1
================================================================================
CONFORMED COPY
Exhibit 10.4
CUSTODY AND LOAN AGREEMENT
dated as of
March 3, 1998
among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AIRCRAFT FINANCE,
the other
MSAF LESSORS
(as defined herein)
and
INTERNATIONAL LEASE FINANCE CORPORATION
================================================================================
2
TABLE OF CONTENTS
_________________
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions...................................................1
ARTICLE 2
CUSTODY
SECTION 2.01. Custody.......................................................7
SECTION 2.02. Change of Required Security Deposits..........................7
SECTION 2.03. Interest on the Required Security Deposits....................7
SECTION 2.04. Termination of Custody........................................7
ARTICLE 3
LOANS
SECTION 3.01. Loans.........................................................8
SECTION 3.02. Borrowings....................................................8
SECTION 3.03. Change of Commitment Amount...................................9
SECTION 3.04. Termination of Commitment and Maturity of Loans...............9
SECTION 3.05. Interest......................................................10
SECTION 3.06. Repayment of Interest and Loans...............................10
SECTION 3.07. Aircraft Acquisition Covenant.................................11
SECTION 3.08. MSAF Facility Covenant........................................11
SECTION 3.09. Amounts Disbursed in Error....................................11
SECTION 3.10. Amounts Repayed in Error......................................11
SECTION 3.11. General Provisions as to Payments.............................12
ARTICLE 4
CREDIT ENHANCEMENT FACILITY
SECTION 4.01. Credit Enhancement Facility...................................12
SECTION 4.02. Drawings under the Credit Enhancement Facility................12
SECTION 4.03. Amount Available under the Credit Enhancement Facility........12
SECTION 4.04. Change of Amount Available under Letter of Credit Facility....12
SECTION 4.05. Non-Replacement of Letter of Credit...........................13
3
ARTICLE 5
SUSPENSION EVENT
SECTION 5.01. Suspension Loan or Drawing 13
SECTION 5.02. Set-off and Deemed Repayment of Loans Upon
Suspension Event 14
SECTION 5.03. Termination of Suspension Event 14
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Notices 15
SECTION 6.02. Amendments and Waivers 16
SECTION 6.03. Accession 16
SECTION 6.04. No Bankruptcy Petition 16
SECTION 6.05. Successors and Assigns 16
SECTION 6.06. Governing Law; Submission to Jurisdiction 17
SECTION 6.07. Counterparts; Effectiveness; Third Party Beneficiaries 17
SECTION 6.08. WAIVER OF JURY TRIAL 17
SECTION 6.09. Entire Agreement 18
SECTION 6.10. Captions 18
SCHEDULE I - Changes of Commitment Amount I-1
EXHIBIT A - Form of Notice of Change of Required
Security Deposits A-1
EXHIBIT B - Form of Accession Agreement B-1
4
CUSTODY AND LOAN AGREEMENT dated as of March 3, 1998 among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
AIRCRAFT FINANCE, a Delaware statutory business trust ("MSAF"), the other MSAF
LESSORS (as defined below) and INTERNATIONAL LEASE FINANCE CORPORATION, a
California corporation ( "ILFC").
WHEREAS, MSAF, ILFC and certain other Persons are parties to a Servicing
Agreement dated as of November 10, 1997 (as amended and in effect from time to
time, the "SERVICING AGREEMENT");
WHEREAS, pursuant to Section 5.06 of the Servicing Agreement, ILFC is to
hold certain security deposits on behalf of the MSAF Lessors and pursuant to
Section 5.05 of the Servicing Agreement, ILFC is to provide a credit facility to
MSAF; and
WHEREAS, ILFC and MSAF have agreed to set forth in this Agreement the
arrangements concerning ILFC's holding of such security deposits and provision
of such credit facility to MSAF;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used in this
Agreement, have the following meanings:
"ACCESSION AGREEMENT" means an Accession Agreement substantially in the
form of Exhibit B.
"AGREEMENT" means this Custody and Loan Agreement, as amended and in effect
from time to time.
"AIRCRAFT" means the "Aircraft" as defined in, and acquired by MSAF or its
designee pursuant to, the Asset Purchase Agreement.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as of
November 10, 1997 between MSAF and ILFC.
1
5
"BUSINESS DAY" means any day on which United States dollar deposits may be
traded on the London inter-bank market and commercial banks and foreign exchange
markets are open in New York, New York and London, England.
"CHANGE OF COMMITMENT AMOUNT" means any increase or decrease in the
Commitment Amount.
"CHANGE OF REQUIRED SECURITY DEPOSITS" means any increase or decrease in
the aggregate amount of Required Security Deposits.
"COMMITMENT" means ILFC's obligation to make Loans to MSAF at any time, up
to a maximum of the Commitment Amount at such time.
"COMMITMENT AMOUNT" means (i) at any time before the Reduction Date, the
sum of (A) $10,000,000 plus (B) Required Security Deposits at such time less (C)
the aggregate amount of outstanding Loans (including the amount of any Drawings,
as provided by Section 3.01(c)) at such time and (ii) at any time from and after
the Reduction Date, the sum of (A) $10,000,000 less (B) the aggregate amount of
outstanding Loans (including the amount of any Drawings, as provided by Section
3.01(c)) at such time; provided that in each of cases (i) and (ii), the
"Commitment Amount" shall not be less than zero.
"CREDIT ENHANCEMENT FACILITY" means, at any time, the credit enhancement
facility provided at such time by ILFC, in its capacity as Servicer under the
Servicing Agreement, for the benefit of MSAF, pursuant to Section 4.01 of this
Agreement.
"DCR" means Duff & ▇▇▇▇▇▇ Credit Rating Co.
"DRAWING" means any drawing by MSAF under the letter of credit issued in
MSAF's favor under the Credit Enhancement Facility or, if the Credit Enhancement
Facility is not a letter of credit facility, any drawing by MSAF under the
Credit Enhancement Facility.
"ELIGIBLE PROVIDER" means ILFC, American International Group, Inc. or a
bank or other financial institution, in each case whose short-term unsecured
debt is rated at least A1+ by S&P, at least D1+ by DCR or at least P1 by
Moody's.
"ILFC" has the meaning specified in the preamble to this Agreement.
"ILFC DRAWING SHARE" means on the occasion of any MSAF Facilities Drawing,
the amount which is equal to the product of (x) the applicable Total
2
6
MSAF Facilities Drawing Amount multiplied by (y) the fraction which is the
quotient of (A) the Commitment Amount immediately before such MSAF Facilities
Drawing divided by (B) the aggregate amounts committed and available for drawing
under the MSAF Facilities immediately before such MSAF Facilities Drawing.
"ILFC REPAYMENT SHARE" means, on each Payment Date, the amount which is
equal to the product of (x) the applicable Total MSAF Facilities Repayment
Amount multiplied by (y) the fraction which is the quotient of (A) outstanding
Loans immediately before the applicable repayment divided by (B) the aggregate
amounts outstanding and required to be repaid under the MSAF Facilities
immediately before such repayment.
"ILFC INSOLVENCY EVENT" means the occurrence of one of the following
events: (i) an involuntary proceeding is commenced or an involuntary petition is
filed in a court of competent jurisdiction seeking relief in respect of ILFC or
in respect of a substantial part of the property or assets of ILFC, under Title
11 of the United States Code, as now constituted or hereafter amended, or any
other United States federal or state or foreign bankruptcy, insolvency,
receivership or similar law, and such proceeding or petition continues
undismissed for 120 days or an order or decree approving or ordering any of the
foregoing is entered or ILFC goes into liquidation, suffers a receiver or
mortgagee to take possession of all or substantially all of its assets or has an
examiner appointed over it or a petition or proceeding is presented for any of
the foregoing and not discharged within 120 days; or (ii) ILFC voluntarily
commences 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
United States federal or state or foreign bankruptcy, insolvency, receivership
or similar law, consents to the institution of, or fails within 120 days to
contest the filing of, any petition described in clause (i) above, files an
answer admitting the material allegations of a petition filed against it in any
such proceeding or makes a general assignment for the benefit of its creditors.
"INDENTURE" means the indenture dated as of March 3, 1998 between MSAF and
Bankers Trust Company, pursuant to which the securitization debt of MSAF is
issued.
"INDENTURE DEFAULT" means any time following the delivery of a "Default
Notice" (as defined in the Indenture) under the Indenture or during the
continuance of an "Acceleration Default" (as defined in the Indenture).
3
7
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as of
March 3, 1998 among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, Discover & Co., ILFC and the
other MSAF Facility Providers (as defined therein).
"LC NON-REPLACEMENT ELECTION" has the meaning specified in Section 4.04(a).
"LEASE" means, with respect to any Aircraft, the aircraft or engine lease
agreement relating to such Aircraft between the applicable MSAF Lessor and the
applicable Lessee, together with all supplements and amendments to such
agreement, pursuant to which such Aircraft is leased to such Lessee.
"LEASE DOCUMENTS" means, with respect to each Aircraft, all agreements
(other than the Lease itself) (including any side letters, assignments of
warranties or option agreements) delivered in connection with, or relating to,
the Lease of such Aircraft.
"LESSEE" means, with respect to each Aircraft, the operating lessee of such
Aircraft.
"LESSEE-INTEREST SECURITY DEPOSIT" means, at any time, a Security Deposit
on which interest earned is required under the terms of the relevant Lease (to
the extent stipulated in such Lease) to be paid by the applicable MSAF Lessor,
in its capacity as lessor, to the applicable Lessee.
"LOAN" means any loan made or deemed made by ILFC to MSAF pursuant to this
Agreement.
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AGREEMENT" means the Loan Agreement dated as of March 3,
1998 between MSAF and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, Discover & Co.
"MSAF" has the meaning specified in the preamble to this Agreement.
"MSAF FACILITIES DRAWING" means any borrowing that MSAF makes under the
MSAF Facilities in order to make a payment of principal of or interest on MSAF's
securitization debt.
"MSAF FACILITY" means (i) this Agreement, (ii) the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Agreement
and (iii) any other credit or liquidity enhancement facility provided to MSAF
that ranks pari passu with this Agreement and the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Agreement.
4
8
"MSAF LESSOR" means MSAF or the Subsidiary of MSAF that is the Person for
whose benefit the Lessee pays Security Deposits under a Lease.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NOTICE OF ADDITIONAL BORROWING" has the meaning specified in Section
3.02(c).
"NOTICE OF BORROWING" has the meaning specified in Section 3.02(a).
"NOTICE OF CHANGE OF REQUIRED SECURITY DEPOSITS" means a notice from ILFC
to MSAF, substantially in the form of Exhibit A to this Agreement.
"NOTICE OF REPAYMENT" has the meaning specified in Section 3.06(a).
"PAYMENT DATE" means the 15th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day), commencing April 1998.
"PERSON" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
of such government or political subdivision.
"PROVIDER" means (i) at any time when ILFC is required to have a Credit
Enhancement Facility in place pursuant to Section, the provider of the Credit
Enhancement Facility and (ii) at any other time, ILFC.
"QUARTERLY LC REPLACEMENT DATE" means the 15th day of each April, July,
October and January (or, if such day is not a Business Day, the next succeeding
Business Day), commencing April 1998.
"REDUCTION DATE" means the date of the termination of the Servicing
Agreement pursuant to any provision of Section 10.02 of the Servicing Agreement
(other than Section 10.02(b) (iii) or Section 10.02(b) (iv)).
"REQUIRED SECURITY DEPOSITS" means, at any time, the aggregate amount of
Security Deposits at such time, other than (i) any amount determined in good
faith by ILFC, in its capacity as Servicer under the Servicing Agreement, to be
no longer held as security for the obligations of a Lessee under a Lease,
whether upon expiry of or default under such Lease or otherwise, and (ii)
Security Deposits in an amount exceeding three months' rent with respect to a
single Aircraft and paid by a single Lessee.
5
9
"S&P" means Standard & Poor's Rating Group, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc.
"SECURITY DEPOSIT" means, at any time, with respect to each Aircraft, all
cash amounts and security deposits in the form of prepayments of rent paid by
the Lessee for the benefit of the applicable MSAF Lessor under the relevant
Lease, as security for the obligations of the Lessee under such Lease and under
any related Lease Documents.
"SERVICING AGREEMENT" has the meaning specified in the preamble to this
Agreement.
"SUBSIDIARY" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"SUSPENSION EVENT" means (i) at any time when ILFC is required to have a
Credit Enhancement Facility in place pursuant to Section 4.01, a failure by ILFC
to renew the Credit Enhancement Facility, or any letter of credit issued under
the Credit Enhancement Facility, on its scheduled expiration, (ii) a downgrade
in the rating of the short-term unsecured debt of the Provider such that it is
no longer an Eligible Provider or (iii) at any time when ILFC is required to
have a Credit Enhancement Facility in place pursuant to Section 4.01, any other
event that causes ILFC to fail to cause the Credit Enhancement Facility to
remain outstanding and in full force and effect.
"SUSPENSION DRAWING" has the meaning specified in Section 5.01(b).
"SUSPENSION LOAN" has the meaning specified in Section 5.01(a).
"TERMINATION DATE" means the date of the termination of the Servicing
Agreement pursuant to Section 10.01 thereof or by MSAF upon the repayment or
defeasance (but not refinancing) of all of MSAF's securitization debt, or of the
sale by MSAF and its Subsidiaries of all the Aircraft.
"TOTAL MSAF FACILITIES DRAWING AMOUNT" means, at the time of each MSAF
Facilities Drawing, the total amount to be drawn by MSAF under the MSAF
Facilities in order to make a payment of principal of or interest on MSAF's
securitization debt on the next Payment Date.
"TOTAL MSAF FACILITIES REPAYMENT AMOUNT" means, on each Payment Date, the
total amount available to MSAF for the repayment of amounts
6
10
outstanding under the MSAF Facilities, after the payment of all amounts required
to be paid on such Payment Date pursuant to Section 3.08(a)(x) or, during an
Indenture Default, Section 3.08(b)(vi) of the Indenture.
"UNITED STATES" means the United States of America.
ARTICLE 2
CUSTODY
SECTION 2.01. Custody. (a) Under this Agreement, ILFC shall hold the
Required Security Deposits in custody for the benefit of the applicable MSAF
Lessor (subject to Section 2.03) and as the agent of the applicable MSAF Lessor.
(b) At the time at which this Agreement becomes effective in accordance
with Section 6.07(b), the amount of Required Security Deposits held by ILFC at
such time shall be deemed to have been delivered as the initial amount in
custody under this Agreement by the MSAF Lessors to ILFC.
SECTION 2.02. Change of Required Security Deposits. (a) On the date of any
Change of Required Security Deposits, ILFC shall give MSAF a Notice of Change of
Required Security Deposits.
(b) On the date of any Change of Required Security Deposits that occurs
because amounts previously held by ILFC are to be returned to any Lessee or to
MSAF pursuant to the terms of this Agreement or the Servicing Agreement, ILFC
shall immediately redeliver such amounts to MSAF.
SECTION 2.03. Interest on the Required Security Deposits. Any interest
earned by ILFC on the Required Security Deposits shall be for the account of
ILFC, except to the extent that interest earned on a Lessee-Interest Security
Deposit is expressly set forth in writing under the applicable Lease to be for
the account of the applicable Lessee, in which case interest to such extent
shall be for the account of such Lessee and ILFC shall be responsible for the
remittance of such interest to the applicable Lessee in accordance with the
terms of the relevant Lease.
SECTION 2.04. Termination of Custody. Upon the termination of the
Servicing Agreement for any reason, ILFC's agency as custodian on behalf of the
MSAF Lessors shall terminate and ILFC shall redeliver the full amount of any
remaining Required Security Deposits at such time to MSAF.
7
11
ARTICLE 3
LOANS
SECTION 3.01. Loans. (a) ILFC agrees, on the terms and conditions set
forth in this Agreement, to make Loans to MSAF from time to time during the term
of this Agreement to enable MSAF to make a payment of principal of or interest
on MSAF's securitization debt; provided that the amount of any such Loan shall
not exceed the Commitment Amount in effect immediately before such Loan is made.
(b) ILFC agrees to make a Loan to MSAF during the continuance of any
Suspension Event, as set forth in Section 5.01(a).
(c) ILFC agrees that any Drawing made pursuant to Section 4.02 or Section
5.01(b) shall be deemed to constitute a Loan made to MSAF by ILFC in a principal
amount equal to the amount of such Drawing.
(d) ILFC agrees that any delivery to MSAF of the amount of an increase in
Required Security Deposits made pursuant to Section 4.05(b) shall be deemed to
constitute a Loan made to MSAF by ILFC in a principal amount equal to the amount
of Required Security Deposits delivered.
(e) MSAF may borrow under this Section 3.01, repay Loans as provided in
Section 3.06 and reborrow under this Section 3.01, at any time during the term
of this Agreement.
SECTION 3.02. Borrowings. (a) Not later than 8:00 P.M. (New York City
time) on the Business Day before the date of any Loan that MSAF wishes ILFC to
make pursuant to Section 3.01(a), MSAF shall give ILFC notice (a "NOTICE OF
BORROWING") (provided that such notice may be given orally by telephone if MSAF
provides written confirmation of such notice by 8:30 P.M. (New York City time)),
stating that the purpose of such Loan is to enable MSAF to make a payment of
principal of or interest on MSAF's securitization debt and specifying:
(i) the applicable Total MSAF Facilities Drawing Amount;
(ii) the amount of such Loan, which shall be equal to the related ILFC
Drawing Share; and
(iii) the date (which shall be a Business Day) of such Loan.
8
12
(b) Not later than 5:30 P.M. (New York City time) on the date of any Loan
specified in a Notice of Borrowing given pursuant to Section 3.02(a), ILFC shall
make available the amount of such Loan to MSAF, in lawful money of the United
States in Federal or other funds immediately available in New York City.
(c) If, for any reason, on the date of any Loan MSAF does not receive the
full applicable Total MSAF Facilities Drawing Amount under the MSAF Facilities,
not later than 8:30 P.M. (New York City time) on the date of such Loan, MSAF may
give ILFC notice of an additional Loan (a "NOTICE OF ADDITIONAL BORROWING"),
specifying:
(i) the shortfall in such Total MSAF Facilities Drawing Amount; and
(ii) the amount of such additional Loan, which may be any amount up to the
Commitment Amount; and
(iii)the date (which shall be the next Business Day) of such additional
Loan.
(d) Not later than 5:30 P.M. (New York City time) on the date of any
additional Loan specified in a Notice of Additional Borrowing, ILFC shall make
available the amount of the applicable additional Loan to MSAF, in lawful money
of the United States in Federal or other funds immediately available in New York
City.
SECTION 3.03. Change of Commitment Amount. On the date of each Change of
Commitment Amount, MSAF and ILFC shall jointly agree: (i) the reason for such
Change of Commitment Amount, (ii) the amount of such Change of Commitment
Amount, (iii) after giving effect to such Change of Commitment Amount, the
amount of Required Security Deposits, (iv) after giving effect to such Change of
Commitment Amount, the amount of outstanding Loans and (v) after giving effect
to such Change of Commitment Amount, the Commitment Amount. MSAF and ILFC shall
complete and each sign Schedule I (or a continuation thereof) to this Agreement
to evidence such agreement.
SECTION 3.04. Termination of Commitment and Maturity of Loans. On the
Termination Date, the Commitment shall terminate and on the next Payment Date,
unless repaid earlier pursuant to Section or deemed repaid earlier pursuant to
Section , each Loan shall mature, and its principal amount shall, to the extent
that there are amounts available to MSAF on such Payment Date after the payment
of all amounts required to be paid on such Payment Date pursuant to Section
3.08(a)(x) or, during an Indenture Default, Section 3.08(b)(vi)
9
13
of the Indenture, be due and payable (together with any and all interest
accrued thereon).
SECTION 3.05. Interest. Each Loan shall bear interest on its outstanding
principal amount, for each day from the date such Loan is made until it is
repaid or deemed repaid, at a rate of 3% per annum, calculated on the basis of a
360-day year consisting of twelve 30-day months.
SECTION 3.06. Repayment of Interest and Loans. On each Payment Date, to
the extent that there are amounts available to MSAF on such Payment Date after
the payment of all amounts required to be paid on such Payment Date pursuant to
Section 3.08(a)(x) or, during an Indenture Default, Section 3.08(b)(vi) of the
Indenture, MSAF shall repay interest on and principal of outstanding Loans in
accordance with Section 3.08 (a) (xi) or, during an Indenture Default, Section
3.08(b)(vii) of the Indenture. Not later than 12:30 P.M. (New York City time)
on the second Business Day before each Payment Date on which MSAF intends to
repay any interest or principal of Loans, MSAF shall give ILFC notice (a "NOTICE
OF REPAYMENT"), specifying:
(i) the Total MSAF Facilities Repayment Amount that it intends to repay on
such Payment Date; and
(ii) the ILFC Repayment Share.
(b) On each Payment Date following a Notice of Repayment, MSAF shall pay
to ILFC the ILFC Repayment Share specified in such Notice of Repayment, which
shall be applied to repay:
(i) first, all interest then accrued in accordance with Section
3.05; and
(ii) second, except during the continuance of a Suspension Event,
the principal amount of any Loans then outstanding;
provided that at any time when ILFC is required to have a Credit Enhancement
Facility in place pursuant to Section , notwithstanding the amount of the ILFC
Repayment Share specified in any Notice of Repayment, MSAF shall not be
obligated to repay Loans in any amount such that (after giving effect to such
repayment) the Commitment Amount would be greater than the face amount of the
Credit Enhancement Facility on such Payment Date (before giving effect to such
repayment), unless MSAF shall first have received (A) if the Credit Enhancement
Facility is a letter of credit, a replacement letter of credit in the full
amount of the Commitment Amount, after giving effect to the repayment
10
14
specified in the applicable Notice of Repayment (provided that facsimile
evidence of the issuance of such replacement letter of credit shall be
sufficient; and provided further that despite receipt of such evidence, such
replacement letter of credit shall be deemed to be held in escrow by MSAF on
ILFC's behalf until ILFC's receipt of the applicable repayment) or (B) if the
Credit Enhancement Facility is not a letter of credit, notice from the Provider
that upon the making by MSAF of the repayment specified in the Notice of
Repayment, the amount available under the Credit Enhancement Facility shall be
the Commitment Amount, after giving effect to such repayment; and
provided further that if MSAF does not repay Loans in an amount such that
the Commitment Amount immediately after such repayment is greater than the then
face amount of the Credit Enhancement Facility, ILFC shall have no obligation to
increase the face amount of the Credit Enhancement Facility.
SECTION 3.07. Aircraft Acquisition Covenant. MSAF covenants with ILFC
that it shall not, and shall not permit any of its Subsidiaries to, purchase or
otherwise acquire any aircraft (other than the Aircraft) or any interest
therein, unless at the time of such purchase or other acquisition there are no
Loans outstanding.
SECTION 3.08. MSAF Facility Covenant. MSAF covenants with ILFC that it
shall not at any time enter into any MSAF Facility unless the provider of such
MSAF Facility simultaneously becomes a party to the Intercreditor Agreement.
SECTION 3.09. Amounts Disbursed in Error. If for any reason MSAF, in a
Notice of Borrowing given pursuant to Section 3.02(a), requests an amount that
is greater than the Commitment Amount at the time of such Notice of Borrowing,
and ILFC disburses the full amount requested, on the next Payment Date MSAF
shall, to the extent that there are amounts available to MSAF on such Payment
Date, repay to ILFC the amount of the excess of such disbursement over such
Commitment Amount as an "Expense" under the Indenture, in accordance with
Section 3.08(a)(i) or, during an Indenture Default, of the Indenture. Such
repayment will not affect MSAF's obligation to make any other repayment under
Section 3.06 on such Payment Date.
SECTION 3.10. Amounts Repaid in Error. If for any reason, on any Payment
Date MSAF pays to any MSAF Facility Provider an amount that is greater than
the"Repayment Share" (as defined in the Intercreditor Agreement) of such MSAF
Facility Provider applicable to such Payment Date, and consequently MSAF pays to
ILFC an amount that is less than the ILFC Repayment Share applicable to such
Payment Date, on the next Payment Date MSAF shall, to the extent that there are
amounts available to MSAF on such Payment Date, repay to
11
15
ILFC the amount of the shortfall in such repayment as an "Expense" under the
Indenture, pursuant to Section 3.08(b)(i).
SECTION 3.11. General Provisions as to Payments. MSAF shall make each
payment of interest on, and principal of, the Loans at the times specified in
Section 3.08 of the Indenture and at such place as ILFC shall specify by notice
to MSAF.
ARTICLE 4
CREDIT ENHANCEMENT FACILITY
SECTION 4.01. Credit Enhancement Facility. At any time when ILFC is not
an Eligible Provider, ILFC will be required to have an Eligible Provider provide
MSAF with the Credit Enhancement Facility described in this Article 4. At any
time when ILFC is an Eligible Provider, ILFC will not be required to have an
Eligible Provider or any other Person provide MSAF with the Credit Enhancement
Facility described in this Article 4.
SECTION 4.02. Drawings under the Credit Enhancement Facility. If ILFC
fails for any reason to make a Loan under Section by 12:00 noon (New York City
time) on the date specified in a Notice of Borrowing, MSAF shall, upon prior
notice to ILFC, be entitled to make a Drawing in the full amount available under
the Credit Enhancement Facility, up to the Commitment Amount at such time.
SECTION 4.03. Amount Available under the Credit Enhancement Facility.
Subject to Section 4.04 and Section 4.05, the total amount available to MSAF for
Drawings under the Credit Enhancement Facility at any time shall be equal to the
Commitment Amount at such time.
SECTION 4.04. Change of Amount Available under Letter of Credit Facility.
(a) If the Credit Enhancement Facility is a letter of credit facility, on the
occasion of each Change of Commitment Amount, ILFC may elect either (i) to give
notice to the Provider (with a copy to MSAF) of such Change of Commitment
Amount, and cause the Provider to issue a replacement letter of credit in favor
of MSAF on the date of such Change of Commitment Amount so that the total amount
available to MSAF under all such letters of credit is equal to the new
Commitment Amount or (ii) provided that it complies with Section , to leave in
place the letter of credit outstanding at such time (an "LC NON-REPLACEMENT
ELECTION").
(b) If the Credit Enhancement Facility at any time is not a letter of
credit facility, on the occasion of each Change of Commitment Amount, ILFC shall
give
12
16
notice to the Provider (with a copy to MSAF) of such Change of Commitment
Amount, and shall cause the Provider to make the new Commitment Amount available
to MSAF under the Credit Enhancement Facility on the date of such Change of
Commitment Amount.
SECTION 4.05. Non-Replacement of Letter of Credit. (a) If a Change of
Commitment Amount (i) is a decrease in the Commitment Amount that results in the
face amount of the outstanding letter of credit exceeding the Commitment Amount
and (ii) ILFC makes an LC Non-Replacement Election, notwithstanding the face
amount of the outstanding letter of credit, the maximum Drawing that MSAF shall
at any time be entitled to make on such letter of credit shall be the Commitment
Amount.
(b) If a Change of Commitment Amount (i) is an increase in the Commitment
Amount resulting from an increase in Required Security Deposits that results in
the Commitment Amount exceeding the face amount of the outstanding letter of
credit and (ii) ILFC makes an LC Non-Replacement Election, ILFC shall
immediately deliver the amount of such increase to MSAF, and such delivery
shall, in accordance with Section 3.01(c), be deemed to constitute a Loan in a
principal amount equal to the amount delivered. On the next succeeding
Quarterly LC Replacement Date, ILFC shall cause the Provider to issue a
replacement letter of credit in the full amount of the Commitment Amount on such
Quarterly LC Replacement Date (calculated after giving effect to any borrowings
or repayments of principal of Loans specified by MSAF in a Notice of Borrowing
or a Notice of Repayment as intended to be made on such Quarterly LC Replacement
Date).
ARTICLE 5
SUSPENSION EVENT
SECTION 5.01. Suspension Loan or Drawing. From and after the fifth
Business Day after the date on which any Suspension Event occurs, if such
Suspension Event is continuing, MSAF may request that ILFC make a Loan (a
"SUSPENSION LOAN") in the full amount of the Commitment Amount at such time, by
giving ILFC notice of such Suspension Loan not later than 12:00 noon (New York
City time) on the second Business Day before the date (which shall be a Business
Day) of such Suspension Loan. Not later than 12:00 noon (New York City time) on
the date of the requested Suspension Loan, ILFC shall make available the amount
of such Suspension Loan to MSAF, in lawful money of the United States in Federal
or other funds immediately available in New York City.
13
17
(b) If ILFC fails for any reason to make a Suspension Loan by 12:00 noon
(New York City time) on the date specified in the notice given by MSAF pursuant
to Section 5.01(a) or if an ILFC Insolvency Event has occurred and is continuing
at such time, MSAF shall, without further notice to ILFC, immediately be
entitled to make a Drawing (a "SUSPENSION DRAWING") in the full amount of the
Commitment Amount at such time.
SECTION 5.02. Set-off and Deemed Repayment of Loans Upon Suspension Event.
(a) On the date of any Suspension Loan or Suspension Drawing, after giving
effect to (i) such Suspension Loan or Suspension Drawing, as applicable, and
(ii) any Change of Required Security Deposits effective on the date of such
Suspension Loan or Suspension Drawing, ILFC shall set off and apply any Required
Security Deposits held by it pursuant to Section 2.01 on such date against the
principal amount of any Loans then outstanding, which shall be deemed repaid in
the amount of such set-off and application.
(b) After giving effect to the set-off and application to be made pursuant
to Section 5.02(a), if any Loans shall still be outstanding, notwithstanding any
Suspension Event, such Loans shall remain outstanding until repaid in accordance
with Section 3.06, and shall accrue interest payable in accordance with Section
3.05.
SECTION 5.03. Termination of Suspension Event. On the first Payment Date
following both (a) the termination of a Suspension Event and (b) if ILFC is not
an Eligible Provider, ILFC's once again procuring and causing to remain in full
force and effect a Credit Enhancement Facility provided by an Eligible Provider,
and upon (i) receipt by MSAF from ILFC of the applicable Notice of Change of
Required Security Deposits under Section 2.02 and, if ILFC is not an Eligible
Provider, receipt by MSAF of the applicable letter of credit or other evidence
satisfactory to MSAF that the full Commitment Amount at such time is available
to it under the Credit Enhancement Facility, and (ii) the applicable joint
endorsement of Schedule I to this Agreement by ILFC and MSAF pursuant to Section
3.03, MSAF shall deliver to ILFC an amount equal to the amount of the Required
Security Deposits at such time. Upon making delivery of such amount, MSAF shall
be deemed to have delivered the full amount of the Required Security Deposits
back to ILFC, to be held in custody pursuant to Section 2.01 by ILFC on behalf
of the MSAF Lessors.
14
18
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Notices. Any notice, request or information required or
permissible under this Agreement will be in writing and in English. Notices
will be delivered in person or sent by fax, letter (mailed airmail, certified
and return receipt requested), or by expedited delivery addressed to the parties
as set forth below in this Section . In the case of a fax, notice will be
deemed received upon the date set forth on the confirmation of receipt produced
by the sender's fax machine immediately after the fax is sent. In the case of a
mailed letter, notice will be deemed received on the tenth day after mailing.
In the case of a notice sent by expedited delivery, notice will be deemed
received on the date of delivery set forth in the records of the Person which
accomplished the delivery. If any notice is sent by more than one of the above
listed methods, notice will be deemed received on the earliest possible date in
accordance with the above provisions. Notices will be addressed as follows:
if to MSAF, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Aircraft Finance
c/o Cabot Aircraft Services Limited
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇'▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇ 4778
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇ 4328
if to ILFC, to:
International Lease Finance Corporation
1999 Avenue of the Stars
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
15
19
Fax: ▇-▇▇▇-▇▇▇ 1990
or to such other address as any party shall from time to time designate in
writing to the other parties.
SECTION 6.02. Amendments and Waivers. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver of such right, power or
privilege nor shall any single or partial exercise of such right, power or
privilege preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. The rights
and remedies provided in this Agreement shall be cumulative and not exclusive of
any rights or remedies provided by law.
SECTION 6.03. Accession. MSAF shall immediately cause any Subsidiary of
MSAF that becomes an MSAF Lessor after the date of this Agreement to become a
party to this Agreement by executing an Accession Agreement. Upon the execution
of such Accession Agreement by such MSAF Lessor and the acceptance and
acknowledgement of such execution by the other parties to this Agreement, such
MSAF Lessor shall become a party to this Agreement for all purposes and shall be
bound by the terms of this Agreement as if it were an original signatory to this
Agreement.
SECTION 6.04. No Bankruptcy Petition. ILFC agrees that it shall not take
any steps for the purposes of procuring the appointment of any administrative
receiver or the making of any administrative order or for instituting any
bankruptcy, reorganization, arrangement, insolvency, winding-up, liquidation,
composition or any like proceedings under the laws of any jurisdiction in
respect of any MSAF Lessor or in respect of any of their respective liabilities,
as a result of any claim or interest of ILFC under this Agreement.
SECTION 6.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights and obligations under this
Agreement without the consent of the other parties.
16
20
SECTION 6.06. Governing Law; Submission to Jurisdiction. (a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
(b) The parties to this Agreement 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 by this
Agreement 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 in the future 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 6.01 shall
be deemed effective service of process on such party.
SECTION 6.07. Counterparts; Effectiveness; Third Party Beneficiaries. (a)
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 to each such
counterpart were upon the same instrument.
(b) This Agreement shall become effective when (i) each party has received
a counterpart of this Agreement signed by each other party or facsimile or other
satisfactory confirmation that each other party has signed a counterpart of this
Agreement, (ii) if ILFC is not an Eligible Provider on the date of this
Agreement, MSAF has received the initial letter of credit issued under the
Credit Enhancement Facility and (iii) both ILFC and MSAF have received a copy of
Schedule I to this Agreement, appropriately endorsed by each of them to reflect
the initial Commitment Amount.
(c) No provision of this Agreement is intended to confer upon any Person
other than the parties to this Agreement any rights or remedies under this
Agreement.
SECTION 6.08. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT.
17
21
SECTION 6.09. 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 6.10. Captions. The captions used in this Agreement are included
for convenience of reference only and shall be ignored in the construction or
interpretation of this Agreement.
18
22
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed by its authorized representative or officer, as applicable, as of
the day and year first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AIRCRAFT FINANCE
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Signatory Trustee
INTERNATIONAL LEASE FINANCE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President
MSA I
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Signatory Trustee
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------
SIGNED SEALED AND DELIVERED
for and on behalf of
GREENFLY (IRELAND) LIMITED,
by ▇▇▇▇▇▇▇ ▇▇▇▇▇
its duly authorized attorney
in fact in the presence of:
23
REDFLY (UK) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
24
SCHEDULE I
CHANGES OF COMMITMENT AMOUNT
Reason for Amount of
Change of Change of (1) (2) ((1)+10,000,000)-(2))
Commitment Commitment Required Security Outstanding Commitment Signature for Signature for
Date Amount* Amount ** Deposits*** Loans Amount MSAF ILFC
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
_______________________
* Specify (i) deemed initial delivery of Required Security Deposits, (ii)
Change of Required Security Deposits, (iii) Loan, (iv) repayment of Loan,
(v) occurrence of Reduction Date, (vi) occurrence of Suspension Event or
(vii) termination of Suspension Event.
** Specify the amount of the applicable increase (expressed as a positive) or
decrease (expressed as a negative) in the Commitment Amount.
*** As detailed in the Notice of Change of Required Security Deposits from ILFC
to MSAF given on the date of the applicable Change of Commitment Amount.
I-1
25
EXHIBIT A
FORM OF NOTICE OF CHANGE OF
REQUIRED
SECURITY DEPOSITS
[Date of Change
of Required Security
Deposits]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Aircraft Finance
c/o Cabot Aircraft Services Limited
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇'▇▇▇▇▇
Fax: ▇▇▇-▇-▇▇▇ 4778
Ladies and Gentlemen:
Re: Custody and Loan Agreement (the "CUSTODY AND LOAN AGREEMENT") dated as
of March 3, 1998 among ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Aircraft Finance ( "MSAF"), the
other MSAF Lessors and International Lease Finance Corporation ("ILFC")
This notice is given to MSAF pursuant to Section 2.02 of the Custody and
Loan Agreement. Capitalized terms used and not defined in this notice have the
meanings specified in the Custody and Loan Agreement.
ILFC hereby notifies MSAF that as of the date of this notice, there has
been a Change of Required Security Deposits, as detailed below.
DETAILS OF CHANGE
Aircraft(1) Reason for Change(2) Amount(3)
[Name of Lessee] $
MSN[_____]
A1
26
Total
________________
(1) List each Aircraft with respect to the Lease of which the applicable
Required Security Deposit held by ILFC has increased or decreased.
(2) Specify the cause of such increase or decrease.
(3) Specify the amount of the applicable increase (expressed as a
positive) or decrease (expressed as a negative) in the Required Security
Deposit.
As a result of the above Change of Required Security Deposits, the
amount of Required Security Deposits is $________.
Sincerely,
INTERNATIONAL LEASE FINANCE CORPORATION
By:
------------------------------------
Name:
Title:
cc: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. International Limited
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax: ▇▇-▇▇▇-▇▇▇ 4328
A-2
27
EXHIBIT B
FORM OF ACCESSION AGREEMENT
[Date]
We refer to the Custody and Loan Agreement dated as of March 3, 1998 among
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Aircraft Finance, the other MSAF Lessors and International Lease
Finance Corporation (the "CUSTODY AND LOAN AGREEMENT"). Capitalized terms used
and not defined in this Accession Agreement have the meanings specified in the
Custody and Loan Agreement.
We agree, as of the date of this Accession Agreement, to be considered a
party to the Custody and Loan Agreement for all purposes, as if an original
signatory to the Custody and Loan Agreement, and to be bound, as an MSAF Lessor,
by the terms of the Custody and Loan Agreement.
[NAME OF ACCEDING MSAF LESSOR]
By:
---------------------------------
Name:
Title:
ACCEPTED AND ACKNOWLEDGED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AIRCRAFT FINANCE
By:
----------------------------
Name:
Title:
B-1
28
INTERNATIONAL LEASE FINANCE CORPORATION
By:
---------------------------
Name:
Title:
MSA I
By:
---------------------------
Name:
Title:
GREENFLY (IRELAND) LIMITED
By:
---------------------------
Name:
Title:
REDFLY (UK) LIMITED
By:
---------------------------
Name:
Title:
[OTHER MSAF LESSORS PREVIOUSLY ACCEDED]
B-2
