EXECUTION COPY
================================================================================
AMENDED AND RESTATED CUSTODY AND LOAN AGREEMENT
dated as of
August 6, 1999
among
MORGAN STANLEY AIRCRAFT FINANCE,
the other
MSAF LESSORS
(as defined herein)
and
INTERNATIONAL LEASE FINANCE CORPORATION
================================================================================
TABLE OF CONTENTS
----------------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.....................................................1
ARTICLE 2
CUSTODY
SECTION 2.01. Custody.........................................................5
SECTION 2.02. Change of Required Security Deposits............................5
SECTION 2.03. Interest on the Required Security Deposits......................6
SECTION 2.04. Termination of Custody..........................................6
ARTICLE 3
LOANS
SECTION 3.01. Loans...........................................................6
SECTION 3.02. Borrowings......................................................7
SECTION 3.03. Change of Commitment Amount.....................................8
SECTION 3.04. Termination of Commitment and Maturity of Loans.................8
SECTION 3.05. Interest........................................................8
SECTION 3.06. Repayment of Interest and Loans.................................8
SECTION 3.07. Aircraft Acquisition Covenant...................................9
SECTION 3.08. MSAF Facility Covenant..........................................9
SECTION 3.09. Amounts Disbursed in Error......................................9
SECTION 3.10. Amounts Repaid in Error........................................10
SECTION 3.11. General Provisions as to Payments..............................10
ARTICLE 4
CREDIT ENHANCEMENT FACILITY
SECTION 4.01. Credit Enhancement Facility....................................10
SECTION 4.02. Drawings under the Credit Enhancement Facility.................10
SECTION 4.03. Amount Available under the Credit Enhancement Facility.........10
SECTION 4.04. Change of Amount Available under Letter of Credit
Facility....................................................10
SECTION 4.05. Non-Replacement of Letter of Credit............................11
PAGE
----
ARTICLE 5
SUSPENSION EVENT
SECTION 5.01. Suspension Loan or Drawing.....................................11
SECTION 5.02. Set-off and Deemed Repayment of Loans Upon Suspension
Event.......................................................12
SECTION 5.03. Termination of Suspension Event................................12
ARTICLE 6
MISCELLANEOUS
SECTION 6.01. Notices........................................................12
SECTION 6.02. Amendments and Waivers.........................................13
SECTION 6.03. Accession......................................................14
SECTION 6.04. No Bankruptcy Petition.........................................14
SECTION 6.05. Successors and Assigns.........................................14
SECTION 6.06. Governing Law; Submission to Jurisdiction
...........................................................14
SECTION 6.07. Counterparts; Effectiveness; Third Party Beneficiaries.........15
SECTION 6.08. WAIVER OF JURY TRIAL...........................................15
SECTION 6.09. Entire Agreement...............................................15
SECTION 6.10. Captions.......................................................15
SCHEDULE I - Changes of Commitment Amount................................I-1
SCHEDULE II - ...........................................................I-2
EXHIBIT A - Form of Notice of Change of Required
Security Deposits......................................A-1
EXHIBIT B - Form of Accession Agreement.................................B-1
ii
AMENDED AND RESTATED CUSTODY AND LOAN AGREEMENT dated as of August 6, 1999
among MORGAN STANLEY 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, ILFC, MSAF and certain of the other parties hereto are party to a
Custody and Loan Agreement dated March 3, 1998 and wish to amend and restate
that agreement in its entirety with effect from the effectiveness of this
Agreement pursuant to Section 6.07 hereof;
WHEREAS, MSAF, ILFC and certain other Persons are parties to an Amended
and Restated Servicing Agreement dated as of August 6, 1999 (as amended and in
effect from time to time, the "Servicing Agreement");
WHEREAS, ILFC is to hold certain security deposits on behalf of certain of
the MSAF Lessors and 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 1
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 Amended and Restated Custody and Loan Agreement, as
amended and in effect from time to time.
"Aircraft" means the Aircraft listed on Schedule II hereto.
"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) $20,000,000 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) $20,000,000 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 & Phelps 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 MSAF
Facilities Drawing Amount multiplied by (y) the fraction which is the quotient
of (A) the Commitment Amount immediately before such MSAF
2
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).
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
March 3, 1998 among Morgan Stanley, Dean Witter, Discover & Co., ILFC and the
other MSAF Facility Providers (as defined therein).
3
"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.
"Morgan Stanley Agreement" means the Loan Agreement dated as of March 3,
1998 between MSAF and Morgan Stanley, Dean Witter, 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 Morgan Stanley
Agreement and (iii) any other credit or liquidity enhancement facility provided
to MSAF that ranks pari passu with this Agreement and the Morgan Stanley
Agreement.
"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 Moody's Investors Service, Inc.
4
"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).
"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 4.01, 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).
"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, (ii) Security
Deposits in an amount exceeding three months' rent with respect to a single
Aircraft and paid by a single Lessee and (iii) Security Deposits returned to
the applicable MSAF Lessor pursuant to Section 2.04(b) hereof.
"S&P" means Standard & Poor's Rating Group, a division of The McGraw-Hill
Companies, Inc.
5
"Security Deposit" means, at any time, with respect to each Aircraft
listed on Schedule II hereto, 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 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.
6
"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 or such other written notice as may be agreed
among the parties hereto.
(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. (a) 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.
(b) ILFC agrees to transfer an amount equal to any Security Deposits that
are designated "Returnable Deposits" on Schedule II hereto on the last 8
7
Business Day of the month specified on Schedule II hereto as the
"Return Month" for such "Returnable Deposits". Upon the return of such
"Returnable Deposits", ILFC's agency as custodian on behalf of the applicable
MSAF Lessors with respect to such Security Deposits shall terminate and ILFC
will have no further obligation with respect to such Returnable Deposits.
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;
8
(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.
(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 (or such other written schedule as may be agreed among the
parties hereto) 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
9
Date, unless repaid earlier pursuant to Section 3.06 or deemed repaid earlier
pursuant to Section 5.02, 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) 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. (a) 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 4.01, 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
10
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 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, Section 3.08(b)(i) 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
11
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 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 3.01 by 5:30 P.M. (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
12
4.05(b), 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 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(d), 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. (a) 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
13
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.
(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
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 6.01. 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:
Morgan Stanley Aircraft Finance
c/o Cabot Aircraft Services Limited
Regus House
Harcourt Centre
Harcourt Road
Dublin 2
Ireland
Attention: Mr. Kieran O'Keefe
Fax: 353-1-402 9496
with a copy to:
Morgan Stanley & Co. International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
Attention: Mr. Scott Peterson
Fax: 44-171-425 4328
if to ILFC, to:
International Lease Finance Corporation
1999 Avenue of the Stars
39th Floor
Los Angeles, CA 90067
Attention: Legal Department
15
Fax: 1-310-788 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.
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.
16
(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 and (ii) MSAF has notified ILFC that MSAF has issued
additional securitization debt and acquired MSA V and MSA III.
(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.
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.
17
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
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.
MORGAN STANLEY AIRCRAFT
FINANCE
By: /s/ Scott Peterson
---------------------------------
Name: Scott Peterson
Title:
INTERNATIONAL LEASE FINANCE
CORPORATION
By: /s/ Steven F. Udvar-Hazy
---------------------------------
Name: Steven F. Udvar-Hazy
Title: President and CEO
MSA I
By: /s/ Scott Peterson
---------------------------------
Name: Scott Peterson
Title:
MSA II
By: /s/ Scott Peterson
---------------------------------
Name: Scott Peterson
Title:
MSA III
By: /s/ Scott Peterson
---------------------------------
Name: Scott Peterson
Title:
GREENFLY (IRELAND) LIMITED
By: /s/ Kieran O'Keefe
---------------------------------
Name: Kieran O'Keefe
Title:
REDFLY (UK) LIMITED
By: /s/ Kieran O'Keefe
---------------------------------
Name: Kieran O'Keefe
Title: