicer'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 the Servicer's commercially reasonable practice for its own
aircraft with any difference between such amount and $200,000 (or such other
amount as AerCo may direct in writing from time to time), taking into account
any deductible insurance procured, to be notified to AerCo by the Servicer.
3. 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 the
Servicer with respect to its own aircraft.
4. 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
AerCo.
5. 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.
80
96
6. 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.
81
97
PAGE
SCHEDULE 4.02
DOCUMENTS
97
98
Schedule 1 to Annex A
AERCO GROUP PORTFOLIO
July 15, 1998 01-Mar-98 July 15, 1998
Aircraft Serial Net Book Value Net Book Value Initial Appraised Note Target Greatest of
No. Type Number @ July 15, 1998 @110% Value Price 1/2/3
1 2 3
880,000 --
-----------------------------------------------------------------------------------------------------------------------------
1 B757-200 26153 42,373 46,610 42,373 40,345 46,610
2 B737-300 26068 25,683 28,251 25,683 24,453 28,251
3 A300-84-200 240 13,317 14,649 13,317 12,679 14,649
4 B737-300 24465 21,953 24,148 21,953 20,902 24,148
5 B737-300 24677 21,943 24,137 21,943 20,893 24,137
6 B737-400 25764 27,353 30,088 27,353 25,044 30,088
7 B737-400 25765 27,500 30,250 27,500 26,184 30,250
8 MD83 49952 22,920 25,212 22,920 21,825 25,212
9 A320-200 85 26,777 29,455 26,777 25,495 29,455
10 B737-400 24685 25,710 28,281 25,710 24,479 28,281
11 F100 11258 14,207 15,628 14,207 13,527 15,628
12 F100 11342 16,343 17,977 16,343 15,561 17,977
13 5767-300ER 24999 63,130 69,443 63,130 60,108 69,443
14 MD83 49627 21,283 23,411 21,283 20,264 23,411
15 MD83 49790 20,820 22,902 20,820 19,823 22,902
16 B757-200 26158 43,097 47,407 43,097 41,034 47,407
17 A320-200 299 31,290 34,419 31,290 29,792 34,419
18 A320-200 362 31,527 34,680 31,527 30,018 34,680
19 B737-400 23858 24,214 26,635 24,214 23,055 26,635
20 A320-200 991 32,883 36,171 32,883 31,309 36,171
21 B737-300 24909 24,157 26,573 24,157 23,001 26,573
22 B737-400 23979 24,667 27,134 24,667 23,486 27,134
23 B737-300 24906 24,367 26,804 24,367 23,200 26,804
24 B737-400 24904 26,430 29,073 26,430 25,165 29,073
25 B737-400 26066 28,143 30,957 29,143 26,796 30,957
26 F100 11341 16,163 17,779 16,163 15,389 17,779
27 F100 11350 16,710 18,381 16,710 15,910 18,381
28 F100 11351 16,313 17,944 16,313 15,532 17,944
29 B767-300ER 24947 62,470 68,717 62,470 59,479 68,717
30 B757-200 26152 41,680 45,848 41,680 39,685 45,848
31 A320-200 403 32,083 35,291 32,083 30,547 35,291
32 DC8-71F 46064 16,020 17,622 18,020 15,253 17,622
33 B747-200B 22496 31,270 34,397 31,270 29,773 34,397
34 B737-500 26067 21,180 23,298 21,180 20,166 23,298
35 DC8-71F 46040 15,997 17,597 15,997 15,231 17,597
951,973 1,047,170 951,973 906,400 1,047,170
** Sum of Subclass X-0, X-0, X-0, X-0 and D-1 Notes on July 15, 1999.
99
ANNEX 2
INDENTURE COVENANTS
SECTION 5.02(a) OF INDENTURE
No Release of Obligations. The company will not take, or knowingly permit
any subsidiary to take, any action which would amend, terminate (other than any
termination in connection with the replacement of such agreement with an
agreement on terms substantially no less favorable to the Company and its
subsidiaries than the agreement being terminated) or discharge or prejudice the
validity or effectiveness of the Indenture (other than as permitted therein),
the Security Trust Agreement, the Cash Management Agreement, the Administrative
Agency Agreement or any Servicing Agreement or permit any party to any such
document to be released from such obligations, except, in each case, as
permitted or contemplated by the terms of such document and provided that such
actions may be taken or permitted, and such releases may be permitted, if the
Company shall have first obtained an authorizing resolution of the Directors of
the Company determining that such action, permitted action or release does not
materially adversely affect the interests of the Noteholders, and provided
further, that in any case (i) the Company will not take any action which would
result in any amendment or modification to the conflicts standard or duty of
care in such agreements and (ii) there must be at all times an administrative
agent, a cash manager and, unless a Servicer resigns prior to the appointment of
a replacement servicer as a result of any failure to pay amounts due and owing
to it, one or more Servicers with respect to all Aircraft in the Portfolio.
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SECTION 5.02(b) OF INDENTURE
Limitation on Encumbrances. Under the terms of the Indenture, the Company
will not, and will not permit any subsidiary to, create, incur, assume or suffer
to exist any mortgage, pledge, lien, encumbrance, charge or security interest
(in each case, an "ENCUMBRANCE"), including,without limitation, any conditional
sale, any sale with recourse against the seller or any affiliate of the seller,
or any agreement to give any security interest over or with respect to any of
the Company's or subsidiary's assets (excluding Segregated Funds) including,
without limitation, all ordinary shares and preferred shares, any options,
warrants and other rights to acquire such shares of capital stock ("STOCK") and
any indebtedness of any subsidiary held by the Company or a subsidiary thereof.
Notwithstanding the foregoing, the Company may create, incur, assume or
suffer to exist (i) any Permitted Encumbrance, (ii) any security interest
created or required to be created under the Security Trust Agreement, (iii)
Encumbrances over rights in or derived from leases, upon confirmation from the
Rating Agencies in advance that such action or event will not result in the
lowering or withdrawal of any rating assigned by any Rating Agency to any of the
AerCo Notes then Outstanding, provided that any transaction or series of
transactions resulting in such Encumbrance, taken as a whole, does not
materially adversely affect the amount of Collections that would have been
received by the Company from such Lease had such Encumbrance not been created,
(iv) Encumbrances over any Aircraft, Leases or funds on deposit in the Tax
Defeasance Account or investments in respect thereof created in connection with
any Permitted Tax-Related Disposition or (v) any other Encumbrance the validity
or applicability of which is being contested in good faith in appropriate
proceedings by the Company or any of its subsidiaries.
As used in this Offering Memorandum, "AFFILIATE" means, with respect to any
person, any other person that, directly or indirectly, controls, is controlled
by or is under common control with, such person or is a director or officer of
such person; "CONTROL" of a person means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting Stock, by contract or
otherwise, and "PERMITTED ENCUMBRANCE" means (i) any lien for taxes, assessments
and governmental charges or levies not yet due and payable or which are being
contested in good faith by appropriate proceedings; (ii) in respect of any
Aircraft, any liens of a repairer, carrier or hanger keeper arising in the
ordinary course of business by operation of law or any engine or parts-pooling
arrangements or other similar lien; (iii) any permitted lien or encumbrance on
any Aircraft, Engines or parts as defined under any Lease thereof (other than
liens or encumbrances created by the relevant lessor); (iv) any liens created by
or through or arising from debt or liabilities or any act or omission of any
Lessee in each case either in contravention of the relevant Lease (whether or
not such Lease has been terminated) or without the consent of the relevant
Lessor (provided that if such Lessor becomes aware of any such lien, such Lessor
shall use commercially reasonable efforts to have any such liens lifted); (v)
any head lease, lease, conditional sale agreement or Purchase Option existing on
the Closing Date, with respect to the Initial Aircraft, or, with respect to any
Additional Aircraft, on the date such Aircraft is acquired, or Aircraft
Agreement meeting the requirements of clauses (iii), (v) or (vi) of the second
paragraph under the "Limitation on Aircraft Sales" covenant; (vi) any lien for
air navigation authority, airport tending, gate or handling (or similar) charges
or levies; (vii) any lien created in favor of the Company, or any of its
subsidiaries or the Security Trustee and (viii) any lien not referred to in (i)
through (vii) above which would not adversely affect the owner's rights and does
not exceed the greater of 1% of the aggregate Initial Appraised Value of the
Portfolio and $250,000 per Aircraft.
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SECTION 5.02(c) OF INDENTURE
Limitation on Restricted Payments. Under the terms of the Indenture, the
Company will not, and will not permit any of its subsidiaries, to (i) declare
or pay any dividend or make any distribution on its Stock held by persons other
than the Company or any of its subsidiaries; (ii) purchase, redeem, retire or
otherwise acquire for value any shares of Stock of the Company or any of its
subsidiaries held by and on behalf of persons other than the Company, any of
its subsidiaries or other Persons permitted under the requirements of (ii)(B)
under the "Limitation on the Issuance. Delivery and Sale of Capital
Stock" covenant; (iii) make any interest, principal or premium payment on the
AerCo Notes or make any voluntary or optional repurchase, defeasance or other
acquisition or retirement for value of Indebtedness of the Company or any of
its subsidiaries that is not owed to the Company or any of its subsidiaries
other than in accordance with, "-- Payment of Principal and Interest" or (iv)
make any investments (other than Permitted Account Investments, investments
permitted under the "Limitation on Engaging in Business Activities" covenant,
Allowed Restructurings and investments in any subsidiaries that own or lease
Aircraft).
The term "INVESTMENT" for purposes of the above restriction shall mean any
loan or advance to a person or entity, any purchase or other acquisition for any
capital stock, warrants, rights, options, obligations or other securities of
such person or entity, any capital contribution to such person or entity or any
other investment in such person or entity. For the avoidance of doubt,
"investment" shall not include any obligation of a purchaser of an Aircraft to
make deferred or installment payments pursuant to any Aircraft Agreement
specified in clauses (iii), (v) or (vi) of the second paragraph under
"Limitations on Aircraft Sales" below so long as AerCo Group retains a security
interest in the relevant Aircraft until all such obligations are discharged.
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SECTION 5.02(d) OF INDENTURE
Limitation on Dividends and Other Payment Restrictions. Under the terms of
the Indenture, the Company will not, and will not permit any of its
subsidiaries to, create or otherwise suffer to exist any consensual encumbrance
or restriction of any kind on the ability of any subsidiary to (i) declare or
pay dividends or make any other distributions permitted by applicable law, or
purchase, redeem or otherwise acquire for value, the Stock of the Company or
such subsidiary, as the case may be, (ii) pay any Indebtedness owed to the
Company or such subsidiary, (iii) make loans or advances to the Company or such
subsidiary or (iv) transfer any of its property or assets to the Company or any
other subsidiary thereof.
The foregoing provisions shall not restrict any consensual encumbrances or
other restrictions: (i) existing on the Closing Date, with respect to the
Initial Aircraft, or, with respect to any Additional Aircraft, on the date such
Aircraft is acquired, under any Related Document, and any amendments,
extensions, refinancings, renewals or replacements of such documents; provided
that such consensual encumbrances and restrictions in any such amendments,
extensions, refinancings, renewals or replacements are no less favorable in any
material respect to the holders of the AerCo Notes than those previously in
effect and being amended, extended, refinanced, renewed or replaced; or (ii) in
the case of clause (iv) in the preceding paragraph, (A) that restrict in a
customary manner the subletting, assignment or transfer of any property or
asset that is a lease, license, conveyance or contract or similar property or
asset or (B) existing by virtue of any transfer of, agreement to transfer,
option or right with respect to, or consensual encumbrance on, any property or
assets of the Company or any subsidiary not otherwise prohibited by the
Indenture. Nothing contained in this covenant shall prevent the Company or
any subsidiary from creating, incurring, assuming or suffering to exist any
Encumbrances not otherwise prohibited under the Indenture.
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SECTION 5.02(e) OF INDENTURE
Limitation on Engaging in Business Activities. Under the terms of the
Indenture, the Company will not, and will not permit any subsidiary to engage
in any business or activity other than:
(i) (A) purchasing or otherwise acquiring aircraft assets both directly
and indirectly through the acquisition of aircraft-owning entities (subject to
the limitations set forth in the "Limitation on Aircraft Acquisitions"
covenant) and (B) owning (including, subject to the limitations set forth in
the "Limitation on Aircraft Acquisitions" covenant, acquiring Additional
Aircraft), holding, converting, maintaining, modifying, managing, operating,
leasing, re-leasing and, subject to the limitations set forth in the
"Limitations on Aircraft Sales" covenant, selling or otherwise disposing of the
Aircraft (including Permitted Tax-Related Dispositions) and entering into all
contracts and engaging in all related activities incidental thereto, including
from time to time accepting, exchanging, holding or permitting any of its
subsidiaries to accept, exchange or hold (an "ALLOWED RESTRUCTURING")
promissory notes, contingent payment obligations or equity interests, of
Lessees or their affiliates issued in connection with the bankruptcy,
reorganization or other similar process, or in settlement of delinquent
obligations or obligations anticipated to be delinquent, of such Lessees or
their respective affiliates in the ordinary course of business;
(ii) providing loans to, and guaranteeing or otherwise supporting the
obligations and liabilities of, any AerCo Group Member or any Future AerCo
Entity, in each case on such terms and in such manner as the Directors see fit
and (whether or not the Company, any member of the AerCo Group or any future
AerCo entity derives a benefit therefrom) so long as such loans, guarantees or
other supports are provided in connection with the purposes set forth in clause
(i) of this covenant;
(iii) financing or refinancing the business activities described in
clause (i) of this covenant through the offer, sale and issuance of any
securities of the Company, upon such terms and conditions as the Directors see
fit, for cash or in payment or in partial payment for any property purchased or
otherwise acquired by AerCo Group or any Future AerCo Entity;
(iv) engaging in currency and interest rate exchange transactions for the
purposes of avoiding, reducing, minimizing, hedging against or otherwise
managing the risk of any loss, cost, expense or liability arising, or which may
arise, directly or indirectly, from any change or changes in the interest rate
or currency exchange rate or in the price or value of any of the property or
assets of the Company or any of its subsidiaries within limits determined by the
Directors from time to time and submitted to the Rating Agencies, including but
not limited to dealings, whether involving purchases, sales or otherwise, in
foreign currency, spot and forward interest rate exchange contracts, forward
interest rate agreements, caps, floors and collars, futures, options, swaps, and
any other currency, interest rate and other similar hedging arrangements and
such other instruments as are similar to, or derivatives of, any of the
foregoing.
(v) (A) establishing, promoting and aiding in promoting, constituting,
forming or organizing companies, syndicates or partnerships of all kinds in
any part of the world for the purposes set forth in clause (i) above, (B)
acquiring, holding and disposing of shares, securities and other interests in
any such company, syndicate or partnership and (C) disposing of shares,
securities and other interests in, or causing the dissolution of, any existing
subsidiary provided that any such disposition which results in the disposition
of an Aircraft meets the requirements set forth under the "Limitation on
Aircraft Sales" covenant; and
(vi) taking out, acquiring, surrendering and assigning policies of
insurance and assurances with any insurance company or companies which the
Company or any of its subsidiaries may think fit and paying the premiums
thereon.
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SECTION 5.02(f) OF INDENTURE
Limitation on Indebtedness. Under the terms of the Indenture, the Company
will not, and will not permit any of its subsidiaries to, incur, create, issue,
assume, guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, whether present or
future (in any such case, to "INCUR"), Indebtedness.
For the purposes of the Indenture, "INDEBTEDNESS" means, with respect to
any person at any date of determination (without duplication), (i) all
indebtedness of such person for borrowed money, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto), (iv) all
obligations of such person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of purchasing such property or service or taking delivery and title thereto
or the completion of such services, and payment deferrals arranged primarily as
a method of raising finance or financing the acquisition of such property or
service, (v) all obligations of such person under a lease of (or other agreement
conveying the right to use) any property, whether real, personal or mixed, that
is required to be classified and accounted for as a capital lease obligation
under U.S. GAAP, (vi) all Indebtedness (as defined in clauses (i) through (v) of
this paragraph) of other persons secured by a lien on any asset of such person,
whether or not such Indebtedness is assumed by such person, and (vii) all
Indebtedness (as defined in clauses (i) through (v) of this paragraph) of other
persons guaranteed by such person.
Notwithstanding the foregoing, the Company and any subsidiary may incur
each and all of the following: (i) Indebtedness in respect of any AerCo Note
issued on the Closing Date and any Subclass D-1 Notes and Subclass E-1 Notes
issued in respect of any Remaining Aircraft or Substitute Aircraft; (ii)
Indebtedness in respect of any Refinancing Notes or other Indebtedness issued in
connection with the repurchase, acquisition, defeasance or retirement for value
of AerCo Notes; provided that (A) such Refinancing Notes or other Indebtedness
receive ratings from the Rating Agencies at the close of such Refinancing or
issuance equal to or higher than those of the subclass being refinanced or
repurchased, acquired, defeased or retired (determined at the date of
incurrence), (B) taking into account such Refinancing or repurchase,
acquisition, defeasance or retirement for value, the Company receives
confirmation prior to such transaction from the Rating Agencies that such
transaction will not result in the lowering or withdrawal of any rating assigned
by any Rating Agency to any AeroCo Notes Outstanding at such time, and (C) the
net proceeds of any such Refinancing or issuance shall be used only to repay the
Outstanding Principal Balance of the subclass of the AeroCo Notes being so
refinanced or repurchased, acquired, defeased or retired (plus any Redemption
Premium and transaction expenses relating thereto); (iii) Indebtedness in
respect of guarantees by AerCo or any subsidiary of any other member of AerCo
Group (other than guarantees described in clause (v)); provided that no such
Indebtedness in respect of any member of AerCo Group other than AerCo or any
subsidiary of AerCo shall be incurred if it would materially adversely affect
the AerCo Noteholders; (iv) Indebtedness in respect of any Additional Notes
incurred in connection with a Permitted Additional Aircraft Acquisition;
provided that (A) taking into account the incurrence of such Indebtedness, AerCo
receives confirmation prior thereto that the incurrence of such Indebtedness
will not result in the lowering or withdrawal of any rating assigned by any
Rating Agency to any subclass of the AerCo Notes Outstanding at such time and
(B) the net proceeds of such Indebtedness shall be used only to finance such
Permitted Additional Aircraft Acquisition; (v) Indebtedness in respect of
guarantees by AerCo or any subsidiary of Indebtedness incurred by any Future
AerCo Entity (other than a subsidiary of AerCo) in connection with a Permitted
Additional Aircraft Acquisition; provided that (A) such Future AerCo Entity
shall have guaranteed the AerCo Notes, (B) the Indebtedness being guaranteed
would be permitted pursuant to clause (ii) or (iv) above if such Indebtedness
were incurred directly by AerCo or any subsidiary in connection with such
Permitted Additional Aircraft Acquisition and (C) the Indebtedness being
guaranteed was issued by such Future AerCo Entity under an indenture, the terms
of which (including the covenants and other obligations of such Future AerCo
Entity thereunder) are substantially similar to those of the Indenture; (vi)
Indebtedness to aircraft sellers pursuant to aircraft acquisition or similar
agreements;
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(vii) Indebtedness under intercompany loans or any agreement between AerCo or
any of its subsidiaries and any other members of AerCo Group (each an
"INTERCOMPANY LOAN"); provided that any Indebtedness owed by any member of
AerCo Group to AerCo shall be evidenced by promissory notes that are pledged to
the Security Trustee, (viii) Indebtedness of AerCo Group under any credit or
liquidity enhancement facility provided in favor of AerCo Group and (ix)
obligations to each investor or other person in respect of the cash proceeds in
the Tax Defeasance Account and any Subordinated Tax-Related Payments pursuant
to the related Permitted Tax-Related Disposition and any related assignment and
assumption agreements and documents related thereto.
As used in this Offering Memorandum, "GUARANTEE" means any obligation,
contingent or otherwise, of any person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of such person (i) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Indebtedness or other obligation of such other
person or (ii) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "GUARANTEE" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "GUARANTEE"
when used as a verb has a corresponding meaning.
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SECTION 5.02(g) OF INDENTURE
Limitation on Aircraft Sales. Under the terms of the Indenture, the Company
will not, and will not permit any of its subsidiaries to, sell, transfer or
otherwise dispose of any Aircraft or any interest therein.
Notwithstanding the foregoing, the Company and any of its subsidiaries will
be permitted to sell, transfer or otherwise dispose of, directly or indirectly,
(a) any engines owned on the Closing Date, with respect to the Initial Aircraft,
or, with respect to any Remaining Aircraft, Substitute Aircraft or Additional
Aircraft, on the date such Aircraft is acquired, or any replacements thereof
("ENGINES") or parts installed in or attached to any Aircraft other than Engines
("PARTS"), or (b) one or more Aircraft or an interest therein (i) pursuant to a
Purchase Option or other agreements of a similar character existing on the
Closing Date, with respect to the Initial Aircraft, or with respect to any
Remaining Aircraft, Substitute Aircraft or Additional Aircraft, on the date such
Aircraft is acquired, (ii) within or among the Company and its subsidiaries
without limitation, and among the Company or any of its subsidiaries and any
other member of AerCo Group if such sale, transfer or disposition, as the case
may be, would not materially adversely affect the AerCo Noteholders, (iii)
pursuant to any Aircraft Agreement as long as such sale does not result in a
Concentration Default, and the net present value of the cash Net Sale Proceeds
is not less than the Note Target Price, (iv) pursuant to receipt of insurance
proceeds in connection with an event of loss, (v) pursuant to an Aircraft
Agreement that is designed to allow a person unrelated to the Company or any
other member of the AerCo Group to realize tax benefits associated with the
Aircraft or other assets being sold (any such sale, transfer or other
disposition, a "PERMITTED TAX-RELATED DISPOSITION"), provided that the Company
receives confirmation prior to entering into such Aircraft Agreement that the
performance of such agreement will not result in the lowering or withdrawal of
any rating assigned by any Rating Agency to each subclass of AerCo Notes
Outstanding at such time and all obligations of the Company or any other member
of AerCo Group (other than the obligation to pay the Tax Defeasance Amount)
under such Aircraft Agreement or to any person provided credit support for such
obligations are payable only under Subordinated Tax-Related Disposition Payments
as set forth under "--Priority of Payments", or (vi) pursuant to an Aircraft
Agreement and, in any one calendar year, not exceeding 10% of the Adjusted
Portfolio Value as determined by the most recent Appraisal obtained for such
calendar year; provided that (x) the Directors unanimously confirm that each
such sale does not materially adversely affect AerCo and the AerCo Noteholders
and (y) such sale does not result in a Concentration Default.
For the purpose of this covenant, the net present value of the cash Net
Sale Proceeds of any sale, transfer or other disposition of any Aircraft shall
mean the present value of all payments received or to be received by AerCo Group
in respect of such Aircraft from the date of execution or option granting date,
as the case may be, of the relevant Aircraft Agreement through and including the
date of transfer of title to such Aircraft, discounted back to the date of
execution or option granting date, as the case may be, of such Aircraft
Agreement at the weighted average cost of funds of AerCo Group (based on the
cost of funds on the Payment Date immediately preceding such date (excluding for
such purpose any interest paid or accrued on the Class E Notes other than the
Class E Notes Interest Amount, but taking into account any Swap Agreements)).
The "NOTE TARGET PRICE" means, in respect of any Aircraft, an amount equal
to 103% of the aggregate Outstanding Principal Balance of Class A, Class B,
Class C and Class D Notes, together with any accrued but unpaid interest thereon
and any related Swap Breakage Costs, allocable to such Aircraft on the date of
the sale agreement or purchase option date, as the case may be. On any date, the
Outstanding Principal Balance of Class A, Class B, Class C and Class D Notes
allocable to an Aircraft will equal the product of (i) (A) the Adjusted Base
Value of such Aircraft divided by (B) the Adjusted Portfolio Value and (ii) the
aggregate Outstanding Principal Balance of the Class A, Class B, Class C and
Class D Notes, in each case on the most recent Payment Date.
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"AIRCRAFT AGREEMENT" means any lease, sub-lease, conditional sale
agreement, finance lease, hire purchase agreement or other agreement (other than
an agreement relating to maintenance, modification or repairs) or any purchase
option granted to a person other than the Company or its subsidiaries or any
other member of AerCo Group to purchase an Aircraft pursuant to a purchase
option agreement, in each case pursuant to which any person acquires or is
entitled to acquire legal title, or the economic benefits of ownership of, such
Aircraft.
"NET SALE PROCEEDS" means, with respect to any sale or other disposition of
any assets, the aggregate amount of cash received or to be received from time to
time (whether as initial or deferred consideration) by or on behalf of the
seller in connection with such transaction after deducting therefrom (without
duplication) (a) reasonable and customary brokers' commissions and other similar
fees and commissions (including fees received by the Servicer under the
Servicing Agreement) and (b) the amount of taxes payable in connection with or
as a result of such transaction, in each case to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid to a person that is not an affiliate of the seller and are
properly attributable to such transaction or to the asset that is the subject
thereof.
"CONCENTRATION DEFAULT" means an Event of Default under "Operating
Covenants -- Concentration Limits", as such covenant may be adjusted from time
to time upon approval of the Rating Agencies, which would arise if effect were
given to any sale, transfer or other disposition or any purchase or other
acquisition as of the date of the binding sale or purchase agreement regardless
of whether such sale, transfer or other disposition or purchase or other
acquisition is scheduled or expected to occur after the date of such binding
agreement.
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SECTION 5.02(h) OF INDENTURE
Limitation on Aircraft Acquisitions. Under the terms of the Indenture, the
Company will not, and will not permit any of its subsidiaries, to purchase or
otherwise acquire any Aircraft other than the Initial Aircraft or any interest
therein.
Notwithstanding for foregoing, the Company and any of its subsidiaries
will be permitted to: (A) purchase or otherwise acquire, directly or
indirectly. Additional Aircraft; provided that (i) no Event of Default shall
have occurred and be continuing, (ii) all Scheduled Principal Payment Amounts
on the AerCo Notes have been paid, (iii) the acquisition does not result in a
Concentration Default, and (iv) after giving effect to such acquisition, no
more than 90% by appraised Base Value of the Portfolio consists of Stage 3
narrowbody aircraft and regional jets, no more than 50% consists of Stage 3
widebody aircraft and no more than 15% consists of Stage 2 aircraft and
turboprop aircraft without the Directors of the Company having obtained
confirmation in advance that such action will not result in the lowering or
withdrawal of any rating assigned by any Rating Agency to any of the AerCo
Notes Outstanding at such time; (B) act as sponsor of a Future AerCo Entity
other than a subsidiary of AerCo that would fund an acquisition of aircraft
assets with indebtedness guaranteed by AerCo pursuant to the "Limitation on
Indebtedness" covenant as described above; provided that, if such acquisition
of aircraft assets had been consummated directly by AerCo, such acquisition
would have been permitted pursuant to the preceding clause (A) (each of the
transactions described in clauses (A) and (B), a "PERMITTED ADDITIONAL AIRCRAFT
ACQUISITION"); and (C) purchase or otherwise acquire, directly or indirectly,
Remaining Aircraft or Substitute Aircraft.
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SECTION 5.02(i) OF INDENTURE
Limitation on Modification Payments and Capital Expenditures. Under the
terms of the Indenture, the Company will not, and will not permit any of its
subsidiaries to, make any capital expenditures for the purpose of effecting any
optional improvement or modification of any Aircraft, or for the optional
conversion of any Aircraft from a passenger aircraft to a freighter or mixed-use
aircraft, for the purpose of purchasing or otherwise acquiring any Engines or
Parts outside of the ordinary course of business (each such expenditure, a
"MODIFICATION PAYMENT"). Notwithstanding the foregoing, the Company may, and may
permit any of its subsidiaries to, make Modification Payments; provided that (i)
each Modification Payment, together with all other Modification Payments made
after the Closing Date pursuant to the covenant with respect to any single
Aircraft, do not exceed the aggregate amount of funds that would be necessary to
perform heavy maintenance (as described in the applicable servicing agreement)
on such Aircraft, including the airframe and the related Engines thereof; (ii)
such Modification Payment is included in the annual operating budget of AerCo
Group and approved by the Directors; (iii) the amount of funds necessary to make
such Modification Payment shall have been accrued in advance as a Permitted
Accrual in the Expense Account through transfers into the Expense Account
pursuant to the Indenture or otherwise allowed to be paid under Permitted
Indebtedness; and (iv) the aggregate amount of all Modification Payments made by
members of AerCo Group, taken as a whole, pursuant to this covenant after the
Closing Date, including such Modification Payment, shall not exceed 5% of the
aggregate Initial Appraised Value of all Aircraft acquired by AerCo Group.
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SECTION 5.02(j) OF INDENTURE
Limitation on Consolidation, Merger and Transfer of Assets. Under the terms
of the Indenture, the Company will not, and will not permit any subsidiary to,
consolidate with, merge with or into, or sell, convey, transfer, lease or
otherwise dispose of its property and assets (as an entirety or substantially an
entirety in one transaction or in a series of related transactions) to, any
other person, or merit any other person to merge with or into the Company or any
subsidiary, unless (i) the resulting entity is a special purpose corporation,
the charter of which is substantially similar to the Memorandum and Articles of
Association of the Company or the equivalent charter document of such
subsidiary, as the case may be, and, after such consolidation, merger, sale,
conveyance, transfer, lease or other disposition, payments from such resulting
entity to the holders of the AerCo Notes do not give rise to any withholding tax
payments less favorable to the holders of AerCo Notes than the amount of any
withholding tax payments which would have been required had such event not
occurred, (ii) in the case of consolidation, merger or transfer by the Company,
the surviving successor or transferee entity shall expressly assume all of the
obligations of the Company in the Indenture, the AerCo Notes and each other
Related Document to which the Company is then a party, (iii) the Directors shall
have obtained confirmation in advance that such action or event will not result
in the lowering or withdrawal of any rating assigned by any Rating Agency to any
of the AerCo Notes, (iv) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing, and (v) the Company
delivers to the Trustee an officers' certificate and an opinion of counsel, in
each case stating that such consolidation, merger or transfer and such
supplemental indenture comply with the above criteria and, if applicable, the
"Limitation on Aircraft Sales" covenant and that all conditions precedent
provided for in the Indenture relating to such transaction have been complied
with; provided that this covenant shall not apply to any such consolidation,
merger, sale, conveyance, transfer, lease or disposition (a) within and among
the Company and any of its subsidiaries and among AerCo Group is such
consolidation merger, sale, conveyance, transfer, lease or disposition, as the
case may be, would not materially adversely affect the holders of the AerCo
Notes, (b) complying with the terms of the "Limitation on Aircraft Sales"
covenant or (c) effected as part of a single transaction providing for the
redemption or defeasance of the AerCo Notes in accordance with the terms thereof
as described under "-- Redemption" or "-- Defeasance", respectively.
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SECTION 5.02(k) OF INDENTURE
Limitation on Transactions with Affiliates. Under the terms of the
Indenture, the Company will not, and will not permit any subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or
assets, or the rendering of any service) with GPA or any affiliate of the
Company or any subsidiary, except upon fair and reasonable terms no less
favorable to the Company or such subsidiary than could be obtained, at the time
of such transaction or at the time of the execution of the agreement providing
therefor, in a comparable arm's-length transaction with a person that is not
such an affiliate.
The foregoing limitation does not limit, and shall not apply to: (i) any
transaction pursuant to the terms of the Related Documents; (ii) any
transaction within and among the Company or any of its subsidiaries and any
other member of the AerCo Group, provided, that no such transaction, other than
between the Company and any of its subsidiaries, shall be consummated if it
would materially adversely affect the holders of the AerCo Notes; (iii) the
payment of reasonable and customary regular fees to, and the provision of
reasonable and customary liability insurance in respect of, Directors; (iv) any
Permitted Additional Aircraft Acquisition or any transaction complying with the
"Limitation on Aircraft Sales" covenant; (v) any payments of the types referred
to in clauses (i) or (ii) of the "Limitation on Restricted Payments" covenant
and not prohibited thereunder, and (vi) entering into any transaction effected
as part of a single transaction providing for the redemption or defeasance of
the AerCo Notes in accordance with the terms thereof as described under
"-- Redemption" or "-- Defeasance", respectively.
112
SECTION 5.02(l) OF INDENTURE
Limitation on the Issuance, Delivery and Sale of Stock. Under the terms of
the Indenture, the Company will not (i) issue, deliver or sell any shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting, other than such shares, interests, participations or other
equivalents existing on the Closing Date) in equity, including without
limitation, all ordinary shares of the Company, or (ii) sell, or permit any
subsidiary, directly or indirectly, to issue, deliver or sell, any shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting, other than such shares, interests, participations or other
equivalents existing on the Closing Date) in equity except (A) to the Charitable
Trust Trustee, (B) issuances or sales of shares of Stock of foreign subsidiaries
of the Company to nationals in the jurisdiction of incorporation or organization
of such subsidiary, as the case may be, to the extent required by applicable law
or necessary in the determination of the Directors to avoid an adverse tax
consequence in any such jurisdiction, (C) the pledge of shares in AerCo's
subsidiaries pursuant to the Security Trust Agreement. (D) the sale, delivery or
transfer of any Stock of any member of AerCo Group in connection with the
redemption or defeasance of the AerCo Notes, in accordance with the terms set
forth under "-- Redemption" or "-- Defeasance", respectively. (E) the sale of
any Stock in connection with any sale of Aircraft in compliance with the terms
of the "Limitation on Aircraft Sales" covenant and (F) the sale, delivery,
transfer or pledge of any Stock of any AerCo Group member to or for the benefit
of any other AerCo Group member.
In addition, under the terms of the Shareholders Undertaking, the
Charitable Trust Trustee and GPA Group will agree that while the AerCo Notes are
outstanding they will not, without prior written approval of the Trustee and all
of the Directors, take any action in their capacity as shareholders of the
Company to alter the share capital or issue any additional shares of the
Company.
113
SECTION 5.03(a) OF INDENTURE
CONCENTRATION THRESHOLDS
Concentration Limits. Unless the Directors obtain prior written
confirmation from each of the Rating Agencies that no lowering or withdrawal of
the then current rating of any subclass of AerCo Notes will result, AerCo will
not permit any of its subsidiaries to lease or re-lease any Aircraft if entering
into such proposed lease would cause the Portfolio (excluding any Aircraft then
subject to an Aircraft Agreement and to be disposed of within one year from the
date of effectiveness of such lease (other than any Aircraft with respect to
which AerCo Group has entered into a binding agreement to acquire and which the
Directors reasonably expect to acquire within 180 days from the date of
effectiveness of such agreement) but including any Aircraft with respect to
which a member of AerCo Group retains an interest including a right to lease
rentals or other payments, finance lease payments, installment purchase payments
or any other payments with respect to such Aircraft) to exceed any of the
concentration limits set forth below (the "CONCENTRATION LIMITS"; provided that
the Indenture will permit breaches of such Concentration Limits upon any
renewal, extension or restructuring of any Lease.
PERCENTAGE OF
LESSEE CONCENTRATION LIMITS MOST RECENT APPRAISED
VALUE OF PORTFOLIO(2)
---------------------
Single Lessees rated BBB/Baa2 (or the equivalent) or better ....... 15%
Other Single Lessees .............................................. 10%
Five largest Lessees .............................................. 35%
PERCENTAGE OF
COUNTRY CONCENTRATION LIMITS MOST RECENT APPRAISED
VALUE OF PORTFOLIO(2)
---------------------
United States ..................................................... 25%
Countries rated BBB/Baa2 (or the equivalent) or better(1).......... 20%
Other ............................................................. 15%
PERCENTAGE OF
REGION CONCENTRATION LIMITS MOST RECENT APPRAISED
VALUE OF PORTFOLIO(2)
----------------------
Developed Market Region(3) ........................................ 50%
Emerging Market Region(3) ......................................... 25%
Other(3) .......................................................... 20%(4)
Asia/Pacific(3) ................................................... 55%
_______________
(1) Based on the sovereign foreign currency debt rating assigned by the
Rating Agencies to the country in which a Lessee is habitually based
at the time the relevant Lease is executed.
(2) Percentage to be obtained by dividing the aggregate most recent
Appraised Values of all Aircraft operating or to be operated by
Lessees habitually based in the applicable country or region by the
aggregate most recent Appraised Values of all Aircraft then owned by
AerCo Group.
(3) The designations of Emerging Markets and Developed Markets are as
determined and published by Capital International Perspective S.A.
("MSCI") from time to time based on, among other things, gross
domestic product levels, regulation of foreign ownership of assets,
applicable regulatory environment, exchange controls and perceived
investment risk. The current designations are as set out below:
114
REGION COUNTRY
------ -------
Developed Markets
Europe.............. EU (except Greece and Luxembourg), Norway and Switzerland
North America....... Canada and United States
Pacific............. Australia, Hong Kong, Japan, New Zealand and Singapore
Emerging Markets
Asia................ China, India, Indonesia, South Korea, Malaysia, Pakistan, Philippines,
Sri Lanka, Taiwan and Thailand
Europe and
Middle East....... Czech Republic, Greece, Hungary, Israel, Jordan, Poland, Russia and
Turkey
Latin America....... Xxxxxxxxx, Xxxxxx, Xxxxx, Xxxxxxxx, Xxxxxx, Xxxx and Venezuela
Other................. All other countries (generally those that have small or undeveloped
capital markets, including Fiji)
(4) In addition, within the "Other" designation, no more than 10% of the
most recent Appraised Value of the Portfolio shall be leased to
Lessees habitually based in "Other" countries rated below BBB/Baa2 (or
the equivalent) and no more than 5% of the most recent Appraised Value
of the Portfolio shall be leased to Lessees habitually based in
"Other" countries in Africa.
In addition, the Indenture will not permit the Company or any subsidiary to
lease Aircraft operated or to be operated by Lessees domiciled in (i) certain
countries and (ii) certain other countries without procuring political risk
insurance. The list of prohibited countries and countries with respect to which
political risk insurance must be procured may be modified from time to time upon
the approval of the Rating Agencies.
The Indenture contains no limitations with respect to the country or region
where any sublessees of Aircraft operated or to be operated are domiciled if
(i) such sublease is permitted under the relevant Lease (including by reason of
consent or waiver, if applicable) or renewed Lease (including by reason of
consent or waiver, if applicable) and (ii) the relevant Lessee is either a
signatory to a Lease or a renewed Lease.
115
SECTION 5.03(b) OF INDENTURE
Compliance with Law. Maintenance of Permits. Under the terms of the
Indenture, the Company will (i) comply, and cause each of its subsidiaries to
comply, in all material respects with all applicable laws, (ii) obtain, and
cause each of its subsidiaries to obtain, all material governmental (including
regulatory) registrations, certificates, licenses, permits and authorizations
required for such person's use and operation of the Aircraft, including, without
limitation, a current certificate of airworthiness for each Aircraft (issued by
the applicable aviation authority and in the appropriate category for the nature
of operations of such Aircraft), except that (A) no certificate of airworthiness
shall be required for any Aircraft (x) during any period when such Aircraft is
undergoing maintenance, modification or repair, (y) following the withdrawal or
suspension by such applicable aviation authority of certificates of
airworthiness in respect of all aircraft of the same model or period of
manufacture as such Aircraft (in which case the Company shall comply, and cause
each of its subsidiaries to comply, with all directions of such applicable
aviation authority in connection with such withdrawal or suspension), (B) no
registration, certificates, licenses, permits or authorizations required for the
use or operation of any Aircraft need be obtained with respect to any period
when such Aircraft is not being operated and (C) no such registrations,
certificates, licenses, permits or authorizations shall be required to be
maintained for any Aircraft that is not the subject of a Lease, except to the
extent required under applicable laws, (iii) not cause or knowingly permit,
directly or indirectly, through any of its subsidiaries, any Lessee to operate
any Aircraft under any Lease in any material respect contrary to any applicable
law and (iv) not knowingly permit, directly or indirectly, through any of its
subsidiaries, any Lessee not to obtain all material governmental (including
regulatory) registrations, certificates, licenses, permits and authorizations
required for such Lessee's use and operation of any Aircraft under any operating
Lease except as provided, mutatis mutandis, in clauses (ii)(A) and (ii)(B)
above.
The foregoing covenant shall not be deemed to have been breached by virtue
of any act or omission of a Lessee or sub-lessee, or of any person which has
possession of the Aircraft or any Engine for the purpose of repairs,
maintenance, notification or storage, or by virtue of any requisition, seizure,
or confiscation of the Aircraft (other than seizure or confiscation arising from
a breach by the Company or a subsidiary of such covenant) (each, a "THIRD PARTY
EVENT"); provided that (i) no member of AerCo Group consents or has consented to
such Third Party Event; and (ii) the member of AerCo Group which is the lessor
or owner of such Aircraft promptly and diligently takes such commercially
reasonable actions as a leading international aircraft operating lessor or owner
would reasonably take in respect of such Third Party Event, including, as deemed
appropriate (taking into account, amount other things, the laws of the
jurisdictions in which the Aircraft are located), seeking to compel such Lessee
or other relevant person to remedy such Third Party Event or seeking to
repossess the relevant Aircraft or Engine.
116
SECTION 5.03(c) OF INDENTURE
Appraisal of Portfolio. Under the terms of the Indenture, the Company will, no
earlier than 90 nor later than 30 days prior to March 31 of each year, deliver
to the Trustee appraisals of the Base Value of each of the Aircraft, from at
least three independent appraisers that are members of the International
Society of Transport Aircraft Trading or any similar organization, each such
appraisal to be dated within 30 days prior to its delivery to the Trustee.
117
SECTION 5.03(d) OF INDENTURE
Maintenance of Assets. Under the terms of the Indenture, the Company will
(i) with respect to each Aircraft and Engine that is subject to a Lease, cause
directly or indirectly, through any of its subsidiaries, such Aircraft and
Engine to be maintained in a state of repair and condition consistent with the
requirements of reasonable commercial practice of leading international aircraft
operating lessors with respect to similar aircraft under lease, taking into
consideration, among other things, the identity of the relevant Lessee
(including the credit standing and operating experience thereof), the age and
condition of the Aircraft and the jurisdiction in which such Aircraft will be
operated or registered under such Lease, and (ii) with respect to each Aircraft
that is not subject to a Lease, maintain, and cause each of its subsidiaries to
maintain, such Aircraft in a state of repair and condition consistent with the
reasonable commercial practice of leading international aircraft operating
lessors with respect to aircraft not under lease. No breach of this covenant,
however, shall be deemed to have occurred by virtue of any Third Party Event;
provided that (i) no member of AerCo Group consents or has consented to such
Third Party Event; and (ii) the member of AerCo Group which is the lessor or
owner of such Aircraft promptly and diligently takes such commercially
reasonable actions as a leading international aircraft operating lessor would
reasonably take in respect of such Third Party Event, including as deemed
appropriate, seeking to compel such Lessee or other relevant person to remedy
such Third Party Event or seeking to repossess the relevant Aircraft or Engine.
118
SECTION 5.03(e) OF INDENTURE
Notification of Trustee, Cash Manager and Administrative Agent. Under the
terms of the Indenture, the Company will notify the Trustee, Cash Manager and
Administrative Agent as soon as the Company or any of its subsidiaries becomes
aware of any loss, theft, damage or destruction to any Aircraft or Engine if the
potential cost of repair or replacement of such asset (without regard to any
insurance claim related thereto) may exceed $2,000,000.
119
SECTION 5.03(f) OF INDENTURE
Leases. Under the terms of the Indenture, the Company shall adopt and will
agree to cause the Servicer to use, and will adopt and will agree to cause any
additional Servicer (including any servicer appointed in respect of any
Additional Aircraft or to replace the Servicer in respect of the Initial
Aircraft, an "ADDITIONAL SERVICER") to use, the pro forma lease agreement or
agreements then used by the Servicer or such Additional Servicer, as the case
may be, in connection with its aircraft operating leasing services business
generally, as such pro forma lease agreement or agreements may be revised from
time to time by the Servicer or such Additional Servicer (the "SERVICER'S PRO
FORMA LEASE"), on behalf of each member of AerCo Group as a starting point in
the negotiation of Future Leases with persons who are not members of AerCo
Group; provided, that with respect to any Future Lease entered into in
connection with (x) the renewal or extension of a Lease, (y) the leasing of an
Aircraft to a person that is or was a Lessee under a pre-existing Lease or (z)
the leasing of an Aircraft to a person that is or was a lessee under an
operating lease of an aircraft that is being managed or serviced by the Servicer
or such Additional Servicer, as the case may be (such Future Lease, a "RENEWAL
LEASE"), a form of lease substantially similar to such pre-existing Lease or
operating lease (a "PRECEDENT LEASE"), as the case may be, may, in lieu of the
Servicer's Pro Forma Lease, be used by the Servicer or such Additional Servicer,
as the case may be, on behalf of any member of AerCo Group as a starting point
in the negotiation of such future lease with persons who are not members of
AerCo Group or a Future AerCo Entity.
120
SECTION 5.03(g) OF INDENTURE
Opinions. Under the terms of the Indenture, the Company will not enter into
and will not permit any of its subsidiaries to enter into, any Future Lease with
any person that is not a member of AerCo Group or change the jurisdiction of
registration of any Aircraft that is subject to a Lease, unless, upon entering
into such Future Lease or changing the jurisdiction of registration of such
Aircraft (or within a commercially reasonable period thereafter), the Servicer
or Additional Servicer, as the case may be, obtains such legal opinions, if any,
with regard to compliance with the registration requirements of the relevant
jurisdiction, enforceability of the Future Lease and such other matters
customary for such transactions to the extent that receiving such legal opinions
is consistent with the reasonable commercial practice of leading international
aircraft operating lessors.
121
SECTION 5.03(h) OF INDENTURE
Insurance. Under the terms of the Indenture, the Company will maintain or
cause, directly or indirectly through its subsidiaries, to be maintained with
reputable and responsible insurers or with insurers that maintain relevant
reinsurance with reputable and responsible reinsurers (i) airline hull insurance
for each Aircraft in an amount at least equal to the Note Target Price for such
Aircraft (or the equivalent thereof from time to time if such insurance is
denominated in a currency other than U.S. dollars), (ii) airline liability
insurance for each Aircraft and occurrence on an amount at least equal to the
relevant amounts set forth in the Indenture for each model of aircraft and (iii)
airline political risk insurance ("PRI") for each Aircraft subject to a Lease
and habitually based in a jurisdiction determined in accordance with the PRI
guidelines, as set forth in the Indenture and as amended from time to time by
the Directors in an amount at least equal to the Note Target Price (or the
equivalent thereof from time to time if such insurance is denominated in a
currency other than U.S. dollars) for such Aircraft; provided, however, that,
with respect to any such insurance for any Aircraft, such insurance may be
subject to commercially reasonable deductibles and self-insurance arrangements
(taking into account, inter alia, the creditworthiness and experience of the
Lessee, if any, the type of aircraft and market practices in the aircraft
insurance industry generally). The coverage and terms (including endorsements)
of any insurance maintained with respect to any Aircraft not subject to a Lease
shall be substantially consistent with the commercial practices of leading
international aircraft operating lessors regarding similar aircraft.
In determining the amount of insurance required to be maintained, the
Company may take into account any indemnification from, or insurance provided
by, any governmental, supranational or inter-governmental authority or agency
(other than, with respect to PRI, any governmental authority or agency of any
jurisdiction for which PRI must be obtained), the sovereign foreign currency
debt rating of which is rated AA, or the equivalent, by at least one of the
Rating Agencies, against any risk with respect to an Aircraft at least in an
amount which, when added to the amount of insurance against such risk maintained
by the Company (or which the Company has caused to be maintained), shall be at
least equal to the amount of insurance against such risk otherwise required by
the covenant (taking into account self-insurance permitted by the covenant). Any
such indemnification or insurance provided by such government shall provide
substantially similar protection as the insurance required by the covenant. The
Company will not be required to maintain (or to cause to be maintained) any
insurance otherwise required hereunder to the extent that such insurance is not
generally available in the relevant insurance market from time to time.
122
SECTION 5.03(i) OF INDENTURE
Indemnity. Under the terms of the Indenture, the Company will, and will
cause each of its subsidiaries to include in each Lease between a member of the
AerCo Group and a person who is not a member of the AerCo Group an indemnity in
respect of the Lease in respect of any losses or liabilities arising from the
use or operation of the Aircraft during the term of such Lease, subject to such
exceptions, limitations and qualifications as are consistent with the reasonable
commercial practices of leading international aircraft operating lessors.
123
Schedule 8 to
Schedule 2.02(a)
WEEKLY, MONTHLY AND QUARTERLY REPORTS
82
124
AerCo - Servicer Reports
125
AERCO - SERVICER REPORTS
1 WEEKLY
(a) Commercial Report
- Narrative report giving a detailed update on AerCo activities for
the previous week. Relevant documentation to be attached (e.g.
LOls, New Leases, Sales, amendments). Commentary on background to
each new transaction
- Headings to be covered each week (giving details of any new
transactions: Leasing Activity; Sales Activity; Aircraft Purchases;
Report on Lessee and/or Lessor options; Default Notices Issued;
Update on AOG remarketing efforts & costs.
- Summary of financial terms of all transactions of previous week
(incl comparison with budget, new lease structures, intercompany
margins etc)
- Report on any Lessee Default (other than payment default) and
lessee claims against AerCo of which the Servicer is aware.
(b) Receivables/Financial Report
- Report giving details of all cash receivable, (showing rentals,
maintenance, interest and other) received and allocations during
the previous pre-agreed period split between current, arrears and
advance
- Receivables summary (split between deferred & non deferred)
detailing receivable outstanding by lessee, age, amounts from non
current lessees, weekly comparison of movement and commentary on
lessees current payment record.
- Report on unallocated cash, cash promised by Lessees and any other
relevant items and progress on resolving same.
- Schedule of any other cash transactions & notifications (e.g.
payment of Lessee maintenance reserve claims; receipt of new Lessee
deposits; repayment of Lessee Deposits; Lessee redelivery
payments/receipts; Drawdown of any LOCs).
- Schedule of any cash transactions offset against receivables (incl
maintenance reserve claims and other credits offset against
receivables)
126
AERCO - SERVICER REPORTS
2 MONTHLY
(a) Receivables/Financial Report
- Summary schedule giving details of all cash receivable (showing
rentals, maintenance, interest and other) and received and
allocations during the previous calendar month and giving an updated
arrears position and showing a profile of Lease Security (LOCs,
Guarantees, Cash deposits held).
- Debtors listing at month end by lessee and age split by due on rent,
maintenance, deposits, interest & other
- Debtors reconciliation for month (i.e. Opening Balance, Total
Invoiced, Total Received, Total Credits, Closing Balance) showing a
breakdown of amounts Invoiced & Received by Rental, Maintenance,
Interest & Other.
- Detailed debtors statements in respect of each AerCo Lessee (incl
historic & current details as required).
- Schedule of Monthly AOG costs
- Copies of Rental Adjustment Calculation Schedules issued during the
previous calendar month.
- Copies of invoices (including intercompany invoices) as required.
(b) Maintenance Reserve Report
- Maintenance Reserves movement report for previous calendar month
showing up to date balances including analysis by current & previous
lessees and by component.
- Access to aircraft/engine utilisation by hours & cycles for each
month, billing rate for each month, cumulative hours & cycles to
date, hours & cycles since last major aircraft/engine check.
- List of maintenance reserves covered by Letters of Credit
- Maintenance redelivery adjustment calculations & supporting
documentation settled during previous month
- List of Maintenance Reserves Abatement
- List of outstanding maintenance reserve claims (already included in
weekly report)
(c) Technical Report
- Detailed Statement of technical expenditure for the previous
calendar month and year to date analysed by relevant category of
expense/aircraft/project etc.
- Detailed schedule of actual expenditure versus expected expenditure
for each month and year (FY) to date and also actual expenditure
versus annual budget expenditure.
- Schedule of expected Servicer originating cash disbursements
including pre-lease expenditure and redelivery adjustments for the
next 4 weeks and monthly for the coming 12 month period analysed by
relevant category of expense/aircraft/project etc. (to be included
in last weekly report prior to each payment date)
(d) Portfolio Report
- Detailed portfolio report showing:
Summary of fleet by Aircraft Type, Lessee, Aircraft Availability,
Leases Committed, Lease Commencement and Expiry dates, Lease
Structures, Aircraft owning company.
127
AERCO - SERVICER REPORTS
3 QUARTERLY
(a) MAINTENANCE RESERVE REPORT
- Maintenance reserve deficit review
- Next projected date for each aircraft & engine maintenance check and
expected cost.
- Confirmation of lessee agreement with maintenance reserve balances
(by component) per Servicer.
- Review of all upsy/downsy maintenance contracts of AerCo fleet.
(b) TECHNICAL REPORT
- Detailed report on technical condition of each AerCo aircraft
showing last inspection date.
- Variance report on actual technical expenditures versus annual
budget cost with commentary on all variances from budget for the
preceding quarter and year to date.
(c) PORTFOLIO REPORT
- AerCo fleet portfolio summary detailing concentration of aircraft:
By country of habitual base;
By Lessee;
By Aircraft Type;
By age;
Number of aircraft;
Leases expiring in next 6 qtrs and annually for 4 years thereafter
Appraised value (as of most recent appraisal);
Analysis of termination, extension and any other material options;
Commentary on quality of AerCo fleet based on Servicers' knowledge
of the aircraft industry.
(d) LEASE REVIEW REPORT
- Summary analysis of the financial condition of each AerCo Lessee on
a rolling basis (or as requested by Administrative Agent) so that at
least seven Lessee reviews reports are provided each quarter so that
all lessees are reviewed annually.
(e) INDUSTRY REVIEW
- Report on issues of commercial concern & latest developments
pertaining to the leasing market in general.
128
AIRCRAFT LEASE AGREEMENT
dated
--------------------
between
[NAME OF LESSOR]
and
[NAME OF LESSEE]
-----------------------------------------------------
AIRCRAFT MAKE AND MODEL: BOEING 737-_____
SERIAL NO.:__________
REGISTRATION NO.:__________
-----------------------------------------------------
129
THIS AGREEMENT is made on ____________,_____
BETWEEN:
[Name, jurisdiction of organization and address]("Lessor"), and
[Name, jurisdiction of organization and address]("Lessee").
WHEREAS, Lessor wishes to lease to Lessee and Lessee wishes to lease from
Lessor the Aircraft (as hereinafter defined) on the terms and subject to the
conditions set forth in this Agreement:
NOW, THEREFORE, in consideration of and subject to the mutual agreements
contained herein, Lessor and Lessee hereby agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS: In this Agreement capitalized words and expressions have the
respective meanings set forth in Schedule I hereto.
1.2 CONSTRUCTION:
(a) In this Agreement, unless the contrary intention is stated, a reference to:
(i) each of "Lessor" or "Lessee" or any other Person includes, without
prejudice to the provisions of this Agreement restricting transfer or
assignment, any successor and any assignee;
(ii) words importing the plural shall include the singular and vice versa,
and the terms "include" or "including" are not limiting;
(iii) any document shall include that document as amended, novated,
assigned or supplemented;
(iv) a Clause or a Schedule is a reference to a clause of or a schedule to
this Agreement;
(b) any Law, or to any specified provision of any Law, is a reference to such
Law or provision as amended, substituted or re-enacted; and
(c) headings are to be ignored in construing this Agreement.
130
2. REPRESENTATIONS AND WARRANTIES
2.1 LESSEE'S REPRESENTATIONS AND WARRANTIES: The representations and
warranties set forth in Clauses 1.1 and 1.2 of Schedule 2 are hereby made by
Lessee to Lessor.
2.2 REPETITION: The representations and warranties in Clauses 1.1 and 1.2 of
Schedule 2 will survive the execution of this Agreement and will be deemed to
be repeated by Lessee on the Delivery Date with reference to the facts and
circumstances then existing (and for this purpose the representation and
warranty contained in Clause 1.1(g) of Schedule 2 shall be constructed by
reference to the accounts most recently provided to Lessor prior to such Rent
Date). The representations and warranties contained in Clause 1.1 of Schedule 2
will be deemed to be repeated by Lessee on each Rent Date as if made with
reference to the facts and circumstances then existing.
2.3 LESSOR'S REPRESENTATIONS AND WARRANTIES: The representations and warranties
set forth in Clause 1.3 of Schedule 2 are hereby made by Lessor to Lessee.
3. CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT: Lessor's obligation to deliver and lease the Aircraft
under this Agreement is subject to satisfaction of each of the Conditions
Precedent specified in Schedule 3.
3.2 WAIVER: The Conditions Precedent are for the sole benefit of Lessor and
may be waived or deferred in whole or in part and with or without conditions by
Lessor. If any Conditions Precedent are not satisfied on the Delivery Date and
Lessor (in its absolute discretion) nonetheless agrees to deliver the Aircraft
to Lessee. Lessee will ensure that such Conditions Precedent are fulfilled
within 15 days after the Delivery Date, and Lessor may treat as in Event of
Default the failure of Lessee to do so.
4. COMMENCEMENT
4.1 LEASING:
(a) Lessor will lease the Aircraft to Lessee and Lessee will take delivery of
the Aircraft on lease in accordance with this Agreement for the duration of
the Term. Subject to Clause 4.3, Lessor will deliver and Lessee will accept
the Aircraft on the Scheduled Delivery Date or such other day as may be
agreed in writing by the parties.
(b) If Lessee is unwilling or unable to accept delivery of the Aircraft on the
Rent Commencement Date, or Lessee fails to fulfill any Condition Precedent
on or before such date, then Lessee's obligation to pay Rent hereunder
shall commence on the Rent Commencement Date notwithstanding that Lessee
has not accepted possession of the Aircraft.
131
(c) After Delivery the Aircraft, the Engines and every part will be in every
respect at the sole risk of Lessee, who will bear all risk of loss, theft,
damage or destruction to the Aircraft, any Engine or any Part from any
cause whatsoever.
4.2 DELIVERY: The Aircraft will be delivered to and accepted by Lessee at the
Delivery Location, as may be agreed in an "AS IS, WHERE AS" condition. Without
prejudice to Clauses 3.1 and 4.1, Lessee will effect acceptance of the Aircraft
by execution and delivery to Lessor of the Certificate of Acceptance.
4.3 DELAYED DELIVERY: If owing to:
(a) any seller, manufacturer or existing lessee of the Aircraft delaying in the
delivery of, or failing to deliver, the Aircraft to Lessor for any reason
(other than because of any default of Lessor in the performance of its
obligations under an agreement with that seller, manufacturer or lessee
unless the default arises from an act or omission of Lessee) whether or not
in circumstances entitling that seller, manufacturer or lessee to terminate
that agreement: or
(b) any Excusable Delay;
Lessor delays in the delivery of, or fails to deliver, the Aircraft under this
Agreement, then in any such case:
(i) Lessor will not be responsible for any losses, including loss of
profit, costs or expenses arising from or in connection with the delay
or failure suffered or incurred by Lessee; and
(ii) Lessee will not be entitled to terminate this Agreement or to reject
the Aircraft when tendered for delivery by Lessor, on the grounds of
any such delay, unless due to such a delay (which is not attributable
in any way to a default by Lessee hereunder or a failure by Lessee to
fulfill a condition precedent hereunder or otherwise attributable to
Lessee or within its control) delivery of the Aircraft does not occur
within______[months] [days] of the Scheduled Delivery Date
("DEADLINE"), in which case either party hereto shall have the right
to terminate the leasing of the Aircraft hereunder if such party gives
notice to the other party of such party's election to terminate
within_____Business Days of the Deadline. In the event of such
termination, neither party will have any further liability to the
other hereunder [except-include Lessor's return of security
deposit/guaranty/letter of credit]. If neither party gives such a
notice of termination within such [____] Business Day period, neither
party shall have any further termination right for such delay and this
Agreement shall remain in full force and effect.
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4.4 LICENSES: Lessee will at its expense obtain all licenses, permits and
approvals which may be necessary to export and/or transport the Aircraft from
the Delivery Location. Lessor will furnish such data and information as may be
reasonably requested by Lessee in connection with obtaining any such license,
permit or approval.
5. PAYMENTS
5.1 RENTAL PERIODS: The first Rental Period will commence on the Rent
Commencement Date and each subsequent Rental Period will commence on the date
succeeding the last day of the previous Rental Period. Each Rental Period will
end on the date immediately preceding the numerically corresponding day in the
next month, except that:
(a) if there is no such numerically corresponding day in that month, it will
end on the last day of that month; and
(b) if a Rental Period would otherwise overrun the Expiry Date, it will end on
the Expiry Date.
5.2 RENT: Lessee will pay to Lessor or its order on each Rent Date Rent in
advance in the amount of $_______. Payment must be initiated adequately in
advance of the Rent Date to ensure that Lessor receives credit for the payment
on the Rent Date. If a Rental Period begins on a day which is not a Business
Day, the Rent payable in respect of that Rental Period shall be paid on the
Business Day immediately preceding such day.
5.3 {MAINTENANCE RESERVES:
(a) Amount: Lessee will further pay to Lessor Maintenance Reserves in relation
to each calendar month (or part thereof) (including the last calendar
month, or part thereof, of the Term) on the fifteenth day following the
end of such calendar month, in the amounts specified in Clause 1.1 of
Schedule 6.
(b) Adjustment: Lessor may adjust the amount of Maintenance Reserves after the
Delivery Date by notice to Lessee not more frequently than annually based
on each of the following:
(i) with respect to Engine LLP Maintenance Reserves by __ per cent per
annum by way of agreed inflation adjustment; and
(ii) with respect to Airframe and Engine Maintenance Reserves, by
reference to the Engine manufacturer's recommendations, industry
overhaul cost experience, any change in the operational environment
of the Aircraft and any change in the hour-to-cycle ratio of the
operation of the Aircraft (it being understood that the Maintenance
reserves are based on the assumption that the operation of the
Aircraft during the
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relevant period will, on average, be not less than two Flight Hours
for each Cycle and may be adjusted upwards if the Flight Hour to
Cycle ratio falls below 2:1).
(c) Release of Maintenance Reserves: Provided no Default has occurred and is
continuing, Lessor will release funds to Lessee from the Maintenance
Reserves on the terms and subject to the conditions specified in Clauses
1.2 and 1.3 of Schedule 6.]1
5.4 PAYMENTS: All payments by Lessee to Lessor under this Agreement will be
made for value on the due date in Dollars and in immediately available funds
settled through the New York Clearing House System or such other funds as may
for the time being be customary for the settlement in New York City of payments
in Dollars by wire transfer to Bankers Trust Company, New York, U.S.A., ABA No.
000-000-000, _________________, Collection Account No.__________, Attention:
Corporate Trust-Structured Finance Team, _______________________ or to such
other account as Lessor may advise Lessee in writing.
5.5 WITHHOLDING:
(a) All payments by Lessee pursuant to the Operative Documents shall be free of
all withholdings of any nature whatsoever except to the extent otherwise
required by Law, and if any such withholding is so required. Lessee shall
pay an additional amount such that after the deduction of all amounts
required to be withheld, the net amount actually received by Lessor will
equal the amount that Lessor would have received if such withholding had
not been required; provided, however, that if Lessee pays any such
additional amount to compensate for the withholding of any Lessor Tax,
Lessor shall repay to Lessee within 30 days after receipt of Lessee's
written request therefor (which request shall include a description in
reasonable detail of the Lessor Tax involved and the calculation of the
additional amount to be repaid) the amount of such additional amount to the
extent attributable to any Lessor Tax.
(b) If any payment is made by Lessee under Clause 5.6(a) and Lessor in good
faith determines that it has actually received a credit against, or relief
or remission for, or repayment of, any Tax paid or payable by Lessor in
respect of or calculated with reference to the deduction or withholding
giving rise to such payment. Lessor shall, to the extent that it can do so
without prejudice to the retention of the amount of such credit, relief,
remission or repayment and without leaving Lessor in any worse position
than that in which it would have been had such deduction or withholding not
been required to be made, pay to Lessee such amount as Lessor shall in good
faith have determined to be attributable to the relevant deduction or
withholding.
-------------------------------
1/ To be inserted only if applicable.
134
Nothing in this Clause 5.5(b) shall:
(i) interfere with the right of Lessor to arrange its tax affairs in
whatever manner it thinks fit and, in particular, but without
limitation, Lessor shall not be under any obligation to claim credit,
relief, remission or repayment from or against its corporate profits
or similar Tax liability in respect of the amount of any such
deduction or withholding in priority to any other claims, reliefs,
credits or deductions available to Lessor; or
(ii) oblige Lessor to disclose any information relating to its Tax affairs
or any computations in respect thereof.
5.6 TAXES AND OTHER OUTGOINGS: Lessee will promptly pay:
(a) all license and registration fees, Taxes (other than Lessor Taxes) and
other amounts of any nature imposed by any Government Entity with respect
to the Aircraft, or this Agreement, including without limitation the
ownership, delivery, leasing, possession, use, operation, return, sale or
other disposition of the Aircraft; and
(b) all rent, fees, charges, Taxes (other than Lessor Taxes) and other amounts
in respect of any premises where the Aircraft, any Engine or any Part is
located from time to time;
except to the extent that, in the reasonable opinion of Lessor, such payment is
being contested in good faith by appropriate proceedings, in respect of which
adequate reserves have been provided by Lessee and non-payment of which does
not give rise to any material likelihood of the Aircraft or any interest
therein being sold, forfeited or otherwise lost or of criminal liability on the
part of Lessor, Security Trustee, Trustee or any Financing Party.
5.7 TAX INDEMNITY:
(a) Lessee will on demand pay and indemnify each Indemnitee against all Taxes
(other than Lessor Taxes) levied or imposed against or upon Lessor or
Lessee or any Indemnitee and relating to or attributable to Lessee, this
Agreement, the Operative Documents or the Aircraft directly or indirectly
in connection with the importation, exportation, registration, ownership,
leasing, sub-leasing, purchase, delivery, possession, use, operation,
repair, maintenance, overhaul, transportation, landing, storage, presence
or redelivery of the Aircraft or any part thereof or any rent, receipts,
insurance proceeds, income or other amounts arising therefrom, or the
making of any Equipment Change.
(b) If Lessee is required by any applicable Law, or by any third party, to
deliver any report or return in connection with any Taxes for which Lessee
is obliged to indemnify Lessor or any
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Indemnitee under the Operative Documents, Lessee will complete the same
and, on request, supply a copy of the report or return to Lessor.
(c) If any report, return or statement is required to be made by Lessor or any
Indemnitee with respect to any Tax for which there is an indemnity
obligation of Lessee under this Agreement, Lessee will promptly notify
Lessor of the requirement; and
(i) if permitted by applicable Law, make and file in a timely manner such
report, return or statement (except for any report, return or
statement that Lessor has notified Lessee that Lessor or any
Indemnitee intends to prepare and file), prepare such return in such
manner as will indicate the interests of Lessor as owner and lessor of
the Aircraft under this Agreement and Security Trustee, in its
capacity as such, if required or appropriate, and provide Lessor upon
request a copy of each such report, return or statement filed by
Lessee, or
(ii) if Lessee is not permitted by applicable Law to file any such report,
return or statement, Lessee will prepare and deliver to Lessor a
proposed form of such report, return or statement within a reasonable
time prior to the time such report, return or statement is to be
filed.
5.8 VALUE ADDED TAX:
(a) For the purposes of this Clause 5.8:
(i) "VAT" means value added tax and any goods and services, sales or
turnover tax, imposition or levy of a like nature;
(ii) "supply" includes anything on or in respect of which VAT is
chargeable.
(b) Lessee will pay to Lessor or the relevant taxing authority, as the case may
be, the amount of any VAT chargeable in respect of any supply for VAT
purposes under this Agreement.
(c) Each amount stated as payable by Lessee under this Agreement is exclusive
of VAT (if any). If VAT is payable in respect of any amount as aforesaid,
Lessee shall pay all such VAT and indemnify Lessor against any claims for
the same (and where appropriate, Lessee shall increase the payments which
would otherwise be required to be made hereunder so that Lessor is left in
the same position as Lessor would have been in had no VAT been payable) and
Lessee shall provide evidence to Lessor, if available, in respect of
payment of any such VAT.
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5.9 TAX CONTEST: If Lessee disputes the payment of any Taxes payable by Lessor
or any Indemnitee for which Lessee is responsible under this Agreement, Lessor
will consider with Lessee the taking of such action as Lessee may reasonably
request at Lessee's expense to contest that payment, but no Indemnitee will be
obliged to take any such action:
(a) which such Indemnitee considers in its sole discretion may prejudice it; or
(b) which such Indemnitee considers does not have a reasonable prospect of
success; or
(c) for which Lessee has not made adequate provision to the satisfaction of
such Indemnitee in respect of the expense concerned.
5.10 INDEMNITY PAYMENTS -- AFTER-TAX BASIS: Lessee agrees that, with respect to
any indemnity payment (the "REQUIRED AMOUNT") pursuant to Clause 5.8 (Tax
Indemnity) or Clause 10 (Indemnity) to or for the benefit of any Indemnitee,
Lessee's obligations shall include such amount as may be necessary to hold such
Indemnitee harmless on an after-Tax basis from all Taxes required to be paid by
such Indemnitee with respect to such payment (including any payments pursuant to
this Clause 5.10), so that the total amount required to be paid by Lessee to
such Indemnitee is an amount which will equal the Required Amount after
deduction of all Taxes required to be paid by such Indemnitee with respect to
the receipt or accrual of such amount.
Such total amount shall be determined based on the assumptions that at the time
when each such payment is accrued by such Indemnitee, such payment will be
subject to (i) United States federal income tax at the highest marginal
statutory rate applicable to corporations for the relevant period, (ii) United
States state and local income taxes at the composite of the highest marginal
statutory rates applicable to such Indemnitee, as such composite rates shall be
certified by an officer of such Indemnitee, and (iii) income taxes (if any)
imposed by countries outside the United States at the actual rates imposed on
such Indemnitee.
5.11 LESSOR OBLIGATIONS FOLLOWING EXPIRY DATE: WITHIN FIVE BUSINESS DAYS AFTER:
(a) redelivery of the Aircraft to Lessor in accordance with and in the
condition required by this Agreement; or
(b) payment to Lessor of the Agreed Value following an Event of Loss after the
Delivery Date;
or in each case such later time as Lessor is satisfied that Lessee has
irrevocably paid to Lessor all amounts which may then be outstanding or become
payable under this Agreement and the Other Agreements, Lessor will pay to Lessee
the amount of any Rent received in respect of any period falling after the date
of redelivery of the Aircraft or payment of the Agreed Value, as the case may
be. [Include return of security deposit/guaranty/letter of credit if
applicable.]
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5.12 NET LEASE: This Agreement is a net lease. Lessee's obligations under this
Agreement are absolute and unconditional irrespective of any circumstance or
contingency whatsoever and shall not be reduced by any circumstance or
contingency whatsoever, including:
(a) any right of set-off, counterclaim, recoupment, defence or other right
which either party to this Agreement may have against the other (including
any right of reimbursement) or which Lessee may have against the
Manufacturer, any manufacturer or seller of or any Person providing
services with respect to the Aircraft, any Engine or any Part or any other
Person, for any reason whatsoever;
(b) any unavailability of the Aircraft for any reason, including, but not
limited to a requisition of the Aircraft or any prohibition or interruption
of or interference with or other restriction against Lessee's use,
operation or possession of the Aircraft;
(c) any lack or invalidity of title or any other defect in title,
airworthiness, merchantability, fitness for any purpose, condition, design,
or operation of any kind or nature of the Aircraft for any particular use
or trade, or for registration or documentation under the Laws of any
relevant jurisdiction, or, except as expressly provided herein, any Event
of Loss in respect of or any damage to the Aircraft;
(d) any insolvency, bankruptcy, reorganisation, arrangement, readjustment of
debt, dissolution, liquidation or similar proceedings by or against Lessor,
Lessee or any other Person;
(e) any illegality, invalidity or unenforceability or lack of due authorisation
of, or other defect in this Agreement; and/or
(f) any other cause or circumstance which (but for this provision) would or
might otherwise have the effect of terminating or in any way affecting any
obligation of Lessee under this Agreement.
5.13 [FURTHER PROVISIONS REGARDING MAINTENANCE RESERVES:
(a) Lessee agrees that Lessor shall be entitled to commingle the Maintenance
Reserves with Lessor's general or other funds, and Lessor will not hold any
such funds as agent or on trust for Lessee or in any similar fiduciary
capacity.
(b) If Lessee fails to comply with an provision of this Agreement or the Other
Agreements, or any Default shall have occurred and be continuing, in
addition to all rights and remedies accorded to Lessor elsewhere in this
Agreement or under Law in respect of the Maintenance Reserves, Lessor may
immediately or at any time thereafter, without prior notice to Lessee,
apply all or part of and/or the Maintenance Reserves in or towards the
payment or discharge of any matured obligation owed by Lessee or any Lessee
Affiliate under this Agreement or
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the Other Agreements, in such order as Lessor sees fit, and/or exercise any
of the rights of set-off described in Clause 5.19 against all or part of
the Maintenance Reserves.
(c) If Lessor exercised the rights described in sub-clause (b) above. Lessee
shall, following a demand in writing from Lessor, immediately restore the
Maintenance Reserves to the level at which they stood immediately prior to
such exercise. Any remaining balances of the Maintenance Reserves on the
Expiry Date shall be retained by Lessor as its sole property.]
5.14 [Include fees/security deposit/guaranty/letter of credit provisions if
applicable.]
5.15 DEFAULT INTEREST: If Lessee fails to pay any amount payable under this
Agreement on the due date, Lessee will pay on demand from time to time to Lessor
interest (both before and after judgment) on that amount, from the due date to
the date of payment in full by Lessee to Lessor, at the rate per annum
calculated by Lessor to be LIBOR plus two per cent (or, if less, at the maximum
interest rate permitted by applicable Law). All such interest will be compounded
monthly and calculated on the basis of the actual number of days elapsed in the
month, assuming a 30 day month and a 360 day year.
5.16 CURRENCY:
(a) Lessee acknowledges that the specification of Dollars in this Agreement
is of the essence and that Dollars shall be the currency of account in any
and all events. Lessee waives any right it may have in any jurisdiction to
pay any amount under this Agreement in a currency other than Dollars.
(b) If Lessor receives an amount in respect of Lessee's liability under this
Agreement or if such liability is converted into a claim, proof, judgment
or order in a currency other than the currency (the "contractual
currency") in which the amount is expressed to be payable under this
Agreement;
(i) Lessee will indemnify Lessor as an independent obligation against any
loss arising out of or as a result of such conversion;
(ii) if the amount received by Lessor, when converted into the contractual
currency (at the market rate at which Lessor is able on the date of
receipt by Lessor (or on the next date thereafter on which under
normal banking practice Lessor is able to convert the amount received
into the contractual currency) to purchase the contractual currency
in New York or at its option London with that other currency) is less
than the amount owed in the contractual currency, Lessee will,
forthwith on demand, pay to Lessor an amount in the contractual
currency equal to the deficit; and
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(iii) Lessee will pay to Lessor on demand any exchange costs and Taxes
payable in connection with the conversion.
5.17 CERTIFICATES: Save where expressly provided in this Agreement, any
certificate or determination by Lessor as to any rate of interest or as to any
other amount payable under this Agreement will, in the absence of manifest
error, be presumed prima facie to be correct.
5.18 APPROPRIATION: If any sum paid or recovered by Lessor in respect of the
liabilities of Lessee under this Agreement is less than the amount then due,
Lessor may apply that sum to amounts due under this Agreement in such
proportions and order and generally in such manner as Lessor may determine at
its sole discretion; provided, that no appropriation pursuant hereto shall
prejudice the contesting in good faith by Lessee, or the ultimate allocation or
appropriation, of any amounts claimed due under this Agreement.
5.19 SET-OFF: Lessor may set off any matured obligation owed by Lessee or any
Lessee Affiliate under this Agreement or the Other Agreements against any
obligation owed by Lessor to Lessee (whether or not matured), regardless of the
place of payment or currency. If the obligations are in different currencies,
Lessor may convert either obligation at the market rate of exchange available
in New York or at its option London for the purpose of the set-off. If an
obligation is unascertained or unliquidated, Lessor may in good faith estimate
that obligation and set off in respect of the estimated amount, in which case
when the obligation is ascertained or liquidated Lessor or Lessee shall make a
payment to the other (as appropriate) in respect of any amount by which the
ascertained or liquidated amount differs from the estimated amount. Lessor will
not be obliged to pay any amounts to Lessee under this Agreement so long as any
sums which are then due from Lessee or any Lessee Affiliate under this
Agreement or the Other Agreements remain unpaid, and any such amounts which
would otherwise be due will fall due only if and when Lessee has paid all such
sums, except to the extent that Lessor otherwise agrees or sets off such
amounts against such payment pursuant to the foregoing provisions.
5.20 EXPENSES: Whether or not the Aircraft is delivered to Lessee pursuant to
this Agreement, Lessee will pay to Lessor on demand:
(a) all fees, costs and expenses (including reasonable legal, professional and
out-of-pocket expenses) payable or incurred by Lessor in connection with
any amendment to or extension of or other documentation in connection with,
or the granting of any waiver or consent under, this Agreement or the
monitoring of compliance by Lessee with this Agreement (provided that such
monitoring reveals a Default) but excluding any fees, costs and expenses
incurred by Lessor in connection with any change in the ownership or
financing of the Aircraft or otherwise reimbursable pursuant to Clause
14.5);
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(b) all fees, costs and expenses (including reasonable legal, professional and
out-of-pocket expenses) associated with perfecting this Agreement in the
State of Registration, the State of Incorporation and the Habitual Base
(and any other state or country as appropriate having regard to the
operation of the Aircraft), including (but not limited to) legal opinions,
tax advice, the provision of translations, registrations and the payment of
documentary Taxes and any other Taxes and fees, whether required by Lessor
or Lessee provided that the foregoing shall not apply to Lessor Taxes; and
(c) all fees, costs and expenses (including reasonable legal, survey,
out-of-pocket expenses and other costs) payable or incurred by Lessor in
contemplation of, or otherwise in connection with the enforcement of or
preservation of any of Lessor's or Security Trustee's rights under this
Agreement, or in respect of the repossession of the Aircraft.
All amounts payable pursuant to this Clause 5.20 will be paid in the currency
in which they are incurred by Lessor.
6. MANUFACTURER'S WARRANTIES
6.1 ASSIGNMENTS:
(a) With effect from Delivery, Lessor assigns to Lessee, and authorises Lessee
to exercise such rights as Lessor may have under any warranty with respect
to the Aircraft, any Engine or any part made by any manufacturer, vendor,
sub-contractor or supplier, to the extent that the same may be assigned or
otherwise made available to Lessee and without warranty by Lessor as to
enforceability of any of the rights so assigned.
(b) To the extent that the same may not be assigned or otherwise made
available to Lessee, Lessor agrees to exert its commercially reasonable
efforts at Lessee's request and expense (and subject to Lessee making
adequate provision to the satisfaction of Lessor in respect of any such
expense) to enforce such rights as Lessor may have with respect thereto
for the benefit of Lessee.
(c) Upon occurrence of an Event of Default (unless the same is immediately
rectified to the reasonable satisfaction of Lessor) or termination or
expiry of the leasing of the Aircraft under this Agreement (each, a
"TERMINATION EVENT"), whichever occurs earlier, all rights under such
warranties will immediately revert to Lessor, including all claims
thereunder (whether or not perfected); and Lessee will immediately take
all steps and execute all documents required by Lessor to perfect such
reversion.
6.2 PROCEEDS: Lessor agrees to apply any proceeds of any claims assigned to
Lessee by Lessor under Clause 6.1 to remedy the defect, if any, in the
Aircraft, any Engine or any Part giving rise to such claim. So long as no
Termination Event has occurred and is continuing, Lessor agrees to co-
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operate with Lessee to cause any proceeds from any rights assigned by Lessor to
Lessee under Clause 6.1 to be paid directly to Lessee, and, if any such
proceeds are nonetheless paid to Lessor, unless a Termination Event has
occurred, Lessor agrees to remit promptly such proceeds to Lessee.
7. QUIET ENJOYMENT
7.1 LESSOR'S COVENANT: Provided no Default has occurred and is continuing.
Lessor will not interfere with the quiet use, possession and enjoyment of the
Aircraft by Lessee in accordance with this Agreement during the Term; but the
exercise by Lessor of its rights under or in connection with this Agreement
will not constitute such an interference.
8. LESSEE'S COVENANTS
8.1 DURATION:
(a) Lessee shall perform and comply with its undertakings and covenants in this
Agreement at all times during the Term. All such undertakings and covenants
shall, except where expressly otherwise stated, be performed at the expense
of Lessee.
(b) Lessee will use its best endeavours to procure that no Person (other than
Lessor) will act in any manner inconsistent with Lessee's obligations under
this Agreement.
8.2 INFORMATION: Lessee will:
(a) notify Lessor forthwith of the occurrence of any Default or any other event
which might in the reasonable opinion of Lessor adversely affect Lessee's
ability to perform any of its obligations under this Agreement;
(b) furnish to Lessor:
(i) as soon as available but not in any event later than 180 days after
the last day of each financial year of Lessee, its audited
consolidated balance sheet in English as of such day and its audited
consolidated profit and loss statement for the year ending on such
day; and
(ii) such other information regarding Lessee and its business and affairs
as Lessor may reasonably request from time to time.
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(C) promptly furnish to Lessor all information Lessor from time to time
reasonably requests regarding the Aircraft, each Engine, any engine
installed on the Airframe, and any Part, and the use, location and
condition of the Aircraft, including the hours remaining on the Aircraft
and any Engine until the next scheduled check, inspection, overhaul or shop
visit, as the case may be;
(d) on request, furnish to Lessor evidence satisfactory to Lessor that all
charges and other outgoings incurred by Lessee with respect to the
Aircraft, including all payments due to the relevant air traffic control
authorities, have been, or are being, paid and discharged in a normal
commercial manner which would not give rise to a Security Interest on, or a
right of detention in relation to, the Aircraft;
(e) provide to Lessor within seven days after the end of each calendar month a
monthly report on the Aircraft and each Engine in the form required by
Lessor;
(f) give Lessor not less than 60 days' written notice as to the time and
location of all Major Checks; and
(g) promptly notify Lessor of:
(i) any loss, theft, damage or destruction to the Aircraft, any Engine or
any Part, or any modification to the Aircraft if the potential cost
may exceed the Damage Notification Threshold (without regard to any
insurance claim related thereto); and
(ii) any claim or other occurrence likely to give rise to (x) a claim under
the hull Insurances in excess of the Damage Notification Threshold, or
(y) any other claim in excess of $[2,000,000] (without regard to any
insurance claim related thereto) and details of any negotiations with
the insurance brokers over any such claim.
8.3 LAWFUL AND SAFE OPERATION: Lessee will:
(a) comply at all times with the Laws in force in any country or jurisdiction
which may then be applicable to the Aircraft (including Laws mandating
insurance coverage) or, so far as concerns the use and operation of the
Aircraft or an owner or operator thereof, and take all reasonable steps to
ensure that the Aircraft is not used for any illegal purpose;
(b) not operate or otherwise use the Aircraft in any manner contrary to any Law
of the Air Authority or for any purpose for which the Aircraft is not
designed or reasonably suitable;
(c) ensure that the crew and engineers employed by it in connection with the
operation and maintenance of the Aircraft have the qualifications and hold
the licenses required by the Air Authority and applicable Law;
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(d) use the Aircraft solely in commercial or other operations for which Lessee
is duly authorised by the Air Authority and under applicable Law;
(e) not use the Aircraft for the carriage of any items or substances which
could reasonably be expected to cause damage to the Aircraft or which would
not be adequately covered by the Insurances, or any item or substance whose
possession or carriage is illegal under any applicable Law; and comply with
the any carriage regulations or restrictions from time to time issued by
IATA;
(f) not utilise the Aircraft for purposes of training, qualifying or
re-confirming the status of cockpit personnel except for the benefit of
Lessee's cockpit personnel, and then only if the use of the Aircraft for
such purpose is not disproportionate to the use for such purpose of other
aircraft of the same type operated by Lessee;
(g) not cause or permit the Aircraft to proceed to, or remain at, any location
which is then the subject of a prohibition order (or any similar order or
directive) or sanctions or restrictions by or under:
(i) any law or government regulation applicable to the Aircraft or to
Lessee, including the relevant provisions of the US Commerce
Department's Export Administration Regulations (15 C.F.R. Parts
760-774); or
(ii) any Government Entity of the State of Registration or the Habitual
Base; or
(iii) any Government Entity of the country in which such location is
situated; or
(iv) any Government Entity having jurisdiction over Lessor, Xxxxxxx &
Xxxxx, Security Trustee, Trustee or the Aircraft;
(h) obtain and maintain in full force all certificates, licenses, permits and
authorisations from time to time required for the use and operation of the
Aircraft, and for the making of payments required by, and the compliance by
Lessee with its other obligations under, this Agreement; and
(i) not use, operate, or locate the Aircraft or suffer or permit the Aircraft
to be used, operated or located during the Term in any manner not covered
by the Insurances or in any area excluded from coverage by the Insurances
or in any manner not covered by the Insurances or in any manner which would
prejudice the interests of the Indemnitees in the Insurances, the Aircraft,
any Engine or any Part.
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8.4 SUBLEASING: Lessee will not sub-lease, or part with possession of the
Aircraft, the Engines or any Part without the prior written consent of Lessor,
such consent not to be unreasonably withheld or delayed, and any permitted
subleasing shall be in accordance with such terms and conditions as Lessor may
impose if it grants its consent thereto; provided, that:
(a) Lessee may part with possession (i) with respect to the Aircraft, the
Engines or any Part of the relevant manufacturers for testing or similar
purposes or to the Agreed Maintenance Performer for service, repair,
maintenance or overhaul work, or alterations, modifications or additions to
the extent required or permitted by this Agreement, and (ii) with respect
to an Engine or Part, as expressly permitted by this Agreement; and
(b) Lessee may wet lease the Aircraft (without parting with possession and
control thereof) and shall notify Lessor of its intention to do so and,
provided, further, that:
(i) no Event of Default has occurred and is continuing; and
(ii) any charter, agreement or other document containing the terms of
such wet-lease;
(A) shall be subordinate in all respects to this Agreement;
(B) will not in any event be capable of extending beyond the
Expiry Date; and
(C) shall not result in any change in the State of Registration
or the Habitual Base (except as provided for in clause
8.7(b)), provided that it is agreed that the consent of
Lessor shall not be required to any such wet-lease which
involves a change in the Habitual Base to a Habitual Base
situated within the European Union, the United States of
America or Canada; and
(c) no such wet lease or parting with possession or permitted sublease shall
release or relieve Lessee from, or reduce, any of Lessee's obligations
under this Agreement, all of which shall remain Lessee's responsibility and
shall be directly enforceable against Lessee as if such wet lease or
parting with possession or permitted sublease had not occurred.
8.5 INSPECTION:
(a) Lessor and any person designated by Lessor may at Lessor's cost, at any
time visit, inspect and survey the Aircraft, any Engine, any Part or the
Aircraft Documents, and for such purpose may, subject to any applicable Air
Authority regulation, travel on the flight deck as observer.
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(b) Lessee will pay to Lessor on demand all reasonable out-of-pocket expenses
incurred by Lessor in connection with any such visit, inspection or survey
conducted after the occurrence of a Default.
(c) Lessor will:
(i) have no duty to make, and no liability arising out of making or
failing to make, any such visit, inspection or survey; and
(ii) so long as no Default has occurred and is continuing, not exercise
such right other than on reasonable notice and so as not to disrupt
unreasonably the commercial operations of Lessee; PROVIDED, HOWEVER,
Lessee will take such action as may be reasonably required to
facilitate Lessor's inspection.
8.6 OWNERSHIP; PROPERTY INTERESTS; RELATED MATTERS: Lessee will:
(a) not do or knowingly permit to be done or omit or knowingly permit to be
omitted to be done any act or thing which might reasonably be expected to
jeopardise the rights of Lessor as owner of the Aircraft and as lessor
thereof under this Agreement or the rights of Security Trustee in its
applicable capacity or the rights of Lessor and Security Trustee as
additional insureds, contract parties or loss payees under the Insurances
or the validity, enforceability or priority of any applicable Security
Documents;
(b) on all occasions when the ownership of the Aircraft, any Engine or any part
is relevant, make clear to third parties that title is held by Lessor;
(c) not at any time (i) represent or hold out Lessor, Security Trustee, Trustee
or any of the Financing Parties as carrying goods or passengers on the
Aircraft or as being in any way connection or associated with any,
operation or carriage (whether for hire or reward or gratuitously) which
may be undertaken by Lessee; or (ii) pledge the credit of Lessor, Security
Trustee, Trustee or any of the Financing Parties;
(d) ensure that there is always affixed, and not removed or in any way
obscured, a fireproof plate (having dimensions of not less than 10 cm. x
7 cm.) in a reasonably prominent position in the cockpit of the Aircraft
adjacent to the certificate of airworthiness and on each Engine stating:
"this Aircraft/Engine is owned by [________], is leased to _______________
and may not be or remain in the possession of, or be operated by, any other
person with the prior written consent of _______________";
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(e) not crease or permit to exist any Security Interest (other than Permitted
Liens) upon the Aircraft, any Engine or any Part;
(f) not do or permit to be done anything which may reasonably be expected to
expose the Aircraft, any Engine or any Part to penalty, forfeiture,
impounding, detention, appropriation, damage or destruction and without
prejudice to the foregoing, if any such penalty, forfeiture, impounding,
detention or appropriation, damage or destruction occurs, give Lessor
immediate notice thereof and procure the immediate release of the Aircraft,
any Engine or the Part, as the case may be;
(g) not abandon the Aircraft, any Engine or any Part;
(h) pay and discharge, or cause to be paid and discharged, when due and payable
or make adequate provision by way of security or otherwise for all debts,
damages, claims and liabilities which have given or might give rise to a
Security Interest (other than Permitted Liens) over or affecting the
Aircraft, any Engine or any Part; and
(i) not attempt, or hold itself out as having only power, to sell, lease or
otherwise dispose of the Aircraft, any Engine or any Part.
8.7 GENERAL: Lessor will:
(a) not make any substantial change in the nature of the business in which it
is engaged, will preserve its corporate existence (other than in connection
with a voluntary liquidation in the context of a solvent reconstruction or
reorganization on terms which shall have been previously approved in
writing by Lessor and provided that upon such voluntary liquidation, an
affiliate of Lessee enters into a lease agreement with Lessor in
substantially identical terms to this Agreement), and will conduct its
business in an orderly and efficient manner and will maintain all rights,
privileges, licenses and franchises material thereto or material to
performing its obligations under this Agreement;
(b) ensure that the Habitual Base remains the habitual base of the Aircraft
unless Lessor gives its prior written consent to a change therein, such
consent not to be unreasonably withheld or delayed; and
(c) not operate, maintain, insure or deal with the Aircraft or any Engine or
Part in a manner which discriminates against the Aircraft or such Engine or
Part, when compared with the manner in which Lessee operates, maintains,
insures or deals with similar aircraft, engines or parts in Lessee's fleet.
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8.8 RECORDS: Lessee will:
(a) cause accurate, complete and current records to be kept of all flights made
by, and all maintenance carried out on, the Aircraft (including in relation
to each Engine and Part subsequently installed, before the installation);
keep the records in such manner as the Air Authority may from time to time
require, and ensure that they comply with the recommendations of any
manufacturers of the Aircraft, any Engine or any Part. The records will
form part of the Aircraft Documents; and
(b) maintain in English with appropriate revision service, all Aircraft
Documents, records, logs and other materials required by applicable Laws
and the practice of major international air transport operators in respect
of the Aircraft.
8.9 PROTECTION: Lessee will:
(a) maintain or procure the maintenance of the registration of the Aircraft
with the Air Authority in the name of Lessor (or, if such registration
cannot be maintained in the name of Lessor, on a basis which reflects the
interests of Lessor, as owner of the Aircraft and as lessor of the Aircraft
under this Agreement and the interest, if any, of the Security Trustee, to
the greatest extent permitted by applicable Law) and not do or suffer to be
done anything which might adversely affect that registration; and
(b) do all acts and things (including making any filing or registration with
the Air Authority or any other Governmental Entity or as required to comply
with the Geneva Convention where applicable) and execute and deliver,
notarise, file, register and record all documents (including any amendment
of this Agreement provided, without prejudice to the rights of Lessor under
Clause 14, such amendment shall not materially affect the rights and
obligations of the Lessee) as may be required by Lessor:
(i) upon or following any change or proposed change in the ownership or
financing of the Aircraft (and Lessor shall reimburse Lessee for the
reasonable out-of-pocket expenses, including reasonable legal fees,
incurred by Lessee at the time of such change in complying with
Lessor's requirements under this paragraph (i)); or
(ii) following any modification of the Aircraft, and Engine or any Part or
the permanent replacement of any Engine, or Part in accordance with
this Agreement so as to ensure that the rights of Lessor as owner and
lessor under this Agreement and the rights of Security Trustee as
applicable apply with the same effect as before; or
(iii) to establish, maintain, preserve, perfect and protect the rights of
Lessor as owner of the Aircraft and lessor under this Agreement or
the interest of Security Trustee as applicable.
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8.10 MAINTENANCE AND REPAIR: Lessee will:
(a) keep the Aircraft airworthy in all respects and in good repair and
condition;
(b) not change the schedule and work content of (i) the C Checks or (ii) the
"D" Check or (iii) the structural inspection items of the Agreed
Maintenance Programme without the prior written consent of Lessor, such
consent not to be unreasonably withheld;
(c) maintain the Aircraft in accordance with the Agreed Maintenance Programme
through the Agreed Maintenance Performer;
(d) maintain the Aircraft in accordance with the standard of maintenance
required by the Air Authority and in at least the same manner and with at
least the same care, including maintenance scheduling, service bulletin
status, modification status and technical condition, as is the case with
respect to similar aircraft owned or otherwise operated by Lessee and as if
Lessee were to retain and continue operating the Aircraft in its fleet
after the Expiry Date, including all maintenance to the Airframe, and
Engine or any Part required to maintain all warranties, performance
guarantees or service life policies in full force and effect;
(e) comply with all Air Authority mandatory inspection and mandatory
modification requirements and Airworthiness Directives and alert service
bulletins of the manufacturer applicable to the Aircraft, any Engine or
Part having a compliance date during the Term; and
if such Airworthiness Directive is issued by the FAA (other than Excluded
Requirements) and/or, to the extent that the same have legal effect, the
Joint Airworthiness Authority (Joint Airworthiness Authority), and if the
costs to Lessee or performing or causing to be performed such Airworthiness
Directive exceeds $______, and (save in the case of those Airworthiness
Directives that shall only reasonably be accomplished during a "D" Check)
if Lessee accomplishes such Airworthiness Directive no later than 12 months
after the effective date stipulated in such Airworthiness Directive, Lessor
shall, following receipt of an invoice in respect of such amount, and
provided no Default has occurred and in continuing, reimburse to Lessee an
amount calculated in accordance with the following formula:
C x (N - R)/N
Where:
"N"=_______
"R"= the remainder of the Term in months after completion of the
performance work:
"C"= the cost of the performance work in excess of $_____
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"Excluded Requirements" means any mandatory FAA operational requirement
which relates solely to operation of the Aircraft within the airspace of
the United States of America, unless, it is required by the Air Authority
or the Joint Airworthiness Authority (Joint Airworthiness Authority) for
operation in the Habitual Base.
(f) comply with all applicable Laws and the regulations of the Air Authority
and other aviation authorities with jurisdiction over Lessee or the
Aircraft, any Engine or Part (regardless of upon whom such requirements are
imposed) and which relate to the maintenance, condition, use or operation
of the Aircraft or require any modification or alteration to the Aircraft,
any Engine or Part;
(g) maintain in good standing a current certificate of airworthiness (in the
appropriate category for the nature of the operations of the Aircraft) for
the Aircraft issued by the Air Authority except where the Aircraft is
undergoing maintenance, modification or repair required or permitted by
this Agreement, and Lessee will provide on request from time to time to
Lessor a copy of such certificates; and
(h) if required by the Air Authority, maintain a current certification as to
maintenance issued by or on behalf of the Air Authority in respect of the
Aircraft and will from time to time provide to Lessor a copy on request.
8.11 REMOVAL/INTERCHANGE OF ENGINES: Lessee will:
(a) ensure that no Engine is removed from the Airframe unless it is promptly
replaced by an engine of the same model as, or an improved or advanced
version of, such Engine and Lessee has full details as to the source and
maintenance records of the replacement engine;
(b) ensure that any Engine which is not installed on the Aircraft (or an
aircraft permitted by paragraph (d) below) is, except as expressly
permitted by this Agreement, properly and safely stored and insured, and
kept free form Security Interests (other than Permitted Liens);
(c) from time to time, on request by Lessor, procure that any person to whom
possession of an Engine is given acknowledges in writing to Lessor, in form
and substance satisfactory to Lessor, that it will respect the interests of
Lessor as owner of such Engine and Lessor thereof and of the Security
Trustee as applicable and will not seek to exercise any rights whatsoever
in relation to such Engine;
(d) be permitted, if no Default has occurred and is continuing, to install any
Engine on an aircraft operated by Lessee, provided that neither (i) the
provisions of any applicable Law nor (ii) the terms of any lease or other
agreement or Security Interest to which such aircraft or engine is subject,
prohibit such installation or will have the effect at any time of divesting
or impairing
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the title and interests of Lessor as owner of such Engine and lessor
thereof under this Agreement, or the interest, if any, of the Security
Trustee as applicable over such Engine; and
(e) promptly procure the replacement of any Engine ("ORIGINAL ENGINE") which
has become time-, cycle- or calendar-expired, or has suffered an Engine
Event of Loss, with the following:
(i) a replacement engine of the same manufacturer and model, or at
Lessee's option an engine of an improved model, that has equivalent
value, utility, modification status, time elapsed since performance
restoration shop visit and equivalent remaining warranty status as
the Original Engine, and is otherwise of an equivalent value and
utility and suitable for installation and use on the Airframe without
impairing the value or utility of the Airframe and compatible with
the remaining installed Engine;
(ii) that has become and remains the property of Lessor, as owner, free
from Security Interests (except Permitted Liens) and on installation
on the Aircraft will without further act be subject to this
Agreement; and Lessee shall at any time when requested by Lessor,
provide evidence to Lessor's satisfaction (including the provision,
if required, to Lessor of bills of sale and one or more legal
opinions) that title to the replacement engine has passed to lessor
subject to this Agreement free and clear of all Security Interests
and shall at its own expense take all such steps and execute and
procure the execution of all such documents as may be required or
desirable to effect such passing of title; and
(iii) Lessee has full details of such engine's source and maintenance
records.
8.12 REMOVAL/INTERCHANGE OF PARTS: Lessee will:
(a) ensure that no Part is at any time removed from the Airframe unless it is
promptly replaced by a part complying with the following:
(i) it is in as good operating condition, has substantially similar hours
available until the next scheduled check, inspection, overhaul and
shop visit, is of the same or a more advanced make and model and is
of the same interchangeable modification status, and of equivalent
value and utility to, as the replacement Part;
(ii) it has become and remains the property of Lessor, as owner, free from
Security Interests (other than Permitted Liens) and on installation
of the Aircraft will without further act be subject to this
Agreement; and
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(iii) Lessee has full details as to such part's source and maintenance
records:
(b) ensure than any Part which is not installed on the Aircraft (or any other
aircraft as expressly permitted by this Agreement) is properly and safely
stored and insured, and kept free from Security Interests (other than
Permitted Liens);
(c) be permitted, if no Default has occurred and is continuing, to install any
Part on an aircraft operated by Lessee, provided that Clause 8.11(d) would
be complied with in respect of such part if it were an Engine; and
(d) promptly procure the replacement of any Part which has become time-, cycle-
or calendar-expired, loss, stolen, seized, confiscated, destroyed, damaged
beyond repair, unserviceable or permanently rendered unfit for use, with a
part complying with paragraph (a) above.
8.13 POOLING OF ENGINES AND PARTS: Lessee will not enter into nor permit any
pooling agreement or arrangement in respect of any Engine or Part without the
prior written consent of Lessor which shall not be unreasonably withheld or
delayed.
8.14 EQUIPMENT CHANGES:
(a) Lessee will not make any modification or addition to the Aircraft (each an
"EQUIPMENT CHANGE"), except for an Equipment Change which
(i) is expressly permitted by this Agreement; or
(ii) has the prior written approval of Lessor and does not diminish or
impair the value, utility, condition, or airworthiness of the
Aircraft below the value, utility, condition or airworthiness thereof
subsisting at the time of the Equipment Change assuming the Aircraft
is in the condition required by the provisions hereof.
(b) So long as no Default has occurred and is continuing, Lessee may remove any
Equipment Change if it can be removed from the Aircraft without diminishing
or impairing the value, utility, condition or airworthiness of the
Aircraft.
8.15 TITLE TO AN EQUIPMENT CHANGE:
(a) Title to all Parts installed on the Aircraft (whether by way of
replacement, as the result of an Equipment Change or otherwise) will on
installation, without further act, vest in Lessor subject to the terms of
this Agreement, free and clear of all Security Interests (other than
Permitted Liens). Lessee will at its own expense take all such steps and
execute, and procure the execution of, all such instruments as Lessor may
require and which are necessary to ensure that title so passes to Lessor
according to all applicable Laws. At any time when
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requested by Lessor, Lessee will provide evidence to Lessor's satisfaction
(including the provision, if required, to Lessor of bills of sale and one
or more legal opinions) that title has so passed to Lessor.
(b) Lessor may require Lessee to remove any Equipment Change on the Expiry Date
and to restore the Aircraft to its condition prior to that Equipment
Change.
(c) Any Engine or Part at any time removed from the Aircraft will remain the
property of Lessor until a replacement has been effected in accordance with
this Agreement and until title in that replacement has passed, according to
applicable Laws, to Lessor subject to the terms of this Agreement, free of
all Security Interests (other than Permitted Liens), whereupon title to the
replaced Engine or Part, will, provided no Default has occurred and is
continuing, pass to Lessee.
9. INSURANCE
9.1 INSURANCES: Lessee will maintain the Insurances in full force during the
Term and thereafter as expressly required in this Agreement, through such
brokers and with such insurers and having such deductibles and subject to such
exclusions as may be approved by Lessor from time to time. The Insurances shall
in any event meet the requirements set forth in Schedule 8, which may be amended
from time to time by Lessor at Lessee's expense so that the scope and level of
insurance cover is maintained in line with such insurance coverage as may then
be customary in the airline industry for aircraft of a type similar to the
Aircraft being used on routes similar to the Aircraft and commonly required by
leading international aircraft operating lessors.
9.2 CHANGE: If at any time Lessor wishes to revoke its approval of any
insurer, reinsurer, insurance or reinsurance, Lessor and/or its brokers will
consult with Lessee and Lessee's brokers (as for the time being approved by
Lessor) regarding whether that approval should be revoked to protect the
interests of the parties insured. If, following such consultation, Lessor
considers that any change should be made, Lessee will then arrange or procure
the arrangement of alternative cover satisfactory to Lessor.
9.3 INSURANCE UNDERTAKINGS AND INFORMATION: Lessee will:
(a) comply with the terms and conditions of each policy of the Insurances, and
not do, consent or agree to any act or omission which:
(i) invalidates or may invalidate the Insurances; or
(ii) renders or may render void or voidable the whole or any part of
any of the Insurances; or
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(iii) brings any particular liability within the scope of an
exclusion or exception to the Insurances;
(b) not take out without the prior written approval of Lessor any insurance or
reinsurance in respect to the Aircraft other than those required under this
Agreement unless relating solely to hull total loss, business interruption,
profit commission and deductible risk;
(c) commence renewal procedures at least ____ days prior to expiry of any of
the Insurances and provide to Lessor:
(i) if requested by Lessor, a written status report of renewal
negotiation ____ days prior to each expiry date;
(ii) telecopy confirmation of completion of renewal prior to each
expiry date:
(iii) certificates of insurance (and where appropriate certificates of
reinsurance) and broker's (and any reinsurance brokers') letter
of undertaking in a form acceptable to Lessor in English,
detailing the coverage and confirming the insurers' (and any
reinsurers') agreement to the specified insurance requirements
of this Agreement within seven days after each renewal date;
(d) on request, provide to Lessor copies of documents or other information
evidencing the Insurances; and
(e) provide any other insurance and reinsurance related information, or
assistance, in respect of the Insurances as Lessor may reasonable require.
9.4 FAILURE TO INSURE: If Lessee fails to maintain the Insurances in compliance
with this Agreement, each of the Indemnitees will be entitled but not bound
(without prejudice to any other rights of Lessor under this Agreement):
(a) to pay the premiums due or to effect and maintain insurances satisfactory
to it or otherwise remedy Lessee's failure in such manner (including,
without limitation to effect and maintain an "owner's interest" policy) as
it considers appropriate. Any sums so expended by it will become
immediately due and payable by Lessee to Lessor together with interest
thereon at the Default Rate, from the date of the expenditure by it up to
the date of reimbursement by Lessee; and
(b) at any time while such failure is continuing to require the Aircraft to
remain at any airport or to proceed to and remain at any airport designated
by it until the failure is remedied to its satisfaction.
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9.5 CONTINUING INDEMNITY: Lessee shall effect and maintain insurance after the
Expiry Date with respect to its liability under the indemnity in Clause 10 for
two years or until the next scheduled Major Check, whichever is the earlier, and
such insurance shall name each Indemnitee as an additional insured.
10. INDEMNITY
10.1 GENERAL: Lessee agrees to defend, indemnify and hold harmless the
Indemnitees on demand from and against any and all Losses (regardless of when
the same are made or incurred):
(a) which may at any time be suffered or incurred directly or indirectly as a
result of or connected with the possession, delivery, performance,
management, ownership, registration, control, maintenance, condition,
service, repair, overhaul, leasing, use, operation or redelivery of the
Aircraft, any Engine or Part (either in the air or on the ground), or the
occurrence of any Default, whether or not the Loss may be attributable to
any defect in the Aircraft, any Engine or any Part or to its design,
testing or use or otherwise, and regardless of when the same arises or
whether it arises out of or is attributable to any act or omission,
negligent or otherwise, of any Indemnitee; or
(b) which arise out of any act or omission which invalidates or which renders
violable any of the Insurances; or
(c) which may at any time be suffered or incurred as a consequence of any
design, article or material in the Aircraft, any Engine or Part or its
operation or use constituting an infringement of patent, copyright,
trademark, design or other proprietary right, or a breach of any
obligation of confidentiality owed to any person in respect of any of the
matters referred to in this paragraph (c);
but excluding any Loss in relation to a particular Indemnitee to the extent that
such Loss (i) is covered pursuant to another indemnity provision of this
Agreement or (ii) arises solely as a result of the gross negligence or wilful
misconduct of that Indemnitee or (iii) arises solely as a result of Lessor Taxes
or a Lessor Lien attributable to that Indemnitee.
10.2 DURATION: The indemnities contained in this Agreement will continue in
full force following the Event of Default notwithstanding any breach or
repudiation by Lessor or Lessee of this Agreement or any termination of the
leasing of the Aircraft hereunder.
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11. EVENTS OF LOSS
11.1 EVENTS OF LOSS:
(a) If an Event of Loss occurs prior to Delivery, this Agreement will
immediately terminate and except as expressly stated in this Agreement
neither party will have any further obligations or liability under this
Agreement other than pursuant to Clause 5.11.
(b) If an Event of Loss occurs after Delivery, Lessee will pay the Agreed Value
to Lessor on or prior to the earlier of (i)__ days after the Event of Loss
and (ii) the date of receipt of insurance proceeds in respect of that Event
of Loss.
(c) Subject to the rights of any insurers and reinsurers or other third party,
upon irrevocable payment in full to Lessor of the Agreed Value and all
other amounts which may be or become payable to Lessor under this
Agreement, Lessor will without recourse or warranty (except as to the
absence of Lessor's Liens) transfer to Lessee all of Lessor's rights to the
Aircraft, on an as-is where-is basis, and will at Lessee's expense, execute
and delivery such bills of sale and other documents and instruments as
Lessee may reasonably request to evidence such transfer, free and clear of
all rights of Lessor and Lessor Liens. Lessee shall indemnify Lessor for
all fees, expenses and Taxes incurred by Lessor in connection with any such
transfer.
11.2 REQUISITION: During any requisition for use or hire of the Aircraft, any
Engine or Part which does not constitute an Event of Loss:
(a) the Rent and other charges payable under this Agreement will not be
suspended or abated either in whole or in part, and Lessee will not be
released from any of its other obligations under the Agreement (other than
operational obligations with which Lessee is unable to comply solely by
virtue of the requisition); and
(b) so long as no Default has occurred and is continuing, Lessee will be
entitled to any hire paid by the requisitioning authority in respect of the
Term or any part thereof. Lessee will, as soon as practicable after the end
of any such requisition, cause the Aircraft to be put into the condition
required by this Agreement. Lessor will be entitled to all compensation
payable by the requisitioning authority in respect of any change in the
structure, state or condition of the Aircraft arising during the period of
requisition, and Lessor will apply such compensation in reimbursing Lessee
for the cost of complying with its obligations under this Agreement in
respect of any such change, but, if any Default has occurred and is
continuing, Lessor may apply the compensation or hire in or towards
settlement of any amounts owing by Lessee under this Agreement.
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12. RETURN OF AIRCRAFT
12.1 RETURN: On the Expiry Date or redelivery of the Aircraft pursuant to
Clause 13.2 or termination of the leasing of the Aircraft under this Agreement,
Lessee will,unless an Event of Loss has occurred, redeliver the Aircraft and
Aircraft Documents at Lessee's expense to Lessor at the Redelivery Location, in
accordance with the procedures and in compliance with the conditions set forth
in Schedule 7, free and clear of all Security Interests (other than Lessor
Liens) and in a condition qualifying for immediate certification of
airworthiness by the Air Authority or as otherwise agreed by Lessor and Lessee.
If requested by Lessor, Lessee shall thereupon cause the Aircraft to be
deregistered by the Air Authority.
12.2 NON-COMPLIANCE: To the extent that, at the time of Final Inspection,
Lessee has not fully complied with any of its obligations under this Agreement,
Lessee will at Lessor's option:
(a) immediately rectify such non-compliance, and all Lessee's obligations under
this Agreement will remain in force until such non-compliance has been
rectified, and in particular (without limitation) Lessee shall pay Rent to
Lessor from the date of Final Inspection up to the date when such
non-compliance shall have been fully rectified, at a rate per month equal
to the monthly Rent specified in Clause 5.2, calculated on a per diem
basis; or
(b) redelivery the Aircraft to Lessor and indemnify and hold Lessor harmless
against the cost putting the aircraft into the condition required by this
Agreement.
12.3 REDELIVERY: Upon redelivery Lessee will provide to Lessor, upon Lessor's
request, all documents necessary to export the Aircraft from the Habitual Base
(including, without limitation, a valid and subsisting export license for the
Aircraft) and required in relation to the deregistration of the Aircraft with
the Air Authority.
12.4 ACKNOWLEDGMENT: Provided Lessee has complied with its obligations under
this Agreement, following redelivery of the Aircraft by Lessee to Lessor at the
Redelivery Location, Lessor will deliver to Lessee an acknowledgment
confirming that Lessee has redelivered the Aircraft to Lessor in accordance
with this Agreement.
12.5 INDEMNITY: Lessor will indemnify and hold Lessee harmless from and against
all Losses arising from death or injury to any observer or any employee of
Lessor in connection with any demonstration flight or inspection of the
Aircraft by Lessor referred to in Schedule 7.
13. DEFAULT
13.1 EVENTS: The occurrence of any of the Event of Default will constitute a
repudiation (but not a termination) of this Agreement by Lessee (whether the
occurrence of any such Event of Default
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is voluntary or involuntary or occurs by operation of Law or pursuant to or in
compliance with any judgment, decree or order of any court or any order, rule
or regulation of any Governmental Entity).
13.2 RIGHTS AND REMEDIES: If an Event of Default occurs, Lessor may at its
option (and without prejudice to any of its other rights under this
Agreement), at any time thereafter (without notice to Lessee except as
required under applicable Law):
(a) accept such repudiation and by notice to Lessee and with immediate effect
terminate the leasing of the Aircraft (but without prejudice to the
continuing obligations of Lessee under this Agreement), whereupon all
rights of Lessee under this Agreement shall cease; and/or
(b) proceed by appropriate court action or actions to enforce performance of
this Agreement or to recover damages for the breach of this Agreement;
and/or
(c) either:
(i) take possession of the Aircraft, for which purpose Lessor may enter
any premises belonging to or in the occupation of or under the control
of Lessee where the Aircraft may be located, or cause the Aircraft to
be redelivered to Lessor at the Redelivery Location (or such other
location as Lessor may require), and Lessee hereby irrevocably by way
of security for Lessee's obligations under this Agreement appoints
(which appointment is coupled with an interest) Lessor as Lessee's
attorney in causing the redelivery or in directing the pilots of
Lessee or other pilots to fly the Aircraft to that airport and Lessor
will have all the powers and authorisations necessary for taking that
action; or
(ii) by serving notice require Lessee to redeliver the Aircraft to Lessor
at the Redelivery Location (or such other location as Lessor may
require).
13.3 DEFAULT INDEMNITY: If an Event of Default occurs, or the Aircraft is not
delivered on the proposed Delivery Date by reason of failure of Lessee to
satisfy any conditions to that delivery, Lessee will indemnify Lessor on
demand against any Loss which Lessor may sustain or incur directly or
indirectly as a result of such Event of Default or non-delivery, including
(but not limited to):
(a) any loss of profit suffered by Lessor because of Lessor's inability to
place the Aircraft on lease with another lessee on terms as favourable to
Lessor as this Agreement, or because whatever use, if any, to which Lessor
is able to put the Aircraft upon its return to Lessor, or the funds arising
upon a sale or other disposal of the Aircraft, is not as profitable to
Lessor as this Agreement;
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(b) any amount of principal, interest, fees or other sums whatsoever paid or
payable on account of funds borrowed in order to carry any unpaid amount;
(c) any Loss which may be incurred in repaying funds raised to finance the
Aircraft or in unwinding any swap, forward interest rate agreement or other
financial instrument relating in whole or in part to Lessor's financing of
the Aircraft; and
(d) any Loss sustained or incurred by Lessor in or as a result of exercising
any of its rights or remedies pursuant to Clause 13.2 or as a result of
Lessee's failure to redeliver the Aircraft on the date, at the place and in
the condition required by this Agreement.
13.4 SALE OR RE-LEASE OF AIRCRAFT: If an Event of Default occurs, Lessor may
sell or re-lease or otherwise deal with the Aircraft at such time and in such
manner and on such terms as Lessor considers appropriate in its absolute
discretion, free and clear of any interest of Lessee, as if this Agreement had
never been entered into.
13.5 DEREGISTRATION: If an Event of Default occurs, Lessee will at the request
of Lessor immediately take all steps necessary to effect (if applicable)
deregistration of the Aircraft and its export from the country where the
Aircraft is for the time being situated, and any other steps necessary to
enable the Aircraft to be redelivered to Lessor in accordance with this
Agreement, and Lessee hereby irrevocably and by way of security for its
obligations under this Agreement appoints (which appointment is coupled with an
interest) Lessor as Lessee's attorney to execute and deliver any documentation
and to do any act or thing required in connection with the foregoing.
14. ASSIGNMENT
14.1 LESSEE: Lessee will not assign, transfer (whether voluntarily or
involuntarily, by operation of law or otherwise) or delegate, or create or
permit to exist any Security Interest over, any of its rights or obligations
under this Agreement.
14.2 ASSIGNMENT BY LESSOR: Lessee agrees that Lessor may at any time during the
Term assign its rights under this Agreement. Notwithstanding any such
assignment, Lessor will remain entitled to the benefit of each indemnity and
the liability insurances effected under this Agreement. Lessee will promptly
execute all documents reasonably requested by Lessor to effect, perfect, record
or implement any such assignment, and will promptly comply with any other
reasonable requests of Lessor, its successors and assigns in respect of any
such novation.
14.3 TRANSFER OF LESSOR: Lessee agrees that Lessor may at any time during the
Term transfer by way of novation its rights and obligations under this
Agreement, and upon completion of any such novation (including the assumption
by the transferee of all of Lessor's remaining obligations under this
Agreement) Lessor will be released from and will have no further obligation
under this Agreement (but, for the avoidance of doubt, Lessor will continue to
be entitled to the benefit of each
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indemnity and the liability insurances effected under this Agreement). Lessee
will promptly execute all documents reasonably requested by Lessor to effect,
perfect, record or implement any such novation, and will promptly comply with
any other reasonable requests of Lessor, its successors and assigns in respect
of any such novation.
14.4 NO ADDITIONAL COST: If at the time of any such assignment or transfer by
Lessor there arises an obligation to make a payment to the assignee or
transferee which exceeds the amount which Lessee would have been obligated to
pay under this Agreement to Lessor if no such assignment or transfer had taken
place, then Lessee shall not be obliged to pay the amount of such excess:
14.5 COSTS: Lessor shall reimburse to Lessee its reasonable out-of-pocket
expenses (including reasonable legal expenses) actually incurred in connection
with co-operating with Lessor in relation to any such assignment or transfer
referred to in this Clause 14, provided that such expenses are substantiated to
Lessor's reasonable satisfaction.
14.6 NO GREATER OBLIGATIONS: The Lessor agrees that any such assignment or
transfer shall not materially affect the Lessee's rights and obligations under
this Agreement.
15. MISCELLANEOUS
15.1 WAIVER, REMEDIES CUMULATIVE: The rights of Lessor under this Agreement may
be exercised as often as necessary, are cumulative and not exclusive of its
rights under any Law; and may be waived only in writing and specifically. Delay
by Lessor in exercising, or non-exercise of, any such right will not constitute
a waiver of that right.
15.2 DELEGATION: Lessor may delegate to any Person all or any of the rights,
powers or discretions vested in it by this Agreement, and any such delegation
may be made upon such terms and conditions and subject to such regulations
(including power to sub-delegate) as Lessor in its absolute discretion thinks
fit.
15.3 SEVERABILITY: Without prejudice to paragraph (s) of Schedule 10, if a
provision of this Agreement is or becomes illegal, invalid or unenforceable in
any jurisdiction, that will not affect:
(a) the legality, validity or enforceability in that jurisdiction of any other
provision of this Agreement; or
(b) the legality, validity or enforceability in any other jurisdiction of that
or any other provision of this Agreement.
15.4 REMEDY: If Lessee fails to comply with any provision of this Agreement,
Lessor may, without being in any way obliged to do so or responsible for so
doing and without prejudice to the ability of Lessor to treat such
non-compliance as a Default, effect compliance on behalf of Lessee:
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whereupon Lessee shall become liable to pay immediately any sums expended by
Lessor together with all costs and expenses (including legal costs) in
connection therewith.
15.5 TIME OF ESSENCE: The time stipulated in this Agreement for all payments
payable by Lessee to Lessor and the prompt, punctual performance of Lessee's
other obligations under this Agreement are of the essence of this Agreement.
15.6 NOTICES: All notices under, or in connection with, this Agreement will,
unless otherwise stated, be given in writing by letter or facsimile. Any such
notice is deemed effectively to be given as follows:
(i) if by letter, on the earlier of the date when delivered and the
seventh day after dispatch; and
(ii) if by facsimile, when transmitted and full transmission has been
separately notified by telephone by the transmitting party.
The addresses and facsimile and telephone numbers of Lessee and Lessor are as
follows:
LESSEE:
Address:
Attention:
Facsimile:
Telephone:
LESSOR:
Address:
Attention:
Facsimile:
Telephone:
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WITH A COPY TO: Xxxxxxx & Xxxxx Limited
Xxxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxxxxx 0
Xxxxxxx
Attention:
Facsimile: 000-0-000-0000
Telephone: 000-0-000-0000
15.7 GOVERNING LAW AND JURISDICTION:
(a) This Agreement in all respects shall be governed by, and construed in
accordance with, the Governing Law.
(b) For the benefit of Lessor, Lessee agrees that the courts of ___________ are
to have non-exclusive jurisdiction to settle any disputes arising out of or
relating to this Agreement and submits itself and its property to the
non-exclusive jurisdiction of the foregoing courts with respect to such
disputes.
(c) Without prejudice to any other mode of service, Lessor and Lessee consent
to the service of process relating to any writ, judgment or other legal
proceedings by prepaid mailing by air mail, certified or registered mail of
a copy of the process to Lessor or Lessee as the case may be at the address
set forth in Clause 15.6.
(d) Lessor and Lessee:
(i) waive to the fullest extent permitted by law any objection with either
party may now or hereafter have to the courts referred to in Clause
15.7(b) above on grounds of inconvenient forum or otherwise as regards
proceedings in connection with this Agreement;
(ii) waive to the fullest extent permitted by law any objection which
either party may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Agreement brought in the courts referred to in Clause 15.7(b); and
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(iii) agrees that a judgment or order of any court referred to in
Clause 15.7(b) in connection with this Agreement is conclusive
and binding on it and may be enforced against it in the courts
of any other jurisdiction.
(e) Nothing in this Clause 15.7 limits the right of Lessor or Lessee to bring
proceedings in connection with this Agreement:
(i) in any other court of competent jurisdiction; or
(ii) concurrently in more than one jurisdiction.
(f) Lessee irrevocably and unconditionally:
(i) agrees that if Lessor brings legal proceedings against it or
its assets in relation to this Agreement no immunity from such
legal proceedings (which will be deemed to include without
limitation, suit, attachment prior to judgment, other
attachment, the obtaining of judgment, execution or other
enforcement) will be claimed by or on behalf of itself or with
respect to its assets;
(ii) waives any such right of immunity which it or its assets now
has or may in the future acquire; and
(iii) consents generally in respect of any such proceedings to the
giving of any relief or the issue of any process in connection
with such proceedings including, without limitation, the
making, enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of any
order of judgment which may be made or given in such
proceedings.
15.8 SALE AND ENTIRE AGREEMENT: This Agreement is the sole and entire agreement
between Lessor and Lessee in relation to the leasing of the Aircraft, and
supersedes all previous agreements in relation to that leasing. Any amendments
to this Agreement must be made in writing and signed on behalf of Lessor and
Lessee.
15.9 INDEMNITEES: All rights expressed to be granted to each INDEMNITEE (other
than Lessor) under this Agreement are given to Lessor on behalf of that
Indemnitee.
15.10 LANGUAGE: All notices to be given under this Agreement will be in
English. All documents delivered to Lessor pursuant to this Agreement
(including any documents to be delivered pursuant to the Conditions Precedent)
will be in English, or if not in English, will be accompanied by a certified
English translation. If there is any inconsistency between the English version
of this Agreement and any version in any other language, the English version
will prevail.
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16. DISCLAIMERS AND WAIVERS
LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS SET
FORTH IN CLAUSES 16.1 TO 16.3 BELOW SHALL APPLY AT ALL TIMES DURING THE TERM
WITH EFFECT FROM LESSEE'S ACCEPTANCE OF THE AIRCRAFT BY EXECUTION OF THE
CERTIFICATE OF ACCEPTANCE, WHICH SHALL BE CONCLUSIVE EVIDENCE THAT LESSEE HAS
FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT THE AIRCRAFT, THE
ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS ARE TECHNICALLY ACCEPTABLE TO
LESSEE AND ARE IN SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE BY LESSEE:
16.1 EXCLUSION: THE AIRCRAFT IS TO BE LEASED AND DELIVERED HEREUNDER "AS IS,
WHERE IS", AND LESSEE AGREES AND ACKNOWLEDGES THAT, SAVE AS EXPRESSLY STATED IN
THIS AGREEMENT:
(A) LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND WILL
NOT BE DEEMED TO HAVE MADE OR GIVEN (WHETHER BY VIRTUE OF HAVING DONE OR
FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS
UNDER OR IN RELATION TO THIS AGREEMENT OR OTHERWISE), ANY WARRANTIES OR
REPRESENTATIONS, EXPRESS OR IMPLIED, WITH RESPECT TO, THE AIRCRAFT OR ANY
ENGINE OR PART, INCLUDING (BUT NOT LIMITED TO) THE DESCRIPTION,
AIRWORTHINESS, COMPLIANCE WITH SPECIFICATIONS, OPERATION, MERCHANTABILITY,
FREEDOM FORM INFRINGEMENT OF PATENT OR OTHER PROPRIETARY RIGHTS, FITNESS
FOR ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY, CONDITION, OR DESIGN
OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP, TITLE, THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER
MATTER WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY
ARISING FROM A COURT OF PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH
RESPECT TO THE AIRCRAFT, ANY ENGINE OR ANY PART; AND
(B) LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER TO LESSEE
(WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING BY REFERENCE
TO NEGLIGENCE OR STRICT LIABILITY OF LESSOR OTHERWISE) FOR:
(i) ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY
INADEQUACY THEREOF OR DEFICIENCY OR DEFECT THEREIN OR
INFRINGEMENT THEREOF OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
THEREWITH;
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(ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS
RELATING THERETO;
(iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED
PROFITS OR ANY OTHER DIRECT, INDIRECT OR CONSEQUENTIAL LOSS OR
DAMAGE; OR
(iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE OR ANY
PART.
16.2 WAIVER: LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND THE LESSOR, ALL ITS
RIGHTS IN RESPECT OF ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED. ON THE
PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER ARISING AT
ANY TIME IN RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED TO IN CLAUSE 16.1.
16.3 CONFIRMATION: LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF
THIS CLAUSE 16 AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS HAVE BEEN
CALCULATED BASED ON ITS PROVISIONS.
17. BROKERS AND OTHER THIRD PARTIES
17.1 NO BROKERS: Each of the parties hereby represents and warrants to the
other that it has not paid, agreed to pay or caused to be paid directly or
indirectly in any form, any commission, percentage, contingent fee, brokerage
or other similar payment of any kind, in connection with the establishment or
operation of this Agreement, to any Person (other than fees payable to Lessee's
legal advisers).
17.2 INDEMNITY: Each party agrees to indemnify and hold the other harmless from
and against any and all claims, suits, damages, costs and expenses (including,
but not limited to reasonable attorneys' fees) asserted by any agent, broker or
other third party for any commission or compensation of any nature whatsoever
based upon this Agreement or the Operative Documents or the Aircraft, if such
claim, suit, damage, cost or expense arises out of any breach by the
indemnifying party, its employees or agents of Clause 17.1.
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IN WITNESS whereof the parties hereto have executed this Agreement on the date
shown at the beginning of this Agreement.
LESSOR:
SIGNED on behalf of ______________
By: ___________________________
Name: ___________________________
Title: ___________________________
LESSEE:
SIGNED on behalf of ______________
By: ___________________________
Name: ___________________________
Title: ___________________________
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SCHEDULE 1
The following words and expressions have the respective meanings set forth
below:
AGREED MAINTENANCE PERFORMER means _______________ or any other FAA or JAA
authorised person agreed to from time to time in writing by Lessor, which
agreement shall not be unreasonably withheld.
AGREED MAINTENANCE PROGRAMME means a maintenance programme for the Aircraft
approved from time to time in writing by Lessor, encompassing scheduled
maintenance (including block maintenance), condition-monitored maintenance,
and/or on-condition maintenance of Airframe, Engines and Parts, including but
not limited to, servicing, testing, preventive maintenance, repairs, structural
inspections, system checks, overhauls, approved modifications, service
bulletins, engineering orders, airworthiness directives, corrosion control,
inspections and treatments.
AGREED VALUE means $ _________________________.
AGREEMENT means this Agreement and any and all amendments, revisions,
supplements and modifications thereto.
AIR AUTHORITY means the civil aviation authority of the State of Registration.
AIRCRAFT means the aircraft described in Part 1 of Schedule 4 (which term
includes, where the context admits, a separate reference to all Engines, Parts
and Aircraft Documents).
AIRCRAFT DOCUMENTS means the documents, data and records identified in the list
attached to the Certificate of Acceptance, and any other documents and records
referred to in Clause 8.8, and all additions, renewals, revisions and
replacements from time to time made to any of the foregoing in accordance with
this Agreement.
AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents.
AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the FAA or
the State of Registration.
APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Lessor in accordance with this Agreement.
XXXXXXX & XXXXX means Xxxxxxx & Xxxxx Limited and any Subsidiary for the time
being of Xxxxxxx & Xxxxx Limited and any Person that directly or indirectly is
controlled by, or controls, or is under common control with, Xxxxxxx & Xxxxx
Limited.
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BLOCK HOUR means each hour or part thereof elapsing during the period from the
moment the chocks are removed from the wheels of the Aircraft until the chocks
are next again returned to the wheels.
BOEING means The Boeing Company, a Delaware corporation with its principal
office in Seattle, State of Washington, U.S.A.
BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in Ireland or New York are authorised or required by Law
to be closed.
"C" CHECK means a "C" check in accordance with the Agreed Maintenance Programme
in effect on the relevant date.
CERTIFICATE OF ACCEPTANCE means a certificate of acceptance in the form of
Schedule 5.
CONDITIONS PRECEDENT means the conditions specified in Schedule 3.
CYCLE means one take-off and landing of the Aircraft.
DAMAGE NOTIFICATION THRESHOLD means [$2,000,000].
"D" CHECK means a "D" check in accordance with the following Manufacturer's
Maintenance Planning Document items:
(a) 1C, 2C, 3C, 4C, and 7C Checks;
(b) 15 month, 45 month, 10,000 Flight Hour and 22,400 Flight Hour structural
inspections;
(c) all CPCP tasks with an initial interval of 12 years or less;
(d) overhaul/function check of components normally scheduled for
accomplishment during "D" Check in accordance with the Agreed
Maintenance Programme; and
(e) the overhaul of the landing gear.
DEFAULT means any Event of Default or any event or circumstance which, with the
giving of notice and/or lapse of time and/or determination of materiality
and/or fulfilment of any other condition, would constitute an Event of Default.
DEFAULT RATE means the rate of interest specified in Clause 5.15.
DELIVERY means the date on which Delivery occurs.
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DELIVERY LOCATION means __________________.
DOLLARS AND $ mean the lawful currency of the United States of America.
ENGINE means, whether or not installed on the Aircraft:
(a) each engine of the manufacture and model specified in Part 1 of Schedule 4
which Lessor elects to tender to Lessee with the Airframe on the Delivery
Date, such engines being described as to serial numbers on the Certificate
of Acceptance; and
(b) any Replacement Engine, with effect from the time when title thereto has
passed to Lessor in accordance with this Agreement;
and in each case includes all modules and Parts from time to time belonging to
or installed in that engine but excludes any properly replaced engine title to
which should have passed to Lessee pursuant to this Agreement.
ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.
ENGINE EVENT OF LOSS means the occurrence with respect to an Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.
ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.
ENGINE REFURBISHMENT means all scheduled and unscheduled off-the-wing engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the manufacturer's
workscope planning guide, which for purposes of clarification shall exclude
replacement of Engine Life Limited Parts.
EQUIPMENT CHANGE has the meaning given in Clause 8.14(a).
EUROCONTROL means the European Organisation for the Safety of Air Navigation.
EVENT OF DEFAULT means any event or condition specified in Schedule 10.
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EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):
(a) the actual or constructive total loss of the Aircraft (including any damage
to the Aircraft which results in an insurance settlement on the basis of a
total loss, or requisition for use or hire which results in an insurance
settlement on the basis of a total loss); or
(b) the Aircraft being destroyed, damaged beyond economic repair or permanently
rendered unfit for normal use for any reason whatsoever; or
(c) the requisition of title or other compulsory acquisition of title for any
reason of the Aircraft by the government of the State of Registration or
any other authority (whether de jure or de facto); or
(d) the hijacking, theft, disappearance, condemnation, confiscation, seizure,
detention or requisition for use or hire of the Aircraft which deprives any
Person permitted by this Agreement to have possession and/or use of the
Aircraft of its possession and/or use for (i) more than ___ days (or
______, in the case of requisition for use or hire by the government of the
State of Registration) or (ii) if earlier, a period ending on the Expiry
Date.
EXCUSABLE DELAY means, with respect to delivery of the Aircraft, delay or
non-performance due to or arising out of acts of God or public enemy, civil war,
insurrection or riot, fire, flood, explosion, earthquake, accident, epidemic,
quarantine restriction, any act of government, governmental priority,
allocation, regulation or order affecting directly or indirectly, the aircraft,
any manufacturer, Lessor or any materials or facilities, strike or labour
dispute causing cessation, slowdown or interruption of work, inability after due
and timely diligence to procure equipment, data or materials from manufacturers,
suppliers, any existing owner, seller or lessee in a time manner, damage,
destruction or loss, or any other cause to the extent that such cause is beyond
the control of Lessor, whether above mentioned or not and whether or not similar
to the foregoing.
EXPIRY DATE means the date failing _____ months after the Rent Commencement
Date, or, if earlier, (i) when Lessor, acting in accordance with the provisions
of this Agreement, terminates the leasing of the Aircraft to Lessee under this
Agreement, or (ii) subject to the provisions of Clauses 11.1(a) and 11.2 the
date when Lessor receives the Agreed Value together with any other amounts then
due and unpaid under this Agreement and the Other Agreements following an Event
of Loss; provided, that if Clause 12.2(a) becomes applicable, the Expiry Date
shall be extended to the date when any non-compliance referred to therein has
been fully rectified and Lessor shall have accepted redelivery of the Aircraft.
FAA means the Federal Aviation Administration of the United States of America
and any successor thereof.
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FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended and modified from time to time.
FINAL INSPECTION has the meaning given in Clause 1.1 of Schedule 7.
FINAL INSPECTION has the meaning given in Clause 1.1 of Schedule 7.
FINANCIAL INDEBTEDNESS means any indebtedness in excess of $ _____________ in
respect of:
(a) moneys borrowed or raised;
(b) any liability under any debenture, bond, note, loan stock, acceptance,
documentary credit or other security;
(c) the acquisition cost of any asset to the extent payable before or after the
time of acquisition or possession; or
(d) any guarantee, indemnity or similar assurance against financial loss of any
person in respect of the above.
FINANCING PARTIES means the financial institutions, certificate holders, any
pass through trust, any trustee of such trust, noteholders and/or other
provider(s) of finance or funds from whom finance or funds for the acquisition
or continued ownership of the Aircraft by Lessor is to be, or is for the time
being obtained and/or in whose favour or for whose benefit security over, or
respecting rights relating to, the Aircraft or this Agreement is to be or is for
the time being granted by Lessor or at its request.
FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.
GENEVA CONVENTION means the Convention for the International Recognition of
Right in Aircraft, signed (ad referendum) at Geneva, Switzerland, on June 19,
1948, and amended from time to time, but excluding the terms of any adhesion
thereto or ratification thereof containing reservations to which the Ireland
does not accede.
GOVERNING LAW means the Laws of ___________________.
GOVERNMENT ENTITY means:
(a) any national government, political subdivision thereof, or local
jurisdiction therein;
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(b) any instrumentality, board, commission, court, or agency of any of the
above, however constituted; and
(c) any association, organisation, or institution of which any of the above is a
member or to whose jurisdiction any thereof is subject or in whose
activities any of the above is a participation.
HABITUAL BASE means____________.
IATA means the International Air Transport Association.
INDEMNITEE means each of Lessor, Lessor Parent, the Security Trustee, the
Trustee.____________ as previous owner, the Financing Parties, and Xxxxxxx &
Xxxxx or any other person as is notified to Lessee by Lessor as being the lease
manager and each of their respective successors and assigns, shareholders,
subsidiaries, affiliates, partners, contractors, directors, officers, servants,
agents and employees.
INSURANCES means insurances in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes (without limitation) any insurances and
reinsurances required by Schedule 8.
LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.
LAW means and includes (a) any statute, decree, constitution, regulation, order,
judgement or other directive of any Government Entity; (b) any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (c) any judicial or administrative interpretation or application of any
Law described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.
LESSEE AFFILIATE means (a) any Subsidiary for the time being of Lessee; and (b)
any Person that directly of indirectly is controlled by, or controls, or is
under common control with, Lessee.
LESSOR LIEN means:
(a) any Security Interest whatsoever from time to time created by Lessor,
Security Trustee, Trustee or any of the Financing Parties in connection with
the financing of the Aircraft or arising as a result of the Security
Documents;
(b) any other Security Interest in respect of the Aircraft which results from
acts of or claims against the Security Trustee or any of the Financing
Parties, Lessor or any other person not related to Lessee or the
transactions contemplated by or permitted under this Agreement: and
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(c) any Security Interest in respect of the Aircraft for Lessor Taxes.
LESSOR PARENT means [AerCo].
LESSOR TAX means any Tax that is:
(a) imposed solely as the result of activities of Lessor in the jurisdiction
imposing the Tax that is unrelated to Lessor's dealings with Lessee or the
transactions contemplated by this Agreement or the operation of the
Aircraft by Lessee; or
(b) imposed on the net income, profits or gains of Lessor by any Government
Entity including ___________; but excluding any Tax imposed by any
government or taxing authority of any jurisdiction if and to the extent
that such Tax results from (i) the use, operation, presence or registration
of the Aircraft, the Airframe, any Engine or any Part in the jurisdiction
imposing the Tax, or (ii) the situs of organisation, any place of business
or any activity of Lessee or any other Person having use, possession or
custody of the Aircraft, the Airframe, any Engine or any Part in the
jurisdiction imposing the Tax; or
(c) imposed solely as the result of an event that occurs after the Expiry Date
and that is unrelated to Lessor's dealings with Lessee or to the
transactions contemplated by this Agreement.
LIBOR means the number which is the arithmetic mean of the rates of interest per
annum (if not already such a multiple, rounded up to the nearest whole multiple
of 1/16 of 1 percent) at which at or about 11:00 a.m. (London time) deposits in
Dollars are offered for the period most nearly corresponding to the Rental
Period on the Reuters "LIBO" page or, if on that the day the Reuters "LIBO" page
is not available or does not display rates for the required period, the
arithmetic mean (rounded up to the nearest whole multiple of 1/16 of 1 percent)
of the respective rates notified to Lessor by each of the Reference Banks as the
rate at which such Reference Bank is offered deposits in Dollars in the London
interbank market for the period most nearly corresponding to the Rental Period.
LOSS means any claim, proceeding, loss, liability, suit, judgement, cost,
expense, fee, penalty or fine.
MAINTENANCE RESERVES means all amounts payable by Lessee under Clause 1.1 of
Schedule 6.
MAJOR CHECKS means any C-Check, multiple C-Check, D-Check or annual heavy
maintenance visit or segment thereof suggested for commercial aircraft of the
same model as the Aircraft by its manufacturer (however denominated) as adopted
and set out in the Agreed Maintenance Programme.
MANUFACTURER means Boeing.
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MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
programme for the Aircraft issued by the Manufacturer.
MINIMUM LIABILITY COVERAGE means $__________.
OPERATIVE DOCUMENTS means this Agreement, any schedules or documents executed
pursuant to this Agreement, including the Schedules hereto, any side letters
related hereto and any amendments, revisions, supplements or modifications
hereto or thereto.
OTHER AGREEMENTS means any aircraft lease agreement from time to time entered
into between Lessor (or any subsidiary, associate or affiliate of Lessor) and
Lessee (or any other Lessee Affiliate).
PART means, whether or not installed on the Aircraft:
(a) any component, furnishing or equipment (other than a complete Engine)
furnished with the Aircraft on the Delivery Date; and
(b) any other component, furnishing or equipment (other than a complete
Engine), with effect from the time when title thereto has passed to Lessor
pursuant to this Agreement;
but excludes any such items title to which should have passed to Lessee
pursuant to this Agreement.
PERMITTED LIEN means:
(a) any lien for Taxes not assessed or, if assessed, not yet due and payable,
or being contested in good faith by appropriate proceedings;
(b) any lien of a repairer, mechanic, carrier, hangar-keeper or other similar
lien arising in the ordinary course of business by operation of Law in
respect of obligations which are not overdue or are being contested in good
faith by appropriate proceedings;
but only if (in the case of both (a) and (b)) (i) adequate reserves have
been provided by Lessee for the payment of the Taxes or obligations; and
(ii) such proceedings, or the continued existence of the lien, do not give
rise to any likelihood of the sale, forfeiture or other loss of the
Aircraft or any interest therein or of criminal liability on Lessor,
Security Trustee, Trustee or any Financing Party; and
(c) any Lessor Lien.
PERSON means any individual person, corporation, partnership, firm, joint stock
company, joint venture, trust estate, unincorporated organisation, association.
Government Entity, or organisation or association of which any of the above is a
member or a participant.
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REDELIVERY LOCATION means____________or such other airport as may be agreed in
writing by Lessor and Lessee.
REFERENCE BANKS means____________.
RENT means all amount payable pursuant to Clause 5.2.
RENTAL PERIOD means each period ascertained in accordance with Clause 5.1.
RENT COMMENCEMENT DATE means the date on which Lessor tenders the Aircraft for
Delivery to Lessee under Clause 4.1.
RENT DATE means the first day of each Rental Period.
REPLACEMENT ENGINE means an engine complying with Clause 8.11(e).
RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor in
accordance with Clause 12.
SCHEDULED DELIVERY DATE means___________________.
SECURITY DOCUMENTS means each and every such mortgage, lease assignment,
insurance assignment or other document from time to time in effect, if any, as
notified to Lessee by Lessor, as being a "Security Document" and granting the
Security Trustee a Security Interest in the Aircraft, this Agreement and/or any
of Lessor's rights or benefits under this Agreement, including the Insurances
(other than to the extent such Insurances relate to third party liabilities).
SECURITY INTEREST means any mortgage, charge, pledge, lien, security interest,
encumbrance, assignment, hypothecation, right or set-off or any other agreement
or arrangement having the effect of conferring security.
SECURITY TRUSTEE means,__________and its permitted successors and assigns as
security trustee and/or collateral agent for and on behalf of certain of the
Financing Parties and Xxxxxxx & Xxxxx and/or such other institution or
institutions as Lessor may from time to time advise Lessee.
STATE OF INCORPORATION means______________.
STATE OF REGISTRATION means_______________.
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SUBSIDIARY means:
(a) in relation to any reference to accounts, any company whose accounts are
consolidated with the accounts of Lessee in accordance with accounting
principles generally accepted under accounting standards of the State of
Incorporation;
(b) for any other purpose, an entity from time to time:
(i) of which another has direct or indirect control or owns directly or
indirectly more than 50 percent of the voting shares capital; or
(ii) which is a direct or indirect subsidiary of another under the Laws of
the jurisdiction of its incorporation.
TAXES means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including without limitation any value added or similar tax and any stamp,
documentary, registration or similar tax), together with any penalties, fines,
surcharges and interest thereon and any additions thereto.
TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.
TRUSTEE means _____________________________.
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SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
LESSEE'S REPRESENTATIONS AND WARRANTIES
1.1 Lessee's representations and warranties to Lessor are as follows:
(a) STATUS: Lessee is a company duly incorporated and validly existing under
the Laws of the State of Incorporation and has the corporate power to own
its assets and carry on its business as it is being conducted and is the
holder of all necessary air transportation licenses required in connection
therewith and with the use and operation of the Aircraft;
(b) POWER AND AUTHORITY: Lessee has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorize the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) LEGAL VALIDITY: this Agreement has been duly authorised, executed and
delivered by Lessee, and this Agreement does, and the Operative Documents
when executed and delivered by Lessee will, constitute legal, valid and
binding obligations of Lessee, enforceable in accordance with their
respective terms, except as may be stated in any of the qualifications to
the legal opinion provided by Lessee to Lessor pursuant to Schedule 3
hereto;
(d) NON-CONFLICT: the entry into and performance by Lessee of, and the
transactions contemplated by, this Agreement do not and will not:
(i) conflict with any Laws binding on Lessee; or
(ii) conflict with the constitutional documents of Lessee; or
(iii) conflict with or result in default under any agreement or instrument
which is binding upon Lessee or any of its assets nor result in the
creation of any Security Interest over any of its assets;
(e) AUTHORISATION: all authorisations, consents, registrations and
notifications required in connection with the entry into, performance,
validity and enforceability of, this Agreement and the transactions
contemplated by this Agreement, have been (or will on or before the
Delivery Date have been) obtained or effected (as appropriate) and are (or
will on their being obtained or effected be) in full force and effect;
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(f) NO IMMUNITY:
(i) Lessee is subject to civil commercial Law with respect to its
obligations under this Agreement; and
(ii) neither Lessee nor any of its assets is entitled to any right of
immunity, and the entry into and performance of this Agreement by
Lessee constitute private and commercial acts;
(g) MATERIAL ADVERSE CHANGE: there has been no material adverse change in the
consolidated financial condition of Lessee since the date to which the
accounts most recently provided to Lessor on or prior to the Delivery Date
were drawn up;
(h) LITIGATION: no litigation, arbitration or administrative proceedings
proceeding are pending or to Lessee's knowledge threatened against Lessee
which, if adversely determined, would have any material respect adverse
effect upon its financial condition or business or its ability to perform
its obligation under this Agreement; and
(i) PARI PASSU: the obligations of Lessee under this Agreement rank at least
pari passu with all other present and future unsecured and unsubordinated
obligations (including contingent obligations) of Lessee, with the
exception of such obligations as are mandatorily preferred by Law and not
by virtue of any contract.
LESSEE'S FURTHER REPRESENTATIONS AND WARRANTIES
1.2 Lessee's further representations and warranties to Lessor are as follows:
(a) ACCOUNTS: the audited consolidated accounts of Lessee most recently
delivered to Lessor, including the balance sheets and statements of income
and retained earnings;
(i) have been prepared in accordance with accounting principals and
practices generally accepted and consistently applied in the State
of Incorporation; and
(ii) fairly represent the consolidated financial condition and
operations of Lessee as at the date to which they were drawn up.
(b) NO DEFAULT:
(i) no Default has occurred and is continuing or would result from the
entry into or performance of this Agreement; and
(ii) no other event or condition has occurred and is continuing which
constitutes (or with the giving of notice, lapse of time,
determination of materiality or the
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fulfillment of any other applicable condition, or any combination of the
foregoing, would constitute) a material default under any agreement or
instrument which is binding on Lessee or any assets of Lessee;
(c) REGISTRATION:
(i) Subject to matters specified in any legal opinion provided
pursuant to paragraph-1.1(c) of Schedule 3, no further filing or
recording of this Agreement or of any other document and no
further action, is or will be necessary under the Laws of the
State of Incorporation, the State of Registration and the
Habitual Base or any other states in order to (A) fully
establish, perfect and protect Lessor's title to, and the
interests of Lessor and Security Trustee in, the Aircraft or any
Engine or Part or this Agreement and their interest as against
Lessee or any third party, or (B) ensure the validity,
effectiveness and enforceability of this Agreement or any other
Operative Document to which the Lessee is a party; and
(ii) the rights and interests of Lessor and Security Trustee in the
Aircraft and this Agreement have been fully established,
perfected and protected under the laws of the State of
Incorporation, the State of Registration and the Habitual Base;
(d) TAXES: Lessee has delivered all necessary returns and payments due to the
tax authorities in the State of Incorporation, the State of Registration
and the Habitual Base and all other jurisdictions in which Lessee is
required to pay taxes and/or file tax returns or reports, and Lessee is not
required by Law to deduct any Taxes from any payments under this Agreement;
and
(e) FULL DISCLOSURE: each of this Agreement, each other Operative Document and
any other document, certificate or statement furnished to Lessor by or on
behalf of Lessee in connection with transactions contemplated hereby or
thereby (including financial information) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained herein and therein not misleading;
all forecasts and opinions contained therein were honestly made on
reasonable grounds after due and careful inquiry by Lessee; and there is no
fact or circumstance which has not been disclosed by Lessee to Lessor in
writing on or before the date of this Agreement and which materially
adversely affects or will materially adversely affect the ability of Lessee
to carry on its business or to perform its obligations in any material
respect under this Agreement or any other Operative Document to which it is
a party.
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LESSOR'S REPRESENTATIONS AND WARRANTIES
1.3 Lessor's representations and warranties to Lessor are as follows:
(a) STATUS: Lessor is a company duly incorporated and validly existing under
the Laws of ____________ and has the corporate power to own its assets and
carry on its business as it is being conducted;
(b) POWER AND AUTHORITY: Lessor has the corporate power to enter into and
perform, and has taken all necessary corporate action to authorize the
entry into, performance and delivery of, this Agreement and the
transactions contemplated by this Agreement;
(c) LEGAL VALIDITY: this Agreement constitutes Lessor's legal, valid and
binding obligation:
(d) NON-CONFLICT: the entry into and performance by Lessor of, and the
transactions contemplated by, this Agreement do not and will not:
(i) conflict with any Laws binding on Lessor; or
(ii) conflict with the constitutional documents of Lessor; or
(iii) conflict with any document which is binding upon Lessor; or any
of its assets.
(e) AUTHORISATION: so far as concerns the obligations of Lessor, all
authorisations, consents, registrations and notifications required under
the Governing Law or the laws of Lessor's state of incorporation in
connection with the entry into, performance, validity and enforceability
of, and the transactions contemplated by this Agreement by Lessor have been
(or will on or before the Delivery Date have been) obtained or effected (as
appropriate) and are (or will on their being obtained or effected be) in
full force and effect; and
(f) NO IMMUNITY:
(i) Lessor is subject to civil commercial Law with respect to its
obligations under this Agreement; and
(ii) neither Lessor nor any of its assets is entitled to any right of
immunity, and the entry into and performance of this Agreement by
Lessor constitute private and commercial acts.
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SCHEDULE 3
CONDITIONS PRECEDENT
The conditions precedent to Lessor's obligation to deliver and lease the
Aircraft are as follows. All documents delivered to Lessor pursuant to this
Schedule 3 will be in English, or if not in English, will be accompanied by a
certified English translation:
PRELIMINARY CONDITIONS
1.1 Lessor will receive from Lessee, not later than two Business Days prior to
the Scheduled Delivery Date, each of the following, satisfactory in form
and substance to Lessor:
(a) CONSTITUTIONAL DOCUMENTS: a copy of the constitutional documents of Lessee;
(b) RESOLUTIONS: a copy of the resolution of the board of directors of Lessee
(or committee of Lessee to which applicable authority has been delegated by
the board of directors of Lessee) approving the terms of, and the
transactions contemplated by, this Agreement, resolving that it enter into
this Agreement and the other Operative Documents, and authorising a
specified person or persons to execute this Agreement and the other
Operative Documents and accept delivery of the Aircraft on its behalf;
(c) OPINION: evidence that an opinion substantially in the form of Schedule 9
will be issued on the Delivery Date by independent legal counsel acceptable
to Lessor in the State of Registration, the Habitual Base and the State of
Incorporation;
(d) APPROVALS: evidence of the issue of each approval, licence and consent
which may be required in relation to, or in connection with the performance
by Lessee of any of its obligations under this Agreement (including without
limitation the remittance by Lessee to Lessor in Dollars of all amounts
payable under this Agreement);
(e) CONSENTS: [to be included as applicable];
(f) PROTECTION OF INTERESTS: evidence of any recordation or any other action
with respect to Lessor's and Security Trustee's interest, as applicable, in
the Aircraft, this Agreement and the Security Documents necessary or
desirable to protect such interests on the State of Incorporation, State of
Registration and the Habitual Base;
(g) IMPORT: evidence that any required import license, and all customs
formalities, relating to the import of the Aircraft into the Habitual Base
have been obtained or complied with, and that the import of the Aircraft
into the Habitual Base is exempt from Taxes.
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(h) LICENSES: copies of Lessee's air transport license, air operator's
certificates and all other licenses, certificates and permits required by
Lessee in relation to, or in connection with, the operation of the
Aircraft;
(i) CERTIFICATE: a form of certificate of a duly authorised officer of
Lessee:
(i) setting out a specimen of each signature of the authorised person
or persons referred to in paragraph (b) above;
(ii) certifying that each copy of each document specified in this
Schedule is correct, complete and in full force and effect;
(iii) certifying that Lessee's representations and warranties in Schedule
2 are true and correct on the Delivery Date as if given on such
date; and
(iv) certifying that there has been no material change in Lessee's
constitutional documents since originally delivered by Lessee to
Lessor;
(j) [AIR TRAFFIC CONTROL: a letter from Lessee addressed to Eurocontrol and
each other relevant air traffic control authority pursuant to which
Lessee authorises the addressee to issue to Lessor, upon Lessor's request
from time to time, a statement of account of all sums due by Lessee to
the authority in respect of all aircraft (including the Aircraft)
operated by Lessee. Lessor hereby undertakes that it will not present
such letter to Eurocontrol unless (i) a Default shall have occurred and
(ii) Lessor shall have demanded from Lessee that Lessee procure the
aforementioned statement of account from Eurocontrol and Lessee shall not
have procured the same within 48 hours following such demand;]1
(k) [DEREGISTRATION: an irrevocable power of attorney authorising Lessor or
such other person as Lessor may from time to time specify to do any thing
or act or to give any consent or approval which may be required to obtain
deregistration of the Aircraft and to export the Aircraft from the
Habitual Base upon termination of the leasing of the Aircraft under this
Agreement, duly notarised and legalised;]1
(l) [Include fee/security deposit/guaranty/letter of credit provisions if
applicable]
(m) GENERAL: such other documents as Lessor may reasonably request;
1.2(a) FINAL DOCUMENTS: Lessor shall receive on or before the Delivery Date each
of the following:
__________________
1 To be inserted only if applicable.
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(i) CERTIFICATE OF ACCEPTANCE: the Certificate of Acceptance, dated and
fully completed by Lessor and Lessee, certifying that Lessee has
completed its inspection of the Aircraft in accordance with Clause
4.5 and that the Aircraft conforms to the provisions set forth
therein, and is in all respects acceptable to Lessee, or if not so
acceptable, then setting forth all discrepancies and corrective
action to be taken;
(ii) CORPORATE CERTIFICATE: the certificate referred to in Clause 1.1(i)
of this Schedule, duly executed by an authorised officer of Lessee
and dated the Delivery Date;
(iii) OPINIONS: a signed original of each of the opinions referred to in
Clause 1.1(i) of this Schedule, dated the Delivery Date;
(iv) PAYMENTS: all sums due to Lessor under this Agreement on or before
the Delivery Date including, without limitation, the first payment
of Rent;
(v) INSURANCES: certificates of insurance, an opinion and undertaking
from Lessee's insurance broker and other evidence satisfactory to
Lessor that Lessee is taking the required steps to ensure due
compliance with the provisions of this Agreement as to Insurances
with effect on and after the Delivery Date;
(vi) ACCOUNTS: the latest available accounts of Lessee as described in
Clause 8.2(b);
(vii) AGREED MAINTENANCE PROGRAMME: such information and documents
relating to the proposed Agreed Maintenance Programme as Lessor may
reasonably require, and Lessor having approved in writing the
Agreed Maintenance Programme, such approval not to be unreasonably
withheld;
(viii) FILINGS: evidence that on the Delivery Date all filings,
registrations, recordings and other actions have been or will be
taken which are necessary or advisable to ensure the validity,
effectiveness and enforceability of this Agreement and to protect
the property rights of Lessor as owner of the Aircraft and lessor
thereof under this Agreement in the Aircraft, any Engine or any
Part, and the applicable rights of Security Trustee; and
(ix) [Include fee/security deposit/guaranty/letter of credit provision
if applicable].
(x) GENERAL: such other documents as Lessor may reasonably request; and
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(xi) ACKNOWLEDGMENT OF ASSIGNMENTS: if applicable. an acknowledgment in
the form set out in Part 2 of Schedule II relating to the notice of
assignments set out in Part I of that Schedule.
(b) REPRESENTATIONS/WARRANTIES: the representations and warranties of Lessee
in Schedule 2 shall be correct, and would be correct if repeated on
Delivery; and
(C) NO DEFAULT: no Default shall have occurred and be continuing on Delivery
or would result from the leasing of the Aircraft to Lessee under this
Agreement.
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SCHEDULE 4
DESCRIPTION OF AIRCRAFT
AIRCRAFT
Manufacturer:
Model:
Serial Number:
ENGINES
Engine Type:
Serial Nos:
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SCHEDULE 5
CERTIFICATE OF ACCEPTANCE
This Certificate of Acceptance is delivered, on the date set out below by
__________ ("Lesser"), to __________ ("Lessor"), pursuant to the Aircraft
Lease Agreement dated __________, _____ between Lessor and Lessee (the
"Agreement"). The capitalized terms used in this Certificate shall have
the meaning given to such terms in the Agreement.
DETAILS OF ACCEPTANCE
1. Lessee hereby confirms to Lessor that Lessee has at [] o'clock on this
__________ day of __________, _____, at __________, technically accepted the
following, in accordance with the provisions of the Agreement:
(a) __________ Aircraft, Manufacturer's Serial Number __________;
(b) __________ Engines;
Engine Number Manufacturer's Serial Number
1 __________; and
2 __________;
(c) Fuel Status; Kilos __________; and
(d) Loose Equipment Check List: in accordance with the list signed by Lessor
and Lessee and attached hereto.
(e) Aircraft Documents: in accordance with the list signed by Lessor and
Lessee and attached hereto.
HOURS AND CYCLES DATA (AS OF DELIVERY DATE)
2.(a) AIRFRAME:
Number of Hours since last phase "D" Check (Heaviest Check): _____ hours
"C" Check (or Equivalent):
Interval: __________
Time Since: __________
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(b) LANDING GEAR OVERHAUL:
Number of Cycles Since Last Overhaul:
Left Gear_________________________________cycles
Right Gear________________________________cycles
Nose Gear_________________________________cycles
Centre Gear_______________________________cycles
Interval: Left Gear_____________________________
Right Gear______________________________________
Nose Gear_______________________________________
(c) ENGINES:
Number of Hours Since Last Performance Restoration Shop Visit:
S/N______:______ hours
S/N______:______ hours
Time Remaining to First Restriction:
Engine S/N:
Hours:___________ Restriction:__________
Cycles:__________ Restriction:__________
Engine S/N:
Hours:___________ Restriction:__________
Cycles:__________ Restriction:__________
(d) AUXILIARY POWER UNIT:
Number of APU Hours Since Last Hot Section Restoration:
___________ hours Date accomplished___________
Hot Section Restoration:
Interval:_____________________________
(e) TIME CONTROLLED COMPONENTS:
[See attached DUJX Report]
Interior Equipment:
Number of passenger Seats and Configuration:_______________________
Number of Galleys and Location:___________
Number of Lavatories and Location:___________
LOPA - Attached ___________
List of Loose Equipment on Board:
(g) AVIONICS:
Description Model Part No.
[(h) VIDEO SYSTEM:
Projector________________________
Tape Reproducer__________________
System Control Unit______________
System Monitor___________________]
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Acceptance:
3. Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft
Documents are technically acceptable to it, and are in the condition for
delivery and acceptance as required under the Agreement.
IN WITNESS WHEREOF, Lessee and Lessor have, by their duly authorized
representative, executed this Certificate of Acceptance on the date in
paragraphe 1 above.
LESSEE:
By: __________________
Title: __________________
LESSOR:
By: __________________
Title: __________________
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SCHEDULE 6
[Maintenance Reserves/Fees/Security Deposit/Guaranty/Letter
of Credit Provisions]
[LESSEE PAYMENTS
1.1 In respect of each calendar month (or part thereof) during the Term,
Lessee will pay to Lessor in accordance with Clause 5.3(a) the
following Maintenance Reserves:
(a) Airframe: in respect of the Airframe, $___ for each Flight Hour opera-
xxx by the Aircraft during that calendar month ("AIRFRAME MAINTENANCE
RESERVES");
(b) Engine Life-Limited Parts: in respect of the life-limited Parts for
each Engine, $___ for each Flight Hour operated by the Engine during
that calendar month ("ENGINE LLP MAINTENANCE RESERVES"); and
(c) Engines in respect of each Engine, $___ for each Engine Flight Hour
(or fraction thereof) operated by that Engine during that calendar
month ("ENGINE MAINTENANCE RESERVES").
RELEASE OF MAINTENANCE RESERVES
Provided no Default has occurred and is continuing, Lessor will
release the following amounts to Lessee from the Maintenance Reserves,
upon receipt by Lessor, within six months after commencement of such
maintenance and before the date falling one year following the Expiry
Date, of an invoice and supporting documentation reasonably
satisfactory to Lessor evidencing performance of the following work by
the Agreed Maintenance Performer:
(a) AIRFRAME: With respect to the Airframe, the complication, in
accordance with this Agreement, of those items of maintenance
characterized by the Manufacturer's Maintenance Planning Document and
best industry practice as "D" Check ("D CHECK AIRFRAME MAINTENANCE")
and/or those structural inspection type items for Boeing 737 Aircraft,
which have an inspection interval of at least 12,000 hours per the
Boeing 737 structural inspection programme (but not including repairs
arising as the result of accidents or incidents (whether or not
eligible for recovery under Lessee's insurance), operational or
maintenance mishandling or airworthiness directive work)(the "AIRFRAME
MAINTENANCE"):
(i) in respect of Airframe Maintenance the lesser of (i) the amount
of that invoice and (ii) an amount equal to the aggregate of the
Airframe Maintenance Reserves held by Lessor at the date of
commencement of such work (such amount being hereinafter referred
to as due "AVAILABLE AIRFRAME AMOUNT") less the aggregate amount
previously paid by Lessor under this sub-clause or sub-clause
(ii) before from the Available Airframe Amount; and
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(ii) In respect to D Check Maintenance an amount equal to the lesser
of (x) $________, less the aggregate amount previously paid by
Lessor under sub-clause (i) above and (y) the balance of the
Available Airframe Amount after deduction of the aggregate amount
previously paid by Lessor under sub-clause (i) above.
(b) ENGINE REFURBISHMENT: With respect to the Engine Refurbishment of any
Engine, the performance, in accordance with this Agreement, of all
shop visits (other than (i) repairs arising as a result of accidents
or incidents (whether or not eligible for recovery under Lessee's
insurance), foreign object damage or operational or maintenance
mishandling, the lesser of (i) the amount of that invoice and (ii) an
amount equal to the aggregate of the Engine Maintenance Reserves held
by Lessor in respect of that Engine at the date of commencement of
such work (such amount being hereinafter referred to as the "AVAILABLE
ENGINE AMOUNT") less the aggregate amount previously paid by Lessor
under this sub-clause from the Available Engine Amount.
(c) ENGINE LIFE LIMITED PARTS REPLACEMENT: With respect to the replacement
of any Engine Life Limited Parts, the performance in accordance with
this Agreement of the replacement of Engine Life Limited Parts (other
than in connection with (i) repairs arising as a result of accidents
or incidents (whether or not eligible for recovery under Lessee's
insurance), foreign objects damage or operational or maintenance
mishandling, the lesser of (i) the amount of that invoice and (ii) an
amount equal to the aggregate of the Engine LCP Maintenance Reserves
held by Lessor in respect of that Engine at the date of commencement
of such work (such amount being hereinafter referred to as the
"AVAILABLE ENGINE LLP AMOUNT") less the aggregate amount previously
paid by Lessor under this sub-clause from the Available Engine LLP
Amount.
MAINTENANCE RESERVES ON REDELIVERY
1.3 All sums remaining in the aforementioned Maintenance Reserves upon
redelivery of the Aircraft hereunder shall be retained by Lessor and shall be
deemed to be the property of Lessor provided that in the event Lessee fails to
comply with its obligations under Schedule 7 and Lessor agrees to accept a cash
payment in lieu of such compliance, Lessee may draw on the aforementioned funds
in respect of such payments to the extent of the balance thereof.
(Fee/Security Deposit/Guaranty/letter of Credit Provisions if applicable)
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SCHEDULE 7
PROCEDURES AND OPERATING CONDITION AT REDELIVERY
On the Return Occasion the Aircraft will be redelivered to Lessor by Lessee in
accordance with the procedures and in the condition set out below, subject to
fair ordinary wear and tear of a kind and to an extent consistent with similar
aircraft engaged in commercial airline operations.
FINAL INSPECTION
1.1 Immediately prior to the Return Occasion, Lessee will make the
Aircraft available to Lessor for inspection ("FINAL INSPECTION") in
order to verify that the condition of the Aircraft compiles with this
Agreement. The Final Inspection will be long enough to permit Lessor
to:
(a) inspect the Aircraft Documents;
(b) inspect the Aircraft and uninstalled Parts;
(c) inspect the Engines, including without limitation (i) a complete video
borescope inspection of (A) the low pressure and high pressure
compressors and (B) turbine area and (ii) engine condition runs;
(d) observe a two hour demonstration flight (with Lessor's representatives
as on-board observers);
PROVIDED THAT Lessor will make all reasonable efforts to accomplish
the inspections contemplated by sub-paragraphs (b), (c) and (d) hereof
within 48 hours.
GENERAL CONDITION
1.2 The Aircraft will:
(a) be in good operating condition and be clean;
(b) have installed the full complement of equipment, parts, accessories,
furnishings and loose equipment as when originally delivered to
Lessee; and if either of the engines redelivered with the Aircraft is
not one of the engines referred to in the Acceptance Certificate or a
Replacement Engine installed pursuant to Clause 8.11(e) following an
Engine Event of Loss, Lessor shall have no obligation to accept such
engine unless Lessee furnishes to Lessor all the documents and
evidence in respect of such engine specified in Clause 8.11(e), as if
such engine were a Replacement Engine;
(c) have in existence a valid certificate of airworthiness (or if required
by Lessor, a valid export certificate of airworthiness) with respect
to the Aircraft issued by the Air Authority;
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(d) comply with the manufacture's original specifications as at the
Delivery Date as amended by subsequent agreed modifications;
(e) have undergone, immediately prior to redelivery, a "C" Check in
block format so that all Airframe inspections falling due within the
next following 3,000 Flight Hours and one year of operation in
accordance with the Agreed Maintenance Programme, have been
accomplished;
(g) have had accomplished all outstanding Airworthiness Directives
affecting that model of Aircraft issued by the FAA which, if the
Aircraft were registered with the FAA, would have to be complied with
during the Term; for this purpose, compliance shall be by terminating
action if:
(i) Lessee has complied by terminating action for other aircraft of
the same model and series then operated by Lessee; or
(ii) the latest date permitted by such Airworthiness Directive for
compliance by terminating action falls within 60 days after the
Expiry Date;
(h) have installed all applicable vendor's and manufacturer's service
bulletin kits received free of charge by Lessee that are appropriate
for the Aircraft and, to the ____________ installed, those kits will
be furnished free of charge to Lessor;
(i) be in such external livery as advised by Lessor, the cost of such
painting not to exceed industry standards;
(j) have all ______________________
(k) have no open, deferred, continued, carry over or placorded log book
items.
COMPONENTS
1.3(a) Each Flight Hour and Cycle limited component (other than the APU)
shall have not less than ______ Flight Hours/______ Cycles of life
remaining to the next scheduled removal, in accordance with the
Agreed Maintenance Programme and shall be supported by appropriate
certification documentation indicating TSN, LSN, TSO and LSO such as
JAR form I or FAA form 8130-I, as applicable;
(b) Each calendar-limited component including safety equipment will have
not less than 12 months life remaining to the next scheduled removal
in accordance with the Agreed Maintenance Programme;
(c) Each life-limited component will be supported by certification
documentation necessary to demonstrate back-to-birth traceability;
(d) The APU shall be serviceable and will have not more than ______
running hours since the last hot section restoration;
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(e) The Engines will have on an average not less than _____ Flight
Hours and _____ Cycles, with no one Engine having less than _____
Flight Hours and _____ Cycles, expected life remaining to the next
expected removal. The expected life remaining will be determined by
the inspection and checks accomplished by Lessor in accordance with
this Agreement;
(f) Each Engine will have no defect which places less that _____ Flight
Hours and _____ Cycles of remaining life pursuant to Manufacturer's
airworthiness requirements until removal; and
(g) Each Engine will be in a condition which can operate at maximum rated
take-off power at sea level at a temperature of 34 Celsius degrees.
FUSELAGE, WINDOWS AND DOORS
1.4(a) The fuselage will be free of major dents and abrasions, loose or
xxxxxx or missing rivets:
(b) Windows will be free of delamination, blemishes, crazing and will be
properly sealed, within maintenance manual limits; and
(c) Doors will be free moving, correctly rigged and be fitted with
serviceable seals.
WINGS AND _________________
1.5(a) Leading edges will be free from damage, within maintenance manual
limits;
(b) All control surfaces shall be waxed and polished; and
(c) Wings shall be free of fuel leaks.
INTERIOR AND COCKPIT
1.6 Carpets and seat covers will be in good condition, clean and free of
stains and meet FAR fire resistance regulations.
LANDING GEAR AND APU
1.7(a) The Landing Gear and wheel xxxxx will be clean, free of leaks and
repaired as necessary;
(b) Each installed Landing Gear shall have not less than _____ Flight
Hours/ _____ Cycles and ___ months life remaining to the next
scheduled removal in accordance with the Agreed Maintenance
Programme; and
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(c) The APU shall have just completed a borescope inspection and shall
meet all air outputs and temperature limitations under load in
accordance with the Agreed Maintenance Programme and the
manufacturer's maintenance manual, and any defects discovered in
such inspection which exceed the APU manufacturer's in service
limits shall be corrected at Lessee's expense.
WHEELS AND BRAKES
1.8 The Landing Gear and wheel xxxxx will be clean, free of leaks and
repaired as necessary.
CORROSION
1.9(a) The Landing Gear and wheel xxxxx will be clean, free of leaks and
repaired as necessary.
(b) The entire fuselage will be substantially free from corrosion and
will be adequately treated and a corrosion prevention programme
approved by Lessor will be in operation; and
(c) Fuel tanks will be free from contamination and corrosion and a tank
treatment programme will be in operation.
FUEL
1.10 At redelivery, Lessor will pay to Lessee or Lessee will pay to Lessor
(as the case may require) a cash adjustment in respect of the difference in fuel
on board at Delivery versus redelivery, at the then prevailing cost of fuel at
the Redelivery Location.
MAINTENANCE PROGRAMME
1.11(a) Prior to the Return Occasion and upon Lessor's request, Lessee will
provide Lessor or its agent reasonable access to the Agreed
Maintenance Programme and the Aircraft Documents in order to
facilitate the Aircraft's integration into any subsequent operator's
fleet; and
(b) Lessee will, if requested by Lessor to do so, upon return of the
Aircraft xxxxx Xxxxxx access to full details of the Agreed
Maintenance Programme. Lessor agrees that it will not disclose the
contents of the Agreed Maintenance Programme to any person or entity
except to the extent necessary to monitor Lessee's compliance with
this Agreement and/or to bridge the maintenance programme for the
Aircraft from the Agreed Maintenance Programme to another programme
after the Return Occasion.
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SCHEDULE 8
INSURANCE REQUIREMENTS
TYPES OF INSURANCE
1.1 The Insurances required to be maintained are as follow:
(a) HULL ALL RISKS of loss or damage whilst flying and on the ground with
respect to the Aircraft on an agreed value basis for the Agreed Value and
with a deductible not exceeding $__________, or such other amount agreed
by Lessor from time to time;
(b) HULL WAR AND ALLIED PERILS, being such risks excluded from the Hull All
Risks Policy to the fullest extent available from the leading intentional
insurance markets, including confiscation and requisition by the State of
Registration for the Agreed Value;
(c) ALL RISKS (including War and Allied Risk except when on the ground or in
transit other than by air) property insurance on all Engines and Parts
when not installed on the Aircraft on an "agreed value" basis for their
full replacement value; and
(d) AIRCRAFT THIRD PARTY, PROPERTY DAMAGE, PASSENGER, BAGGAGE, CARGO AND MAIL
AND AIRLINE GENERAL THIRD PARTY (including Products) LEGAL LIABILITY for a
combined single limit (bodily injury/property damage) of an amount not
less than the Minimum Liability Coverage for the time being for any one
occurrence (but in respect of products and personal injury liability, this
limit may be an aggregate limit for any and all losses occurring during
the currency of the policy). War and Allied Risks are also to be covered
under the policy to the fullest extent available from the leading
international insurance markets.
TERMS OF HULL AND SPARES INSURANCE
1.2 All required hull and spares insurance, so far as it relates to the
Aircraft, will:
(a) ADDITIONAL ASSUREDS: same Lessor, Security Trustee and their respective
successors and assigns as additional assureds for their respective rights
and interests:
(b) SETTLEMENT OF LOSSES: provide that any loss will be settled jointly with
Lessor, and will be payable in Dollars to Lessor, or, if applicable,
Security Trustee, for the account of all interests, except where the loss
does not exceed the Damage Notification Threshold, and neither Lessor nor
Security Trustee has notified the insurers to the contrary, in which case
the loss will be settled with and paid to Lessee;
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(c) NOTICE: include a notice and/or acknowledgement of assignment
(relating to the assignment of Lessor's interest in the Insurances to
the Security Trustee if applicable) in a form acceptable to Lessor;
(d) 50/50 PROVISION: if separate Hull "all risks" and "war risks"
insurances are arranged, include a 50/50 provision in accordance with
market practice (AVS. 10G is the current market language); and
(e) NO OPTION TO REPLACE: confirm that the insurers are not entitled to
replace the Aircraft in the event of an insured Event of Loss.
TERMS AND LIABILITY INSURANCE
1.3 All required liability insurances will:
(a) ADDITIONAL ASSUREDS: include Lessor and each of the other Indemnitees,
and their respective successors and assigns and their respective
shareholders, subsidiaries, directors, officers, agents, employees and
indemnitees, as additional insureds for their respective rights and
interests, warranted, each as to itself only, no operational interest;
(b) SEVERABILITY: include a severability of interests clause which
provides that the insurance, except for the limit liability, will
operate to give each assured the same protection as if there was a
separate policy issued to each assured; and
(c) PRIMARY POLICY: contain a provision confirming that the policy is
primary without right of contribution and the liability of the
insurers will not be affected by any other insurance of which Lessor,
Security Trustee or any other Indemnitee or Lessee have the benefit so
as to reduce the amount payable to the additional insureds under such
policies.
TERMS OF ALL INSURANCES
1.4 All Insurances will:
(a) PRUDENT INDUSTRY PRACTICE: be in accordance with prudent industry
practice of persons operating similar aircraft in similar
circumstances;
(b) DOLLARS: provide cover denominated in Dollars and any other
currencies which Lessor may reasonably require in relation to
liability insurance;
(c) WORLDWIDE: operate on a worldwide basis subject to such limitations
and exclusions as Lessor may agree;
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(d) ACKNOWLEDGMENT: acknowledge the insurer is aware (and has seen a copy)
of this Agreement and that the Aircraft is owned by Lessor, leased by
Lessor and is subject to the interest of the Security Trustee as
applicable and that, if applicable, including the Lessor's interest in
the Insurances are subject to a security assignment in favour of the
Security Trustee;
(e) BREACH OF WARRANTY: provide that, in relation to the interests of
each of the additional assureds, the Insurances will not be
invalidated by any act or omission by Lessee or any other person
other than the respective additional assured seeking protection and
shall insure the interests of each of the additional assureds
regardless of any breach or violation by Lessee or any other person
other than the respective additional assured seeking protection of
any warranty, declaration or condition, contained in such Insurances.
(f) SUBROGATION: provide that the insurers will hold harmless and waive
any rights of recourse against the additional assureds or to be
subrogated to any rights or Lessor or Lessee;
(g) PREMIUMS: provide that the additional assureds will have no
obligation or responsibility for the payment of any preniums due (but
reserve the right to pay the same should any of them elect so to do)
and that the insurers will not exercise any right to set-off or
counter-claim in respect of any premium due against the respective
interests of the additional assureds other than outstanding premiums
relating to the Aircraft, any Engine or Part the subject of the
relevant claim;
(h) CANCELLATION/CHANGE: provide that the Insurances will continue
unaltered for the benefit of the additional assureds for at least
30 days after written notice by registered mail or telex of any
cancellation, change, event of non-payment of premium or instalment
thereof has been sent to Lessor, Xxxxxxx & Xxxxx and Security
Trustee, except in the case of war risks for which 7 days (or
such lesser period as is or may be customarily available in respect
of war risks or allied perils) will be given, or in the case of was
between the 5 great powers or nuclear peril for which termination
is automatic;
(i) REINSURANCES: if reinsurance is a requirement of this Agreement such
reinsurance will:
(aa) be on the same terms as the original insurances and will include
the provisions of this Schedule,
(bb) provide that notwithstanding any bankruptcy, insolvency,
liquidation, dissolution or similar proceedings of or affecting
the reinsured that the reinsurers' liability will be to make such
payments as would have fallen due under the relevant policy of
reinsurance if the reinsured had (immediately before such
bankrupty, insolvency, liquidation, dissolution or similar
proceedings) discharged its obligations in full under the
original insurance policies in respect of which the then relevant
policy of reinsurance has been effected; and
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(cc) contain a "cut-through" clause in the following form (or
otherwise satisfactory to Lessor):
"The Reinsurers and the Reinsured hereby actually agree that
in the event of any claim arising under the reinsurances in
respect of a total loss or other claim where as provided by
this Agreement dated [__________], _____ and made between
[Lessor] and [Lessee] such claim is to be paid to the person
named as sole loss payee under the primary insurances, the
Reinsurers will in lieu of payment to the Reinsured, its
successors in interest and assigns pay to the person named
as sole loss payee under the primary insurances effected by
the Reinsured that portion of any loss due for which the
Reinsurers would otherwise be liable to pay the Reinsured
(subject to proof of loss), it being understood and agreed
that any such payment by the Reinsurers will (to the extent
of such payment) fully discharge and release the Reinsurers
from any and all further liability in connection therewith",
subject to such provisions not contravening any Law of the
State of Incorporation;
(j) INITIATING CLAIMS: contain a provision entitled Lessor or any insured
party to initiate a claim under any policy in the event of the refusal
or failure to Lessee to do so; and
(k) INDEMNITIES: accept and insure the indemnity provisions of this
Agreement, to the extent of the risks covered by the policies.
DEDUCTIBLES
1.5 Lessee shall be responsible for any and all deductibles under the
Insurances.
APPLICATION OF INSURANCE PROCEEDS
1.6 The Insurances will be endorsed to provide for payment of proceeds as
follows:
(a) EVENT OF LOSS: all insurance payments received as the result of an
Event of Loss occurring during the Term will be paid to Lessor, or, if
applicable, Security Trustee, and Lessor, or, if applicable, Security
Trustee will pay the balance of those amounts to Lessee after
deduction of all amounts which may be or become payable by Lessee to
Lessor under this Agreement and the Other Agreements (including under
Clause 11.1(b));
(b) EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance proceeds of any
property, damage or loss to the Aircraft, any Engine or any Part
occurring during the Term not constituting an Event of Loss and in
excess of the Damage Notification Threshold will be paid to Lessor and
applied in payment (or to reimburse Lessee) for repairs or replacement
property upon Lessor being satisfied that the repairs or replacement
have been effected in accordance with this Agreement. Any balance
remaining may be retained by Lessor;
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(c) BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in amounts
below the Damage Notification Threshold may be paid by the insurer
directly to Lessee;
(d) LIABILITY PROCEEDS: all insurance proceeds in respect of third party
liability will, except to the extent paid by the insurers to the
relevant third party, be paid to Lessor to be paid directly in
satisfaction of the relevant liability or to Lessee in reimbursement
of any payment so made; and
(e) DEFAULT: notwithstanding the foregoing paragraphs, if at the time of
the payment of any such insurance proceeds a Default has occurred and
is continuing, all such proceeds will be paid to or retained by Lessor
to be applied toward payment of any amounts which may be or become
payable by Lessee in such order as Lessor may elect.
To the extent that insurance proceeds are paid to Lessee, Lessee agrees to
comply with the foregoing provisions and apply or pay over such proceeds as so
required.
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SCHEDULE 9
FORM OF LEGAL OPINION
[To be determined based on applicable lessee and jurisdictions].
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SCHEDULE 10
EVENTS OF DEFAULT
Each of the following events or conditions constitutes an Event of Default:
(a) NON-PAYMENT: Lessee fails to make any payment under this Agreement within
__ days of the due date; or
(b) INSURANCE: Lessee fails to comply with any provision of Clause 9 or
Schedule 1, or any insurance required to be maintained under this
Agreement is cancelled or terminated, or a notice of cancellation is given
in respect of any such insurance; or
(c) BREACH: Lessee fails to comply with any other provision of this Agreement
or any other Operative Document and, if such failure is in the reasonable
opinion of Lessor capable of remedy, the failure continues for __ days
after notice from Lessor to Lessee; or
(d) REPRESENTATION: any representation or warranty made (or deemed to be
repeated) by Lessee in or pursuant to this Agreement or in any document or
certificate or statement is or proves to have been incorrect in any
material respect when made or deemed to be repeated; or
(e) CROSS-DEFAULT:
(i) any Financial Indebtedness of Lessee is not paid when due (subject
to any applicable grace periods); or
(ii) any such Financial Indebtedness becomes due or capable of being
declared due prior to the date when it would otherwise have become
due (subject to any applicable grace periods); or
(iii) the security for any such Financial Indebtedness becomes
enforceable (subject to any applicable grace periods; or
(iv) any event of default or termination event, howsoever described,
occurs under any Other Agreement or any lease, hire purchase,
conditional sale or credit sale agreement of Lessee; or
(f) APPROVALS:
(i) any authorisation required by Lessee to obtain and transfer freely
Dollars (or any other relevant currency) out of any relevant
country; or
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(ii) any authorisation required by Lessee to authorise, or in connection
with, the execution, delivery, validity, enforceability or
admissibility in evidence of this Agreement or the performance by
Lessee of its obligations under this Agreement; or
(iii) the registration of the Aircraft or the Aircraft's certificate of
airworthiness; or
(iv) any airline license or air transport license required by Lessee;
is modified in a manner which would have a material adverse effect on
Lessee's ability to perform its obligations under this Agreement, and/or on
Lessor's or Security Trustee's right, title and interest to and in the
Aircraft and/or under this Agreement or is withheld, or is revoked,
suspended, cancelled, withdrawn, terminated or not renewed, or otherwise
ceases to be in full force; or
(g) INSOLVENCY:
(i) Lessee is, or is deemed for the purposes of any relevant law to be,
unable to pay its debts as they fall due or to be insolvent, or
admits inability to pay its debts as they fall due; or
(ii) Lessee suspends making payments on all or any class of its debts or
announces an intention to do so, or a moratorium is declared in
respect of any of its indebtedness; or
(h) LIQUIDATION AND SIMILAR PROCEEDINGS:
(i) a meeting of the shareholders or directors of Lessee is convened to
consider a resolution to present an application for an
administration order or any such resolution is passed; or
(ii) any step (including petition proposal or convening a meeting) is
taken with a view to a composition, assignment or arrangement with
any creditors of, or the rehabilitation, administration,
custodianship, liquidation, or dissolution of Lessee or any other
insolvency proceedings involving Lessee; or
(iii) any order is made or resolution passed for any such composition,
assignment, arrangement, rehabilitation, administration,
custodianship, liquidation, dissolution or insolvency proceedings,
or Lessee becomes subject to or enters into any of the foregoing; or
(iv) any liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrator, examiner or similar
officer is appointed in respect of Lessee or any of its assets; or
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(i) RECEIVER:
(i) an administrative or other receiver or manager is appointed in
respect of Lessee or any part of its assets; or
(ii) Lessee requests any person to appoint such a receiver or manager; or
(iii) any other steps are taken to enforce any Security Interest over all
or any part of the assets of Lessee; or
(iv) any attachment, sequestration, distress or execution affects any
assets of Lessee and is not discharged within __ days; or
(j) OTHER JURISDICTION: there occurs in relation to Lessee any event anywhere
which, in the reasonable opinion of Lessor, corresponds with any of those
mentioned in paragraphs (g), (h) or (i) above; or
(k) SUSPENSION OF BUSINESS: Lessee suspends or ceases or threatens to suspend
or cease to carry on all or a substantial part of its business; or
(l) DISPOSAL: Lessee disposes, conveys or transfers or threatens to dispose,
convey or transfer of all or a material part of its assets, liquidates or
dissolves or consolidates or merges with any other Person (whether by one
or a series of transactions, related or not), subject to sub-paragraph
(n), other than for the purpose of a reorganisation the terms of which
have received the prior written approval of Lessor, such approval not to
be unreasonably withheld; or
(m) RIGHTS AND REMEDIES: Lessee or any other Person claiming by or through
Lessee challenges the existence, validity, enforceability or priority of
the rights of Lessor as owner of the Aircraft or as lessor thereof under
this Agreement or the rights of Security Trustee under the Security
Documents; or
(n) CHANGE OF CONTROL: any single person, or group of persons acquire control
of Lessee without the previous consent in writing of Lessor; or
(o) DELIVERY: Lessee fails to comply with its obligation under Clause 4 to
accept delivery of the Aircraft; or
(p) (insert security deposit/guaranty/letter of credit provisions if
applicable; or)
(q) REDELIVERY: Lessee fails to return the Aircraft to Lessor on the Expiry
Date in accordance with Clause 12; or
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(r) EUROCONTROL: Eurocontrol (or any authority on its behalf) or any other
authority notifies Lessor that there are Eurocontrol charges or other
navigation, landing, airport or similar charges due from Lessee, and such
charges remain outstanding for a period of 30 days from the date of such
notice; provided that (i) no Event of Default shall arise under this
paragraph (u) for so long as such charges are being contested in good faith
and by appropriate proceedings and such proceedings will not involve the
detention, interference with use or operation or sale, forfeiture or loss
of the Aircraft; and (ii) such 30 day period shall not apply if there is
any risk of detention, interference with use or operation or sale,
forfeiture or loss of the Aircraft; or
(s) ILLEGALITY: this Agreement or any other Operative Document is or becomes
wholly or partly invalid, illegal or unenforceable other than as a result
of an act on the part of Lessor.
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SCHEDULE 11
Part 1
Notice of Assignment
From: (1)
(2) ___________________ (The "Security Trustee")
To:
(___________________, __________)
Dear Sirs:
We refer to the Aircraft Lease Agreement date [______________] between ________
and ________ (the "Lease") relating to one Boeing 737-____ aircraft with
manufacturer's serial number ________ together with two installed General
Electric CFM 56-3C1 engines with serial number ________ and ________ (the
"Aircraft").
All terms defined in the Lease shall, unless the context otherwise requires,
have the meaning herein.
We hereby give you notice that by an assignment dated _______________, ________
and made between ________ and the Security Trustee (the "Security
Assignment"), ________ has assigned to ________ by way of security all its
right, title and interest in and to the Lease and including without limitation
the Insurances.
Henceforth, all monies that may be payable by you under the Lease shall continue
to be paid to the bank account specified in the Lease unless and until the
Security Trustee otherwise directs, whereupon you are authorised and required
to comply with the Security Trustee's directions.
By your signature on the enclosed Acknowledgement you acknowledge, that ________
has appointed Xxxxxxx & Xxxxx Limited as its servicer, agent and attorney in
respect of the Lease and the Aircraft and the servicing of both. Communications
received by you from Xxxxxxx & Xxxxx Limited in connection with the Lease and
the Aircraft may and shall be relied upon (and complied with where the context
calls for compliance) by you as if received from ________. You may rely on this
notice of such appointment until notified in writing to the contrary by ________
or the Security Trustee.
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This notice and the instructions herein contained are irrevocable. Please
acknowledge receipt of this notice to ___________, Xxxxxxx & Xxxxx Limited and
the Security Trustee on the enclosed Acknowledgement, it being provided hereby
that your signature on such Acknowledgement shall confirm your acknowledgement
and agreement for the benefit of, Xxxxxxx & Xxxxx Limited and the Security
Trustee that neither Xxxxxxx & Xxxxx Limited nor the Security Trustee shall be
bound by, or have any liability to you for the performance of any of the
obligations of ___________ under the Lease save and to the extent otherwise
expressly agreed in writing by Xxxxxxx & Xxxxx Limited and the Security Trustee
with you and that ___________ shall not, nor shall have any authority to, agree
to any termination of or amendment to the Lease without the prior written
consent of Xxxxxxx & Xxxxx Limited and the Security Trustee.
You are hereby authorised to assume the obligations expressed to be assumed by
you under the enclosed Acknowledgement to the effect that, so far as the same
would otherwise be incompatible with the Lease, your obligations to ___________
under the Lease shall be modified accordingly.
This Notice shall be goverment by and construed in accordance with ________ law.
Yours faithfully,
For and on behalf of
For and on behalf of
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PART 2
ACKNOWLEDGEMENT
From: ____________
To: (1) __________ ("Security Trustee")
(2) Xxxxxxx & Xxxxx Limited
(3)
[_________ , 1997]
Dear Sirs,
We acknowledge receipt of a Notice of Assignment dated [_________] (the
"Assignment Notice") relating to an assignment between ________ and the Security
Trustee (the "Security Assignment").
We acknowledge the effectiveness of the Security Assignment to confer on the
Security Trustee all rights, title and interests of ________ under the Aircraft
Lease Agreement dated [________] between ________ and ourselves (the "Lease")
relating to one Boeing 737-______ aircraft with manufacturer's serial number
________ together with two installed General Electric CFM 56-3C1 engines (the
"Aircraft").
In consideration of payment to us of US$1 we hereby agree as follows:
(1) to comply with the provisions of the Assignment Notice;
(2) If the Security Trustee issues to us a notice (a "Relevant Notice") that
its rights as assignee under the Security Assignment have become
exercisable we agree that we shall thereafter (a) perform, observe and
comply with all our other undertakings and obligations under the Lease in
favour and for the benefit of the Security Trustee (as the case may be) as
if the Security Trustee were named as lessor therein instead of ________;
and (b) if the Security Trustee so requests, enter into a lease with the
Security Trustee or its nominee at no cost to us, on the same terms
(mutatis mutandis) as the Lease;
(3) If ________ is in breach of any of its obligations, express or implied,
under the Lease, or if any event occurs which would permit us to terminate,
cancel or surrender the Lease we will (a) immediately upon becoming aware
of it, give the Security Trustee notice of such breach or event and
(b) accept as adequate remedy for any such breach performance by the
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Security Trustee of such obligations within seven days of our written
notice to the Security Trustee.
(4) We agree that after issue by the Security Trustee of any Relevant Notice,
we shall not recognise the exercise by the Security Trustee of any of its
rights and powers under the Lease unless and until requested to do so by
the Security Trustee;
(5) We agree that the Security Trustee and Xxxxxxx & Xxxxx Limited shall have
the benefit of Clause 10 of the Lease (indemnity) and (as regards our
payment obligations to the Security Trustee and Xxxxxxx & Xxxxx Limited)
Clause 5.12 (Net Lease) and agree that we are bound by the terms of such
Clauses, as though the same were set out herein in full mutatis mutandis;
and
(6) This acknowledgement shall be governed by and construed in accordance
with _______ law.
Yours faithfully,
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CONTENTS
Clause Page
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210
Exhibit A
Pro Forma Lease
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